Replies to post #2499 on Daybreak Oil and Gas Inc (DBRM)

[OilStockReport]

Any good due diligence out there?

[alsobirdman]

He actually has quite a few, which is one of the things I like about the company. He has incentive to not dilute. With his 600K in hand and another 500K in warrants, getting the pps up would benefit him as well as us.

[OilStockReport]

Some interesting information in the filings. Looks like a mixture of funding and the company could move into profitability.

Management Plans to Continue as a Going Concern

The Company continues to implement plans to enhance its ability to continue as a going concern. Daybreak currently has a net revenue interest in eleven producing wells in its East Slopes Project located in Kern County, California (the “East Slopes Project”). The revenue from these wells has created a steady and reliable source of revenue for the Company.

On September 17, 2010, the Company exercised a preferential right to acquire an additional 16.67% working interest from another working interest owner in the East Slopes Project. Since the purchase of the additional working interest Daybreak’s average monthly revenue from the five wells affected by this purchase has increased by 75.76% or approximately $19,345 per month over the last six months of the year ended February 28, 2011. With this purchase of additional working interest and the completion of two additional wells in October 2010 the Company’s average net revenue interest in eleven producing wells in Kern County, California is now 29.85%. The Company’s average working interest is 40.15% for these same wells.

Daybreak anticipates revenues will continue to increase as the Company participates in the drilling of more wells in the East Slopes Project. The Company plans to continue its development drilling program at a rate that is compatible with its cash flow and funding opportunities.

On January 13, 2010, Daybreak commenced a private placement of 12% Subordinated Notes. The Company sold $595,000 of Notes to 13 accredited investors. The private placement concluded on March 16, 2010.

On September 17, 2010, the Company financed an additional working interest purchase in its East Slopes Project by issuing, to a third party, a one-year convertible secured promissory note for the principal amount of $750,000 (the “Loan”), subject to an annual interest rate of 10% per annum, which was prepaid at closing.

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On March 15, 2010, the Company finalized the sale of its 12.5% working interest in the East Gilbertown Field in Choctaw County, Alabama. This sale helped the Company by improving its cash reserves and allowed Daybreak to focus on its East Slopes Project.

Sources of funds in the past for the Company have included the debt or equity markets and, while the Company does have positive cash flow from its oil and gas properties, it has not yet established a positive cash flow on a company-wide basis. Daybreak anticipates it may be necessary to rely on additional funding from the private or public debt or equity markets in the future. However, the Company cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern.

Daybreak’s financial statements as of February 28, 2011 do not include any adjustments that might result from the inability to implement or execute Daybreak’s plans to improve our ability to continue as a going concern.