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

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2010

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

For the transition period from _______________to _______________

EUROGAS INC.
(Exact name of registrant as specified in its charter)

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 [   ]    No [X]

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]    No [X]

As of November 8, 2010, the registrant had 443,545,950 shares of common stock outstanding.

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EUROGAS INC.

TABLE OF CONTENTS

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EUROGAS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(The following statements have only been reviewed by EuroGas Inc. management)

PART I - FINANCIAL INFORMATION

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EUROGAS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(The following statements have only been reviewed by EuroGas Inc. management)

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

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EUROGAS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(The following statements have only been reviewed by EuroGas Inc. management)

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

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EUROGAS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations EuroGas is primarily engaged in the acquisition of rights to explore for and exploit natural gas, unconventional gas, coal bed methane gas, crude oil and minerals. We have acquired interests in several large exploration concessions and are in various stages of identifying industry partners, farming out exploration rights, undertaking exploration drilling, and seeking to develop production. Unless otherwise indicated, all dollar amounts in this Form 10-Q are reflected in United States dollars.

Business Condition - EuroGas has accumulated a deficit of $(160,967,525) through September 30, 2010. At September 30, 2010, the Company had a working capital of $(10,555,187) and a capital of $ 11,500,814. These conditions raise substantial doubt regarding the Company's ability to continue as a going concern. Realization of the investment in properties and equipment is dependent upon management obtaining financing for exploration, development and production of its properties. In addition, if exploration or evaluation of property and equipment is unsuccessful, all or a portion of the remaining recorded amount of those properties will be recognized as impairment losses. Payment of current liabilities will require substantial additional financing. Management of the Company plans to finance operations, explore and develop its properties and pay its liabilities through borrowing, through sale of interests in its properties, through advances received against future talc sales and through the issuance of additional equity securities. Although realization of any of these planned transactions is not assured, management of the Company still was able to raise new capital and acquire new assets through a combination of cash and the issuance of additional equity securities after the Chapter 7 bankruptcy proceedings were formally terminated by the Bankruptcy Court of Utah in February 2007. At the time of the formal termination of the Chapter 7 bankruptcy proceedings the Company had approx. 200,000,000 shares outstanding without any assets, while until September 30, 2010 the Company was able to accumulate new assets by issuing approx. 229,000,000 new shares bringing the total number of outstanding shares to 429,761,340.

Principles of Consolidation - The accompanying consolidated financial statements include the accounts of EuroGas Inc. The investment for the interest in McCallan was accounted at cost based upon the ownership percentage that was held by EuroGas during that period.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The critical accounting policies that require management's most significant estimates and judgments include the assessment of recoverability of property and equipment. The actual results experienced by the Company may differ materially from management's estimates.

Note 2 Other Receivables

Other Receivables reflect a short term loan by EuroGas Inc. to McCallan for working capital and advances to EuroGas Polska Sp.z.o.o. and EuroGas GmbH with a balance of US $ 4,152,551 at September 30, 2010 including interest.

Other Receivables reflect a short term loan by EuroGas Inc. to Rozmin s.r.o. for working capital with a balance of $432,860 at September 30, 2010.

Note 3 Property and Equipment

Rio Plata “Sandwich” Properties

On January 10, 2008, the company entered into a letter of intent with Rio Plata Exploration and Mining Inc. pursuant to which the company was granted an option to acquire a 60% interest in and to 56 mining claims, covering approximately 2,000 acres (809 ha.) and known as the Tombstone “Sandwich” Property, a gold and silver base metals property, located in the Tombstone Mining District of Arizona. On April 2, 2009, a formal option agreement having retroactive effect to January, 2008, was subsequently entered into between Rio Plata and the company covering this acquisition. Under the terms of this agreement, the company earned the 60% interest by the payment of $250,000 and the issuance of 12,000,000 restricted common shares.

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On April 2, 2009, the registrant entered into another option agreement with Rio Plata to acquire the remaining 40% interest in the Tombstone “Sandwich” claims, plus a $3,000 reclamation bond, in exchange for the payment of $5,500 and the issuance of 8,000,000 restricted common shares.

Although 5,500,000 shares of common stock are not allotted yet, both parties agreed, that the company owns all rights, titles and a 100% interest in the Tombstone “Sandwich” claims, which have been recorded at the US Government BLM (Bureau of Land Management) in the company’s name. The claims were recorded at cost with a total amount of $2,050,000.

Note 4 Investment at cost

Tombstone Exploration Corporation

On June 30, 2008 the company signed a subscription agreement in a private placement transaction with Tombstone Exploration Corporation for the sale of 2,000,000 shares of common stock for $0.20 per share with a total amount of $400,000. Attached was a three year warrant for the purchase of an additional 1,000,000 shares of common stock at $0.40 per share.

In April 2010 the company signed a subscription agreement in a private placement transaction for 25 Million shares of common stock for $0.04 per share with an attached warrant for additional 25 million shares of common stock for $0.10 per share. EuroGas has the right to nominate two members of the board of directors, including the position of the Chief Executive Officer.

