Golden Star Enterprises (FCUL) 10-Q 2011 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

_____________

FORM 10-Q

(Mark One)

x	Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended September 30, 2011
o	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from to

Commission File Number: 0001073262

Golden Spirit Enterprises Ltd.

(Exact name of small business issuer as specified in it’s charter)

Delaware

(State or other jurisdiction of incorporation or organization)

52-2132622

(I.R.S. Employer Identification No.)

35 South Ocean Avenue

Patchogue, New York, 11772

(Address of principal executive offices)

888-488-6882

 (Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes    o 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   o Yes     o No

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

Large accelerated filer                                                         o	Accelerated filer                                              o
Non-accelerated filer                                                           o (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). o Yes  x No

APPLICABLE ONLY TO CORPORATE ISSUERS

On October 31, 2011 there were 57,198,691 shares outstanding of the issuer’s common stock.

INDEX		PAGE
Part I.	FINANCIAL INFORMATION		3
Item 1.	Financial Statements		3
	Balance Sheet as of September 30, 2011 (Unaudited) and December 31, 2010		F-1
	Statements of Operations (Unaudited) For the Three and Nine Months Ended September 30, 2011 and 2010, and the Period from September 13, 1993 (Inception) through September 30, 2011		F-2
	Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, 2011 and 2010, and the Period from September 13, 1993 (Inception) through September 30, 2011		F-3
	Notes To Consolidated Financial Statements (Unaudited)		F-4
Item 2.	Management's Discussion and Analysis or Plan of Operation		4-8
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		9
Item 4T.	Controls and Procedures		9
Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings		10
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		10
Item 3.	Defaults Upon Senior Securities		11
Item 4.	Submission of Matters to a Vote of Security Holders		11
Item 5.	Other Information		11
Item 6.	Exhibits		11
SIGNATURES			12

2

PART I -  FINANCIAL INFORMATION

Item 1. Financial Statements

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(UNAUDITED)

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF CASH FLOWS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2011			2010
	(unaudited)
ASSETS
CURRENT ASSETS
Cash	$	48		$	824
TOTAL CURRENT ASSETS		48			824
AVAILABLE FOR SALE SECURITIES – related parties		15,483			42,039
INTANGIBLE ASSETS		130,556			125,000
FILM PRODUCTION & DEVELOPMENT COSTS		1			1
TOTAL ASSETS	$	146,088		$	167,863
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	32,187		$	31,695
Due to related parties		32,466			129,755
TOTAL CURRENT LIABILITIES		64,653			161,450
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ (DEFICIT)
Common stock, $0.0001 par value, 500,000,000 shares authorized
Issued and outstanding:
57,198,691 (2010 – 44,923,691) common shares		5,720			4,492
Additional paid-in capital		18,439,150			18,063,878
Deferred compensation		(19,632	)		(56,135	)
Deficit accumulated during the development stage		(18,321,492	)		(18,010,067	)
Accumulated other comprehensive income		(22,311	)		4,245
TOTAL STOCKHOLDERS’ (DEFICIT)		81,435			6,413
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)	$	146,088		$	167,863

The accompanying notes are an integral part of these financial statements

F-1

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended  September 30,						Nine Months Ended  September 30,						Sept.13, 1993 (inception) to Sept. 30,
	2011			2010			2011			2010			2011
REVENUES
Processing fees	$	-		$	-		$	-		$	-		$	98,425
Gaming Revenue		-			-			-			-			18,596
Sale of oil and gas interest		-			-			-			-			47,501
Interest income		-			-			-			-			2,927
TOTAL REVENUES		-			-			-			-			167,449
COST OF SALES
Poker royalties and processing fees		-			-			-			-			30,601
GROSS PROFIT (LOSS)		-			-			-			-			136,848
GENERAL AND ADMINISTRATIVE EXPENSES
Advertising and marketing		-			-			-			-			93,895
Consulting fees		5,502			92,559			225,731			152,997			7,829,609
Depreciation and amortization		-			-			-			-			132,569
Exploration costs		-			-			-			-			241,754
Investor relations		3,750			7,637			15,628			26,443			746,963
Litigation settlement		-			-			-			-			52,169
Loss on settlement of debt		-			-			-			-			302,500
Management fees		-			-			-			-			378,447
Office and general		12,728			12,710			36,798			37,433			727,074
Poker Sponsorships		-			-			-			-			52,500
Professional fees		8,626			9,321			21,870			26,587			706,228
Travel and accommodation		2,233			6,944			5,655			15,749			288,234
Wages and salaries		1,500			3,692			5,743			7,887			266,793
Write-off of website development costs		-			-			-			-			425,682
Write-down (recovery) of URL costs		-			-			-			-			1,571,657
Write-down of technology license		-			-			-			-			2,055,938
Write-down of film production and distribution costs		-			-			-			-			90,762
Write-off of other assets		-			-			-			9,657			275,543
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES		34,339			132,863			311,425			276,753			16,238,317
OTHER INCOME (EXPENSES)
EQUITY LOSS FROM ORGANA		-			-			-			-			(1,394,280	)
WRITE-DOWN OF INVESTMENT IN ORGANA GARDENS		-			-			-			-			(313,301	)
GAIN/LOSS ON SALE OF SECURITIES-RELATED PARTIES					- -			-			-			216,509
(LOSS) ON IMPAIRMENT- SECURITIES-RELATED PARTIES					- -			-			-			(81,070	)
DILUTION GAIN – LEGACY		-			-			-			-			334,087
PROPERTY OPTION LOSS		-			-			-			-			(600,000	)
TOTAL OTHER INCOME (EXPENSES)		-			-			-			-			(1,838,055	)
Loss before income taxes		(34,339	)		(132,863	)		(311,425	)		(276,753	)		(18,076,372	)
Income Tax Provision		-			-			-			-			-
NET LOSS		(34,339	)		(132,863	)		(311,425	)		(276,753	)		(17,939,524	)
NET LOSS - NONCONTROLLING INTEREST		-			-			-			-			479,978
NET LOSS TO GOLDEN SPIRIT ENTERPRISES LTD		(34,339	)		(132,863	)		(311,425	)		(276,753	)	$	(17,459,546	)
BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES		57,198,691			33,836,589			53,123,508			28,789,460

