0001493152-21-016902.txt : 20210715 0001493152-21-016902.hdr.sgml : 20210715 20210715093255 ACCESSION NUMBER: 0001493152-21-016902 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 42 CONFORMED PERIOD OF REPORT: 20210531 FILED AS OF DATE: 20210715 DATE AS OF CHANGE: 20210715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Norris Industries, Inc. CENTRAL INDEX KEY: 0001603793 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 465034746 STATE OF INCORPORATION: NV FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55695 FILM NUMBER: 211091857 BUSINESS ADDRESS: STREET 1: 102 PALO PINTO ST. STREET 2: SUITE B CITY: WEATHERFORD STATE: TX ZIP: 76086 BUSINESS PHONE: 8558096900 MAIL ADDRESS: STREET 1: 102 PALO PINTO ST. STREET 2: SUITE B CITY: WEATHERFORD STATE: TX ZIP: 76086 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL WESTERN PETROLEUM, INC. DATE OF NAME CHANGE: 20140327 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended May 31, 2021.

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-55695

 

Norris Industries, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada   46-5034746

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

102 Palo Pinto St, Suite B

Weatherford, Texas

  76086
(Address of principal executive offices)   (Zip Code)

 

(855) 809-6900

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

  Title of each class   Trading Symbol(s)   Name of each exchange on which registered
  N/A   N/A   N/A  

 

Securities registered pursuant to Section 12 (g) of the Act:

 

  Title of each class   Trading Symbol(s)   Name of exchange on which registered
  Common Stock, $.01 Par Value   NRIS   OTCMKTS

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large, accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
   
Non-accelerated filer [X] Smaller reporting company [X]
   
  Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

As of July 15, 2021, the registrant had 90,883,013 shares of common stock issued and outstanding.

 

 

 

 
 

 

NORRIS INDUSTRIES, INC.

TABLE OF CONTENTS

FORM 10-Q REPORT

May 31, 2021

 

    Page Number
PART I - FINANCIAL INFORMATION F-1
     
Item 1.

Financial Statements: (Unaudited)

 

  Consolidated Balance Sheets F-1
  Consolidated Statement of Operations F-2
  Consolidated Changes in Shareholders Deficit F-3
  Consolidated Statement of Cash Flows F-4
  Notes to Consolidated Financial Statements F-5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
Item 4. Controls and Procedures 8
     
PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 8
Item 1A. Risk Factors 8
Item 2. Unregistered Sales of Equity Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Mine Safety Disclosures 9
Item 5. Other Information 9
Item 6. Exhibits 9
     
SIGNATURES 10

 

2 
 

 

Item 1 Financial Statements

 

NORRIS INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

MAY 31, 2021 AND FEBRUARY 28, 2021

(UNAUDITED)

 

   May 31, 2021   February 28, 2021 
ASSETS          
Current Assets          
Cash  $85,686   $160,631 
Account receivable - oil & gas   42,755    32,890 
Total Current Assets   128,441    193,521 
           
Oil and Gas Property - Full Cost Method          
Properties subject to amortization   2,989,732    2,989,156 
Less: accumulated depletion and impairment   (2,812,643)   (2,768,306)
           
Total Oil and Gas Property, net   177,089    220,850 
           
Total Assets  $305,530   $414,371 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities          
Accounts payable and accrued expenses  $166,793   $171,564 
Accounts payable and accrued expenses - related parties   259,181    233,510 
Convertible note payable - related party   3,050,000    - 
Total Current Liabilities   3,475,974    405,074 
           
Convertible note payable - related party   250,000    3,200,000 
Asset retirement obligations   99,321    96,010 
           
Total Liabilities   3,825,295    3,701,084 
           
Stockholders’ Deficit          
Preferred stock, $0.001 par value per share 20,000,000 shares authorized   -    - 
Series A Convertible Preferred stock, $0.001 par value per share 1,000,000 shares authorized; 1,000,000 shares issued and outstanding; liquidation preference of $2,250,000   1,000    1,000 
Common stock, $0.001 par value per share, 150,000,000 shares authorized; 90,883,013 shares issued and outstanding   90,883    90,883 
Additional paid-in capital   6,286,399    6,286,399 
Accumulated deficit   (9,898,047)   (9,664,995)
Total Stockholder’s Deficit   (3,519,765)   (3,286,713)
           
Total Liabilities and Stockholders’ Deficit  $305,530   $414,371 

 

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

 

F-1
 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

NORRIS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MAY 31, 2021 AND 2020

(UNAUDITED)

 

   2021   2020 
         
Revenues          
Oil and gas sales  $126,641    30,946 
Total Revenues   126,641    30,946 
           
Operating Expenses          
Lease operating expenses   178,973    121,599 
General and administrative expenses   107,977    92,614 
Depletion, depreciation and accretion   47,072    34,145 
           
Total Operating Expenses   334,022    248,358 
           
Loss from Operations   (207,381)   (217,412)
           
Other Expense          
Interest expense   25,671    21,693 
Total Other Expense   25,671    21,693 
           
Net Loss  $(233,052)   (239,105)
           
Net loss per common share - basic and diluted  $(0.00)   (0.00)
           
Weighted average number of common shares outstanding - basic and diluted   90,883,013    90,883,013 

 

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

 

F-2
 

 

Item 1. Financial Statements

 

NORRIS INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MAY 31, 2020

(UNAUDITED)

 

  

Series A Convertible

Preferred Stock

   Common Stock  

Additional

Paid-in

   Subscription   Accumulated  

Total

Stockholders’

 
   Shares   Amount   Shares   Amount   Capital   Receivable   Deficit   Deficit 
                                 
Balance, March 1, 2021   1,000,000   $1,000    90,883,013   $90,883   $6,286,399   $(7,200)  $(8,555,203)  $(2,184,121)
                                         
Collection of subscription receivable   -    -    -    -    -    7,200    -    7,200 
                                         
Net loss   -    -    -    -    -    -    (239,105)   (239,105)
                                         
Balance, May 31, 2020   1,000,000   $1,000    90,883,013   $90,883   $6,286,399   $-   $(8,794,308)  $(2,416,026)

 

NORRIS INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MAY 31, 2021

(UNAUDITED)

 

  

Series A Convertible

Preferred Stock

   Common Stock  

Additional

Paid-in

   Accumulated  

Total

Stockholders’

 
   Shares   Amount   Shares   Amount   Capital   Deficit   Equity 
                             
Balance, March 1, 2021   1,000,000   $1,000    90,883,013   $90,883   $6,286,399   $(9,664,995)  $(3,286,713)
                                    
Net loss   -    -    -    -    -    (233,052)   (233,052)
                                    
Balance, May 31, 2021   1,000,000   $1,000    90,883,013   $90,883   $6,286,399   $(9,898,047)  $(3,519,765)

 

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

 

F-3
 

 

Item 1. Financial Statements

 

NORRIS INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MAY 31, 2021 AND 2020

(UNAUDITED)

 

   2021   2020 
Cash Flow from Operating Activities          
Net loss  $(233,052)  $(239,105)
Adjustments to reconcile net loss to net cash from operating activities:          
Depletion, depreciation, and accretion   47,072    34,145 
Changes in operating assets and liabilities:          
Accounts receivable - oil & gas   (9,865)   35,419 
Accounts payable and accrued expenses   (4,771)   8,180 
Accounts payable and accrued expenses - related parties   25,671    21,693 
Net Cash Used in Operating Activities   (174,945)   (139,668)
           
Cash Flow from Financing Activities          
Proceeds from related party loan   100,000    100,000 
Collection of subscription receivable   -    7,200 
Net Cash Provided by Financing Activities   100,000    107,200 
           
Net Decrease in Cash   (74,945)   (32,468)
Cash – beginning of period   160,631    158,081 
           
Cash – end of period  $85,686   $125,613 
           
Noncash Investing and Financing Activities          
Change in estimate of asset retirement obligations  $576   $20,774 

 

The accompanying notes are an integral part of these interim unaudited consolidated financial statements.

