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

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, 2010 ~~2009~~

o [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

BONANZA OIL AND GAS, INC. (Exact Name of Registrant as Specified in Its Charter)

(Exact Name of Registrant as Specified in Its Charter)

Nevada	000-52411	76-0720654
(State or Other Jurisdiction	(Commission File No.)	(I.R.S. Employer
of Incorporation or		Identification No.)
Organization)

3417 Mercer		(713) 333-5808
Suite E		(Registrant’s telephone number)
Houston, TX 77027
(Address of Principal Executive
Offices)

Nevada	000-52411	76-0720654
(State or Other Jurisdiction of Incorporation or Organization)	(Commission File No.)	(I.R.S. Employer Identification No.)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X] No [ ]

3417 Mercer Suite E Houston, TX 77027		(713) 333-5808
(Address of Principal Executive Offices)		(Registrant’s telephone number)

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)
Yes [ ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one)

Large accelerated filer o[ ] Accelerated filer o[ ] Non-accelerated filer o[ ] Smaller reporting company x[X] (Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in section 12b-2 of the Exchange Act) Yes [ ] No [X]

Yes o No x

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.

Common Stock, par value $0.001 (Class) 44,936,017 (Outstanding at November 18, 2009)

Common Stock, par value $0.001	757,879,235
(Class)	(Outstanding at May 14, 2010)

BONANZA OIL & GAS, INC.

TABLE OF CONTENTS

PART I
ITEM 1.	~~ITEM~~FINANCIAL 1.STATEMENTS	~~FINANCIAL STATEMENTS~~2	3
ITEM 2.	~~ITEM~~MANAGEMENT’S 2.DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL~~17
		CONDITION AND RESULTS OF OPERATIONS	17
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
ITEM 4.	CONTROLS AND PROCEDURES	25
		MARKET RISK	23
PART II
	ITEM 4.	CONTROLS AND PROCEDURES	24
ITEM 1.	LEGAL PROCEEDINGS	26
	ITEM 4T.	CONTROLS AND PROCEDURES	24
ITEM 1A.	RISK FACTORS	26
PART II
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26
	ITEM 1.	LEGAL PROCEEDINGS	24
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	27
	ITEM 1A.	RISK FACTORS	24
ITEM 4.	REMOVED AND RESERVED	31
	ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
ITEM 5.	OTHER INFORMATION	31
		PROCEEDS	24
ITEM 6.	EXHIBITS	31
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	25
SIGNATURES		34
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	25
	ITEM 5.	OTHER INFORMATION	25
	ITEM 6.	EXHIBITS	26
SIGNATURES			27

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
	September 30,			December 31,
	2009			2008
	(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	209		$	3,881
Accounts receivable		-			5,068
Drilling advances		-			395,350
Other		494			152,900
		703			557,199
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties		5,246,926			4,941,803
Unproved properties and properties under development		8,265,889			7,599,369
Other		9,669			11,679
		13,522,484			12,552,851
Less: Accumulated depreciation, depletion and amortization		(4,421,931	)		(4,325,679	)
		9,100,553			8,227,172
	$	9,101,256		$	8,784,371
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	593,677		$	138,389
Accrued operating expenses		355,387			52,224
Accrued exploration and development expenditures		1,584,894			1,558,408
Notes payable, net of $250,296 of unamortized
discount at December 31, 2008		2,660,000			2,099,704
		5,193,958			3,848,725
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, 60,000,000 shares authorized;
41,208,017 and 36,100,317 issued and outstanding, respectively		41,208			36,100
Preferred stock - Series A, $0.001 par value, 5,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Preferred stock - Series B, $0.001 par value, 5,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Preferred stock - Series C, $0.001 par value, 5,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Additional paid-in capital		12,442,502			11,962,198
Accumulated deficit		(8,576,412	)		(7,062,652	)
		3,907,298			4,935,646
	$	9,101,256		$	8,784,371
The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

		March 31,			December 31,
		2010			2009
		(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	1,942		$	9,892
Other		-			89
		1,942			9,981
PROPERTY AND EQUIPMENT:
Oil and gas, on the basis of full cost accounting:
Proved properties		11,788,196			11,617,669
Unproved properties		488,444			488,444
Other		9,669			9,669
		12,286,309			12,115,782
Less: Accumulated depreciation, depletion and amortization		(10,930,276	)		(10,905,081	)
		1,356,033			1,210,701
	$	1,357,975		$	1,220,682
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	736,774		$	804,440
Accrued operating expenses		564,955			419,004
Notes payable, net of $22,944 and $27,272 of unamortized
discount at March 31, 2010 and December 31, 2009, respectively		1,572,056			2,540,028
		2,873,785			3,763,472
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Preferred stock - Series A, $0.001 par value, 5,000,000 shares authorized;
5,000,000 shares issued and outstanding, respectively		5,000			5,000
Preferred stock - Series B, $0.001 par value, 5,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Preferred stock - Series C, $0.001 par value, 5,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Preferred stock - Series D, $0.001 par value, 10,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Preferred stock - Series E, $0.001 par value, 10,000,000 shares authorized;
0 shares issued and outstanding, respectively		-			-
Common stock, $0.001 par value, 1,500,000,000 shares authorized;
591,052,034 and 124,352,034 issued and outstanding, respectively		591,052			124,352
Additional paid-in capital		20,963,394			13,268,811
Accumulated deficit		(23,075,256	)		(15,940,953	)
		(1,515,810	)		(2,542,790	)
	$	1,357,975		$	1,220,682

The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)

		For the Three Months Ended
		March 31,
		2010			2009
REVENUES:
Crude oil sales	$	73,845		$	59,477
		73,845			59,477
OPERATING EXPENSES:
Depreciation, depletion and amortization		25,194			32,075
Lease operating expenses		17,043			33,344
Severance and other taxes		3,206			2,628
General and administrative		290,270			323,405
Loss on conversion of debt and accounts payable		6,709,660			-
Financing costs, net		162,775			260,433
		7,208,148			651,885

OPERATING LOSS		(7,134,303	)		(592,408	)

Provision for income taxes		-			-

NET LOSS	$	(7,134,303	)	$	(592,408	)

BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.02	)	$	(0.01	)

Weighted average number of common shares outstanding - basic and fully diluted		314,806,479			72,905,596

The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited)
	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
REVENUES:
Crude oil sales	$	59,506		$	83,031		$	192,323		$	112,497
		59,506			83,031			192,323			112,497
OPERATING EXPENSES:
Depreciation, depletion and amortization		22,976			21,011			96,251			25,942
Lease operating expenses		43,668			7,138			113,372			25,911
Severance and other taxes		2,578			3,759			8,416			5,185
General and administrative		160,124			295,618			988,849			1,249,638
Financing costs, net		69,416			810,475			499,195			1,038,711
		298,762			1,138,001			1,706,083			2,345,387
OPERATING LOSS		(239,256	)		(1,054,970	)		(1,513,760	)		(2,232,890	)
Provision for income taxes		-			-			-			-
NET LOSS	$	(239,256	)	$	(1,054,970	)	$	(1,513,760	)	$	(2,232,890	)
BASIC AND DILUTED LOSS
PER COMMON SHARE	$	(0.01	)	$	(0.03	)	$	(0.04	)	$	(0.08	)
Weighted average number of common shares
outstanding - basic and fully diluted		41,157,474			34,714,191			38,546,047			29,114,754
The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' DEFICIT
(Unaudited)

													Total
	Preferred Stock - Series A			Common Stock				Paid-In		Accumulated			Stockholders'
	Shares		Amount	Shares		Amount		Capital		Deficit			Deficit
BALANCE AT DECEMBER 31, 2009	5,000,000	$	5,000	124,352,034	$	124,352	$	13,268,811	$	(15,940,953	)	$	(2,542,790	)
Fair value of warrants to acquire common shares
issued with the August 2008 Notes	-		-	-		-		17,612		-			17,612
Fair value of warrants to acquire common shares
issued with the October 2008 Note	-		-	-		-		1,761		-			1,761
Common shares issued in conversion
of notes payable and accounts payable	-		-	446,700,000		446,700		7,529,710		-			7,976,410
Fair value of beneficial conversion feature
of Convertible Notes	-		-	-		-		25,000		-			25,000
Common shares issued in property acquisitions	-		-	20,000,000		20,000		120,500		-			140,500
Net loss	-		-	-		-		-		(7,134,303	)		(7,134,303	)
BALANCE AT MARCH 31, 2010	5,000,000	$	5,000	591,052,034	$	591,052	$	20,963,394	$	(23,075,256	)	$	(1,515,810	)

The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
(Unaudited)
													Total
	Common Stock						Paid-In			Accumulated			Stockholders'
	Shares			Amount			Capital			Deficit			Equity
BALANCE AT DECEMBER 31, 2007		25,649,654		$	25,650		$	2,760,950		$	(197,245	)	$	2,589,355
Common shares issued with the
January 2008 Notes		160,000			160			119,840			-			120,000
Common shares issued for
consulting services - April 9, 2008		75,000			75			52,425			-			52,500
Common shares issued for
consulting services - May 7, 2008		600,000			600			155,400			-			156,000
Common shares issued for
consulting services - May 15, 2008		800,000			800			359,200			-			360,000
Common shares issued with the
May 2008 Convertible Note		375,000			375			99,087			-			99,462
Fair value of beneficial conversion feature
of the May 2008 Convertible Note		-			-			305,576			-			305,576
Fair value of warrants to acquire common shares
issued with the May 2008 Convertible Note		-			-			278,844			-			278,844
Fair value of warrants to acquire common shares
issued with the August 2008 Notes		-			-			569,606			-			569,606
Fair value of warrants to acquire common shares
issued with the October 2008 Note		-			-			29,180			-			29,180
Common shares issued in the acquisition of
Black Pearl Energy, Inc.		7,024,665			7,024			8,211,834			-			8,218,858
Common shares retired in the acquisition of
Black Pearl Energy, Inc.		(2,709,000	)		(2,709	)		(3,164,113	)		-			(3,166,822	)
Equity offerings, net		4,124,998			4,125			2,184,368			-			2,188,493
Net loss		-			-			-			(6,865,407	)		(6,865,407	)
BALANCE AT DECEMBER 31, 2008		36,100,317		$	36,100		$	11,962,198		$	(7,062,652	)	$	4,935,646
Common shares issued for
consulting services - January 21, 2009		75,700			76			15,821			-			15,897
Common shares issued as penalty upon default
of the January 2008 Notes		150,000			150			10,350			-			10,500
Fair value of warrants to acquire common shares
issued with the August 2008 Notes		-			-			89,053			-			89,053
Fair value of warrants to acquire common shares
issued with the October 2008 Note		-			-			8,903			-			8,903
Fair value of warrants to acquire common shares
issued with the May 2009 Note		-			-			33,139			-			33,139
Stock Compensation		4,882,000			4,882			323,038			-			327,920
Net loss		-			-			-			(1,513,760	)		(1,513,760	)
BALANCE AT SEPTEMBER 30, 2009		41,208,017		$	41,208		$	12,442,502		$	(8,576,412	)	$	3,907,298
The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)

		For the Three Months Ended
		March 31,
		2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,134,303	)	$	(592,408	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, depletion and amortization		25,194			32,075
Amortization of deferred financing costs		48,701			260,058
Loss on conversion of debt and accounts payable		6,709,660			-
Stock-based compensation		-			65,000
Fair value of shares issued for consulting services		-			15,897
Changes in operating assets and liabilities:
Accounts receivable		-			3,454
Other current assets		64			(27,750	)
Accounts payable and accrued expenses		317,734			131,644
Net cash used in operating activities		(32,950	)		(112,030	)
CASH FLOWS FROM INVESTING ACTIVITIES
Oil and gas capital expenditures		-			(13,969	)
Net cash used in investing activities		-			(13,969	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable		25,000			285,000
Repayment of notes payable		-			(132,874	)
Debt issue costs		-			(23,850	)
Net cash provided by financing activities		25,000			128,276
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(7,950	)		2,277
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		9,892			3,881
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,942		$	6,158

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	-		$	-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fair value of equity issued upon conversion of notes and accounts payable	$	7,976,410		$	-
Acquisition of oil and gas property for common shares and debt	$	170,500		$	-

The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
	For the NineMonths Ended September 30,
	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(1,513,760	)	$	(2,232,890	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation, depletion and amortization		96,251			25,942
Stock-based compensation		327,920			-
Fair value of shares issued for consulting services		15,897			568,500
Amortization of deferred financing costs		499,195			894,353
Changes in operating assets and liabilities:
Accounts receivable		5,068			(9,424	)
Other current assets		36,036			(458,166	)
Accounts payable and accrued expenses		389,808			(17,030	)
Net cash used in operating activities		(143,585	)		(1,228,715	)
CASH FLOWS FROM INVESTING ACTIVITIES
Oil and gas capital expenditures		(105,642	)		(2,566,532	)
Additions to other property and equipment		-			(11,679	)
Issuance of Black Pearl Energy, Inc. note receivable		-			(500,000	)
Net cash used in investing activities		(105,642	)		(3,078,211	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable		720,000			2,050,000
Repayment of notes payable		(418,075	)		-
Debt issue costs		(56,370	)		(90,000	)
Proceeds from equity issuances, net		-			2,203,499
Net cash provided by financing activities		245,555			4,163,499
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(3,672	)		(143,427	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		3,881			154,357
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	209		$	10,930
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	15,000		$	139,310
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of oil and gas property for common shares	$	-		$	5,052,036
Non-cash exploration and development activities	$	26,486		$	1,631,834
Foregiveness of Black Pearl Energy, Inc. note receivable	$	-		$	500,000
Fair value of common shares and warrants to purchase common
shares issued with notes payable	$	141,595		$	1,310,703
The accompanying notes are an integral part of these consolidated unaudited financial statements.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009 (unaudited)

1. BASIS OF PRESENTATION

Bonanza Oil and Gas, Inc. (“Bonanza” or the “Company”) has prepared the accompanying ~~unaudited~~ unaudited consolidated financial statements in accordance with accounting ~~principles~~ principles generally accepted in the United States of America for interim ~~financial~~ financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Item 310(b) of regulation S-K. These interim financial statements should be read together with the financial statements and notes in the Company’s ~~2008~~2009 Form 10-K filed with the SEC on April 15, 2010. Certain information and footnote disclosures ~~normally~~ normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The accompanying financial statements reflect ~~all~~ all adjustments and disclosures, which, in the Company’s opinion, are necessary ~~for~~ for fair presentation. All such adjustments are of a normal recurring nature. ~~The~~ The results of operations for the interim periods are not necessarily indicative of the results of the entire year. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.

Going Concern

The Company has incurred significant losses and had negative cash flow from operations since Inception (August 17, 2007), and has an accumulated deficit of $823,~~576~~075,~~412~~256 at ~~September~~March 3031, ~~2009~~ 2010. Substantial portions of the losses are attributable to non-cash writedowns of oil and gas properties, with the balance attributable to primarily personnel costs, legal and professional fees, and financing costs. The Company's operating ~~plans~~ plans require additional funds that may take the form of debt or equity financings. There can be no assurance that any additional funds will be be available. The Company's ability to continue as a going concern is in in substantial doubt and is dependent upon achieving a profitable level of operations and obtaining additional financing.

We The ~~have~~ Company has undertaken steps as part of a plan to improve operations with the goal of sustaining ~~our~~ its operations for the next twelve months and beyond. These steps include (a) raising additional capital and/or obtaining financing, if available, (b) converting debt and accounts payable into common shares (c) increasing our current production (cd) continuing development drilling onor farming out our ~~proved~~ ~~and~~interest in our proved, undeveloped properties and (de) controlling overhead and expenses.

There can be no assurance that the weCompany will successfully accomplish these steps and it is uncertain weif it will achieve a profitable level of operations and/or obtain ~~additional~~ additional financing. There can be no assurance that any additional financings will be available to usthe Company on satisfactory terms and conditions, if at all. In the event wethe ~~are~~Company is unable to continue as a going concern, we it may elect or be required to seek protection from ~~our~~its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries after elimination of intercompany balances and transactions. The Company’s interest in oil and gas exploration and production ventures and partnerships are proportionately consolidated.

Use of Estimates

Preparation of financial statements in conformity with U.S. Generally Accepted Accounting ~~Principles~~ Principles requires management to make estimates and assumptions that affect the ~~reported~~ reported amounts of assets and liabilities and disclosure of contingent assets ~~and~~ and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its financial statements and changes in these estimates are recorded when known.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)

believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its financial statements and changes in these estimates are recorded when known.

2. NOTES PAYABLE

The Company’s notes payable at March 31, 2010 and December 31, 2009, consisted of the following:

		March 31,			December 31,
		2010			2009

January 2008 Notes	$	50,000		$	724,800
May 2008 Convertible Note		482,500			750,000
August 2008 Notes		445,000			500,000
October 2008 Notes		50,000			50,000
May 2009 Note		340,000			340,000
July 2009 Note		40,000			40,000
September 2009 Note		55,000			55,000
October 2009 Convertible Notes		15,000			15,000
November 10, 2009 Note		50,000			50,000
November 30, 2009 Note		15,000			15,000
December 2009 Convertible Note		20,000			20,000
December 2009 Note		7,500			7,500
January 2010 Note		25,000			-
Total		1,595,000			2,567,300
Unamortized discount		(22,944	)		(27,272	)
Balance, net of discount	$	1,572,056		$	2,540,028

January 2008 Notes

In January 2008, the Company entered into three 14% Senior Secured Promissory Note and Security Agreements, and Securities Purchase Agreements, with accredited investors for an aggregate principal amount of $800,000 (the "January 2008 Notes") and the issuance of 320,000 shares of the Company’s Common Stock. The January 2008 Notes matured on January 31, 2009, with interest payable on a monthly basis. The Company's obligations under the January 2008 Notes are secured by the Company’s interest in three prospect areas located in Borden, Hidalgo and Brazoria counties of Texas. The shares issued in conjunction with the January 2008 Notes were valued at $120,000, based on the market price of the Company’s Common Stock at the time of issuance, and was recorded as a discount to the January 2008 Notes and additional paid-in capital. This discount was amortized using the effective interest rate method over the term of the indebtedness. These balances were fully amortized as of March 31, 2010. Under the terms of the January 2008 Notes, as a result of their non-repayment as of July 31, 2009, the Company was obligated to issue an additional 300,000 shares of its Common Stock as an additional interest payment. The Company issued the additional 300,000 shares of its Common Stock in August 2009.

The Company is in default with respect to the repayment obligation upon maturity which occurred on January 31, 2009. Pursuant to the terms of the January 2008 Notes, upon becoming in default, the interest rate on all amounts outstanding increased to 24% per annum. The Company made no interest payments on the January 2008 Notes during the three months ended March 31, 2010, or during the year ended December 31, 2009, and paid $92,726 in interest on the January 2008 Notes during the year ended December 31, 2008. As of March 31, 2010, the Company had total accrued and unpaid interest of $161,954 on the January 2008 Notes.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~ On TODecember 2, 2009, the Company ~~CONSOLIDATED~~entered ~~FINANCIAL~~a ~~STATEMENTS~~Letter Agreement with the holder of $750,000 principal amount of the January 2008 Notes whereby, in order to induce the holder to convert the notes into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the terms with respect to $750,000 of principal of January 2008 Notes held by holder were amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of their January 2008 Notes into shares of the Company’s common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”). On January 29, 2010, the Company entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. During December 2009, the holder converted $75,200 of principal due into 30,080,000 shares of the Company’s Common Stock. During the three months ended March 31, 2010, the holder converted an additional $756,250, including $81,450 of accrued and unpaid interest, into 302,500,000 shares of the Company’s Common Stock. The Company recognized a loss of $5,322,600 and $347,720 on conversion during the three months ended March 31, 2010, and the year ended December 31, 2009, respectively, as a result of the difference between the conversion price and the fair market value of the Company’s common shares, as determined by the closing price of the Company’s common stock on the OTC Bulletin Board on the day prior to the conversion.

~~September~~ As of March 31, 2010, the Company 30had not cured its default with respect to any of the January 2008 Notes; however, ~~2009~~the ~~(unaudited)~~lenders have not yet taken any further action with respect to the default. Although the Company is actively seeking additional financing to remedy this default, continuing to convert principal and accrued interest into shares of its Common Stock and are in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the January 2008 Notes.

