| Nevada                                        |   | 51-0482104                           |
|-----------------------------------------------|--------|--------------------------------------|
| (State or other jurisdictionof incorporation) |   | (IRS Employer Identification Number) |

| Three Riverway, Suite 1590Houston, Texas |   |  77056 |
|------------------------------------------|--------|-------------|
| (Address of principalexecutive offices)  |   | (zip code)  |

| Large accelerated filer    [] | Accelerated filer     [] | Non-accelerated filer    []  | Smaller reporting company [X]  |
|---------------------------------------------------|---------------------------------------------------|-------------------------------------------------------|-------------------------------------|

----

| PART I. FINANCIAL INFORMATION                                                                                                                                                                 | Page    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                                                                                                                                                                                          |    |
| Item 1. Financial Statements                                                                                                                                                                  |    |
|      Consolidated Balance Sheets as of March 31, 2010 (Unaudited) and          December 31, 2009 (Unaudited)       |  3 |
|      Consolidated Statements of Operations for the three months ended          March 31, 2010 and 2009 (Unaudited) |  4 |
|      Consolidated Statements of Cash Flows for the three months ended          March 31, 2010 and 2009 (Unaudited) |  5 |
|                                                                                                                                                                                          |    |
| Notes to Consolidated Financial Statements (Unaudited)                                                                                                                                        | 6       |
|                                                                                                                                                                                          |    |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations                                                                                                 | 13      |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk                                                                                                                            | 16      |
| Item 4T. Controls and Procedures                                                                                                                                                              | 16      |
|                                                                                                                                                                                          |    |
| PART II. OTHER INFORMATION                                                                                                                                                               |    |
| Item 1. Legal Proceedings                                                                                                                                                                     | 17      |
| Item 1A. Risk Factors                                                                                                                                                                         | 17      |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                           | 17      |
| Item 3. Defaults Upon Senior Securities                                                                                                                                                       | 17      |
| Item 4. Submission of Matters to a Vote of Security Holders                                                                                                                                   | 17      |
| Item 5. Other Information                                                                                                                                                                     | 17      |
| Item 6. Exhibits                                                                                                                                                                              | 17      |
| Signatures                                                                                                                                                                                    | 18      |

