We cordially invite you to which transaction applies: None

2)

Aggregate number of securities to which transaction applies: None

3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11  (Set forthattend the amount on which the filing fee is calculated and state how it was determined):

       -$0- no fee is payable pursuant to Rule 0-11(c) (ii)

4)

Proposed maximum aggregate value of transaction: n/a

5)

Total fee paid: $-0-

  [  ]

Fee paid previously with preliminary materials.

  [  ]

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.  Identify the previous filing by registration statement number, or the Form of Schedule and the date of its filing.

1)

Amount Previously Paid: n/a

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Date Filed: n/a

SEC 1913  (12-03)

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

DAYBREAK MINES, INC.

Notice of 2005 Annual Meeting of Shareholders

(the “Annual Meeting”) of Daybreak Oil and Gas, Inc. to be held on Thursday, July 16, 2009, at 11:00 a.m., (PDT), at 601 W. Main Avenue, Spokane, Washington 99201.  The following items are enclosed with respect to our Annual Meeting:

We encourage you to read all of the materials to learn about the business to come before the meeting.  Your participation is important, regardless of the number of shares you own.  To be Heldensure your representation at the meeting, please review the instructions on October 25, 2005

the proxy or voting instruction card.  Whether or not you plan to attend the Annual Meeting, I hope you will vote as soon as possible.  Please complete, sign, date and promptly return the accompanying proxy card in the enclosed postage-paid envelope or follow the alternate voting procedures described on the proxy card.

The Proxy Statement, which follows this notice, fully describes these items.  We have not received notice of other matters that may be properly presented at the Annual Meeting or any adjournment or postponement thereof.

Only Shareholdersshareholders of record on the books of the CompanyCompany’s common stock and Series A convertible preferred stock at the close of business on August 31, 2005, will beMay 21, 2009 are entitled to notice of and to vote at the Annual Meeting.

It is important that your shares be represented at the Annual Meeting regardless of whether you plan to attend.  You are cordially invited to attend the meeting, but whether or any adjournment thereof.

_________________, 2005

By Ordernot you expect to attend in person, you are urged to mark, date and sign the enclosed proxy and return it in the enclosed prepaid envelope or follow the alternative voting procedures described on the proxy card.  We recommend that you complete and return a proxy even if you plan to attend the Annual Meeting; you will be free to revoke your proxy and vote in person at the meeting if you wish.  If you wish to vote your shares at the meeting, the inspector of election will be available to record your vote at the meeting site beginning at 10:00 a.m. on the date of the meeting.

The Board of Directors (the “Board”) of Daybreak Mines,Oil and Gas, Inc. ("Daybreak", a Washington corporation (the “Company” or the "Company"“Daybreak”) to holders of shares of the Company's $0.001 par value Common Stock, (the "Common Stock") in connection with the solicitation by the Board of Directors of Proxies, is soliciting your proxy to be voted at the Annual Meeting of Shareholders of the Company(the “Annual Meeting”) to be held at 11:00 a.m. (PDT), on October 25, 2005, and any adjournment or adjournments thereof (the "Annual Meeting")Thursday, July 16, 2009, at our corporate headquarters at 601 W. Main Avenue, Spokane, Washington 99201, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders, and at any adjournments of the Annual Meeting.  ThisIn this Proxy Statement, is first being mailedunless the context requires otherwise, when we refer to “we,” “us,” “our” or the “Company,” we are describing Daybreak Oil and Gas, Inc.

The Company has determined August 31, 2005,May 21, 2009, as the record date with respect to the determination of Shareholdersshareholders entitled to vote at the Annual MeetingMeeting.  Daybreak’s outstanding stock includes both common stock and Series A convertible preferred stock.  Only shareholders of Shareholders.

PURPOSES OF THE ANNUAL MEETING

Election of Directors

At the Annual Meeting, Shareholders will be asked to consider and to take action on the election of six (6) members to the Board of Directors to serve for a one year term or until their respective successors are elected and qualified(See "Election of Directors").