~~Recently Adopted~~ May ~~Accounting~~2008 ~~Pronouncement~~Convertible Note

In ~~June 2009~~ May 2008, the ~~FASB~~Company ~~issued~~entered into ~~SFAS~~a ~~No. 168,~~Securities ~~“The~~Purchase ~~FASB~~Agreement ~~Accounting Standards~~with ~~CodificationTM~~an ~~and~~accredited investor providing for the ~~Hierarchy~~sale by the Company of ~~Generally~~an ~~Accepted~~8% ~~Accounting~~convertible ~~Principles~~note in the principal amount of $750,”000 ~~which~~(the ~~has~~"May ~~been~~2008 Convertible Note") and the issuance of 750,000 shares of ~~primarily~~Common ~~codified~~Stock ~~into~~of ~~ASC~~the ~~Topic~~Company, ~~105~~a Series A Common Stock Purchase Warrant to purchase 1,500,000 shares of the Company’s Common Stock (the “~~Generally~~Series ~~Accepted~~A ~~Accounting~~May ~~Standards.~~Warrant” ~~This~~) ~~guidance~~and ~~establishes~~a Series B Common Stock Purchase Warrant to purchase 1,500,000 shares of the ~~FASB~~Company’s ~~Accounting~~Common ~~Standards~~Stock (the “Series B May Warrant”). The May 2008 ~~Codification,~~Convertible ~~which~~Note ~~officially~~matured ~~commenced~~on ~~July 1~~May 14, 2009, toand ~~become~~interest ~~the~~is ~~single source~~payable ofon ~~authoritative~~a Uquarterly basis.S. ~~GAAP~~The ~~recognized~~May by2008 Convertible Note is unsecured, however, in the ~~FASB~~event tothat the beCompany ~~applied~~grants bya secured interest in its assets in connection with any ~~nongovernmental~~future ~~entities. Rules~~financing, ~~and~~then ~~interpretive~~the ~~releases~~holder of the ~~SEC under~~May ~~authority~~2008 ofConvertible ~~federal~~Note ~~securities~~will ~~laws~~be entitled ~~are~~to ~~also~~a ~~sources~~pari ofpassu ~~authoritative U.S.~~interest ~~GAAP~~in ~~for~~such ~~SEC~~secured ~~registrants~~interest. ~~All~~ ~~other~~The ~~accounting~~May ~~literature~~2008 ~~excluded~~Convertible ~~from~~Note was convertible into the ~~Codification~~Company’s isCommon ~~considered~~Stock, ~~nonauthoritative. The~~at a ~~subsequent~~conversion ~~issuances~~price of ~~new~~$0.1871 ~~standards~~per ~~will~~common beshare, inas ~~the~~adjusted, ~~form~~and ofis ~~Accounting~~subject to ~~Standards~~normal ~~Updates~~and ~~that~~customary ~~will~~anti-dilution beprovisions. ~~included~~The inCompany may require that the ~~Codification. Generally,~~holder of the ~~Codification~~May ~~does~~2008 ~~not~~Convertible ~~change~~Note ~~U.S.~~convert all or a portion of the May 2008 ~~GAAP. This~~Convertible ~~statement~~Note isin ~~effective~~the ~~for~~event ~~financial~~that ~~statements~~the ~~issued~~Company’s closing market price for any 10 ~~interim~~consecutive ~~and~~trading ~~annual~~days ~~periods~~exceeds ~~ending~~300% ~~after~~of ~~September 15,~~the ~~2009~~then conversion price. ~~The~~ However, in ~~Company~~no ~~has~~event ~~adopted~~can ~~this~~the ~~standard~~holder of the May 2008 Convertible Note convert the May 2008 Convertible Note into such shares which would provide for the ~~quarter~~holder ~~ending~~to ~~September 30,~~own more ~~2009~~than 4. ~~The~~9% ~~standard~~of ~~has~~the ~~had~~then aoutstanding ~~minimal~~shares ~~effect~~of on the Company’s ~~financial~~ ~~statement~~Common ~~disclosures~~Stock, including asthe ~~all~~shares ~~references~~for towhich ~~authoritative~~the ~~accounting literature~~holder ~~are~~is ~~referenced~~entitled inupon ~~accordance~~exercise ~~with~~of the Series ~~Codification~~A May Warrant and Series B May Warrant. The Series A May Warrant and Series B May Warrant were exercisable until May 14, 2010, at an exercise price of $0.375 and $0.50 per share, respectively.

In Pursuant to ASC Topic 740-20, ~~May 2009~~"Debt with Conversions and Other Options,” the ~~FASB~~proceeds ~~issued~~from ~~SFAS~~the ~~No. 165,~~debt ~~“Subsequent~~were allocated ~~Events~~to the common shares issued,” ~~which~~the ~~was~~warrants issued and the debt on a ~~primarily~~relative ~~codified~~fair ~~into~~value ~~FASB~~basis. ~~Accounting~~The ~~Standards~~Company ~~Codification~~calculated ~~(ASC,~~the ~~also~~value ~~known~~of the beneficial ~~collectively~~conversion feature as $305,576, and recorded such value as a discount to the ~~Codification)~~May 2008 ~~Topic~~Convertible ~~855,~~Note ~~“Subsequent~~and ~~Events~~to additional paid-in capital.” ~~This~~Using ~~guidance~~the Black Scholes ~~establishes~~pricing ~~general~~model, ~~standards~~with volatility of ~~accounting~~140.69%, ~~for~~a ~~and~~risk-free ~~disclosure~~interest rate of ~~events that~~3.88% ~~occur~~and ~~after~~a 0% dividend yield, the ~~balance~~Series ~~sheet~~A ~~date~~May ~~but~~Warrant ~~before~~and ~~financial~~Series ~~statements~~B ~~are~~May ~~issued.~~Warrant were Indetermined ~~particular,~~to ~~this~~have ~~statement~~a ~~sets~~fair ~~forth:~~

· The period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; and

· The circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and

· The disclosures that an entity should make about events or transactions that occurred after the balance sheet date.

ASC Topic 855 is effective for interim or annual periods ending after June 15, 2009, and is to be applied prospectively. The Company adopted ASC Topic 855 as of June 30, 2009. We evaluated all events or transactions that occurred after September 30, 2009, up through the date we issued the Company’s financial statements on November 20, 2009. For further discussion about subsequent events, see Note 4 – Subsequent Events of this Form 10-Q.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~value TOof $236,114, with such value also recorded as a discount ~~CONSOLIDATED~~to ~~FINANCIAL~~the ~~STATEMENTS~~May 2008 Convertible Note and to additional paid-in capital. The value of the 750,000 common shares was determined to be $99,462, based on the market price of the Company’s Common Stock at the time of issuance, and was also recorded as a discount to the May 2008 Convertible Note and as Common Stock and additional paid-in capital. The aggregate discount of $641,152 attributable to the shares, the warrants and the beneficial conversion feature was amortized using the effective interest rate method over the term of the indebtedness and as was fully amortized as of March 31, 2010. The Company also incurred issue costs of $90,000 associated with the May 2008 Convertible Note which it recorded as deferred financing costs as a component of prepaid and other current expenses. The Company also issued 150,000 Series A May Warrants and 150,000 Series B May Warrants, valued at $42,730, to its investment banking firm as additional compensation. The deferred financing costs were amortized using the effective interest rate method over the term of the indebtedness.

~~September~~ The Company has not made any 30required interest payment since March 31, 2009, ~~(unaudited)~~and was unable to repay the May 2008 Convertible Note at maturity on May 14, 2009. Pursuant to the terms of the May 2008 Convertible Note, upon becoming in default, the interest rate on all amounts outstanding increased to 15% per annum. The Company made no interest payments on the May 2008 Convertible Note during the three months ended March 31, 2010 or the year ended December 31, 2009 and paid $23,808 in interest on the May 2008 Convertible Note during the year ended December 31, 2008. As of March 31, 2010, the Company had total accrued and unpaid interest of $114,139 on the May 2008 Convertible Note.

~~New~~ On December 2, 2009, the Company ~~Pronouncements~~entered ~~Issued~~a ~~But~~Letter ~~Not~~Agreement ~~Yet~~with ~~Adopted~~the holder of the May 2008 Convertible Note whereby, in order to induce the holder to convert the May 2008 Convertible Note into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the May 2008 Convertible Note was amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of the May 2008 Convertible Note into shares of the Company’s common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”). On January 29, 2010, the Company entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. The holder did not convert any of the May 2008 Convertible Note into shares of the Company’s Common Stock during the year ended December 31, 2009. During the three months ended March 31, 2010, the holder converted $267,500 of the principal balance outstanding into 107,000,000 shares of the Company’s Common Stock. The Company recognized a loss of $987,100 on conversion during the three months ended March 31, 2010, as a result of the difference between the conversion price and the fair market value of the Company’s common shares, as determined by the closing price of the Company’s common stock on the OTC Bulletin Board on the day prior to the conversion.

~~In January 2009,~~ As ~~the~~of ~~SEC~~March ~~issued Release No. 33-8995~~31, ~~“Modernization of Oil and Gas Reporting~~2010,” ~~amending~~the ~~oil and gas reporting requirements under~~Company ~~Rule 4-10~~had ofnot ~~Regulation S-X~~cured ~~and~~its ~~Industry~~default ~~Guide 2 in Regulation S-K and bringing full-cost accounting rules into alignment~~ with ~~the~~ ~~revised~~respect ~~disclosure requirements. The new rules include changes~~ to ~~the~~ ~~pricing used to estimate reserves,~~ the ~~ability~~May to2008 ~~include~~Convertible ~~nontraditional~~Note; ~~resources in reserves~~however, the ~~use~~lender ofhas ~~new~~not ~~technology~~yet ~~for~~taken ~~determining~~any ~~reserves~~further ~~and permitting~~action ~~disclosure~~with ofrespect ~~probable~~to ~~and possible reserves~~the default. In ~~September 2009,~~Although the ~~FASB~~Company ~~issued~~is ~~Proposed~~actively ~~Accounting~~seeking ~~Standards~~additional ~~Update~~financing ~~(ASU),~~to ~~“Extractive Industries—Oil~~remedy ~~and~~this ~~Gas~~default, ~~(Topic~~continuing ~~932):~~to ~~Oil~~convert principal and ~~Gas~~accrued ~~Reserve~~interest ~~Estimation~~into ~~and Disclosures” (Exposure~~shares ~~Draft~~of ~~No. 1730-100),~~its toCommon ~~align~~Stock ~~the~~and ~~guidance~~are in ~~U.S.~~constant ~~GAAP~~communication with the ~~changes the SEC made in December 2008. The final rules are effective for registration statements filed on or after January 1~~lender, ~~2010,~~there ~~and for annual~~can ~~reports~~be ~~for~~no ~~fiscal~~assurances ~~years~~that ~~ending~~the onlender orwill ~~after~~continue ~~December 31, 2009. The~~to ~~public~~delay ~~comment period for~~ the ~~Proposed~~enforcement ~~ASU~~of ~~ended~~their ~~October 15,~~remedies ~~2009; however,~~under ~~no final guidance has been issued by~~ the ~~FASB.~~May ~~The~~2008 ~~Company~~Convertible ~~is continuing to evaluate the impact of this release~~Note.

~~2. NOTES~~ August 2008 Note ~~PAYABLE~~

~~The~~ In August 2008, the Company entered into four 12% Unsecured Promissory Notes, and Securities Purchase Agreements, with accredited investors for an aggregate principal amount of $500,000 (the "August 2008 Notes") and the issuance of 500,000 shares of the Company’s ~~notes~~Common ~~payable~~Stock. atThe August 2008 Notes matured on September 3028, ~~2009~~2008. ~~and~~In the ~~December~~event 31that the August 2008 Notes were not repaid by September 28, 2008, ~~consisted~~the Company became required to issue 250,000 shares of the ~~following:~~Company’s Common Stock every thirty days that any amounts remain outstanding under the August 2008 Notes (the “Additional Shares”).

	Balance as of
	September 30, 2009		December 31, 2008
December 2007 Secured Promissory Note	$	125,000	$	250,000
January 2008 Secured Promissory Notes		800,000		800,000
May 2008 Convertible Note		750,000		750,000
August 2008 Unsecured Promissory Notes		500,000		500,000
October 2008 Unsecured Promissory Notes		50,000		50,000
May 2009 Unsecured Promissory Note		340,000		-
July 2009 Unsecured Promissory Note		40,000		-
September 2009 Unsecured Promissory Note		55,000		-
Total		2,660,000		2,350,000
Unamortized discount		-		(250,296	)
Balance, net of discount	$	2,660,000	$	2,099,704

December 2007 Secured Promissory Note

In December 2007, the Company entered into a 14% Senior Asset Backed Secured Promissory Note and Security Agreement, and a Securities Purchase Agreement, with Phoenix Capital Opportunity Fund, L.P. ("Phoenix") in principal amount of $250,000 (the "December 2007 Note) and the issuance of 74,999 shares (on a post-split adjusted basis) of Common Stock of the Company. The December 2007 Note matured on December 17, 2008, and interest was payable on a quarterly basis. The Company's obligations under the December 2007 Note are secured by the Company’s interest in eight oil and gas wells located in Gonzales County, Texas. The shares issued in conjunction with the December 2007 Note were valued at $22,500, based on the price of the Company’s Common Stock issued in its then most recent private placement offering, and was recorded as a discount to the December 2007 Note and additional paid-in capital. The Company also incurred $12,500 in issue costs which it recorded as deferred financing costs as a component of prepaid and other current expenses. The discount and deferred financing costs were amortized using the effective interest rate method over the term of the indebtedness. These balances were fully amortized as of December 31, 2008. Under the terms of the December 2007 Note, the interest rate increased to an annual rate of 24%, plus all enforcement costs, if in default.

At September 30, 2009, the Company was in default with respect to the repayment obligation upon maturity on December 17, 2008, with respect to the December 2007 Note. Pursuant to the terms of the December 2007 Note, the interest rate on all amounts outstanding increased to 24% per annum, effective December 17, 2008. On February 6, 2009, the Company made a partial payment of $125,000 toward satisfaction of this obligation. On June 30, 2009, Phoenix filed suit against the Company seeking repayment of the principal balance outstanding plus all accrued interest, along with their attorney fees and court costs. The Company has a total of $36,389 in accrued and unpaid interest on the December 2007 Note at September 30, 2009.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~ In TOOctober 2008, and prior to the ~~CONSOLIDATED~~issuance ~~FINANCIAL~~of ~~STATEMENTS~~the 500,000 shares of the Company’s Common Stock or the Additional Shares, the Company and the holders of the August 2008 Notes elected to amend the terms of the August 2008 Notes. In connection therewith, in exchange for the holders of the August 2008 Notes election to forego their right to receive the 500,000 shares of the Company’s Common Stock and the Additional Shares, the Company agreed to issue the holders of the August 2008 Notes common stock purchase warrants to purchase an aggregate of 1,000,000 common shares of the Company’s Common Stock (the “August 2008 Warrants”). The August 2008 Warrants are exercisable for a period of three years at a price of $0.50 per share. As the August 2008 Notes were not repaid by September 28, 2008, the Company is required to issue the holders of the August 2008 Notes an aggregate of 250,000 warrants to purchase shares of the Company’s Common Stock every thirty days that any amounts remain outstanding under the August 2008 Notes (the “Additional Warrants”). The Additional Warrants shall be exercisable for a period of three years at a price equal to the greater of $0.50 or the market price as of the date of the issuance. As of March 31, 2010 a total of 4,750,000 Additional Warrants have been issued.

~~September~~ Using the Black Scholes pricing 30model, with volatility ranging from 146.59% to 181.19%, a risk-free interest rate ranging from 1.25% to 4.50% and a 0% dividend yield, the August 2008 Warrants and the Additional Warrants issued during 2008 were determined to have an aggregate fair value of $569,606, with such value recorded as a discount to the August 2008 Notes and to additional paid-in capital. This discount was amortized using the effective interest rate method over the term of the indebtedness and as of December 31, 2008, was fully amortized. Using the Black Scholes pricing model, with volatility ranging from 168.44% to 241.61%, a risk-free interest rate of ranging from 1.25% to 1.46% and a 0% dividend yield, the 3,000,000 Additional Warrants issued during 2009 ~~(unaudited)~~were determined to have an aggregate fair value of $98,873, with such value recorded as additional interest expense and to additional paid-in capital. Using the Black Scholes pricing model, with volatility ranging from 243.21% to 246.98%, a risk-free interest rate of ranging from 1.36% to 1.60% and a 0% dividend yield, the 750,000 Additional Warrants issued during 2010 were determined to have an aggregate fair value of $17,612, with such value recorded as additional interest expense and to additional paid-in capital.

~~January~~ As of March 31, 2010, the Company was in default of the repayment provision with respect to the August 2008 ~~Secured~~Notes; however, ~~Promissory~~the lenders have not yet taken any further action with respect to the default. During the three months ended March 31, 2010, the Company, in order to reduce the Company’s debt and avoid potentially filing for bankruptcy, entered into a series of individual agreements with the holders of an aggregate of $250,000 of principal amount of the August 2008 Notes to convert portions of their notes into shares of the Company’s Common Stock. During the three months ended March 31, 2010, the lenders converted an aggregate of $55,000 of unpaid principal into 22,000,000 shares of the Company’s Common Stock. The Company recognized a loss of $328,200 on conversion during the three months ended March 31, 2010, as a result of the difference between the conversion price and the fair market value of the Company’s common shares, as determined by the closing price of the Company’s common stock on the OTC Bulletin Board on the day prior to the conversion.

~~In January~~ Although ~~2008,~~ the Company ~~entered~~is ~~into three 14% Senior Secured Promissory Note~~actively ~~and~~seeking ~~Security~~additional ~~Agreements,~~financing ~~and~~to ~~Securities~~remedy ~~Purchase~~this ~~Agreements~~default, ~~with~~converting ~~accredited investors for an aggregate~~ principal ~~amount of $800,000 (the "January 2008~~and ~~Notes")~~accrued ~~and~~interest ~~the~~into ~~issuance of 160,000~~ shares of ~~the~~its ~~Company’s~~ Common Stock~~. The~~ ~~January~~and ~~2008 Notes matured on January 31, 2009, with interest payable on a monthly basis. The Company's obligations under the January 2008 Notes~~ are ~~secured by the Company’s interest~~ in ~~three prospect~~constant ~~areas~~communication ~~located in Borden, Hidalgo and Brazoria counties of Texas. The shares issued in conjunction~~ with the ~~January 2008 Notes were valued at $120~~lender,~~000,~~ ~~based~~there oncan ~~the~~be ~~market~~no ~~price~~assurances ofthat the ~~Company’s~~lenders ~~Common~~will continue ~~Stock~~to atdelay the ~~time~~enforcement of ~~issuance,~~ ~~and~~their ~~was~~remedies ~~recorded~~under ~~as a discount to~~ the ~~January~~August 2008 Notes ~~and additional paid-in capital~~. ~~This discount was amortized using the~~ ~~effective~~As ~~interest~~noted ~~rate~~above, ~~method~~pursuant ~~over~~to the ~~term~~terms of the ~~indebtedness. These~~ ~~balances~~August ~~were~~2008 ~~fully~~Notes, ~~amortized~~the asCompany ~~of March~~is ~~31,~~required ~~2009. Under~~to issue to the ~~terms~~holders of the ~~January~~August 2008 Notes, ~~the~~a ~~interest rate~~total ~~increased to an annual rate~~ of ~~24%~~250,000 warrants ~~plus~~to ~~all~~purchase ~~enforcement~~shares ~~costs,~~of ~~if in default. In addition, if~~ the Company’s ~~did~~Common ~~not~~Stock ~~repay~~every ~~the~~30 ~~January~~days ~~2008~~that ~~Notes~~amounts byremain ~~July~~outstanding ~~31,~~under ~~2009,~~ the ~~Company~~August ~~was~~2008 ~~obligated~~Notes. toThe ~~issue~~Company anhad ~~additional 150,000~~accrued ~~shares~~and ofunpaid ~~its~~interest ~~Common~~totaling ~~Stock~~$79,759 asassociated anwith ~~additional~~the ~~interest~~August ~~payment. The~~2008 ~~Company~~Notes ~~issued~~at ~~the~~March ~~additional 150~~31,~~000~~ ~~additional shares in August 2009~~2010.

~~At September~~ October ~~30, 2009, the Company was in default with respect to the repayment obligation upon maturity on January 31, 2009, with respect to the January~~ 2008 ~~Notes. Pursuant to the terms of the January 2008 Notes,~~Note the interest rate on all amounts outstanding increased to 24% per annum, effective January 31, 2009. As of November 20, 2009, the Company had not cured the default; however the lenders have not yet taken any further action with respect to the default. Although the Company is actively seeking additional financing to remedy this default, and is in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the January 2008 Notes. The Company has a total of $154,293 in accrued and unpaid interest on the January 2008 Notes at September 30, 2009.

~~May~~ On October 17, 2008, ~~Convertible~~the Company entered into a 12% Unsecured Promissory Note, and Securities Purchase Agreement, with an accredited investor for an aggregate principal amount of $50,000 (the "October 2008 Note") and the issuance of

In May 2008, the Company entered into a Securities Purchase Agreement with an accredited investor providing for the sale by the Company of an 8% convertible note in the principal amount of $750,000 (the "May 2008 Convertible Note") and the issuance of 375,000 shares of Common Stock of the Company, a Series A Common Stock Purchase Warrant to purchase 750,000 shares of the Company’s Common Stock (the “Series A May Warrant”) and a Series B Common Stock Purchase Warrant to purchase 750,000 shares of the Company’s Common Stock (the “Series B May Warrant”). The May 2008 Convertible Note matured on May 14, 2009, and interest is payable on a quarterly basis. The May 2008 Convertible Note is unsecured, however, in the event that the Company grants a secured interest in its assets in connection with any future financing, then the holder of the May 2008 Convertible Note will be entitled to a pari passu interest in such secured interest. The May 2008 Convertible Note is convertible into the Company’s Common Stock, at a conversion price of $0.3742 per common share, as adjusted, and is subject to normal and customary anti-dilution provisions. The Company may require that the holder of the May 2008 Convertible Note convert all or a portion of the May 2008 Convertible Note in the event that the Company’s closing market price for any 10 consecutive trading days exceeds 300% of the then conversion price. However, in no event can the holder of the May 2008 Convertible Note convert the May 2008 Convertible Note into such shares which would provide for the holder to own more than 4.9% of the then outstanding shares of the Company’s Common Stock, including the shares for which the holder is entitled upon exercise of the Series A May Warrant and Series B May Warrant.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~common TOstock purchase warrants to purchase an aggregate of ~~CONSOLIDATED~~100,000 ~~FINANCIAL~~common ~~STATEMENTS~~shares of the Company’s Common Stock (the “October 2008 Warrants”). The October 2008 Warrants are exercisable for a period of three years at a price of $0.50 per share. The October 2008 Notes matured on November 17, 2008. In the event that the October 2008 Notes were not repaid by November 17, 2008, the Company became required to issue 25,000 warrants to purchase shares of the Company’s Common Stock every thirty days that any amounts remain outstanding under the October 2008 Notes (the “Additional October Warrants”). The Additional October Warrants are exercisable for a period of three years at a price equal to the greater of $0.50 or the market price as of the date of the issuance. As of March 31, 2010, a total of 425,000 Additional Warrants have been issued.