With respect to the strategic investment the Tombstone shares were recorded at cost with an amount of $ 700,000 at September 30, 2010.

TEI Open Pit Mine

Effective April 2, 2009, the company entered into an assignment agreement with Henry & Munroe, LLC, pursuant to which Henry & Munroe assigned to the company all rights and obligations in and to an option to purchase real estate agreement dated March 3, 2009 between Henry & Munroe (as Optionee) and Dale Turner, Tombstone Development Co. and Tombstone Hills LLC (as Optionors). This agreement covers approximately 485 acres (196 ha.) in three parcels of land, and is known as the TEI Open Pit Mine located in the Tombstone Mining District of southeast Arizona. The consideration paid to Henry & Munro consisted of $10,000 and the issuance of 2,000,000 restricted common shares of the company.

In the event the company wishes to exercise the option to acquire the TEI Open Pit Mine, it must pay the Optionors $600,000 for Parcel A of the lands (approximately 200 acres), $400,000 for Parcel B of the lands (approximately 150 acres), and $540,000 for Parcel C of the lands (approximately 135 acres).

The interest in the TEI Open Pit Mine was recorded at September 30, 2010 with $305,000 as investment at cost.

McCallan

McCallan is a private UK Company previously owned by Regent Ventures Ltd. Canada as to 45 % and by Mr. Hans D. Dietmann as to 55 %. McCallan's main assets are its wholly-owned subsidiaries EuroGas Polska sp.zo.o ("EuroGas Polska"), a Polish company, and Vienna, Austria based EuroGas GmbH (“EuroGas Austria”).

Regent Ventures Ltd.

On May 1, 2008 the company signed a Share Option Agreement with Regent Ventures Ltd. (Regent), a Canadian public company, to acquire Regent's 45% interest in McCallan. Under the terms and conditions of the agreement, Regent has granted EuroGas the Option to purchase Regent's entire interest in McCallan in exchange for the issuance of 10 million common shares of EuroGas and a cash-payment of CDN $ 3 million payable in three stages. The company has issued the 10 Million restricted common shares of EuroGas during 2008.

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The date of the final cash-payment of CDN 3 Million $ was postponed by 2 amendment agreements until March 31, 2010. For the first amendment the company issued a signing bonus of 2 Million shares of restricted common stock of EuroGas in 2009 and for the second amendment 1 Million shares of non-restricted common stock of EuroGas were issued.

During April 2010, the Company entered into a further amending agreement with Regent, where Regent has extended the due date of the $3,000,000 cash payments to June 30, 2010. During June 2010, the Company entered into a further amending agreement with Regent, where Regent has extended the due date of the $3,000,000 cash payments until further notice.

Hans D. Dietmann

On May 28, 2008 the company entered into an agreement to acquire a 30% interest in McCallan from Mr. Hans D. Dietmann, McCallan's controlling shareholder and Managing Director, and secured an option to purchase an additional 25% interest in McCallan from Mr. Dietmann. The company purchased Mr. Dietmann's 30% interest by issuing 20,000,000 restricted EuroGas Inc. common shares, 1 Million preferred shares of the company and by cash payments totalling US-$750,000.

On April 1, 2010 the company and Mr. Dietman entered into a final agreement enabling the company to purchase the remaining 25 % interest in McCallan for issuing 15 Million restricted common shares of the company as per the terms and conditions of the May 28, 2008 agreement. Mr. Dietmann relinquished the rights to the 1,000,000 preferred shares of the company. The 15 Million restricted common shares of the company are not issued yet.

The interest in McCallan was recorded at cost with an amount of $19,001,000 at September 30, 2010.

Rozmin s.r.o.

On April 17, 2001, EuroGas entered into an agreement to purchase 57% interest in Rozmin s.r.o. from Belmont Resources, Inc. ("Belmont"), in exchange for EuroGas issuing 12,000,000 common shares, paying Belmont $100,000 in advance royalties, and modifying the exercise price of existing stock options.

EuroGas further agreed to issue an additional 1,000,000 common shares for each $0.05 decrease in the ten-day average OTC Bulletin Board quoted trading price of the company's common shares below $0.30 per share through April 17, 2002. During 2002 EuroGas issued 3,830,000 common shares to Belmont under the stock price guarantee. In connection with the purchase by EuroGas, Rozmin s.r.o. granted an overriding royalty to Belmont of two percent of gross revenues from any talc sold.

Additionally, EuroGas agreed to issue additional common shares to Belmont if Belmont did not realize approximately $1,218,000 from the resale of the original 12,000,000 common shares by April 17, 2002, and provide notice of such deficiency to EuroGas, to compensate Belmont for the shortfall based on the ten-day average trading price on the date of the notice of shortfall from Belmont.

In January 2005 the Company’s subsidiary Rozmin s.r.o. was notified that the concession regarding the talc deposit had been cancelled by the Slovakian Government for unspecified and dubious reasons. Therefore, no further concession is held by Rozmin at this point. This does not nullify the obligation to Belmont Resources as to the balance of the purchase price. The Company and Belmont, however, entered into an agreement for Belmont not to pursue legal proceedings against the Company as long as the situation in respect to Rozmin has not been cleared.