----

|                                                                    |   | March 31, |        |   | December 31, |   |
|-------------------------------------------------------------------------|--------|-----------|-------------|--------|--------------|--------|
|                                                                    |   | 2010      |        |   | 2009         |   |
| Assets                                                                  |   |      |        |   |         |   |
| Current assets:                                                         |   |      |        |   |         |   |
| Cash and cash equivalents                                               |   | $         | 191,641     |   |         | $      | 142,703 |   |
| Restricted cash                                                         |   |      | -           |   |         |   | 1,613,637 |   |
| Accounts receivable                                                     |   |      | 4,836,458   |   |         |   | 2,948,159 |   |
| Prepaid expenses and other                                              |   |      | 146,788     |   |         |   | 132,325 |   |
| Total current assets                                                    |   |      | 5,174,887   |   |         |   | 4,836,824 |   |
|                                                                    |   |      |        |   |         |   |   |   |
| Property and equipment:                                                 |   |      |        |   |         |   |   |   |
| Oil and gas properties, evaluated (full cost method)                    |   |      | 14,505,792  |   |         |   | 14,425,950 |   |
| Other property and equipment                                            |   |      | 174,676     |   |         |   | 144,625 |   |
|                                                                    |   |      | 14,680,468  |   |         |   | 14,570,575 |   |
| Less:  Accumulated depreciation, depletion & amortization |   |      | (8,235,462  | )      |         |   | (8,017,822 | ) |
| Net property and equipment                                              |   |      | 6,445,006   |   |         |   | 6,552,753 |   |
|                                                                    |   |      |        |   |         |   |   |   |
| Other assets:                                                           |   |      |        |   |         |   |   |   |
| Goodwill (less impairment allowance of $3,400,000)                      |   |      | 1,536,313   |   |         |   | 1,536,313 |   |
| Other assets                                                            |   |      | 102,678     |   |         |   | 76,021 |   |
| Total other assets                                                      |   |      | 1,638,991   |   |         |   | 1,612,334 |   |
|                                                                    |   |      |        |   |         |   |   |   |
| Total assets                                                            |   | $         | 13,258,884  |   |         | $      | 13,001,911 |   |
|                                                                    |   |      |        |   |         |   |   |   |
| Liabilities and Stockholders’ Equity (Deficit)                    |   |      |        |   |         |   |   |   |
| Current liabilities:                                                    |   |      |        |   |         |   |   |   |
| Current portion of long-term debt - stockholders                        |   | $         | 744,335     |   |         | $      | 1,682,317 |   |
| Current portion of long-term debt - others                              |   |      | 5,404,572   |   |         |   | 5,226,861 |   |
| Accounts payable                                                        |   |      | 3,534,802   |   |         |   | 2,436,846 |   |
| Accrued liabilities                                                     |   |      | 1,299,578   |   |         |   | 1,518,698 |   |
| Fair value of oil and gas derivatives                                   |   |      | 67,400      |   |         |   | 88,990 |   |
| Total current liabilities                                               |   |      | 11,050,687  |   |         |   | 10,953,712 |   |
|                                                                    |   |      |        |   |         |   |   |   |
| Long-term debt, net of current portion                                  |   |      | 320,000     |   |         |   | 408,179 |   |
| Deferred income taxes                                                   |   |      | 1,594,300   |   |         |   | 1,513,847 |   |
| Asset retirement obligations                                            |   |      | 311,981     |   |         |   | 305,370 |   |
| Total liabilities                                                       |   |      | 13,276,968  |   |         |   | 13,181,108 |   |
|                                                                    |   |      |        |   |         |   |   |   |
| Stockholders’ equity (deficit):                                   |   |      |        |   |         |   |   |   |
| Preferred stock, $.01 par value per share, 1,000,000 shares authorized, |   |      |        |   |         |   |   |   |
| None issued                                                             |   |      | -           |   |         |   | - |   |
| Common stock, $.01 par value per share, 5,000,000 shares authorized,    |   |      |        |   |         |   |   |   |
| 2,655,738 shares issued and outstanding                                 |   |      | 26,557      |   |         |   | 26,557 |   |
| Additional paid in capital                                              |   |      | 12,894,489  |   |         |   | 12,808,867 |   |
| Accumulated deficit                                                     |   |      | (12,701,709 | )      |         |   | (12,783,790 | ) |
| Accumulated foreign currency translation adjustment                     |   |      | (237,421    | )      |         |   | (230,831 | ) |
| Total stockholders’ equity (deficit)                              |   |      | (18,084     | )      |         |   | (179,197 | ) |
|                                                                    |   |      |        |   |         |   |   |   |
| Total liabilities and stockholders’ equity (deficit)              |   | $         | 13,258,884  |   |         | $      | 13,001,911 |   |

----

|                                                         |   | Three Months Ended March 31, |      |
|--------------------------------------------------------------|--------|------------------------------|-----------|
|                                                         |   | 2010                         |      |   | 2009 |   |
| Revenues:                                                    |   |                         |      |   |   |   |
| Energy services                                              |   | $                            | 5,747,471 |   |   | $ | 5,593,914 |   |
| Oil and gas sales                                            |   |                         | 594,430   |   |   |   | 548,931 |   |
| Other                                                        |   |                         | 11,187    |   |   |   | 42,610 |   |
|                                                         |   |                         | 6,353,088 |   |   |   | 6,185,455 |   |
| Expenses:                                                    |   |                         |      |   |   |   |   |   |
| Energy services                                              |   |                         | 5,234,996 |   |   |   | 5,087,417 |   |
| Lease operating expense                                      |   |                         | 477,358   |   |   |   | 549,344 |   |
| Depreciation, depletion & amortization                   |   |                         | 168,337   |   |   |   | 121,809 |   |
| Impairment of acquisition goodwill                           |   |                         | -         |   |   |   | 1,900,000 |   |
| Workover expense                                             |   |                         | 200,495   |   |   |   | 39,598 |   |
| Selling, general and administrative                          |   |                         | 417,660   |   |   |   | 562,045 |   |
|                                                         |   |                         | 6,498,846 |   |   |   | 8,260,213 |   |
|                                                         |   |                         |      |   |   |   |   |   |
| Operating income (loss)                                      |   |                         | (145,758  | ) |   |   | (2,074,758 | ) |
|                                                         |   |                         |      |   |   |   |   |   |
| Other income (expense):                                      |   |                         |      |   |   |   |   |   |
| Interest expense                                             |   |                         | (190,418  | ) |   |   | (178,463 | ) |
| Gain on debt extinguishment                                  |   |                         | 438,967   |   |   |   | - |   |
| Gain on oil and gas derivatives                              |   |                         | 21,590    |   |   |   | - |   |
|                                                         |   |                         |      |   |   |   |   |   |
| Income (loss) from continuing operations before income taxes |   |                         | 124,381   |   |   |   | (2,253,221 | ) |
| Benefit (provision) for income taxes                         |   |                         | (42,300   | ) |   |   | 120,100 |   |
| Net income (loss) from continuing operations                 |   |                         | 82,081    |   |   |   | (2,133,121 | ) |
| Discontinued operations, net of tax                          |   |                         | -         |   |   |   | (25,419 | ) |
| Net income (loss)                                            |   | $                            | 82,081    |   |   | $ | (2,158,540 | ) |
|                                                         |   |                         |      |   |   |   |   |   |
| Net income (loss) per share, basic and diluted               |   |                         |      |   |   |   |   |   |
| Net income (loss) from continuing operations                 |   | $                            | 0.03      |   |   | $ | (0.80 | ) |
| Discontinued operations                                      |   |                         | -         |   |   |   | (0.01 | ) |
| Net income (loss)                                            |   | $                            | 0.03      |   |   | $ | (0.81 | ) |
|                                                         |   |                         |      |   |   |   |   |   |
| Weighted average shares outstanding, basic and diluted       |   |                         | 2,655,738 |   |   |   | 2,655,738 |   |
|                                                         |   |                         |      |   |   |   |   |   |

