16

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark  One)

[X]     ANNUAL  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
        OF  1934

                   For the fiscal year ended February 28, 2003

[ ]    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT  OF  1934
                    For  the  transition  period          to

                         Commission file number 0-50107
                              DAYBREAK MINES, INC.
                 (Name of small business issuer in its charter)

           Washington                          91-0626366
  (State or other jurisdiction              (I.R.S. Employer
of incorporation or organization)          Identification No.)

          850  Mullan  Ave.;  P.O.  Box  370,  Osburn,  Idaho      83849
            (Address  of  principal  executive  offices)        (Zip  code)

         Issuer's telephone number, including area code:  (208) 556-1139

         Securities registered under Section 12(b) of the Exchange Act:
                                      None

         Securities registered under Section 12(g) of the Exchange Act:
                    Common Stock, par value $0.001 per share

Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the  past  90  days.
Yes          No   X
    ---------   --------

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  contained  in this form and no disclosure will be contained, to
the  best  of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in  Part III of this Form 10-KSB or any
amendment  to  this  Form  10-KSB.  [X]

The  registrant's  revenues  for  its  most  recent  fiscal  year  were  $0.

The  aggregate  market  value  of  the  voting  and  non-voting  stock  held  by
non-affiliates  of the registrant, based on the average bid and ask price on May
21, 2003, as reported  by  the  Over  the Counter "Pink Sheets" was $168,820.

At  May 21, 2003, the registrant had 16,949,419 outstanding shares of $0.001 par
value  common  stock.


<PAGE>


                                TABLE OF CONTENTS

                                     PART I
<TABLE>
<CAPTION>


<S>                      <C>                                             <C>
ITEM 1.           DESCRIPTION OF BUSINESS                                     3


ITEM 2.           DESCRIPTION OF PROPERTIES                                   6


ITEM 3.           LEGAL PROCEEDINGS                                           6

ITEM 4.. .   . .  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         6

                                   PART II

ITEM 5.. . . . .  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS    6

ITEM 6.. . . . .  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS  7

ITEM 7.           FINANCIAL STATEMENTS                                        7

ITEM 8.. . . . .  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                  ON ACCOUNTING AND FINANCIAL DISCLOSURE                      7

                                  PART III

ITEM 9.. . . . .  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
                  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.          8

ITEM 10.          EXECUTIVE COMPENSATION                                      9

ITEM 11. . . .    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                  AND MANAGEMENT. . . . . . . . .                             9

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS             10

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K                           10

ITEM 14.          CONTROLS AND PROCEDURES                                    11

SIGNATURES . . . . . . . . . . . . .                                         12

CERTIFICATIONS . . . . . . . . . . .                                         13

FINANCIAL STATEMENTS . . . . . . . .                                . .  F1-F12



</TABLE>


                                             2
<PAGE>


                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS

GENERAL

Matters  discussed  in  this document may constitute forward-looking statements.
The  Private  Securities  Litigation  Reform  Act  of  1995 provides safe harbor
protections  for  forward-looking  statements in order to encourage companies to
provide  prospective  information  about  their  businesses.  Forward-looking
statements  include  statements concerning plans, objectives, goals, strategies,
future  events  or performance, and underlying assumptions and other statements,
which  are  other  than  statements  of  historical  facts.

Daybreak  Mines, Inc. desires to take advantage of the safe harbor provisions of
the  Private  Securities  Litigation  Reform  Act  of 1995 and is including this
cautionary  statement  in  connection  with  this safe harbor legislation.  This
document  and  any  other written or oral statements made by us or on our behalf
may  include  forward-looking  statements,  which reflect our current views with
respect  to  future  events  and  financial  performance.  The  words "believe,"
"expect,"  "anticipate,"  "intends,"  "estimates,"  "forecast,"  "project"  and
similar  expressions  identify  forward-looking  statements.

The  forward-looking  statements  in  this  document  are  based  upon  various
assumptions,  many  of  which  are  based,  in  turn,  upon further assumptions,
including  without  limitation,  management's discussion and analysis or plan of
operations  and  elsewhere  in  this  report.  Although  we  believe  that these
assumptions  were  reasonable  when made, these statements are not guarantees of
future  performance  and  are  subject to certain risks, uncertainties and other
factors,  some  of  which  are  beyond our control, are difficult to predict and
could  cause  actual  results  to  differ  materially  from  those  expressed or
forecasted  in  the  forward-looking  statements.   Readers are cautioned not to
place  undue  reliance  on  these  forward-looking statements, which reflect our
management's  view  only  as  of  the  date  of  this  report.

HISTORY

Daybreak Mines, Inc. (hereinafter "the Company") was incorporated under the laws
of  the  State  of Washington on March 11, 1955, and was organized primarily for
the purpose of exploring for, acquiring and developing mineral properties with a
potential  for  production.  The Company's initial and subsequent efforts in the
acquisition,  exploration,  and development of potentially viable and commercial
properties  were  unsuccessful.  Daybreak  has  conducted  no  active  mineral
exploration  or  other  active  business  operations since 1970. During the past
thirty-three  years,  the  Company's  activities  have  been  confined to annual
assessment  and  maintenance  work  on  the  Idaho  mineral properties and other
general  and  administrative  functions. The Company currently holds the mineral
rights  to approximately 340 acres in Shoshone County, Idaho. There are no known
proven  or  probable  ore  reserves  on  this  property.

The  board  of  directors  of  the Company has decided not to pursue any further
business  operations  in  the  natural  resources  sector and to implement a new
business  direction  for  the  Company.


                                         3
<PAGE>


RISK  FACTORS

The  Company's  business  is  subject  to  numerous  risk factors, including the
following:

Independent  Certified  Public  Accountants'  Opinion  -  Going  Concern
------------------------------------------------------------------------

The  Company's  financial  statements  for the years ended February 28, 2003 and
2002,  were  audited  by the Company's independent certified public accountants,
whose  report  includes  an  explanatory  paragraph  stating  that the financial
statements  have  been  prepared  assuming  the Company will continue as a going
concern  and  that  the  Company  has incurred significant operating losses that
raise  substantial  doubt  about  its  ability  to  continue as a going concern.

No  Revenue  and  Minimal  Assets
---------------------------------

The Company has had no revenues or earnings from operations.  The Company has no
significant assets or financial resources.  The Company will, in all likelihood,
sustain  operating  expenses  without corresponding revenues, at least until the
consummation  of a business combination.  This may result in our incurring a net
operating  loss  which  will  increase  continuously  until  we can consummate a
business  combination  with  a  profitable  business  opportunity.  There  is no
assurance that we can identify such a business opportunity and consummate such a
business  combination.

