| Organization, Nature of Operations and summary of Significant Accounting Policies | Note
1 – Organization, Nature of Operations and summary of Significant Accounting Policies Norris
Industries, Inc. (“NRIS” or the “Company”), was incorporated on February 19, 2014 as a Nevada corporation. The
Company was formed to conduct operations in the oil and gas industry. The Company’s principal operating properties are in the Ellenberger
formation in Coleman County, and in Jack County and Palo-Pinto County Texas. The Company’s production operations are all located
in the State of Texas. On
April 25, 2018, the Company incorporated a Texas registered subsidiary, Norris Petroleum, Inc., as its own operating entity. Basis
of Presentation The
accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”). The
Company’s consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities in
which the Company has a controlling financial interest. All significant inter-company accounts and transactions have been eliminated
in consolidation. Liquidity
and Capital Considerations The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following
the issuance date of these consolidated financial statements. The
Company’s business and operations have been adversely affected by and are expected to continue to be adversely affected by the
recent COVID-19 outbreak and may be adversely affected in the future by other similar outbreaks. As
a result of the recent COVID-19 outbreak, including voluntary and mandatory quarantines, travel restrictions and other restrictions,
the Company’s operations, and those of its subcontractors, customers and suppliers, have and are anticipated to continue to experience
delays or disruptions and temporary suspensions of operations. In addition, the Company’s financial condition and results of operations
have been and are likely to continue to be adversely affected by the COVID-19 outbreak. The
timeline and potential magnitude of the COVID-19 outbreak and the Ukraine-Russia war is currently unknown. The continuation or amplification
of this virus could continue to more broadly affect the United States and global economy, including our business and operations, and
the demand, for oil and gas. The
Company has incurred continuing losses since 2016, including a loss of $ 498,947 400,000 421,062 $ 600,000 140,000 71,000 The
Company’s principal capital and exploration expenditures during next fiscal year are expected to relate to selected well workovers
on its Jack and Palo Pinto County acreages. The Company believes that it has sufficient cash on hand and available funds from its line
of credit to fund its costs for such expenditures as well as other operating costs, for the 12 month period subsequent to issuance of
these financial statements. In
the event that the Company requires additional capital to fund higher operational losses or oil and gas property lease purchases for
fiscal year ending February 28, 2023, the Company expects to seek additional capital from one or more sources via restricted private
placement sales of equity and debt securities from those other than JBB. However, there can be no assurance that the Company would be
able to secure the necessary capital to fund its costs on acceptable terms, or at all. If, for any reason, the Company is unable to fund
its operations, it would have to undertake other aggressive cost cutting measures and then be subject to possible loss of some of its
rights and interests in prospects to curtail operations and forced to forego opportunities or in worst case, cease operations . Use
of Estimates The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expense during the period.
Actual results could differ from those estimates. Risks
and Uncertainties The
Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other
risks associated with operating an emerging business, including the potential risk of business failure. Cash
and Cash Equivalents The
Company considers all highly liquid investments purchased with an original maturity of the year or less to be cash equivalents. The Company
has not experienced any losses on its deposits of cash and cash equivalents . Oil
and Gas Properties, Full Cost Method The
Company follows the full cost method of accounting for its oil and gas properties, whereby all costs incurred in connection with the
acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition,
geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil wells and administrative
costs directly attributable to those activities and asset retirement costs. Disposition of oil properties are accounted for as a reduction
of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital
costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the statement of operations. Depletion
and depreciation of proved oil properties are calculated on the units-of-production method based upon estimates of proved reserves. Such
calculations include the estimated future costs to develop proved reserves. Costs of unproved properties are not included in the costs
subject to depletion. These costs are assessed periodically for impairment. At
the end of each quarter, the unamortized cost of oil and gas properties, net of related deferred income taxes, is limited to the sum
of the estimated future after-tax net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at
10% Income
Taxes Income
taxes are accounted for in accordance with the provisions of ASC Topic No. 740. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. Uncertain
Tax Positions The
Company evaluates uncertain tax positions to recognize a tax benefit from an uncertain tax position only if it is more likely than not
that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those
tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely
than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations.
De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no
longer meets the more likely than not threshold of being sustained. Revenue
Recognition The
Company’s revenue is comprised entirely of revenue from exploration and production activities. The Company’s oil is sold
primarily to wholesalers and others that sell product to end use customers. Natural gas is sold primarily to interstate and intrastate
natural-gas pipelines, various end-users, local distribution companies, and natural-gas marketers. NGLs are sold primarily to various
end-users. Payment is generally received from the customer in the month following delivery. Contracts
with customers have varying terms, including spot sales or month-to-month contracts, or contracts with a finite term, where the production
from a well or group of wells is sold to one or more customers. The Company recognizes sales revenues for oil, natural gas, and NGLs
based on the amount of each product sold to a customer when control transfers to the customer. Generally, control transfers at the time
of delivery to the customer at a pipeline interconnect, the tailgate of a processing facility, or as a tanker lifting is completed. Revenue
is measured based on the contract price, which may be index-based or fixed, and may include adjustments for market differentials and
downstream costs incurred by the customer, including gathering, transportation, and fuel costs. Revenues
are recognized for the sale of the Company’s net share of production volumes. Sales on behalf of other working interest owners
and royalty interest owners are not recognized as revenues. The Company does not hedge nor forward sell any of its current production
via derivative financial contracts. Share-based
Compensation The
Company estimates the fair value of each share-based compensation award at the grant date by using the Black-Scholes option pricing model.
The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required
to provide service in exchange for the award. Share-based compensation expense is recognized based on awards ultimately expected to vest.
Excess tax benefits, if any, are recognized as an addition to paid-in capital. Net
Loss per Common Share Basic
net loss per common share amounts are computed by dividing the net loss available to the Company’s shareholders by the weighted
average number of common shares outstanding over the reporting period. In periods in which the Company reports a net loss, dilutive securities
are excluded from the calculation of diluted earnings per share as the effect would be anti-dilutive. The following table summarizes
the common stock equivalents excluded from the calculation of diluted net loss per as the inclusion of these shares would be anti-dilutive
for the years ended February 28, 2022 and February 28, 2021: Schedule
of Antidilitive Securities Excluded from Computation of Earning Per Shares
2022 2021
Series A Convertible Preferred Stock 66,666,667 66,666,667
Convertible debt 21,000,000 16,000,000
Total Common Shares to be issued 87,666,667 82,666,667 Concentrations
of Credit Risk Financial
instruments which potentially subject the Company to concentrations of credit risk include cash deposits placed with financial institutions.
The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit
Insurance Corporation (“FDIC”). At February 28, 2022, $- 0 Recently
Issued Accounting Pronouncements In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses
on Financial Instruments The
Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial
position, results of operations, or cash flows. Subsequent Events In preparing these consolidated financial statements,
the Company has evaluated events and transactions for potential recognition or disclosure through the date these consolidated financial
statements were issued. |