----

|                                                                               |   | Three Months Ended March 31, |      |
|------------------------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                               |   | 2010                         |      |   | 2009 |   |
| Cash flows provided by (used in) operating activities:                             |   |                         |      |   |   |   |
| Net income (loss) from continuing operations                                  |   | $                            | 82,081    |   |   | $ | (2,133,121 | ) |
| Adjustments to reconcile net income (loss) from continuing                         |   |                         |      |   |   |   |   |   |
|      operations to cash provided by (used in) operations: |   |                         |      |   |   |   |   |   |
| Depreciation, depletion & amortization                                         |   |                         | 168,337   |   |   |   | 121,809 |   |
| Impairment expense                                                                 |   |                         | -         |   |   |   | 1,900,000 |   |
| Provision (benefit) for income taxes                                               |   |                         | 42,300    |   |   |   | (120,100 | ) |
| Stock based compensation                                                           |   |                         | 11,525    |   |   |   | 9,441 |   |
| Gain on debt extinguishment                                                        |   |                         | (438,967  | ) |   |   | - |   |
| Unrealized gain on oil and gas derivatives                                         |   |                         | (21,590   | ) |   |   | - |   |
| Changes in current assets and liabilities                                          |   |                         | (754,172  | ) |   |   | (424,864 | ) |
| Other changes, net                                                                 |   |                         | 22,667    |   |   |   | (2,528 | ) |
| Net cash flows from continuing operations                                          |   |                         | (887,819  | ) |   |   | (649,363 | ) |
| Net cash flows from discontinued operations                                        |   |                         | -         |   |   |   | (25,419 | ) |
| Total cash flows from operating activities                                         |   |                         | (887,819  | ) |   |   | (674,782 | ) |
|                                                                               |   |                         |      |   |   |   |   |   |
| Cash flows provided by (used in) investing activities:                             |   |                         |      |   |   |   |   |   |
| Decrease in restricted cash from sale of subsidiary                                |   |                         | 1,613,637 |   |   |   | 524,954 |   |
| Purchase of property and equipment                                                 |   |                         | (109,893  | ) |   |   | (967 | ) |
| Net cash flows from investing activities                                           |   |                         | 1,503,744 |   |   |   | 523,987 |   |
|                                                                               |   |                         |      |   |   |   |   |   |
| Cash flows provided by (used in) financing activities:                             |   |                         |      |   |   |   |   |   |
| Proceeds from long term debt                                                       |   |                         | 877,711   |   |   |   | 257,745 |   |
| Payments of long term debt                                                         |   |                         | (953,844  | ) |   |   | (85,163 | ) |
| Net (payments) proceeds of stockholder advances                                    |   |                         | (490,854  | ) |   |   | (35,000 | ) |
| Net cash flows from financing activities                                           |   |                         | (566,987  | ) |   |   | 137,582 |   |
|                                                                               |   |                         |      |   |   |   |   |   |
| Net increase in cash and cash equivalents                                          |   |                         | 48,938    |   |   |   | (13,213 | ) |
| Cash and equivalents at beginning of period                                        |   |                         | 142,703   |   |   |   | 203,200 |   |
|                                                                               |   |                         |      |   |   |   |   |   |
| Cash and equivalents at end of period                                              |   | $                            | 191,641   |   |   | $ | 189,987 |   |
|                                                                               |   |                         |      |   |   |   |   |   |
| Supplemental cash flow data:                                                       |   |                         |      |   |   |   |   |   |
| Cash paid for interest                                                             |   | $                            | 97,830    |   |   | $ | 118,130 |   |
| Cash paid for income taxes                                                         |   |                         | -         |   |   |   | 251,875 |   |
|                                                                               |   |                         |      |   |   |   |   |   |
| Supplemental financing activity:                                                   |   |                         |      |   |   |   |   |   |
| Gain on debt extinguishment - related party                                        |   | $                            | 74,097    |   |   | $ | - |   |