Speculative  Nature  of  Company's  Proposed  Operations
--------------------------------------------------------

The  success of the Company's proposed plan of operation will depend, to a great
extent,  on the operations, financial condition and management of the identified
business  opportunity.  While  management  intends to seek business combinations
with  entities having established operating histories, there can be no assurance
that  the  Company  will  be  successful  in  locating  candidates  meeting such
criteria.  In  the  event  that the Company completes a business combination, of
which there can be no assurance, the success of operations may be dependent upon
management  of  the  successor  firm  or venture partner firm and numerous other
factors  beyond  the  Company's  control.

Scarcity  of  and  Competition  for  Business  Opportunities  and  Combinations
-------------------------------------------------------------------------------

The  Company  is  and  will  continue  to be an insignificant participant in the
business  of seeking mergers with, joint ventures with and acquisitions of small
private  entities.  A  large  number  of established and well-financed entities,
including  venture  capital  firms,  are  active  in mergers and acquisitions of
companies  which  may  be  desirable  target  candidates for us. Nearly all such
entities have significantly greater financial resources, technical expertise and
managerial capabilities than Daybreak Mines, Inc. and, consequently, the Company
will  be  at  a  competitive  disadvantage  in  identifying  possible  business
opportunities  and successfully completing a business combination. Moreover, the
Company  will  also  compete  in  seeking  merger or acquisition candidates with
numerous  other  small  public  companies.

                                       4
<PAGE>

Continued  Management  Control,  Limited  Time  Availability
------------------------------------------------------------

While  seeking  a  business  combination,  management anticipates devoting up to
twenty  hours per month to the business of the Company.   The Company's officers
have not entered into written employment agreements with the Company and are not
expected  to  do so in the foreseeable future.  The Company has not obtained key
man  life  insurance  on  any of its officers or directors.  Notwithstanding the
combined  limited  experience  and  time  commitment  of management, loss of the
services  of  any of these individuals would adversely affect development of the
Company's  business  and  its  likelihood  of  continuing  operations.

Conflicts  of  Interest  -  General
-----------------------------------

The  Company's  officers  and  directors  participate in other business ventures
which  compete  directly with the Company.  Additional conflicts of interest and
non-arms  length  transactions  may  also  arise  in the future in the event the
Company's  officers or directors are involved in the management of any firm with
which  the  Company  transacts  business.

Lack  of  Market  Research  or  Marketing  Organization
-------------------------------------------------------

The Company has neither conducted, nor have others made available to it, results
of  market  research  indicating  that market demand exists for the transactions
contemplated  by  the  Company.  Even  in  the  event demand is identified for a
merger  or  acquisition  contemplated  by the Company, there is no assurance the
Company  will  be  successful  in  completing  any  such  business  combination.

Probable  Change  in  Control  and  Management
----------------------------------------------

A  business  combination  involving the issuance of the Company's stock will, in
all  likelihood,  result  in  shareholders  of  a  private  company  obtaining a
controlling  interest  in  the  Company.  The resulting change in control of the
Company  will  likely  result  in  removal  of  one or more present officers and
directors and a corresponding reduction in or elimination of their participation
in  the  future  affairs  of  the  Company.

Reduction  of  Percentage  Share  Ownership  Following  Business  Combination
-----------------------------------------------------------------------------

The  Company's  primary  plan  of operation is based upon a business combination
with  a  private  concern  which, in all likelihood, would result in the Company
issuing  securities  to  shareholders  of such private company.  The issuance of
previously  authorized  and unissued common stock of the Company would result in
reduction  in percentage of shares owned by present and prospective shareholders
of the Company and would most likely result in a change in control or management
of  the  Company.

Requirement  of  Audited  Financial  Statements  May  Disqualify  Business
--------------------------------------------------------------------------
Opportunities
-------------

Management  of the Company believes that any potential business opportunity must
provide  audited  financial statements for review, and for the protection of all
parties  to  the  business  combination.  One  or  more  attractive  business
opportunities  may  choose  to  forego the possibility of a business combination
with  the  Company,  rather  than  incur  the expenses associated with preparing
audited  financial  statements.

                                        5
<PAGE>



Employees
---------

The  Company has no paid employees. None of the Company's executive officers are
employed  by  the  Company.  Management  services are provided on an "as needed"
basis without compensation, generally less than five hours per week. The Company
has  no  oral  or  written contracts for services with any member of management.

There  is  no  preliminary  agreement  or  understanding  existing  or  under
contemplation by the Company (or any person acting on its behalf) concerning any
aspect  of the Company's operations pursuant to which any person would be hired,
compensated  or  paid  a  finder's  fee.

ITEM  2.  DESCRIPTION  OF  PROPERTIES

The  Company  currently  holds  the mineral rights to approximately 340 acres in
Shoshone  County,  Idaho.  There are no known proven or probable ore reserves on
this property.  The Company has conducted no active mineral exploration or other
active  business  operations  since  1970.

The  company  presently operates from office space provided on a rent-free basis
by  the  president  of  the  Company.  In  the  event  that  this  space becomes
unavailable  in  the future, the Company will seek to lease office space from an
unaffiliated  party  at  prevailing  competitive  rates.

ITEM  3.  LEGAL  PROCEEDINGS

None

ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS

None

                                     PART II

ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

The  Company's  common stock is listed on the Over the Counter "Pink Sheets" and
is traded under the symbol, "DBRM."  The following table sets forth the range of
high  and  low  closing  sale  prices  for  the  Company's  common  stock.  Such
over-the-counter  market  quotations reflect inter-dealer prices, without retail
mark-ups,  mark-downs  or commissions and may not represent actual transactions.
<TABLE>
<CAPTION>


<S>                      <C>       <C>      <C>       <C>
                           February 28,      February 28,
                             2002               2003
                        Low. . .  High      Low      High
First Quarter.          0.02      0.05      0.04     0.08
Second Quarter          0.02      0.05      0.04     0.08
Third Quarter.          0.02      0.05      0.04     0.08
Fourth Quarter          0.02      0.05      0.04     0.08
</TABLE>


The  approximate  number  of  record  holders of common stock at May 21, 2003 is
2,269.

                                          6
<PAGE>


No  dividends  have  been  paid  or declared by the Company during the last five
years;  and the Company does not anticipate paying dividends on its common stock
in  the foreseeable future.  Instead, the Company expects to retain its earnings
for  the  operation  and  expansion  of  its  business.

ITEM  6.  MANAGEMENT'S DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATIONS

GENERAL

Certain  matters discussed are forward-looking statements that involve risks and
uncertainties  including  changing  market  conditions  and  the  regulatory
environment  and  other  risks.  Actual results may differ materially from those
projected.  These forward-looking statements represent the Company's judgment as
of  the  date  of  this  filing.  The  Company disclaims, however, any intent or
obligation  to  update  these  forward-looking  statements.

