SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 FORM
10-Q
 
 [x]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 For the
Quarterly period ended   September 30,
2009
 
 []
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES
EXCHANGE ACT OF 1934
 
 Commission File No.
0-52997
 
 GREAT
SPIRITS, INC.
 (Exact
Name of Registrant as specified in its charter)
 Colorado
                20-5572519(State
      or other jurisdiction
                (IRS
      Employer File Number)of
      incorporation)
 
 3230
      Fall Creek Highway, Suite 206Granbury
      Texas
                76049(Address
      of principal executive offices)
                (zip
      code)
 
 (817)
736-2900
 (Registrant's
telephone number, including area code)
  Indicate
by check mark whether the registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports); and
(2) has been subject to such filing requirements for the past 90
days.    Yes [X]  No [ ]
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T(Section 232.405 of
this chapter) during the preceding 12 months(or such shorter period that the
registrant was required to submit and post such files. Yes []  No [
]
 
 Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer,” and “small reporting company” in Rule
12b-2 of the Exchange Act.
 
 Large
      accelerated filer []
                Accelerated
      filer []Non-accelerated
      filer [] (Do not check if a smaller reporting
      company)
                Smaller reporting
company  [X]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act)  Yes []    No
[X]
 
 The
number of shares outstanding of the registrant's common stock, as of the latest
practicable date, November 10, 2009was
8,248,020.
 
 
 FORM
10-Q
 
 Great
Spirits, Inc.
 
 TABLE OF
CONTENTS
 
 
 PART
      I  FINANCIAL INFORMATIONItem
      1. Financial Statements for the period ended September 30,
      2009
              PageConsolidated
      Balance Sheet (Unaudited)
              4Consolidated
      Statements of Operations (Unaudited)
              5Consolidated
      Statements of Shareholders' Equity
              6Consolidated
      Statements of Cash Flows (Unaudited)
              7Notes
      to Financial Statements
              8Item
      2. Management’s Discussion and Analysis and Plan of
    Operation
              12Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
              15Item
      4. Controls and Procedures
              15Item
      4T. Controls and Procedures
              15PART
      II  OTHER INFORMATIONItem
      1. Legal Proceedings
              15Item
      1A. Risk Factors
              15Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              19Item
      3. Defaults Upon Senior Securities
              19Item
      4. Submission of Matters to a Vote of Security Holders
              19Item
      5. Other Information
              19Item
      6. Exhibits
              19Signatures
              20
   -
2 -
  
 
 PART
I  FINANCIAL INFORMATION
 
 References
in this document to "us," "we," or "Company" refer to Great Spirits, Inc. and
its subsidiary.
 
 ITEM
1.  FINANCIAL STATEMENTS
 
 
 
 Great
Spirits, Inc.
 (A
Development Stage Company)
 
 CONSOLIDATED
COMPARATIVE FINANCIAL STATEMENTS
 
 With
Independent Accountant’s Audit Report
 
 The Year
Ended June 30, 2009 and 2008
 and
 the
Period September 26, 2005 (Inception) Through June 30, 2009
 
 
 
 
 
  -
3 -
  
 
 
 Great
      Spirits Inc.Consolidated
      Balance Sheet(A
      Development Stage Company)Unaudited
              
              
              AuditedSeptember
              
              
              June30, 2009
              
              
              
              30, 2009ASSETSCurrent
      Assets:Cash
      and cash equivalents
              
              $
              1,543
              
              
              $
              1,543Total
      Current Assets
              
              
              1,543
              
              
              
              1,543TOTAL
      ASSETS
              
              $
              1,543
              
              
              $
              1,543LIABILITIES AND SHAREHOLDERS'
      EQUITYAccounts
      payable
              
              $
              7,649
              
              
              $
              7,649Note
      payable
              
              $
              4,500
              
              
              $
              4,500Interest
      payable
              
              $
              106
              
              
              $
              38Advances
      from officer
              
              
              65
              
              
              
              65Total
      current liabilities
              
              
              12,320
              
              
              
              12,252Total
      Liabilities
              
              $
              12,320
              
              
              $
              12,252SHAREHOLDERS' EQUITYPreferred
      stock, $.10 par value per share;Authorized
      1,000,000 Shares; Issuedand
      outstanding -0- shares.
              
              
              -
              
              
              
              -Common
      Stock, $.001 per share;Authorized
      50,000,000 Shares; Issuedand
      outstanding 8,248,020 shares
              
              
              8,248
              
              
              
              8,248Capital
      paid in excess of par value
              
              
              33,437
              
              
              
              33,437(Deficit)
      accumulated during the development stage
              
              
              (52,462
              )
              
              
              (52,394
              )TOTAL
      SHAREHOLDERS' EQUITY
              
              
              (10,777
              )
              
              
              6,828TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
              
              $
              1,543
              
              
              $
              1,543
  See
Accompanying Notes To These Unaudited Financial Statements.
 
