UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2011

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:  333-138806

MOGUL ENERGY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware	98-0461623
State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

2500 Wilcrest Drive, Suite 405, Houston, Texas	77042
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code:	(713) 784-2446

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.Yes o   No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes x  No o

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§Sec.229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x   No o

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting Company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer £	Accelerated filer o
Non-accelerated filer £	Smaller reporting company x
(Do not check if a smaller reporting Company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £   No S

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. As of October 30, 2011, there were 57,505,987 common shares outstanding.

PART I

Mogul Energy International, Inc.

Financial Statement Index

Index

Balance Sheet	F- 2
Statements of Operations	F- 3
Statements of Cash Flows	F- 4
Notes to the Financial Statements	F- 5 to F-9

F-1

 

Mogul Energy International, Inc.

Balance Sheets

(expressed in U.S. dollars)

	September 30, 2011 (Unaudited)			December 31, 2010
Assets:
Current
Cash	$	69,333		$	65,085
Investments held for sale		11,765			102,052
Prepaid and deposits		74,666			100,477
Other receivables		192,009			72,611
Restricted funds		430,929			-
Total current assets		778,703			340,225
Non-current
Oil and gas properties		93,533			36,342
Other property and equipment – net		15,477			-
Total Assets	$	887,713		$	376,567
Current Liabilities:
Accounts payable	$	150,613		$	31,537
Accrued expenses and other payables		45,870			38,106
Drilling advances		457,321			-
Due to related parties		818,281			-
Total current liabilities		1,472,085			69,643
Contingencies and commitments		115,280			300,000
Total Liabilities		1,587,365			369,643
Shareholders’ Equity:
Accumulated deficit	$	(8,411,640	)	$	(7,656,718	)
Common stock (Authorized: 100,000,000 shares, $0.0001 par value. Outstanding: 57,505,987 shares at 09/30/11 and 57,445,987 at 12/31/10)		5,804			5,744
Additional paid-in capital		7,639,981			7,638,241
Warrants & Options:		114,000			144,000
Preferred: 10,000,000 shares authorized, none issued		-			-
Foreign exchange adjustment		(39,242	)		(151,187	)
Other comprehensive income (loss)		(8,552	)		56,844
Total Shareholders’ Equity		(699,652	)		6,924
Total Shareholders’ Equity and Liabilities		887,713		$	376,567

The Notes are an integral part of the Financial Statements

F-2

Mogul Energy International, Inc.

Statements of Operations

For the Nine Months Ended September 30, 2011 and 2010

(expressed in U.S. dollars)

Unaudited

	Three Months Ended September 30, 2011			Three Months Ended September 30,  2010			Nine Months Ended September 30, 2011			Nine Months  Ended September 30, 2010
Revenue:
Oil and gas sales		3,220			-			10,918			-
Management fees		3,668			-			8,885			-
Total revenue		6,887						19,802			-
Expenses:
Lease operating expense		150			-			194			-
Production tax		148			-			503			-
Depreciation, depletion  and amortization		4,089			-			8,405			-
General and administrative		127,389			574,920			334,782			816,745
Salaries and wages		129,901			29,296			366,002			222,544
Stock based compensation		1,800			-			1,800			-
Taxes, other		-			-			83,357			-
Total expenses		(263,477	)		(599,216	)		(795,043	)		(1,039,299	)
Other income and expenses
Gain on sale of oil and gas properties		-			-			-			575,000
Gain on sale of investment held for sale		-			-			20,319			310,931
Net income (loss) for the periods	$	(256,590	)	$	(599,216	)	$	(754,922	)	$	(153,368	)
Other comprehensive income:
Net unrealized gain (loss) on investments held for sale for periods	$	(7,585	)	$	349,238		$	(65,400	)	$	85,026
Foreign exchange adjustment		43,537			15,771			111,945			(16,749	)
Total other comprehensive gain (loss) for the periods	$	35,952		$	365,009		$	46,545		$	68,277
Total comprehensive net gain (loss) for the periods	$	(220,638	)	$	158,667		$	(708,377	)	$	(85,091	)
Basic earnings (loss) per share	$	(0.00	)	$	0.00		$	(0.01	)	$	(0.00	)
Weighted average common shares outstanding		57,460,987			57,445,987			57,460,987			57,445,987

The Notes are an integral part of the Financial Statements

F-3

Mogul Energy International, Inc.