 

F-4
 

 

NORRIS INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Note 1 – Organization, Nature of Operations and Summary of Significant Accounting Policies

 

Norris Industries, Inc. (“NRIS” or the “Company”) (formerly International Western Petroleum, Inc.), 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 an 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”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K for the year ended February 28, 2021. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. 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 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 $1,109,792 for the fiscal year ended February 28, 2021 and $233,052 for the three months ended May 31, 2021. During the three months ended May 31, 2021, the Company received $100,000 in funding from its credit line and incurred cash losses of approximately $175,000 from its operating activities. The Company has availability of $900,000 on its new $1,000,000 credit line entered into May 1, 2021. As of May 31, 2021, the Company had and a cash balance of approximately $85,686 and negative working capital of approximately $3,300,000. The Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022.

 

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 the ability to fund its costs for such expenditures from cash on-hand and available funds from its line of credit.

 

F-5
 

 

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, 2022, 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 its current primary lender JBB Partners, Inc. (“JBB”) an investment entity controlled by the majority owner of the Company. 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 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%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. Costs in excess of the present value of estimated future net revenues are charged to impairment expense. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method.

 

The Company capitalizes pre-acquisition costs directly identifiable with specific properties when the acquisition of such properties is probable. Capitalized pre-acquisition costs are presented in the balance sheet.

 

Equipment

 

Equipment is stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 to 10 years.

 

F-6
 

 

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.

 

Revenue Recognition

 

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method applied to contracts that were not completed as of March 1, 2018. Under the modified retrospective method, prior period financial positions and results were not adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption.

 

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.

 

Net Loss per Common Share

 

Basic net loss per common share amounts are computed by dividing the net loss available to Norris Industries, Inc. 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 common share as the inclusion of these shares would be anti-dilutive for the three months ended May 31, 2021 and 2020:

 

   2021   2020 
         
Series A Convertible Preferred Stock   66,666,667    66,666,667 
Convertible debt   16,500,000    13,500,000 
Total common shares to be issued   83,166,667    80,166,667 

 

F-7
 

 

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 May 31, 2021, $0 of the Company’s cash balances was uninsured. The Company has not experienced any losses on such accounts.

 

Recent 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 standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. The effective date of ASU No. 2016-13 will be the first quarter of the Company’s fiscal 2022 with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements.

 

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

 

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

 

Note 2 – Revenues from Contracts with Customers

 

Disaggregation of Revenues from Contracts with Customers

 

The following table disaggregates revenue by significant product types for the three months ended May 31, 2021 and 2020:

 

   2021   2020 
Oil sales  $100,886   $27,771 
Natural gas sales   25,755    3,175 
Total  $126,641   $30,946 

 

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of May 31, 2021 and February 28, 2021.

 

Note 3 – Oil and Gas Properties

 

The following table summarizes the Company’s oil and gas activities by classification for the three months ended May 31, 2021:

 

   February 28, 2021   Additions   Change in Estimates   May 31, 2021 
                 
Oil and gas properties, subject to depletion  $2,930,237   $-   $-   $2,930,237 
Asset retirement costs   58,919    -    576    59,495 
Accumulated depletion and impairment   (2,768,306)   (44,337)   -    (2,812,643)
Total oil and gas assets  $220,850   $(44,337)  $576   $177,089 

 

F-8
 

 

The depletion recorded for production on proved properties for the three months ended May 31, 2021 and 2020, amounted to $44,337 and $230,848, respectively. During the three months ended May 31, 2021 and 2020, there were no ceiling test write-downs of the Company’s oil and gas properties.

 

Note 4 – Asset Retirement Obligations

 

The following table summarizes the change in the Company’s asset retirement obligations during the three months ended May 31, 2021:

 

Asset retirement obligations as of February 28, 2021  $96,010 
Additions   2,735 
Current year revision of previous estimates   - 
Accretion adjustment during the three months ended May 31, 2021   576 
Asset retirement obligations as of May 31, 2021  $99,321 

 

During the three months ended May 31, 2021 and 2020, the Company recognized accretion expense of $2,735 and $7,648, respectively.

 

Note 5 – Related Party Transactions

 

Promissory Note to JBB

 

On December 28, 2017, the Company borrowed $1,550,000 from JBB to complete the purchases of a series of oil and gas leases (“Loan Note”). The loan has an interest rate of 3% per annum, a maturity date of December 28, 2018 and is secured by all assets of the Company. The loan is convertible to the Company’s common stock at the conversion rate of $0.20 per share.

 

On June 26, 2018, the Company and JBB entered into a modification of the existing Loan Note, to add provisions to permit the Company to obtain additional advances under the Loan Note up to a maximum of $1,000,000. The Company may request an advance in increments of $100,000 no more frequently than every 30 days, provided that (i) it provides a description of the use of proceeds for the advance reasonably acceptable to JBB, and (ii) the Company is not otherwise in default of the Loan Note. The original loan amount and the advances are secured by all the assets of the Company and are convertible into common stock of the Company at the rate of $0.20 per share, subject to adjustment for any reverse and forward stock splits. The Loan Note may be repaid at any time, without penalty, however, any advance that is repaid before maturity may not be re-borrowed as a further advance.

 

On October 11, 2018, the Company entered into an amendment of its promissory note to JBB to extend the maturity date to December 31, 2019. On May 21, 2019, the Company entered into an extension agreement with JBB to extend the maturity of its outstanding promissory note to September 30, 2020.

 

On June 13, 2019, JBB lent the Company $250,000 under a secured promissory note. The funds were used to acquire the remaining working interest in the Marshall Walden oil and gas property from Odyssey Enterprises LLC. The loan has an interest rate of 5% per annum, a maturity date of June 30, 2022, and is secured by all assets of the Company. The loan is convertible into the Company’s common stock at a conversion rate of $0.20 per common share.

 

On October 1, 2019, the Company entered into another amendment of its Loan Note with JBB to increase the line of credit by an additional $500,000, for a total of $1,500,000, and extend the maturity date for the original note and line of credit to December 31, 2020.

 

On May 29, 2020, the Company entered into an extension agreement with JBB to extend the maturity of its outstanding Loan Note to September 30, 2021.

 

F-9
 

 

On December 22, 2020, the Company entered into an extension agreement with JBB to extend the maturity of all its outstanding indebtedness under credit line and Loan Note to May 31, 2022, while there can be no guarantees the Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022.

 

As of February 28, 2021 and February 29, 2020, the Company has borrowed $3,200,000 and $2,700,000, respectively, from JBB. During the three months ended May 31, 2021 and 2020, JBB advanced $100,000 to the Company. The Company recognized interest expense of $25,671 and $21,693 for the three months ended May 31, 2021 and 2020, respectively. As of May 31, 2021, there was $3,300,000 outstanding under this note. On May 1, 2021, the Company entered into a new funding agreement with a maturity date of May 31, 2022 and an interest rate of five percent annual percentage rate (5% APR) with JBB for a further $1 million drawable in $100,000 increments at the discretion of JBB to cover the Company’s current and projected working capital requirements in near-term. The Company has availability of $900,000 on its new $1,000,000 credit line entered into May 1, 2021.

 

Note 6 – Commitments and Contingencies

 

Office Lease

 

In September 2018, the Company moved to the offices of International Western Oil (“IWO”) in Weatherford, TX that is being rented on a month-to-month sublease basis at rate of $950 per month from IWO. During the three months ended May 31, 2021 and 2020, the Company incurred $2,850 of rent expense under this lease, that are included in general and administrative expenses on the statements of operations in both periods.

