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,
2008





[]
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)215 N. Washington StreetMonte Vista, Colorado
            81144(Address
      of principal executive offices)
            (zip
      code)




(575)
770-1157


(Registrant's
telephone number, including area code)





Check
whether the issuer: (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 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 1, 2008, was 8,248,000.







FORM
10-Q





Great
Spirits, Inc.





TABLE OF
CONTENTS





PART
      I  FINANCIAL INFORMATIONItem
      1. Financial Statements for the period ended September 30,
      2008Balance Sheet
      (Unaudited)
              4Statements of
      Operations (Unaudited)
              5Consolidated
      Statements of Shareholders' Equity (Unaudited)
              6Statements of
      Cash Flows (Unaudited)
              7Notes
      to Financial Statements
              8Item
      2. Management’s Discussion and Analysis and Plan of
    Operation
              9Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
              11Item
      4. Controls and Procedures
              11Item
      4T. Controls and Procedures
              12PART
      II  OTHER INFORMATIONItem
      1. Legal Proceedings
              12Item
      1A. Risk Factors
              12Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
              16Item
      3. Defaults Upon Senior Securities
              16Item
      4. Submission of Matters to a Vote of Security Holders
              16Item
      5. Other Information
              16Item
      6. Exhibits
              16Signatures
              17


-
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)





FINANCIAL
STATEMENTS


(Unaudited)





Quarter
Ended September 30, 2008










-
3 -





Great
      Spirits Inc.Consolidated
      Balance Sheet(A
      Development Stage Company)Unaudited
            
            
            AuditedSeptember
            
            
            June30,
      2008
            
            
            
            30,
      2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
            
            $
            3,493
            
            
            $
            9,130Total
      Current Assets
            
            
            3,493
            
            
            
            9,130TOTAL
      ASSETS
            
            $
            3,493
            
            
            $
            9,130LIABILITIES
      AND SHAREHOLDERS' EQUITYAccounts
      payable
            
            $
            557
            
            
            $
            2,237Advances
      from officer
            
            
            65
            
            
            
            65Total
      current liabilities
            
            
            622
            
            
            
            2,302Total
      Liabilities$
            622
            
            
            $
            2,302SHAREHOLDERS'
      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
            
            
            (38,814
            )
            
            
            (34,857
            )TOTAL
      SHAREHOLDERS' EQUITY
            
            
            2,871
            
            
            
            6,828TOTAL
      LIABILITIES AND SHAREHOLDERS' EQUITY
            
            $
            3,493
            
            
            $
            9,130




See
Accompanying Notes To These Unaudited Financial Statements.


-
4 -








Great
      Spirits Inc.Unaudited
      Consolidated Statement Of Operations(A
      Development Stage Company)Unaudited
            
            
            Unaudited
            
            
            September
      26,Three
      month
            
            
            Three
      month
            
            
            2005
      Inceptionperiod
      ended
            
            
            period
      ended
            
            
            throughSeptember
      30,
            
            
            September
      30,
            
            
            September
      30,2008
            
            
            2007
            
            
            2008(Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)Revenue:
            
            $
            -
            
            
            $
            -
            
            
            $
            -General
      & Administrative ExpensesAccounting
            
            
            3,250
            
            
            
            3,250
            
            
            
            10,250Bank
      charges
            
            
            -
            
            
            
            19
            
            
            
            27Consulting
            
            
            -
            
            
            
            1,000
            
            
            
            9,500Legal
            
            
            -
            
            
            
            -
            
            
            
            7,500Lincenses
            
            
            -
            
            
            
            -
            
            
            
            375Office
            
            
            557
            
            
            
            598
            
            
            
            5,007Research
      & development
            
            
            -
            
            
            
            -
            
            
            
            800Stock
      transfer
            
            
            150
            
            
            
            158
            
            
            
            5,355Total
      G & A
            
            
            3,957
            
            
            
            5,025
            
            
            
            38,814Net
      (Loss)
            
            $
            (3,957
            )
            
            $
            (5,025
            )
            
            $
            (38,814
            )Basic
      (Loss) per common share
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )Weighted
      Average Common Shares Outstanding
            
            
            8,248,020
            
            
            
            8,117,294
            
            
            
            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
            )
            
            
            6,828Net
      (Loss)
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (3,957
            )
            
            
            (3,957
            )Balance
      at September 30, 2008 - Unaudited
            
            
            8,248,020
            
            
            $
            8,248
            
            
            $
            33,437
            
            
            $
            (38,814
            )
            
            $
            2,871











(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,Three
      month
            
            
            Three
      month
            
            
            2005
      Inceptionperiod
      ended
            
            
            period
      ended
            
            
            throughSeptember
      30,
            
            
            September
      30,
            
            
            September
      30,2008
            
            
            2007
            
            
            2008(Unaudited)
            
            
            (Unaudited)
            
            
            (Unaudited)Net
      (Loss)
            
            $
            (3,957
            )
            
            $
            (5,025
            )
            
            $
            (38,814
            )Adjustments
      to reconcile decrease in net assets to net cashprovided
      by operating activities:Stock
      issued for services
            
            
            -
            
            
            
            -
            
            
            
            7,500Increase
      (Decrease) in accounts payable
            
            
            (1,680
            )
            
            
            (3,885
            )
            