Amendment to the Articles of Incorporation

To consider and vote upon the adoption of amendment to the Company's Articles of Incorporation to change the namerecord of the Company to Daybreak OilCompany’s common stock and Gas, Inc. (See "Amendment of the Company's Articles of Incorporation").

VOTING AT ANNUAL MEETING

1.

Record Date.  The Board of Directors of Daybreak has fixedSeries A convertible preferred stock at the close of business on August 31, 2005, as the record date for the purpose of determining ShareholdersMay 21, 2009 are entitled to notice of and to vote at the Annual Shareholders’ Meeting.  At

As of May [21], 2009, the closerecord date, there were [46,979,899] shares of businessDaybreak common stock outstanding and entitled to one vote each at the Annual Meeting and [1,060,465] shares of Daybreak Series A convertible preferred stock outstanding and entitled to [3,181,395] aggregate votes at the Annual Meeting, which number is equal to the number of shares of common stock into which such shares of Series A convertible preferred stock could be converted on that date, Daybreak had 21,495,419the record date.  Holders of the common stock and the Series A convertible preferred stock vote together as a single class.  The outstanding shares issuedof common stock were registered in the names of [2,245] shareholders and outstanding.the outstanding shares of Series A convertible preferred stock were registered in the names of [78] shareholders.

The presence of the holders of a majority of suchthe outstanding shares 10,747,710 willof common stock and Series A convertible preferred stock, either in person or by proxy, is required to constitute a quorum for the transaction of business at the Annual Meeting.  ProxiesWe will count abstentions and broker non-votes for purposes of determining whether a quorum is present.  Therefore, proxies that are submitted but are not voted FOR or AGAINST (because of abstention, broker non-votes, or otherwise) will be treated as present for all matters considered at the meeting.

The stock does not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of the voting power of the shares voting in an election of directors, acting together (as applicable), may elect all of the directors if they choose to do so.  In such event, the holders of the remaining shares aggregating less than fifty percent (50%) would not be able to elect any directors.  ShareholderEach common shareholder has the right to vote in person or by proxy one vote for every share of stock standing in his or her name on the books of the Company on the record date, and each holder of Series A convertible preferred stock has the right to vote the number of shares registered in his name for as many persons as there are directors to be elected, or to cumulateof common stock into which such shares and to give one candidate as many votes as shall equal the number of directors toSeries A convertible preferred stock could be elected multiplied by the number of his shares, or distribute the votes so cumulated among as many candi dates as he may desire.

6.

Principal Shareholders.

The following table sets forth as of August 31, 2005, information concerning the direct ownership of each class of equity securities by all persons known by the Company toconverted.

Directors will be the beneficial holder of 5% or more of the Company’s Stock.

Title

Percent

of Class             

Name of Beneficial Owner

No. of Shares   

of Class

Common Stock

Terry Dunne

3,115,000

14.5%

Common Stock

Robert W. O'Brien

3,095,000

14.4%

Common Stock

413294 Alberta Ltd.

1,100,000

5.1%

The Company does not know of any other person who held more than five percent (5%) of the Company's outstanding Common Stock as of August 31, 2005, or as of the date of the preparation of this Proxy Statement.

7.

Required Approvals.

By unanimous consent, the Board of Directors of the Company have adopted resolutions (1) nominating Robert Martin, Jeffrey R. Dworkin, Thomas C. Kilbourne, Dale B. Lavigne, Ronald D. Lavigne and Michael Curtis to the Board of Directors of the Company to serve for a one-year term or until their respective successors are elected and has qualified; (2) approving an amendment to the Company’s Articles of Incorporation to change the name of the Company to Daybreak Oil and Gas, Inc.; and (3) recommending that the Company’s Shareholders vote to approve each of the above matters to be submitted to the Shareholders for consideration at the Annual Meeting of Shareholders.

Directors are elected by a plurality of the votes cast by the holders of the Common Stock meeting at which a quorum is present.  "Plurality"cast.  “Plurality” means that the individuals who receive the largest number of votes cast are elected as Directorsdirectors up to the maximum number of Directorsdirectors to be chosen at the meeting.  