 

Leasehold Drilling Commitments

 

The Company’s oil and gas leasehold acreage is subject to expiration of leases if the Company does not drill and hold such acreage by production or otherwise exercises options to extend such leases, if available, in exchange for payment of additional cash consideration. In the King County, Texas lease acreage, 640 acres are due to expire in June 2021. The Company plans to hold significantly all of this acreage through a program of drilling and completing producing wells. Where the Company is not able to drill and complete a well before lease expiration, the Company may seek to extend leases where it is able.

 

F-10
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Cautionary Notice Regarding Forward Looking Statements

 

The information contained in this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those indicated in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although the Company’s management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

 

This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events or developments which management expects or anticipates will or may occur in the future, and non-historical information are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” and variations of those words and similar expressions identify forward-looking statements. The foregoing are not the exclusive means of identifying forward looking statements, and their absence does not mean that a statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements.

 

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Factors which could cause or contribute to such differences include, but are not limited to, the risks discussed in our Annual Report on Form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

 

Overview

 

The Company underwent a change of control in July 2017, when Patrick Norris, and his affiliate JBB Partners, Inc. (“JBB”) acquired the majority of ownership of the Company and provided loans and equity funding for the oil/gas mineral rights purchases and covering the operational expenses of Company.

 

The Company will, from time to time, seek strategic investors and other funding to help it develop additional exploration and acquisition projects located within the Bend Arch-Fort Worth Basin and other prime acquisition targets in the Central West, South and East Texas.

 

THE OIL AND GAS INDUSTRY IS IN A SUBSTANTIAL DOWNTURN DUE TO THE COVID-19 PANDEMIC.

 

Our business and operations have been adversely affected by and are expected to continue to be adversely affected by the COVID-19 pandemic and the public health response.

 

As a result of the COVID-19 outbreak and the adverse public health developments, including voluntary and mandatory quarantines, travel restrictions and other restrictions, our operations, and those of our subcontractors, customers and suppliers, have experienced and are anticipated to continue to experience delays or disruptions and temporary suspensions of operations. In addition, our financial condition and results of operations have been and are likely to continue to be adversely affected by the coronavirus outbreak.

 

The timeline and potential magnitude of the COVID-19 outbreak and its consequences are currently unknown. The continuation or amplification of this virus could continue to more broadly affect the United States and global economy, including the demand for oil and gas.

 

3 
 

 

The Company has experienced the effects of a negatively impacted domestic and international demand for crude oil and natural gas, which has contributed to price volatility, impacted the price we receive for oil and natural gas, and has materially and adversely affected the demand for and marketability of our production, For the Company, this means that our production may have to be shut-in for some of our wells at any point in time and we may hold, or continue to store some, or all of our oil production as inventory to be sold at a later date because to date we have refused to accept a loss price for our production. Our 2021 fiscal year end was negatively impacted by the pandemic response, and the negative impact of the pandemic is continuing to be experienced in the first quarter of the 2022 fiscal year. At this time, we expect that our financial results for the full fiscal year will be adversely impacted by the existence of and the government response to the COVID-19 pandemic.

 

Our Business Strategy

 

We are an Exploration and Production (“E&P”) oil and natural gas company that focuses on the acquisition, development, and exploration of crude oil and natural gas properties in Texas. The Company is currently managed by business and oil and gas exploration veterans who specialize in the oil and gas acquisition and exploration markets of the Central West Texas region. The Company’s goal is to tap into the high potential leases of the Central West Texas region of the United States, aiming to unlock its potential, specifically in the prolific Bend Arch-Fort Worth region. This area is approximately 120 miles long and 40 miles wide running from Archer County, Texas in the north to Brown County, Texas in the south. The Company is also selectively open toother acquisition opportunities in the Permian Basin, West Texas, East Texas and South Texas region.

 

Management believes that focusing on the development of existing small producing fields is one of the key differentiators of the Company. Oil and natural gas reserve development is a technologically oriented industry. Management believes that the use of current technology has greatly increased the success rate of finding commercial oil or natural gas deposits. In this context, success means the ability to make an oil/gas well that produces a commercialized quantity of hydrocarbons. . For short-term cash flow enhancement, the Company is open to consider transactions of large-reserve oil and gas properties with low production to acquire at the lowest cost possible and then implement effective Enhanced Oil Recovery (“EOR”) methods to improve its current revenues and assets. For long-term cash flow enhancement, the Company plans to identify larger and more mature production opportunities while selecting capital and strategic operating partners to buyout via the Company’s strategic joint venture partnerships, thus significantly increasing production via additional drilling and its EOR implementations.

 

We plan to execute the following business strategies:

 

Develop and Grow Our Hydrocarbon Resource Acreage Positions Using Outside Development Expertise. We plan to continue to seek and acquire niche assets in hydrocarbon-rich resource plays to improve our asset quality and expand our drilling inventory as market conditions improve and selected opportunities become available. n. Our operational plan is to adjust our capital spending based on drilling results and the economic environment. As a small producer, we regionally evaluate industry drilling results to implement simple yet effective operating practices which may increase our initial production rates, ultimate recovery factors and rate of return on invested capital.

 

Acquire Small Producing Companies with Compelling Potential Values. We identify acquisition opportunities of exploration and production companies with underlying assets to unlock the development potential and accelerate production using new technologies and capital infusion from capital partners.

 

Our operation strategy is to position the Company by growing our management team with added petroleum experts in the United States to partner up with other oil and gas players once we have established our business to positive cash flow from our existing presence in the Texas oil field markets.

 

Management believes that the Company’s near prospects as a public company could become attractive, even if our current business is still small and at a risky stage of transition and development.

 

4 
 

 

Our Competitive Strengths

 

Management believes that we have a number of competitive strengths that will allow us to successfully execute our business strategies:

 

Simple Capital Structure. We have a simple capital structure and de-risked inventory of quality locations with what we believe is upside potential to take advantage of the current recovery of oil prices to acquire potential production at reasonable cost. Management believes there are opportunities for profits to be made now that oil prices appear to have stabilized and if they continue to gradually rise higher.

 

Moderate Risk Exploration Practice. Unlike many major oil companies that often drill very deep wells with a high degree of risk, we focus on shallow well exploration (sub 5,000 feet) that is less expensive and has lower risk factors. The basis for management’s belief that the wells that can be drilled in the prospective leases will have the capacity to produce a reasonable amount of hydrocarbon and due to our recent studies of the general areas where we are prospecting the projects. That is our most important exploration practice.

 

Under The Radar Asset Base. Management believes our local West Texas E&P team has a special talent in acquiring local “prime time” hydrocarbon land leases with sub-300 barrels of oil per day (“bopd”) wells that have large hydrocarbon reserves. Management believes that these “under the radar” prospective leases have multi-year drilling inventory and reasonable production history with high upside potential and not readily accessible to the public for auctions, thus adding to our competitive advantage on these “under the radar” opportunities. It is because management also believes that these highly valuable leases are not economically justifiable for the major oil and gas companies in the region because such companies need the wells they drill to produce at least 300 barrels (“Bbls”) of oil per day per well.

 

Technologies

 

Oil and natural gas reserve development is a technologically oriented industry; many techniques developed by the industry are now used in other industries, including the space program. Management believes that technological innovations have made it possible for the oil and natural gas industry to furnish the fuels that power the world economy. Management also believes that technology has greatly increased the success rate of finding commercial oil or natural gas deposits. In this context, success rate means the ability to make an oil/gas well that can produce a commercialized quantity of hydrocarbon.

 

At NRIS, we focus on core basic field EOR management practices and contract outside experts to provide us the understanding of complex mineralogy in shale reservoirs to better determine zones prone to fracture stimulation.