PLAN  OF  OPERATIONS

The  Company's  purpose  is  to  seek,  investigate  and,  if such investigation
warrants,  acquire  an  interest  in  business  opportunities presented to it by
persons  or  firms  who  or  which desire to seek the perceived advantages of an
Exchange Act registered corporation.  The primary method the Company will use to
find  potential  merger  or acquisition candidates will be to run classified ads
seeking  companies, which are looking to merge with a public shell.  The Company
has  no recurring revenue from operating activities and plans to fund its future
operations  through  additional sales of its common stock, although there can be
no  assurances  the  Company  will  be  able  to continue sell its common stock.

Management  of the Company, while not especially experienced in matters relating
to  the  new business of the Company, will rely primarily upon their own efforts
to  accomplish the business purposes of the Company.  It is not anticipated that
any  outside consultants or advisors, other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business purposes
described  herein.

As  of  February  28,  2003, the Company had $9,965 in cash and $750 in accounts
payable.  An estimate of expenses for the fiscal year ended February 29, 2004 is
as  follows:  Legal  $10,000;  accounting  $10,000;  transfer  agent  $600;
miscellaneous  general and administrative $5,000. These total estimated expenses
of  $25,600  approximates the total operating expenses of $25,176 for the fiscal
year  ended  February  28,  2003.  In  order  to  provide  enough cash for these
operating  expenses,  management  plans  to sell additional shares of restricted
common  stock  during  the  fiscal  year  ending  on  February  29,  2004.

ITEM  7.     FINANCIAL  STATEMENTS

The financial statements of the registrant are included herein on pages F-1
through  F-12.

ITEM  8.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

None

                                              7

<PAGE>

                                    PART III

ITEM  9.     DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS,
COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT

Identification  of  Directors  and  Executive  Officers  are  as  follows:

The following information is provided with respect to each executive officer and
director  of  the  Company  as  of  February  28,  2003:

<TABLE>
<CAPTION>


<S>                  <C>  <C>
Name. . . . . . . .  Age  Office with the Company

Dale B. Lavigne . .   72  President and Director
-------------------  ---  --------------------------------

Ronald D. Lavigne .   48  Vice President and Director
-------------------  ---  --------------------------------

Thomas C. Kilbourne   51  Secretary/Treasurer and Director
-------------------  ---  --------------------------------

Lewis J. Lavigne. .   78  Director
-------------------  ---  --------------------------------
</TABLE>



Dale B. Lavigne is the President and a Director of the Company.  Mr. Lavigne has
been  a  director  of  the  Company for more than 30 years and has served as the
Company's  President  for  more  than  15 years.  Mr. Lavigne graduated from the
University of Montana with a B.S. Degree in Pharmacy.  For the past 47 years Mr.
Lavigne has been the Chairman and a Director of the Osburn Drug Company, Inc., a
4-store chain of drug stores in North Idaho.  Mr. Lavigne is also a Director and
Officer of Metropolitan Mines, Inc., a reporting publicly-held, inactive mineral
exploration  company.  Mr.  Lavigne  is  also  a director and officer of various
other  public non-reporting inactive mineral exploration companies.  Mr. Lavigne
is  the  former  Chairman  of  the  First National Bank of North Idaho; a former
member  of  the  Gonzaga  University  Board of Regents; current President of the
Silver  Valley  Economic  Development  Committee  and  a  current  member of the
Governor's  Task  Force  on  Rural  Idaho.

Ronald  D.  Lavigne  is  the  Vice-President and a Director of the Company.  Mr.
Lavigne  has  been  Vice President and a Director of the Compay since 2000.  Mr.
Lavigne graduated from the University of Montana with a B.S. Degree in Pharmacy.
Mr. Lavigne is the President and Director of the Osburn Drug Company, Inc.   Mr.
Lavigne  is  also  a  director and officer of various other public non-reporting
inactive  mineral  exploration  companies.

Thomas  C.  Kilbourne  is the Secretary-Treasurer and a Director of the Company.
Mr.  Kilbourne  has  been  an  officer  of the Company since February 2001 and a
Director  of  the  Company since January 2000.  Mr. Kilbourne graduated from the
University of Montana with a B.S. Degree in Business Administration and Finance.
Mr.  Kilbourne has been the Chief Financial Officer and a Director of the Osburn
Drug  Company,  Inc.  since  1999.  Prior  to  that time he had been the General
Manager  of  Tabor's/Modern  Drug  Company  in  Wallace,  Idaho  since  1980.

Lewis  J. Lavigne is the Assistant Secretary, Assistant Treasurer and a Director
of  the  Company. Mr. Lavigne has been a Director of the Company for the past 15
years  and  served  as  the Company's Secretary and Treasurer from approximately
1985  until  2000.  Since  1981, Mr. Lavigne has been an officer and Director of
the  Osburn  Drug  Company,  Inc.  Mr. Lavigne is also a director and officer of
various  other  public  non-reporting  inactive  mineral  exploration companies.
                                       8
<PAGE>


ITEM  10.  EXECUTIVE  COMPENSATION

No  officer  receives  any  compensation  for  services rendered to the Company.
Directors receive no annual compensation nor attendance fees for serving in such
capacity.

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND  MANAGEMENT

A  person  who  directly  or indirectly has shares or voting power or investment
power  with  respect  to  a  security  is  considered  a beneficial owner of the
security.  Voting  power is the power to vote or direct the voting of shares and
investment power is the power to dispose of or direct the disposition of shares.
Shares  as  to  which voting power or investment power may be acquired within 60
days  are  also  considered  as  beneficially  owned.

The  following  tables  set  forth  certain  information,  as  of  May 21, 2003,
regarding  beneficial ownership of the Company's stock by (1) each person who is
known  to  the  Company  to  own  beneficially  more than 5% of any class of the
Company's  voting  stock,  and  (2)  (a)  each director and each nominee for the
election as a director of the Company, and (b) all current directors and current
executive  officers  of  the  Company  as  a  group.

The  information  on beneficial ownership in the table and the footnotes thereto
is  based upon the Company's records and, in the case of holders of more than 5%
of  the Company's stock, the most recent Forms 3 and 4 filed by each such person
or  entity  and  information  supplied  to the Company by such person or entity.
Unless  otherwise  indicated,  to  the  Company's knowledge each person has sole
voting  power  and  sole  investment  power  with  respect  to the shares shown.

SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS

As  of  the close of business on May 21, 2003, based on information available to
the Company, the following persons own beneficially more than 5% of any class of
the  outstanding  voting  securities  of  Daybreak  Mines,  Inc.