  -
4 -
  Great
      Spirits Inc.Unaudited
      Consolidated Statement Of Operations(A
      Development Stage Company)UnauditedUnaudited
                
                
                Unaudited
                
                
                September
      26,3
      month
                
                
                3
      month
                
                
                2005
      Inceptionperiod
      ended
                
                
                period
      ended
                
                
                throughSeptember
      30,
                
                
                September
      30,
                
                
                September
      30,2009
                
                
                2008
                
                
                2009(Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)Revenue:
                
                $
                -
                
                
                $
                -
                
                
                $
                -General
      & Administrative ExpensesAccounting
                
                
                -
                
                
                
                3,250
                
                
                
                16,250Bank
      charges
                
                
                -
                
                
                
                -
                
                
                
                27Consulting
                
                
                -
                
                
                
                -
                
                
                
                9,500Legal
                
                
                -
                
                
                
                -
                
                
                
                7,500Lincenses
                
                
                -
                
                
                
                -
                
                
                
                375Office
                
                
                -
                
                
                
                557
                
                
                
                6,159Research
      & development
                
                
                -
                
                
                
                -
                
                
                
                800Stock
      transfer
                
                
                -
                
                
                
                150
                
                
                
                8,745Total
      G & A
                
                
                0
                
                
                
                3,957
                
                
                
                49,356(Loss)
      before other expenses
                
                
                -
                
                
                
                (3,957
                )
                
                
                (49,356
                )Other
      expense - interest
                
                
                (68
                )
                
                
                -
                
                
                
                (3,106
                )Net
      (Loss)
                
                $
                (68
                )
                
                $
                (3,957
                )
                
                $
                (52,462
                )Basic
      (Loss) per common share
                
                $
                (0.00
                )
                
                $
                (0.00
                )
                
                $
                (0.01
                )Weighted
      Average Common Shares Outstanding
                
                
                8,248,020
                
                
                
                8,248,020
                
                
                
                8,248,020
  See
Accompanying Notes To These Unaudited Financial Statements.
 
 
  -
5 -
  Great Spirits, Inc.(A
      Development Stage Company)Consolidated
      Statements of Shareholders' EquityNumber
      Of
                
                
                
                
                
                Capital
      Paid
                
                
                RetainedCommon
                
                
                Common
                
                
                in
      Excess
                
                
                EarningsShares Issued (1)
                
                
                Stock
                
                
                of Par Value
                
                
                (Deficit)
                
                
                TotalBalance
      at September 26, 2005 (Inception)
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Net
      Income (Loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Balance
      at June 30, 2006
                
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -July
      1, 2006 issued 7,500,000shares
      of par value $.001 common stockto
      founders for services
                
                
                7,500,000
                
                
                
                7,500
                
                
                
                -
                
                
                
                
                
                
                
                7,500September
      1, 2006 issued 500,000shares
      of par value $.001 common stockfor
      cash of $500 or $.001 per share
                
                
                500,000
                
                
                
                500
                
                
                
                -
                
                
                
                
                
                
                
                500November
      10, 2006 issued 20,000shares
      of par value $.001 common stockfor
      cash of $3,000 or $.15 per share
                
                
                20,000
                
                
                
                20
                
                
                
                2,980
                
                
                
                
                
                
                
                3,000November
      24, 2006 issued 6,670shares
      of par value $.001 common stockfor
      cash of $1,000.50 or $.15 per share
                
                
                6,670
                
                
                
                7
                
                
                
                994
                
                
                
                
                
                
                
                1,001December
      11, 2006 issued 13,340shares
      of par value $.001 common stockfor
      cash of $2,001 or $.15 per share
                
                
                13,340
                
                
                
                13
                
                
                
                1,988
                
                
                
                
                
                
                
                2,001December11,
      2006 issued 13,670shares
      of par value $.001 common stockfor
      cash of $2,050 or $.15 per share
                
                
                13,670
                
                
                
                14
                
                
                
                2,036
                
                
                
                
                
                
                
                2,050January
      3, 2007 issued 13,340shares
      of par value $.001 common stockfor
      cash of $2,001 or $.15 per share
                
                
                13,340
                
                
                
                13
                
                
                
                1,988
                
                
                
                
                
                
                
                2,001June
      18, 2007 issued 147,000shares
      of par value $.001 common stockfor
      cash of $36,750 or $.25 per share
                
                
                147,000
                
                
                
                147
                
                
                
                36,603
                
                
                
                
                
                
                
                36,750Deferred
      offering costs
                
                
                -
                
                
                
                -
                
                
                
                (21,052
                )
                
                
                
                
                
                
                (21,052
                )June
      24, 2007 issued 34,000shares
      of par value $.001 common stockfor
      cash of $8,500 or $.25 per share
                
                
                34,000
                
                
                
                34
                
                
                
                8,466
                
                
                
                
                
                
                
                8,500Net
      (Loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (13,281
                )
                
                
                (13,281
                )Balance
      at June 30, 2007
                
                
                8,248,020
                
                
                $
                8,248
                
                
                $
                34,003
                
                
                $
                (13,281
                )
                
                $
                28,970Deferred
      offering costs
                
                
                
                
                
                
                
                
                
                
                (566
                )
                
                
                
                
                
                
                (566
                )Net
      (Loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (21,576
                )
                
                
                (21,576
                )Balance
      at June 30, 2008
                
                
                8,248,020
                
                
                
                8,248
                
                
                
                33,437
                
                
                
                (34,857
                )
                
                
                6,828-
                
                
                
                -
                
                
                
                -
                
                
                
                (17,537
                )
                
                
                (17,537
                )Balance
      at June 30, 2009
                
                
                8,248,020
                
                
                
                8,248
                
                
                
                33,437
                
                
                
                (52,394
                )
                
                
                (10,709
                )Net
      (Loss)
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (68
                )
                
                
                (68
                )Balance
      at September 30, 2009 (Unaudited)
                
                
                8,248,020
                
                
                $
                8,248
                
                
                $
                33,437
                
                
                $
                (52,462
                )
                
                $
                (10,777
                )(1)
      As restated for a 75,000 for 1 recapitalization on September 1,
      2006
 See
Accompanying Notes To These Unaudited Financial Statements.
  -
6 -
  