 

Sales Strategy

 

Our sales strategy in relation to spot pricing will be to produce less when the sales price is lower and produce more when the sales price is higher. To maintain the lowest production cost, we will aim to have our inventory be as low as possible, in some instances virtually zero. Our E&P core team has business relationships with BML, Transport Oil, and Lion Oil Trading & Transportation, for oil sales and WTG Jameson for gas sales. The Company entered into production agreements with BML, Lion Oil and WTG Jameson so that, as our tier 1 buyer, they can handle pick-up and sales of our crude oil stock to refineries and gas via local gas pipelines.

 

As such, crude oil will be picked up from our leases as needed during the calendar month. At the end of the month the crude total sales will be tallied by lease and the 30-day average of the daily closing of oil will be tabulated. On or about the 25th of the following month the proceeds checks’ will be issued to the financial parties of record.

 

Operational Plans

 

Overall, we will consider on a selective basis, oil and gas reserve concessions with existing production. To maintain our operations and complete any acquisitions we intend to raise capital via equity or debt, be this from our control owner, or other third-party financing sources, including the capital markets. The Company is still in the process of assessing the wells it holds, or recently acquired and is reviewing its options to make improvements in the future to address underperformance.

 

The Company shifted its E&P plan on regional acquisition(s) to a focus in the North Texas and Outside of Permian Basin region. This region has been producing oil continuously for nearly 100 years and the U.S. Geological Survey (“USGS”) has recently announced that this region has the largest estimate of continuous oil production that it has ever assessed. Our area of interest is production locations in Texas but outside of the Texas Permian Basin market where property prices are too high for a smaller player as a result of USGS estimates that there are 20 billion barrels of undiscovered, technically recoverable oil.

 

5 
 

 

As result of COVID-19 the Company will likely take a pause on any activity until such time has elapsed that energy prices are consistent and have stabilized. If the Company does review any acquisitions, it will follow model which is based on a concept that has been proven in the past to be an effective and successful path of development for many other well- known E&P players:

 

a) the financed acquisition of mature smaller oil fields that have potential for instituting EOR incremental production processes; and
   
b) Develop strategic partnerships with existing operators to share production increases garnered through the implementation of this EOR plan.

 

The Company has plans to curtail its operating budget for each well to basic maintenance and does not plan any new drill programs in the near future.

 

Results of Operations

 

Comparison of the Three Months Ended May 31, 2021 with the Three Months Ended May 31, 2020

 

Revenues

 

The Company generated revenues of $126,641 from oil and gas sales for the three months ended May 31, 2021, compared to $30,946 for the three months ended May 31, 2020. The increase in revenues mainly came from an increase in the market price of the Company’s oil and gas, and restart of production from our oil and gas properties as compared to prior year shutdown. The increase in the price was in part attributable to the changes in demand due to the economic recovery from the COVID-19 pandemic, that is still on-going in other parts of world.

 

Operating Expenses

 

Operating expenses for the three months ended May 31, 2021 and 2020 were $334,022 and $248,358, respectively. Our lease operating expenses increased to $178,973 for the three-month period ended May 31, 2021, compared to $121,599 for the three-month period ended May 31, 2020, that was primarily related to higher variable lease operating expenses as a result of our restart of production efforts during the current period. Our general and administrative expense increased slightly to $107,977 for the three-month period ended May 31, 2021, compared to $92,614 for the three-month period ended May 31, 2020. Our depletion, depreciation, and accretion expense increased by $12,927.

 

Other Income (Expense)

 

For the three months ended May 31, 2021 and 2020, the Company recorded interest expense of $25,671 and $21,693 related to outstanding debts. The increase in interest expense was result of additional draws from the line of credit.

 

Net Loss

 

We had a net loss in the amount of $233,052 for the three months ended May 31, 2021, compared to a net loss of $239,105 for the three months ended May 31, 2020. The decrease in losses was slightly changed as result of both an increase in operating expenses offset by an increase in revenues due to the recovery of oil prices and also production from the Company’s oil and gas properties.

 

Liquidity and Capital Resources

 

As of May 31, 2021, the Company had cash on-hand of $85,686.

 

6 
 

 

Net cash used by operating activities during the three months ended May 31, 2021 was $174,945, compared to cash used in operating activities of $139,668 for the same period in 2020. The increase was mainly related to an increase in operating expenses incurred from the Company’s oil and gas properties because of an increase in lease operating expenses in response to resumption of production due to higher energy prices and a slight increase in general costs during the current period compared to the prior year’s period.

 

Net cash provided by financing activities for three months ended May 31, 2021 was $100,000, related to proceeds of $100,000 from the Company’s line of credit with JBB, compared to cash provided by financing activities of $107,200 for the same period in 2020, related to proceeds from the Company’s line of credit with JBB and proceeds received from a subscription receivable.

 

The Company will seek capital from various third-party sources and to the extent necessary from its officers and significant stockholders, from time to time. There is no assurance that it will be able to obtain financing of any amount or of any specific nature. If obtained the terms may have restrictive covenants or obligations that will be difficult to meet or may be too onerous for the Company to accept. Any financing accepted by the Company may have a dilutive effect on the outstanding equity of the Company and may restrict the payment of dividends.

 

The Company currently has a secured, convertible note entered into effective December 28, 2017, which is secured by all the assets of the Company. The note is issued to an affiliate of the Chief Executive Officer of the Company, and the holder of the note is a controlling majority shareholder of the Company. The existence of the notes, as well as the security interest, may limit the opportunity to raise financing that requires a security interest or would suffer dilution because of the convertibility of the notes. Additionally, the note is convertible into shares of common stock of the Company, which if converted will cause a substantial dilution to the equity of the outstanding Common Stock. On February 26, 2018, the note holder converted its prior note for $750,000, that was due July 28, 2018, into 1,000,000 Series A Preferred Stock. The note for $1,550,000 was extended to September 30, 2020 from the original due date of December 28, 2018.

 

On June 26, 2018, and May 21, 2019, the Company and JBB entered into modifications of the existing Secured Promissory Note originally dated December 28, 2017 (“Loan Note”), to add provisions to permit the Company to obtain advances under the Loan Note up to a maximum of $1,000,000 and extend the maturity dates. The Company may request an advance in an amount of $100,000 no more frequently than every 30 days, provided that it provides a description of the use of proceeds for the advance reasonably acceptable to JBB, and the Company is not otherwise in default of the Loan Note. On October 1, 2019, the Company entered into another amendment of its Loan Note with JBB to increase the line of credit by an additional $500,000, for a total of $1,500,000, and extend the maturity date for the original note and line of credit to December 31, 2020. On May 29, 2020, the Company entered into an extension agreement with JBB to extend the maturity of its outstanding Loan Note to September 30, 2021. On December 22, 2020, the Company entered into an extension agreement with JBB to extend the maturity of all its outstanding indebtedness under credit line and Loan Note to May 31, 2022, while there can be no guarantees the Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022.

 

The original loan amount and the advances are secured by all the assets of the Company and are convertible into common stock of the Company at the rate of $0.20 per share, subject to adjustment for any reverse and forward stock splits. The Loan Note may be repaid at any time, without penalty, however, any advance that is repaid before maturity may not be re-borrowed as a further advance.

 

In addition, in June 2019, the Company entered into a separate promissory note agreement with JBB for $250,000, with a maturity date of June 30, 2022 to complete the purchase of the additional ownership in the Marshall-Walden oil and gas property.