Statements of Cash Flows

For the Nine Months Ended September 30, 2011 and 2010

(Expressed in U.S. dollars)

Unaudited

	Nine Months  Ended September 30, 2011			Nine Months  Ended September 30,  2010
Operating Activities
Net income (loss) for periods	$	(754,922	)	$	(153,368	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion, amortization		8,405			-
Gain on disposition of exploration Property		-			(575,000	)
Gain on investment held for sale		(20,319	)		(310,931	)
Stock based compensation		1,800
Changes in non-cash working capital
Accounts payables (decrease) increase		119,076			(179,767	)
Accrued expenses and other payables		7,764			-
Drilling advances		457321			-
Other receivables (decrease) increase		(119,398	)		(4,150	)
Prepaid and deposits		25,811			(37,054	)
Restricted cash		(430,929	)		-
Contingency decrease		(184,720	)		303,457
Cash used in operating activities	$	(890,112	)	$	(955,677	)
Investing Activities
Purchases of other property and equipment		(23,881	)		-
Proceeds - sale of investments held for sale		45,206			448,804
Proceeds from the disposition of exploration property		-			1,000,000
Oil and gas properties		(57,191	)		5,389
Cash used for investing activities	$	(35,866	)	$	(1,454,191	)
Financing Activities
Due to related parties		818,281			(145,320	)
Bank indebtedness		-			(43,143	)
Cash from financing activities	$	818,281		$	(188,463	)
Foreign exchange adjustment		111,945			(16,740	)
Increase (decrease) in cash during periods		4,248			310,052
Cash beginning of periods		65,085			7,481
Cash at end of periods	$	69,333		$	299,648
Interest paid during period		-			32,972
Taxes paid during period		-			-
Schedule of Non-cash Transactions
Expiration of shareholder warrants		-			132,738

The Notes are an integral part of the Financial Statements

F-4

Mogul Energy International, Inc.

Notes to the September 30, 2011 and 2010 Financial Statements

Mogul Energy International, Inc. (the “Company”), was formed in the state of Delaware on July 25, 2005 and is focused on oil and gas acquisition, exploration, development and production activity primarily in the State of Texas.  The Company’s business strategy is focused on building a portfolio of prospective oil and gas properties that are close in proximity to areas containing known oil and gas reserves.  By securing industry partners on a promoted basis where practical, the Company is also able to minimize the exploration risk contained within its oil and gas property portfolio.  In addition, the Company strives to be the operator, so it can control the operations, timing, scope and financial obligations with respect to its oil and gas exploration, development and production operations.

In management’s opinion all of the adjustments necessary for a fair statement of the results of the interim period ended September 30, 2011 have been made, such adjustments are of a normal recurring nature.  These financial statements for the nine months ended September 30, 2011 should be read in conjunction with our audited financial statements for the year ended December 31, 2010.

NOTE 2 – Basis of Presentation and Use of Estimates

Going Concern

The Company has a history of operating losses, including an accumulated deficit of $8,411,640 through September 30, 2011.  This and other factors raise substantial doubt about the ability of the Company to continue as a going concern.  Management plans to address these matters through the sale of additional shares of its common stock, additional borrowings, the sale in whole or partial property interests, or a combination thereof to finance the Company’s future operations.

Although there is no assurance that the Company will be successful in these actions, management believes that it will be able to secure the necessary financing to continue operations for the foreseeable future.  Accordingly, these financial statements do not reflect adjustments to the carrying value of assets and liabilities, the reported expenses and balance sheet classifications used that would be necessary if the going concern assumption were not appropriate.  Such adjustments would be material and would have an adverse effect on the ability of the Company to continue as a going concern.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires use of estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Because of various factors affecting future costs and operations, actual results could differ from estimates. Critical accounting policies and estimates used in the preparation of the financial statements relate to the accounting for impairments and carrying amounts of exploration properties including the realizable value of capitalized resource properties for exploration and evaluation costs. Future operations will be affected to the extent there are material differences between the estimated and actual amounts.

