UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

## FORM 10-K/A

(Amendment No. 2)

|Mark One |                                                                                               
|-------- | ----------------------------------------------------------------------------------------------
|[ X ]    | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934    
|         | For the Fiscal Year ended December 31, 2012                                                   
|[   ]    | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

### BALTIA AIR LINES, INC.

(Exact name of Registrant as specified in its charter)

|NEW YORK(State of Incorporation)                                                                                                                                                                                                                                                                                                                                   | 11-2989648(IRS Employer Identification No.)          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------------------------------
|JFK International Airport, Building 151, Jamaica, NY
11430(Address of principal executive offices)(718) 244 8880
(Registrant's telephone number, including area code)                                                                                                                                                                                             
|Title of each class
-None-                                                                                                                                                                                                                                                                                                                                         | Name of each Exchange on which registered
-None-     
|Securities Registered pursuant to Section 12(g) of the Exchange Act:                                                                                                                                                                                                                                                                                              
|Common Stock,(Title of Class)                                                                                                                                                                                                                                                                                                                                      | $.0001 Par Value                                     
|Indicate by check mark if the
Registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes [  ] - - No [X]                                                                                                                                                                                                                       
|Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes [   ] - - No [X]                                                                                                                                                                                                                         
|Indicate by check mark whether the Registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] - - No [  ]
|Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes [X] - - 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 definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):                                                       
|Large accelerated filer [   ] 
Non-accelerated filer [   ]                                                                                                                                                                                                                                                                                                         | Accelerated filer [  ]
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 of 1934).  Yes [ ]   No [X]                                                                                                                                                                                                                        
|The aggregate market value of the voting common equity
            held by non-affiliates as of December 31, 2012 is
            $23,185,507.                                                                                                                                                                                                                     
|The number of shares of the registrant's common stock
            outstanding as of April 15, 2013
            was 2,579,123,580.                                                                                                                                                                                                                                 

---

EXPLANATORY NOTE

This amended report, No 2., is made to correct a typographical error
 introduced by mistake in the 1st Amended 10-K/A, filed April 23, 2013, wherein a single character, albeit rather important, to wit: the Fiscal Year of the Annual Report, which was erroneously stated as "Fiscal Year ended December 31, 2011" when it should have correctly stated "Fiscal Year ended December 31, 2012" as in the original filing on April 16, 2013.
No other changes have been made to the Form 10-K. This Amendment speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures or exhibits made in the original Form 10-Q or 1st 10-K/A.

This report is filed in its entirety for ease of review.

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### TABLE OF CONTENTS

|PART 1   |                                                                                                             
|-------- | ------------------------------------------------------------------------------------------------------------
|Item 1.  | Business                                                                                                    
|Item 1A. | Risk Factors                                                                                                
|Item 1B. | Unresolved Staff Comments                                                                                   
|Item 2.  | Properties                                                                                                  
|Item 3.  | Legal Proceedings                                                                                           
|PART II  |                                                                                                             
|Item 5.  | Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities
|Item 6.  | Selected Financial Information                                                                              
|Item 7.  | Management's Discussion and Analysis of Financial Condition and
Results of Operations                       
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                  
|Item 8.  | Financial Statement Supplementary Data                                                                      
|Item 9.  | Changes in and Disagreements with Accountants on Accounting And
Financial Disclosures                       
|Item 9A  | Controls and Procedures                                                                                     
|Item 9B  | Other Information - Required FD Disclosure of Nonpublic Material Information                                
|PART III |                                                                                                             
|Item 10. | Directors and Executive Officers of the Registrant                                                          
|Item 11. | Executive Compensation                                                                                      
|Item 12. | Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters              
|Item 13. | Certain Relationships and Related Transactions                                                              
|Item 14. | Principal Accountant Fees and Services                                                                      
|PART IV  |                                                                                                             
|Item 15. | Financial Statements and Other Exhibits                                                                     

---

### PART
      I

Item
      1. Business.

Baltia Air Lines, Inc. (the
      "Company" or "Baltia" or "Baltia Air Lines") is a Part 121
      (heavy jet operator) start-up United States airline with
      Government fitness approval and is currently conducting the
      FAA Air Carrier Certification. Upon completion of the Air
      Carrier Certification, Baltia will commence scheduled
      non-stop service from its Base of Operations at Terminal 4,
      JFK Int'l Airport in New York to Pulkovo II Int'l Airport of
      St. Petersburg.Baltia Air Lines, Inc. was organized in the
      State of New York on August 24, 1989.

On December 19, 2008, the
      U.S. Department of Transportation (DOT) issued its Order to
      Show Cause, finding that Baltia Air Lines is fit, willing and
      able to engage in international air transport of persons,
      property and mail. Baltia was awarded the non-stop route from
      JFK International Airport, New York, New York to Pulkovo
      International Airport, St. Petersburg Russia. Baltia was also
      authorized for worldwide charter services. Baltia had filed
      its application with the DOT in October 2007.

On March 20, 2009 the DOT
      awarded Baltia Air Lines its initial frequencies for flights
      from JFK to St. Petersburg.