All other proposals will be decided by a majority vote of the votes cast with respect thereto.  Because abstentions are not counted as votes cast, they will have no effect on any vote, including as to the Company’selection of directors.  Similarly, broker non-votes will have no effect on the vote.

In addition, if other matters come before the Annual Meeting, the persons named as proxies have discretionary authority to changevote on those matters in accordance with their best judgment.  The Board is not currently aware of any other matters to come before the name ofmeeting.

You have the Companyright to revoke your proxy at anytime prior to its exercise by written notice to the Corporate Secretary at: Daybreak Oil and Gas, Inc., 601 W. Main Avenue, Suite 1012, Spokane, Washington 99201.  Your written revocation will requirebe effective only if the affirmative voteCorporate Secretary receives the notice at least twenty-four (24) hours prior to the Annual Meeting, or the Inspector of Election receives the notice at the Annual Meeting.

In addition to the solicitation of proxies by use of this Proxy Statement, our directors, officers and employees may solicit the return of proxies by mail, personal interview, telephone or facsimile.  We will not pay additional compensation to our directors, officers or employees for their solicitation efforts, but we will reimburse them for any out–of–pocket expenses they incur in their solicitation efforts.  We will request that brokerage houses and other custodians, nominees and fiduciaries forward solicitation materials to the beneficial owners of stock registered in their names.  We have retained Georgeson Inc. to assist us in soliciting your proxy for an estimated fee of $7,000, plus reasonable out-of-pocket expenses.  Georgeson will ask brokerage houses and other custodians and nominees whether other persons are beneficial owners of Daybreak common stock.  If so, we will supply them with additional copies of the holdersproxy materials for distribution to the beneficial owners.  We will also reimburse banks, nominees, fiduciaries, brokers and other custodians for their costs of at least a majoritysending the proxy materials to the beneficial owners of Daybreak common stock.

Your telephone or Internet vote authorizes the named proxies to vote thereon.  Abstentionsyour shares in the same manner as if you had returned your proxy card.  We encourage you to use these cost effective and convenient ways of voting, 24 hours a day, 7 days a week.

Directors will be elected by a plurality of the votes cast at the meeting.  The effects of abstentions and broker nonvotes will havenon-votes are discussed under “Information About the effectMeeting, Voting and Proxies, Outstanding Shares, Quorum and Voting” on page 1.

A shareholder may (i) vote for the election of a vote against the proposal with respect changing the Company’s state of domicile.  

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

(a)

Identification of Directors

The following information asany one or more of the fiscal year ended February 28, 2005, is provided with respectnominees, or (ii) withhold authority to each director and executive officervote for one or more of the Company.

Name                                 

Age

Office withnominees by so indicating on the Company

Robert Martin, P. Geol

51

Director/President

Jeffrey R. Dworkin

47

Director/Secretary

Thomas C. Kilbourne

53

Director /Treasurer

Dale B. Lavigne

74

Director/Chairman

Ronald D. Lavigne

51

Director

Michael Curtis

51

Director

(b)

Identification of Executive Officers

Set forth below isproxy card.  Shares will be voted as specified on the name, ageenclosed proxy card or as so instructed via the alternative voting procedure described on the proxy card. If you sign, date and length of servicereturn the proxy card without specifying how you want your shares voted, they will be voted for the election of the Company's present Executive Officers.

Name                                  

Age

Office withdirector nominees.  If, at the Company

Lengthtime of service

Robert Martin, P. Geol

51

Director/President

since 2004

Jeffrey R. Dworkin

47

Director/Secretary

since 2004

Thomas C. Kilbourne   

53

Director /Treasurer

since 2001

Dale B. Lavigne

74

Director/Chairman

since 1975

Executive Officers are appointedor prior to serve until the meeting of the Board of Directors following the next annual meeting of shareholders and until their successors have been elected and qualified. There are no arrangements or understandings betweenAnnual Meeting, any of the nominees are unable or decline to serve, the persons named as proxies may use the discretionary authority provided in the proxy to vote for a substitute or substitutes designated by the Board.  The Board has no reason to believe that any substitute nominee or nominees will be required.