~~September~~ Using the Black Scholes pricing 30model, with volatility ranging from 150.67% to 176.24%, a risk-free interest rate ranging of 1.25% and a 0% dividend yield, the October 2008 Warrants and the Additional October Warrants issued during 2008 were determined to have an aggregate fair value of $29,180, with such value recorded as a discount to the October 2008 Note and to additional paid-in capital. This discount was amortized using the effective interest rate method over the term of the indebtedness and as of December 31, 2008, was fully amortized. Using the Black Scholes pricing model, with volatility ranging from 168.44% to 241.61%, a risk-free interest rate of ranging from 1.25% to 1.46% and a 0% dividend yield, the 300,000 Additional Warrants issued during 2009 ~~(unaudited)~~were determined to have an aggregate fair value of $9,885, with such value recorded as additional interest expense and to additional paid-in capital. Using the Black Scholes pricing model, with volatility ranging from 243.21% to 246.98%, a risk-free interest rate of ranging from 1.36% to 1.60% and a 0% dividend yield, the 75,000 Additional Warrants issued during 2010 were determined to have an aggregate fair value of $1,761, with such value recorded as additional interest expense and to additional paid-in capital.

~~The Series~~ As Aof ~~May~~March ~~Warrant~~31, ~~and~~2010, ~~Series~~the Company Bwas ~~May~~in ~~Warrant~~default ~~are~~of ~~exercisable~~the ~~for~~repayment aprovision ~~period~~with ofrespect to the October ~~two~~2008 ~~years~~Note; athowever, anthe ~~exercise~~lender ~~price~~has ofnot ~~$0.75~~yet ~~and~~taken ~~$1.00~~any ~~per~~further ~~share,~~action with respect ~~respectively. In~~to the ~~event~~default. ~~that~~Although the Company ~~issues~~is ~~securities~~actively atseeking aadditional financing to ~~per~~remedy ~~share~~this ~~price~~default, ~~less~~and ~~than~~is ~~the~~in ~~conversion~~constant ~~price,~~communication ~~then~~with the ~~exercise~~lender, ~~price~~there can ~~associated~~be ~~with~~no ~~the~~assurances ~~Series~~that Athe ~~May~~lender ~~Warrant~~will ~~and~~continue ~~Series~~to Bdelay ~~May~~the ~~Warrant~~enforcement ~~and~~of ~~the~~their ~~conversion~~remedies ~~price~~under ~~for~~ the ~~May~~October 2008 ~~Convertible~~ Note. ~~shall~~As benoted ~~adjusted~~above, pursuant to ~~equal~~the terms of ~~such~~the ~~price. However~~October 2008 Notes, nothe ~~adjustment~~Company ~~will~~is berequired ~~made~~to ~~for~~issue ~~issuances~~to the holders of the ~~relating~~October 2008 Notes, a total of 25,000 warrants to purchase shares of the Company’s Common Stock orevery ~~options~~30 todays ~~employees, officers,~~that ~~consultants~~amounts orremain ~~directors~~outstanding ofunder the October ~~Company,~~2008 ~~securities~~Notes. ~~outstanding~~The asCompany ~~of the~~has ~~date~~a total of ~~the closing~~$8,712 ~~securities issued~~ in ~~connection~~accrued ~~with~~and ~~acquisitions or~~unpaid ~~strategic~~interest ~~transactions~~on orthe ~~securities~~October ~~issued~~2008 asNote ~~equity~~at ~~enhancements~~March in31, ~~connection with~~2010. ~~standard non-convertible debt transactions~~

~~Pursuant to~~ May ~~ASC~~2009 ~~Topic 740-20, “Debt with Conversions and Other Options,” the proceeds~~Note ~~from the debt were allocated to the common shares issued, the warrants issued and the debt on a relative fair value basis.~~

~~The Company~~ On ~~calculated~~May ~~the~~26, ~~value~~2009, of the ~~beneficial conversion feature as $305,576,~~Company ~~and~~entered ~~recorded~~into ~~such value as~~ a ~~discount~~16% toUnsecured ~~the~~Promissory ~~May 2008 Convertible~~ Note ~~and~~with ~~to additional~~an ~~paid-in~~accredited ~~capital. Using~~investor ~~the~~for ~~Black Scholes pricing model,~~an ~~with~~aggregate ~~volatility~~principal ofamount ~~140.69%, a risk-free interest rate~~ of ~~3.88% and a 0% dividend yield~~$340,000 (the ~~Series A~~ "May ~~Warrant~~2009 Note") and ~~Series~~the Bissuance ~~May Warrant were determined to have a fair value~~ of ~~$236,114, with such value also recorded as a discount~~ tocommon ~~the~~stock ~~May~~purchase ~~2008~~warrants ~~Convertible Note and~~ to ~~additional~~purchase ~~paid-in capital. The~~an ~~value~~aggregate of ~~the 375~~1,000,000 common shares ~~was determined to be $99,462, based on the market price~~ of the Company’s Common Stock at (the ~~time~~“May ~~of issuance,~~2009 ~~and~~Warrants”). ~~was~~The ~~also~~May ~~recorded~~2009 Warrants asare aexercisable ~~discount~~for toa ~~the~~period ~~May~~of ~~2008~~three ~~Convertible~~years ~~Note and~~at asa ~~Common~~price ~~Stock~~of ~~and~~$0.05 ~~additional paid-in capital~~per share. The ~~aggregate discount~~May of2009 ~~$641,152~~Note ~~attributable~~matured toon ~~the~~August ~~shares~~24, 2009. In the ~~warrants~~event ~~and~~that the ~~beneficial~~May ~~conversion~~2009 ~~feature~~Note was ~~amortized~~not ~~using~~repaid ~~the~~by ~~effective~~August ~~interest~~24, ~~rate~~2009, ~~method over~~ the ~~term~~interest ofrate ~~the~~increased ~~indebtedness~~to ~~and~~18% per ~~was~~annum ~~fully~~and ~~amortized~~the lender, at ~~September~~its 30option, ~~2009. The~~ ~~Company~~could ~~also~~convert ~~incurred~~all ~~issue~~outstanding ~~costs~~amounts in shares of ~~$90,000 associated with~~ the ~~May~~Company’s ~~2008~~Common ~~Convertible~~Stock ~~Note~~at ~~which it recorded as deferred financing costs as~~ a ~~component~~conversion price of ~~prepaid~~$0.05 ~~and other current expenses~~per share. The Company ~~also~~ ~~issued~~incurred 75$17,000 ~~Series~~of Aissue ~~May~~costs ~~Warrants~~associated ~~and~~with ~~75,000~~the ~~Series B~~ May ~~Warrants,~~2009 ~~valued at $42~~Note,~~730,~~ towhich ~~its~~was ~~investment banking firm as additional compensation. The deferred financing costs were also~~ amortized using the effective interest rate method over the term of the indebtedness and as of March 31, 2010, was fully amortized.

As Using ~~of September 30, 2009,~~ the ~~Company~~Black ~~had~~Scholes ~~not made the quarterly interest payment due~~pricing ~~on March 31~~model, ~~2009, June 30, 2009, or September 30, 2009,~~ with ~~respect to~~volatility ~~the May 2008 Convertible Note. Pursuant to the terms~~ of ~~the May 2008 Convertible Note~~231%, ~~the~~a risk-free interest rate onof ~~the~~1.25% ~~past~~and ~~due~~a ~~quarterly interest~~0% ~~payment~~dividend ~~increased to 15% per annum~~yield, ~~effective~~the ~~March 31~~1,000,000 May 2009~~. The Company~~ ~~had~~Warrants 90were ~~days~~determined to ~~make~~have ~~the scheduled quarterly interest payment before~~ an ~~Event~~aggregate offair ~~Default~~value ~~should~~of ~~occur. At September 30~~$33, ~~2009~~139, ~~the Company was in default~~ with ~~respect~~such tovalue ~~the~~recorded ~~March~~as ~~31,~~a ~~2009~~discount ~~quarterly interest payment in addition~~ to ~~being in default with respect to~~ the ~~repayment obligation upon~~ ~~maturity on~~ May ~~14,~~ 2009~~. Pursuant~~ ~~to the terms of the May 2008 Convertible~~ Note, ~~the~~and ~~interest rate on all amounts outstanding increased~~ to ~~15% per~~additional ~~annum. As~~paid-in ~~of November 20, 2009, the Company had not cured the default; however the lender has not yet taken any further action with respect to the default~~capital. ~~Although~~ ~~the~~This ~~Company~~discount iswas ~~actively seeking additional~~amortized ~~financing~~using ~~to remedy this default, and is in constant communication with~~ the ~~lender,~~ ~~there~~effective ~~can~~interest berate nomethod ~~assurances~~over ~~that~~ the ~~lender~~term ~~will continue to delay the enforcement~~ of ~~their remedies under~~ the ~~May~~indebtedness ~~2008 Convertible~~and ~~Note. The~~as ~~Company~~of ~~had~~March a31, ~~total of $57~~2010,~~187~~ inwas ~~accrued~~fully ~~and unpaid interest on the May 2008 Convertible Note at September 30, 2009~~amortized.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~ As TOof March 31, 2010, the Company ~~CONSOLIDATED~~was ~~FINANCIAL~~in ~~STATEMENTS~~default of the repayment provision with respect to the May 2009 Note; however, the lender has not yet taken any further action with respect to the default. Although the Company is actively seeking additional financing to remedy this default, and is in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the May 2009 Note. The Company has a total of $54,615 in accrued and unpaid interest on the May 2009 Note at March 31, 2010.

~~September 30,~~ July 2009 ~~(unaudited)~~Note

~~August~~ On ~~2008~~July ~~Unsecured~~16, ~~Promissory~~2009, the Company issued an unsecured promissory note to an accredited investor providing for a loan of $40,000 (the “July 2009 Note”). The July 2009 Note matured on October 13, 2009, and bears interest at 14% per annum.

In As ~~August 2008~~of March 31, 2010, the Company was ~~entered~~in ~~into~~default ~~four~~of ~~12%~~the ~~Unsecured~~repayment ~~Promissory~~provision ~~Notes,~~with ~~and Securities~~respect ~~Purchase~~to ~~Agreements,~~the ~~with~~July ~~accredited~~2009 ~~investors~~Note; however, ~~for~~the anlender ~~aggregate principal~~has ~~amount~~not ofyet ~~$500,000~~taken ~~(the~~any ~~"August~~further ~~2008~~action ~~Notes")~~with ~~and~~respect ~~the~~to ~~issuance of~~the ~~250,000~~default. ~~shares~~Although of the Company’s ~~Common~~is ~~Stock. The~~actively ~~August~~seeking ~~2008~~additional ~~Notes matured~~financing onto ~~September~~remedy this 28default, ~~2008. In~~and ~~the~~is ~~event~~in ~~that~~constant ~~the~~communication ~~August~~with ~~2008 Notes~~the ~~were~~lender, ~~not~~there ~~repaid~~can bybe ~~September~~no assurances ~~28,~~that ~~2008,~~ the ~~Company~~lender ~~became~~will ~~required~~continue to ~~issue~~ ~~125,000~~delay ~~shares of~~ the ~~Company’s~~enforcement ~~Common~~of ~~Stock~~their remedies ~~every~~under ~~thirty~~the ~~days~~July ~~that~~2009 ~~any amounts~~Note. ~~remain~~The ~~outstanding~~Company ~~under~~has ~~the~~a ~~August~~total ~~2008~~of ~~Notes~~$3,687 ~~(the~~in ~~“Additional~~accrued ~~Shares”). An~~and ~~entity~~unpaid ~~controlled~~interest byon the ~~Company’s~~July ~~Chief~~2009 ~~Financial Officer~~Note ~~purchased~~at ~~$50~~March 31,~~000~~ ~~of the August 2008 Notes~~2010.

In October 2008, and prior to the issuance of the either the 250,000 shares of the Company’s Common Stock or the Additional Shares, the Company and the holders of the August 2008 Notes elected to amend the terms of the August 2008 Notes. In connection therewith, in exchange for the holders of the August 2008 Notes election to forego their right to receive the 250,000 shares of the Company’s Common Stock and the Additional Shares, the Company agreed to issue the holders of the August 2008 Notes common stock purchase warrants to purchase an aggregate of 500,000 common shares of the Company’s Common Stock (the “August 2008 Warrants”). The August 2008 Warrants are exercisable for a period of three years at a price of $1.00 per share. As the August 2008 Notes were not repaid by September 28, 2008, the Company is required to issue the holders of the August 2008 Notes an aggregate of 125,000 warrants to purchase shares of the Company’s Common Stock every thirty days that any amounts remain outstanding under the August 2008 Notes (the “Additional Warrants”). The Additional Warrants shall be exercisable for a period of three years at a price equal to the greater of $1.00 or the market price as of the date of the issuance. As of September 30, 2009, ~~a total of 1,625,000 Additional Warrants have been~~Note ~~issued.~~

~~Using~~ On ~~the Black~~September ~~Scholes pricing model~~21, ~~with volatility ranging from 146.59% to 181.19%~~2009, athe ~~risk-free~~Company ~~interest~~issued ~~rate~~an ~~ranging~~unsecured ~~from~~promissory ~~1.25%~~note to ~~4.50%~~an ~~and~~accredited ainvestor ~~0% dividend yield, the~~providing ~~1,000,000~~for ~~August~~a ~~2008~~loan ~~Warrants and the Additional Warrants issued during 2008 were determined to have an aggregate fair value~~ of $~~569~~55,~~606,~~000 ~~with such value recorded as a discount to~~ (the ~~August~~“September ~~2008~~2009 ~~Notes and to additional paid-in capital~~Note”). ~~This~~ ~~discount~~The ~~was~~September ~~amortized~~2009 ~~using~~Note ~~the effective interest~~is ~~rate~~due ~~method~~on ~~over~~September ~~the term of the indebtedness and as of December 31~~21, ~~2008~~2010, ~~was fully~~and ~~amortized. Using~~bears ~~the~~interest ~~Black~~at ~~Scholes pricing model, with volatility ranging from 168.44~~12% toper ~~187~~annum.~~76%,~~ aThe ~~risk-free~~Company ~~interest rate of 1.25%~~has ~~and~~ a 0%total ~~dividend yield, the 1,125,000 Additional Warrants issued during 2009 were determined to have an aggregate fair value~~ of $893,~~053,~~483 ~~with~~in ~~such~~accrued ~~value recorded~~and asunpaid ~~additional~~ interest ~~expense~~on ~~and~~the toSeptember ~~additional~~2009 ~~paid-in~~Note at ~~capital~~March 31, 2010.

As October ~~of September 30,~~ 2009~~, the Company had not repaid any of the amounts due under the~~ ~~August~~Convertible ~~2008~~ Notes~~. As~~ noted above, pursuant to the terms of the August 2008 Notes, the Company is required to issue to the holders of the August 2008 Notes, a total of 125,000 warrants to purchase shares of the Company’s Common Stock every 30 days that amounts remain outstanding under the August 2008 Notes. The Company has a total of $64,528 in accrued and unpaid interest on the August 2008 Notes at September 30, 2009.

On October 30, 2009, the Company ~~2008~~issued ~~Unsecured~~unsecured ~~Promissory~~convertible ~~Note~~notes to two accredited investors for an aggregate principal amount of $15,000 (the “October 2009 Convertible Notes”). The October 2009 Notes matured on April 30, 2010, and bore interest at 18% per annum. In the event that the October 2009 Convertible Notes were not repaid by April 30, 2010, the interest rate increased to 21% per annum. The October 2009 Convertible Notes are convertible into the Company’s Common Stock at the discretion of the holder at any time, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion.

~~On October~~ Pursuant ~~17,~~to ~~2008,~~ASC ~~the~~Topic ~~Company entered into a 12% Unsecured Promissory Note~~740-20, ~~and~~ ~~Securities~~"Debt ~~Purchase Agreement,~~ with anConversions ~~accredited~~and ~~investor~~Other ~~for an aggregate principal amount of $50~~Options,~~000~~” (the ~~"October~~proceeds ~~2008~~from ~~Note") and~~ the ~~issuance~~debt ~~of common~~were ~~stock~~allocated ~~purchase warrants~~ to ~~purchase~~the anbeneficial ~~aggregate~~conversion offeature ~~50,000~~and ~~common shares of~~ the ~~Company’s~~ ~~Common~~debt ~~Stock~~on ~~(the “October 2008 Warrants”). The October 2008 Warrants are exercisable for~~ a ~~period~~relative ~~of three years at a price of $1.00~~fair ~~per~~value ~~share~~basis. The ~~October~~Company ~~2008~~calculated ~~Notes matured on November 17, 2008. In~~ the ~~event~~value ~~that~~of the ~~October~~beneficial ~~2008 Notes were not repaid by~~conversion ~~November~~feature ~~17,~~as ~~2008~~$15,000, ~~the~~and ~~Company~~recorded ~~became~~such ~~required~~value toas ~~issue~~a ~~12,500~~discount ~~warrants~~ to ~~purchase~~ ~~shares of~~ the ~~Company’s~~October ~~Common Stock every thirty days that any amounts~~2009 ~~remain~~Convertible ~~outstanding~~Notes ~~under~~and ~~the~~to ~~October~~additional ~~2008~~paid-in ~~Notes (the “Additional October Warrants”)~~capital. The ~~Additional~~discount ~~October~~was ~~Warrants shall be exercisable for~~amortized ausing ~~period~~the ofeffective ~~three~~interest ~~years~~rate atmethod aover ~~price equal to~~ the ~~greater~~term of ~~$1.00 or~~ the ~~market price~~indebtedness and, as of ~~the~~March ~~date of the issuance. As of September 30~~31, ~~2009~~2010, ~~a total~~had ofan ~~137,500~~unamortized ~~Additional~~balance ~~October~~of ~~Warrants have been issued~~$2,381.

As of May 17, 2010, the Company was in default of the repayment provision with respect to the October 2009 Convertible Notes; however, the lenders have not yet taken any further action with respect to the default. Although the Company is actively seeking additional financing to remedy this default, and is in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the October 2009 Convertible Notes. The Company has a total of $1,176 in accrued and unpaid interest on the October 2009 Convertible Notes at March 31, 2010.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~ November TO10, 2009 ~~CONSOLIDATED~~Note ~~FINANCIAL STATEMENTS~~

~~September~~ On November 10, 2009, the Company 30entered into a loan agreement with an accredited investor providing for a loan of $50,000 (the “November 10, 2009 Note”). The November 10, 2009 Note matured on December 31, 2009, and bears interest at 12% per annum. In the event that the November 10, 2009 Note was not repaid by December 31, 2009, the interest rate increased to an annual rate equal to Prime plus 10% (~~unaudited~~currently an effective rate of 13.25%) .

~~Using~~ As ~~the Black~~of ~~Scholes~~March ~~pricing model~~31, ~~with volatility ranging from 150.67% to 176.24%~~2010, athe Company ~~risk-free~~was ~~interest~~in ~~rate~~default ~~ranging~~ of ~~1.25%~~the ~~and~~repayment aprovision 0%with ~~dividend~~respect ~~yield,~~to the 75November 10,~~000~~ 2009 ~~October~~Note; ~~2008~~however, ~~Warrants and~~ the ~~Additional~~lender ~~October~~has ~~Warrants~~not ~~issued~~yet ~~during~~taken ~~2008, were~~any ~~determined~~further toaction ~~have an aggregate fair value of $29,180,~~ with ~~such~~respect ~~value~~to ~~recorded~~the asdefault. aAlthough ~~discount to~~ the ~~October~~Company ~~2008~~is ~~Note~~actively ~~and~~seeking to additional ~~paid-in~~financing to ~~capital. This~~remedy ~~discount~~this ~~was~~default, ~~amortized~~and ~~using~~is ~~the~~in ~~effective~~constant ~~interest rate~~communication ~~method~~with ~~over~~ the ~~term of the indebtedness and as of December 31~~lender, ~~2008,~~there ~~was~~can ~~fully~~be ~~amortized. Using~~no ~~the~~assurances ~~Black~~that ~~Scholes~~the ~~pricing~~lender ~~model,~~will ~~with volatility~~continue ~~ranging from 168.44%~~ to ~~187.76%,~~delay athe ~~risk-free~~enforcement ~~interest rate~~ of ~~1.25%~~their ~~and~~remedies aunder 0%the ~~dividend~~November ~~yield~~10, ~~the 112,500 Additional October Warrants issued during~~ 2009 ~~were~~Note. ~~determined~~The toCompany ~~have~~has ana ~~aggregate~~total ~~fair value~~ of $82,~~903,~~490 ~~with such value~~in ~~recorded~~accrued asand ~~additional~~unpaid interest ~~expense~~on ~~and~~the toNovember ~~additional~~10, ~~paid-in capital~~2009 Note at March 31, 2010.

As November ~~of September~~ 30, 2009~~, the Company had not repaid any of the amounts due under the~~ October 2008 Notes. As noted above, pursuant to the terms of the October 2008 Notes, the Company is required to issue to the holders of the October 2008 Notes, a total of 12,500 warrants to purchase shares of the Company’s Common Stock every 30 days that amounts remain outstanding under the October 2008 Notes. The Company has a total of $6,453 in accrued and unpaid interest on the October 2008 Note ~~at September 30, 2009.~~

~~February~~ On November 30, 2009, the Company entered into a loan agreement with an accredited investor providing for a loan of $15,000 (the “November 30, 2009 ~~Unsecured~~Note”). ~~Promissory~~The November 30, 2009 Note matured on April 1, 2010, and bore interest at 12% per annum. In the event that the November 10, 2009 Note was not repaid by April 1, 2010, the interest rate increased to an annual rate equal to Prime plus 10% (currently an effective rate of 13.25%) . The Company has a total of $600 in accrued and unpaid interest on the November 30, 2009 Note at March 31, 2010.