<TABLE>
<CAPTION>


<S>                    <C>                                   <C>                                        <C>

Title of Class. . . .  Name and Address of Beneficial Owner  Amount and Nature of Beneficial Ownership  Percent of Class(1)
---------------------  ------------------------------------  -----------------------------------------  -------------------

                       Terrence J. Dunne
Common. . . . . . . .  601 W. Main Ave., Ste. 1017
Stock . . . . . . . .  Spokane, WA 99201                                                     3,200,000               18.90%
---------------------  ------------------------------------  -----------------------------------------  -------------------

                       Robert W. O'Brien
Common. . . . . . .    1511 S. Riegel Court
Stock . . . . . . . .  Spokane, WA 99212                                                     3,200,000               18.90%
---------------------  ------------------------------------  -----------------------------------------  -------------------
</TABLE>

(1)Percent  of  ownership  is  based  upon  16,979,419  shares  of  common stock
outstanding  on  May  21,  2003.

                                                        9
<PAGE>

SECURITY  OWNERSHIP  OF  MANAGEMENT  AS  OF  MAY  21,  2003

The  following table sets forth certain information as of May 21, 2003 regarding
the  number and percentage of shares of common stock of the Company beneficially
owned  by  each director, each of the named executive officers and directors and
officers  as  a  group.
<TABLE>
<CAPTION>


<S>                       <C>                                    <C>                                         <C>

Title of Class . . . . .  Name and Address of Beneficial Owner   Amount and Nature of Beneficial Ownership   Percent of Class(1)
------------------------  -------------------------------------  ------------------------------------------  -------------------

                          Dale B. Lavigne
Common . . . . . . . . .  P.O. Box A
Stock. . . . . . . . . .  Osburn, ID 83849                                                         743,425                 4.39%
------------------------  -------------------------------------  ------------------------------------------  -------------------

                          Ronald D. Lavigne
Common . . . . . . . . .  21 Sunset Avenue
Stock. . . . . . . . . .  Silverton, ID 83867                                                      403,000                 2.38%
------------------------  -------------------------------------  ------------------------------------------  -------------------

                          Thomas C. Kilbourne
Common . . . . . . . .    P.O. Box 953
Stock. . . . . . . . .    Osburn, ID 83849                                                         403,000                 2.38%
------------------------  -------------------------------------  ------------------------------------------  -------------------

                          Lewis J. Lavigne
Common . . . . . . . . .  HC-01 Box 188
Stock. . . . . . . . . .  Marler St. Montgomery Gulch
                          Kellogg, ID 83837. .                                                    558,950(2)               3.30%


Common . . . . . . . . .  All Directors and Officers
Stock. . . . . . . . . .  As a Group
                         (4 Individuals). . .                                                   2,108,375                 12.45%
------------------------                                                                      ============
</TABLE>


(1)Percent  of  ownership  is  based  upon  16,979,419  shares  of  common stock
outstanding  on  May  21,  2003.

(2)Includes  2,200  shares  of  stock  held  by  Mr.  Lavigne's  children.

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

See  Note  5  to  the  financial  statements.

ITEM  13.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

Exhibits
     Exhibit  99.1   Certifications pursuant to Rule 906 of Sarbannes -Oxley Act

Reports  on  Form  8-K
     None

                                       10
<PAGE>


ITEM  14.  CONTROLS  AND  PROCEDURES

The  Registrant's  President and Principal Accounting Officer have evaluated the
Registrant's  disclosure  controls  and  procedures within 90 days of the filing
date  of  this  annual  report.  Based  upon  this  evaluation, the Registrant's
President  and  Principal  Accounting  Officer  concluded  that the Registrant's
disclosure  controls  and  procedures  are  effective  in ensuring that material
information  required  to  be disclosed is included in the reports that it files
with  the  Securities  and  Exchange  Commission.

There  were  no significant changes in the Registrant's internal controls or, to
the  knowledge  of the management of the Registrant, in other factors that could
significantly  affect  these  controls  subsequent  to  the  evaluation  date.



          [The balance of this page has been intentionally left blank.]




                                          11


<PAGE>


                                   SIGNATURES

Pursuant  to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act  of  1934,  the  registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized.


                                                        DAYBREAK  MINES,  INC.

                                             By:     /s/  Dale  B.  Lavigne
                                                     ----------------------
                                             Dale B. Lavigne, its President and
                                             Chief  Executive  Officer
                                             Date:  May  27,  2003

                                             By: /s/ Thomas C. Kilbourne
                                              --------------------------
                                             Thomas  C.  Kilbourne,  its
                                             Principal  Accounting  Officer
                                             Date:  May  27,  2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has  been  signed below by the following persons on behalf of the registrant and
in  the  capacities  and  on  the  dates  indicated.

By:     /s/  Thomas  C.  Kilbourne
        --------------------------
        Thomas  C.  Kilbourne
        Secretary/Treasurer
        Date:  May  27,  2003

By:     /s/  Ronald  D.  Lavigne
        ------------------------
        Ronald  D.  Lavigne
        Director
        Date:  May  27,  2003

By:     /s/  Dale  B.  Lavigne
        ----------------------
        Dale  B.  Lavigne
        Director
        Date:  May  27,  2003

By:     /s/  Lewis  J.  Lavigne
        -----------------------
        Lewis  J.  Lavigne
        Director
        Date:  May  27,  2003

                                     12

<PAGE>


                                  Certification

I,  Dale  B.  Lavigne,  certify  that:

1.     I have reviewed this annual report on Form 10-KSB of Daybreak Mines, Inc.

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
Registrant  as  of  and  for  the  periods  presented  in  this  annual  report.

4.     The  Registrant's  other  certifying  officer  and  I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  Registrant  and  have:

a.     designed  such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;
b.     evaluated  the  effectiveness of the Registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and
c.     presented  in  this annual report our conclusions about the effectiveness
of  disclosure  controls  and  procedures  based  on  our  evaluation  as of the
Evaluation  Dates'

5.     The  Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit committee
of  the  Registrant's  board  of directors (or persons performing the equivalent
functions);

a.     all  significant  deficiencies  in  the  design or operations of internal
controls  which  could  adversely  affect  the  Registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
Registrant's  auditors  any  material  weaknesses  in  internal  controls;  and
b.     any  fraud,  whether  or  not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and

6.     The  Registrant's  other  certifying officer and I have indicated in this
annual  report whether there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  May  27,  2003

/s/  Dale  B.  Lavigne
----------------------
Dale  B.  Lavigne
President,  and  Chief  Executive  Officer
                                            13
<PAGE>

                                  CERTIFICATION

I,  Thomas  Kilbourne,  certify  that:

1.     I have reviewed this annual report on Form 10-KSB of Daybreak Mines, Inc.

2.     Based  on  my  knowledge,  this annual report does not contain any untrue
statement  of a material fact or omit to state a material fact necessary to make
the  statements  made, in light of the circumstances under which such statements
were  made,  not  misleading  with  respect to the period covered by this annual
report;

3.     Based  on  my  knowledge,  the  financial statements, and other financial
information  included  in  this  annual  report,  fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
Registrant  as  of  and  for  the  periods  presented  in  this  annual  report.