 
 Great
      Spirits, Inc.(A
      Development Stage Company)Unaudited
      Consolidated Statements of Cash FlowsUnauditedUnaudited
              
              
              Unaudited
              
              
              September
      26,3
      month
              
              
              3
      month
              
              
              2005
      Inceptionperiod
      ended
              
              
              period
      ended
              
              
              throughSeptember
      30,
              
              
              September
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009(Unaudited)
              
              
              (Unaudited)
              
              
              (Unaudited)Net
      (Loss)
              
              $
              (68
              )
              
              $
              (3,957
              )
              
              $
              (52,462
              )Adjustments
      to reconcile decrease in net assets to net cashprovided
      by operating activities:Stock
      issued for services
              
              
              -
              
              
              
              -
              
              
              
              7,500Expenses
      paid by shareholder
              
              
              
              
              
              
              
              
              
              
              1,500Interest
      acretion
              
              
              
              
              
              
              
              
              
              
              3,000Increase
      in interest payable
              
              
              68
              
              
              
              
              
              
              
              106Increase
      (Decrease) in accounts payable
              
              
              -
              
              
              
              (1,680
              )
              
              
              7,649Net
      cash (used) in operation activities
              
              
              -
              
              
              
              (5,637
              )
              
              
              (32,707
              )Cash
      flows from investing activities:Advances
      received from officer
              
              
              -
              
              
              
              -
              
              
              
              1,065Advances
      paid to officer
              
              
              -
              
              
              
              -
              
              
              
              (1,000
              )Net
      cash (used) in investing activities
              
              
              -
              
              
              
              -
              
              
              
              65Cash
      flows from financing activities:Issuance
      of common stock
              
              
              -
              
              
              
              -
              
              
              
              45,251Deferred
      offering costs
              
              
              -
              
              
              
              -
              
              
              
              (11,066
              )Net
      cash provided from financing activities
              
              
              -
              
              
              
              -
              
              
              
              34,185Net
      increase in cash
              
              
              -
              
              
              
              (5,637
              )
              
              
              1,543Cash
      at beginning of period
              
              
              1,543
              
              
              
              9,130
              
              
              
              -Cash
      at end of period
              
              $
              1,543
              
              
              $
              3,493
              
              
              $
              1,543Supplemental
      disclosure information:Stock
      issued for services
              
              $
              -
              
              
              $
              -
              
              
              $
              7,500Cash
      paid for:Interest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Income
      taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              -Cash
      paid for interest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Cash
      paid for income taxes
              
              $
              -
              
              
              $
              -
              
              
              $
              -
  See
Accompanying Notes To These Unaudited Financial Statements.
  -
7 -
  
 Great
Spirits, Inc.
 (A
Development Stage Company)
 Notes to
Consolidated Comparative Financial Statements
 The Year
Ended June 30, 2009 and 2008 and
 the
Period September 26, 2005 (Inception) Through June 30, 2009
 
 Note 1 - Organization and
Summary of Significant Accounting Policies
 
 ORGANIZATION
 Great
Spirits, Inc. (the “Company”), was incorporated as a holding company in the
State of Colorado on August 31, 2006. The Company was formed to distill and
market a premium priced potato vodka to the public.
 
 Rocky
Mountain Distilleries, Inc. is a wholly-owned subsidiary of the Company. It was
incorporated as a Colorado corporation on September 26, 2005 to act as a vodka
producer and marketer. The Company may also engage in any business that is
permitted by law, as designated by the board of directors of the
Company.
 
 On
September 1, 2006, in an acquisition classified as a transaction between parties
under common control, Great Spirits, Inc. acquired all the outstanding common
shares of Rocky Mountain Distilleries, Inc. (7,500,000 shares of Great Spirits,
Inc common shares were issued for 100 common shares of Rocky Mountain
Distilleries, Inc.), making Rocky Mountain Distilleries, Inc. a wholly owned
subsidiary of Great Spirits, Inc. Financial activity of the Company up to August
31, 2006 as represented in the financial statements is that of Rocky Mountain
Distilleries, Inc., as Great Spirits, Inc. had no activity. The results of
operations of Rocky Mountain Distilleries, Inc., and Great Spirits, Inc. have
been consolidated from August 31, 2006 forward.
 
 PRINCIPLES
OF CONSOLIDATION
 
 The
accompanying consolidated financial statements include the accounts of Eagle
Bend Holding Company and its wholly owned subsidiary. All intercompany accounts
and transactions have been eliminated in consolidation.
 
 DEVELOPMENT
STAGE
 The
Company is currently in the developmental stage and has no significant
operations to date.
 
 USE
OF ESTIMATES
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those
estimates.
 
  -
8 -
  Great
Spirits, Inc.
 (A
Development Stage Company)
 Notes to
Consolidated Comparative Financial Statements
 The Year
Ended June 30, 2009 and 2008 and
 the
Period September 26, 2005 (Inception) Through June 30, 2009
 
 Note 1 - Organization and
Summary of Significant Accounting Policies (continued)
 
 STATEMENT
OF CASH FLOWS
 For
purposes of the statement of cash flows, the Company considered demand deposits
and highly liquid-debt instruments purchased with maturity of three months or
less to be cash equivalents. Cash paid for interest during the period was
$0.  Cash paid for income taxes during the period was $0.
 
 BASIC
EARNINGS PER SHARE
 The basic
earnings (loss) per common share are computed by dividing the net income (loss)
for the period by the weighted average number of shares outstanding at June 30,
2009 and 2008.
 