Our shareholders do not have the right to cumulative voting in the election of our directors.  Cumulative voting could allow a minority group to elect at least one director to our Board.  Because there is no provision for cumulative voting, a minority group will not be able to elect any directors.  Conversely, if our principal beneficial shareholders and directors officers,wish to act in concert, they would be able to vote to appoint directors of their choice, and other persons pursuant to which such person was selected as an Executive Officer.   

Family Relationships:

Dale B. Lavigneotherwise directly or indirectly, control the direction and Ronald D. Lavigne are father and son.  Thomas C. Kilbourne is Dale B. Lavigne’s son-in-law.

Business Experience

Set forth below is certain biographical information regarding each Director and Executive Officeroperation of the Company:

Robert N. Martin, a Professional Geologist, is the PresidentCompany.

The names and a Directorprofessional backgrounds of the Company.  Mr. Martin is graduated from McGill University with a Bachelor of Science degree. Prior to becomingnominees for election at the President of the Company, Mr. Martin Annual Meeting are set forth below.

Dale B. Lavigne and was discharged on June 3, 2004.

Michael Curtis is a Director of the Company.  Since 1998 Mr. Curtis has been the president of Cardwell Capital Corporation, a private investmentRonald D. Lavigne are father and trading company that invests in private and public corporations in the North American Markets.

Board Committees

The entire board performs the function of the Audit, Compensation and Nominating Committee. Directors are currently nominated by the total Board of Directors.  It is anticipated that a Nominating Committee charter will be implemented during 2005.

The entire board performed the functions of the Audit Committee during the year ended February 28, 2005.  The Audit Committee approves the selection of the Company’s independent certified public accountants to audit the annual financial statements and review the quarterly financial statement, discusses with the auditors and approves in advance the scope of the audit and reviews, reviews management’s administration of the system of internal controls, and reviews the Company’s procedures relating to business ethics.  None of the Directors are deemed to be independent directors

as that term is defined in Rule 4200(a) (14) of the NASD’s listing standards.son.  Thomas C. Kilbourne, Controller and Assistant Corporate Secretary, is Dale B. Lavigne’s son-in-law and Ronald D. Lavignes’s brother-in-law.

Beneficial ownership information for these individuals is shown under the financial expert for the purposeheading “Security Ownership of compliance with the Sarbanes–Oxley Act of 2002.  The Company does not have a written audit committee charter but intends to adopt a written audit committee charter prior to year-end.

Certain Beneficial Owners, Executive Management and Directors” on page 27.

Our Audit Committee has appointed the firm DeCoria, Maichelof Malone & Teague P.S.Bailey, PC (“Malone & Bailey”) as our independent certified public accountants for the Companyto audit our accounts for the fiscal year ending February 28, 2006.  DeCoria, Maichel2010.  Malone & Teague P.S.Bailey has served as the Corporation'sour independent auditorspublic accountants since 2002.  No representative of DeCoria, Maichel & Teague P.S. is expected to be present at the Special Meeting with the opportunity to make statements and respond to appropriate questions from shareholders present at the meeting.  Under the Sarbanes-Oxley Act of 2002, the Audit Committee has the sole authority to appoint the independent auditorsNovember 2006, including for the Corporation.  Therefore,fiscal year ended February 28, 2009.  While the Corporation is not submitting the selection of DeCoria, Maichel & Teague P.S.to our shareholders for ratification.  It is intended that DeCoria, Maichel & Teague P.S. will continue as the independent auditors for Daybreak.

Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditors

The Audit Committee is responsible for appointing, settingthe appointment, compensation, retention, termination and overseeing the work ofoversight over the independent auditors.  public accountants, our bylaws do not require that our shareholders ratify the appointment of our independent public accountants.  We are requesting, as a matter of good corporate governance, that the shareholders ratify the appointment of Malone & Bailey to audit the books, records and accounts of Daybreak for the year ending February 28, 2010.  If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether to retain Malone & Bailey and may retain that firm or another without re-submitting the matter to our shareholders.  Even if the appointment is ratified, the Audit Committee may, in its discretion, direct the appointment of different independent public accountants at anytime during the year if it determines that such change would be in the best interest of our shareholders.