4.     The  Registrant's  other  certifying  officer  and  I are responsible for
establishing  and  maintaining disclosure controls and procedures (as defined in
Exchange  Act  Rules  13a-14  and  15d-14)  for  the  Registrant  and  have:

a.     designed  such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated subsidiaries,
is  made  known  to  us by others within those entities, particularly during the
period  in  which  this  annual  report  is  being  prepared;
b.     evaluated  the  effectiveness of the Registrant's disclosure controls and
procedures  as  of a date within 90 days prior to the filing date of this annual
report  (the  "Evaluation  Date");  and
c.     presented  in  this annual report our conclusions about the effectiveness
of  disclosure  controls  and  procedures  based  on  our  evaluation  as of the
Evaluation  Dates'

5.     The  Registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit committee
of  the  Registrant's  board  of directors (or persons performing the equivalent
functions);

a.     all  significant  deficiencies  in  the  design or operations of internal
controls  which  could  adversely  affect  the  Registrant's  ability to record,
process,  summarize  and  report  financial  data  and  have  identified for the
Registrant's  auditors  any  material  weaknesses  in  internal  controls;  and
b.     any  fraud,  whether  or  not material, that involves management or other
employees who have a significant role in the Registrant's internal controls; and

6.     The  Registrant's  other  certifying officer and I have indicated in this
annual  report whether there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  May  27,  2003

/s/  Thomas  Kilbourne
----------------------
Thomas  Kilbourne
Principal  Accounting  Officer
                                             14

<PAGE>

                                  EXHIBIT 99.1

CERTIFICATION  PURSUANT  TO  THE  SARBANES-OXLEY  ACT
18  U.S.C.  SECTION  1350
AS  ADOPTED  PURSUANT  TO  SECTION  906
OF  THE  SARBANES-OXLEY  ACT  OF  2002

I,  Dale  Lavigne, President and Chief Executive Officer of Daybreak Mines, Inc.
("the  "Registrant")  do  hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted  pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge:

1.     This  Annual  Report on Form 10-KSB of the Registrant for the fiscal year
ended  February  28,  2003, as filed with the Securities and Exchange Commission
(the  "report"),  fully complies with the requirements of Section 13(a) or 15(d)
of  the  Securities  Exchange  Act  of  1934;  and

2.     The  information contained in the report fairly presents, in all material
respects,  the  financial condition and results of operations of the Registrant.
Date:  May  27,  2003
       --------------
/s/  Dale  B.  Lavigne
----------------------
Dale  B.  Lavigne
President  and  Chief  Executive  Officer

                                             15

<PAGE>

CERTIFICATION  PURSUANT  TO  THE  SARBANES-OXLEY  ACT
18  U.S.C.  SECTION  1350
AS  ADOPTED  PURSUANT  TO  SECTION  906
OF  THE  SARBANES-OXLEY  ACT  OF  2002

I,  Thomas  C.  Kilbourne,  Principal Accounting Officer of Daybreak Mines, Inc.
("the  "Registrant")  do  hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted  pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my
knowledge:

1.     This  Annual  Report on Form 10-KSB of the Registrant for the fiscal year
ended  February  28,  2003, as filed with the Securities and Exchange Commission
(the  "report"),  fully  complies  with     the requirements of Section 13(a) or
15(d)  of  the  Securities  Exchange  Act  of  1934;  and

2.     The  information contained in the report fairly presents, in all material
respects,  the  financial     condition  and  results  of  operations  of  the
Registrant.
Date:  May  27,  2003
       --------------
/s/  Thomas  C.  Kilbourne
--------------------------
Thomas  C.  Kilbourne
Principal  Accounting  Officer

                                                  16

<PAGE>



                                                          DeCoria,
                                                          Maichel &
                                                          Teague P.S.


REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS

Board  of  Directors
Daybreak  Mines,  Inc.


We  have  audited  the accompanying balance sheets of Daybreak Mines, Inc. ("the
Company")  for  the  years  ended  February  28,  2003 and 2002, and the related
statements  of  operations,  stockholders'  equity, and cash flows for the years
then  ended.  These financial statements are the responsibility of the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements  based  on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the financial position of Daybreak Mines, Inc. for the
years  ended  February  28, 2003 and 2002, and the results of its operations and
its  cash  flows  for  the  years  then  ended,  in  conformity  with accounting
principles  generally  accepted  in  the  United  States  of  America.

The  accompanying  financial  statements  have  been  prepared assuming that the
Company  will  continue  as  a  going  concern.  As  discussed  in Note 1 to the
financial  statements,  the  Company's  operating losses raise substantial doubt
about  its  ability to continue as a going concern.  The financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

DeCoria,  Maichel  &  Teague  P.S.

/s/ DeCoria, Maichel & Teague P.S.

Spokane,  Washington
May  21,  2003

                                       F-1
<PAGE>

<TABLE>
<CAPTION>


                                 DAYBREAK MINES, INC.
                                  TABLE OF CONTENTS





                                                                        Page
<S>                                                                      <C>
Balance Sheets, February 28, 2003 and 2002. . . . . . . . . . . . . . .  F-3


Statements of Operations for the years ended February 28, 2003 and 2002  F-4


Statements of Changes in Stockholders' Equity
for the years ended February 28, 2003 and 2002. . . . . . . . . . . . .  F-5


Statements of Cash Flows for the years ended February 28, 2003 and 2002  F-6


Notes to Financial Statements . . . . . . . . . . . . . . . . . ..  F-7-F-12


</TABLE>



                              F-2

<PAGE>


DAYBREAK  MINES,  INC.
BALANCE  SHEETS
February  28,  2003  and  2002
<TABLE>
<CAPTION>




                                     ASSETS

                                                           2003      2002

<S>                                                   <C>         <C>
Current assets:
  Cash . . . . . . . . . . . . . . . . . . . . . . .  $   9,965   $  34,328
                                                      ----------  ----------
    Total current assets . . . . . . . . . . . . . .      9,965      34,328
                                                      ----------  ----------