The purchase price of the 57 % interest in Rozmin is recorded with $1.

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NOTE 5 – Accrued Liabilities

Judgment EuroGas Texas Corp.

EuroGas Inc. has been notified by Texas EuroGas Corp., a Houston, Texas based private company (The “independent party”), that it has purchased the Judgment against EuroGas Inc. and others in the original amount of $113 Million, plus accrued interest thereon. The Judgment against the Company et. al. was originally obtained in the South Texas Bankruptcy Court by the Bankruptcy Trustee of the McKenzie estate, Trustee Steve Smith of Houston, Texas in 2004. The independent party has received an assignment of the Judgment from Trustee Smith on September 24, 2007 after the Honorable Judge Brown of the South Texas Bankruptcy Court approved the sale of the Judgment on August 22, 2007 by Court Order. Trustee Smith had forced EuroGas Inc. into involuntary bankruptcy (Chapter 7) in the fall of 2004 and EuroGas Inc.’s remaining assets were sold at public auction in March 2006 in Salt Lake City, Utah. The involuntary bankruptcy of EuroGas Inc. was closed and terminated by Court Order of the Utah Bankruptcy Court in February 2007.

The independent party, Texas EuroGas Corp., paid US-$1.6 million cash to the McKenzie Bankruptcy Trustee as specified and approved by the August 22, 2007, Court Order of the South Texas Bankruptcy Court. The independent party has also informed the Company that it will not seek legal redress towards the Company and others after having obtained the Judgment and is prepared to negotiate with the Company and others to redeem the Judgment.

Texas EuroGas Corporation, a Texas corporation, was established in 2007 by Mr. David Sacks, a Houston solicitor, acting as Trustee on behalf of Mr Hans D. Dietmann, a non-affiliated shareholder of the Company.

The entire financing of the purchase of the Judgment by Texas EuroGas Corp. from the Bankruptcy Trustee Steve Smith, as well as all the costs involved related to the purchase of the judgment by Texas EuroGas Corporation, was entirely financed by Mr. Dietmann, who provided approx. $800,000 cash, and by the CEO of EuroGas Inc., Mr. Wolfgang Rauball, who provided approx. $1,125,000 cash.

Although Mr. Dietmann had indicated in writing to settle the Judgment issue with the Company, the Trustee for Mr. Dietmann, Mr David Sacks, still has not transferred ownership of Texas EuroGas Corp. into Mr. Dietmann’s name, although agreed to in writing by Mr. Sacks in summer 2008, as Mr. Sacks was asking for further financial remuneration. Therefore the Judgment could not have been settled with EuroGas Inc. yet.

In order to solve this problem Mr. Dietmann and Mr. Wolfgang Rauball have entered into an agreement with EuroGas Inc. in October 2009 and have transferred all their respective rights of ownership and their respective receivables in connection with their financing of Texas EuroGas Corporation and the purchase of the Judgment from Trustee Smith, incl. accrued interest thereon, to the Company.

In addition to the financing of the purchase of the $113 million Judgment from Trustee Smith in September 2007 by the Company’s CEO Mr. Wolfgang Rauball and Mr. Dietmann, Trustee Smith had obtained a second Judgment against the company in early 2009 in a different case in the amount of approx. $125,000 plus accrued interest and had threatened to start again legal procedures to reopen bankruptcy proceedings under Chapter 7 against the Company. On April 30, 2009 Mr. Dietmann has also bought this Judgment from Trustee Smith and has also assigned his receivable for this second judgment to the Company.

For the transfer of the rights of ownership and the respective receivables, including accrued interest and costs since 2007, the company agreed to reimburse Mr. Dietmann $950,000 and Mr. Wolfgang Rauball $1,600,000. The loan accounts of Mr. Dietmann and Mr. Rauball were credited with these amounts in October 2009.

Mr. Wolfgang Rauball and Dr. Reinhard Rauball have paid a lump sum of $100,000 each in favor of the company to release both gentlemen from any claims under the Judgment to be held by the company.

The formal transfer of the ownership of EuroGas Texas Ltd. to the company has not taken place as of September 30, 2010. The final payment for Mr. Sacks’ services is shown as an accrued liability in favor of Mr. Sacks with an estimated amount of $300,000. Mr. Sacks had already received $300,000 cash in May 2008 from Mr. Dietmann for his services in 2007/ 2008.

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Salaries

The agreed salaries for the directors of the company have not been paid for several years due to the bankruptcy proceedings and the general financial situation of the company and the financial commitments by the company to acquire and support its various assets after the release from chapter 7 bankruptcy proceedings in 2007. At September 30, 2010 a total amount of $927,688 is recorded as accrued liability for outstanding salaries of Mr. Hank Blankenstein.

Rozmin

The company recorded an accrued liability of $1,500,000 at September 30, 2010 under the purchase agreement dated April 17, 2001 to purchase 57 % of Rozmin s.r.o. from Belmont Resources Ltd.