The Audit Committee has established a policy regardingadopted guidelines for the pre-approval of all audit and non-audit services provided by the independent auditors.  On an ongoing basis, management communicates specific projects and categories of services for which advance approval of the Audit Committee is requested.  The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of the independent auditors for specific projects.  On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services compared to the approved amounts.  The Audit Committee may also delegate the ability to pre-approve audit and permitted non-audit s ervices toservices by our independent public accountants, as described under “Pre-Approval Policies and Procedures” on page 14.

The following table provides a subcommittee consistingsummary of one or more Audit Committee members, provided that any such pre-approvals are reported on at a subsequent Audit Committee meeting.

Audit Fees

The aggregate fees billed for professional services renderedperformed by the Company’s principal accountantMalone & Bailey for the audit of the Company’s annualour financial statements for the fiscal years ended February 28, 20052009 and February 29, 2004 were $11,150.002008 together with fees billed for other services:

The Audit Committee has reviewed the nature and $9,745.00 respectively.

scope of the services provided by Malone & Bailey and considers the services provided to have been compatible with the maintenance of Malone & Bailey’s independence.

The Audit Related Fees

Committee has determined that the scope of services to be provided by Malone & Bailey for the year ending February 28, 2010 will generally be limited to audit and audit-related services.  The Company incurred no fees duringAudit Committee must expressly approve the last two fiscal years for assurance and related servicesprovision of any service by Malone & Bailey outside the scope of the foregoing services.

Ratification of Proposal No. 2 requires approval by the holders of a majority of the shares of common stock and Series A convertible preferred stock (voting on an as-converted basis) present at the Annual Meeting (either in person or by proxy).

The Restated Articles incorporate a series of amendments, which generally include several non-substantive, ministerial amendments, such as changes to the company’s registered agent, the updating of cross-references and the elimination of duplicative language.  The Restated Articles also specifically include the following changes:  (1) a modification to Article V (Directors) to remove the specific language providing that were reasonably relatedthe Company shall have no less than three directors and no more than nine directors, which is not required to be included in the articles under Washington law, to defer to the language set forth in Company’s bylaws (which, consistent with the Present Articles, states that the board will be composed of not less than three nor more than nine directors); (2)  a modification to Article V (Directors) to clarify that the Board of Directors, and not the shareholders, will fill any director vacancies (the Present Articles provide that director vacancies may be filled by the remaining directors, but do not clarify that only the Board can fill such vacancies); (3) a correction of an apparent drafting error in Article VI (Capital Shares) by deleting a reference to directors elected/appointed by Series A convertible preferred shareholders, since the Present Articles do not contemplate that the Series A convertible preferred shareholders have such a right; (4) a correction of an apparent drafting error in Article VI, Section 6.4.4(d) (Capital Shares) by adding the word “Board” to complete an incomplete clause, consistent with what is believed to have been the intent of such provision; (5) a revision to language in Article X regarding indemnification and limitation of director liability to clarify that any repeal or modification of the provision does not adversely affect any rights relating to acts or omissions occurring prior to such repeal or modification.  Please refer to Appendix A attached to this Proxy Statement to review the full text of the Restated Articles.

Corporate governance is the process by which public corporations are governed and/or monitored.  Corporate governance also refers to the structures and processes for the direction and control of companies.  Corporate governance concerns the relationships among the management, Board, and all shareholders.  Good corporate governance enhances the performance of companies and shareholder value.

The Board ensures the auditsoundness of policies and the overall direction of the Company’s financial statements.

