Norris Industries (NRIS) is a micro-cap Texas E&P operator with total assets of $335,925 as of November 30, 2025, against total liabilities of $4,919,934 — producing a GAAP stockholders' deficit of $(5,334,009). Under a liquidation lens, the recovery posture is deeply negative and worsening. Applying standard haircuts: cash at 100% yields $88,690; oil and gas AR at 90% yields approximately $50,055; net oil and gas property (full cost method, net book value $191,618) at 50-60% yields roughly $96,000-$115,000 given the heavily depleted asset base (accumulated depletion/impairment of $3.02M against gross cost of $3.22M). Total haircut asset value is approximately $235,000-$254,000. Against this, total liabilities of $4.92M must be settled at face: $141,459 current AP/accruals, $3,700,000 convertible note payable to related party JBB (maturity March 31, 2027, secured by all company assets), $725,614 accrued interest to related parties (long-term), and $352,861 in asset retirement obligations. ARO does not extinguish on windup — it accelerates. Estimated liquidation deficit to equity is approximately $(4.67M) to $(4.69M), roughly consistent with the GAAP stockholders' deficit. The mezzanine Series A Convertible Preferred Stock carries a $2,250,000 liquidation preference (carrying value $750,000) that stands senior to common equity — this preference is entirely unfunded given the asset/liability gap. Subsequent to period end, the preferred was cancelled (February 28, 2026), eliminating this claim, though the underlying balance sheet deficit is unchanged. Quarter-over-quarter from August 31, 2025 (prior filing): the convertible note payable rose from $3,500,000 to $3,700,000 (an additional $200,000 draw against the JBB credit line), accrued interest increased from $695,570 to $725,614, and oil and gas net assets declined from $198,813 to $191,618 via continued depletion. Operating cash burn for the nine months was $(396,937), funded entirely by $400,000 in related-party borrowings — without JBB credit line draws, the company would be cash-insolvent. The JBB facility (security interest in all assets) effectively controls recovery order. No ceiling test write-downs were recorded in the period, though the proved reserve base declined 21 Mbbl YoY per management's own disclosure. The filing includes a Note 8 error correction reclassifying $750,000 Series A preferred from permanent to mezzanine equity under ASC 480; no effect on total assets, liabilities, or cash. Going-concern language is present but softened based on remaining JBB availability of $1,000,000 as of period end.
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