  Marketable securities. . . . . . . . . . . . . . .      2,595
                                                      ----------  ----------
      Total assets . . . . . . . . . . . . . . . . .  $  12,560   $  34,328
                                                      ==========  ==========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable . . . . . . . . . . . . . . . . .  $     750   $     100
  Related party payables . . .             . . . . . . . . . . .         78
                                                      ----------  ----------
      Total liabilities. . . . . . . . . . . . . . .        750         178
                                                      ----------  ----------

Stockholders' equity:
  Preferred stock, $0.001 par value; 10,000,000
    shares authorized, none issued and outstanding
  Common stock, $0.001 par value; 200,000,000 shares
    authorized, 16,949,419 issued and outstanding. .     16,949      16,949
  Additional paid-in capital . . . . . . . . . . . .    689,789     689,789
  Accumulated deficit. . . . . . . . . . . . . . . .   (697,523)   (672,588)
  Accumulated other comprehensive income . . . . . .      2,595
                                                      ----------
      Total stockholders' equity . . . . . . . . . .     11,810      34,150
                                                      ----------  ----------
      Total liabilities and stockholders' equity . .  $  12,560   $  34,328
                                                      ==========  ==========


</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-3
<PAGE>

DAYBREAK  MINES,  INC.
STATEMENTS  OF  OPERATIONS  AND  COMPREHENSIVE  LOSS
For  the  years  ended  February  28,  2003  and  2002


<TABLE>
<CAPTION>


<S>                                                               <C>          <C>
                                                                2003          2002
Operating expenses:
  Legal expenses                                           $     5,001   $    3,888
  General and administrative expenses                           20,175        9,485
                                                           ------------  ----------
                                                                25,176       13,373
                                                            ----------   ----------

Other (income) expense:
  Interest income                                                 (241)         (65)
                                                           ------------  -----------

NET LOSS                                                   $    24,935   $   13,308
                                                           ============  ===========

Other comprehensive (income) loss
  Unrealized gain in marketable securities                 $    (2,595)
                                                           ------------  ----------
COMPREHENSIVE LOSS                                         $    22,340   $   13,308
                                                           ============  ==========


Net loss per common share. . .                . . . . . .  $       Nil   $      Nil
                                                           ===========   ==========

Weighted average common
shares outstanding-basic                                    16,949,419    8,028,871
                                                           ============  ===========
</TABLE>



   The accompanying notes are an integral part of these financial statements.
                                       F-4
<PAGE>


DAYBREAK  MINES,  INC.
STATEMENTS  OF  CHANGES  IN  STOCKHOLDERS'  EQUITY
For  the  years  ended  February  28,  2003  and  2002


<TABLE>
<CAPTION>


<S>                         <C>           <C>            <C>               <C>         <C>       <C>
                            OTHER
                            ADDITIONAL    ACCUMULATED    COMPREHENSIVE
                                SHARES        AMOUNT    PAID-IN CAPITAL     DEFICIT     INCOME        TOTAL

Balance, February 28, 2001    5,949,419   $    594,942   $   62,869       $(659,280)                $(1,469)

Reduction in par value
of common stock. . . . . .                    (588,993)     588,993

Issuance of common stock,
net of offering costs. . .   11,000,000         11,000       37,927                                   48,927

Net loss . . . . . . . . .                                                  (13,308)                  (13,308)
                            ------------  -------------   ----------     -----------  ------------ ----------

Balance, February 28, 2002   16,949,419         16,949      689,789        (672,588)                   34,150

Unrealized gain in
marketable securities. . .                                                             $     2,595      2,595

Net loss . . . . . . .                                               .      (24,935)                  (24,935)
                            ------------  -------------   --------------  ----------   ----------  -----------

Balance, February 28, 2003   16,949,419   $     16,949  $ 689,789         $(697,523)   $     2,595   $  11,810
                            ============  ============= =========         ==========   ===========   =========


</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                       F-5
<PAGE>


DAYBREAK  MINES,  INC.
STATEMENTS  OF  CASH  FLOWS
For  the  years  ended  February  28,  2003  and  2002

<TABLE>
<CAPTION>



<S>                                              <C>        <C>

                                                     2003       2002

Cash flows from operating activities:
      Net loss. . . . . . . . . . . . . . . . .  $(22,340)  $(13,308)
Adjustment to reconcile net loss to net cash
  used by operating activities:
  Unrealized gain in marketable securities. . .    (2,595)
    Change in:
    Accounts payable. . . . . . . . . . . . . .       650       (488)
    Related party payables. . . . . . . . . . .       (78)      (853)
                                                 ---------  ---------
      Net cash used by operating activities . .   (24,363)   (14,649)
                                                 ---------  ---------

Cash flows from financing activities:
  Proceeds from sale of common stock, net . . .                48,927
                                                 ---------   --------
      Net cash provided by financing activities                48,927
                                                 ---------   --------


Net increase (decrease) in cash . . . . . . . .   (24,363)    34,278
                                                 ---------  ---------

Cash, beginning of year . . . . . . . . . . . .    34,328         50
                                                 ---------  ---------

Cash, end of year . . . . . . . . . . . . . . .  $  9,965   $ 34,328
                                                 =========  =========



</TABLE>




The accompanying notes are an integral part of these financial statements.
                               F-6


<PAGE>


DAYBREAK  MINES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS

1.     DESCRIPTION  OF  BUSINESS

Daybreak  Mines, Inc. is a Washington Corporation that was incorporated on March
11, 1955.  The Company was organized to explore for, acquire and develop mineral
properties  in  the  Western  United  States.  During the past several years the
Company's  activities  have  been  confined to annual assessment and maintenance
work  on  its  Idaho  mineral  properties  and  other general and administrative
functions.

The Company has incurred losses over the past several years and has no recurring
source  of revenue. These conditions raise substantial doubt as to the Company's
ability to continue as a going concern.  Management's plans for the continuation
of  the  Company  as  a going concern include financing the Company's operations
through  sales  of its unregistered common stock and the eventual acquisition of
an entity with profitable business operations. There are no assurances, however,
with  respect  to the future success of these plans. The financial statements do
not  contain any adjustments, which might be necessary, if the Company is unable
to  continue  as  a  going  concern.

Unless  otherwise  indicated,  amounts  provided in these notes to the financial
statements  pertain  to  continuing  operations.

2.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Use  of  Estimates
------------------

The  preparation  of  the  financial  statements  in  conformity with accounting
principles  generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the amounts reported in
the  financial  statements  and  accompanying notes. Actual results could differ
from  those  estimates.

Income  Taxes
-------------

Income taxes are recognized in accordance with Statement of Financial Accounting
Standards  No.  109,  "Accounting for Income Taxes," whereby deferred income tax
liabilities  or  assets  at  the end of each period are determined using the tax
rate  expected  to be in effect when the taxes are actually paid or recovered. A
valuation  allowance is recognized on deferred tax assets when it is more likely
than  not that some or all of these deferred tax assets will not be realized. At
February  28, 2003 and 2002, the Company had recorded no net deferred tax assets
or  liabilities  and  recognized  no  income  tax provision as it had no taxable
income  for  the  years  then  ended.