 REVENUE
RECOGNITION
 The
Company will be producing and marketing vodka. The revenue is recognized when
the product is delivered. As of  June 30, 2009 and 2008 the Company
has had no operations.
 
 Note 2 – Basis of
Presentation
 
 In the
course of its life the Company has had limited operations.  This
raises substantial doubt about the Company’s ability to continue as a going
concern.  Management filed a Limited Offering Registration with the
State of Colorado to acquire capital.  Management believes this will
contribute toward its operations and subsequent profitability.  The
accompanying financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
 
 Note 3 – Related Party
Events
 
 The
Company currently has an office located at an address maintained by the
President on a rent free basis.
 
 Note 4 – Capital
Stock
 
 The
Company authorized 50,000,000 shares of no par value common
stock.  Through December 31, 2006, the Company issued a total of
8,053,680 shares raising $8,552.
 
 
  -
9 -
  Great
Spirits, Inc.
 (A
Development Stage Company)
 Notes to
Consolidated Comparative Financial Statements
 The Year
Ended June 30, 2009 and 2008 and
 the
Period September 26, 2005 (Inception) Through June 30, 2009
 
 Note 4 – Capital Stock
(continued)
 
 On
September 1, 2006 the Company issued 7,500,000 shares of $.001 par value common
stock for all of the shares of Rocky Mountain Distilleries, Inc. valued at
$7,500 or $.001 per share. The issuance has been reported in the consolidated
statements of shareholders’ equity as a retroactive recapitalization of the
shares issued to the founders of Rocky Mountain Distilleries, Inc. on July 1,
2006.
 
 On
September 1, 2006 the Company issued 500,000 shares of $.001 par value common
stock for $500 or $.001 per share.
 
 On
November 10, 2006 the Company issued 20,000 shares of $.001 par value common
stock for $3,000 or $.15 per share.
 
 On
November 24, 2006 the Company issued 6,670 shares of $.001 par value common
stock for $1,000.50 cash or $.15 per share.
 
 On
December 10, 2006 the Company issued 13,340 shares of $.001 par value common
stock for $2,001 cash or $.15 per share.
 
 On
December 10, 2006 the Company issued 13,670 shares of $.001 par value common
stock for $2,050.50 cash or $.15 per share.
 
 On
January 3, 2007 the Company issued 13,340 shares of $.001 par value common stock
for $2,001.00 cash or $.15 per share.
 
 On June
18, 2007, as part of a private offering, the Company issued 147,000 shares of
$.001 par value common stock for $36,750 cash or $.25 per share.
 
 On June
24, 2007, as part of a private offering, the Company issued 34,000 shares of
$.001 par value common stock for $8,500 cash or $.25 per share.
 
 In
addition the Company incurred deferred offering expenses of $21,688 that
directly reduces the proceeds received from the offering. If the offering had
been unsuccessful these expenses would have been deducted in the period in which
the offering was unsuccessful.
 
  -
10 -
  Great
Spirits, Inc.
 (A
Development Stage Company)
 Notes to
Consolidated Comparative Financial Statements
 The Year
Ended June 30, 2009 and 2008 and
 the
Period September 26, 2005 (Inception) Through June 30, 2009
 
 
 Note 4 – Capital Stock
(continued)
 
 The
Company authorized 1,000,000 shares of no par value, preferred stock, to have
such preferences as the Directors of the Company may assign from time to time.
No preferred stock is either issued or outstanding as of June 30,
2009.
 
 The
Company has declared no dividends through June 30, 2009.
 
 Note 5 -  Note
Payable
 
 The
Company at June 30, 2009 had an outstanding note payable for $4,500 to an
individual, unsecured, bearing an interest rate at 6% per annum and due on
demand. Interest expense under the note for the period ended June 30, 2009 was
$3,038 and $5,026 respectively with accrued interest payable of $38 at June 30,
2009.
 
 Note 6 -  Income
Taxes
 
 Deferred
income taxes arise from the temporary differences between financial statement
and income tax recognition of net operating losses. These loss carryovers are
limited under the Internal Revenue Code should a significant change in ownership
occur. The Company accounts for income taxes pursuant to SFAS 109. At June 30,
2009 and 2008, the Company had approximately $52,394 and $34,857 in unused
federal net operating loss carryforwards, which begin to expire principally in
the year 2027. A deferred tax asset at each date of approximately $10,479 and
$6,971 resulting from the loss carryforwards has been offset by a 100% valuation
allowance. The change in the valuation allowance for the periods ended June 30,
2009 and  2008 was approximately $3,507 and $4,315.
 
  -
11 -
   ITEM
2.   MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATION
 
 The
following discussion of our financial condition and results of operations should
be read in conjunction with, and is qualified in its entirety by, the
consolidated financial statements and notes thereto included in, Item 1 in this
Quarterly Report on Form 10-Q. This item contains forward-looking statements
that involve risks and uncertainties. Actual results may differ materially from
those indicated in such forward-looking statements.
 
 Forward-Looking
Statements
 
 This
Quarterly Report on Form 10-Q and the documents incorporated herein by reference
contain forward-looking statements.  Such forward-looking statements
are based on current expectations, estimates, and projections about our
industry, management beliefs, and certain assumptions made by our
management.  Words such as “anticipates”, “expects”, “intends”,
“plans”, “believes”, “seeks”, “estimates”, variations of such words, and similar
expressions are intended to identify such forward-looking
statements.  These statements are not guarantees of future performance
and are subject to certain risks, uncertainties, and assumptions that are
difficult to predict; therefore, actual results may differ materially from those
expressed or forecasted in any such
forward-looking  statements.  Unless required by law, we
undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events, or
otherwise.  However, readers should carefully review the risk factors
set forth herein and in other reports and documents that we file from time to
time with the Securities and Exchange Commission, particularly the Annual
Reports on Form 10-K, Quarterly reports on Form 10-Q and any Current Reports on
Form 8-K.
 