Rio Plata

5,500,000 common shares of the company are not allotted to Rio Plata at September 30, 2010 and were recorded as an accrued liability with an amount of $495,000.

Regent Ventures Ltd.

The outstanding final payment of $ 3,000,000 to purchase the 45 % interest in McCallan is recorded as an accrued liability at September 30, 2010.

NOTE 6 — Shareholders Loan

Mr. Hans D. Dietmann, a non-affiliated shareholder of EuroGas, has provided miscellaneous business expenses on behalf of EuroGas in 2009. On October 7, 2009 the shareholder gave notice to EuroGas Inc. to convert the entire loan due to the loan agreement into common stock of EuroGas at the average price traded on the US Pink Sheet for 90 Days prior to the conversion request.In June 2010 Mr. Dietmann cancelled the conversion request, because EuroGas failed to issue the shares within a period of over 8 months. The entire loan was now due for repayment on September 30, 2010 with an interest rate of 10 % p.a. In order to avoid a default situation on September 30, 2010 the company requested Mr. Dietmann to extend the deadline, which Mr. Dietmann refused, but he agreed to accept shares based on the previously agreed terms and conditions. On September 30, 2010 Mr. Dietmann received 19,480,555 shares of common stock of EuroGas in consideration of his original loan of $ 1,753,249.

On October 13, 2009 the Company entered into a loan and option agreement with Mr. and Mrs. Walter Storm and Forstgarten International Holding GmbH (“the investors”). The investors, under the loan and option agreement, have forwarded EUR 680,000 (corresponding to approximately US $ 1,010,000) to EuroGas. The loan is repayable on October 1, 2010 and will carry an interest rate of 8%. These funds were used for EuroGas Polskas JOA liabilities under the 2009 seismic program. The investors also demanded a signing bonus in the form of 2 Million free tradable common shares of the company under the October 13, 2009 agreement. These shares were provided by non-affiliated shareholders and the company has to reimburse those shareholders in 2010.

On January 4, 2010 the company and Forstgarten agreed to terminate Forstgarten’s participation in the October 13, 2009 loan and option agreement and to repay Forstgarten’s portion of the $1,010,000 loan plus accrued interest under the terms and conditions of the convertible debenture.

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NOTE 7 — NOTES PAYABLE TO RELATED PARTIES

Notes payable to related parties are considered current and consist of:

NOTE 8— PREFERRED AND COMMON STOCK

There are 260 shares of 1997 Series Preferred Stock (the “1997 Series preferred stock”). The 1997 Series preferred stock is non- voting and accrues dividends at $60.00 per share, or 6 % annually. The 1997 Series preferred stock has a liquidation preference of $1,000.00 per share, plus unpaid dividends before liquidation payments applicable to common shares. The 1997 Series preferred stock, along with unpaid dividends thereon, is convertible in common shares at the rate of $1,000.00 divided by the lesser of 125 % of the average closing bid price for five trading days prior to issuance or 82% of the closing bid price for five trading days prior to conversion. Annual dividend requirements of the 1997 Series preferred stock are $15,600. The following is a summary of the preferred stock outstanding at September 30, 2010:

Aggregate accrued dividends on preferred stock were $198,900 and $187,200 at September 30, 2010 and at December 31, 2009, respectively.

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

General – The Company is primarily engaged in the acquisition of rights to explore for and exploit natural gas, coal bed methane gas, crude oil, talc and other minerals. The Company has acquired interests in several large exploration concessions and is in various stages of identifying industry partners, farming out exploration rights, undertaking exploration drilling, and seeking to develop production. The Company is also involved in a planning-stage co-generation and mineral reclamation project. Unless otherwise indicated, all dollar amounts in this Form 10-Q are reflected in United States dollars. When used herein, the terms the "Company," and "EuroGas," include EuroGas Inc. and its wholly owned subsidiaries.

Results of Operations – The following table sets forth consolidated income statement data and other selected operating data for the nine-months periods ended September 30, 2010 and 2009, respectively.

Nine months ended September 30, 2010 compared with nine months ended September 30, 2009

Revenues

The Company had no oil and gas sales for the nine months ended September 30, 2010 and for the nine months ended September 30, 2009.

Operating Expenses

Operating expenses primarily include general and administrative expenses, depreciation, impairment of mineral interests and equipment and litigation settlement expenses. General and administrative expenses were $ 815,471 for the nine months ended September 30, 2010 compared to $ 877,053 for the nine months ended September 30, 2009. Depreciation expense was $ 0 for the nine months ended September 30, 2010 compared to $ 213 for the nine months ended September 30, 2009.

Other Income and Expense

Interest expense was $ 561,229 for the nine months ended September 30, 2010 compared to $ 87,038 during the nine months ended September 30, 2009.

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Income Taxes

Historically, the Company has not been required to pay income taxes due to the Company's absence of net profits. For future years, the Company anticipates that it will be able to utilize operating loss carry forwards in the United States of America of approximately $18,350,000 as of September 30, 2010 to offset profits, if and when achieved, resulting in a reduction in income taxes payable. However, to the extent accumulated deficits have not been incurred in countries where income is earned, such offsets will not be available.