NOTE 3 - Securities available for sale

At September 30, 2011 the Company held 135,000 common shares of Sea Dragon Energy Inc., a Canadian company trading on the TSX Venture exchange under the symbol SDX. This investment is accounted for as held for sale.  The fair market value of these shares was estimated to be $11,765 at September 30, 2011.  The Company sold 165,000 common shares for net proceeds of $45,134 during the preceding nine months.

F-5

Mogul Energy International, Inc.

Notes to the September 30, 2011 and 2010 Financial Statements

NOTE 4- Other Receivables

At September 30, 2011, Other Receivables of $192,009 included $154,809 of receivables due from partners for property acquisition, drilling and operating costs and $21,041 covering the Company’s Harmonized Sales Tax (“HST”) Receivable.  At September 30, 2010, Other Receivables were $72,611 and  included HST Receivable of $22,361.  The HST Receivable relates to the Goods and Services Tax (Canada). The Company anticipates the full amount the HST Receivable to be refunded within 12 months of the balance sheet date. Due to the nature of this receivable, management does not consider an allowance for doubtful accounts to be necessary.

Other receivables at September 30, 2011 included accrued revenue, maintenance fees and rent receivable from sublet office space.

NOTE 5 – Property, Plant and Equipment

Oil and Gas Properties

The Company’s capitalized oil and gas properties are located solely in the United States. A summary of capitalized oil and gas property costs follows:

Net book value at December 31, 2009	$	425,000
Reduction: repayment by Vesta to acquire interest in Excelaron		(425,000	)
Additions: related to California leases		1,396
Additions: acquisition costs related to leases for oil and gas rights in Texas		33,613
Additions: Acquisition of 15% working interest for Stafford lease		1,333
Net book value at December 31, 2010	$	36,342
Reduction: Billed to joint interest partners		(33,789	)
Additions: Lease acquisition costs		15,668
Additions: Geological and geophysical		1,441
Additions: Intangible drilling costs		42,288
Additions: Intangible completion costs		14,185
Additions: Lease and well equipment		17,398
Net book value at September 30, 2011	$	93,533

F-6

Mogul Energy International, Inc.

Notes to the September 30, 2011 and 2010 Financial Statements

Other Property and Equipment

Other property and equipment is recorded at original cost and depreciated using the declining balance method.  A summary of the property and equipment for the quarter ended September 30, 2011 is as follows:

	September 30, 2011
Furniture and fixtures	$	11,669
Computer equipment		1,933
Pump equipment		2,250
Software		14,239
Total other property and equipment		30,091
Less: accumulated depreciation		(14,616	)
Other property and equipment – net	$	15,477

The Company did not have any capitalized other property and equipment at September 30, 2010.

NOTE 6 - Foreign Exchange Rate

The impact of the cumulative effect of the unrealized foreign currency exchange gain or loss is accounted for in the equity section of the balance sheet. This adjustment included an unrealized foreign exchange loss of $39,242 for the nine months ended September 30, 2001, as compared to an unrealized foreign exchange loss of $165,207 during the same period in 2010.  A realized foreign exchange loss of $17,444 was recognized in nine months ended September 30, 2011 and was accounted for as an increase of general and administrative expenses.  The realized foreign exchange loss for the same period in 2010 was $23,404.

NOTE 7 – Restricted Cash

As of September 30, 2011 the Company held $430,929 in escrow received from our joint venture partners.  The Company had no restricted cash at December 31, 2010.

NOTE 8 – Drilling Advances

During 2011 the Company received drilling advances from Joint venture partners with a remaining balance of $457,321 at September 30, 2011.  These advances will be applied towards the payment of drilling costs incurred in 2011.