 Overview
and History
 
 We are a
Colorado corporation. We were incorporated on August 31, 2006. Our
wholly-owned subsidiary was formed in September, 2005. Our proposed business is
to distill and market to the public a premium-priced potato vodka. We are a
holding company to Rocky Mountain Distilleries, Inc., a wholly-owned subsidiary,
which was incorporated in September, 2005 and is the actual operating company.
Both we and our subsidiary are headquartered in Monte Vista, Colorado. We
acquired the capital stock of Rocky Mountain Distilleries, Inc. in a tax-free
exchange under the Internal Revenue Code in September, 2006.
 
 In June,
2007, we completed a registered offering of our common shares under the
provisions of the Colorado securities laws and under an exemption from the
federal securities laws. We sold a total of 181,000 common shares at a price of
$0.25 per share to a total of forty investors. We raised a total of $45,250 in
this offering.
 
 We have
not been subject to any bankruptcy, receivership or similar
proceeding.
 
 Our
address is 3230 Fall Creek Highway, Suite 206, Granbury Texas 76049. Our
telephone number is (817) 736-2900.
 
 Subsequent
Event
  On
October 23, 2009, we entered into a Securities Purchase Agreement (the “Agreement”), dated as of
October 20, 2009 (the “Closing”), with Brian
Leftwich, Steven Free, and Jack Minter (collectively, the “Buyers”) and Dana Hyde and
other sellers named therein (the “Sellers”), whereby the
Sellers sold an aggregate of 7,998,020 shares (the “Shares”) of our common stock,
par value $0.001 per share (the “Common Stock”), to the Buyers
for cash consideration in the net aggregate amount of $190,000 (“Transaction”). The Shares
include substantially all shares of Common Stock owned beneficially or of record
by the Sellers, or issuable upon the exercise, conversion, or exchange of
securities or obligations held by, or owed to, the Sellers.
  As
a result of the Closing of the Transaction, Mr. Leftwich now owns 2,666,020
shares of our Common Stock representing 32.3% of the outstanding Common Stock on
a beneficial basis, and each of Messrs. Free and Minter now own 2,666,000 shares
of our Common Stock representing 32.3% of the outstanding Common Stock on a
beneficial basis.
   -
12 -
   
  Before
the Closing of the Transaction, the Board consisted of one member, Dana Hyde. In
connection with the Transaction and pursuant to the Agreement, the director
voted to expand the Board thereby creating one vacancy, to which vacancy Mr.
Leftwich was appointed upon Closing. Ms. Hyde resigned from all offices and
other positions with us.
 
 Effective October 30, 2009, we placed
all of the common shares of our wholly owned subsidiary, Rocky Mountain
Distilleries, Inc., into a trust in anticipation of a spin off to our
shareholders of record as of October 19, 2009. The trustee has the authority to
complete the spin off to our shareholders as soon as an effective registration
statement with the SEC is in place for the transaction.
 
 Results
of Operations
 
 Revenue. We had no revenue for
the three months ended September 30, 2009. Otherwise, we have had no revenue
since inception, including for the three months ended September 30,
2009.
 
 Operating Expenses. We
incurred operating expenses of $-0- for the three months ended September 30,
2009 compared to operating expenses of $3,957 for the three months ended
September 30, 2008.  This compares with $49,356 in operating expenses
from inception through September 30, 2009.
 
 Our
operating expenses are comprised solely of general and administrative expenses.
The primary components of general and administrative expenses are the expenses
of our corporate office, professional fees, general and administrative
expenses.
 
 Gross Profit (Loss). We had no
gross profit since inception, including for the three months ended September 30,
2009.
 
 Net Loss. We incurred a net
loss of $68 for the three months ended September 30, 2009 compared to a net loss
of $3,957 for the three months ended September 30, 2008. This compares with
$52,462 in net loss from inception through September 30, 2009.
 
 Liquidity
and Capital Resources
 
 As of
September 30, 2009, we had cash totaling $1,534. As of September 30, 2008, we
had cash totaling $3,493.
 
 For the
three months ended September 30, 2009, we had net cash of $-0- used for
operating activities, compared to $5,637 for the three months ended September
30, 2008. From inception through September 30, 2009, we had net cash of $32,707
used for operating activities.
 
 For the
three months ended September 30, 2009, we had net cash of $-0- provided or used
for investing activities, compared to $-0- for the three months ended September
30, 2008. From inception through September 30, 2009, we had net cash of $65 used
for investing activities.
 
 For the
three months ended September 30, 2009, we had net cash of $-0- provided or used
by financing activities, compared to $-0- used by financing activities for the
three months ended September 30, 2008. From inception through September 30,
2009, we had net cash of $34,185 provided by financing activities.
 
