Thoughts on internal(?) loan, warrants and pps?
I've not see much comment here on the SEC filing about (see below) on the notes and warrants. My first impression is that my concern about cash burn vs revenue generation was correct. They had to get cash. They did, with a private placement. Bad short-term hit for my share price due to dilution. But perhaps also necessary and good for long-term given it was necessary. But the amount raised wasn't huge. Hopefully just a cushion and carry over as they get more production going which will allow them to be self-sufficient soon? Next couple of quarters will show if they have hit the balance point or not. I got the impression that the notes were picked up by at least some internal folks - which is a positive sign. Rather like insiders buying the stock. They made a loan, and get cheap warrants. But thier willingness to make the loan themselves is a positive thing.
So what are you folks thoughts?
Xiws
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On January 29, 2010, in connection with a private placement of 12% Subordinated Notes due 2015 (the “Notes”), in the form attached hereto as Exhibit 4.1, Daybreak Oil and Gas, Inc. (“Daybreak”), issued Warrants to purchase shares of Daybreak’s common stock (the “Warrants”), in the form attached hereto as Exhibit 4.2. Daybreak issued Warrants to 11 accredited investors to purchase 1,030,000 shares of Daybreak’s common stock at an exercise price of $0.14 per share of common stock. The Warrants give the holder the right to two shares of common stock for each $1.00 principal amount of Notes purchased, which shall be exercisable for five years from the date of issuance of the Warrants. Daybreak issued the Warrants pursuant to a private placement held under Regulation D promulgated under the Securities Act of 1933, as amended.
Item 8.01 Other Events.
On January 13, 2010, Daybreak commenced an offering to raise up to $605,000 in capital by offering securities. The securities consist of the Notes and the Warrants. The Notes mature on the fifth anniversary of the original date of issuance of the Notes. The terms of the Warrants are described in the above Item 3.02. The offering of the securities is being made pursuant to a private placement held under Regulation D promulgated under the Securities Act of 1933, as amended. The Subscription Agreement is attached hereto as Exhibit 10.1.
AI