NOTE 9 - Capital Stock

Common Stock

At September 30 2011, 57,505,987 shares of the Company`s common stock was outstanding.  During the nine months the Company issued 60,000 shares to an officer and director of the Company for compensation.

F-7

Mogul Energy International, Inc.

Notes to the September 30, 2011 and 2010 Financial Statements

Employee Stock Option Plan

The following table summarizes the continuity of the Company’s stock options:

September 30, 2011
	Options		Weighted Average Exercise Price		Weighted Average  Remaining Life (years)
Options outstanding at beginning of period		2,850,000	$	0.05		4.06
Options issued during the period		-		-		-
Exercised		-		-		-
Forfeited		-		-		-
Expired		-		-		-
Outstanding at the end of period		2,850,000	$	0.05		4.06

On October 22, 2010 the Company granted 2,850,000 fully vested stock options to directors, officers, employees and contractors.  These options will expire on October 22, 2015.  The fair value of the options is $0.04 calculated using the Black-Scholes method:  risk free rate 1.1%, share price $0.04, strike price $0.05, volatility 215%, and dividend yield 0.00.

Preferred Stock

The Company’s Articles of Incorporation authorize its Board of Directors, without approval from the common shareholders, to issue 10,000,000 shares of preferred stock in any series, rights and preferences as determined by the Board. Preferred shares may be issued that have greater voting rights than the common stock, which may dilute the value of any outstanding shares of common stock.  There was no preferred stock issued or outstanding at September 30, 2011 or 2010.

NOTE 10 – Related Party Transactions

At September 30, 2011 the Company had a zero interest loan of $818,713 from a private company owned by a Director of the Company.

On January 26, 2011, the Company entered into a Stafford Area Participation Agreement with Aura Oil Holdings Ltd. (“Aura”), a privately owned corporation organized under the laws of Bermuda. Pursuant to the terms of the Stafford Area Participation Agreement, Aura purchased an 8.3333% interest in the Company’s oil and gas leases, leasehold rights, and rights to participate in the development of oil, gas and other related substances in the Stafford Prospect for $75,521.  The Company’s Chairman is the sole shareholder of Aura.

The Company sub leases office space in its Toronto location to a related party with directors in common.

NOTE 11 – Contingencies and Commitments

Office Leases

Our principal office is located at 2500 Wilcrest Drive, Suite 405, Houston, Texas, 77042, USA.  This is a sub-lease agreement that expires on June 30, 2012 at a monthly rate of $1,497.08 per month.

F-8

Mogul Energy International, Inc.

Notes to the September 30, 2011 and 2010 Financial Statements

We also have administrative offices located at 207 West Hastings Street, Suite 1111, Vancouver, British Columbia, Canada V6B 1H7. The Company sublets office space from a related party for $1,313 per month, renewable annually.

Additionally, the Company has an office at Suite 201, 47 Colborne St., Toronto, Ontario, Canada M5E 1P8.  This is a lease at a monthly cost of $8,417.  This space is also subleased to related parties at a rate of $8,000 per month.

Environmental Uncertainties

The Company may be exposed to financial risks in the oil and gas exploration business for pollution or hazards against which it cannot adequately insure or which it may elect not to insure. Incurring any such liability may have a material adverse effect on our financial position and operations.

Flow-through Financing

The Company raised a total of CAD$950,000 in 2008 on a flow-through basis.  The gross proceeds of the financing were renounced to investors at December 31, 2008 and were to be used by the Company to incur qualified Canadian exploration expenses by June 30, 2010.  The company spent CAD$154,850 on qualified capital exploration expenditures leaving a commitment of approximately CAD$795,150 that was not spent on qualified capital exploration expenditures by July of 2010.  The Company has paid $55,000 in taxes and penalties assessed by the Canadian Customs and Revenue Agency.  An additional $83,357 tax was assessed as of June 30, 2011 that is as yet unpaid.  This tax is stated under the caption “Tax, other” on the Company’s Income Statement.  The Company has paid out $171,894 to shareholders as an indemnity for tax losses they incurred.  The Company estimates that a possible $115,280, still remains to be paid to investors.