~~On February~~ December 2, 2009~~, the Company issued an unsecured promissory note with an~~ ~~accredited~~Convertible ~~investor providing for a loan of $285,000 (the “February 2009~~ Note~~”). The~~ February 2009 Note was due on May 3, 2009, and bore interest at 14% per annum. The Company incurred issue costs of $23,850 associated with the February 2009 Note which it recorded as deferred financing costs as a component of prepaid and other current expenses. The deferred financing cost was amortized using the effective interest rate method over the term of the indebtedness. The net proceeds were used to reduce the principal amount due on the December 2007 Note ($125,000) and for general corporate purposes. The February 2009 Note and accrued interest was repaid in May 2009.

On December 14, 2009, the Company issued an unsecured convertible notes to an accredited investor for a principal amount of $20,000 (the “December 2009 Convertible Note”). The December 2009 Convertible Note matures on May 14, 2010, and bear interest at 18% per annum. In the event that the December 2009 ~~Unsecured~~Convertible ~~Promissory~~Note was not repaid on May 14, 2010, the interest rate increases to 21% per annum. The December 2009 Convertible Note is convertible into the Company’s Common Stock at the discretion of the holder at any time, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion.

On Pursuant ~~May 26,~~to ~~2009,~~ASC ~~the~~Topic ~~Company~~740-20, "Debt ~~entered into a 16% Unsecured Promissory Note~~ with ~~an accredited~~Conversions ~~investor~~and ~~for~~Other ~~an aggregate principal amount of $340~~Options,~~000~~” (the ~~"May~~proceeds ~~2009 Note")~~from ~~and~~ the ~~issuance~~debt ofwere allocated ~~common stock purchase warrants~~ to ~~purchase~~the ~~an aggregate~~beneficial ofconversion ~~500,000~~feature ~~common~~and ~~shares of~~ the ~~Company’s~~debt ~~Common~~on ~~Stock (the “May 2009 Warrants”). The May 2009 Warrants are exercisable for~~ a ~~period~~relative offair ~~three~~value ~~years at a price of $0~~basis.10 ~~per share.~~ The ~~May~~Company ~~2009~~calculated ~~Note matured on August 24, 2009. In~~ the ~~event~~value ~~that~~of the ~~May~~beneficial ~~2009 Note was not~~conversion ~~repaid~~feature byas ~~August 24~~$20, ~~2009~~000, ~~the~~and ~~interest~~recorded ~~rate~~such ~~increased~~value toas ~~18%~~a ~~per~~discount ~~annum~~to ~~and~~ the ~~lender,~~ atDecember ~~its~~2009 Convertible ~~option,~~Note ~~could~~and ~~convert~~to ~~all~~additional ~~outstanding amounts~~ paid-in ~~shares of the Company’s Common Stock at a conversion price of $0~~capital.10 ~~per share.~~ The ~~Company~~ ~~incurred~~discount ~~$17,000~~is ~~of issue costs associated with the May 2009 Note, which~~being ~~was~~ amortized using the effective interest rate method over the term of the indebtedness and, as of ~~September~~March 3031, ~~2009~~2010, ~~was~~had ~~fully~~an ~~amortized~~unamortized balance of $5,828. ~~The~~ ~~net~~The ~~proceeds~~Company ~~were~~has ~~used~~a tototal ~~repay~~of ~~the~~$1,055 ~~principal~~in accrued and ~~accrued~~unpaid interest ~~due~~ on the ~~February~~ December 2009 Convertible Note, ~~the~~at ~~due~~March ~~date of which had been extended until July 24~~31, ~~2009, and for general corporate purposes~~2010.

December 2009 Note

On December 31, 2009, the Company entered into a loan agreement with an accredited investor providing for a loan of $7,500 (the “December 2009 Note”). The December 2009 Note matured on May 1, 2010, and bore interest at 12% per annum. In the event that the December 2009 Note was not repaid by May 1, 2010, the interest rate increased to an annual rate equal to Prime plus 10% (currently an effective rate of 13.25%) .

As of May 17, 2010, the Company was in default of the repayment provision with respect to the December 2009 Note; however, the lender has not yet taken any further action with respect to the default. Although the Company is actively seeking additional financing to remedy this default, and is in constant communication with the lender, there can be no

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~assurances TOthat the lender will continue to delay the ~~CONSOLIDATED~~enforcement ~~FINANCIAL~~of ~~STATEMENTS~~their remedies under the December 2009 Note. The Company has a total of $225 in accrued and unpaid interest on the December 2009 Note at March 31, 2010.

~~September 30,~~ January ~~2009~~2010 ~~(unaudited)~~Note

~~Using~~ On ~~the Black~~January ~~Scholes pricing model~~28, ~~with volatility of 231%~~2010, athe ~~risk-free interest rate~~Company ofissued ~~1.25% and~~ a ~~0% dividend yield~~$25,000 ~~the~~Convertible ~~500,000~~Note ~~May~~(“January ~~2009~~2010 ~~Warrants~~Convertible ~~were~~Note”). ~~determined~~The January to2010 ~~have~~Convertible anNote ~~aggregate~~matures ~~fair~~on ~~value~~June of28, ~~$33~~2010,~~139,~~ ~~with~~and ~~such~~bears ~~value~~interest ~~recorded~~at asan aannual ~~discount~~rate toof ~~the~~18%. ~~May~~The ~~2009~~January 2010 Convertible Note ~~and~~is toconvertible ~~additional~~into ~~paid-in~~the ~~capital. This~~Company’s ~~discount~~Common ~~was~~Stock ~~amortized~~at ~~using~~the discretion of the ~~effective~~holder ~~interest~~at ~~rate~~any ~~method~~time, ~~over~~at the ~~term~~lesser of (i) ~~the~~$0.0025 ~~indebtedness~~or ~~and~~(ii) asa of50% ~~September~~discount ~~30,~~to ~~2009,~~the ~~was~~average ~~fully amortized. The~~of ~~Company~~the ~~has~~three alowest ~~total~~trading prices of ~~$20,892~~the incommon ~~accrued~~stock ~~and~~during ~~unpaid interest on~~ the ~~May~~20 ~~2009~~trading ~~Note~~day atperiod ~~September~~prior ~~30,~~to ~~2009~~conversion.

~~July~~ Pursuant to ASC Topic 740-20, ~~2009~~"Debt ~~Unsecured~~with ~~Promissory~~Conversions and Other Options,” the proceeds from the debt were allocated to the beneficial conversion feature and the debt on a relative fair value basis. The Company calculated the value of the beneficial conversion feature as $25,000, and recorded such value as a discount to the January 2010 Convertible Note and to additional paid-in capital. The discount is being amortized using the effective interest rate method over the term of the indebtedness and, as of March 31, 2010, had an unamortized balance of $14,735. The Company has a total of $764 in accrued and unpaid interest on the January 2010 Convertible Note at March 31, 2010.

On July 16, 2009, the Company issued an unsecured promissory note with an accredited investor providing for a loan of $40,000 (the “July 2009 Note”). The July 2009 Note matured on October 13, 2009, and bears interest at 14% per annum.

September 2009 Unsecured Promissory Note

On September 21, 2009, the Company issued an unsecured promissory note with an accredited investor providing for a loan of $55,000 (the “September 2009 Note”). The September 2009 Note is due on September 21, 2010, and bears interest at 12% per annum.

3. EQUITY TRANSACTIONS

~~In January~~ During ~~2009~~2010, the Company issued 75 15,~~700~~200,000 ~~of its~~ common shares toin asettlement ~~consultant~~of ~~for prospect~~$188,000 ~~evaluation~~of accounts payable. The Company ~~value~~recognized a loss of ~~these~~$71,760 ~~shares~~on ~~was~~conversion ~~determined~~during tothe bethree months ended ~~$15~~March 31,~~897~~ 2010, ~~based~~as ona result of the ~~market~~difference between the conversion price and the fair market value of the Company’s ~~Common~~common ~~Stock~~shares, atas determined by the closing ~~time~~price of ~~issuance,~~ ~~and~~the ~~was~~Company’s ~~recorded~~common asstock ~~general~~on ~~and~~the ~~administrative~~OTC ~~expense,~~Bulletin ~~common~~Board ~~stock~~on the day ~~and~~prior ~~additional~~to ~~paid-in~~the ~~capital~~conversion.

On ~~February~~ 6March 25, ~~2009~~2010, the Company ~~issued 500,000 restricted shares of Common Stock~~ toentered ~~its~~into ~~Chief~~a ~~Financial~~purchase ~~Officer~~agreement ~~pursuant~~whereby to the ~~terms~~Company ofpurchased ana ~~Executive~~10% ~~Employment~~interest ~~Agreement~~in ~~entered~~a ~~into~~non-producing ascrude ofoil ~~February~~well 6,and ~~2009,~~associated ~~between~~oil ~~the Company~~ and ~~its~~gas ~~Chief Financial~~leases, ~~Officer. The~~in ~~value~~exchange ~~of the 500~~for $15,000 ~~common~~and ~~shares was determined to be $65~~5,000,000 ~~based~~shares ~~on the market price~~ of the Company’s Common Stock. atThe ~~the~~aggregate ~~time~~consideration oftotaled ~~issuance~~$52, ~~and was recorded as stock compensation expense, common stock and additional paid-in capital~~000.

On ~~June 3~~March 30, ~~2009~~2010, ~~pursuant~~the toCompany entered aninto ~~Employment~~a ~~Agreement~~contract ~~entered~~and onassignment ~~June~~agreement 1,whereby ~~2009,~~ the Company ~~issued~~purchased ~~2,120,500~~a 10% ~~restricted~~interest ~~shares~~in ofa ~~Common~~non-producing ~~Stock~~crude tooil ~~its~~well ~~Chief Executive~~and ~~Officer. The~~associated ~~value~~oil ofand ~~the~~gas 2leases,~~120,500~~ ~~common shares was~~in ~~determined~~exchange tofor be $~~127~~15,~~230,~~000 ~~based~~and on15,000,000 ~~the~~shares ~~market price~~ of the Company’s Common Stock. atThe ~~the~~aggregate ~~time~~consideration oftotaled ~~issuance~~$118, ~~and was recorded as stock compensation expense, common stock and additional paid-in capital~~500.

On June 3, 2009, pursuant to an Employment Agreement entered on June 1, 2009, the Company issued 2,261,500 restricted shares of Common Stock to its Vice President, Operations. The value of the 2,261,500 common shares was determined to be $135,690, based on the market price of the Company’s Common Stock at the time of issuance, and was recorded as stock compensation expense, common stock and additional paid-in capital.

On July 31, 2009, pursuant to the terms of the January 2008 Notes, the Company was required to issue 150,000 shares of its Common Stock as a penalty for not having repaid the outstanding borrowings. The value of the 150,000 common shares was determined to be $10,500, based on the market price of the Company’s Common Stock at the time of issuance, and was recorded as interest expense, common stock and additional paid-in capital.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2010 (Unaudited)

~~NOTES~~ As TOof March 31, 2010, the Company ~~CONSOLIDATED~~had ~~FINANCIAL~~the ~~STATEMENTS~~following dilutive securities outstanding:

September 30, 2009 (unaudited)

	Number		Exercise	Expiration
	of Shares		Price	Date
Common Shares issuable:
Upon conversion of the amended January 2008 Note	58,130,800		-	-
In connection with the May 2008 Convertible Note:
Upon conversion of May 2008 Convertible Note	238,655,600		-	-
Upon exercise of the Series A May Warrants	1,650,000	$	0.38	May 14, 2010
Upon exercise of the Series B May Warrants	1,650,000	$	0.50	May 14, 2010
In connection with the June 2008 Unit Offering:
Upon exercise of Series A June Warrants	3,704,165	$	0.50	June 30, 2010
Upon exercise of Series A June Warrants	833,334	$	0.0005	June 30, 2010
Upon exercise of Series B June Warrants	3,704,165	$	0.50	June 30, 2010
Upon exercise of Series B June Warrants	833,334	$	0.0005	June 30, 2010
Upon exercise of Series C June Warrants	12,000,000	$	0.0005	November 30, 2012
In connection with the August 2008 Notes:
Upon exercise of the August 2008 Warrants	1,000,000	$	0.50	August 28, 2011
Upon exercise of the Penalty Warrants (9/08 - 12/09)	4,750,000	$	0.50	September 30, 2011 - March 31, 2013
In connection with the October 2008 Notes:
Upon exercise of the October 2008 Warrants	100,000	$	0.50	October 17, 2011
Upon exercise of the Penalty Warrants (11/08 - 12/09)	425,000	$	0.50	November 17, 2011 - March 17, 2013
In connection with the May 2009 Note:
Upon exercise of the May 2009 Warrants	1,000,000	$	0.05	May 26, 2012
Upon conversion of May 2009 Note in the event of default	6,800,000		-	-
Upon conversion of the October 2009 Convertible Notes	6,000,000		-	-
Upon conversion of the December 2009 Convertible Notes	8,000,000		-	-
Upon conversion of the January 2010 Convertible Notes	10,000,000		-	-
Total dilutive securities at March 31, 2010	359,236,398

As The Company’s basic earnings per share (EPS) amounts have been computed based on the weighted-average number of ~~September~~shares 30of Common Stock outstanding for the period. Diluted EPS reflects the potential dilution, ~~2009~~using the treasury stock method, which could occur if the above dilutive securities were exercised. As the Company ~~had~~realized a net loss for each of the ~~following~~three ~~dilutive~~months ended March 31, 2010 and 2009, no potentially dilutive securities were included in the calculation of diluted earnings per share as ~~outstanding:~~their impact would have been anti-dilutive.

	Number		Exercise		Expiration
Common Shares issuable:	of Shares		Price		Date
In connection with the May 2008 Convertible Note:
Upon conversion of May 2008 Convertible Note		2,004,276		-		-
Upon exercise of the Series A May Warrants		825,000	$	0.75	May 14, 2010
Upon exercise of the Series B May Warrants		825,000	$	1.00	May 14, 2010
In connection with the June 2008 Unit Offering:
Upon exercise of the Series A June Warrants		2,268,749	$	1.00	June 30, 2010
Upon exercise of the Series B June Warrants		2,268,749	$	1.00	June 30, 2010
In connection with the August 2008 Notes:
Upon exercise of the August 2008 Warrants		500,000	$	1.00	August 28, 2011
Upon exercise of the Penalty Warrants (9/08)		125,000	$	1.00	September 30, 2011
Upon exercise of the Penalty Warrants (10/08)		125,000	$	1.00	October 31, 2011
Upon exercise of the Penalty Warrants (11/08)		125,000	$	1.00	November 30, 2011
Upon exercise of the Penalty Warrants (12/08)		125,000	$	1.00	December 31, 2011
Upon exercise of the Penalty Warrants (1/09)		125,000	$	1.00	January 31, 2012
Upon exercise of the Penalty Warrants (2/09)		125,000	$	1.00	February 28, 2012
Upon exercise of the Penalty Warrants (3/09)		125,000	$	1.00	March 31, 2012
Upon exercise of the Penalty Warrants (4/09)		125,000	$	1.00	April 30, 2012
Upon exercise of the Penalty Warrants (5/09)		125,000	$	1.00	May 31, 2012
Upon exercise of the Penalty Warrants (6/09)		125,000	$	1.00	June 30, 2012
Upon exercise of the Penalty Warrants (7/09)		125,000	$	1.00	July 31, 2012
Upon exercise of the Penalty Warrants (8/09)		125,000	$	1.00	August 31, 2012
Upon exercise of the Penalty Warrants (9/09)		125,000	$	1.00	September 30, 2012
In connection with the October 2008 Notes:
Upon exercise of the October 2008 Warrants		50,000	$	1.00	October 17, 2011
Upon exercise of the Penalty Warrants (11/08)		12,500	$	1.00	November 17, 2011
Upon exercise of the Penalty Warrants (12/08)		12,500	$	1.00	December 17, 2011
Upon exercise of the Penalty Warrants (1/09)		12,500	$	1.00	January 17, 2012
Upon exercise of the Penalty Warrants (2/09)		12,500	$	1.00	February 17, 2012
Upon exercise of the Penalty Warrants (3/09)		12,500	$	1.00	March 17, 2012
Upon exercise of the Penalty Warrants (4/09)		12,500	$	1.00	April 17, 2012
Upon exercise of the Penalty Warrants (5/09)		12,500	$	1.00	May 17, 2012
Upon exercise of the Penalty Warrants (6/09)		12,500	$	1.00	June 17, 2012
Upon exercise of the Penalty Warrants (7/09)		12,500	$	1.00	July 17, 2012
Upon exercise of the Penalty Warrants (8/09)		12,500	$	1.00	August 17, 2012
Upon exercise of the Penalty Warrants (9/09)		12,500	$	1.00	September 17, 2012
In connection with the May 2009 Note:
Upon exercise of the May 2009 Warrants		500,000	$	0.10	May 26, 2012
Total dilutive securities at September 30, 2009		11,004,274

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2009 (unaudited)

The Company’s basic earnings per share (EPS) amounts have been computed based on the weighted-average number of shares of Common Stock outstanding for the period. Diluted EPS reflects the potential dilution, using the treasury stock method, which could occur if the above dilutive securities were exercised. As the Company realized a net loss for each of the three and nine months ended September 30, 2009, and September 30, 2008, no potentially dilutive securities were included in the calculation of diluted earnings per share as their impact would have been anti-dilutive.

4. SUBSEQUENT EVENTS

~~On November~~ Since 10March 31, ~~2009~~2010, the Company ~~issued an unsecured promissory note with an~~ ~~accredited~~entered ~~investor~~into ~~providing~~conversion ~~for~~agreements converting a ~~loan~~total of $50112,~~000. The~~500 ~~promissory~~of accrued ~~note~~interest ~~is due~~ on ~~December~~the ~~31,~~January ~~2009,~~2008 ~~and~~Notes ~~bears~~into ~~interest~~45,000,000 atshares ~~12%~~of ~~per~~the Company’s ~~annum~~Common Stock.

Since March 31, 2010, the Company entered into conversion agreements converting a total of $112,500 of principal of the May 2008 Convertible Note into 45,000,000 shares of the Company’s Common Stock.

During 2010, the Company was advanced $128,250 by two accredited investors for working capital purposes. On April 12, 2010, the Company issued two promissory notes totaling $129,250 for the balance of the monies advanced plus $1,000 due one of the investors as of December 31, 2009 (“April Promissory Notes”). The April Promissory Notes mature on December 31, 2010, and bear interest at an annual rate of 10%.

BONANZA OIL AND GAS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
(Unaudited)

On April 12, 2010, the Company entered into an Accounts Receivable Agreement with Westerly Exploration, Inc. the operator of the Company’s Apclark producing field (“Operator”) whereby Operator is willing to settle all amounts then outstanding. Concurrent with entering into the Accounts Receivable Agreement, Operator sold $200,000 of the then outstanding amounts due to several accredited investors who, in turn, entered into conversion agreements with the Company to convert the amount due into shares of the Company’s Common Stock at a conversion price of $0.005 per share. The Company issued a total of 40,000,000 shares of its Common Stock as a result of this transaction subsequent to March 31, 2010.

On April 27, 2010, the Company entered a Letter Agreement with the holder of approximately $235,000 of unpaid principal and accrued interest on the August 2008 Notes whereby, in order to induce the holder to convert the notes into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the holder agreed to exchange the approximate $235,000 of principal and accrued interest on the August 2008 Notes held by holder into 27,416,667 shares of the Company’s Common Stock.

On May 13, 2010, the Company entered a Letter Agreement with the holder of approximately $169,000 of unpaid principal amount of the August 2008 Notes whereby, in order to induce the holder to convert the notes into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the terms with respect to $169,000 of remaining principal of August 2008 Notes held by holder were amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of their August 2008 Notes into shares of the Company’s common stock at a price of $0.0025 per share of Common Stock.

Since March 31, 2010, the Company issued a total of 36,827,201 shares of its Common Stock in conversion of approximately $163,400 of principal and accrued interest on its August 2008 Notes.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following information should be read in conjunction with the Company’s consolidated unaudited financial statements and the notes thereto ~~contained~~ contained elsewhere in this report. ~~The~~ ~~Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements.~~ Information in this Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-Q that does not consist of historical facts, are "forward-looking statements." Statements accompanied or qualified by, or ~~containing~~ containing words such as "may," "will," "should," "believes," "expects," "intends," "plans," "projects," "estimates," "predicts," "potential," "outlook," "forecast," "anticipates," "presume," and "assume" constitute forward-looking statements, and as such, are not a guarantee of future performance. ~~The~~ The statements involve factors, risks and uncertainties including those discussed in the “Risk Factors” section found in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2008~~2009, filed with the Securities and Exchange Commission on April 15, ~~2009~~2010, the impact or occurrence of which can cause actual results to differ materially from the expected results described in such statements. Risks and uncertainties can include, among others, fluctuations in general business cycles and changing economic conditions; changing product demand and industry capacity; increased competition and pricing pressures; advances in technology that can reduce the demand for the Company's products, as well as other factors, many or all of which may be beyond the Company's control. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results. The Company disclaims any obligation to update the forward-looking statements in this report.

Overview

Bonanza Oil & Gas, Inc. is an independent energy company engaged primarily in the acquisition, development, production and the sale of crude oil, natural gas and natural gas liquids. The Company's production activities are located in the United States of America. The principal executive offices of the Company are located at 3417 Mercer, Suite E, Houston, TX 77027.