 Over the
next twelve months our capital costs will be approximately $10,000 to $12,000
primarily to develop operations. We plan to buy office equipment to be used in
our operations. In the next three months, we plan to develop a relationship with
a contract distiller to begin distilling our potato vodka. At the present time,
we have no definitive agreement in place for any contract distiller. We do not
anticipate an extensive capital cost to develop this relationship. Eventually,
we want to distill our own vodka at our own distillery. However, we have no
definite plans to do so at this time and do not know what, if any, capital costs
would be involved for us.
  -
13 -
  
 We
believe that we have sufficient capital in the short term for our current level
of operations. This is because we believe that we can attract sufficient product
sales and services within our present organizational structure and resources to
become profitable in our operations. Additional resources would be needed to
expand into additional locations, which we have no plans to do at this time. We
do not anticipate needing to raise additional capital resources in the next
twelve months. In the event that we need additional capital, Mr. Leftwich has
agreed to loan such funds as may be necessary through December 31, 2009 for
working capital purposes.
 
 Our
principal source of liquidity will be our operations. We expect variation in
revenues to account for the difference between a profit and a loss. Also
business activity is closely tied to the U.S. economy. Because we plan to market
a vodka product, a slow down in purchases of consumer goods could have a
negative impact to our business in the future. We have no idea to what extent
this may affect us. In any case, we try to operate with minimal overhead. Our
primary activity will be to seek to develop customers and, consequently, our
sales. If we succeed in developing customers for our vodka and generating
sufficient sales, we will become profitable. We cannot guarantee that this will
ever occur. Our plan is to build our company in any manner which will be
successful.
 
 Off-Balance Sheet
Arrangements
 
 We have
not entered into any transactions with unconsolidated entities in which we have
financial guarantees, subordinated retained interests, derivative instruments or
other contingent arrangements that expose us to material continuing risks,
contingent liabilities or any other obligations under a variable interest in an
unconsolidated entity that provides us with financing, liquidity, market risk or
credit risk support.
 
 Critical
Accounting Policies
 
 Our
discussion and analysis of results of operations and financial condition are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these consolidated financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. We evaluate our estimates on an ongoing basis, including those
related to provisions for uncollectible accounts receivable, inventories,
valuation of intangible assets and contingencies and litigation. We base our
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results May differ from
these estimates under different assumptions or conditions.
 
 The
accounting policies that we follow are set forth in Note 2 to our financial
statements as included in this prospectus. These accounting policies conform to
accounting principles generally accepted in the United States, and have been
consistently applied in the preparation of the financial
statements.
 
 Recently
Issued Accounting Pronouncements
 
 In
December 2004, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123R "Share Based Payment." This
statement is a revision of SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and its related implementation guidance. SFAS No. 123R addresses all
forms of share based payment ("SBP") awards including shares issued under
employee stock purchase plans, stock options, restricted stock and stock
appreciation rights. Under SFAS No. 123R, SBP awards result in a cost that will
be measured at fair value on the awards' grant date, based on the estimated
number of awards that are expected to vest. This statement is effective for
public entities that file as Registrants, as of the beginning of the first
interim or annual reporting period that begins after December 15, 2005. We
adopted this pronouncement during the first quarter of 2005.
 
 In
December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary Assets -
An Amendment of APB Opinion No. 29. The amendments made by SFAS No. 153 are
based on the principle that exchanges of non-monetary assets should be measured
based on the fair value of the assets exchanged. Further, the amendments
eliminate the narrow exception for non-monetary exchanges of similar productive
assets and replace it with a broader exception for exchanges of non-monetary
assets that do not have "commercial substance." SFAS No. 153 is effective for
non-monetary asset exchanges occurring in fiscal periods beginning after June
15, 2005. The adoption of SFAS No. 153 on its effective date did not have a
material effect on our consolidated financial statements.
  -
14 -
  In
December 2005, the FASB issued Financial Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations - an Interpretation of FASB Statement
No. 143", which specifies the accounting treatment for obligations associated
with the sale or disposal of an asset when there are legal requirements
attendant to such a disposition. We adopted this pronouncement in 2005, as
required, but there was no impact as there are no legal obligations associated
with the future sale or disposal of any assets.
 
 In May
2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections —
A Replacement of APB Opinion No. 20 and SFAS Statement No. 3". SFAS No. 154
changes the requirements for the accounting and reporting of a change in
accounting principle by requiring retrospective application to prior periods'
financial statements of the change in accounting principle, unless it is
impracticable to do so. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005. We
do not expect the adoption of SFAS No. 154 to have any impact on our
consolidated financial statements.
 
  ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
 
 None.
  
 ITEM
4. CONTROLS AND PROCEDURES
 
 Not applicable
  
 ITEM
4T. CONTROLS AND PROCEDURES
 
 As of the
end of the period covered by this report, based on an evaluation of our
disclosure controls and procedures (as defined in Rules 13a -15(e) and
15(d)-15(e) under the Exchange Act), our Chief Executive Officer and the Chief
Financial Officer has concluded that our disclosure controls and procedures are
effective to ensure that information required to be disclosed by us in our
Exchange Act reports is recorded, processed, summarized, and reported within the
applicable time periods specified by the SEC’s rules and forms.
 
 There
were no changes in our internal controls over financial reporting that occurred
during our most recent fiscal three months that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
 
 
 PART
II.  OTHER INFORMATION
 
 ITEM
1.  LEGAL PROCEEDINGS
 
 There are
no legal proceedings, to which we are a party, which could have a material
adverse effect on our business, financial condition or operating
results.
 
 
 ITEM
1A. RISK FACTORS
 
 You
should carefully consider the risks and uncertainties described below and the
other information in this document before deciding to invest in shares of our
common stock.
 
 The
occurrence of any of the following risks could materially and adversely affect
our business, financial condition and operating result. In this case, the
trading price of our common stock could decline and you might lose all or part
of your investment.
 