 

Off-Balance Sheet Arrangements

 

As of May 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303 (a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

 

7 
 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities and Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, which in our case is the same individual. We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of May 31, 2020 (the “Evaluation Date”). Based upon the evaluation of our disclosure controls and procedures as of the Evaluation Date, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective because of the identification of material weaknesses in our internal control over financial reporting that were disclosed in Item 9A. Controls and Procedures in our 2021 annual report on Form 10-K in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the three months ended May 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

You should carefully consider the risk factors in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 15, 2021 (the “2020 10-K”), together with all of the other information included in this report, before investing in our common stock. Those risks and uncertainties encompass many of the risks that could affect our business and the value of our stock. Not all risks and uncertainties are described. Risks that we do not know about could occur and issues we now view as minor could become more important. If any of these risks actually occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

 

Item 2. Unregistered Sales of Equity Securities

 

None

 

Item 3. Defaults Upon Senior Securities.

 

None.

 

8 
 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

Exhibit Number   Exhibit Title
     
31.1*   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2*   Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1+   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2+   Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS *   XBRL Instance Document
     
101.SCH *   XBRL Taxonomy Schema
     
101.CAL *   XBRL Taxonomy Calculation Linkbase
     
101.DEF *   XBRL Taxonomy Definition Linkbase
     
101.LAB *   XBRL Taxonomy Label Linkbase
     
101.PRE *   XBRL Taxonomy Presentation Linkbase

 

* Filed herewith.

 

+ In accordance with SEC Release 33-8238, Exhibit 32.1 and 32.2 are being furnished and not filed.

 

9 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  Norris Industries, Inc.
     
Date: July 15, 2021 By: /s/ Patrick L. Norris
    Patrick L. Norris
   

Chief Executive Officer, Chief Financial Officer

(Principal Executive Office, Principal Financial and Principal Accounting Officer) and Chairman of Board

     
Date: July 15, 2021 By: /s/ Ross Henry Ramsey
    Ross Henry Ramsey
    President of the Oil and Gas Division and Director

 

 

10 

  

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Patrick L. Norris, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Norris Industries, Inc.;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

  a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

  Norris Industries, Inc.
     
Date: July 15, 2021 By: /s/ Patrick L. Norris
   

Chief Executive Officer, Chief Financial Officer

(Principal Executive Office, Principal Financial and Principal Accounting Officer) and Chairman of Board

 

 

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Patrick L. Norris, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Norris Industries, Inc.;

 

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

 

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

 

5. I have disclosed, based on my most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

 

  a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

  Norris Industries, Inc.
     
Date: July 15, 2021 By: /s/ Patrick L. Norris
    Patrick L. Norris
   

Chief Executive Officer, Chief Financial Officer

(Principal Executive Office, Principal Financial and Principal Accounting Officer) and Chairman of Board

 

 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report of Norris Industries, Inc. (the “Company”), on Form 10-Q for the period ended May 31, 2021, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Patrick L. Norris, Principal Executive Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) Such Quarterly Report on Form 10-Q for the period ended May 31, 2021, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934: and
     
  (2) The information contained in such Quarterly Report on Form 10-Q for the period ended May 31, 2021, fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: July 15, 2021 By: /s/ Patrick L. Norris
    Patrick L. Norris
 

Chief Executive Officer, Chief Financial Officer

(Principal Executive Office, Principal Financial and Principal Accounting Officer) and Chairman of Board

 

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

EX-32.2 5 ex32-2.htm

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with this Quarterly Report of Norris Industries, Inc. (the “Company”), on Form 10-Q for the period ended May 31, 2021, as filed with the U.S. Securities and Exchange Commission on the date hereof, I, Patrick L. Norris, Principal Financial Officer of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) Such Quarterly Report on Form 10-Q for the period ended May 31, 2021, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934: and
     
  (2) The information contained in such Quarterly Report on Form 10-Q for the period ended May 31, 2021, fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: July 15, 2021 By: /s/ Patrick L. Norris
    Patrick L. Norris
   

Chief Executive Officer, Chief Financial Officer

(Principal Executive Office, Principal Financial and Principal Accounting Officer) and Chairman of Board

 

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

 

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

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ModificationOfExistingLoanNoteMember Assets, Current Oil and Gas Property, Full Cost Method, Depletion Oil and Gas Property, Full Cost Method, Net Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Expenses [Default Label] Operating Income (Loss) Nonoperating Income (Expense) Shares, Outstanding Increase (Decrease) in Accounts Receivable Increase (Decrease) in Accounts Payable and Accrued Liabilities Increase (Decrease) in Due to Related Parties, Current ProceedsFromCollectionOfSubscriptionReceivable Net Cash Provided by (Used in) Financing Activities Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations Capitalized Costs, Accumulated Depreciation, Depletion, Amortization and Valuation Allowance Relating to Oil and Gas Producing Activities EX-101.PRE 11 nris-20210531_pre.xml XBRL PRESENTATION FILE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.21.2
Document and Entity Information - shares
3 Months Ended
May 31, 2021
Jul. 15, 2021
Cover [Abstract]    
Entity Registrant Name Norris Industries, Inc.  
Entity Central Index Key 0001603793  
Document Type 10-Q  
Document Period End Date May 31, 2021  
Amendment Flag false  
Current Fiscal Year End Date --02-28  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   90,883,013
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2022  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.21.2
Consolidated Balance Sheets (Unaudited) - USD ($)
May 31, 2021
Feb. 28, 2021
Current Assets    
Cash $ 85,686 $ 160,631
Account receivable - oil & gas 42,755 32,890
Total Current Assets 128,441 193,521
Oil and Gas Property - Full Cost Method    
Properties subject to amortization 2,989,732 2,989,156
Less: accumulated depletion and impairment (2,812,643) (2,768,306)
Total Oil and Gas Property, net 177,089 220,850
Total Assets 305,530 414,371
Current Liabilities    
Accounts payable and accrued expenses 166,793 171,564
Accounts payable and accrued expenses - related parties 259,181 233,510
Convertible note payable - related party 3,050,000
Total Current Liabilities 3,475,974 405,074
Convertible note payable - related party 250,000 3,200,000
Asset retirement obligations 99,321 96,010
Total Liabilities 3,825,295 3,701,084
Stockholders' Deficit    
Preferred stock value
Common stock, $0.001 par value per share, 150,000,000 shares authorized; 90,883,013 shares issued and outstanding 90,883 90,883
Additional paid-in capital 6,286,399 6,286,399
Accumulated deficit (9,898,047) (9,664,995)
Total Stockholder's Deficit (3,519,765) (3,286,713)
Total Liabilities and Stockholders' Deficit 305,530 414,371
Series A Convertible Preferred Stock [Member]    
Stockholders' Deficit    
Preferred stock value $ 1,000 $ 1,000
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.21.2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)
May 31, 2021
Feb. 28, 2021
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 20,000,000 20,000,000
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 150,000,000 150,000,000
Common stock, shares issued 90,883,013 90,883,013
Common stock, shares outstanding 90,883,013 90,883,013
Series A Convertible Preferred Stock [Member]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 1,000,000 1,000,000
Preferred stock, shares outstanding 1,000,000 1,000,000
Preferred stock, liquidation preference $ 2,250,000 $ 2,250,000
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.21.2
Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
May 31, 2021
May 31, 2020
Revenues    
Total Revenues $ 126,641 $ 30,946
Operating Expenses    
Lease operating expenses 178,973 121,599
General and administrative expenses 107,977 92,614
Depletion, depreciation and accretion 47,072 34,145
Total Operating Expenses 334,022 248,358
Loss from Operations (207,381) (217,412)
Other Expense    
Interest expense 25,671 21,693
Total Other Expense 25,671 21,693
Net Loss $ (233,052) $ (239,105)
Net loss per common share - basic and diluted $ (0.00) $ (0.00)
Weighted average number of common shares outstanding - basic and diluted 90,883,013 90,883,013
Oil and Gas Sales [Member]    
Revenues    
Total Revenues $ 126,641 $ 30,946
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.21.2
Consolidated Statement of Changes in Stockholders' Deficit (Unaudited) - USD ($)
Series A Convertible Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Subscription Receivable [Member]
Accumulated Deficit [Member]
Total
Balance at Feb. 29, 2020 $ 1,000 $ 90,883 $ 6,286,399 $ (7,200) $ (8,555,203) $ (2,184,121)
Balance, shares at Feb. 29, 2020 1,000,000 90,883,013        
Collection of subscription receivable 7,200 7,200
Net loss (239,105) (239,105)
Balance at May. 31, 2020 $ 1,000 $ 90,883 6,286,399 (8,794,308) (2,416,026)
Balance, shares at May. 31, 2020 1,000,000 90,883,013        
Balance at Feb. 29, 2020 $ 1,000 $ 90,883 6,286,399 $ (7,200) (8,555,203) (2,184,121)
Balance, shares at Feb. 29, 2020 1,000,000 90,883,013        
Net loss           (1,109,792)
Balance at Feb. 28, 2021 $ 1,000 $ 90,883 6,286,399   (9,664,995) (3,286,713)
Balance, shares at Feb. 28, 2021 1,000,000 90,883,013        
Net loss   (233,052) (233,052)
Balance at May. 31, 2021 $ 1,000 $ 90,883 $ 6,286,399   $ (9,898,047) $ (3,519,765)
Balance, shares at May. 31, 2021 1,000,000 90,883,013        
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.21.2
Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended 12 Months Ended
May 31, 2021
May 31, 2020
Feb. 28, 2021
Cash Flow from Operating Activities      
Net loss $ (233,052) $ (239,105) $ (1,109,792)
Adjustments to reconcile net loss to net cash from operating activities:      
Depletion, depreciation, and accretion 47,072 34,145  
Changes in operating assets and liabilities:      
Accounts receivable - oil & gas (9,865) 35,419  
Accounts payable and accrued expenses (4,771) 8,180  
Accounts payable and accrued expenses - related parties 25,671 21,693  
Net Cash Used in Operating Activities (174,945) (139,668)  
Cash Flow from Financing Activities      
Proceeds from related party loan 100,000 100,000  
Collection of subscription receivable 7,200  
Net Cash Provided by Financing Activities 100,000 107,200  
Net Decrease in Cash (74,945) (32,468)  
Cash - beginning of period 160,631 158,081 158,081
Cash - end of period 85,686 125,613 $ 160,631
Noncash Investing and Financing Activities      
Change in estimate of asset retirement obligations $ 576 $ 20,774  
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.21.2
Organization, Nature of Operations and Summary of Significant Accounting Policies
3 Months Ended
May 31, 2021
Accounting Policies [Abstract]  
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”) (formerly International Western Petroleum, Inc.), 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 an 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”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K for the year ended February 28, 2021. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. 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 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 $1,109,792 for the fiscal year ended February 28, 2021 and $233,052 for the three months ended May 31, 2021. During the three months ended May 31, 2021, the Company received $100,000 in funding from its credit line and incurred cash losses of approximately $175,000 from its operating activities. The Company has availability of $900,000 on its new $1,000,000 credit line entered into May 1, 2021. As of May 31, 2021, the Company had and a cash balance of approximately $85,686 and negative working capital of approximately $3,300,000. The Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022.