The Company has incurred significant losses and had negative cash flow from operations since inception on August 17, 2007, and has an accumulated deficit of $8,576,412 at September 30, 2009. Substantial portions of the losses are attributable to non-cash writedowns of oil and gas properties, with the balance attributable to primarily personnel costs, legal and professional fees, and financing costs. The Company's operating plans require additional funds that may take the form of debt or equity financings. There can be no assurance that any additional funds will be available. The Company's ability to continue as a going concern is in substantial doubt and is dependent upon achieving a profitable level of operations and obtaining additional financing.

~~We have~~ August ~~undertaken~~17, ~~steps~~2007, asand ~~part~~has an accumulated deficit of a$23,075,256 ~~plan~~at toMarch ~~improve~~31, ~~operations~~2010. Substantial ~~with~~portions of the ~~goal~~losses are attributable to non-cash writedowns of ~~sustaining~~oil ~~our~~and ~~operations~~gas ~~for~~properties, with the ~~next~~balance ~~twelve~~attributable ~~months~~to primarily personnel costs, legal and ~~beyond~~professional fees, and financing costs. ~~These~~The ~~steps~~Company's operating ~~include~~plans ~~(a)~~require ~~raising~~ additional ~~capital~~funds ~~and/or~~that ~~obtaining~~may ~~financing,~~take ifthe ~~available,~~form of debt or equity ~~(b)~~financings. ~~increasing~~There ~~our~~can ~~current~~be ~~production~~no ~~(c)~~assurance ~~continuing~~that ~~development~~any ~~drilling~~additional onfunds ~~our~~will be ~~proved,~~available. ~~undeveloped~~The ~~properties~~Company's ~~and~~ability ~~(d)~~to ~~controlling~~continue ~~overhead~~as a going concern is in substantial doubt and is dependent upon achieving a profitable level of ~~expenses~~operations and obtaining additional financing.

~~There can~~ We behave noundertaken ~~assurance that we will successfully accomplish these~~ steps ~~and~~as itpart ~~is uncertain~~of ~~we will achieve~~ a ~~profitable~~plan ~~level~~to ofimprove operations ~~and/or~~with ~~obtain additional~~the ~~financing. There~~goal ~~can be no assurance that any additional~~of ~~financings~~sustaining ~~will~~our beoperations ~~available~~for tothe usnext ontwelve ~~satisfactory~~months ~~terms~~ and ~~conditions,~~beyond. ifThese atsteps ~~all. In~~include ~~the~~(a) ~~event~~raising weadditional ~~are~~capital ~~unable~~and/or toobtaining ~~continue~~financing, asif ~~a going concern~~available, we ~~may~~(b) ~~elect~~converting ordebt beand ~~required~~accounts topayable ~~seek~~into ~~protection~~common ~~from~~shares ~~our~~(c) ~~creditors~~increasing byour current ~~filing~~production ~~a voluntary~~(d) ~~petition~~continuing indevelopment ~~bankruptcy~~drilling or ~~may~~farming beout ~~subject~~our interest ~~to an involuntary petition~~ in ~~bankruptcy. To~~ ~~date,~~our ~~management has not considered this alternative~~proved, ~~nor~~ ~~does~~undeveloped ~~management~~properties ~~view~~and it(e) ascontrolling aoverhead ~~likely occurrence~~and expenses.

17 There can be no assurance that we will successfully accomplish these steps and it is uncertain if we will achieve a profitable level of operations and/or obtain additional financing. There can be no assurance that any additional financings will be available to us on satisfactory terms and conditions, if at all. In the event we are unable to continue as a going concern, we may elect or be required to seek protection from our creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, we have not considered this alternative, nor do we view it as a likely occurrence.

~~Results of Operations~~17

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008
REVENUES:
Crude oil sales	$	59,506		$	83,031		$	192,323		$	112,497
		59,506			83,031			192,323			112,497
OPERATING EXPENSES:
Depreciation, depletion and amortization		22,976			21,011			96,251			25,942
Lease operating expenses		43,668			7,138			113,372			25,911
Severance and other taxes		2,578			3,759			8,416			5,185
General and administrative		160,124			295,618			988,849			1,249,638
Financing costs, net		69,416			810,475			499,195			1,038,711
		298,762			1,138,001			1,706,083			2,345,387
OPERATING LOSS		(239,256	)		(1,054,970	)		(1,513,760	)		(2,232,890	)

Results of Operations

Three months ended September 30, 2009 compared to the three months ended September 30, 2008

		For the Three Months Ended
		March 31,
		2010			2009
REVENUES:
Crude oil sales	$	73,845		$	59,477
		73,845			59,477
OPERATING EXPENSES:
Depreciation, depletion and amortization		25,194			32,075
Lease operating expenses		17,043			33,344
Severance and other taxes		3,206			2,628
General and administrative		290,270			323,405
Loss on conversion of debt and accounts payable		6,709,660			-
Financing costs, net		162,775			260,433
		7,208,148			651,885
OPERATING LOSS		(7,134,303	)		(592,408	)

~~During~~ Three ~~the three~~ months ended ~~September~~March 3031, ~~2009~~2010 ~~and~~compared ~~2008,~~to the ~~Company realized gross revenue from its first two development wells drilled in the exploitation of the Apclark field in the second half of 2008. During the~~ three months ~~ended~~ ~~September 30, 2008, the Company’s also had production from three of its eight wells in the Plantation field, while no such production was realized during the three months~~ ended ~~September~~March 3031, 2009~~. During the three~~ months ended September 30, 2009 and 2008, the Company had total sales, net to its interest, of 869 and 766 barrels of crude oil, respectively, and realized average prices of $68.44 and $108.40, respectively. During the same periods, lease operating expenses, including severance and other taxes and transportation costs, totaled $53.19 and $14.22 per barrel, respectively, resulting in netbacks to the Company of $15.25 and $94.18 per barrel, respectively.

~~Depreciation,~~ During ~~depletion~~the ~~and~~three ~~amortization~~months ~~expense~~ended ~~totaled~~March ~~$22~~31,~~976~~ 2010 and ~~$21~~2009,~~011~~ ~~for~~the Company realized gross revenue from its first two development wells drilled in the ~~three~~exploitation of the Apclark field in the second half of 2008. During the three months ended ~~September 30~~March 31, 2010 and 2009, the Company had total sales, net to its interest, of 921 and 1,575 ~~2008~~barrels of crude oil, respectively, ~~most~~and realized average prices of ~~which~~$80.14 isand ~~attributable~~$37.77, torespectively. ~~depletion~~During onthe ~~our~~same ~~Apclark~~periods, ~~field~~lease operating expenses, including severance and ~~Plantation~~other ~~field~~taxes ~~producing~~and transportation costs, totaled $21.98 and ~~properties~~$22.46 per barrel, respectively, resulting in netbacks to the Company of $58.16 and $15.31 per barrel, respectively.

~~For the~~ Depreciation, ~~three~~depletion ~~months ended September 30, 2009~~ and ~~2008,~~amortization ~~general~~expense ~~and administrative expenses~~ totaled $~~160~~25,~~124~~194 and $~~295~~32,~~618,~~075 ~~respectively. For~~for ~~2009,~~the ~~these~~three ~~expenses~~months ~~were~~ended ~~comprised~~March ~~primarily of payroll and other personnel expenses ($108~~31,~~000),~~ ~~audit~~2010 and ~~accounting services ($10~~2009,~~000),~~ ~~legal services ($18~~respectively,~~000) and~~ ~~rent~~most ~~expense~~of ~~($26,057). For~~which ~~2008, these expenses were comprised~~is ~~primarily~~attributable ofto ~~payroll~~depletion ~~and~~on ~~other~~our ~~personnel~~Apclark ~~expenses ($111,683) and legal expenses ($74,500)~~field.

~~Financing~~ For ~~costs, net for~~ the three months ended ~~September~~March 3031, ~~2009~~2010 and ~~2008~~2009, ~~totaled~~general and administrative expenses totaled $69290,~~416~~270 and $~~810~~323,~~475~~405, respectively. ~~The~~ ~~Company~~For ~~capitalized $130~~2010,~~724 of~~ ~~interest~~these ~~associated~~expenses were ~~with~~comprised ~~unproved~~primarily ~~properties~~of ~~during~~payroll ~~the~~and ~~three~~other ~~months~~personnel ~~ended~~expenses ($108,000), ~~September 30~~consulting fees ($80, ~~2009. No~~470), ~~interest~~audit ~~was~~and ~~capitalized~~accounting ~~during~~services ~~the~~($16,000), legal ~~three~~services ~~months~~($18,000), ~~ended~~transfer ~~September~~agent 30fees ($32,549) ~~2008. The~~and ~~balance~~rent ofexpense ~~financing costs~~($23,807). ~~recognized~~For ~~was~~2009, ~~primarily~~these ~~attributable~~expenses towere ~~the~~comprised ~~amortization~~primarily of ~~deferred~~payroll ~~financing~~and other personnel ~~fees~~expenses ($190,596), audit and ~~discounts~~accounting ~~associated~~services ~~with~~($46,000), ~~the~~legal ~~outstanding~~services ($18,000) ~~debt~~and rent expense ($14,813).

18 For the three months ended March 31, 2010, the loss on conversion of debt and accounts payable resulted from the conversion of $756,250 of principal and accrued interest on the January 2008 Notes into 302,500,000 shares of the Company’s Common Stock, the conversion of $267,500 of principal of the May 2008 Convertible Note into 107,000,000 shares of the Company’s Common Stock, the conversion of $55,000 of principal of the August 2008 Notes into 22,000,000 shares of the Company’s Common Stock and $188,000 of accounts payable into 15,200,000 shares of the Company’s Common Stock. The loss on each such conversion was calculated as the difference between the conversion price and the fair market value of the Company’s common shares, as determined by the closing price of the Company’s common stock on the OTC Bulletin Board on the day prior to the conversion.

~~Nine~~ Financing costs, net for the three months ended ~~September~~March 3031, ~~2009~~2010, ~~compared~~totaled to$162,775 and $260,433, respectively. The Company capitalized $84,013 of interest associated with unproved properties during the ~~nine~~three months ended ~~September~~March 3031, ~~2008~~ 2009.

During the nine months ended September 30, 2009 and 2008, the Company realized gross revenue from its first two development wells drilled in the exploitation of the Apclark field in the second half of 2008. During the nine months ended September 30, 2008, the Company also realized production from three of its eight wells in the Plantation field, while in 2009 the Company only realized such production during the first three months of the year. During the nine months ended September 30, 2009 and 2008, the Company had total sales, net to its interest, of 3,716 and 1,055 barrels of crude oil, respectively, and realized average prices of $51.75 and $106.63, respectively. During the same periods, lease operating expenses, including severance and other taxes and transportation costs, totaled $32.61 and $29.47 per barrel, respectively, resulting in netbacks to the Company of $19.14 and $77.16 per barrel, respectively.18

~~Depreciation, depletion~~No ~~and~~interest ~~amortization~~was ~~expense~~capitalized ~~totaled~~during ~~$96,251 and $25,942 for~~ the ~~nine~~ three months ended ~~September 30~~March 31, ~~2009~~2010. ~~and~~The ~~2008,~~balance ~~respectively,~~of ~~most~~financing ofcosts ~~which~~recognized ~~is attributable~~was primarily attributable to ~~depletion~~the onamortization ~~our~~of ~~Apclark~~deferred ~~field~~financing fees and ~~Plantation~~discounts ~~field~~associated ~~producing~~with the ~~properties~~outstanding debt.

~~For~~Liquidity ~~the nine months ended September 30, 2009~~ and ~~2008,~~Capital general and administrative expenses totaled $988,849 and $1,249,638, respectively. For 2009, these expenses were comprised primarily of payroll and other personnel expenses ($268,955), stock based compensation ($327,920), audit and accounting services ($90,500), legal services ($54,000) and rent expense ($65,804). For 2008, these expenses were comprised primarily of payroll and other personnel expenses ($293,673), financial consulting ($516,000), legal expenses ($153,204) and audit and accounting services ($52,685).Resources

~~Financing~~ At ~~costs~~March 31, ~~net~~2010, ~~for~~we ~~the~~had ~~nine~~a ~~months~~working ~~ended~~capital ~~September~~deficit ~~30,~~of ~~2009 and 2008~~$2,871,843 ~~totaled~~consisting of ~~$499,195~~principally ~~and~~of $1,~~038~~572,~~711,~~056 ~~respectively. The Company capitalized $342,154~~ of ~~interest~~short-term ~~associated~~debt ~~with~~and ~~unproved properties during the nine months ended September 30~~$1, ~~2009. No interest was capitalized during the nine months ended September 30~~301,729 ~~2008. The balance~~ of ~~financing~~ ~~costs~~accounts ~~recognized was primarily attributable to the amortization of~~payable ~~deferred financing fees~~ and ~~discounts~~accrued ~~associated with the outstanding debt~~expenses.

~~Liquidity~~ We have raised net proceeds of $6,118,723 in various debt and ~~Capital~~equity ~~Resources~~financings since our inception (August 17, 2007), and have used the majority of the net proceeds to begin the exploitation of our interest in the Apclark field with the completion of the first two wells to be drilled, the acquisition of various oil and gas properties, initial payments toward the exercise of the option on the two drilling projects acquired in the merger with Black Pearl Energy, Inc., as well as for general and administrative expenses and working capital purposes.

At Net ~~September~~cash 30used in operating activities for the three months ended March 31, ~~2009~~2010, totaled we$32,950 ~~had~~and aconsisted ~~working~~primarily ~~capital~~of ~~deficit~~the net loss of $57,~~193~~134,~~255~~303, ~~consisting~~net of non-cash charges of a $26,709,660 loss on conversion of debt and accounts payable into shares of the Company’s common stock,~~000~~ $48,701 related to the amortization of ~~short-term~~deferred financing fees and discount on outstanding debt, and $125,~~584~~194 related to depreciation,~~894~~ depletion and amortization expense. The Company also had $317,798 of ~~accrued~~other ~~exploration~~working ~~and~~capital ~~development~~changes. Net cash used in operating activities ~~expenses~~for the three months ended March 31, 2009, totaled $112,030 and consisted primarily of the net loss of $~~949~~592,~~064~~408, net of ~~accounts~~non-cash ~~payable~~charges of $260,058 related to the amortization of deferred financing fees and ~~accrued~~discount ~~expenses~~on outstanding debt, $65,000 related to stock-based compensation, $32,075 related to depreciation, depletion and amortization expense and $15,897 related to the fair value of our common share issued for consulting services. The Company also had $107,348 of other working capital changes.

~~We have~~ The ~~raised~~Company ~~net~~had ~~proceeds~~no ofcash ~~$6,157,593 in~~flow ~~various~~activity ~~debt~~related ~~and~~to ~~equity financings~~investing ~~since~~activities ~~our~~during ~~inception (August 17, 2007), and have used~~ the ~~majority of~~ ~~the~~three ~~net~~months ~~proceeds~~ended toMarch ~~successfully~~31, ~~begin~~2010. ~~the~~Net ~~exploitation~~cash ofused ~~our interest~~ in ~~the Apclark~~investing ~~field~~activities ~~with~~for the three ~~completion~~months ofended ~~the~~March ~~first~~31, ~~two wells to be drilled~~2009, ~~the acquisition~~totaled ~~of our interest in the Plantation field~~$13,969 ~~initial~~and ~~payments~~consisted ~~toward~~primarily ~~the~~of ~~exercise~~payments ofdue ~~the~~from ~~option on~~ the ~~two~~2008 drilling ~~projects~~activity ~~acquired~~ in the ~~merger~~Apclark ~~with Black Pearl Energy, Inc~~field., ~~as well as for general and administrative expenses and working capital purposes.~~

Net ~~cash~~ ~~used~~cash inprovided ~~operating~~by financing activities for the ~~nine~~three months ended ~~September~~March 30, ~~2009~~2010, totaled $~~143~~25,~~585~~000 and consisted ~~primarily~~ of the ~~net~~issuance ~~loss~~by ~~of $1,513,760, net of non-cash charges of $499,195 related to~~ the ~~amortization~~Company of ~~deferred financing fees and discount on outstanding debt, $327,920 related to stock-based compensation, $96,251 related to depreciation, depletion and amortization expense and $15,897 related to~~ the ~~fair~~January ~~value of our common shares issued for~~2010 ~~consulting services~~Note. ~~The~~ ~~Company also had $430,912 of other working capital changes.~~ Net cash ~~used~~provided inby ~~operating~~financing activities for the ~~nine~~ three months ended ~~September 30~~March 31, ~~2008~~2009, totaled $1128,~~228,715~~276 ~~and~~from ~~consisted primarily of~~ the ~~net~~issuance ~~loss~~ of ~~$2,232,890, net of non-cash charges of $568,500 related to the fair value of~~ our ~~common~~February ~~share~~2009 ~~issued for consulting services~~Note, ~~$894,353~~net ~~related to the amortization~~ of ~~deferred financing fees and discount on outstanding debt~~ ~~and~~issuance ~~$25~~costs,~~942~~ ~~related to depreciation, depletion~~ and ~~amortization expense. The~~the ~~Company~~partial ~~also~~repayment ~~had $484,620~~ of ~~other~~the ~~working~~December ~~capital changes~~2007 Note.

~~Net~~ We ~~cash~~are ~~used~~ in ~~investing~~default ~~activities~~on ~~for~~ the ~~nine~~January months ended September 30, 2009, totaled $105,642 and consisted of payment of amounts due related to the Company’s activity in its Apclark field. Net cash used in investing activities for the nine months ended September 30, 2008, ~~totaled~~Notes ~~$3,078,211 and consisted primarily of payments made toward the drilling activity in the Apclark field.~~

19 In January 2008, we entered into three 14% Senior Secured Promissory Note and Security Agreements, and Securities Purchase Agreements, with accredited investors for an aggregate principal amount of $800,000 (the "January 2008 Notes") and the issuance of 320,000 shares of our Common Stock. The January 2008 Notes matured on January 31, 2009. Under the terms of the January 2008 Notes, as a result of their non-repayment as of July 31, 2009, we were obligated to issue an additional 300,000 shares of our Common Stock as an additional interest payment. We issued the additional 300,000 shares of Common Stock in August 2009.

~~Net cash~~ We ~~provided~~are byin ~~financing~~default ~~activities~~with ~~for~~respect to the ~~nine~~repayment ~~months~~obligation ~~ended~~upon ~~September~~maturity ~~30, 2009,~~which ~~totaled~~occurred ~~$245,555~~on ~~and~~January ~~consisted~~31, ~~primarily~~2009. ofPursuant to the ~~issuance~~terms byof the ~~Company~~January of2008 ~~the~~Notes, ~~February~~upon ~~2009~~becoming ~~Note~~in default, the ~~May~~interest ~~2009~~rate ~~Note,~~on ~~the~~all ~~July~~amounts ~~2009~~outstanding ~~Note~~increased to ~~and~~24% ~~the~~per ~~September~~annum. On December 2, 2009 ~~Note~~, ~~net~~we ofentered ~~issuance~~a ~~costs,~~Letter ~~and~~Agreement with the holder ~~partial~~of ~~repayment~~$750,000 principal amount of the ~~December~~January ~~2007~~2008 ~~Note~~Notes whereby, in order ~~and~~to induce the ~~complete~~holder ~~repayment~~to ofconvert the ~~February~~notes ~~2009~~into ~~Note. Net~~shares ~~cash~~of our common stock and, ~~provided~~in byturn, ~~financing~~to ~~activities~~reduce our debt and avoid potentially filing for bankruptcy, the terms ~~nine~~of ~~months~~the ~~ended September 30~~$750, 000 of principal of January 2008, ~~totaled~~Notes ~~$4,163,499~~held by holder were amended providing that the holder may from time to time convert all or any part of the ~~issuance~~outstanding and unpaid principal amount of ~~our~~ their January 2008 ~~Secured~~Notes ~~Promissory~~into shares ~~Notes~~of our common stock, ~~May~~at ~~2008~~the ~~Convertible~~holder's ~~Note~~option, ~~and~~at ~~August~~the ~~2008~~lesser of (i) $0.0025 ~~Notes,~~or ~~net~~(ii) a 50% discount to the average of ~~issuance~~the ~~costs,~~three ~~and~~lowest trading prices of the common ~~proceeds~~stock ~~from~~during the ~~Company’s~~20 ~~equity~~trading day period prior to conversion (the “Variable ~~issuances~~Conversion Price”). On January 29, 2010, we entered into a Letter Agreement

At September 30, 2009, the Company was in default with respect to the repayment obligation upon maturity on December 17, 2008, with respect to its December 2007 Secured Promissory Note. Pursuant to the terms of the December 2007 Secured Promissory Note, the interest rate on all amounts outstanding increased to 24% per annum, effective December 17, 2008. On February 6, 2009, the Company made a partial payment of $125,000 toward satisfaction of this obligation. As of June 10, 2009, the Company has not remitted the balance of amount due and on June 30, 2009, the lender filed suit against the Company seeking repayment of the principal balance outstanding plus all accrued interest, along with their attorney fees and court costs.19

~~At September~~with ~~30, 2009,~~ the ~~Company~~holder ~~was~~removing inthe ~~default~~holder’s ~~with~~ability ~~respect~~ to ~~the~~convert ~~repayment obligation~~at ~~upon maturity on January 31, 2009, with respect to its~~the ~~January~~Variable ~~2008~~Conversion ~~Secured Promissory Notes~~Price. ~~Pursuant~~ toDuring ~~the~~December ~~terms~~2009, of the ~~January~~ ~~2008~~holder ~~Secured~~converted ~~Promissory Notes~~$75,200 ~~the interest rate on all amounts~~of ~~outstanding~~principal ~~increased~~and toaccrued ~~24%~~interest ~~per~~due ~~annum,~~into ~~effective January 31~~30, ~~2009. In addition~~080,000 asshares ~~the~~of ~~January~~our ~~2008~~Common ~~Secured~~Stock. ~~Promissory~~During ~~Notes~~the ~~was~~three ~~not~~months ~~repaid~~ended ~~prior~~March ~~to July~~ 31, ~~2009~~2010, the ~~Company~~holder ~~was obligated~~converted toan ~~issue~~additional $756,250, ~~and~~including ~~did~~$81,450 ~~issue~~of inaccrued ~~August~~and ~~2009~~unpaid interest, aninto ~~additional 150~~302,500,000 ~~shares~~ shares of ~~its~~the Company’s Common Stock ~~as an additional interest payment~~. As of ~~September~~ 30May 17, ~~2009~~2010, ~~the~~we ~~Company~~have ~~has~~entered ~~not~~into conversion ~~cured~~agreements ~~its~~whereby ~~default;~~an ~~however~~additional ~~the~~$112,500 ~~lenders~~of unpaid accrued interest ~~have~~on ~~not,~~the asJanuary of2008 ~~September~~Notes ~~30, 2009,~~has ~~taken~~been ~~any~~converted ~~further~~into ~~action~~45,000,000 ~~with~~million ~~respect~~shares of toour ~~the~~Common ~~default.~~Stock

~~As of~~ ~~September~~We ~~30,~~have ~~2009, the Company had~~ not ~~made~~cured the ~~quarterly~~underlying ~~interest~~default ~~payment due on March 31, 2009, June 30, 2009, or September 30, 2009,~~ with respect to ~~the May 2008 Convertible Note. Pursuant~~ to ~~the~~any ~~terms~~ of the ~~May~~ January 2008 Notes; ~~Convertible Note~~however, the ~~interest~~lenders ~~rate~~have onnot ~~the~~yet ~~past~~taken ~~due~~any ~~quarterly~~further ~~interest payment~~action ~~increased~~with ~~to 15% per annum, effective March 31, 2009. The~~respect ~~Company had 90 days~~ to ~~make~~ the ~~scheduled~~default. ~~quarterly~~Although ~~interest~~we ~~payment~~are ~~before~~actively ~~an Event~~seeking ofadditional ~~Default~~financing ~~should~~to ~~occur. At September 30, 2009, the Company was~~remedy inthis default, ~~with~~continuing ~~respect~~ to ~~the~~convert ~~March~~principal ~~31,~~and ~~2009~~accrued ~~quarterly~~ interest ~~payment~~into inshares ~~addition~~of toour ~~being~~Common inStock ~~default~~and ~~with~~are ~~respect~~in toconstant ~~the~~communication ~~repayment~~with ~~obligation~~the ~~upon maturity on May 14~~lenders, ~~2009. Pursuant~~ tothere can ~~the~~be ~~terms~~no ofassurances ~~the~~that ~~May 2008 Convertible Note,~~ the ~~interest~~lenders ~~rate~~will oncontinue ~~all amounts outstanding increased~~ to ~~15% per~~delay ~~annum. As of September 30, 2009,~~ the ~~Company~~enforcement ~~had~~of their ~~not~~remedies ~~cured~~under the ~~default;~~ ~~however~~January ~~the~~2008 ~~lender has not yet taken any further action with respect to the default~~Notes.