Net Profit/ Loss

The Company incurred a net loss of $(1,267,550) for the nine months ended September 30, 2010 compared to a net loss of $(670,009) for the nine months ended September 30, 2009.

Due to the fluctuating economies of the Eastern European countries in which the Company operates, the Company is subject to fluctuations in currency exchange rates that can result in the recognition of significant gains or losses during any period. The Company recognized a loss of $0 in the nine months ended September 30, 2010 compared to a loss of $0 in the nine months ended September 30, 2009 as a result of exchange rate changes and currency transactions during these periods. The Company does not currently employ any hedging techniques to protect against the risk of currency fluctuations.

Capital and Liquidity

The Company had an accumulated deficit of $160,967,525 at September 30, 2010 substantially all of which has been funded out of proceeds received from the issuance of stock and the incurrence of liabilities. At September 30, 2010 the Company had current assets of $ 4,784,003 and current liabilities of $ 15,339,190 resulting in a negative working capital of $(10,555,187).

Throughout its existence, the Company has relied on cash from financing activities to provide the funds required for acquisitions and operating activities.

While the Company had a positive amount of cash of $ 19,550 at September 30, 2010 it had substantial short-term and long-term financial commitments. As noted above, the Company has relied principally on cash provided from equity and debt transactions to meet its cash requirements. The Company does not have sufficient cash to meet its short-term or long-term needs, and it will require additional cash, either from financing transactions or operating activities, to meet its immediate and long-term obligations. There can be no assurance that the Company will be able to obtain additional financing, either in the form of debt or equity, or that, if such financing is obtained, it will be available to the Company on reasonable terms. If the Company is able to obtain additional financing or structure strategic relationships in order to fund existing or future projects, existing shareholders will likely continue to experience further dilution of their percentage ownership of the Company.

If the Company is unable to establish production or reserves sufficient to justify the carrying value of its assets, to obtain the necessary funding to meet its short and long-term obligations, or to fund its exploration and development program, all or a portion of the mineral interests in unproven properties will be charged to operations, leading to significant additional losses.

Inflation

     The amounts presented in the Company's consolidated financial statements do not provide for the effect of inflation on the Company's operations or its financial position. Amounts shown for property, plant, and equipment and for costs and expenses reflect historical costs and do not necessarily represent replacement costs or charges to operations based on replacement costs. The Company's operations, together with other sources, are intended to provide funds to replace property, plant and equipment as necessary. Net income would be lower than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments. Due to inflationary problems in Eastern Europe that are seen in currency exchange losses, the Company has seen losses on its asset values in those countries.

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This report on Form 10-Q contains forward-looking statements. You can identify forward-looking statements by their use of the forward-looking words “anticipate,” “estimate,” “project,” “likely,” “believe,” “intend,” “expect,” or similar words. These statements discuss future expectations, contain projections regarding future developments, operations, or financial conditions, or state other forward-looking information. When considering the forward-looking statements made in this report, you should keep in mind the risks noted in “Factors That May Affect Future Results” below and other cautionary statements throughout this report. You should also keep in mind that all forward-looking statements are based on management’s existing beliefs about present and future events outside of management’s control and on assumptions that may prove to be incorrect. If one or more risks identified in this report or other filing materializes, or any other underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected, or intended.

Our consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.

We have incurred significant losses since inception, which have resulted in an accumulated deficit of $160,967,525 at September 30, 2010. These losses and this significant deficit raise substantial doubt about our ability to continue as a going concern. The accompanying unaudited consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

We are dependent upon financing activities to fund our operations and will continue to require significant funds to meet our obligations and to pursue our business plan.

EuroGas has historically been undercapitalized. Actually we have no source of revenues, do not anticipate any revenues in the near term and expect to continue to incur operating losses in the foreseeable future. As a result, we are entirely dependent on financing from the sale of securities or loans in the future and/or amounts made available by industry partners in the future. We expect to continue to incur significant costs as part of our ongoing and planned projects and do not anticipate that these costs will be offset fully, if at all, by revenues for the foreseeable future. If we are unable to raise capital from the sale of securities, loans, or industry partnerships in the future, we will have to scale back our operations and may, at some point, become insolvent.

Our projects are highly speculative and generally only at the exploration stage.

Our assets and interests are primarily in methane gas, natural gas, unconventional gas and crude oil exploration and mineral development projects. These projects are highly speculative, whether we are still at the exploratory stage or have commenced development. We can provide no assurance that any drilling, testing, or other exploration project will locate recoverable gases or other fuels in sufficient quantities to be economically extracted. Several test wells are typically required to explore each concession or field. We may continue to incur significant exploration costs in specific fields.

Some of our projects are in countries that have fragile and unpredictable political and socio-economic systems.