The accompanying notes are an integral part of these financial statements

F-2

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months			Nine Months			September 13,
	Ended			Ended			1993 (inception) to
	Sept. 30, 2011			Sept. 30, 2010			Sept. 30, 2011
OPERATING ACTIVITIES
Net loss	$	(311,425	)	$	(276,753	)	$	(17,939,524	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		-			-			132,569
Fees and services paid for with shares		242,003			33,993			5,494,536
Loss on settlement of debt		-			-			302,500
Stock-based compensation		-			-			2,208,169
Non-cash component of URL write-down		-			-			1,214,193
Resource property acquisition and exploration costs		-			-			763,000
Film production and development costs		-			-			(90,763	)
Write-down of technology license		-			--			2,055,938
Write-off of website development costs		-			-			206,876
Write-down of film production & development costs		-			-			90,762
Write-off of other assets		-			9,657			9,657
Equity loss from Organa		-			-			1,394,280
Write-down of investment in Organa		-			-			313,301
(Gain)/Loss on sale of marketable securities		-			-			(216,509	)
Loss on impairment of securities		-			-			81,070
Dilution gain – Legacy		-			-			(334,087	)
Net changes in operating assets and liabilities		492			(4,108	)		316,555
CASH FLOWS USED IN OPERATING ACTIVITIES		(68,930	)		(237,211	)		(3,997,477	)
INVESTING ACTIVITIES
Deposit		-			-			(75,000	)
Technology license		-			-			(135,938	)
Acquisition of furniture and equipment		-			-			(32,696	)
Website development costs		-			-			(306,876	)
Other tangible and  intangible assets		(5,556	)		(9,657	)		(20,402	)
Purchase of securities – related parties		-			-			(75,603	)
Net proceeds from sale of securities – related parties		-			-			380,238
Net cash on disposition of Legacy Wine & Spirits International Ltd.		-			-			209,955
CASH FLOWS (USED IN)  INVESTING ACTIVITIES		(5,556	)		(9,657	)		(56,322	)
FINANCING ACTIVITIES
Net advances (to)/ from related parties		73,710			246,028			928,424
Net proceeds on sale of common stock		-			-			3,125,423
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES		73,710			246,028			4,053,847
NET (DECREASE) INCREASE IN CASH		(776	)		(840	)		48
CASH, BEGINNING OF PERIOD		824			1,223			-
CASH , END OF PERIOD	$	48		$	383		$	48

The accompanying notes are an integral part of these financial statements

F-3

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 1 – NATURE OF OPERATIONS

The Company was incorporated on September 13, 1993 in the State of Delaware as Power Direct, Inc.  On January 31, 2000 the Company changed its name to 2U Online.com Inc. to reflect management’s decision to shift the Company’s focus from oil and gas exploration and development to internet-based business development.  On October 8, 2003, the Company changed its name to Golden Spirit Minerals Ltd. to reflect management’s decision to shift the Company’s focus from internet-based business development to mineral exploration. On October 19, 2004, the Company changed its name to Golden Spirit Mining Ltd. On July 18, 2005, the Company changed its name to Golden Spirit Gaming Ltd. to reflect management’s decision to develop an online gaming business.  Effective June 30, 2006, the Company completed a 1 for 18 reverse stock split and changed its name to Golden Spirit Enterprises Ltd. to reflect the Company’s plan to expand its operations to include the marketing of other products and venues not related to gaming including the development, production, financing and packaging of innovative film and television programming. In addition, the Company has signed an agreement with Eneco Industries to participate in a series of Municipal Solid Waste (garbage) fueled Recycling and Resource Recovery Plants (refer to Note 5) and the Company signed an agreement with Global Terralene Inc. for the acquisition of all assets pertaining to Terralene Fuels.(refer to Note 4).

The consolidated financial statements have been prepared on the basis of a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has incurred losses since inception of $17,939,524 and at September 30, 2011 had a working capital deficiency of $64,605. The Company and its subsidiaries are in the development stage and further significant losses are expected to be incurred in developing its business.  The recoverability of the carrying value of assets and the ability of the Company to continue as a going concern is dependent on raising additional capital and ultimately on generating future profitable operations.  There can be no assurance that the Company will be able to raise the necessary funds when needed to finance its ongoing costs. Given the Company’s limited operating history, lack of sales, and its operating losses, there can be no assurance that it will be able to achieve or maintain profitability. The Company intends to fund the marketing of its business with both equity financing and joint venture opportunities, although there are no assurances these opportunities will be successful. Accordingly, these factors raise substantial doubt regarding the ability of the Company to continue as a going concern.

NOTE 2- BASIS OF PRESENTATION

The financial statements include the accounts of the Company and its subsidiaries, a 100% interest in PD Oil & Gas, Inc. (inactive), and a 100% interest in Cardstakes.com Enterprises Ltd. (inactive).

The foregoing unaudited interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X Article 8 “Financial Statements of Smaller Reporting Companies”, as promulgated by the Securities and Exchange Commission ("SEC").  Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements.  These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the period ended December 31, 2010 referenced in the 10-K.  In the opinion of management, the unaudited interim consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in accordance with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period.  Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.

Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

F-4

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 2- BASIS OF PRESENTATION (continued)

Film Production and Development Costs

Capitalized film production and development costs consist of investments in films which include the unamortized costs of completed films which have been produced by the Company or for which the Company has acquired distribution rights.  For films produced by the Company, capitalized costs include all direct production and financing costs, and production overhead. For acquired films, capitalized costs consist of minimum guarantee payments to acquire the distribution rights.

Costs of acquiring and producing films are amortized using the individual-film-forecast method as defined in SOP 00-2, whereby these are amortized and participation and residual costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films.

Capitalized film costs are stated at the lower of amortized cost or estimated fair value on an individual film basis. The valuation of investment in films is reviewed on a title-by-title basis, when an event or changes in circumstances indicate that the fair value of a film is less than its unamortized cost. The fair value of the film is determined using management’s future revenue and cost estimates. Additional amortization is recorded for the amount, if any, by which the unamortized costs exceed the estimated fair value of the film. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films may be required as a consequence of changes in management’s future revenue estimates.