Impaired  Asset  Policy
-----------------------

The  Company  periodically  reviews  its  long-lived  assets  when applicable to
determine  if  any  events  or  changes  in  circumstances have transpired which
indicate  that  the  carrying  value  of  its assets may not be recoverable. The
Company  determines  impairment  by comparing the undiscounted future cash flows
estimated  to  be  generated by its assets to their respective carrying amounts.


                                  F-7
<PAGE>

DAYBREAK  MINES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS

2.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED:

Net  Loss  Per  Share
---------------------

Statement  of  Financial  Accounting  Standards  No.  128, "Earnings per Share,"
requires  dual  presentation of basic earnings per share ("EPS") and diluted EPS
on  the  face  of  all income statements issued after December 15, 1997, for all
entities  with  complex  capital structures. Basic EPS is computed as net income
divided  by  the  weighted  average  number  of  both  classes  of common shares
outstanding  for  the  period.  Diluted EPS reflects the potential dilution that
could occur from common stock equivalents such as common shares issuable through
stock  options,  warrants and other convertible securities. At February 28, 2003
and  2002,  the  Company  had  no outstanding common stock equivalents, and only
basic  EPS  is  reported  for  the  years  then  ended.

Reclassifications
-----------------

Certain  reclassifications have been made to conform to prior years' data to the
current  presentation.  These  reclassifications  had  no  effect  on  reported
earnings.

Fair  Values  of  Financial  Instruments
----------------------------------------

The  carrying amounts of financial instruments including cash, accounts payable,
and  related  party  payables, approximated their fair values as of February 28,
2003  and  2002.

Environmental  Matters
----------------------

The  Company  currently  owns  mineral  property interests on certain public and
private lands in Idaho on which it has explored for commercial mineral deposits.
In  prior  years,  the Company held mineral property interests in California and
Washington.  The  Company  and  its  properties  have  been and are subject to a
variety  of  federal  and state regulations governing land use and environmental
matters. The Company's management believes it has been in substantial compliance
with  all  such  regulations, and is unaware of any pending action or proceeding
relating  to  regulatory matters that would affect the financial position of the
Company.

Investments
-----------

Marketable  equity  securities  are categorized as non current and available for
sale  and carried at quoted market value.  Realized gains and losses on the sale
of  securities  are  recognized  on a specific identification basis.  Unrealized
gains  and losses are included as a component of accumulated other comprehensive
income  or  loss,  net of related deferred income taxes, if applicable, unless a
permanent impairment in value has occurred, which is then charged to operations.
During  the  year ended February 28, 2003, the Company's investments experienced
an  unrealized  gain  of $2,595.  The gain increased the Company's investment in
marketable  securities  from zero at February 28, 2002 to $2,595 at February 28,
2003.

                           F-8
<PAGE>


DAYBREAK  MINES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS

2.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED:

New  Accounting  Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations," and No. 142,
"Goodwill  and  Other  Intangible  Assets,"  collectively, the Statements. These
statements drastically change the accounting for business combinations, goodwill
and  intangible  assets.  Companies are required to adopt Statement 142 in their
fiscal  year beginning after December 15, 2001. Under SFAS No. 142, goodwill and
intangible  assets  that  have indefinite useful lives will not be amortized but
rather  will  be tested at least annually for impairment. Intangible assets that
have  finite useful lives will continue to be amortized over their useful lives,
but  without the constraint of the 40-year ceiling. The Company adopted SFAS No.
142  on  March  1,  2002,  with  no  impact  to  its  financial  statements.

In  August  2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations."  SFAS  No.  143  addresses  financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs.  The provisions of SFAS No. 143 are effective
for  fiscal years beginning after June 15, 2002.  The Company presently does not
have  any  asset retirement obligations and does not anticipate that adoption of
this  pronouncement will result in any impact on its reported financial position
or  results  of  operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets."  SFAS No. 144 addresses financial accounting and
reporting  for  the impairment or disposal of long-lived assets and discontinued
operations.  The  provisions  of SFAS No. 144 are generally effective for fiscal
years  beginning  after  December 15, 2001.  The Company adopted SFAS No. 144 on
March 1, 2002 and the adoption of the pronouncement did not result in any impact
on  its  reported  financial  position  or  results  of  operations.

In  April 2002, the FASB issued SFAS No. 145, "Rescission of SFAS Statements No.
4,  44,  and  64,  Amendment  of  SFAS No. 13, and Technical Corrections."  This
statement  culminates  the  current  requirements  that gains and losses on debt
extinguishment  must  be  classified  as  extraordinary  items  in  the  income
statement.  Instead,  such  gains and losses will be classified as extraordinary
items  only  if they are deemed to be unusual and infrequent, in accordance with
the  current GAAP criteria for extraordinary classifications.  In addition, SFAS
No.  145  eliminates  an  inconsistency  in  lease  accounting by requiring that
modifications  of  capital  leases  that result in reclassification as operating
leases  be  accounted  for consistent with sales-leaseback accounting rules. The
statement  also  contains  other  nonsubstantive  corrections  to  authoritative
accounting  literature.  The  rescission  of  SFAS  No. 4 is effective in fiscal
years  beginning after May 15, 2002.  The amendment and technical corrections of
SFAS  No.  13  are  effective for transactions occurring after May 15, 2002. All
other  provisions  of SFAS No. 145 are effective for financial statements issued
on  or  after  May 15, 2002.  The Company believes that the adoption of SFAS No.
145  will  not  have a material impact on its results of operations or financial
position.

                                            F-9
<PAGE>

DAYBREAK  MINES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS

2.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED:

New  Accounting  Pronouncements,  Continued:
--------------------------------------------

In  June  2002,  the  FASB issued SFAS No. 146, "Accounting for Costs Associated
with  Exit or Disposal Activities," which addresses accounting for restructuring
and  similar  costs.  SFAS  No.  146  supersedes  previous  accounting guidance,
principally Emerging Issues Task Force Issue No. 94-3. FAS No. 146 requires that
the  liability  for  costs  associated  with  an  exit  or  disposal activity be
recognized  when  the liability is incurred.  SFAS No. 146 also establishes that
the  liability  should  initially  be  measured  and  recorded  at  fair  value.
Accordingly  SFAS  No.  146  may  affect  the  timing  of  recognizing  future
restructuring  costs as well as the amount recognized. SFAS 146 is effective for
exit  or  disposal  activities  that are initiated after December 31, 2002.  The
Company  believes  that  the  adoption  of SFAS No. 146 will not have a material
impact  on  its  results  of  operations  or  financial  position.