Our operations in Eastern Europe, especially in the Eastern and Western Ukraine carry with them certain risks in addition to the risks normally associated with the exploration for, and development of, natural gas and other fuels. Although recent political and socio-economic trends in these countries have been toward the development of market economies that encourage foreign investment, these countries continue to be subject to the risks of political instability, a change of government, unilateral renegotiation of concessions or contracts, nationalization, foreign exchange restrictions, and other uncertainties. The terms of the agreements governing our projects are subject to administration by the various governments and are, therefore, subject to changes in the government itself, changes in government personnel, the development of new administrative policies or practices, the adoption of new laws, and many other factors.

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Moreover, we may be required to obtain and renew licenses and permits on an ongoing basis in connection with further exploration, the drilling of wells, the construction of transportation facilities and pipelines, the marketing of any fuel that may be produced, and financial transactions necessary for all of the foregoing. The rules, regulations, and laws governing all such matters are subject to change by the various governmental agencies involved. We can provide no assurance that the laws, regulations, and policies applicable to our interests in various countries in which our projects are located will not be radically and adversely altered at some future date.

The continuance, completion or renewal of many of our licenses may be subject to the discretion of government authorities and we cannot therefore predict with certainty whether they will be continued or renewed or whether we will be successful in obtaining all permits and licenses required to fully exploit our interests in those countries.

In general, we have had the right to conduct basic exploration on all concessions or fields in which we have an interest. However, in order to drill for, recover, transport or sell any gas or other hydrocarbons, we will generally be required to obtain additional licenses and permits and enter into agreements with various landowners and/or government authorities. The issuance of most such permits and licenses will be contingent upon the consent of national and local governments having jurisdiction over the production area, which entities have broad discretion in determining whether or not to grant permits and licenses. Moreover, even if obtained, such licenses, permits, and agreements will generally contain numerous restrictions and require payment by us of a development/exploration fee, typically based on the market value of the economically recoverable reserves. The amount of a fee and other terms of any such license, permit, or agreement will affect the commercial viability of any extraction project. We can provide no assurance that we will be able to obtain the necessary licenses, permits, and agreements. Even if we do obtain such items, the associated costs, delays and restrictions may significantly affect our ability to develop the affected project.

Our projects may never begin producing valuable hydrocarbons.

None of the projects in which we own an interest in is presently producing gas or other hydrocarbons. We can provide no assurance that any of our projects will at any time commence production of any valuable resource.

We are dependent upon certain officers, key employees, and consultants, the loss of which would adversely affect our ability to continue in business.

We are dependent on the services of Wolfgang Rauball, Chairman and Chief Executive Officer of the company, who had personally guaranteed substantial investments by various creditors as well as solving the company’s bankruptcy proceedings over the last couple of years. We do not maintain key-man life insurance on any of EuroGas employees.

Subsequent evaluation may reveal that our unproved properties are not valuable, and we may need to record an impairment of the value of those properties, which would adversely affect our financial condition.

We capitalize costs related to unproved gas and mineral properties under the full cost method. We review our unproved properties periodically to assess whether an impairment allowance should be recorded. On September 30, 2010, we had capitalized costs related to the acquisition of mineral properties not subject to amortization in the amount of $ 2,050,000.

Severe weather will interrupt, and may adversely affect, our activities in various parts of the world.

Severe weather conditions frequently interrupt much of our exploratory and testing work. Heavy precipitation sometimes makes travel to exploration sites or drilling locations difficult or impossible. Extremely cold temperatures may delay or interrupt drilling, well servicing, and production (if commenced, of which we can give no assurance). The temperatures in all of the regions in which we have exploratory or other operations are extremely cold. Even if recoverable reserves are discovered in regions prone to severe weather, the above-described adverse weather conditions may limit production volumes, increase production costs, or otherwise prohibit production during extended portions of the year.

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The prices of the various hydrocarbons we produce or may produce are volatile and unstable.

The prices of oil, natural gas, methane gas and other fuels have been, and are likely to continue to be, volatile and subject to wide fluctuations in response to numerous factors, including the following:

• changes in the supply and demand for such fuels;
• political conditions in oil, natural gas, and other fuel-producing and fuel-consuming areas;
• the extent of domestic production and importation of such fuels and substitute fuels in relevant markets;
• weather conditions;
• the competitive position of each such fuel as a source of energy as compared to other energy sources;
• the refining capacity of crude purchasers;
• the effect of governmental regulation on the production, transportation, and sale of oil, natural gas, and other fuels.

Low prices or highly volatile prices for any fuel being explored or produced at one of our projects will adversely affect our ability to secure financing or enter into suitable joint ventures or other arrangements with industry participants. In addition, if we commence recovery of fuel at any of our projects, a low or volatile price for the fuel being recovered will adversely affect revenue and other operations.

Our operations involve numerous hazards, and we maintain no insurance against such risks.

Exploring for fuel, drilling wells, and producing fuel involves numerous hazards, including the following:

• fire,
• explosions,
• blowouts,
• pipe failures,
• casing collapses,
• unusual or unexpected formations and pressures, and
• environmental hazards such as spills, leaks, ruptures, and discharges of toxic substances.

