UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
Current Report
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Securities Exchange Act of 1934
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| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 15, 2021, Daybreak Oil and Gas, Inc. (OCT PINK:DBRM), a Washington corporation (“Daybreak” or the “Company”), finalized agreements with its directors, executive officers, and other employees with respect to the forgiveness and conversion of related party debts into shares of the Company’s common stock (the “Debt Conversion”) at a conversion rate of $0.45 per share of common stock.
Completing this Debt Conversion is a condition to closing the previously disclosed Equity Exchange Agreement dated as of October 20, 2021 entered into by and among the Company, Reabold California LLC, a California limited liability company (“Reabold”), and Gaelic Resources Ltd., a private company incorporated in the Isle of Man and the 100% owner of Reabold (“Gaelic”), pursuant to which Daybreak will acquire Reabold in exchange for issuing 160,964,489 shares of its common stock to Gaelic (the foregoing transaction, the “Equity Exchange”).
The following is a description of the debts converted, amounts of debt, and shares of common stock agreed to be issued in exchange:
| Description of Debt Converted | Dollar Amount Converted | Shares of Common Stock to be Issued | ||||||
| Accrued deferred salary amounts owed to employees | $ | 629,046.00 | 1,045,881 | |||||
| Accrued deferred director fees | $ | 142,968.75 | 317,708 | |||||
| 12% Subordinated Note Payable to James F. Westmoreland | $ | 514,986.35 | 1,144,414 | |||||
| Interest in Production Payments purchased pursuant to a Production Payment Interest Purchase Agreement dated as of August 22, 2019 between the Company and James F. Westmoreland | $ | 550,100.00 | 1,222,444 | |||||
| TOTAL | $ | 1,837,101.10 | 3,730,447 | |||||
Further, the Company’s President and Chief Executive Officer, James F. Westmoreland, declined the Company’s offer to convert accrued deferred salary amounts payable to him and totaling $53,125.00 and instead entered into an agreement with the Company to fully forgive this debt owed to him.
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| Item 3.02 | Unregistered Sales of Equity Securities. |
The information in Item 1.01 is incorporated by reference herein. The shares of common stock to be issued pursuant to the Debt Conversion will be issued in reliance upon exemptions from registration requirements pursuant to Section 4(a)(2) under the Securities Act of 1933, as amended, and Regulation D promulgated thereunder, and pursuant to applicable state securities laws and regulations, in that the sale and purchase of such securities will not involve any public offering, the recipients of the shares are each either an “accredited investor” as that term is defined under Rule 501 of Regulation D, or the Company has furnished or will, a reasonable prior to sale furnish, to each investor the information specified by paragraph (b)(2) of Rule 501 of Regulation D.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
The information in Item 1.01 is incorporated by reference herein.
[signature page follows]
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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 hereunto duly authorized.
DAYBREAK OIL AND GAS, INC.
| By: /s/ JAMES F. WESTMORELAND |
James F. Westmoreland, President and Chief Executive Officer
Date: December 20, 2021
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