NOTE 12 - Loss Per Share

Loss per share is calculated using the weighted average number of shares issued during the relevant period. The weighted average number of common shares was 57,460,987 for the period ended September 30, 2011.

F-9

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These statements relates to future events and/or our future financial performance.  Generally, you can identify forward-looking statements by terminology such as “intends,” "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", or "potential" or the negative of these terms or other comparable terminology.  To the extent that such statements are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties.  These statements reflect only our current expectations and involve known and unknown risks, uncertainties and other factors, many of which are unforeseen, including the risks in Item 1A entitled "Risk Factors," that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  You should not place undue reliance on these forward-looking statements.  These forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbours created thereby.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited interim financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our unaudited interim financial statements and the related notes that appear elsewhere in this Quarterly Report.

In this Quarterly Report, unless otherwise specified, all references to "common shares" refer to common shares in the capital of Mogul Energy International, Inc., and the terms "we" "us" and "our" mean Mogul Energy International, Inc. (the “Company” and “Registrant”).

Overview

Mogul Energy International, Inc. (the “Company”), was formed in the state of Delaware on July 25, 2005 and is focused on oil and gas acquisition, exploration, development and production activity primarily in the State of Texas.  The Company’s business strategy is focused on building a portfolio of prospective oil and gas properties that are close in proximity to areas containing known oil and gas reserves.  By securing industry partners on a promoted basis where practical, the Company is also able to minimize the exploration risk contained within its oil and gas property portfolio.  In addition, the Company strives to be the operator, so it can control the operations, timing, scope and financial obligations with respect to its oil and gas exploration, development and production operations.

Cash Requirements

Further cash requirements may be necessary should we wish to participate in further development of our prospects prospect and working capital.  These funds may be raised through equity financing, debt financing, the sale of assets, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.

Selected Annual Financial Information

	September 30, 2011			September 30, 2010
Cash		69,333			299,648
Securities available for sale		11,765			84,607
Working capital		(782,270	)		453,516
Total assets		887,713			984,030
Total liability		1,587,365			342,262
Shareholders' equity		(699,652	)		641,768
Share capital		7,645,785			7,351,485
Weighted average common shares outstanding		57,460,987			57,445,987
Accumulated deficit		(8,411,640	)		(6,875,273	)
Cash flow from operations		(890,112	)		(956,814	)
Net loss		(54,922	)		(153,368	)
Loss per share		(0.01	)		(0.00	)

At September 30, 2011 we had total assets of $887,713, as compared to $984,030 at September 30, 2010.   Working capital at September 30, 2011 was negative $782,270 and excludes restricted cash and drilling advances of $430,929 and $457,321, respectively.  The accumulated deficit balance has grown to $8,411,640 from $6,875,273 in the comparable prior period due to continued net losses.  The Company received $818,281 in loans from a related party, which largely accounts for the increase in liabilities and the working capital deficit at September 30, 2011 as compared to the working capital deficit of $342,262 at September 30, 2010.  These related party loans have no interest due and are convertible into the Company’s common stock at the Company’s option.

At September 30, 2011, we had  total current liabilities of $1,587,365, including $457,321 for drilling advances and $818,281 for zero interest loans received from a related party.  Our total liabilities included an accrual of $115,289 for the potential claims remaining as a contingency due to reassessments denying personal tax deductions to investors in connection with funds raised in 2008 via a flow-though financing (see Financial Statements Note 11).   Current liabilities in the corresponding period of 2010 were $342,262.

Capitalized oil and gas assets increased to $93,533 at September 30, 2011 as compared to $36,342 at September 30, 2010.  The Increase was principally associated with our 15% working interest for the two wells drilled on the Stafford property.

Cash used for operations during the nine months ended September 30, 2011 was $890,112, as compared to $956,814 during the same period of 2010.  The Company continues to focus on developing its property interests in Texas.  The Company’s projects in Saskatchewan, Canada have been terminated pending completion of reclamation operations.