Films in progress include the accumulated costs of production, which have not yet been completed by the Company.

Films in development include costs of acquiring film rights to original screenplays and costs to adapt such projects. Such costs are capitalized and, upon commencement of production, are transferred to production costs. Projects in development are written off at the earlier of the date determined not to be recoverable or when abandoned, or three years from the date of the initial investment.

Intangible Assets

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles-Goodwill and Other” requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of ASC 350. This standard also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. As of September 30, 2011, the Company believes there is no impairment of its intangible assets. The Company's intangible assets consist of the acquisition of patents and other proprietary information of Terralene Fuels, a patented fuel alternative formulation. The Company determined that the intangibles have indefinite useful lives and will be reviewed annually for impairment.

Stock-Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

Recent Accounting Pronouncements

In January 2010, the FASB issued ASU No. 2010-06 regarding fair value measurements and disclosures and improvement in the disclosure about fair value measurements.  This ASU requires additional disclosures regarding significant transfers in and out of Levels 1 and 2 of fair value measurements, including a description of the reasons for the transfers.  Further, this ASU requires additional disclosures for the activity in Level 3 fair value measurements, requiring presentation of information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements.  This ASU is effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.  We are currently evaluating the impact of this ASU, however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

F-5

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 2- BASIS OF PRESENTATION (continued)

In July 2010, the FASB issued ASU No. 2010-20, Receivables (Topic 310):  Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses.  The ASU amends FASB Accounting Standards Codification Topic 310, Receivables, to improve the disclosures that an entity provides about the credit quality of its financing receivables and the related allowance for credit losses.  As a result of these amendments, an entity is required to disaggregate, by portfolio segment or class of financing receivables, certain existing disclosures and provide certain new disclosures about its financing receivables and related allowance for credit losses.  This ASU is effective for interim and annual reporting periods ending on or after December 15, 2010.  The adoption of this standard may require additional disclosures, but we do not expect the adoption to have a material effect on our consolidated financial statements.

On December 21, 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-29, which impacts any public entity that enters into business combinations that are material on an individual or aggregate basis. The guidance specifies that if a public entity presents comparative financial statements, the entity should disclose revenues and earnings of the combined entity as though the business combination(s) that occurred during the year had occurred at the beginning of the prior annual period when preparing the pro forma financial information for both the current and prior reporting periods. The guidance also requires that pro forma disclosures be accompanied by a narrative description regarding the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in reported pro forma revenues and earnings. This guidance is effective for business combinations consummated in periods beginning after December 15, 2010.  We do not believe the adoption of this guidance will have a material impact on our Consolidated Financial Statements

In April 2011, FASB issued ASU 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring”. This amendment explains which modifications constitute troubled debt restructurings (“TDR”). Under the new guidance, the definition of a troubled debt restructuring remains essentially unchanged, and for a loan modification to be considered a TDR, certain basic criteria must still be met. For public companies, the new guidance is effective for interim and annual periods beginning on or after June 15, 2011, and applies retrospectively to restructuringoccurring on or after the beginning of the fiscal year of adoption. The Company does not expect that the guidance effective in future periods will have a material impact on its consolidated financial statements.

In May 2011, FASB issued ASU 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The amendments in this update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs. Consequently, the amendments change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. For many of the requirements, the Board does not intend for the amendments in this update to result in a change in the application of the requirements in Topic 820. Some of the amendments clarify the Board’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. For public entities, the new guideline is effective for interim and annual periods beginning after December 15, 2011 and should be applied prospectively. The Company does not expect that the guidance effective in future periods will have a material impact on its consolidated financial statements.

NOTE 3 – AVAILABLE–FOR-SALE SECURITIES – RELATED PARTIES

Organa

The Company owns common shares of Organa Gardens International Inc. (“Organa”), a public company with directors and significant shareholders in common that does not represent a position of control of or significant influence over Organa.  During 2007 the Company recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $3,775, which was recorded as other comprehensive income (loss).  During the year ended December 31, 2008, the Company recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $5,612 which was recorded as other comprehensive income (loss). During the year ended December 31, 2009, the Company sold 50,000 shares resulting in a realized loss of $(780) and recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $5,138, which was recorded as other comprehensive income. During the year ended December 31, 2010, the Company received 700,300 restricted shares of Organa valued to $7,003 pursuant to a debt settlement and sold Nil Organa shares. The Company recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $2,541, which was recorded as other comprehensive income (loss). As a result, the carrying value of the available for sale shares of Organa is $4,504 as at December 31, 2010.

F-6

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 3 – AVAILABLE–FOR-SALE SECURITIES – RELATED PARTIES (continued)

During the nine month period ended September 30, 2011, the Company sold Nil Organa shares and recorded an additional unrealized gain of $422 to September 30, 2011. As a result, the carrying value of the available for sale shares of Organa is $4,926 as at September 30, 2011.

Legacy

The Company owns common shares of Legacy Wine & Spirits International Ltd. (“Legacy”), a public company with directors and significant shareholders in common, that does not represent a position of control of or significant influence over Legacy.  During 2007 the Company recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $590,993. During the year ended December 31, 2008, the Company acquired 23,200 shares valued at $19,532 sold 99,400 shares resulting in a realized gain of $28,645 (net of commissions of $2,132) and recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $275,121, which was recorded as other comprehensive income. During the year ended December 31, 2009, the Company sold 301,600 shares resulting in a realized gain of $180,398 and recorded an other-than-temporary loss in the carrying value of its available-for-sale securities totaling $34,001.During the year ended December 31, 2010, the Company the Company received 1,451,360 restricted shares of Legacy valued to $72,568 pursuant to a debt settlement and sold Nil Legacy shares. The Company recorded an other-than-temporary loss in the carrying value of its available-for-sale securities totaling $47,069. As a result, the carrying value of the available for sale shares of Legacy is $37,535 as at December 31, 2010.

During the nine month period ended September 30, 2011, the Company sold Nil Legacy shares and recorded an additional unrealized loss of $ (26,978) to September  30, 2011. As a result, the carrying value of the available for sale shares of Legacy is $10,557 as at September 30, 2011.