 We
have a limited operating history, have never been profitable, and may never be
profitable.  We have a history of losses.
 
 We were
formed as a Colorado business entity in August, 2006. Our wholly-owned
subsidiary was formed in September, 2005. At the present time, have a limited
operating history. There can be no guarantee that we will ever be
profitable. From our inception on September 26, 2005 through September 30,
2009, we have a history of losses.
  -
15 -
  
 
 Because
we had incurred operating losses from our inception, our accountants have
expressed doubts about our ability to continue as a going concern.
 
 For the
period ended June 30, 2009, our accountants have expressed doubt about our
ability to continue as a going concern as a result of our continued net losses.
Our ability to achieve and maintain profitability and positive cash flow is
dependent upon:
 
 t
              our
      ability to begin active operations;
 
 t
              our
      ability to locate clients who will purchase our vodka products;
      and
 
 t
              our
      ability to generate revenues.
 
 Based
upon current plans, we may incur operating losses in future periods because we
may, from time to time, be incurring expenses but not generating sufficient
revenues. We expect approximately $50,000 in operating costs over the next
twelve months. We cannot guarantee that we will be successful in generating
sufficient revenues or other funds in the future to cover these operating costs.
Failure to generate sufficient revenues will cause us to go out of
business.
 
 We
have a lack of liquidity and will need additional financing in the future.
Additional financing may not be available when needed, which could delay our
development or indefinitely postponed.
 
 We are
only minimally capitalized. Because we are only minimally capitalized, we expect
to experience a lack of liquidity for the foreseeable future in our proposed
operations. We will adjust our expenses as necessary to prevent cash flow or
liquidity problems. However, we expect we will need additional financing of some
type, which we do not now possess, to fully develop our operations. We expect to
rely principally upon our ability to raise additional financing, the success of
which cannot be guaranteed. We will look at both equity and debt financing,
including loans from our principal shareholder. However, at the present time, we
have no definitive plans for financing in place, other than the funds which may
be loaned to us by Mr. Leftwich, our President. In the event that we need
additional capital, Mr. Leftwich has agreed to loan such funds as may be
necessary through December 31, 2009 for working capital purposes. To the extent
that we experience a substantial lack of liquidity, our development in
accordance with our proposed plan may be delayed or indefinitely postponed, our
operations could be impaired, we may never become profitable, fail as an
organization, and our investors could lose some or all of their
investment.
 
 As
a company with limited operating history, we are inherently a risky
investment.
 
 We have
limited operating history. Because we are a company with limited history, the
operations in which we engage in, to distill and market to the public a
premium-priced potato vodka, is an extremely risky business. An investor could
lose his entire investment.
 
 Our
operations are subject to our ability to successfully market our products. We
have no substantial history of being able to successfully market our
products.
 
 Our
operations will depend, among other things, upon our ability to develop and to
market our vodka product for sale to consumers. Further, there is the
possibility that our operations will not generate income sufficient to meet
operating expenses or will generate income and capital appreciation, if any, at
rates lower than those anticipated or necessary to sustain the investment. An
investor could lose his entire investment.
 
 There
are factors beyond our control which may adversely affect us.
 
 Our
operations may also be affected by factors which are beyond our control,
principally general market conditions and changing consumer
tastes.  Any of these problems, or a combination thereof, could have
affect on our viability as an entity. We may never become profitable, fail as an
organization, and our investors could lose some or all of their
investment.
  -
16 -
  
 Intense
competition in our market could prevent us from developing revenue and prevent
us from achieving annual profitability. In either situation, we may never become
profitable, fail as an organization, and our investors could lose some or all of
their investment.
 
 We plan
to distill and market to the public a premium-priced potato vodka. While the
barriers to entry are significant, more importantly, it is necessary to gain a
share of the potato vodka market. The barriers to gaining a market share are
significant. We face strong competitors in all areas of our business. All
aspects of our business are highly competitive. All of our competitors are
larger than us and have greater financial resources than we do. All of our
competitors have substantially greater experience distilling and marketing to
the public premium-priced vodka, including potato vodka. Competition with these
companies could curtail price increases or could require price reductions or
significant spending on marketing and sales, any of which could adversely affect
our results of operations. Competition from larger and more established
companies is a significant threat and is expected to increase.
 
 Our
products could be rendered noncompetitive or obsolete. Any competition may cause
us to fail to gain or to lose market share, which could result in reduced
margins for our products. Competitive pressures may not only impair our margins
but may also impact our revenues and our growth.
 
 We currently have no suppliers or
third party distillery contracts and may never acquire any suppliers or third
party contracts.
 
 We
currently have no contracts with any suppliers or third party distilleries for
the production of our product. We may never acquire either suppliers or third
party distilleries, either of which could cause our business to
fail.
 
 Fluctuations
in the supply and prices of raw materials could negatively impact our
financial results.
 
 Under
normal market conditions, raw materials for our proposed product are generally
available on the open market. From time to time, however, the prices and
availability of these raw materials may fluctuate significantly, which could
impair our ability to procure necessary products, or increase the cost of our
product. If material costs increase, and we are unable to pass along, or are
delayed in passing along, those increases to our customers, we will experience
reductions to our profit margins and our ability to generate a profit will be
reduced or eliminated completely.
 
 Our
success will be dependent upon our management’s efforts. We cannot sustain
profitability without the efforts of our management.
 