In  October  2002,  the  FASB  issued  SFAS  No.  147,  "Acquisitions of Certain
Financial  Institutions-an  amendment of FASB Statements No. 72 and 144 and FASB
Interpretation  No.  9."  SFAS  No.  147  will  have  no impact on the Company's
financial  statements.

In  December  2002,  the  FASB  issued SFAS No. 148, "Accounting for Stock-Based
Compensation,  Transition  and  Disclosure,  an  amendment of FASB Statement No.
123." SFAS No. 148 provides alternative methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee  compensation. It also amends the disclosure provisions of SFAS No. 123
to  require  prominent disclosure about the effects of reported net income of an
entity's  accounting  policy  decisions  with  respect  to  stock-based employee
compensation.  Finally,  this  Statement  amends  APB  Opinion  No.  28, Interim
Financial  Reporting,  to  require  disclosure  about  those  effects in interim
financial  information.  The  amendments  to  SFAS  No.  123,  which  provides
alternative  methods of transition for an entity that voluntarily changes to the
fair  value  based method of accounting for stock-based employee compensation is
effective  for  financial  statements for fiscal years ending after December 15,
2002. The amendment to SFAS No. 123 relating to disclosures and the amendment to
Opinion  28  is  effective  for financial reports containing condensed financial
statements  for  interim  periods  beginning after December 15, 2002. Management
does  not  intend  to adopt the fair value accounting provisions of SFAS No. 123
and  currently  believes  that  the  adoption  of  SFAS  No. 148 will not have a
material  impact  on  the  Company's  financial  statements.

In  November  2002,  the  FASB  issued  FASB Interpretation No. 45, "Guarantor's
Accounting  for  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness of Others, an interpretation of FASB Statements No.
5,  57  and  107  and  rescission  of  FASB Interpretation No. 34, Disclosure of
Indirect  Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 clarifies the
requirements  for  a  guarantor's  accounting  for  and  disclosure  of  certain
guarantees issued and outstanding. It also requires a guarantor to recognize, at
the  inception  of a guarantee, a liability for the fair value of the obligation
undertaken  in  issuing  the  guarantee.  This  interpretation also incorporates
without  reconsideration  the  guidance  in FASB Interpretation No. 34, which is
being  superseded. The adoption of FIN 45 will not have a material effect on the
Company's  financial  statements.

                                 F-10
<PAGE>

DAYBREAK  MINES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS

3.     MINERAL  PROPERTIES

At  February  28,  2003  and 2002, the Company's mineral properties consisted of
approximately  340  acres  of  unpatented  mining  claims  and mineral rights on
privately deeded lands located in Shoshone County Idaho.  The properties contain
no  known  economical  mineral  resources.  In accordance with the provisions of
FASB Statement No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets,"  the  Company  reduced  the carrying value of its mineral properties to
zero  during  1999.

4.     INCOME  TAXES

Income  taxes  are  recognized  in  accordance  with  FASB  Statement  No.  109,
"Accounting for Income Taxes," whereby deferred income tax liabilities or assets
at  the  end  of each period are determined using the tax rate expected to be in
effect  when the taxes are actually paid or recovered.  A valuation allowance is
recognized  on  deferred tax assets when it is more likely than not that some or
all  of  these  deferred  tax  assets will not be realized.  The Company has not
recorded  an  income tax provision as it has no taxable income.  The Company has
no net operating loss carryforwards for income tax purposes and accounts for its
operating  expenses  as capitalized deferred development costs on its income tax
returns.  At  February 28, 2003 and 2002, the Company had no deferred tax assets
or  liabilities.

5.     RELATED  PARTY  PAYABLES

The Company has funded the majority of its operating activities by advances from
related  parties throughout much of its history. The related parties, to a large
extent,  have been business entities owned or controlled by Dale B. Lavigne, the
Company's  president  and  a director. The advances have not been subject to any
specific  repayment  terms  and are payable on demand. At February 28, 2002, the
Company  had  $78 due Mr. Lavigne and entities controlled by him for general and
administrative  costs  paid  on  the  Company's  behalf.

During  the  fiscal  year  ended  February  28,  2002,  certain of the Company's
shareholders paid expenses of approximately $18,000 on the Company's behalf. The
expenses  primarily  related  to  legal fees and administrative costs associated
with  a  private placement of the Company's common stock and an amendment to its
articles  of  incorporation (See Note 6).  The shareholders were reimbursed from
proceeds  received  by  the  Company's  private  placement.


                                  F-11
<PAGE>


DAYBREAK  MINES,  INC.
NOTES  TO  FINANCIAL  STATEMENTS

6.     STOCKHOLDERS'  EQUITY

Common  Stock
-------------

Up  until  the fiscal year ended February 28, 2001, the Company had one class of
non-assessable common stock. The common stock had a par value of $0.10 per share
and  6,000,000  shares  were  authorized  for  issue.  On  August  30, 2001, the
Company's  board  of  directors  resolved  to  amend  the  Company's articles of
incorporation  to  increase  the  number of shares of common stock available for
issue  to  200,000,000,  and  to  reduce  the  par value to $0.001 per share. In
September  of 2001, the Company's shareholders affirmatively voted to ratify the
amendments to the articles of incorporation. In connection with the amendment to
the Company's articles of incorporation that reduced the par value of its common
stock,  the  Company  recorded a charge to its common stock account of $588,993,
with  a  corresponding  credit to its additional paid-in capital account, during
the  fiscal  year  ended  February  28,  2002.

Preferred  Stock
----------------

During  the August 30, 2001, board of directors meeting, a resolution was passed
to amend the Company's articles of incorporation to authorize the issue of up to
10,000,000  shares  of  $0.001  par  value  preferred stock.  The resolution was
subsequently  ratified  by the Company's shareholders.  At February 28, 2003 and
2002,  no  shares  of  preferred  stock  were  issued  or  outstanding.

Private  Placement
------------------

In December of 2001, the Company offered shares of its common stock for sale, in
a  private  placement, to certain accredited investors.  The offering, which was
exempt  from  registration under the Securities Act of 1933 ("the Act") pursuant
to Section 4(2) of the Act and Rule 506 of Regulation D, resulted in the sale of
11,000,000  shares  of  the  Company's  unregistered common stock for $0.005 per
share, or $55,000.  Net proceeds of approximately $49,000 from the offering were
used  to fund general and administrative activities necessary to reestablish the
Company's  compliance  with  securities  regulations  and  investigate potential
business  opportunities  with  other  entities.
                                 F-12