Available for sale securities – related parties include the following:

	September 30,		December 31,
	2011		2010
2,345,937  (2010-2,345,937) shares of Legacy Wine & Spirits	$	10,557	$	37,535
703,750  (2010- 703,750) shares of  Organa Gardens International		4,926		4,504
	$	15,483	$	42,039

NOTE 4 – INTANGIBLE ASSETS PURCHASED FROM TERRALENE FUELS

On August 24, 2010, the Company signed an agreement with Global Terralene Inc. for the acquisition of all assets pertaining to Terralene Fuels. Under the terms of the agreement, the Company will issue 7,000,000 restricted common shares to Global Terralene Inc. in two phases. On November 30, 2010, the Company approved and issued 5,000,000 restricted common shares valued at $125,000 to Global Terralene Inc. The Company will issue a further 2,000,000 restricted common shares once certain documents outlined in the agreement are prepared and exchanged by both parties. Terralene Fuel is a patented fuel alternative formulation that is the equivalent of 87 octane regular gasoline and utilizes renewable energy sources in 45% of its composition. Terralene’s unique fuel reduces greenhouse gas and other environmental damaging emissions and can be easily integrated into the existing fuel infrastructure.

During the nine month period ended September 30,2011, the Company incurred $5,556 in additional patent costs. (2010 - $Nil)

F-7

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 4 – INTANGIBLE ASSETS PURCHASED FROM TERRALENE FUELS (con’t)

Investment in Terralene Fuels costs are made up as follows:

	September 30, 2011		December 31, 2010
Patents, trademarks, copyright	$	80,556	$	75,000
Formulas, reports, studies		25,000		25,000
Schematics, proprietary info		15,000		15,000
Website		5,000		5,000
Terralene brandname		5,000		5,000
	$	130,556	$	125,000

Amortization for intangible assets with definitive useful life purchased from Terralene Fuels, specifically the website, will be recorded over the estimated useful life of the website using the straight-line method for financial statement purposes when the product or service has been delivered or performed and invoiced by the Company and it begins to recognize revenues.

NOTE 5 – FILM PRODUCITON AND DEVELOPMENT COSTS

Film Production and development costs at September 30, 2011 are made up as follows:

	Gross Cost		Accumulated amortization		2008 writedown of film rights and related costs			Net Cost September 30,  2011		Net Cost December31, 2010
Acquired films and film rights	$	84,970	$	-		(84,969	)	$	1	$	1
Films in progress		5,793		-		(5,793	)		-		-
	$	90,763	$	-	$	(90,762	)	$	1	$	1

NOTE 6 – OTHER ASSETS

The Company signed an Agreement dated March 28, 2008 with EnEco Industries Ltd. ("EnEco"), a waste management company that has been in operation for fifteen years, to form an alliance for a renewable energy entity, where the Company will take majority interest in a series of Municipal Solid Waste (garbage) fueled Recycling and Resource Recovery Plants designed by EnEco. These plants will be in strategically located areas diverting tons of garbage from landfills and drastically reducing greenhouse gas outputs. As of  September 30, 2011 and December 31, 2010, the Company has incurred $Nil on this project.

In April, 2010 the Company has signed a Memorandum of Understanding with Tectane Technologies Corporation (Tectane), a Montreal-based Company in the Alternative Fuel industry for over 30 years. The MOU outlined the plans for Golden Spirit to acquire all world-wide patents and patents pending technologies relative to Tectane’s AQUAGAS, AQUAHOL Alternative Energy System and New Dual H2O Engine Oxygenerator. During the second quarter of 2010, the Company advanced Tectane $9,657 for expenses as per the MOU. After completing its due diligence, the Company and Tectane mutually agreed not to proceed with a formal agreement. The $9,657 expenses incurred were charged to operations during the year ended December 31, 2010.

F-8

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 7 – DEFERRED COMPENSATION

The Company has recorded as deferred compensation prepaid amounts for consulting and management services contracts paid for by issuance of shares of common stock as follows:

a)   On November 18, 2009, the Company entered into an agreement with a consultant, for a eighteen month term, whereby the consultant provides consulting services to the Company (valued at $17,500) in exchange for 250,000 shares of the Company’s common stock.  During the nine months ended September 30, 2011, a total of $4,378 has been expensed (December 31, 2010 - $11,664).

b)   On November 18, 2009, the Company entered into an agreement with Palisades Financial Ltd. (“Palisades”), a private company controlled by a significant shareholder, with a two-year term, whereby Palisades provides investment-banking services to the Company (valued at $14,000) in exchange for 200,000 restricted shares of the Company’s common stock.  During the nine months ended September 30, 2011, a total of $5,247 has been expensed (December 31, 2010 - $6,996).

c)   On November 18, 2009 the Company entered into an agreement with Compte de Sierge Accomodative Corp. (“Compte”), a private company controlled by a significant shareholder, with a eighteen month term, whereby Compte provides investor relations services to the Company (valued at $17,500) in exchange for 250,000 restricted shares of the Company’s common stock.  During the nine months ended September 30, 2011, a total of $4,378 has been expensed (December 31, 2010 - $11,664).

d)   On May 15, 2010, the Company entered into an agreement with Domain Land Holdings Ltd. (“Domain”), a private company controlled by a significant shareholder, with a two-year term, whereby Domain provides investment-banking services to the Company (valued at $30,000) in exchange for 750,000 restricted shares of the Company’s common stock.  During the nine months ended September 30, 2011, a total of $11,250 has been expensed (December 31, 2010 - $9,375).

e)   On May 15, 2010, the Company entered into an agreement with 103244 Alberta Ltd. (“1063244”), a private company controlled by a significant shareholder, with a two-year term, whereby 1063244 provides investor relations services to the Company (valued at $30,000) in exchange for 750,000 restricted shares of the Company’s common stock.  During the nine months ended September 30, 2011, a total of $11,250 has been expensed (December 31, 2010 - $9,375).

As at September 30, 2011, the unamortized portion of the deferred compensation totaled $19,632 (December 31, 2010 - $56,135).

NOTE 8 – CAPITAL STOCK

The Company’s capitalization is 500,000,000 common shares with a par value of $0.0001 per share.  No preferred shares have been authorized.