	Nine months ended September 30, 2011			Nine months ended September 30, 2010
Revenues
Oil and gas sales		10,918			-
Management fees		8,885			-
Total revenues		19,802			-
Expenses
General & Administrative:
Depreciation, depletion & amortization		8,405
Interest expense		-			32,972
Internet and telephone		14,106			9,659
Insurance		29,009			-
Production tax		503			-
Professional fees		125,945			190,998
Lease operating expenses		194
Lease reclamation expenses		4,499			59,737
Rent		44,566			61,079
Travel and Promotion		37,562			85,558
Tax on flow-through funds		83,357			18,722
Realized foreign exchange loss		(17,444	)		23,404
Wages		367,802			234,794
Stock based compensation		1,800
Other		94,739			55,626
Total expenses		795,043			(772,549	)
Deferred indemnity charge					(266,750	)
Gain on disposition of exploration property					575,000
Gain on sale of securities available for sale		20,319			310,931
Service revenue
Net loss		(754,922	)		(153,368	)

Revenues from oil and gas production for the nine month period ended September 30. 2011were $10,918 and management fees as operator were $8,885. There were no revenues in the comparable period in 2010.

For the nine month period ended September 30, 2011 total general and administrative costs were $795,043, relatively flat, as compared to $772,549 in the corresponding period of 2010.  

Internet and telephone charges increased 46% period-on-period due to increased communication costs between our new head office in Texas and our Canadian offices.  Insurance costs were $29,009 for the nine months ended September 30, 2011 as compared to nil for the same period of 2010. Professional fees decreased period-on-period, as the company used fewer consultants during the first nine months of 2011, as compared to the same period of 2010. Lease reclamation costs were $4,499 for the nine months ended September 30, 2011, a significant decrease over $59,737 for the same period of 2010, as the Company wound down its Canadian oil and gas operations. Rent expense decreased period-on-period, as the Company began subletting a portion of its office space at its Toronto location during 2011. Travel and Promotions costs have decreased period-on-period from $85,558 to $37,562, as the company narrowed its business focus to its properties in Texas. Travel and promotion costs may increase during future periods as management continues its efforts to grow the Company’s business. Wages increased to $367,802 during the nine months ended September 30, 2001, as compared to $234,794 in the same period of 2010 due to the hiring of additional individuals with expertise in oil and gas development in Texas during the first nine months of 2011.

During the nine months ended September 30, 2011 the Company sold 165,000 common shares of Sea Dragon Energy Inc. (TSXV: SDX) for net proceeds of $45,206 leaving the Company with 135,000 common shares of Sea Dragon Energy Inc. This investment is accounted for as held for sale.  The remaining shares Sea Dragon Energy Inc. had an estimated fair market value of $11,765 at September 30, 2011.

Milestones - During the nine months ended September 30, 2011

Stafford Prospect, Jackson County, Texas

On November 26, 2010, we entered into a Joint Operating Agreement and a Participation Agreement with C. H. Squyres Family, LLC, Fossil Oil Company LLC and certain other individuals who are signatories thereto to develop an extension to the La Ward NE Field in Jackson County (Stafford Prospect).  This agreement provides for the shared costs in the acquisition of oil and gas leases in the Stafford Prospect.  As operator, we  participate in the drilling of the initial well with an 8.89% working interest and will acquire a 6.11% promoted interest resulting in our having a 15.00% working  interest upon the successful completion of the initial well drilled on the property.  Each participant would also pay the same percentage costs for the next well as was paid on the first well.

On March 6th, 2011, we completed the drilling of the Stafford Well #1 at the La Ward NE Field area in Jackson County, Texas.  The well was drilled to a total depth of 7,400 feet.  Initial open-hole logging indicates multiple productive zones from the Frio formation with both oil and gas shows.  The deepest prospective oil zone shows a structural sand 10 feet higher to an offsetting productive well with a sand thickness of 5 ½ feet with a 33% porosity and 20% water saturation.  Additional tests and analysis of the several other productive zones will continue while the casing is installed, cemented and surface equipment are put into place.  We have had some intermittent production as we evaluate production from various zones.