On August 18, 2009, the
      Company purchased its first Boeing 747 aircraft from Logistic
      Air, Inc.

In the first quarter of
      2010, we leased engines on a power by the hour basis from
      Logistic Air, Inc. The engines have been delivered and
      installed on the aircraft.

In the last quarter of 2010,
      we purchased our second Boeing 747 aircraft from Kalitta
      Air.

Baltia carries $500,000,000
      aircraft liability insurance, and has placed $1.2 billion
      airline liability insurance through JLT Aerospace meeting the
      regulatory requirement in preparation for the commencement of
      revenue service. The Company will carry airline liability
      insurance as required for a US airline by DOT
      regulation.

Following the commencement
      of service on the JFK-St. Petersburg route, Baltia's
      objective is to develop its route network to Russia, Latvia,
      Ukraine, and Belarus.

Baltia intends to provide
      full service, i.e. passenger, cargo and mail. Baltia has two
      registered trademarks "BALTIA" and "VOYAGER CLASS" and five
      trademarks are subject to registration.

There is currently no
      non-stop service from JFK to St. Petersburg. Connecting
      service is provided mainly by foreign carriers. Finnair,
      Lufthansa and SAS are the leading competitors in the
      US-Russia market. KLM, British Airways, Air France, Austrian
      Airlines, and Swiss International also provide service.
      However, foreign carriers are required to have intermediate
      stops at transit airports in their respective countries
      (Helsinki, Frankfurt, Stockholm, Copenhagen, etc.) because
      they are "third nation" airlines and as such cannot fly
      directly between the US and Russia (only a US airline as well
      as a reciprocating Russian airline is eligible to fly
      nonstop). Delta and two Russian airlines, Aeroflot and
      Transaero, currently operate between JFK and Moscow. With the
      exception of the JFK-Moscow route, there exists no non- stop
      competitive air transportation service on the routes for
      which Baltia intends to apply.

Baltia's objective is to
      establish itself as the leading non-stop carrier in the
      market niche over the North Atlantic with operations with
      profitable growth over time. In order to accomplish this
      objective, we intend to establish and maintain high quality
      service standards which we believe will be competitive with
      the European airlines currently providing connecting

flights. Baltia does not
      expect to be in direct competition with deep discount
      airlines, including several East European airlines and the
      offspring of the former Soviet airline Aeroflot, which
      provide connecting flights.

Baltia intends to provide
      First, Business, and Voyager Class accommodations. Baltia's
      passenger market strategy is tailored to particular
      preferences of the various segments of its customer base,
      with marketing attention particularly focused on American
      business travelers with interests in Russia who require high
      quality, non-stop service from the US to Russia.

Baltia's initial marketing
      strategy is based on existing agencies specializing in the
      market, selected travel and business publications,
      supplemented by direct mailings to corporate travel planners,
      and individual American businesses that are currently
      involved in Russia. Soon after the inauguration of flight
      service, Baltia plans to implement its frequent flyer
      program. As the marketing matures, Baltia plans to advertise
      to the general public throughout the US, and in Russia.
      Baltia also plans to sponsor selected industry and trade
      events in the US and in St. Petersburg.

Baltia intends to provide
      customer service and reservations centers in New York and in
      St. Petersburg, to list Baltia's schedules and tariffs in the
      Official Airline Guide, and provide world-wide access to
      reservations on Baltia's flights through a major Computer
      Reservations and Ticketing System ("CRS").

The Company intends to
      activate its reservations service when the DOT issues its
      order authorizing Baltia to sell tickets (expected to be
      approximately 30 to 45 days before the inaugural
      flight).

Baltia has identified the
      following market segments in the U.S.-Russia market: (i)
      Business Travelers, (ii) General Tourism, (iii) Ethnic
      Travelers, (iv) Special Interest Groups, (v) Professional
      Exchanges, and (vi) Government and Diplomatic Travel.

Baltia believes that the
      direct non-stop service to be offered by it will be superior
      to the stop-over service currently offered by foreign
      airlines. A comparison between the two services with respect
      to passenger convenience and cargo transport efficiency is
      set forth below.

BALTIA - US flag, non-stop
      service:

With non-stop service, a
      passenger can fly from JFK to St. Petersburg in about 8 hours
      in a Boeing B747 wide body airplane. Cargo arrives
      containerized, palletized, and secure.

Foreign, stop-over
      journeys:

With stop-over service, it
      would take a passenger 10 to 18 hours to fly through
      Helsinki, Copenhagen, Moscow, or Frankfurt on a foreign
      carrier. In addition, passengers must change to narrow-body
      aircraft at a layover airport. Cargo is "broken up" and
      manually loaded onto narrow-body aircraft, or trucked from
      Helsinki.

Because of the increased
      reliability and comfort of a non-stop flight, Baltia expects
      to capture a portion of the existing traffic.

With the Boeing 747
      wide-body aircraft Baltia intends to provide cargo service
      from JFK to St. Petersburg, offering containers, pallets, and
      block space arrangements. Baltia expects to carry contract
      cargo for express shippers. Baltia also plans to market its
      own "Baltia Courier", "Baltia Express", and "Baltia Priority"
      express service for letters and packages. Baltia also expects
      revenues from diplomatic mail and cargo, under the Fly
      America Act.