(1)  2011 Stock Transactions

On January 13, 2011, the Company issued 25,000 restricted common shares valued at $750 to a new director for his services and issued 250,000 restricted common shares valued at $7,500 to a consultant for his services in relation to the company’s Terralene Fuels project.

The Company issued a total of 12,000,000 common shares pursuant to the exercise of options under the Company’s 2011 Stock Incentive and Option Plan at prices between $0.03 - $0.035 per share to satisfy debt to related parties in the amount of $171,000 and for consulting services in the amount of $197,250.

(2)   2011 Stock Options

On January 18, 2011, the Company filed a Registration Statement on Form S-8 to cover 12,000,000 shares of common stock to be granted pursuant to the Company’s 2011 Stock Incentive and Option Plan.

F-9

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 8 – CAPITAL STOCK (con’t)

During the nine months ended September 30, 2011, the Company issued a total of 12,000,000 common shares pursuant to the exercise of options under the Company’s 2011 Stock Incentive and Option Plan at prices between $0.03 - $0.035 per share to satisfy debt to related parties in the amount of $171,000 and for consulting services in the amount of $197,250.

The Company’s stock option activity is as follows:

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance, December 31, 2009		3,002,517		$	0.20	2.67 years
Granted during 2010		14,516,667			-
Exercised during 2010		(14,516,667	)		-
Balance, December 31,2010		3,002,517			-
Granted during 2011		12,000,000			0.03
Exercised during 2011		(12,000,000	)
Balance, September 30, 2011		3,002,517		$	0.20	2.67 years

(3)   2010 Stock Transactions

During the nine months ended September 30, 2010, 515,000 incentive stock options were granted and immediately  exercised at $0.04 per share to satisfy debts  related parties in the amount of $20,600 , 5,610,000 incentive stock options were granted and immediately  exercised at $0.02 per share to satisfy debts related parties in the amount of $112,200 and 5,200,000 incentive stock options were granted and immediately  exercised at $0.03 per share to satisfy debts related parties in the amount of  $156,000. Accordingly, no compensation expense was recorded.

During the nine months ended September 30, 2010, 1,500,000 restricted common shares were issued valued at $60,000 pursuant to deferred compensation contracts with related parties. See note 6.

(4)    2010 Stock Options

On April 21, 2010, the Company filed a Registration Statement on Form S-8 to cover 10,000,000 shares of common stock to be granted pursuant to the Company’s 2010 Stock Incentive and Option Plan.

During the nine months ended June 30, 2010, 515,000 incentive stock options were granted and immediately  exercised at $0.04 per share to satisfy debts  related parties in the amount of $ 20,600 ,5,610,000 incentive stock options were granted and immediately  exercised at $0.02 per share to satisfy debts to related parties in the amount of $ 112,200 and 5,200,000 incentive stock options were granted and immediately  exercised at $0.03 per share to satisfy debts related parties in the amount of  $156,000.

The Company’s stock option activity is as follows:

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance, December 31, 2008		2,351,787		$	0.20	2.67 years
Granted during 2008		-			-
Exercised during 2008		-			-
Granted during 2009		3,900,000			-
Exercised during 2009		(3,900,000	)		0.03
Granted during 2010		11,325,000			-
Exercised during 2010		(11,325,000	)		0.03
Balance, September 30, 2010		2,351,787		$	0.09	2.67 years

F-10

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 9 – RELATED PARTY TRANSACTIONS

During the nine months ended September 30, 2011, companies controlled by significant shareholders earned $36,503 (2010 - $33,993) pursuant to deferred compensation services contracts (refer to Note 7).

During the nine months ended September 30, 2011, the Company paid $5,743 (2010 -$7,887) to directors for management fees.

During the nine months ended September 30, 2011, the Company incurred expenses for office rent of $23,187 (2010 - $20,487) to a private company controlled by a significant shareholder.

The following amounts are due to related parties at:

	September 30, 2011		December 31, 2010
Significant shareholders	$	32,466	$	129,755

All related party transactions are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

As of August 1, 2010, the Company has leased 1250 sq. ft of office space from Holm Investments Ltd. at $2,500 per month for a period of 3 years.

NOTE 11 – INCOME TAXES

As of September 30, 2011, the Company had net operating loss carryforwards of approximately $17,940,000 that may be available to reduce future years' taxable income and will expire between the years 2012 - 2032.  Availability of tax losses is subject to change of ownership limitations under Internal Revenue Code 382.  Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carryforwards.

F-11

GOLDEN SPIRIT ENTERPRISES LTD.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

(unaudited)

NOTE 12 – SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES

Supplemental disclosure of non-cash investing and financing activities:

Cash paid during the nine months ended September 30, 2011 and 2010 for:	2011		2010
Interest	$	-	$	-
Income taxes	$	-	$	-
Shares issued for debt settlement	$	171,000	$	228,800
Shares issued for deferred compensation	$	-	$	60,000

During the nine month period ended September 30, 2011, the Company issued a total of 12,000,000 common shares pursuant to the exercise of options under the Company’s 2011 Stock Incentive and Option Plan at prices between $0.03 - $0.035 per share to satisfy debt to related parties in the amount of $171,000 and for consulting services in the amount of $197,250.

.

The Company paid no cash for interest and income taxes for the nine months ended September 30, 2011 and 2010.

NOTE 13 – SUBSEQUENT EVENTS

During the fourth quarter, Golden Spirit’s Management reports that the Company will be changing its name to Terralene Fuels Corporation to better reflect the business direction of the Company. The name change will not involve a change in authorized or issued common shares.

F-12

Item 2. Management’s Discussion and Analysis or Plan of Operation.