Stafford Well #1 has produced a gross amount 1,048 barrels of oil through September 30, 2011.   The Company continues to test and analyze the production of multiple productive zones in this well.  The Company has a 15% working interest in the Stafford Well #1.

We completed drilling of the Stafford #2 well at the end of the quarter.  The well is located approximately 600 feet west of the Stafford #1 well.  Open-hole logging indicated the potential of eight productive zones from the Frio formation with a cumulative thickness of 49 feet of pay of both oil and gas shows and further indicating several zones structurally higher than the Stafford #1 well.  Unanimous consent was secured form all partners to complete the well as a viable producing well on September 23rd.

North Pasture Prospect – San Patricio County, Texas

On December 8, 2010, we entered into a Joint Operating Agreement and a Participation Agreement with Global Oil and Gas Resources Inc., Dolimiti Partners LLC, Indian Lane Asso., LLC, Plastiform Packaging, Inc. and certain other individuals who are signatories thereto for the first prospect known as the North Pasture Prospect in San Patricio County, Texas.  Subject to the continued acquisition of the mineral leases in the area, we, as operator, would pay no proportionate cost for the drilling of the well and would earn a 25% net working interest upon the successful completion of the initial well.  We have acquired leasehold rights to an additional 245 acres increasing our total acreage of the prospect to 260 acres. We are currently in negotiations with drilling companies to spud the well in the fourth quarter

Saskatchewan Exploration Program

We do not plan on any further exploration in Saskatchewan due to the expiration of our mineral leases.  Our Ryerson 16-17-009-31W1M well, previously suspended after encountering a heavily oil stained, marginal reservoir within the Bakken interval, was determined by management to be uneconomical and it has been plugged and abandoned.  On December 31, 2010 an impairment charge $523,558 has been made against previously capitalized costs.

Material Asset Purchases and Sales

Excelaron Interest

On February 12, 2009, we had acquired a 40% interest (the “Excelaron Interest”) in Excelaron LLP, a privately held company based in California (“Excelaron”). The acquisition was contingent upon our making a capital contribution of $2,300,000 in installments over a specified period.  After making payments of $425,000 we engaged in assigning our interest to other parties better positioned to capitalize on this asset in exchange for either shares or cash.

On March 26, 2010, an Amended Qualifying Transaction Agreement was executed  pursuant to which we agreed to accept, an aggregate of $1,000,000 Canadian Dollars (less $150,000 in debt financing repaid and $87,900 in legal and consulting fees) and the reimbursement of approximately, $425,000 of advances made by us to Excelaron, in exchange for the Excelaron Interest.  The agreement was consummated on April 30 of 2010.

Sea Dragon Energy Inc.

At September 30, 2011 the Company held 135,000 common shares of Sea Dragon Energy Inc., a Canadian company trading on the TSX Venture exchange under the symbol SDX. This investment is accounted for as held for sale.  The fair market value of these shares was estimated to be $11,765 at September 30, 2011.  The Company sold 165,000 common shares for net proceeds of $45,134 during the preceding nine months.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment (excluding oil and gas activities) over the next twelve months ending December 31, 2011.

Liquidity and Capital Resources

We have no current arrangements with any party to supplement our operations or provide us with financing in the future.  In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.

Going Concern

We have suffered recurring losses from operations. The continuation of our Company as a going concern is dependent upon our Company attaining and maintaining profitable operations and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our Company discontinue operations.

Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above, in thereport on the annual financial statements for the period ended December 31, 2010, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements for the period ended December 31, 2010, contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. As noted herein, we are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Governmental Regulations and Licensing

In order to drill for, recover, transport or sell any gas or oil from the properties subject to the Company’s drilling rights, the Company will generally be required to obtain additional licenses and permits and enter into agreements with various landowners and/or government authorities. The issuance of these permits and licenses generally will be contingent upon the consent of the governmental authority having jurisdiction over the property, which entities have broad discretion in determining whether or not to grant such authority. These licenses, permits, and agreements will generally contain numerous restrictions and require payment of development and exploration fees and royalties typically based on the recoverable reserves or expenditures. The amount of any such fee and royalties and other terms will determine in part, the commercial viability of any extraction prospect.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

No information is provided under this Item because the Company is a smaller reporting company.