Tax Fees

Company.  The Board has focused on building Daybreak’s strong corporate governance practices.  Accordingly, our corporate governance policies and practices are designed not only to satisfy regulatory requirements, but also to provide for the effective oversight and management of the Company.  Daybreak has adopted various corporate governance enhancements, which formalize Daybreak’s corporate governance policies and practices, highlighted in this Proxy Statement and include:

The Company incurred no fees duringhas adopted the last two fiscal yearsstandards of the NYSE Alternext, formerly known as the American Stock Exchange, for professional services rendereddetermining the independence of its directors.  These independence standards specify the relationships deemed sufficiently material to create the presumption that a director is not independent.  No director qualifies as independent unless the Company’s Board affirmatively determines that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  In addition, Section 803A of the NYSE Alternext US Company Guide (and related commentary) sets forth the following non-exclusive list of persons who shall not be considered independent:

Each of the current nominees for tax compliance, tax advicedirector listed under the caption “Proposal Number 1: Election of Directors” is an existing director standing for re-election.  The Governance Committee did not receive any recommendation for a nominee proposed from any shareholder or group of shareholders with respect to our 2009 Annual Meeting.

Our Corporate Governance Guidelines require our non-management directors to meet in executive session in conjunction with each of the Board’s regularly scheduled meetings and tax planning.

All Other Fees

our independent directors to meet alone in special session at least once each calendar year.  Executive sessions including only non-management directors are chaired by the Chairman of the Audit Committee.  The Company incurred fees totaling $6,850.00Chairman of the Governance Committee would preside over executive sessions of only independent directors.

Our Corporate Governance Guidelines dictate that directors use all reasonable efforts to attend all meetings of shareholders, the Board and all Committees on which they serve, unless impracticable or excused.  For the fiscal yearsyear ended February 28, 20052009, our Board met seven times.  All directors attended at least 75 percent of the aggregate number of meetings of our Board and February 29, 2004, respectively, for services rendered bymeetings of Committees on which they served.

In addition to the Ethical Business Conduct Policy Statement, all members of our senior financial statementsmanagement, including our Chief Executive Officer, have agreed in writing to our Code of Ethics for inclusionSenior Financial Officers, which prescribes additional ethical obligations pertinent to the integrity of our internal controls and financial reporting process, as well as the overall fairness of all financial disclosures.

We intend to promptly disclose via a Current Report on Form 10QSB.

8-K or an update to our website information about any amendment to, or waiver of, these codes with respect to our executive officers and directors.

The Audit Committee’s report for 2009 appears under “Report of the Audit Committee of the Board of Directors.Directors” beginning on page 15.

As of the date hereof, it is the opinion of management that there is no material proceeding to which any director, officer or affiliate of the registrant, any owner of record or beneficially of more than five percent of any class of voting securities of the registrant, or any associate of any such director, officer, affiliate of the registrant, or security holder is a party adverse to the registrant or any of its subsidiaries or has a material interest adverse to the registrant or any of its subsidiaries.

The Compensation Committee has responsibility for establishing, implementing and continually monitoring adherence to our compensation philosophy.  As part of the process of continuing to restructure the Board and management during the fiscal year ended February 28, 2009, the Company, borrowedthrough the Compensation Committee, focused on researching and establishing an appropriate compensation program for its employees and directors on a totalgoing forward basis.  In deciding on the type and amount of $65,000 from threecompensation for each named executive officer, we focused on the market value of its directors (Tom Kilbourne, Dale Lavigne,the role and Ron Lavigne) and a totalcurrent pay of $93,820.52 from two (in excessthe individual, along with the Company’s current cost structure.  For the fiscal year ended February 28, 2009, compensation to our named executive officers consisted primarily of 10% ownership) control shareholders (Terry Dunne and Robert O’Brien). These various loans all havebase salaries.  Also, the following terms and conditions:

(1)

Interest rate of 6% per annum

(2)

Due one yearBoard, with assistance from the dateCompensation Committee,  approved cash bonuses and stock-based compensation awards for two of our named executive officers in recognition of past services and to align executive goals with shareholder value.  For the loan

(3)

Convertible into common stockfiscal year ending February 28, 2010, the Company has approved a 2009 Restricted Stock and Restricted Stock Unit Plan pursuant to which it may compensate executive officers, directors, consultants and employees.  These elements of Daybreak after six months (both principal and interest) atcompensation, as applied in the ratefiscal year ended February 28, 2009, are described in more detail under “Narrative Disclosure to Summary Compensation Table”, beginning on page 22 of $0.25 per share at the option of the noteholder.