If any of these events were to occur we might be forced to cease any or all of our exploration, drilling, or production activities on a temporary or permanent basis. In addition, these events might lead to environmental damage, personal injury, and other harm resulting in substantial liabilities to third parties. We do not maintain insurance against these risks. Even if we were to obtain insurance, we might not be insured against all losses or liabilities that might arise from these hazards because the insurance may be unavailable at economic rates, due to limitations in the insurance policies, or other factors. Any uninsured loss would likely have a material adverse impact on our business and operations.

Our operations are subject to numerous environmental laws, compliance with which may be extremely costly.

Our operations are subject to environmental laws and regulations in the various countries in which they are conducted. These laws and regulations frequently require completion of a costly environmental impact assessment and government review process prior to commencing exploratory and/or development activities. In addition, environmental laws and regulations may restrict, prohibit, or impose significant liability in connection with spills, releases, or emissions of various substances produced in association with fuel exploration and development.

We can provide no assurance that we will be able to comply with applicable environmental laws and regulations or that those laws, regulations or administrative policies or practices will not be changed by the various governmental entities. The cost of compliance with current laws and regulations or changes in environmental laws and regulations could require significant expenditures. Moreover, if we violate any governing laws or regulations, we may be compelled to pay significant fines, penalties, or other payments. Costs associated with environmental compliance or noncompliance may have a material adverse impact on our financial condition or results of operations in the future.

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Most of our outstanding shares are free trading and, if sold in large quantities, may adversely affect the market price for our common stock.

Most of the approximately 429,761,340 shares of common stock issued and outstanding as of September 30, 2010 are free trading or are eligible for resale under Rule 144 under the Securities Act. Although the resale of certain of these shares may be subject to the volume limitations and other restrictions under Rule 144, the possible resale of the remaining shares may have an adverse effect on the market price for our common stock.

On August 23, 2010, the special shareholders’ meeting subject of our Information Statement previously filed on Edgar and mailed to the shareholders in early August was held. At that meeting, the proposed Amendment to Article IV of our Amended and Restated Articles, increasing our authorized preferred and common shares, was duly approved and adopted. Thereafter, we filed a Certificate of Amendment with the Utah Department of Commerce and Commercial Code by which the Amendment was deemed effective on the date of its adoption, namely, August 23, 2010. We have since obtained a Confirmation Order in the state court proceeding discussed in our Information Statement and received approval of the Third District Court of the State of Utah confirming the results of the court-ordered shareholders’ meeting.

EuroGas has authorized capital of 650,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. As of September 30, 2010 there were 429,761,340 shares of common stock and 260 shares of preferred stock issued.

We have not paid any dividends on our common stock and do not expect to pay dividends with respect to the common stock in the near future.

We have not paid, and do not plan to pay, dividends on our common stock in the foreseeable future, even if we become profitable. Earnings, if any, are expected to be used to advance our activities and for general corporate purposes, rather than to make distributions to shareholders.

You should consider this cautionary warning concerning forward-looking statements in this report

Certain statements in this report constitute "forward-looking statements" within the meaning of the rules and regulations promulgated by the SEC. Those forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed above, that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks, uncertainties and other factors include, among other things, our lack of revenue and our substantial net losses and accumulated deficit, as well as the continuing uncertainty of profitability, the highly competitive industry in which we operate, changes in or failure to comply with governmental regulation, the uncertainty of third party reimbursement for our products, general economic and business conditions and other factors referenced above.

Item 3 Quantitative and Qualitative Disclosures about Market Risk

The Company conducts business in many foreign currencies. As a result of the effects that foreign exchange rate movements of those currencies have on the Company's costs and on the cash flows, which it receives from its foreign operations, the Company is subject to foreign exchange rate risks. The Company believes that it currently has no other material market risk exposure. To date, the Company has addressed its foreign currency exchange rate risks principally by maintaining its liquid assets in U.S. dollars until payments in foreign currency are required, but the Company does not reduce this risk by utilizing hedging activities.

Item 4 Controls and Procedures

Based on their evaluation, as of a date within 90 days of the filing date of this Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended) are effective. There have been no significant changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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PART II - OTHER INFORMATION

Item 1 Legal Proceedings

Judgment EuroGas Texas Corp.

EuroGas Inc. has been notified by Texas Euro Gas Corp., a Houston, Texas based private company (The “independent party”), that it has purchased the Judgment against EuroGas Inc. and others in the original amount of $113 Million, plus accrued interest thereon. The Judgment against the Company et al. was originally obtained in the South Texas Bankruptcy Court by the Bankruptcy Trustee of the McKenzie estate, Trustee Steve Smith of Houston, Texas in 2004. The independent party has received an assignment of the Judgment from Trustee Smith on September 24, 2007 after the Honorable Judge Brown of the South Texas Bankruptcy Court approved the sale of the Judgment on August 22, 2007 by Court Order. Trustee Smith had forced EuroGas Inc. into involuntary bankruptcy (Chapter 7) in the fall of 2004 and EuroGas Inc.’s remaining assets were sold at public auction in March 2006 in Salt Lake City, Utah. The involuntary bankruptcy of EuroGas Inc. was closed and terminated by Court Order of the Utah Bankruptcy Court in February 2007.

