Item 1.01 Entry into a Material Definitive Agreement.
On February 22, 2022, Daybreak Oil and Gas, Inc. (OCT PINK:DBRM), a Washington
corporation ("Daybreak" or the "Company"), entered into an amendment (the
"Amendment") with Gaelic Resources Ltd., a private company incorporated in the
Isle of Man and the 100% owner of Reabold ("Gaelic"), to amend the Equity
Exchange Agreement (the "Exchange Agreement") dated as of October 20, 2021 by
and between Daybreak, Reabold California LLC, a California limited liability
company ("Reabold"), and Gaelic. Pursuant to the Amendment, effective February
14, 2022, Daybreak and Gaelic agreed to amend the "Long-Stop Date" set forth in
the Exchange Agreement from February 14, 2022 to April 29, 2022 (the "Long-Stop
Date"). As part of the Amendment, Daybreak acknowledges that in order to carry
out certain operational activities in advance of the completion of the Exchange
Agreement, Reabold may borrow up to US$250,000 from its parent company, Reabold
Resources PLC and that this money will be repaid in full to Reabold Resources
PLC, by Daybreak, as soon as is practicably possible following the completion of
the Exchange Agreement. If the Exchange Agreement has not been completed by the
amended Long-Stop Date, Daybreak agrees to compensate Gaelic through the payment
of a break fee, in the amount of US$500,000, to be paid in Daybreak common stock
shares (the "Break Fee Shares") priced according to the VWAP calculated over the
five trading days prior to and including the Long-Stop Date, with payment (to be
satisfied by the issuance of the Break Fee Shares) made as soon as practicably
possible after the amended Long-Stop Date has expired. However, if the Exchange
Agreement is completed after an agreed upon date after April 29, 2022, then 50%
of the Break Fee Shares issued to Gaelic will be applied in part satisfaction of
the number of the Parent Shares that are due to Gaelic under the Exchange
Agreement. Further, Gaelic consented to the Company selling a convertible
promissory note to a Private Investor (the "purchaser") in the amount of
US$200,000 (the "Convertible Note").
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Item 3.02 Unregistered Sales of Equity Securities.
The information in Item 1.01 is incorporated by reference herein. The
Convertible Note is being issued pursuant to a Convertible Note Purchase
Agreement by and between the Company and the purchaser dated as of February 15,
2022 (the "Purchase Agreement"). The Convertible Note will convert into shares
of the Company's common stock, par value, $0.001, upon the earlier of the
closing of the Exchange Agreement or the purchaser's instruction any time on or
after the Long-Stop Date. If the Convertible Note converts at the closing of the
Exchange Agreement, it will convert at a price of $0.017 per share. If the
Convertible Note converts upon the Long-Stop Date, it will convert at a price of
$0.0085 per share. Payable-in-kind interest will accrue on the Convertible Note
at a rate of 18% per annum; provided, that a minimum of one year of interest is
payable. The terms of the Purchase Agreement also provide that if the Company
sells shares over the next six months for a price less than $0.02 per share, the
Company will adjust the number of conversion shares issued under the Convertible
Note accordingly, at a conversion price equal to the sale price with a 15%
discount.
The Convertible Note was issued pursuant to the exemption from registration
promulgated under Regulation S of the Securities Act of 1933, as amended. The
sale and purchase of the Convertible Note did not involve any public offering,
the offer and sale of the Convertible Note took place outside the United States,
the purchaser is an "accredited investor" as that term is defined under Rule 501
of Regulation D, the purchaser had access to information about the Company and
its investment, the purchaser took the securities for investment and not resale,
and the Company took appropriate measures to restrict the transfer of the
securities.
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DAYBREAK OIL AND GAS, INC. 