The following should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

We changed our name from Power Direct, Inc., to 2UOnline.com, Inc. by filing a Certificate of Amendment to our Certificate of Incorporation on January 31, 2000. We also changed our trading symbol from "PWDR" to "TWOU" in order to reflect our decision to shift our focus from oil and gas production to Internet- related activities. Our symbol was then changed to "TWOUE".  On or about April 18, 2000, we were removed from the Over-the-Counter Bulletin Board ("OTCBB") for failure to comply with NASD Rule 6530, which requires any company listed on the OTCBB to be current in its public reporting obligations pursuant to the Securities and Exchange Act of 1934. The Company was re-instated on the OTCBB on October 7, 2002 under the symbol "TWOU". The Company filed a certificate of amendment to its Articles of Incorporation with the State of Delaware on October 1, 2003 to change its name to Golden Spirit Minerals Ltd. The name change reflects management's decision to shift the Company's focus from internet-based business development to mineral exploration. On October 8, 2003, the trading symbol for the Company became "GSPM". On October 19, 2004, the Company changed its name to Golden Spirit Mining Ltd. and the trading symbol was "GSML". On July 18, 2005 the Company changed its name to Golden Spirit Gaming Ltd. and the trading symbol was “GSGL”. On June 30, 2006, the Company changed its name to Golden Spirit Enterprises Ltd. and the trading symbol is currently “GSPT”.

During the third quarter, the Company filed the necessary documentation to change its name to Terralene Fuels Corporation to better reflect the business direction of the Company. The name change will not involve a change in authorized or issued common shares.

The Company will be involved in the development, production, financing and packaging of innovative film and television programming. In addition, the Company has signed an agreement with Eneco Industries to participate in a series of Municipal Solid Waste (garbage) fueled Recycling and Resource Recovery Plants. The Agreement calls for a joint venture utilizing EnEco's expertise and technology to develop a municipal solid waste (garbage) recycling and biomass derived renewable energy facility. Golden Spirit and EnEco will build and operate a series of solid waste recycling and biomass derived renewable energy facility with greenhouse and algae subsystems that will utilize our Thermal Oxidation Process System (TOPS) technology to generate electricity for sale to the local power grid. Further details on the new Golden Spirit - Eneco project can be viewed on our website www.goldenspirit.ws.

On August 24, 2010, the Company signed an agreement with Global Terralene Inc. for the acquisition of all assets pertaining to Terralene Fuels. Under the terms of the agreement, the Company will issue 7,000,000 restricted common shares to Global Terralene Inc. in two phases. On November 30, 2010, the Company approved and issued 5,000,000 restricted common shares valued at $125,000 to Global Terralene Inc. The Company will issue a further 2,000,000 restricted common shares once certain documents outlined in the agreement are prepared and exchanged by both parties. Terralene Fuel is a patented fuel alternative formulation that is the equivalent of 87 octane regular gasoline and utilizes renewable energy sources in 45% of its composition. Terralene’s unique fuel reduces greenhouse gas and other environmental damaging emissions and can be easily integrated into the existing fuel infrastructure.Further details on the new Golden Spirit - Terralene project can be viewed on our website www.terralenefuels.com.

4

Our Investment in Available for sale securities – related parties

Organa

The Company owns common shares of Organa Gardens International Inc. (“Organa”), a public company with directors and significant shareholders in common that does not represent a position of control of or significant influence over Organa.  During 2007 the Company recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $3,775, which was recorded as other comprehensive income (loss).  During the year ended December 31, 2008, the Company recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $5,612 which was recorded as other comprehensive income (loss). During the year ended December 31, 2009, the Company sold 50,000 shares resulting in a realized loss of $(780) and recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $5,138, which was recorded as other comprehensive income. During the year ended December 31, 2010, the Company received 700,300 restricted shares of Organa valued to $7,003 pursuant to a debt settlement and sold Nil Organa shares. The Company recorded an unrealized loss in the carrying value of its available-for-sale securities totaling $2,541, which was recorded as other

comprehensive income (loss). As a result, the carrying value of the available for sale shares of Organa is $4,504 as at December 31, 2010.

During the nine month period ended September 30, 2011, the Company sold Nil Organa shares and recorded an additional unrealized gain of $422 to September 30, 2011. As a result, the carrying value of the available for sale shares of Organa is $4,926 as at September 30, 2011.

Legacy

The Company owns common shares of Legacy Wine & Spirits International Ltd. (“Legacy”), a public company with directors and significant shareholders in common, that does not represent a position of control of or significant influence over Legacy.  During 2007 the Company recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $590,993. During the year ended December 31, 2008, the Company acquired 23,200 shares valued at $19,532 sold 99,400 shares resulting in a realized gain of $28,645 (net of commissions of $2,132) and recorded an unrealized gain in the carrying value of its available-for-sale securities totaling $275,121, which was recorded as other comprehensive income. During the year ended December 31, 2009, the Company sold 301,600 shares resulting in a realized gain of $180,398 and recorded an other-than-temporary loss in the carrying value of its available-for-sale securities totaling $34,001.During the year ended December 31, 2010, the Company the Company received 1,451,360 restricted shares of Legacy valued to $72,568 pursuant to a debt settlement and sold Nil Legacy shares. The Company recorded an other-than-temporary loss in the carrying value of its available-for-sale securities totaling $47,069. As a result, the carrying value of the available for sale shares of Legacy is $37,535 as at December 31, 2010.

During the nine month period ended September 30, 2011, the Company sold Nil Legacy shares and recorded an additional unrealized loss of $ (26,978) to September 30, 2011. As a result, the carrying value of the available for sale shares of Legacy is $10,557 as at September 30, 2011.

Available for sale securities – related parties include the following:

	September 30,		December 31,
	2011		2010
2,345,937  (2010-2,345,937) shares of Legacy Wine & Spirits	$	10,557	$	37,535
703,750  (2010- 703,750) shares of  Organa Gardens International		4,926		4,504
	$	15,483	$	42,039

5

FILM PRODUCTION & DEVELOPMENT SECTOR

Film Production and development costs at September30, 2011 are made up as follows:

	Gross Cost		Accumulated amortization		2008 writedown of film rights and related costs			Net Cost September 30, 2011		Net Cost December31, 2010
Acquired films and film rights	$	84,970	$	-		(84,969	)	$	1	$	1
Films in progress		5,793		-		(5,793	)		-		-
	$	90,763	$	-	$	(90,762	)	$	1	$	1

WASTE ENERGY SECTOR

The Thermal Oxidation Process System (TOPS) Greencycle Gasification plants decompose organic matter (with heat and air) and recover non-organics by utilizing specialized equipment and is a proven alternative to landfills. Greencycle uses low heat (500-600 Celsius) to convert all the carbon locked up in unsorted garbage into a form where it produces high quality heat through a second stage gas oxidizer running at around 1,100 Celsius. This process creates energy, enough to make electrical energy and support district heating / greenhouses. The Greencycle system provides controlled conditions to utilize Carbon Dioxide (CO2) for accelerated plant growth in greenhouses and algae farms.  The other non-carbon materials in garbage, such as aluminum, tin, copper and stainless steel, and can be easily separated after all the carbon has been removed without melting or slagging. Micron sized metals, silica, calcium etc, are also sorted out for re-use by using the Ash Recycling and Recovery Equipment (ARRE) sub-system.