 Our
success will be dependent upon the decision making of our directors and
executive officers. These individuals intend to commit as much time as necessary
to our business, but this commitment is no assurance of success. The loss of any
or all of these individuals, particularly Ms. Dana Hyde our President, could
have a material, adverse impact on our operations. We have no written employment
agreements with any officers and directors, including Mr. Leftwich. We have not
obtained key man life insurance on the lives of any of our officers or
directors.
 
 Our
stock has a limited public trading market and there is no guarantee a trading
market will ever develop for our securities.
 
 There has
been, and continues to be, a limited public market for our common stock. We
trade on the Over-the-Counter Bulletin Board under the trading symbol GSPS.OB.
An active trading market for our shares  has not, and may never
develop or be sustained. If you purchase shares of common stock, you may not be
able to resell those shares at or above the initial price you paid. The market
price of our common stock may fluctuate significantly in response to numerous
factors, some of which are beyond our control, including the
following:
  -
17 -
  
 
 *
              actual
      or anticipated fluctuations in our operating results;*
              changes
      in financial estimates by securities analysts or our failure to perform in
      line with such estimates;*
              changes
      in market valuations of other companies, particularly those that market
      services such as ours;*
              announcements
      by us or our competitors of significant
      innovations,  acquisitions, strategic partnerships, joint
      ventures or    capital commitments;*
              introduction
      of product enhancements that reduce the need for our
    products;*
              departures
      of key personnel.
 
 Of our
total outstanding shares as of November 10, 2009, a total of 8,067,020, or
approximately 98%, will be restricted from immediate resale but may be sold into
the market in the near future. This could cause the market price of our common
stock to drop significantly, even if our business is doing well.
 
 As
restrictions on resale end, the market price of our stock could drop
significantly if the holders of restricted shares sell them or are perceived by
the market as intending to sell them.
 
 Applicable
SEC rules governing the trading of “Penny Stocks” limit the liquidity of our
common stock, which may affect the trading price of our common
stock.
 
 Our
common stock is currently not quoted on in any market. If our common stock
becomes quoted, we anticipate that it will trade well below $5.00 per share. As
a result, our common stock is considered a “penny stock” and is subject to SEC
rules and regulations that impose limitations upon the manner in which our
shares can be publicly traded.  These regulations require the
delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock and the associated risks.  Under
these regulations, certain brokers who recommend such securities to persons
other than established customers or certain accredited investors must make a
special written suitability determination for the purchaser and receive the
written purchaser’s agreement to a transaction prior to
purchase.  These regulations have the effect of limiting the trading
activity of our common stock and reducing the liquidity of an investment in our
common stock.
 
 The
over-the-counter market for stock such as ours is subject to extreme price and
volume fluctuations.
 
 The
securities of companies such as ours have historically experienced extreme price
and volume fluctuations during certain periods. These broad market fluctuations
and other factors, such as new product developments and trends in the our
industry and in the investment markets generally, as well as economic conditions
and quarterly variations in our operational results, may have a negative effect
on the market price of our common stock.
 
 Buying
low-priced penny stocks is very risky and speculative.
 
 The
shares being offered are defined as a penny stock under the Securities and
Exchange Act of 1934, and rules of the Commission. The Exchange Act and such
penny stock rules generally impose additional sales practice and disclosure
requirements on broker-dealers who sell our securities to persons other than
certain accredited investors who are, generally, institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or
annual income exceeding $200,000, or $300,000 jointly with spouse, or in
transactions not recommended by the broker-dealer. For transactions covered by
the penny stock rules, a broker-dealer must make a suitability determination for
each purchaser and receive the purchaser's written agreement prior to the sale.
In addition, the broker-dealer must make certain mandated disclosures in penny
stock transactions, including the actual sale or purchase price and actual bid
and offer quotations, the compensation to be received by the broker-dealer and
certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may affect the ability of
broker-dealers to make a market in or trade our common stock and may also affect
your ability to resell any shares you may purchase in the public
markets.
  -
18 -
  
 We
do not expect to pay dividends on common stock.
 
 We have
not paid any cash dividends with respect to our common stock, and it is unlikely
that we will pay any dividends on our common stock in the foreseeable future.
Earnings, if any, that we may realize will be retained in the business for
further development and expansion.
 
 
 
 ITEM 2.UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS.
  None
 
 
 ITEM
3.  DEFAULTS UPON SENIOR SECURITIES
  
 None
 
 
 ITEM
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 None
 
 
 ITEM
5.  OTHER INFORMATION
 
 None
 
 
 ITEM
6.  EXHIBITS
 
 Exhibits
 
 3.1*
              Articles
      of Incorporation3.2*
              Bylaws10.1**
              Form
      of Securities Purchase Agreement, dated October 20, 2009, among the Buyers
      identified therein, the Sellers identified therein, and Great Spirits,
      Inc.21
      *
              List
      of Subsidiaries.31.1
              Certification
      of Chief Executive and Chief Financial Officer pursuant to Rule
      13a-14(a)/15(d)-14(a)32.1
              Certification
      of Chief Executive and Chief Financial Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002
 
 *   Previously
filed under cover of Form SB-2 on November 1, 2007.
 **
Previously filed under cover of Form 8-K on November 2, 2009.
 
 Reports on Form
8-K
 
 We had no
filings under cover of Form 8K for the fiscal quarter ended September 30,
2009.
  -
19 -
  
 
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized on November 23, 2009.
 
 
 
 
 
 GREAT
      SPIRITS, INC.By:
              /s/
      Brian LeftwichBrian
      Leftwich,Chief
      Executive Officer and President
                (principal
      executive officer)
                Chief
      Financial Officer
                (principal
      financial and accounting officer)
 
 
  -
20 -