----

----

----

|                                                                                                                                                                                                                                                      |   | March 31, |       |   | December 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|------------|--------|--------------|--------|
|                                                                                                                                                                                                                                                      |   | 2010      |       |   | 2009         |   |
| $25,000,000 line of credit with a bank, maturing on January 1, 2011, interest at 1.0% above prime payable monthly, secured by first lien on CYMRI, LLC’s oil and gas properties, with a declining borrowing base of $3,076,000 as of March 31, 2010 |   | $         | 3,001,000  |   |         | $      | 3,001,000 |   |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
| Notes payable to individuals and entities, incurred in acquisition of CYMRI, bearing interest at 10%, with principal and accrued interest due at extended maturity in March 2010, unsecured                                                               |   |      | -          |   |         |   | 1,125,000 |   |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
| $4,000,000 (Cdn) revolving line of credit with a bank, interest at 4.5% above Canadian prime payable monthly through maturity in May 2010, secured by accounts receivable of Canadian petroleum services business                                         |   |      | 2,256,464  |   |         |   | 1,389,667 |   |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
| Notes payable to 2 individuals, incurred in acquisition of Decca Consulting, Ltd., bearing interest at 9%, payable in monthly installments of $30,099 (Cdn) from April 1, 2007 through March 31, 2012, unsecured                                          |   |      | 564,335    |   |         |   | 618,179 |   |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
| Advances from stockholders, bearing interest at 10%, with principal and accrued interest due in March 2010, unsecured                                                                                                                                     |   |      | 500,000    |   |         |   | 1,047,317 |   |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
| Other short term notes for liability insurance and accrued payables, interest rates at 7% to 9%                                                                                                                                                           |   |      | 147,108    |   |         |   | 136,194 |   |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
|                                                                                                                                                                                                                                                      |   |      | 6,468,907  |   |         |   | 7,317,357 |   |
| Current portion of long term debt - stockholders                                                                                                                                                                                                          |   |      | (744,335   | )      |         |   | (1,682,317 | ) |
| Current portion of long term debt - others                                                                                                                                                                                                                |   |      | (5,404,572 | )      |         |   | (5,226,861 | ) |
|                                                                                                                                                                                                                                                      |   |      |       |   |         |   |   |   |
|                                                                                                                                                                                                                                                      |   | $         | 320,000    |   |         | $      | 408,179 |   |

----

----

|                             |   | Number |    |   | Wtd. Avg. |   |   | Wtd. Avg. |   |   | Aggregate |   |
|----------------------------------|--------|--------|---------|--------|----------------|--------|--------|----------------|--------|--------|-----------|--------|
|                             |   | of     |    |   | Exercise       |   |   | Remaining      |   |   | Intrinsic |   |
|                             |   | Shares |    |   | Price          |   |   | Term (Yrs.)    |   |   | Value     |   |
|                             |   |   |    |   |           |   |   |           |   |   |      |   |   |   |
| Outstanding at January 1, 2009   |   |   | 47,500  |   |           | $      | 7.60   |           |   |   |      |   |   |   |
| Option activity                  |   |   |  - |   |           |   | -      |           |   |   |      |   |   |   |
| Outstanding at December 31, 2009 |   |   | 47,500  |   |           |   | 7.60   |           |   |   |      |   |   |   |
| Options forfeited                |   |   | (10,000 | )      |           |   | (1.50  | )              |   |   |      |   |   |   |
| Outstanding at March 31, 2010    |   |   | 37,500  |   |           | $      | 9.18   |           |   |   | 1.0       |   |   | $ | - |   |
|                             |   |   |    |   |           |   |   |           |   |   |      |   |   |   |   |   |
| Exercisable at March 31, 2010    |   |   | 37,500  |   |           | $      | 9.18   |           |   |   | 1.0       |   |   | $ | - |   |