REMUNERATION AND OTHER COMPENSATION OF MANAGEMENT

this Proxy Statement.

The following table sets forth summary information concerning the compensation we paid or accrued during the fiscal years ended February 28, 2003 and 20052009 and February 29, 2004, no2008 to our named executive compensation was paid. The presidentofficers.  

On October 20, 2008, the Board appointed James F. Westmoreland to the position of President and Chief Executive Officer of the Company.  Mr. Westmoreland stepped down from his role of Executive Vice President and Chief Financial Officer of the Company, Robert N. Martin, received 1,100,000but currently continues to serve as the interim principal finance and accounting officer of the Company.  In connection with Mr. Westmoreland’s appointment as President and Chief Executive Officer, the Compensation Committee approved an annual salary payable to him of $200,000, retroactive to October 1, 2008.  As Mr. Westmoreland previously served as an officer of the Company without compensation, the Compensation Committee also awarded a cash bonus of $150,000 to Mr. Westmoreland in recognition of his past services.  As further compensation for his services during the fiscal year ended February 28, 2009, the Compensation Committee agreed to award Mr. Westmoreland shares of common stock for services to be performed from March 1, 2005 to February 28, 2006. He will also receive $1,000 per month from March 1, 2005 to February 28, 2006. The secretary of the Company, Jeffery Dworkin,in an amount to be determined.  Subsequently, on April 6, 2009, the Compensation Committee approved an award to Mr. Westmoreland of 500,000 shares of restricted common stock of the Company, with a grant date of April 7, 2009.

In conjunction with Mr. Westmoreland’s appointment as President and Chief Executive Officer, on October 20, 2008, Timothy R. Lindsey resigned from his position as interim President and Chief Executive Officer.  Mr. Lindsey will also receive $1,000continue to serve in his capacity as a director of the Company.  Mr. Lindsey served as interim President and Chief Executive Officer of the Company without compensation.  As such, the Compensation Committee awarded a cash bonus of $175,000 to Mr. Lindsey in recognition of his past services.  As further compensation for his services as interim President and Chief Executive Officer during the fiscal year ended February 28, 2009, the Compensation Committee agreed to award Mr. Lindsey shares of common stock of the Company, in an amount not determined.  Subsequently, on April 6, 2009, the Compensation Committee  approved an award to Mr. Lindsey of 500,000 shares of restricted common stock of the Company, with a grant date of April 7, 2009.

After reviewing the Company’s current cost structure, on April 6, 2009, the Board, with the assistance of the Compensation Committee, approved an arrangement reducing the base salaries of the Company’s named executive officers.  Effective April 1, 2009, the salary of James F. Westmoreland, President and Chief Executive Officer, was reduced by 25% to $150,000.  The salaries of Robert N. Martin, Senior Vice President – Exploration, and Bennett W. Anderson, Chief Operating Officer, were reduced by 50% to $87,000 and $63,000, respectively.  Additionally, if Mr. Anderson works more than 11 days per month, from March 1, 2005he will earn an additional amount equal to $200 per day, with such additional amount being capped at $2,200 per month.

The following table provides information regarding our outstanding restricted stock awards held by our named executive officers at the end of the fiscal year ended February 28, 2006.

2009.  The Company has no qualified or nonqualified stock option plans and has no outstanding stock options.

The Board adopted a policy prescribing procedures for review, approval and monitoring of transactions involving Daybreak and “related persons” (directors and executive officers or their immediate family members, or shareholders owning five percent or greater of our outstanding stock).  The Policy Statement Regarding Related Party Transactions of Daybreak Oil and Gas, Inc. (“Related Party Transactions Policy”) supplements the conflict of interest provisions in our Ethical Business Policy Conduct Statement and Corporate Governance Guidelines.  The Board has determined that the Governance Committee is best suited to review and consider for approval related party transactions, although the Board may instead determine that a particular related party transaction be reviewed and considered for approval by a majority of disinterested directors.