 

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 the ability to fund its costs for such expenditures from cash on-hand and available funds from its line of credit.

 

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, 2022, 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 its current primary lender JBB Partners, Inc. (“JBB”) an investment entity controlled by the majority owner of the Company. 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 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%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. Costs in excess of the present value of estimated future net revenues are charged to impairment expense. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method.

 

The Company capitalizes pre-acquisition costs directly identifiable with specific properties when the acquisition of such properties is probable. Capitalized pre-acquisition costs are presented in the balance sheet.

 

Equipment

 

Equipment is stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 to 10 years.

 

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.

 

Revenue Recognition

 

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method applied to contracts that were not completed as of March 1, 2018. Under the modified retrospective method, prior period financial positions and results were not adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption.

 

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.

 

Net Loss per Common Share

 

Basic net loss per common share amounts are computed by dividing the net loss available to Norris Industries, Inc. 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 common share as the inclusion of these shares would be anti-dilutive for the three months ended May 31, 2021 and 2020:

 

    2021     2020  
             
Series A Convertible Preferred Stock     66,666,667       66,666,667  
Convertible debt     16,500,000       13,500,000  
Total common shares to be issued     83,166,667       80,166,667  

 

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 May 31, 2021, $0 of the Company’s cash balances was uninsured. The Company has not experienced any losses on such accounts.

 

Recent 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 standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. The effective date of ASU No. 2016-13 will be the first quarter of the Company’s fiscal 2022 with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements.

 

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

 

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

XML 19 R8.htm IDEA: XBRL DOCUMENT v3.21.2
Revenues from Contracts with Customers
3 Months Ended
May 31, 2021
Revenue from Contract with Customer [Abstract]  
Revenues from Contracts with Customers

Note 2 – Revenues from Contracts with Customers

 

Disaggregation of Revenues from Contracts with Customers

 

The following table disaggregates revenue by significant product types for the three months ended May 31, 2021 and 2020:

 

    2021     2020  
Oil sales   $ 100,886     $ 27,771  
Natural gas sales     25,755       3,175  
Total   $ 126,641     $ 30,946  

 

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of May 31, 2021 and February 28, 2021.

XML 20 R9.htm IDEA: XBRL DOCUMENT v3.21.2
Oil and Gas Properties
3 Months Ended
May 31, 2021
Extractive Industries [Abstract]  
Oil and Gas Properties

Note 3 – Oil and Gas Properties

 

The following table summarizes the Company’s oil and gas activities by classification for the three months ended May 31, 2021:

 

    February 28, 2021     Additions     Change in Estimates     May 31, 2021  
                         
Oil and gas properties, subject to depletion   $ 2,930,237     $ -     $ -     $ 2,930,237  
Asset retirement costs     58,919       -       576       59,495  
Accumulated depletion and impairment     (2,768,306 )     (44,337 )     -       (2,812,643 )
Total oil and gas assets   $ 220,850     $ (44,337 )   $ 576     $ 177,089  

 

The depletion recorded for production on proved properties for the three months ended May 31, 2021 and 2020, amounted to $44,337 and $230,848, respectively. During the three months ended May 31, 2021 and 2020, there were no ceiling test write-downs of the Company’s oil and gas properties.

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.21.2
Asset Retirement Obligations
3 Months Ended
May 31, 2021
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligations

Note 4 – Asset Retirement Obligations

 

The following table summarizes the change in the Company’s asset retirement obligations during the three months ended May 31, 2021:

 

Asset retirement obligations as of February 28, 2021   $ 96,010  
Additions     2,735  
Current year revision of previous estimates     -  
Accretion adjustment during the three months ended May 31, 2021     576  
Asset retirement obligations as of May 31, 2021   $ 99,321  

 

During the three months ended May 31, 2021 and 2020, the Company recognized accretion expense of $2,735 and $7,648, respectively.

XML 22 R11.htm IDEA: XBRL DOCUMENT v3.21.2
Related Party Transactions
3 Months Ended
May 31, 2021
Related Party Transactions [Abstract]  
Related Party Transactions

Note 5 – Related Party Transactions

 

Promissory Note to JBB

 

On December 28, 2017, the Company borrowed $1,550,000 from JBB to complete the purchases of a series of oil and gas leases (“Loan Note”). The loan has an interest rate of 3% per annum, a maturity date of December 28, 2018 and is secured by all assets of the Company. The loan is convertible to the Company’s common stock at the conversion rate of $0.20 per share.