            
            557Net
      cash (used) in operation activities
            
            
            (5,637
            )
            
            
            (8,910
            )
            
            
            (30,757
            )Cash
      flows from investing activities:Advances
      received from officer
            
            
            0
            
            
            
            -
            
            
            
            1,065Advances
      paid to officer
            
            
            -
            
            
            
            65
            
            
            
            (1,000
            )Net
      cash (used) in investing activities
            
            
            -
            
            
            
            65
            
            
            
            65Cash
      flows from financing activities:Issuance
      of common stock
            
            
            -
            
            
            
            -
            
            
            
            45,251Deferred
      offering costs
            
            
            -
            
            
            
            (566
            )
            
            
            (11,066
            )Net
      cash provided from financing activities
            
            
            -
            
            
            
            (566
            )
            
            
            34,185Net
      increase in cash
            
            
            (5,637
            )
            
            
            (9,411
            )
            
            
            3,493Cash
      at beginning of period
            
            
            9,130
            
            
            
            33,605
            
            
            
            -Cash
      at end of period
            
            $
            3,493
            
            
            $
            24,194
            
            
            $
            3,493Supplemental
      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


Notes To
Unaudited Financial Statements


For
The Three Month Period Ended September 30, 2008






Note
1 - Unaudited Financial Information




The
unaudited financial information included for the three month interim period
ended September 30, 2008  were taken from the books and records
without audit. However, such information reflects all adjustments (consisting
only of normal recurring adjustments, which are of the opinion of management,
necessary to reflect properly the results of interim period presented). The
results of operations for the three month period ended September 30, 2008 are
not necessarily indicative of the results expected for the fiscal year ended
June 30, 2009.




Note
2 - Financial Statements




For a
complete set of footnotes, reference is made to the Company’s Report on Form
10K-SB for the year ended June 30, 2008 as filed with the Securities and
Exchange Commission and the audited financial statements included
therein.


-
8 -




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
QuarterlyReport 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-KSB, 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 215 N. Washington Street, Monte Vista, Colorado 81144Our telephone number is
(575) 770-1157.





Results
of Operations





Revenue. We had no revenue for
the three months ended September 30, 2008. Otherwise, we have had no revenue
since inception, including for the three months ended September 30,
2008.





Operating Expenses. We
incurred operating expenses of $3,957 for the three months ended September 30,
2008 compared to operating expenses of $5,025 for the three months ended
September 30, 2007.  This compares with $38,814 in operating expenses
from inception through September 30, 2008.





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.
The increase in operating expenses is directly related to the increase in
salaries during the relevant periods.





Gross Profit (Loss). We had no
gross profit since inception, including for the three months ended September 30,
2008.


-
9 -




Net Loss. We incurred a net
loss of $3,957 for the three months ended September 30, 2008 compared to a net
loss of $5,025 for the three months ended September 30, 2007. This compares with
$38,814 in net loss from inception through September 30, 2008.





Liquidity
and Capital Resources





As of
September 30, 2008, we had cash totaling $3,493.





For the
three months ended September 30, 2008, we had net cash of $5,637 used for
operating activities, compared to $8,910 for the three months ended September
30, 2007. From inception through September 30, 2008, we had net cash of $30,757
used for operating activities.





For the
three months ended September 30, 2008, we had net cash of $-0- provided or used
for investing activities, compared to $65 for the three months ended September
30, 2007. From inception through September 30, 2008, we had net cash of $65 used
for investing activities.





For the
three months ended September 30, 2008, we had net cash of $-0- provided or used
by financing activities, compared to $566 used by financing activities for the
three months ended September 30, 2007. From inception through September 30,
2008, we had net cash of $34,185 provided by financing activities. Most of the
activities came from deferred offering costs.





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.




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, Ms. Hyde has agreed
to loan such funds as may be necessary through December 31, 2008 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.




-
10 -


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.





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


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11 -


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 each have 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 quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.





This
report does not include an attestation report of the company’s registered public
accounting firm regarding internal control over financial reporting. Identified
in connection with the evaluation required by paragraph (d) of Rule 240.13a-15
or Rule 240.15d-15 of this chapter that occurred during the registrant’s last
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s 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,
2008, we have a history of losses.





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, 2008, 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:




l
            our
      ability to begin active operations;




l
            our
      ability to locate clients who will purchase our vodka products;
      and




l
            our
      ability to generate revenues.




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12 -


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 Ms. Hyde, our President. In the event that we need additional
capital, Ms. Hyde has agreed to loan such funds as may be necessary through
December 31, 2008 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.




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13 -


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 Ms. Hyde. We have not
obtained key man life insurance on the lives of any of our officers or
directors.





Our
stock has no public trading market and there is no guarantee a trading market
will ever develop for our securities.





There has
been, and continues to be, no public market for our common stock. 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:


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14 -





*
            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 1, 2008, 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.




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15 -


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.





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*
            Bylaws21
      *
            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.





Reports on Form
8-K





We had
no filings under cover of Form 8K.


-
16 -










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 10, 2008.










GREAT
      SPIRITS, INC.By:
            /s/
      Dana HydeDana
      Hyde,Chief
      Executive Officer and President
              (principal
      executive officer)
              Chief
      Financial Officer
              (principal
      financial and accounting officer)






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