~~As of September 30, 2009, the Company~~ ~~had~~We ~~not~~are ~~repaid~~in ~~any~~default ofon the ~~amounts~~May ~~due under the August~~ 2008 ~~Unsecured~~Convertible ~~Promissory Notes or the October 2008 Unsecured Promissory~~ Note~~. Pursuant~~ to the terms of the August 2008 Unsecured Promissory Notes and the October 2008 Unsecured Promissory Note agreements, the Company is required to issue to the holders of the August 2008 Unsecured Promissory Notes and the October 2008 Unsecured Promissory Note, a total of 137,500 warrants to purchase shares of the Company’s Common Stock every 30 days that amounts remain outstanding under the August 2008 Unsecured Promissory Notes and the October 2008 Unsecured Promissory Note.

~~As of~~ ~~September~~In ~~30,~~May ~~2009~~2008, we entered into a Securities Purchase Agreement with an accredited investor providing for the ~~Company~~sale ~~had~~of ~~not~~an ~~repaid~~8% convertible note in the principal amount of $750,000 (the "May ~~2009~~2008 Convertible Note,") ~~which~~and ~~matured~~the issuance of 750,000 onshares ~~August~~of 24our Common Stock, ~~2009. In~~a ~~the~~Series ~~event~~A ~~that~~Common Stock Purchase Warrant to purchase 1,500,000 shares of our Common Stock (the “Series A May ~~2009~~Warrant”) ~~Note~~and ~~was~~a ~~not~~Series B ~~repaid~~Common byStock ~~August~~Purchase ~~24,~~Warrant ~~2009~~to purchase 1,500,000 shares of our Common Stock (the ~~interest~~“Series ~~rate~~B ~~increased~~May toWarrant”). ~~18%~~The ~~per~~May ~~annum~~2008 ~~and~~Convertible ~~the~~Note matured on May 14, ~~lender~~2009, atand ~~its~~interest ~~option,~~is ~~can~~payable ~~convert~~on ~~all~~a ~~outstanding~~quarterly ~~amounts~~basis. inThe ~~shares~~May of2008 ~~the~~Convertible ~~Company’s~~Note was convertible into our Common Stock, at a conversion price of $0.101871 per common share, as adjusted, and is subject to normal and customary anti-dilution provisions.

As We have not made any required interest payment since March 31, 2009, and we were unable to repay the May 2008 Convertible Note at maturity on May 14, 2009. Pursuant to the terms of the May 2008 Convertible Note, upon becoming in ~~November~~default, 20the interest rate on all amounts outstanding increased to 15% per annum. On December 2, 2009, we entered into a Letter Agreement with the ~~Company~~holder of ~~had~~the ~~not~~May ~~repaid~~2008 Convertible Note whereby, in order to induce the ~~July~~holder ~~2009~~to convert the May 2008 Convertible Note into shares of our common stock and, ~~which~~in turn, ~~matured~~to reduce our debt and avoid potentially filing for bankruptcy, the May on2008 ~~October~~Convertible 13Note was amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of the May 2008 Convertible Note into shares of our common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”). On January 29, 2010, we entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. The holder did not convert any of the May 2008 Convertible Note into shares of our Common Stock during the year ended December 31, 2009. During the three months ended March 31, 2010, the holder converted $267,500 of the principal balance outstanding into 107,000,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional $112,500 of principal of the May 2008 Convertible Note has been converted into 45,000,000 shares of our Common Stock.

20 We have not cured the default with respect to the May 2008 Convertible Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, continuing to convert principal and accrued interest into shares of our Common Stock and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the May 2008 Convertible Note.

~~Capital~~ ~~Expenditures~~We ~~and~~are ~~2009~~in ~~Outlook~~default on the August 2008 Notes

We ~~presently~~In doAugust ~~not have any available credit~~2008, ~~bank~~we ~~financing~~entered orinto ~~other~~four ~~external sources~~12% ofUnsecured ~~liquidity. Due~~Promissory toNotes, ~~our brief history~~ and ~~historical~~ ~~operating~~Securities ~~losses~~Purchase Agreements, ~~our~~with ~~operations~~accredited ~~have~~investors ~~not~~for ~~been~~an aaggregate principal ~~source~~amount of ~~liquidity. We~~ ~~will~~$500,000 ~~need~~(the to"August ~~obtain~~2008 ~~additional~~Notes"). ~~capital~~The inAugust ~~order~~2008 toNotes ~~expand~~matured ~~operations~~on ~~and~~September ~~become profitable. In order to obtain capital~~28, we ~~may need to sell additional shares of our common stock or borrow funds from private lenders~~2008. ~~There can be no assurance that we will be successful in obtaining additional funding.~~

We will still need additional capital in order to continue operations until we are able to achieve positive operating cash flow. Additional capital is being sought, but we cannot guarantee that we will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our common stock and a downturn in the North American stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail our operations.20

~~Contractual~~ ~~Obligations~~We are in default of the repayment provision with respect to the August 2008 Notes; however, the lenders have not yet taken any further action with respect to the default. Although we are actively seeking additional financing, began, in 2010, to convert principal and accrued interest into shares of our Common Stock and are in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the August 2008 Notes. Pursuant to the terms of the August 2008 Notes, we are required to issue to the holders of the August 2008 Notes, a total of 250,000 warrants to purchase shares of our Common Stock every 30 days that amounts remain outstanding under the August 2008 Notes.

~~We are~~ ~~subject~~During tothe ~~various~~three ~~financial~~months ~~obligations~~ended ~~and~~March ~~commitments~~31, 2010, in ~~the~~order ~~normal~~to ~~course~~reduce ofthe Company’s ~~operations. These~~debt ~~contractual~~and ~~obligations~~avoid ~~represent~~potentially ~~future~~filing ~~cash payments~~for ~~that~~bankruptcy, we ~~are~~entered ~~required~~into toa ~~make~~series ~~and~~of individual ~~relate~~agreements ~~primarily~~with tothe ~~notes~~holders ~~payable~~of ~~and accounts~~an ~~payable,~~aggregate ~~all~~ of ~~which~~$250,000 ~~are~~of ~~due~~principal amount ~~currently~~of ~~and~~the ~~which~~August ~~are~~2008 ~~reflected~~Notes onto ~~the Company’s~~convert ~~Unaudited~~portions ~~Consolidated~~of ~~Balance~~their ~~Sheet~~notes atinto ~~September~~shares of ~~30,~~our ~~2009,~~Common ~~found~~Stock. ~~in Item~~During 1the inthree ~~this~~months ~~Form~~ended ~~10-Q. The~~March ~~Company~~31, ~~does~~2010, ~~have~~the ~~an operating lease~~lenders ~~obligation~~converted ~~with~~an ~~annual~~aggregate ~~payments~~of ~~totaling~~ $6755,~~180~~000 inof ~~2009,~~unpaid ~~$103,790~~principal ininto ~~2010~~22, ~~$108~~000,~~321~~000 inshares ~~2011~~of the ~~and~~Company’s ~~$36,610~~Common ~~in 2012~~Stock. ~~The~~ ~~Company~~As ~~is in default~~ of ~~several~~ ofMay ~~these obligations~~17, ~~as disclosed herein~~2010, iswe ~~working~~have ~~toward~~entered aninto ~~amicable~~conversion ~~resolution~~agreements ~~and~~whereby ~~expects~~an toadditional ~~fund~~approximate ~~these contractual obligations with additional financing~~$163,400 ~~either in the form~~ of ~~equity~~principal orand ~~debt issuances, for which there is no~~accrued ~~assurance~~interest ~~that~~of ~~any~~the ~~additional~~August ~~financings~~2008 ~~will~~Notes behas ~~available~~been toconverted usinto ~~on satisfactory terms and conditions~~36,827,201 ifshares atof our ~~all~~Common Stock.

~~Off-balance~~ ~~Sheet~~On ~~Arrangements~~April 27, 2010, the Company entered a Letter Agreement with the holder of approximately $235,000 of unpaid principal and accrued interest on the August 2008 Notes whereby, in order to induce the holder to convert the notes into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the holder agreed to exchange the approximate $235,000 of principal and accrued interest on the August 2008 Notes held by holder into 27,416,667 shares of the Company’s Common Stock.

~~The~~ On May 13, 2010, the Company ~~does~~entered ~~not~~a ~~currently~~Letter ~~utilize~~Agreement ~~any~~with ~~off-balance~~the ~~sheet~~holder ~~arrangements~~of approximately $169,000 of unpaid principal amount of the August 2008 Notes whereby, in order to induce the holder to convert the notes into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the terms with respect to $169,000 of ~~unconsolidated~~remaining ~~entities~~principal of August 2008 Notes held by holder were amended providing that the holder may from time to ~~enhance~~time ~~liquidity~~convert all or any part of the outstanding and ~~capital~~unpaid ~~resource~~principal amount of their August 2008 Notes into shares of the ~~positions~~Company’s common stock at a price of $0.0025 per share of Common Stock.

~~Critical~~ ~~Accounting~~We ~~Policies~~are ~~and~~in ~~Estimates~~default on the October 2008 Note

~~Management's Discussion and Analysis of~~ ~~Financial~~On ~~Condition~~October ~~and~~17, ~~Results of Operations discusses our consolidated financial statements~~2008, ~~which~~we ~~have~~entered ~~been~~into ~~prepared~~a in12% ~~accordance~~Unsecured ~~with~~Promissory ~~accounting principles~~Note, ~~generally accepted in the United States of America. The~~and ~~preparation~~Securities ofPurchase ~~these~~Agreement, ~~financial~~with ~~statements~~an ~~requires~~accredited ~~management~~investor tofor ~~make~~an ~~estimates~~aggregate ~~and~~principal ~~assumptions~~amount ~~that affect the reported amounts~~ of ~~assets~~$50,000 ~~and liabilities at~~ (the ~~date~~"October of2008 ~~the~~Note"). ~~financial~~The ~~statements~~October ~~and~~2008 ~~the reported amounts of revenues and~~Notes ~~expenses~~matured ~~during the reporting period. On an~~ on~~-going~~ ~~basis, management~~November ~~evaluates our estimates and judgments~~17, ~~including those related to revenue recognition, recovery of oil and gas reserves, financing operations, and contingencies and litigation~~2008.

21 We are in default of the repayment provision with respect to the October 2008 Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the October 2008 Note. Pursuant to the terms of the October 2008 Notes, we are required to issue to the holders of the October 2008 Notes, a total of 25,000 warrants to purchase shares of our Common Stock every 30 days that amounts remain outstanding under the October 2008 Notes.

~~Oil~~ We ~~and~~are ~~Gas~~in ~~Properties~~default on the May 2009 Note

We On ~~follow~~May ~~the~~26, ~~full~~2009, ~~cost~~we ~~method~~entered ofinto a 16% Unsecured Promissory Note with an ~~accounting~~accredited investor for ~~oil~~an ~~and~~aggregate ~~gas~~principal ~~producing~~amount ~~activities.~~of ~~Costs~~$340,000 to(the ~~acquire~~"May ~~mineral~~2009 ~~interests~~Note"). inThe ~~oil~~May ~~and~~2009 ~~gas~~Note ~~properties~~matured on August 24, to2009. ~~drill~~In ~~and~~the ~~equip~~event ~~exploratory~~that ~~wells~~the ~~used~~May to2009 ~~find~~Note ~~proved~~was ~~reserves~~not repaid by August 24, ~~and~~2009, the interest rate increased to ~~drill~~18% per annum and ~~equip~~the ~~development~~lender, ~~wells~~at ~~including~~its option, could convert all outstanding amounts ~~directly~~in ~~related~~shares ~~overhead~~of ~~costs~~the ~~and~~Company’s ~~related~~Common ~~asset~~Stock ~~retirement~~at ~~costs~~a ~~are~~conversion price of $0.05 per ~~capitalized~~share.

Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalizable as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. Bonanza assesses the realizability of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management's intention with regard to future exploration and development of individually significant properties and the ability of Bonanza to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.21

~~The~~ We ~~provision~~are ~~for~~in ~~depreciation~~default ~~and depletion~~ of ~~oil and gas properties is computed on~~ the ~~unit-of-production method. Under~~repayment ~~this~~provision ~~method,~~with werespect ~~compute~~to the ~~provision~~May by2009 ~~multiplying~~Note; ~~the total unamortized costs of oil and gas properties including future development~~however, ~~site restoration, and dismantlement abandonment costs, but excluding costs of unproved properties by an overall rate determined by dividing~~ the ~~physical~~lender ~~units~~has ofnot ~~oil~~yet ~~and~~taken ~~gas~~any ~~produced~~further ~~during~~action ~~the~~with ~~period~~respect byto the ~~total~~ ~~estimated units of proved oil and gas reserves~~default. ~~This~~ ~~calculation~~Although ~~is done~~we onare aactively ~~country-by-country~~seeking ~~basis. As~~additional offinancing ~~September~~to ~~30,~~remedy ~~2009~~this default, ~~all~~and ~~of our oil production operations~~ are ~~conducted~~ in ~~the~~constant ~~United~~communication ~~States~~with ~~of America. The~~the ~~cost of unevaluated properties not being amortized~~lender, ~~to the extent~~ there iscan ~~such~~be ~~a cost, is assessed quarterly to determine whether the~~no ~~value~~assurances ~~has~~that ~~been impaired below~~ the ~~capitalized~~lender ~~cost. The~~will ~~cost~~continue ~~of any impaired property is transferred~~ to delay the ~~balance~~enforcement of ~~oil and gas properties being~~their ~~depleted. The~~remedies ~~costs~~under ~~associated with unevaluated properties relate to projects which were undergoing exploration or development activities or in which we intend to commence such activities in~~ the ~~future.~~May We2009 ~~will begin to amortize these costs when proved reserves are established or impairment is determined~~Note.

~~In accordance with ASC Topic 410-10,~~ ~~“Asset~~We Retirement and Environmental Obligations,” we report a liability for any legal retirement obligations on our oil and gas properties. The asset retirement obligations represent the estimated present value of the amounts expected to be incurred to plug, abandon, and remediate the producing properties at the end of their productive lives, in accordance with state laws, as well as the estimated costs associated with the reclamation of the property surrounding. The Company determines the asset retirement obligations by calculating the present value of estimated cash flows related to the liability. The asset retirement obligations are recorded as a liability at the estimated present value as of the asset's inception, with an offsetting increase to producing properties. Periodic accretion of the discount related to the estimated liability is recorded as an expense in ~~the~~default ~~statement~~on ~~of operations. The estimated liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs,~~ the ~~productive~~July lives of wells, and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated asset retirement obligations. Revisions to the asset retirement obligations are recorded with an offsetting change to producing properties, resulting in prospective changes to depletion and depreciation expense and accretion of the discount. Because of the subjectivity of assumptions and the relatively long lives of most of the wells, the costs to ultimately retire the Company's wells may vary significantly from prior estimates. As of September 30, 2009, ~~the~~Note ~~Company’s Asset Retirement Obligation was not significant.~~

~~Reserve~~ ~~Estimates~~ On July 16, 2009, we issued an unsecured promissory note to an accredited investor providing for a loan of $40,000 (the “July 2009 Note”). The July 2009 Note matured on October 13, 2009.

~~Our~~ ~~estimate~~We ofare ~~proved~~in ~~reserves~~default isof ~~based on~~ the ~~quantities~~repayment ofprovision ~~oil and gas that geological and engineering data demonstrate,~~ with ~~reasonable~~respect ~~certainty,~~ to ~~be recoverable~~the inJuly ~~future~~2009 ~~years~~Note; however, ~~from~~the ~~known~~lender ~~reservoirs~~has ~~under~~not ~~existing~~yet ~~economic~~taken ~~and operating conditions. The accuracy of~~ any ~~reserve~~further ~~estimate~~action iswith ~~a function~~respect ofto the ~~quality of available data, engineering and geological~~ ~~interpretation and judgment~~default. ~~For~~ ~~example,~~Although we ~~must~~are ~~estimate~~actively ~~the~~seeking ~~amount and~~additional ~~timing~~financing ofto ~~future~~remedy ~~operating costs~~this default, ~~severance taxes, development costs~~ and ~~workover~~ ~~costs,~~are ~~all of which may~~ in ~~fact~~constant ~~vary~~communication ~~considerably~~with ~~from~~the ~~actual results. In addition~~lender, asthere ~~prices~~can ~~and~~be ~~cost levels change from year to~~no ~~year,~~assurances that the ~~estimate~~lender ofwill ~~proved~~continue ~~reserves~~to ~~also~~delay ~~changes. Any significant variance in these assumptions could materially affect~~ the ~~estimated~~enforcement ~~quantity and value~~ of ~~our reserves. As such, our reserve engineers review and~~their ~~revise~~remedies under the ~~Company’s~~July ~~reserve~~2009 ~~estimates at least annually~~Note.

22 We are in default on the October 2009 Convertible Notes

~~Despite~~ ~~the~~On ~~inherent~~October ~~imprecision~~30, ~~in these engineering estimates~~2009, ~~our~~the ~~reserves~~Company ~~are~~issued ~~used throughout~~unsecured ~~our~~convertible ~~financial~~notes ~~statements. For~~to ~~example, since we use the~~two ~~units-of-production~~accredited ~~method~~investors tofor ~~amortize~~an ~~our~~aggregate ~~oil~~principal ~~and~~amount ~~gas~~of ~~properties~~$15,000 (the ~~quantity~~“October of2009 ~~reserves~~Convertible ~~could significantly impact our DD&A expense~~Notes”). ~~Our~~ ~~oil and~~The ~~gas~~October ~~properties~~2009 ~~are~~Notes ~~also~~matured ~~subject to a “ceiling” limitation based in part~~ on ~~the~~ ~~quantity~~April of30, ~~our proved reserves.~~2010,

~~Revenue~~ ~~Recognition~~As of May 17, 2010, the Company was in default of the repayment provision with respect to the October 2009 Convertible Notes; however, the lenders have not yet taken any further action with respect to the default. Although the Company is actively seeking additional financing to remedy this default, and is in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the October 2009 Convertible Notes.

~~Bonanza~~ ~~recognizes~~We ~~oil~~are ~~and natural gas revenue under the sales method of accounting for its interests~~ in ~~producing~~default ~~wells~~on as crude oil and natural gas is produced and sold from those wells. Crude oil and natural gas sold by Bonanza is not significantly different from Bonanza’s share of production. We recognize revenue upon transfer of ownership of the ~~product~~November ~~to the customer which occurs when (i) the product is physically received by the customer~~10, ~~(ii) an~~2009 ~~invoice~~Note ~~is generated which evidences an arrangement between the customer and us, (iii) a fixed sales price has been included in such invoice and (iv) collection from such customer is probable.~~

~~Income~~ ~~Taxes~~On November 10, 2009, we entered into a loan agreement with an accredited investor providing for a loan of $50,000 (the “November 10, 2009 Note”). The November 10, 2009 Note matured on December 31, 2009.