The independent party, Texas EuroGas Corp., paid $1.6 million US cash to the McKenzie Bankruptcy Trustee as specified and approved by the August 22, 2007 Court Order of the South Texas Bankruptcy Court. The independent party has also informed the Company that it will not seek legal redress towards the Company and others after having obtained the Judgment and is prepared to negotiate with the Company and others to redeem the Judgment.

Texas EuroGas Corporation, a Texas corporation, was established in 2007 by Mr. David Sacks, a Houston solicitor, acting as Trustee on behalf of Mr. Hans D. Dietmann, a non-affiliated shareholder of the Company.

The entire financing of the purchase of the Judgment by Texas EuroGas Corp. from the Bankruptcy Trustee Steve Smith, as well as all the costs involved related to the purchase of the judgment by Texas EuroGas Corporation, was entirely financed by Mr. Dietmann, who provided approx. $800,000 cash, and by the CEO of EuroGas Inc., Mr. Wolfgang Rauball, who provided approx. $1,125,000 cash.

Although Mr. Dietmann had indicated in writing to settle the judgment issue with the Company, the Trustee for Mr. Dietmann, Mr. David Sacks, still has not transferred ownership of Texas EuroGas Corp. into Mr. Dietmann’s name, although agreed to in writing by Mr. Sacks in summer 2008, as Mr. Sacks was asking for further financial remuneration. Therefore the judgment could not have been settled with EuroGas Inc. yet.

In order to solve this problem Mr. Dietmann and Mr. Wolfgang Rauball have entered into an agreement with EuroGas Inc. in October 2009 and have transferred all their respective rights of ownership and their respective receivables in connection with their financing of Texas EuroGas Corporation and the purchase of the judgment from Trustee Smith, incl. accrued interest thereon, to the Company.

In addition to the financing of the purchase of the $113 million judgment from Trustee Smith in September 2007 by the Company’s CEO Mr. Wolfgang Rauball and Mr. Dietmann, Trustee Smith had obtained a second judgment against the company in early 2009 in a different case in the amount of approx. $125,000 plus accrued interest and had threatened to start again legal procedures to reopen Bankruptcy proceedings under Chapter 7 against the Company. On April 30, 2009 Mr. Dietmann has also bought this judgment from Trustee Smith and has also assigned his receivable for this second judgment to the Company.

For the transfer of the rights of ownership and the respective receivables, including accrued interest and costs since 2007, the company agreed to reimburse Mr. Dietmann $950,000 and Mr. Wolfgang Rauball $1,600,000. The loan accounts of Mr. Dietmann and Mr. Rauball were credited with these amounts in October 2009.

Mr. Wolfgang Rauball and Dr. Reinhard Rauball have paid a lump sum of $100,000 each in favor of the company to release both gentlemen from any claims under the Judgment to be held by the company.

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The formal transfer of the ownership of EuroGas Texas Ltd. to the company has not taken place as of June 30, 2010. The final payment for Mr. Sacks’ services is shown as an accrued liability in favor of Mr. Sacks with an estimated amount of $300,000. Mr. Sacks had already received $300,000 cash in May 2008 from Mr. Dietmann for his services in 2007/ 2008.

Spencer Clarke

Spencer Clarke, a New York based Investment House is claiming $375,000 in unpaid consulting fees from the company under a consulting agreement between Spencer Clarke and the company dated January 2, 2008.

The company has rejected the claim alleging that Spencer Clarke had not provided any services to the company since summer 2008 and is countersuing Spencer Clarke for a nominal amount of $1,000,000 for failure to provide services in the closing of a valuable Ukrainian CBM concession, which had been brought to the attention of the company earlier by a client of Spencer Clarke.

In addition Spencer Clarke has acted as investment consultant on the Regent transaction to purchase the 45 % interest in McCallan from Regent Ventures Ltd. (see ITEM 1 Activities in the United Kingdom) and the company has agreed to issue 1 Million restricted shares of common stock as consulting fee to Spencer Clarke on the closing of the acquisition. The shares are subject to an internal settlement between Spencer Clarke and its former employee Ira Rubenstein, who had arranged and negotiated the sale.

Spencer Clarke and the company had agreed to settle the lawsuit for a nominal $100,000 and to deposit the shares in Trust. However, Spencer Clarke’s solicitor rejected the settlement and demanded a higher cash amount and insisted on the delivery of the 1 Million shares of common stock of the company.

The company has advised its solicitor to go back to court.

Item 1 A. Risk Factors

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

None

Item 3. Defaults Upon Senior Securities

None

Item 4.

Item 5. Other Information

On September 24, 2010 Mr. Alexander Danicek accepted the offer to serve as a Director and Officer ( Senior Vice President Central & East Europe) of EuroGas Inc. Mr. Danicek will be responsible for the company`s activities in Eastern Europe and will coordinate the company`s applications to obtain licenses for unconventional gas in Ukraine. He speaks fluently Russian, German and English and has worked many years as an engineer in Moscow.

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Item 6. Exhibits

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*Incorporated by reference

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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.

EUROGAS INC.
(Registrant)

DATE: November 25, 2010