As of September 30, 2011, the Company has not secured any facilities to construct the Gasification Plant, nor has it incurred any other expenditures for the nine month period ended September 30, 2011 (2010- $Nil)

ALTERNATIVE FUELS SECTOR

On August 24, 2010, the Company signed an agreement with Global Terralene Inc. for the acquisition of all assets pertaining to Terralene Fuels. Under the terms of the agreement, the Company will issue 7,000,000 restricted common shares to Global Terralene Inc. in two phases. On November 30, 2010, the Company approved and issued 5,000,000 restricted common shares valued at $125,000 to Global Terralene Inc. The Company will issue a further 2,000,000 restricted common shares once certain documents outlined in the agreement are prepared and exchanged by both parties. Terralene Fuel is a patented fuel alternative formulation that is the equivalent of 87 octane regular gasoline and utilizes renewable energy sources in 45% of its composition. Terralene’s unique fuel reduces greenhouse gas and other environmental damaging emissions and can be easily integrated into the existing fuel infrastructure.

During the nine month period ended September 30, 2011, the Company incurred $5,556 in additional patent costs. (2010- $Nil)

6

Investment in Terralene Fuels costs are made up as follows:

	June 30,  2011		December 31, 2010
Patents, trademarks, copyright	$	80,556	$	75,000
Formulas, reports, studies		25,000		25,000
Schematics, proprietary info		15,000		15,000
Website		5,000		5,000
Terralene brandname		5,000		5,000
	$	130,556	$	125,000

Amortization for intangible assets with definitive useful life purchased from Terralene Fuels, specifically the website, will be recorded over the estimated useful life of the website using the straight-line method for financial statement purposes when the product or service has been delivered or performed and invoiced by the Company and it begins to recognize revenues.

Liquidity and Capital Resources.

At September 30, 2011, we had total assets of $146,088, including current assets in cash of $48. We have film production & development costs of $1, available for sale securities of $15,483, and intangible assets of $130,556. As of December 31, 2010, we had total assets of $167,863. The decrease in assets is due to a decrease in cash and decrease in the value of available for sale securities – related parties.

At September 30, 2011, we had current liabilities of $64,653, which was represented by accounts payable and accrued liabilities of $32,187 and due to related parties in the amount of $32,466. As of December 31, 2010 we had total current liabilities of $161,450. The decrease in liabilities was due to a reduction the amounts due to related parties. At September 30, 2011, we had a working capital deficiency of $64,605. (December 31, 2010 - $160,626).

We do not believe that our current cash resources will be able to maintain our current operations for an extended period of time.  We will be required to raise additional funds or arrange for additional financing over the next 12 months to adhere to our development schedule, mainly with respect to advancing the Terralene project closer to the goal of marketing the product.  No assurance can be given, however, that we will have access to additional cash in the future, or that funds will be available on acceptable terms to satisfy our working capital requirements. If we are not able to arrange for additional funding or if our officers, directors and shareholders stop advancing funds to us, we may be forced to make other arrangements for financing such as loans or entering into strategic alliances. We have not identified any alternative sources of financing.

Results of Operations

We have realized minimal revenues from operations to date. Loss from operations for the three month period ended September 30, 2011 was $34,339 (2010 - $132,863). This decrease in loss was due to a decrease in consulting fees.

From inception to September 30, 2011, we have incurred cumulative net losses of $17,939,524 resulting primarily from a write-down and equity loss in Organa Gardens International Inc. (a related party) of $1,394,280, a $600,000 property option loss as a recorded value of certain restricted shares issued to Legacy Wine & Spirits International Ltd. (a related party – see our Investment in Available for sale securities - Legacy Wine & Spirits International Ltd. above) and general and administrative expenses of $16,238,317, the majority of which is made up of consulting fees and stock based compensation expense totaling $7,829,609, write-down of URL costs of $1,571,657 and write-down of technology license of $2,055,938.

7

The cash and equivalents constitute our present internal sources of liquidity. Because we are not generating any significant revenues, our only external source of liquidity is the sale of our capital stock and any advances from officers, directors or shareholders.

To address the going concern problem discussed in our financial statements, we will require additional working capital.  We will also require additional funds to implement our business strategies, including funds for:

·   payment of increased operating expenses, and further implementation of film industry business strategies.

·   payment of undetermined expenses relating to the Eneco and Terralene ventures (see above)

No assurance can be given; however, that we will have access to the capital markets in the future, or that financing will be available on acceptable terms to satisfy our cash requirements needed to implement our business strategies. Our inability to access the capital markets or obtain acceptable financing could have a material adverse effect on our results of operations and financial condition and could severely threaten our ability to operate as a going concern.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary as a result of a number of factors.

Our Plan of Operation for the Next 12 Months.  We anticipate that we will need to raise additional capital within the next 12 months in order to continue as a going concern. Therefore, additional capital may be raised through additional public or private financings, as well as borrowings and other resources.  To the extent that additional capital is raised through the sale of equity or equity-related securities, the issuance of such securities could result in dilutionof our stockholders.  There can be no assurance that additional funding will be available on favorable terms, if at all.  If adequate funds are not available within the next 12 months, we may be required to curtail our operations significantly or to obtain funds through entering into arrangements with collaborative partners or others that may require us to relinquish rights to certain of our assets that we would not otherwise relinquish.