 

On June 26, 2018, the Company and JBB entered into a modification of the existing Loan Note, to add provisions to permit the Company to obtain additional advances under the Loan Note up to a maximum of $1,000,000. The Company may request an advance in increments of $100,000 no more frequently than every 30 days, provided that (i) it provides a description of the use of proceeds for the advance reasonably acceptable to JBB, and (ii) the Company is not otherwise in default of the Loan Note. The original loan amount and the advances are secured by all the assets of the Company and are convertible into common stock of the Company at the rate of $0.20 per share, subject to adjustment for any reverse and forward stock splits. The Loan Note may be repaid at any time, without penalty, however, any advance that is repaid before maturity may not be re-borrowed as a further advance.

 

On October 11, 2018, the Company entered into an amendment of its promissory note to JBB to extend the maturity date to December 31, 2019. On May 21, 2019, the Company entered into an extension agreement with JBB to extend the maturity of its outstanding promissory note to September 30, 2020.

 

On June 13, 2019, JBB lent the Company $250,000 under a secured promissory note. The funds were used to acquire the remaining working interest in the Marshall Walden oil and gas property from Odyssey Enterprises LLC. The loan has an interest rate of 5% per annum, a maturity date of June 30, 2022, and is secured by all assets of the Company. The loan is convertible into the Company’s common stock at a conversion rate of $0.20 per common share.

 

On October 1, 2019, the Company entered into another amendment of its Loan Note with JBB to increase the line of credit by an additional $500,000, for a total of $1,500,000, and extend the maturity date for the original note and line of credit to December 31, 2020.

 

On May 29, 2020, the Company entered into an extension agreement with JBB to extend the maturity of its outstanding Loan Note to September 30, 2021.

 

On December 22, 2020, the Company entered into an extension agreement with JBB to extend the maturity of all its outstanding indebtedness under credit line and Loan Note to May 31, 2022, while there can be no guarantees the Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022.

 

As of February 28, 2021 and February 29, 2020, the Company has borrowed $3,200,000 and $2,700,000, respectively, from JBB. During the three months ended May 31, 2021 and 2020, JBB advanced $100,000 to the Company. The Company recognized interest expense of $25,671 and $21,693 for the three months ended May 31, 2021 and 2020, respectively. As of May 31, 2021, there was $3,300,000 outstanding under this note. On May 1, 2021, the Company entered into a new funding agreement with a maturity date of May 31, 2022 and an interest rate of five percent annual percentage rate (5% APR) with JBB for a further $1 million drawable in $100,000 increments at the discretion of JBB to cover the Company’s current and projected working capital requirements in near-term. The Company has availability of $900,000 on its new $1,000,000 credit line entered into May 1, 2021.

XML 23 R12.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments and Contingencies
3 Months Ended
May 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 6 – Commitments and Contingencies

 

Office Lease

 

In September 2018, the Company moved to the offices of International Western Oil (“IWO”) in Weatherford, TX that is being rented on a month-to-month sublease basis at rate of $950 per month from IWO. During the three months ended May 31, 2021 and 2020, the Company incurred $2,850 of rent expense under this lease, that are included in general and administrative expenses on the statements of operations in both periods.

 

Leasehold Drilling Commitments

 

The Company’s oil and gas leasehold acreage is subject to expiration of leases if the Company does not drill and hold such acreage by production or otherwise exercises options to extend such leases, if available, in exchange for payment of additional cash consideration. In the King County, Texas lease acreage, 640 acres are due to expire in June 2021. The Company plans to hold significantly all of this acreage through a program of drilling and completing producing wells. Where the Company is not able to drill and complete a well before lease expiration, the Company may seek to extend leases where it is able.

XML 24 R13.htm IDEA: XBRL DOCUMENT v3.21.2
Organization, Nature of Operations and Summary of Significant Accounting Policies (Policies)
3 Months Ended
May 31, 2021
Accounting Policies [Abstract]  
Basis of Presentation

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”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K for the year ended February 28, 2021. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. 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

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 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 $1,109,792 for the fiscal year ended February 28, 2021 and $233,052 for the three months ended May 31, 2021. During the three months ended May 31, 2021, the Company received $100,000 in funding from its credit line and incurred cash losses of approximately $175,000 from its operating activities. The Company has availability of $900,000 on its new $1,000,000 credit line entered into May 1, 2021. As of May 31, 2021, the Company had and a cash balance of approximately $85,686 and negative working capital of approximately $3,300,000. The Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022.

 

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 the ability to fund its costs for such expenditures from cash on-hand and available funds from its line of credit.

 

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, 2022, 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 its current primary lender JBB Partners, Inc. (“JBB”) an investment entity controlled by the majority owner of the Company. 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

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

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

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

Oil and Gas Properties, Full Cost Method

 

The Company follows the full cost method of accounting for its oil 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%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. Costs in excess of the present value of estimated future net revenues are charged to impairment expense. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method.

 

The Company capitalizes pre-acquisition costs directly identifiable with specific properties when the acquisition of such properties is probable. Capitalized pre-acquisition costs are presented in the balance sheet.

Equipment

Equipment

 

Equipment is stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets, which are 3 to 10 years.

Income Taxes

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.

Revenue Recognition

Revenue Recognition

 

ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”, supersedes the revenue recognition requirements and industry-specific guidance under Revenue Recognition (Topic 605). Topic 606 requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services. The Company adopted Topic 606 on March 1, 2018, using the modified retrospective method applied to contracts that were not completed as of March 1, 2018. Under the modified retrospective method, prior period financial positions and results were not adjusted. The cumulative effect adjustment recognized in the opening balances included no significant changes as a result of this adoption.

 

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.

Net Loss Per Common Share

Net Loss per Common Share

 

Basic net loss per common share amounts are computed by dividing the net loss available to Norris Industries, Inc. 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 common share as the inclusion of these shares would be anti-dilutive for the three months ended May 31, 2021 and 2020:

 

    2021     2020  
             
Series A Convertible Preferred Stock     66,666,667       66,666,667  
Convertible debt     16,500,000       13,500,000  
Total common shares to be issued     83,166,667       80,166,667  
Concentrations of Credit Risk

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 May 31, 2021, $0 of the Company’s cash balances was uninsured. The Company has not experienced any losses on such accounts.

Recent Issued Accounting Pronouncements

Recent 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 standard replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables. This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. The effective date of ASU No. 2016-13 will be the first quarter of the Company’s fiscal 2022 with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU No. 2016-13 on its consolidated financial statements.

 

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

Subsequent Events

 

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration.

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.21.2
Organization, Nature of Operations and Summary of Significant Accounting Policies (Tables)
3 Months Ended
May 31, 2021
Accounting Policies [Abstract]  
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table summarizes the common stock equivalents excluded from the calculation of diluted net loss per common share as the inclusion of these shares would be anti-dilutive for the three months ended May 31, 2021 and 2020:

 

    2021     2020  
             
Series A Convertible Preferred Stock     66,666,667       66,666,667  
Convertible debt     16,500,000       13,500,000  
Total common shares to be issued     83,166,667       80,166,667  
XML 26 R15.htm IDEA: XBRL DOCUMENT v3.21.2
Revenues from Contracts with Customers (Tables)
3 Months Ended
May 31, 2021
Revenue from Contract with Customer [Abstract]  
Schedule of Disaggregation of Revenue

The following table disaggregates revenue by significant product types for the three months ended May 31, 2021 and 2020:

 

    2021     2020  
Oil sales   $ 100,886     $ 27,771  
Natural gas sales     25,755       3,175  
Total   $ 126,641     $ 30,946  
XML 27 R16.htm IDEA: XBRL DOCUMENT v3.21.2
Oil and Gas Properties (Tables)
3 Months Ended
May 31, 2021
Extractive Industries [Abstract]  
Summary of Oil and Gas Activities

The following table summarizes the Company’s oil and gas activities by classification for the three months ended May 31, 2021:

 