----

----

|                                               |   | Energy   |   |   | Exploration & |   |   |   |   |   |
|----------------------------------------------------|--------|----------|--------|--------|-------------------|--------|--------|--------|--------|--------|
|                                               |   | Services |   |   | Production        |   |   |   |   |   |
|                                               |   | (Canada) |   |   | (U. S.)           |   |   | Total  |   |   |
| Income Statement Data:                             |   |     |   |   |              |   |   |   |   |   |
| Operating revenues                                 |   | $        | 5,748  |   |              | $      | 594    |   |   | $      | 6,342 |   |   |
| Other revenues                                     |   |     | 10     |   |              |   | 1      |   |   |   | 11 |   |   |
| Total revenues                                     |   |     | 5,758  |   |              |   | 595    |   |   |   | 6,353 |   |   |
| Depreciation, depletion & amortization         |   |     | -      |   |              |   | (168   | )      |   |   | (168 | ) |   |
| Other allocable operating expenses                 |   |     | (5,235 | )      |              |   | (678   | )      |   |   | (5,913 | ) |   |
| Gross profit (loss)                                |   |     | 523    |   |              |   | (251   | )      |   |   | 272 |   |   |
| General & administrative                       |   |     |   |   |              |   |   |   |   |   | (418 | ) |   |
| Operating loss                                     |   |     |   |   |              |   |   |   |   |   | (146 | ) |   |
| Interest expense                                   |   |     |   |   |              |   |   |   |   |   | (190 | ) |   |
| Gain on debt extinguishment                        |   |     |   |   |              |   |   |   |   |   | 439 |   |   |
| Unrealized gain on oil and gas derivatives         |   |     |   |   |              |   |   |   |   |   | 21 |   |   |
| Net income from continuing operations before taxes |   |     |   |   |              |   |   |   |   | $      | 124 |   |   |
|                                               |   |     |   |   |              |   |   |   |   |   |   |   |   |
| Balance Sheet Data:                                |   |     |   |   |              |   |   |   |   |   |   |   |   |
| Subsidiary assets                                  |   | $        | 4,404  |   |              | $      | 7,201  |   |   | $      | 11,605 |   |   |
| Goodwill                                           |   |     | 1,536  |   |              |   | -      |   |   |   | 1,536 |   |   |
| Segment assets                                     |   |     | 5,940  |   |              |   | 7,201  |   |   |   | 13,141 |   |   |
| Corporate assets                                   |   |     |   |   |              |   |   |   |   |   | 118 |   |   |
| Consolidated assets                                |   |     |   |   |              |   |   |   |   | $      | 13,259 |   |   |

| Income Statement Data:                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Operating revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $      | 5,594  |   |   | $      | 549    |   |   | $      | 6,143 |   |   |
| Other revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 33     |   |   |   | 9      |   |   |   | 42 |   |   |
| Total revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   | 5,627  |   |   |   | 558    |   |   |   | 6,185 |   |   |
| Depreciation, depletion & amortization                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |   | -      |   |   |   | (122   | )      |   |   | (122 | ) |   |
| Impairment expense                                                                            |   |   | (1,900 | )      |   |   | -      |   |   |   | (1,900 | ) |   |
| Other allocable operating expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |   | (5,087 | )      |   |   | (589   | )      |   |   | (5,676 | ) |   |
| Gross profit                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   | (1,360 | )      |   |   | (153   | )      |   |   | (1,513 | ) |   |
| General & administrative                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |   |   |   |   |   |   | (562 | ) |   |
| Operating loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |   |   |   |   |   |   |   |   |   | (2,075 | ) |   |
| Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |   | (178 | ) |   |
| Net loss from continuing operations before taxes                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   | $      | (2,253 | ) |   |

----

----

----

----

----

|    31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15(d)-14(a)                                                                              |   |
|------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                   |                                                                                                                                                         |   |
|    31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15(d)-14(a)                                                                              |   |
|                   |                                                                                                                                                         |   |
|    32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002            |   |
|                   |                                                                                                                                                         |   |
|    32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |   |

----

|   | STRATUM HOLDINGS, INC. |
|--------|------------------------|
|   |                   |   |
|   |                   |   |
|   |  /s/         |  Larry M. Wright |
|   |                   | Larry M. Wright |
|   |                   | Chief Executive Officer |
|   |                   |   |
|   |  /s/         | D. Hughes Watler, Jr. |
|   |                   | D. Hughes Watler, Jr. |
|   |                   | Chief Financial Officer |

----

----