The Governance Committee shall review, consider and determine whether to approve any proposed charitable contributions, or pledges of charitable contributions, in excess of $120,000 in the aggregate for any fiscal year by the Company to any charitable or non-profit organization in which a Related Party serves as a director, trustee or in a similar capacity or is actively involved in fundraising.  If management, in consultation with the Governance  Committee Chairman, the Company’s Chief Executive Officer or Chief Financial Officer, determines that it is not practicable to wait until the next Committee meeting, the Chairman of the Governance Committee has the delegated authority during the period between Governance Committee meetings, to review, consider and determine whether to approve any such contributions or pledges.  The Chairman of the Governance Committee shall report to the Governance Committee any such contributions or pledges approved by him or her pursuant to this delegated authority at the next Governance Committee meeting.

Our shareholders do not have the right to cumulative voting in the election of our directors.  Cumulative voting could allow a minority group to elect at least one classdirector to our Board.  Because there is no provision for cumulative voting, a minority group will not be able to elect any directors.  Conversely, if our principal beneficial shareholders and directors wish to act in concert, they would be able to vote to appoint directors of their choice, and otherwise directly or indirectly control the direction and operation of the Company.

As of May [21], 2009, the record date, based on information available to the Company, the following table shows the beneficial ownership of the Company’s voting securities (common stock and Series A convertible preferred stock)  by: (i) any persons or entities known by management to beneficially own more than 5% of the outstanding shares of the Company’s common stock; (ii) each current director and director nominee of the Company; (iii) each current executive officer of the Company named in the Summary Compensation Table appearing on page 22; and (iv) all of the current directors and executive officers of Daybreak as a group.  The address of each of the beneficial owners, except where otherwise indicated, is the Company’s address.  Unless otherwise indicated, each person shown below has the sole power to vote and the sole power to dispose of the shares of voting securitiesstock listed as beneficially owned.

Under Rule 14a-8 of the Exchange Act, shareholder proposals may be eligible for inclusion in our 2010 Proxy Statement.  We must receive any shareholder’s proposal intended to be votedpresented at the 2010 Annual Meeting at our principal executive offices no later than March 18, 2010, if the proposal is to be considered for inclusion in our Proxy Statement relating to the 2010 Annual Meeting.  At August 31. 2005,

(a)  Change as a whole, by subdivision or combination in any manner, the meeting.

The Company has determined August 31, 2005, as the record date with respect to the determinationnumber of Shareholders entitled to vote at the 2005 Annual Meeting of Shareholders.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a)

Security Ownership of Certain Beneficial Owners

The following table sets forth as of August 31, 2005, information concerning the direct ownership of each class of equity securities by all persons known by the Company to be the beneficial holder of 5% or moreshares of the Company’s Stock:

Title

Percent

of Class              

Name of Beneficial Owner

No. of Shares  

of Class

Common Stock

Terry Dunne

3,115,000

14.5%

Common Stock

Robert W. O'Brien

3,095,000

14.4%

(b)

Security Ownership then outstanding into a different number of Management

The following table sets forthshares, with or without par value, without making the identical change as a whole in the number of August 31, 2005, information concerningshares of Series A Preferred then outstanding;

(b)  Amend, alter or repeal, in any manner whatsoever, the direct ownership of each class of equity securities by all directorsdesignations, powers, preferences, relative participating, optional or other special rights, qualifications, limitations and all directors and officersrestrictions for the benefit of the CompanySeries A Preferred;

Shareholders of the Corporation have no preemptive rights to acquire additional shares issued by the Board of DirectorsCorporation, or any securities convertible into, or carrying or evidencing any rights or option to serve for a one-year term or until their respective successors are elected and qualified.

purchase, any such shares, other than any preemptive rights otherwise described within these Articles.