    February 28, 2021     Additions     Change in Estimates     May 31, 2021  
                         
Oil and gas properties, subject to depletion   $ 2,930,237     $ -     $ -     $ 2,930,237  
Asset retirement costs     58,919       -       576       59,495  
Accumulated depletion and impairment     (2,768,306 )     (44,337 )     -       (2,812,643 )
Total oil and gas assets   $ 220,850     $ (44,337 )   $ 576     $ 177,089  
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.21.2
Asset Retirement Obligations (Tables)
3 Months Ended
May 31, 2021
Asset Retirement Obligation Disclosure [Abstract]  
Schedule of Asset Retirement Obligations

The following table summarizes the change in the Company’s asset retirement obligations during the three months ended May 31, 2021:

 

Asset retirement obligations as of February 28, 2021   $ 96,010  
Additions     2,735  
Current year revision of previous estimates     -  
Accretion adjustment during the three months ended May 31, 2021     576  
Asset retirement obligations as of May 31, 2021   $ 99,321  
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.21.2
Organization, Nature of Operations and Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
May 31, 2021
May 31, 2020
Feb. 28, 2021
May 01, 2021
Net loss $ (233,052) $ (239,105) $ (1,109,792)  
Increase (decrease) in operating capital 100,000      
Net cash used in operating activities (174,945) $ (139,668)    
Availability of existing credit line 900,000     $ 900,000
New credit line 1,000,000      
Cash 85,686   $ 160,631  
Working capital deficit $ 3,300,000      
Cash flow hedge, discount rate 10.00%      
Equipment [Member] | Minimum [Member]        
Estimated useful lives 3 years      
Equipment [Member] | Maximum [Member]        
Estimated useful lives 10 years      
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.21.2
Organization, Nature of Operations and Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares
3 Months Ended
May 31, 2021
May 31, 2020
Total common shares to be issued 83,166,667 80,166,667
Series A Convertible Preferred Stock [Member]    
Total common shares to be issued 66,666,667 66,666,667
Convertible Debt [Member]    
Total common shares to be issued 16,500,000 13,500,000
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.21.2
Revenues from Contracts with Customers - Schedule of Disaggregation of Revenue (Details) - USD ($)
3 Months Ended
May 31, 2021
May 31, 2020
Disaggregation of Revenue [Line Items]    
Total $ 126,641 $ 30,946
Oil Sales [Member]    
Disaggregation of Revenue [Line Items]    
Total 100,886 27,771
Natural Gas Sales [Member]    
Disaggregation of Revenue [Line Items]    
Total $ 25,755 $ 3,175
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.21.2
Oil and Gas Properties (Details Narrative) - USD ($)
3 Months Ended
May 31, 2021
May 31, 2020
Extractive Industries [Abstract]    
Depletion recorded for production on proved properties $ 44,337 $ 230,848
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.21.2
Oil and Gas Properties - Summary of Oil and Gas Activities (Details) - USD ($)
May 31, 2021
Feb. 28, 2021
Oil and gas properties, subject to depletion $ 2,930,237 $ 2,930,237
Asset retirement costs 59,495 58,919
Accumulated depletion and impairment (2,812,643) (2,768,306)
Total oil and gas assets $ 177,089 220,850
Additions [Member]    
Oil and gas properties, subject to depletion  
Asset retirement costs  
Accumulated depletion and impairment   (44,337)
Total oil and gas assets   (44,337)
Change in Estimates [Member]    
Oil and gas properties, subject to depletion  
Asset retirement costs   576
Accumulated depletion and impairment  
Total oil and gas assets   $ 576
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.21.2
Asset Retirement Obligations (Details Narrative) - USD ($)
3 Months Ended
May 31, 2021
May 31, 2020
Asset Retirement Obligation Disclosure [Abstract]    
Accretion expense $ 2,735 $ 7,648
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.21.2
Asset Retirement Obligations - Schedule of Asset Retirement Obligations (Details)
3 Months Ended
May 31, 2021
USD ($)
Asset Retirement Obligation Disclosure [Abstract]  
Asset retirement obligations as of February 28, 2021 $ 96,010
Additions 2,735
Current year revision of previous estimates
Accretion adjustment during the three months ended May 31, 2021 576
Asset retirement obligations as of May 31, 2021 $ 99,321
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.21.2
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended
May 01, 2021
Dec. 22, 2020
May 29, 2020
May 21, 2020
Oct. 01, 2019
Jun. 13, 2019
Jun. 26, 2018
Dec. 28, 2017
May 31, 2021
May 31, 2020
Feb. 28, 2021
Feb. 29, 2020
Related Party Transaction [Line Items]                        
Loan bears interest rate 5.00%                      
Loan maturity date May 31, 2022                      
Maximum of amount permitted to obtain advances $ 1,000,000                      
Increments of line of credit 100,000                      
Proceeds from advances                 $ 100,000 $ 100,000    
Availability of existing credit line $ 900,000               900,000      
Interest expense                 25,671 $ 21,693    
Note payable, outstanding                 250,000   $ 3,200,000 $ 2,700,000
JBB Partners, Inc. [Member]                        
Related Party Transaction [Line Items]                        
Increments of line of credit         $ 500,000              
Line of credit borrowing capacity total         $ 1,500,000              
Promissory Note [Member] | JBB Partners, Inc. [Member]                        
Related Party Transaction [Line Items]                        
Proceed from loan payable               $ 1,550,000        
Loan bears interest rate               3.00%        
Loan maturity date               Dec. 28, 2018        
Debt conversion price per share               $ 0.20        
Promissory Note [Member] | JBB Partners, Inc. [Member] | Modification of Existing Loan Note [Member]                        
Related Party Transaction [Line Items]                        
Maximum of amount permitted to obtain advances             $ 1,000,000          
Promissory Note [Member] | JBB Partners, Inc. [Member] | Modification of Existing Loan Note [Member]                        
Related Party Transaction [Line Items]                        
Increments of line of credit             $ 100,000          
Debt conversion of price, shares             0.20          
Loan Note [Member] | JBB Partners, Inc. [Member]                        
Related Party Transaction [Line Items]                        
Debt maturity date description   The Company entered into an extension agreement with JBB to extend the maturity of all its outstanding indebtedness under credit line and Loan Note to May 31, 2022, while there can be no guarantees the Company expects to renegotiate the terms, or to extend the maturity date on or before the due date of May 31, 2022. The Company entered into an extension agreement with JBB to extend the maturity of its outstanding Loan Note to September 30, 2021. The Company entered into an extension agreement with JBB to extend the maturity of its outstanding promissory note to September 30, 2020.                
Loan Note [Member] | JBB Partners, Inc. [Member] | Extended Maturity [Member]                        
Related Party Transaction [Line Items]                        
Loan maturity date   May 31, 2022 Sep. 30, 2021 Sep. 30, 2020                
Secured Promissory Note [Member] | Odyssey Enterprises LLC [Member]                        
Related Party Transaction [Line Items]                        
Loan bears interest rate           5.00%            
Loan maturity date           Jun. 30, 2022            
Debt conversion price per share           $ 0.20            
Proceeds from advances           $ 250,000            
Notes Payable [Member]                        
Related Party Transaction [Line Items]                        
Note payable, outstanding                 $ 3,300,000      
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.21.2
Commitments and Contingencies (Details Narrative)
1 Months Ended 3 Months Ended
Sep. 30, 2018
USD ($)
May 31, 2021
USD ($)
a
May 31, 2020
USD ($)
Loss Contingencies [Line Items]      
Monthly rent $ 950    
Operating lease, rent expense   $ 178,973 $ 121,599
Area of land | a   640  
Lease expire description   In the King County, Texas lease acreage, 640 acres are due to expire in June 2021.  
General and Administrative Expense [Member]      
Loss Contingencies [Line Items]      
Operating lease, rent expense   $ 2,850 $ 2,850
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