Item 4T. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

As required under the Exchange Act, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the period covered by this report, being September 30, 2011. We are responsible for establishing and maintaining adequate internal controls and procedures for the financial reporting of our company. Disclosure control and procedures are the controls and other procedures that are designed to ensure that we record, process, summarize and report in a timely manner the information that we must disclose in reports that we file with or submit to the SEC.  Our management has concluded, based on their evaluation, that as of September 30, 2011, as the result of the material weaknesses, our disclosure controls and procedures were ineffective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes.  For more information, see Item 9A – Controls and Procedures – in Part II of our Annual Report on Form 10-K for the year ended December 31, 2010.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the period covered by this report that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Item 1A – Risk Factors – in Part I of our Annual Report on Form 10-K for the year ended December 31, 2010.

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

Between September 30, 2011 and December 31, 2010, the Company did not sell any equity securities of the Company which were not registered under the Securities Act.

Item 3. Defaults Upon Senior Securities

    None

Item 4. Submission of Matters to a Vote of Securities Holders

None

Item 5. Other Information

There have been no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.

Item 6. Exhibits

Exhibit
Number	Description
(3)	(i) Articles of Incorporation; and (ii) Bylaws
3.1	Certificate of Incorporation (1)*
3.2	By-laws (1)*
3.3	Form of Subscription Agreement ($0.15) dated for reference December 12, 2007 (incorporated by reference from our Form 8-K filed on February 15, 2008)*
3.4	Form of Flow Through Subscription Agreement ($0.18) dated for reference December 12, 2007 (incorporated by reference from our Form 8-K filed on February 15, 2008)*
(4)	Instruments Defining the Rights of Security Holders
4.1	2007 Stock Incentive Plan (incorporated by reference from our Form 8-K filed on August 10, 2007)*
(10)	Material Contracts
10.1	Letter of Intent dated July 30, 2007 (incorporated by reference from our Form 8-K filed on August 7, 2007)*
10.2	Form of Stock Option Agreement (incorporated by reference from our Form 8-K filed on August 10, 2007)*
10.3	Stafford Area Participation Agreement – Aura Oil Holdings Ltd. (incorporated by reference from our Current Report on Form 8-K filed on March 21, 2011)
10.4	North Pasture Joint Operating Agreement
10.5	Stafford Joint Operating Agreement
10.6	Form of the Stafford Participation Agreement between C.H. Squires Family, LLC, Fossil Oil Company LLC and certain individuals who are signatories thereto.
10.7	Form of the North Pasture Participation Agreement between Global Oil and Gas Resources Inc., Dolimiti Partners LLC, Indian Lane Asso., LLC, Plastiform Packaging, Inc. and certain other individuals who are signatories thereto.

(14)	Code of Ethics
14.1	Code of Ethics

(23)	Consents of Experts and Counsel
23.1	Consent of Jorgensen & Co.

(31)	Certifications
31.1	Certification of Principal Executive Officer pursuant to Section 302
31.2	Certification of Principal Financial and Accounting Officer pursuant to Section 302
32.1	Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 1350
(101)
101.INS	Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

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

MOGUL ENERGY INTERNATIONAL, INC.

/s/ Timothy J. Turner

By: Timothy J. Turner, President

(Chief Executive Officer)

Dated:  November 14, 2011

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

/s/ Timothy J. Turner

By: Timothy J. Turner, Director and President

(Chief Executive Officer)

/s/ Naeem Tyab

By: Naeem Tyab, Chairman of the Board

/s/ Henry Kloepper

By: Henry Kloepper, Director

/s/ Gary Countryman

By: Gary Countryman, Director

Dated:  August 14, 2011