~~The~~ ~~Company~~We ~~uses~~are ~~the~~in ~~liability~~default ~~method~~of ~~for~~the ~~accounting~~repayment ~~for~~provision ~~income taxes. Under~~with ~~this~~respect ~~method,~~to ~~deferred~~the ~~tax~~November ~~assets~~10, 2009 ~~and~~Note; ~~liabilities~~however, ~~are determined~~the ~~based~~lender onhas ~~differences~~not ~~between~~yet ~~financial~~taken ~~reporting~~any ~~and~~further ~~tax~~action ~~bases~~with ofrespect ~~assets~~to ~~and liabilities and are measured using~~ the ~~enacted~~default. ~~tax~~Although ~~rates~~we ~~and~~are ~~laws that~~actively ~~will~~seeking beadditional infinancing ~~effect when the differences are expected~~ to remedy ~~reverse. The~~this ~~realizability~~default, ofand ~~deferred tax assets~~ are ~~evaluated annually~~in ~~and~~constant acommunication ~~valuation~~with ~~allowance~~the islender, ~~provided~~there ifcan itbe ~~is more likely than not~~no assurances that the ~~deferred~~lender ~~tax assets~~ will ~~not~~continue ~~give~~to ~~rise~~delay tothe ~~future~~enforcement ~~benefits~~of intheir remedies under the ~~Company’s~~ ~~tax~~November ~~returns~~10, 2009 Note.

~~The~~ ~~Company’s~~We ~~estimates~~ are ~~based~~in default on the ~~information~~November available to it at the time that it prepares the income tax provision. The Company generally files its annual income tax returns several months after its fiscal year-end. Income tax returns are subject to audit by federal30, ~~state, and~~2009 ~~local~~Note ~~governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws.~~

At ~~Inception~~On ~~(August~~November 1730, ~~2007)~~2009, the Company ~~adopted~~entered ~~ASC~~into ~~Topic~~a ~~740-10,~~loan ~~“Income Taxes”,~~agreement ~~which~~with ~~is intended to clarify the accounting for income taxes prescribing~~an aaccredited ~~minimum~~investor ~~recognition~~providing ~~threshold~~ for a ~~tax~~loan ~~provision~~of ~~before~~$15,000 ~~being recognized in~~ (the ~~consolidated~~“November ~~financial statements. ASC Topic 740-10 also provides guidance on derecognition~~30, ~~measurement, classification, interest and penalties,~~2009 ~~accounting in interim periods, disclosure and transition~~Note”). As ~~a result, the Company has concluded that it does not have any unrecognized tax benefits or any additional tax liabilities after applying ASC Topic 740-10.~~ The ~~adoption~~November of30, ~~ASC~~2009 ~~Topic~~Note ~~740-10~~matured ~~therefore had no impact~~ on ~~the~~ ~~Company’s~~April ~~consolidated~~1, ~~financial statements~~2010.

~~Item~~ 3We are in default of the repayment provision with respect to the November 30, 2009 Note; however, the lender has not yet taken any further action with respect to the default. ~~Quantitative~~ Although we are actively seeking additional financing to remedy this default, and ~~Qualitative~~are ~~Disclosures~~in ~~About~~constant ~~Market~~communication with the lender, there can be no ~~Risks~~assurances that the lender will continue to delay the enforcement of their remedies under the November 30, 2009 Note.

~~Since we are a company that qualifies~~ asWe ~~a “smaller reporting company,” as defined under Rule 12b-2, we~~ are ~~not required~~in todefault ~~provide~~on the ~~information~~December ~~required~~2009 ~~by this Item 3.~~Note

23 On December 31, 2009, the Company entered into a loan agreement with an accredited investor providing for a loan of $7,500 (the “December 2009 Note”). The December 2009 Note matured on May 1, 2010.

~~Item 4. Controls and Procedures~~22

~~Since~~ As weof ~~are~~May a17, ~~company~~2010, ~~that~~the ~~qualifies as~~Company awas ~~“smaller~~in ~~reporting~~default ~~company,”~~of asthe ~~defined~~repayment ~~under~~provision ~~Rule~~with respect ~~12b-2~~to the December 2009 Note; however, wethe ~~are~~lender has not yet taken any ~~required~~further action with respect to ~~provide~~the default. Although the ~~information~~Company ~~required~~is byactively seeking additional financing to remedy this ~~Item~~default, 4and is in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the December 2009 Note.

~~Item~~ ~~4T. Controls~~Capital Expenditures and ~~Procedures~~2010 Outlook

We ~~maintain~~presently ~~disclosure~~do ~~controls~~not ~~and~~have ~~procedures~~any ~~(as~~available ~~defined~~credit, inbank ~~Rules~~financing ~~13a-15(e)~~or ~~and~~other external ~~15d-15(e)~~sources ~~under the Securities Exchange Act~~ of ~~1934,~~liquidity. asDue ~~amended the "Exchange Act) that are designed~~ to ~~ensure~~our ~~that~~brief ~~information~~history ~~required~~and tohistorical beoperating ~~disclosed in~~losses, our ~~reports~~operations ~~filed~~have ~~under~~not ~~the~~been ~~Exchange~~a ~~Act,~~source isof ~~recorded,~~liquidity. ~~processed,~~We ~~summarized~~will ~~and reported~~need ~~within~~to ~~the~~obtain additional ~~time~~capital ~~periods specified~~ in ~~the~~order ~~Securities~~to ~~and~~expand ~~Exchange Commission’s~~operations ~~rules~~ and ~~forms,~~become ~~and~~profitable. ~~that~~In ~~such information is accumulated and~~order ~~communicated~~ to ~~our~~obtain ~~management~~capital, ~~including~~we ~~our~~may ~~Chief~~need ~~Executive Officer and Principal Financial Officer, as appropriate,~~ to ~~allow~~sell ~~timely~~additional ~~decisions~~shares ~~regarding required~~of ~~disclosure. In~~our ~~designing~~common ~~and~~stock ~~evaluating the disclosure~~or ~~controls~~borrow ~~and~~funds ~~procedures,~~from ~~management~~private ~~recognized~~lenders. ~~that~~There ~~any~~can ~~controls~~be ~~and procedures,~~ no ~~matter how well designed and operated, can provide only reasonable~~ assurance of ~~achieving~~that ~~the~~we ~~desired~~will ~~control objectives, and management necessarily was~~be ~~required~~successful ~~to apply its judgment~~ in ~~evaluating~~obtaining ~~the~~additional ~~cost-benefit relationship of possible controls and procedures~~funding.

We will still need additional capital in order to continue operations until we ~~carried~~are ~~out~~able anto ~~evaluation~~achieve ~~under~~positive ~~the~~operating ~~supervision~~cash ~~and~~flow. ~~with~~Additional ~~the~~capital ~~participation~~is ofbeing ~~management~~sought, ~~including~~but ~~our~~we ~~Chief~~cannot ~~Executive~~guarantee ~~Officer~~that ~~and~~we ~~Principal~~will ~~Financial~~be able to obtain such investments. ~~Officer,~~Financing oftransactions may include the ~~effectiveness~~issuance of ~~the~~equity ~~design~~or ~~and~~debt ~~operation~~securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of our ~~disclosure controls~~common stock and ~~procedures~~a asdownturn ofin ~~September~~the ~~30,~~North ~~2009,~~American stock and debt markets could make it more difficult to obtain financing through the ~~end~~issuance of equity or debt securities. Even if we are able to raise the ~~period~~funds ~~covered~~required, it byis ~~this~~possible ~~report. Based~~that onwe could incur unexpected costs and expenses, or experience unexpected cash requirements that ~~evaluation~~would force us to seek alternative financing. Furthermore, ~~our~~if ~~Chief~~we ~~Executive~~issue ~~Officer~~additional equity or debt securities, stockholders may ~~and~~experience ~~Principal~~additional ~~Financial~~dilution ~~Officer~~or ~~concluded~~the ~~that~~new equity securities may have rights, preferences or privileges senior to those of existing holders of our ~~disclosure~~common stock. ~~controls~~If ~~and~~additional financing is not available or is not available on ~~procedures~~acceptable ~~were~~terms, ~~effective~~we will have to curtail our operations.

~~There~~ ~~have~~Contractual ~~been~~Obligations no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2009, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~PART~~ We IIare –subject ~~OTHER~~to ~~INFORMATION~~various financial obligations and commitments in the normal course of operations. These contractual obligations represent future cash payments that we are required to make and relate primarily to notes payable and accounts payable, all of which are due currently and which are reflected on the Company’s Unaudited Consolidated Balance Sheet at September 30, 2009, found in Item 1 in this Form 10-Q. The Company does have an operating lease obligation with annual payments totaling $103,790 in 2010, $108,321 in 2011 and $36,610 in 2012. The Company expects to fund these contractual obligations with additional financing, either in the form of equity or debt issuances, for which there is no assurance that any additional financings will be available to us on satisfactory terms and conditions, if at all.

~~Item~~ ~~1. Legal~~Off-balance ~~Proceedings~~Sheet Arrangements

~~From time~~ The ~~to time, the~~ Company ~~may~~does ~~become a party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. The Company is~~ not ~~involved~~ currently inutilize ~~legal~~any ~~proceedings that~~off-balance ~~could~~sheet ~~reasonably~~arrangements bewith unconsolidated ~~expected~~entities to ~~have~~enhance aliquidity ~~material~~and ~~adverse~~capital ~~affect~~resource ~~on its business, prospects, financial condition or results of operations~~positions. ~~The Company may become involved in material legal~~ ~~proceedings in the future.~~

~~Item~~ ~~1A. Risk~~Critical ~~Factors.~~Accounting Policies and Estimates

~~Since~~ Management's weDiscussion ~~are~~and aAnalysis ~~company~~of ~~that~~Financial ~~qualifies~~Condition and Results of asOperations adiscusses ~~“smaller~~our ~~reporting~~consolidated ~~company~~financial statements,” aswhich ~~defined~~have ~~under~~been prepared ~~Rule~~in ~~12b-2,~~accordance wewith ~~are~~accounting ~~not required~~principles togenerally ~~provide~~accepted in the United ~~information~~States ~~required~~of byAmerica. ~~this~~The ~~Item~~preparation ~~1A. Refer~~of these financial statements requires management to make estimates and assumptions that affect the ~~Company’s~~reported ~~Annual~~amounts ~~Report~~of assets onand ~~Form~~liabilities ~~10-K~~at ~~for~~the date of the ~~year~~financial ~~ended~~statements ~~December~~and ~~31,~~the reported ~~2008,~~amounts ~~filed~~of ~~with~~revenues and expenses during the ~~Securities~~reporting ~~and~~period. ~~Exchange~~On ~~Commission~~an on-going basis, ~~April~~management ~~15,~~evaluates ~~2009~~our estimates and judgments, ~~for~~including athose related ~~discussion~~to revenue recognition, recovery of ~~the~~oil ~~Company’s~~and ~~Risk~~gas ~~Factors~~reserves, financing operations, and contingencies and litigation.

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~23

~~None~~ Oil and Gas Properties

24 We follow the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells including directly related overhead costs and related asset retirement costs are capitalized.

~~Item~~ 3Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalizable as oil and gas property costs. ~~Default~~ ~~upon~~Properties ~~Senior~~not ~~Securities~~subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. Bonanza assesses the realizability of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management's intention with regard to future exploration and development of individually significant properties and the ability of Bonanza to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized.

At ~~September~~The ~~30,~~provision ~~2009,~~for depreciation and depletion of oil and gas properties is computed on the ~~Company~~unit-of-production ~~was~~method. inUnder ~~default~~this ~~with~~method, ~~respect~~we tocompute the provision ~~repayment~~by multiplying the total unamortized costs of oil and gas properties ~~obligation~~including ~~upon~~future ~~maturity~~development, onsite ~~December 17~~restoration, ~~2008~~ and dismantlement abandonment costs, ~~with~~but ~~respect~~excluding tocosts ~~its December~~of ~~2007~~unproved ~~Secured~~properties ~~Promissory~~by ~~Note. Pursuant~~an tooverall rate determined by dividing the ~~terms~~physical units of ~~the December~~oil ~~2007~~and ~~Secured~~gas ~~Promissory~~produced ~~Note,~~during the ~~interest~~period ~~rate~~by onthe total ~~all~~estimated ~~amounts outstanding~~units ~~increased~~of toproved ~~24%~~oil ~~per~~and ~~annum,~~gas ~~effective~~reserves. ~~December~~This ~~17,~~calculation is done ~~2008~~on a country-by-country basis. On ~~February~~As 6of March 31, ~~2009~~2010, all of our oil production operations are conducted in the ~~Company~~United ~~made~~States aof ~~partial~~America. ~~payment~~The cost of ~~$125~~unevaluated properties not being amortized,~~000~~ ~~toward~~to ~~satisfaction~~the ofextent ~~this~~there ~~obligation. As~~is ofsuch ~~June~~a 10cost, ~~2009,~~ is assessed quarterly to determine whether the ~~Company~~value has ~~not~~been ~~remitted~~impaired below the capitalized ~~balance~~cost. ofThe ~~amount~~cost ~~due~~of ~~and~~any onimpaired ~~June~~property ~~30,~~is ~~2009,~~transferred to the ~~lender~~balance ~~filed~~of ~~suit~~oil ~~against~~and ~~the~~gas ~~Company~~properties ~~seeking~~being ~~repayment~~depleted. ofThe ~~the~~costs ~~principal~~associated ~~balance~~with ~~outstanding~~unevaluated ~~plus~~properties ~~all~~relate ~~accrued~~to ~~interest,~~projects ~~along~~which ~~with~~were ~~their~~undergoing ~~attorney~~exploration ~~fees~~or development ~~and~~activities ~~court~~or in which we intend to commence such activities in the future. We will begin to amortize these costs when proved reserves are established or impairment is determined.

At ~~September~~In ~~30,~~accordance ~~2009~~with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 410 “Asset Retirement and Environmental Obligations," we ~~the~~report ~~Company~~a ~~was~~liability infor ~~default~~any ~~with~~legal ~~respect~~retirement toobligations on our oil and gas properties. The asset retirement obligations represent the ~~repayment~~estimated present ~~obligation~~value ~~upon~~of ~~maturity~~the onamounts ~~January 31~~expected to be incurred to plug, ~~2009~~ abandon, ~~with~~and ~~respect~~remediate tothe producing ~~its~~properties at the end of their productive lives, in accordance with ~~January~~state ~~2008~~laws, ~~Secured~~as ~~Promissory~~well ~~Notes. Pursuant~~as tothe estimated costs associated with the ~~terms~~reclamation of the property surrounding. The Company determines the ~~January~~ ~~2008~~asset ~~Secured~~retirement obligations ~~Promissory~~by ~~Notes,~~calculating the ~~interest~~present ~~rate~~value onof ~~all~~estimated ~~amounts outstanding~~cash ~~increased~~flows related to the ~~24%~~liability. ~~per~~The ~~annum,~~asset ~~effective~~retirement obligations are recorded as a liability at ~~January 31, 2009. In~~the ~~addition,~~estimated present value as of the ~~January~~asset's ~~2008~~inception, ~~Secured~~with an offsetting ~~Promissory~~increase ~~Notes~~to ~~was~~producing ~~not~~properties. ~~repaid~~Periodic ~~prior~~accretion of the discount related to the ~~July~~estimated ~~31,~~liability ~~2009,~~is recorded as an expense in the ~~Company~~statement ~~was~~of ~~obligated~~operations. toThe ~~issue~~estimated liability is determined using significant assumptions, including current estimates of plugging and ~~did~~abandonment ~~issue~~costs, inannual ~~August~~inflation of ~~2009~~these costs, anthe ~~additional~~productive ~~150~~lives of wells,~~000~~ ~~shares~~and a risk-adjusted interest rate. Changes in any of ~~its~~these ~~Common~~assumptions ~~Stock~~can asresult anin ~~additional~~significant ~~interest~~revisions ~~payment~~to the estimated asset retirement obligations. As ofRevisions to the asset retirement ~~September~~obligations ~~30,~~are ~~2009~~recorded with an offsetting change to producing properties, resulting ~~the~~in ~~Company~~prospective ~~has~~changes ~~not~~to ~~cured~~depletion ~~its~~and ~~default;~~depreciation ~~however~~expense and accretion of the ~~lenders~~discount. Because of the subjectivity of assumptions and the ~~have~~relatively ~~not,~~long aslives of ~~September~~most 30of the wells, ~~2009,~~ ~~taken~~the ~~any~~costs ~~further~~to ~~action~~ultimately ~~with~~retire ~~respect~~the toCompany's ~~the~~wells ~~default~~may vary significantly from prior estimates. As of March 31, 2010, our asset retirement obligation was not significant.

~~As of~~ ~~September~~Reserve 30, 2009, the Company had not made the quarterly interest payment due on March 31, 2009, June 30, 2009, or September 30, 2009, with respect to the May 2008 Convertible Note. Pursuant to the terms of the May 2008 Convertible Note, the interest rate on the past due quarterly interest payment increased to 15% per annum, effective March 31, 2009. The Company had 90 days to make the scheduled quarterly interest payment before an Event of Default should occur. At September 30, 2009, the Company was in default with respect to the March 31, 2009 quarterly interest payment in addition to being in default with respect to the repayment obligation upon maturity on May 14, 2009. Pursuant to the terms of the May 2008 Convertible Note, the interest rate on all amounts outstanding increased to 15% per annum. As of September 30, 2009, the Company had not cured the default; however the lender has not yet taken any further action with respect to the default.Estimates

As Our estimate of ~~September~~proved ~~30,~~reserves ~~2009,~~is ~~the~~based ~~Company had~~on ~~not~~the ~~repaid~~quantities ~~any~~ of ~~the~~oil ~~amounts~~and ~~due~~gas ~~under the August 2008 Unsecured Promissory~~that ~~Notes~~geological orand ~~the~~engineering ~~October~~data ~~2008~~demonstrate, ~~Unsecured~~with ~~Promissory~~reasonable ~~Note. Pursuant~~certainty, to ~~the~~be ~~terms~~recoverable ofin ~~the~~future ~~August~~years ~~2008~~from ~~Unsecured~~known ~~Promissory~~reservoirs ~~Notes~~under ~~and~~existing ~~the~~economic ~~October 2008~~and ~~Unsecured~~operating ~~Promissory~~conditions. ~~Note~~The ~~agreements,~~accuracy ~~the~~of ~~Company~~any isreserve ~~required~~estimate tois ~~issue~~a tofunction of the ~~holders~~quality of ~~the~~available ~~August~~data, ~~2008~~engineering ~~Unsecured Promissory Notes~~ and ~~the~~geological ~~October~~interpretation ~~2008~~and ~~Unsecured~~judgment. ~~Promissory~~For ~~Note~~example, awe ~~total~~must ofestimate ~~137,500~~the ~~warrants~~amount toand ~~purchase~~timing ~~shares~~ of ~~the~~future ~~Company’s~~operating ~~Common~~costs, ~~Stock every 30 days that amounts remain outstanding under the August 2008 Unsecured Promissory Notes and the October 2008 Unsecured Promissory Note.~~

~~As of September 30, 2009, the Company had not repaid the May 2009 Note, which matured on August~~ 24, 2009. In the event that the May 2009 Note was not repaid by August 24, 2009, the interest rate increased to 18% per annum and the lender, at its option, can convert all outstanding amounts in shares of the Company’s Common Stock at a conversion price of $0.10 per share.

Asseverance taxes, development costs and workover costs, all of ~~November~~which 20may in fact vary considerably from actual results. In addition, ~~2009~~as prices and cost levels change from year to year, the ~~Company~~estimate ~~had~~of ~~not~~proved ~~repaid~~reserves also changes. Any significant variance in these assumptions could materially affect the ~~July~~estimated ~~2009~~quantity ~~Note~~and value of our reserves. As such, ~~which~~our ~~matured~~reserve engineers onreview ~~October~~and ~~13,~~revise ~~2009~~our reserve estimates at least annually.

~~Item~~ Despite 4the inherent imprecision in these engineering estimates, our reserves are used throughout our financial statements. ~~Submission~~ For example, since we use the units-of-production ~~Matters~~method to amortize our oil and gas properties, the quantity of reserves could significantly impact our DD&A expense. Our oil and gas properties are also subject to a ~~Vote~~“ceiling” limitation based in part on the quantity of ~~Security~~our ~~Holders~~proved reserves. Finally, these reserves are the basis for our supplemental oil and gas disclosures.

~~None~~ Revenue Recognition

~~Item~~ Bonanza 5recognizes oil and natural gas revenue under the sales method of accounting for its interests in producing wells as crude oil and natural gas is produced and sold from those wells. ~~Other~~ ~~Information~~Crude oil and natural gas sold by Bonanza is not significantly different from Bonanza’s share of production. We recognize revenue upon transfer of ownership of the product to the customer which occurs when (i) the product is physically received by the customer, (ii) an invoice is generated which evidences an arrangement between the customer and us, (iii) a fixed sales price has been included in such invoice and (iv) collection from such customer is probable.

~~None~~ Income Taxes

25 The Company uses the liability method for accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The realizability of deferred tax assets are evaluated annually and a valuation allowance is provided if it is more likely than not that the deferred tax assets will not give rise to future benefits in the Company’s tax returns.

~~Item~~ The 6Company’s estimates are based on the information available to it at the time that it prepares the income tax provision. ~~Exhibits~~ The Company generally files its annual income tax returns several months after its fiscal year-end. Income tax returns are subject to audit by federal, state, and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws.