We do anticipate certain expenditures within the next 12 months for our corporate projects.  We do not anticipate any significant research and development within the next 12 months, nor do we anticipate that we will lease or purchase any significant equipment within the next 12 months. We do not anticipate a significant change in the number of our employees within the next 12 months. We are not aware of any material commitment or condition that may affect our liquidity within the next 12 months.

Off-Balance Sheet Arrangements

Our company has not entered into any off balance sheet arrangements.

8

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of September 30, 2011, we had cash in the amount of $48. We have not generated any significant revenues since inception and have incurred a net loss of $17,939,524 from our inception on September 13, 1999 to September 30, 2011. Our current operating funds are insufficient to cover any additional costs for our film production & distribution sector or our waste energy sector. Golden Spirit Enterprises does not expect significant start up costs to complete the installation of Gasification Plants for its waste energy project, nor does it expect significant cost relating to the distribution of its films inventory. The newly acquired Terralene project has had all the research and development already completed and the Company will incur costs to get the product to market, which are not yet determinable. It will have to obtain funds through entering into arrangements with collaborative partners or others to accomplish these expenditures. However, we do not have any specific plans for raising the required funds. There is no assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our projects.

ITEM 4. Controls and Procedures.

Our management carried out an evaluation with the participation of our Chief Executive Officer who serves as our principal executive officer and principal financial and accounting officer, required by Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act.

Based on this evaluation, our Chief Executive Officer and principal financial and accounting officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective such that the information relating to our company required to be disclosed in our SEC reports (i) is recorded processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosures.

The weakness identified by our management in the quarter ended March 31, 2001 was a lack of a timely review by corporate management. This weakness was corrected by management by conducting a timely review resulting in the timely filing of our quarterly report on Form 10-Q for the quarterly period ended June 30, 2011 and September 30, 2011.

This quarterly report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

9

PART II - OTHER INFORMATION

ITEM 1.     Legal Proceedings

None

ITEM 1A.    Risk Factors

Not applicable

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None

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

The Company’s capitalization is 500,000,000 common shares with a par value of $0.0001 per share.  No preferred shares have been authorized.

(1)    2011 Stock Transactions

On January 13, 2011, the Company issued 25,000 restricted common shares valued at $750 to a new director for his services and issued 250,000 restricted common shares valued at $7,500 to a consultant for his services in relation to the company’s Terralene Fuels project.

The Company issued a total of 12,000,000 common shares pursuant to the exercise of options under the Company’s 2011 Stock Incentive and Option Plan at prices between $0.03 - $0.035 per share to satisfy debt to related parties in the amount of $171,000 and for consulting services in the amount of $197,250.

(2)     2011 Stock Options

On January 18, 2011, the Company filed a Registration Statement on Form S-8 to cover 12,000,000 shares of common stock to be granted pursuant to the Company’s 2011 Stock Incentive and Option Plan.

During the nine months ended September 30, 2011, the Company issued a total of 12,000,000 common shares pursuant to the exercise of options under the Company’s 2011 Stock Incentive and Option Plan at prices between $0.03 - $0.035 per share to satisfy debt to related parties in the amount of $171,000 and for consulting services in the amount of $197,250.

.

The Company’s stock option activity is as follows:

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance, December 31, 2009		3,002,517		$	0.20	2.67 years
Granted during 2010		14,516,667			-
Exercised during 2010		(14,516,667	)		-
Balance, December 31,2010		3,002,517			-
Granted during 2011		12,000,000			0.03
Exercised during 2011		(12,000,000	)
Balance, September 30, 2011		3,002,517		$	0.20	2.67 years

(3)   2010 Stock Transactions

During the nine months ended September 30, 2010, 515,000 incentive stock options were granted and immediately exercised at $0.04 per share to satisfy debts  related parties in the amount of $20,600 , 5,610,000 incentive stock options were granted and immediately rcised at $0.02 per share to satisfy debts related parties in the amount of $112,200 and 5,200,000 incentive stock options were granted and immediately exercised at $0.03 per share to satisfy debts related parties in the amount of  $156,000. Accordingly, no compensation expense was recorded.

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During the nine months ended September 30, 2010, 1,500,000 restricted common shares were issued valued at $60,000 pursuant to deferred compensation contracts with related parties.

(4)    2010 Stock Options

On April 21, 2010, the Company filed a Registration Statement on Form S-8 to cover 10,000,000 shares of common stock to be granted pursuant to the Company’s 2010 Stock Incentive and Option Plan.

During the nine months ended June 30,2010,515,000 incentive stock options were granted and immediately  exercised at $0.04 per share to satisfy debts  related parties in the amount of $ 20,600,5,610,000 incentive stock options were granted and immediately  exercised at $0.02 per share to satisfy debts to related parties in the amount of $ 112,200 and 5,200,000 incentive stock options were granted and immediately  exercised at $0.03 per share to satisfy debts related parties in the amount of  $156,000.

The Company’s stock option activity is as follows:

	Number of options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life
Balance, December 31, 2008		2,351,787		$	0.20	2.67 years
Granted during 2008		-			-
Exercised during 2008		-			-
Granted during 2009		3,900,000			-
Exercised during 2009		(3,900,000	)		0.03
Granted during 2010		11,325,000			-
Exercised during 2010		(11,325,000	)		0.03
Balance, September 30, 2010		2,351,787		$	0.09	2.67 years

ITEM 3.  Defaults Upon Senior Securities

None.

ITEM 4. Submission of Matters to Vote of Security Holders

None.

ITEM 5.  Other Information

None.

ITEM 6. EXHIBITS

Exhibit 31.1 - Section 906 Certification of Periodic Report of the Chief Executive Officer.

Exhibit 31.2 - Section 906 Certification of Periodic Report of the Chief Financial Officer.

Exhibit 32.1 - Section 302 Certification of Periodic Report of the Chief Executive Officer.

Exhibit 32.2 - Section 302 Certification of Periodic Report of the Chief Financial Officer.

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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.

	GOLDEN SPIRIT ENTERPRISES LTD.
Date: November 21, 2011	By:   /s/ J. Cruz
	Jaclyn Cruz
	President and Director.
Date: November 21, 2011	By:   /s/ S. Deutsch
	Sharon Deutsch
	Secretary & Treasurer and Director

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