Exhibit No.	Description
2.2	Acquisition Agreement and Plan of Merger between National Filing Agents, Inc. and Plantation Working Interests, LLC dated October 23, 2007 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 24, 2007)
3.1	Articles of Incorporation of Bonanza Oil and Gas, Inc. (incorporated by reference to Exhibit 3.1 to the Bonanza Oil and Gas, Inc. Form SB-2 filed December 18, 2006)
3.2	Articles of Merger (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on January 11, 2008)
3.3	Bylaws of Bonanza Oil and Gas, Inc. (incorporated by reference to Exhibit 3.2 to the Bonanza Oil and Gas, Inc. Form SB-2 filed December 18, 2006)
4.1	Securities Purchase Agreement (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 21, 2007)
4.2	14% Senior Asset Backed Secured Promissory Note dated December 17, 2007 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 21, 2007)
4.3	Securities Purchase Agreement dated May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.4	8% Convertible Note issued May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.5	Series A Common Stock Purchase Warrants issued May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.6	Series B Common Stock Purchase Warrants issued May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.7	Form of Securities Purchase Agreement (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 7, 2008)
4.8	Form of Series A June 2008 Common Stock Purchase Warrants issued June 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 7, 2008)
4.9	Form of Series B June 2008 Common Stock Purchase Warrants issued June 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 7, 2008)
4.10	Form of Securities Purchase Agreement dated August 28, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 3, 2008)
4.11	Form of 12% Promissory Note dated August 28, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 3, 2008)
4.12	Amendment No. 1 to the Form of Securities Purchase Agreement dated August 28, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 10, 2008)
4.13	Form of Common Stock Purchase Warrant (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 10, 2008)
4.14	Bridge Loan Letter Agreement dated February 2, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2009)
4.15	14% Promissory Note issued February 2, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2009)
4.16	16% Promissory Note issued May 26, 2009, (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 14, 2009)
4.17	Bridge Loan Letter Agreement dated July 8, 2009, (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
4.18	Bridge Loan Letter Agreement dated September 18, 2009, (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
10.1	Asset Purchase Agreement between National Filing Agents, Inc. and Lucas Energy, Inc. dated October 23, 2007 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 24, 2007)
10.2	Agreement and Plan of Merger between Bonanza Oil & Gas, Inc., Borland Good North, Inc., Black Pearl Energy, Inc. and the shareholders holding a majority of the issued and outstanding shares of Black Pearl Energy, Inc. dated July 18, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 18, 2008)
10.3	Executive Employment Agreement between G. Wade Stubblefield and Bonanza Oil and Gas, Inc. (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2009)
10.4	Executive Employment Agreement between William Wiseman and Bonanza Oil and Gas, Inc., (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
10.5	Executive Employment Agreement between Robert L. Teague and Bonanza Oil and Gas, Inc., (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
14.1	Code of Ethics and Business Conduct for Officers, Directors and Employees of Bonanza Oil & Gas, Inc. (incorporated by reference to the Amendment No. 1 to the Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on April 29, 2009)
31.1*	Certification of Principal Executive Officer
31.2*	Certification of Principal Financial Officer
32.1*	Certification of Principal Executive Officer and Principal Financial Officer

Item 3. Quantitative and Qualitative Disclosures About Market Risks

*Filed ~~herewith~~Since we are a company that qualifies as a “smaller reporting company,” as defined under Rule 12b-2, we are not required to provide the information required by this Item 3.

26Item 4. Controls and Procedures

~~SIGNATURES~~ We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended the "Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized.~~25

		BONANZA OIL AND GAS, INC. (Registrant)
Date: November 20, 2009	By:	/s/ William Wiseman
		William Wiseman
		President and Chief Executive Officer Principal Financial Officer

We carried out an evaluation under the supervision and with the participation of management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2010, the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective.

Date: November 20, 2009	By:	/s/ Robert Teague
		Robert Teague Principal Financial Officer

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2010, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

27PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become a party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. The Company is not involved currently in legal proceedings that could reasonably be expected to have a material adverse affect on its business, prospects, financial condition or results of operations. The Company may become involved in material legal proceedings in the future.

Item 1A. Risk Factors.

Since we are a company that qualifies as a “smaller reporting company,” as defined under Rule 12b-2, we are not required to provide the information required by this Item 1A. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on April 15, 2010, for a discussion of the Company’s Risk Factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On December 2, 2009, the Company entered a Letter Agreement with the holder of $750,000 principal amount of the January 2008 Notes whereby, in order to induce the holder to convert the notes into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the terms with respect to $750,000 of principal of January 2008 Notes held by holder were amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of their January 2008 Notes into shares of the Company’s common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”).

On January 29, 2010, the Company entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. During December 2009, the holder converted $75,200 of principal due into 30,080,000 shares of the Company’s Common Stock. During the three months ended March 31, 2010, the holder converted an additional $756,250, including $81,450 of accrued and unpaid interest, into 302,500,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional $112,500 of accrued interest on the January 2008 Notes has been converted into 45,000,000 million shares of our Common Stock

Warrant to purchase 1,500,000 shares of the Company’s Common Stock (the “Series B May Warrant”). The May 2008 Convertible Note matured on May 14, 2009, and interest is payable on a quarterly basis. The May 2008 Convertible Note is unsecured, however, in the event that the Company grants a secured interest in its assets in connection with any future financing, then the holder of the May 2008 Convertible Note will be entitled to a pari passu interest in such secured interest.

On December 2, 2009, the Company entered a Letter Agreement with the holder of the May 2008 Convertible Note whereby, in order to induce the holder to convert the May 2008 Convertible Note into shares of the Company’s common stock and, in turn, to reduce the Company’s debt and avoid potentially filing for bankruptcy, the May 2008 Convertible Note was amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of the May 2008 Convertible Note into shares of the Company’s common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”).

On January 29, 2010, the Company entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. The holder did not convert any of the May 2008 Convertible Note into shares of the Company’s Common Stock during the year ended December 31, 2009. During the three months ended March 31, 2010, the holder converted $267,500 of the principal balance outstanding into 107,000,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional $112,500 of principal of the May 2008 Convertible Note has been converted into 45,000,000 shares of our Common Stock.

In August 2008, the Company entered into four 12% Unsecured Promissory Notes, and Securities Purchase Agreements, with accredited investors for an aggregate principal amount of $500,000 (the "August 2008 Notes") and the issuance of 500,000 shares of the Company’s Common Stock. The August 2008 Notes matured on September 28, 2008.

During the three months ended March 31, 2010, the Company, in order to reduce the Company’s debt and avoid potentially filing for bankruptcy, entered into a series of individual agreements with the holders of an aggregate of $250,000 of principal amount of the August 2008 Notes to convert portions of their notes into shares of the Company’s Common Stock. During the three months ended March 31, 2010, the lenders converted an aggregate of $55,000 of unpaid principal into 22,000,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional approximate $163,400 of principal and accrued interest of the August 2008 Notes has been converted into 36,827,201 shares of our Common Stock.

On March 25, 2010, the Company entered into a contract and assignment agreement whereby the Company purchased a 10% interest in a producing crude oil well and associated oil and gas leases, in exchange for $15,000 and 5,000,000 shares of the Company’s Common Stock.

On March 30, 2010, the Company entered into a contract and assignment agreement whereby the Company purchased a 10% interest in a producing crude oil well and associated oil and gas leases, in exchange for $15,000 and 15,000,000 shares of the Company’s Common Stock.

During the three months ended March 31, 2010, the Company issued 15,200,000 common shares in settlement of $188,000 of accounts payable.

The above issuances were made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated under Regulation D thereunder. The holders of the above securities are accredited investors as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

Item 3. Default upon Senior Securities

We are in default on the January 2008 Notes

In January 2008, we entered into three 14% Senior Secured Promissory Note and Security Agreements, and Securities Purchase Agreements, with accredited investors for an aggregate principal amount of $800,000 (the "January 2008 Notes") and the issuance of 320,000 shares of our Common Stock. The January 2008 Notes matured on January 31, 2009. Under the terms of the January 2008 Notes, as a result of their non-repayment as of July 31, 2009, we were obligated to issue an additional 300,000 shares of our Common Stock as an additional interest payment. We issued the additional 300,000 shares of Common Stock in August 2009.

We are in default with respect to the repayment obligation upon maturity which occurred on January 31, 2009. Pursuant to the terms of the January 2008 Notes, upon becoming in default, the interest rate on all amounts outstanding increased to 24% per annum. On December 2, 2009, we entered a Letter Agreement with the holder of $750,000 principal amount of the January 2008 Notes whereby, in order to induce the holder to convert the notes into shares of our common stock and, in turn, to reduce our debt and avoid potentially filing for bankruptcy, the terms of the $750,000 of principal of January 2008 Notes held by holder were amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of their January 2008 Notes into shares of our common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”). On January 29, 2010, we entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. During December 2009, the holder converted $75,200 of principal and accrued interest due into 30,080,000 shares of our Common Stock. During the three months ended March 31, 2010, the holder converted an additional $756,250, including $81,450 of accrued and unpaid interest, into 302,500,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional $112,500 of principal and accrued interest on the January 2008 Notes has been converted into 45,000,000 million shares of our Common Stock

We have not cured the underlying default with respect to any of the January 2008 Notes; however, the lenders have not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, continuing to convert principal and accrued interest into shares of our Common Stock and are in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the January 2008 Notes.

We are in default on the May 2008 Convertible Note

In May 2008, we entered into a Securities Purchase Agreement with an accredited investor providing for the sale of an 8% convertible note in the principal amount of $750,000 (the "May 2008 Convertible Note") and the issuance of 750,000 shares of our Common Stock, a Series A Common Stock Purchase Warrant to purchase 1,500,000 shares of our Common Stock (the “Series A May Warrant”) and a Series B Common Stock Purchase Warrant to purchase 1,500,000 shares of our Common Stock (the “Series B May Warrant”). The May 2008 Convertible Note matured on May 14, 2009, and interest is payable on a quarterly basis. The May 2008 Convertible Note was convertible into our Common Stock, at a conversion price of $0.1871 per common share, as adjusted, and is subject to normal and customary anti-dilution provisions.

We have not made any required interest payment since March 31, 2009, and we were unable to repay the May 2008 Convertible Note at maturity on May 14, 2009. Pursuant to the terms of the May 2008 Convertible Note, upon becoming in default, the interest rate on all amounts outstanding increased to 15% per annum. On December 2, 2009, we entered into a Letter Agreement with the holder of the May 2008 Convertible Note whereby, in order to induce the holder to convert the May 2008 Convertible Note into shares of our common stock and, in turn, to reduce our debt and avoid potentially filing for bankruptcy, the May 2008 Convertible Note was amended providing that the holder may from time to time convert all or any part of the outstanding and unpaid principal amount of the May 2008 Convertible Note into shares of our common stock, at the holder's option, at the lesser of (i) $0.0025 or (ii) a 50% discount to the average of the three lowest trading prices of the common stock during the 20 trading day period prior to conversion (the “Variable Conversion Price”). On January 29, 2010, we entered into a Letter Agreement with the holder removing the holder’s ability to convert at the Variable Conversion Price. The holder did not convert any of the May 2008 Convertible Note into shares of our Common Stock during the year ended December 31, 2009. During the three months ended March 31, 2010, the holder converted $267,500 of the principal balance

outstanding into 107,000,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional $112,500 of principal and accrued interest of the May 2008 Convertible Note has been converted into 45,000,000 shares of our Common Stock.

We have not cured the default with respect to the May 2008 Convertible Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, continuing to convert principal and accrued interest into shares of our Common Stock and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the May 2008 Convertible Note.

We are in default on the August 2008 Notes

In August 2008, we entered into four 12% Unsecured Promissory Notes, and Securities Purchase Agreements, with accredited investors for an aggregate principal amount of $500,000 (the "August 2008 Notes"). The August 2008 Notes matured on September 28, 2008.

We are in default of the repayment provision with respect to the August 2008 Notes; however, the lenders have not yet taken any further action with respect to the default. Although we are actively seeking additional financing, began, in 2010, to convert principal and accrued interest into shares of our Common Stock and are in constant communication with the lenders, there can be no assurances that the lenders will continue to delay the enforcement of their remedies under the August 2008 Notes. Pursuant to the terms of the August 2008 Notes, we are required to issue to the holders of the August 2008 Notes, a total of 250,000 warrants to purchase shares of our Common Stock every 30 days that amounts remain outstanding under the August 2008 Notes.

During the three months ended March 31, 2010, in order to reduce the Company’s debt and avoid potentially filing for bankruptcy, we entered into a series of individual agreements with the holders of an aggregate of $250,000 of principal amount of the August 2008 Notes to convert portions of their notes into shares of our Common Stock. During the three months ended March 31, 2010, the lenders converted an aggregate of $55,000 of unpaid principal into 22,000,000 shares of the Company’s Common Stock. As of May 17, 2010, we have entered into conversion agreements whereby an additional approximate $163,400 of principal and accrued interest of the August 2008 Notes has been converted into 36,827,201 shares of our Common Stock.

We are in default on the October 2008 Note

On October 17, 2008, we entered into a 12% Unsecured Promissory Note, and Securities Purchase Agreement, with an accredited investor for an aggregate principal amount of $50,000 (the "October 2008 Note"). The October 2008 Notes matured on November 17, 2008.

We are in default of the repayment provision with respect to the October 2008 Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the October 2008 Note. Pursuant to the terms of the October 2008 Notes, we are required to issue to the holders of the October 2008 Notes, a total of 25,000 warrants to purchase shares of our Common Stock every 30 days that amounts remain outstanding under the October 2008 Notes.

We are in default on the May 2009 Note

On May 26, 2009, we entered into a 16% Unsecured Promissory Note with an accredited investor for an aggregate principal amount of $340,000 (the "May 2009 Note"). The May 2009 Note matured on August 24, 2009. In the event that the May 2009 Note was not repaid by August 24, 2009, the interest rate increased to 18% per annum and the lender, at its option, could convert all outstanding amounts in shares of the Company’s Common Stock at a conversion price of $0.05 per share.

We are in default of the repayment provision with respect to the May 2009 Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the May 2009 Note.

We are in default on the July 2009 Note

On July 16, 2009, we issued an unsecured promissory note to an accredited investor providing for a loan of $40,000 (the “July 2009 Note”). The July 2009 Note matured on October 13, 2009.

We are in default of the repayment provision with respect to the July 2009 Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the July 2009 Note.

We are in default on the October 2009 Convertible Notes

On October 30, 2009, the Company issued unsecured convertible notes to two accredited investors for an aggregate principal amount of $15,000 (the “October 2009 Convertible Notes”). The October 2009 Notes matured on April 30, 2010,

We are in default on the November 10, 2009 Note

On November 10, 2009, we entered into a loan agreement with an accredited investor providing for a loan of $50,000 (the “November 10, 2009 Note”). The November 10, 2009 Note matured on December 31, 2009.

We are in default of the repayment provision with respect to the November 10, 2009 Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the November 10, 2009 Note.

We are in default on the November 30, 2009 Note

On November 30, 2009, the Company entered into a loan agreement with an accredited investor providing for a loan of $15,000 (the “November 30, 2009 Note”). The November 30, 2009 Note matured on April 1, 2010.

We are in default of the repayment provision with respect to the November 30, 2009 Note; however, the lender has not yet taken any further action with respect to the default. Although we are actively seeking additional financing to remedy this default, and are in constant communication with the lender, there can be no assurances that the lender will continue to delay the enforcement of their remedies under the November 30, 2009 Note.

We are in default on the December 2009 Note

Item 4. Removed and Reserved

Item 5. Other Information

Item 6. Exhibits

Exhibit No.	Description
2.2	Acquisition Agreement and Plan of Merger between National Filing Agents, Inc. and Plantation Working Interests, LLC dated October 23, 2007 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 24, 2007)
3.1	Articles of Incorporation of Bonanza Oil and Gas, Inc. (incorporated by reference to Exhibit 3.1 to the Bonanza Oil and Gas, Inc. Form SB-2 filed December 18, 2006)
3.2	Articles of Merger (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on January 11, 2008)
3.3	Bylaws of Bonanza Oil and Gas, Inc. (incorporated by reference to Exhibit 3.2 to the Bonanza Oil and Gas, Inc. Form SB-2 filed December 18, 2006)
3.4	Certificate of Amendment for the State of Nevada filed November 9, 2009 (incorporated by reference to the Schedule 14C filed with the Securities and Exchange Commission on January 6, 2010)
4.1	Securities Purchase Agreement (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 21, 2007)
4.2	14% Senior Asset Backed Secured Promissory Note dated December 17, 2007 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 21, 2007)
4.3	Form of 14% Senior Secured Promissory Note dated January 31, 2008 (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.4	Form of Securities Purchase Agreement dated January 31, 2008 (incorporated by reference to the Form 10- K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.5	Securities Purchase Agreement dated May 14, 2008 (incorporated by reference to the Form 8-K Current

	Report filed with the Securities and Exchange Commission on May 19, 2008)
4.6	8% Convertible Note issued May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.7	Series A Common Stock Purchase Warrants issued May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.8	Series B Common Stock Purchase Warrants issued May 14, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on May 19, 2008)
4.9	Form of Securities Purchase Agreement (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 7, 2008)
4.10	Form of Series A June 2008 Common Stock Purchase Warrants issued June 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 7, 2008)
4.11	Form of Series B June 2008 Common Stock Purchase Warrants issued June 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 7, 2008)
4.12	Form of Securities Purchase Agreement dated August 28, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 3, 2008)
4.13	Form of 12% Promissory Note dated August 28, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on September 3, 2008)
4.14	Amendment No. 1 to the Form of Securities Purchase Agreement dated August 28, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 10, 2008)
4.15	Form of Common Stock Purchase Warrant (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 10, 2008)
4.16	Bridge Loan Letter Agreement dated February 2, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2009)
4.17	14% Promissory Note issued February 2, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2009)
4.18	16% Promissory Note issued May 26, 2009, (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on August 14, 2009)
4.19	Bridge Loan Letter Agreement dated July 8, 2009, (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
4.20	Bridge Loan Letter Agreement dated September 18, 2009, (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
4.21	Form of Convertible Note issued October 2009 (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.22	Bridge Loan Letter Agreement dated November 10, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 4, 2009)
4.23	Bridge Loan Letter Agreement dated November 30, 2009 (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.24	Convertible Note issued December 14, 2009 (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.25	Bridge Loan Letter Agreement dated December 31, 2009 (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.26	Convertible Note issued January 28, 2010 (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.27	Promissory Note issued April 12, 2010 to Mirus Capital Management LLC (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
4.28	Promissory Note issued April 12, 2010 to Triumph Small Cap Fund Ltd. (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)

10.1	Asset Purchase Agreement between National Filing Agents, Inc. and Lucas Energy, Inc. dated October 23, 2007 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on October 24, 2007)
10.2	Agreement and Plan of Merger between Bonanza Oil & Gas, Inc., Borland Good North, Inc., Black Pearl Energy, Inc. and the shareholders holding a majority of the issued and outstanding shares of Black Pearl Energy, Inc. dated July 18, 2008 (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on July 18, 2008)
10.3	Executive Employment Agreement between G. Wade Stubblefield and Bonanza Oil and Gas, Inc. (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2009)
10.4	Executive Employment Agreement between William Wiseman and Bonanza Oil and Gas, Inc., (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
10.5	Executive Employment Agreement between Robert L. Teague and Bonanza Oil and Gas, Inc., (incorporated by reference to the Form 10-Q Quarterly Report filed with the Securities and Exchange Commission on September 21, 2009)
10.6	Conversion Agreement between Bonanza Oil & Gas, Inc. and Robert Teague dated December 2, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 4, 2009)
10.7	Letter Agreement between Bonanza Oil & Gas, Inc. and Triumph Small Cap Fund Ltd. dated December 2, 2009, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 4, 2009)
10.8	Agreement between Bonanza Oil & Gas, Inc. and Whalehaven Capital Fund Limited, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on December 4, 2009)
10.9	Letter Agreement between Bonanza Oil & Gas, Inc. and Triumph Small Cap Fund Ltd. dated January 29, 2010, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on February 9, 2010)
10.10	Contract by and between Bonanza Oil & Gas, Inc. and Diversified Group, LLC dated March 24, 2010, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2010)
10.11	Assignment by and between Bonanza Oil & Gas, Inc. and Diversified Group, LLC dated March 18, 2010, (incorporated by reference to the Form 8-K Current Report filed with the Securities and Exchange Commission on March 31, 2010)
10.12	Bonanza Accounts Receivable Agreement by and between Westerly Exploration, Inc. and Bonanza Oil and Gas, Inc. (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
10.13	Form of Westerly Debt Conversion Agreement (incorporated by reference to the Form 10-K Annual Report filed with the Securities and Exchange Commission on April 15, 2010)
10.14*	Purchase Agreement by and between Bonanza Oil & Gas, Inc. and Superior Oil and Gas Co. dated March 25, 2010
10.15*	Agreement and Release by and between Bonanza Oil & Gas, Inc. and Paul DiFrancesco dated April 27, 2010
10.16*	Letter Agreement by and between Bonanza Oil & Gas., Inc. and Eric Dale dated May 13, 2010
14.1	Code of Ethics and Business Conduct for Officers, Directors and Employees of Bonanza Oil & Gas, Inc. (incorporated by reference to the Amendment No. 1 to the Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on April 29, 2009)
31.1*	Certification of Principal Executive Officer
31.2*	Certification of Principal Financial Officer
32.1*	Certification of Principal Executive Officer and Principal Financial Officer

*Filed herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized.

	BONANZA OIL AND GAS, INC.
		(Registrant)


Date: May 17, 2010	By:	/s/ William Wiseman

		William Wiseman
		President and Chief Executive Officer
		Principal Financial Officer



Date: May 17, 2010	By:	/s/ Robert Teague

		Robert Teague
		Principal Financial Officer

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