Baltia has passenger service
      and ground service arrangements at JFK and at Pulkovo II
      Airport in St. Petersburg. As a US carrier flying into a
      foreign country, Baltia will be eligible to the same degree
      of priority that a foreign carrier receives when arriving in
      the US.

Baltia intends to start the
      JFK-St. Petersburg service with one round- trip flight per
      week, then increase the frequency to three round trips, and
      then to five round trips.

Baltia plans to build
      operating modules and apply them in developing new markets.
      Once established, Baltia plans to duplicate its JFK-St.
      Petersburg standards on flights on other transatlantic
      routes.

Additional revenues from
      charter flying. Concurrently with with its Part 121 air
      carrier certification ("Part 121") for scheduled service,
      Baltia is certifying for world wide charter service. Baltia
      plans to utilize aircraft time available between scheduled
      service, to earn additional revenues from charters. We may
      also qualify our aircraft for military contracts.

As of December 31, 2012,
      Baltia's staff of twenty-five includes professionals who have
      extensive major US airline experience in aircraft
      maintenance, airline operations, airline regulatory
      compliance, reservation, info technology, passenger service,
      and administration.

Item
      1A. Risk Factors.

We are a smaller reporting
      company as defined by Rule 12b-2 of the Securities Exchange
      Act of 1934 and are not required to provide the information
      under this item.

Item
      1B. Unresolved Staff Comments.

We are a smaller reporting
      company as defined by Rule 12b-2 of the Securities Exchange
      Act of 1934 and are not required to provide the information
      under this item.

Item
      2. Properties.

The Company rents space at
      Concourse A, Terminal 4, JFK International Airport and has
      headquarters at Building 151, JFK Airport. Baltia has an
      office space in Pulkovo Airport, St. Petersburg, Russia. In
      addition, in 2012, Baltia opened its operations office in at
      Willow Run Airport, Ypsilanti, Michigan.

Item
      3. Legal Proceedings.

None.

Item 4. Reserved

PART
      II.

Item
      5. Market for Registrant's Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities.

The following table sets
      forth the high and low sales prices, as quoted by the OTCBB,
      for our common stock for each quarter during our two most
      recent fiscal years ended December 31, 2011 and 2012. These
      quotations reflect inter-dealers prices, without retail
      mark-ups, mark-downs or commissions, and may not represent
      actual transactions.

|Fiscal Quarter
            Ended | High | Low
|-------------------------------- | ---- | ---
|March 31, 2011                   | .04  | .04
|June 30, 2011                    | .04  | .04
|September 30,
            2011   | .05  | .04
|December 31,
            2011    | .05  | .04
|March 31, 2012                   | .05  | .03
|June 30,2012                     | .04  | .01
|September 30,
            2012   | .04  | .01
|December 31,
            2012    | .04  | .01

The Company currently
      estimates that there are more than 1000 holders of record of
      its common stock. Given its continuing need to retain any
      earnings to fund its future operations and desired growth,
      the Company has not declared or paid, nor does it currently
      anticipate declaring or paying for the foreseeable future,
      any dividends on the Company's common stock.

Equity
      Compensation Plan

The Company’s
      compensation plan is a generic plan that was adopted by its
      Board without the securities holders approval. Under this
      plan, Baltia’s President is authorized to negotiate
      compensation in shares to obtain goods and services necessary
      to achieve the Company’s goal – commencing
      commercial flights. All services and goods supplied to Baltia
      are essential to that goal. Baltia’s president reports
      to the Board of Directors about the distribution of shares,
      including shares issued to each officer and director, and the
      aggregate number of shares issued to all non-employees, such
      as directors, consultants, advisors, vendors, suppliers, or
      lenders.

Baltia currently has no
      written purchase, savings, option, bonus, appreciation,
      profit sharing, thrift, incentive, or pension.



Item
      6. Selected Financial Information.

We are a smaller reporting
      company as defined by Rule 12b-2 of the Securities Exchange
      Act of 1934 and are not required to provide the information
      under this item.

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

The following discussion
      includes certain forward-looking statements within the
      meaning of the safe harbor protections of Section 27A of the
      Securities Act of 1933, as amended, and Section 21E of the
      Securities Exchange Act of 1934, as amended. Statements that
      include words such as "believe," "expect," "should," intend,"
      "may," "anticipate," "likely," "contingent," "could," "may,"
      or other future-oriented statements, are forward-looking
      statements. Such forward-looking statements include, but are
      not limited to, statements regarding our business plans,
      strategies and objectives, and, in particular, statements
      referring to our expectations regarding our ability to
      continue as a going concern, generate increased market
      awareness of, and demand for, our service, realize
      profitability and positive cash flow, and timely obtain
      required financing. These forward-looking statements involve
      risks and uncertainties that could cause actual results to
      differ from anticipated results. The forward-looking
      statements are based on our current expectations and what we
      believe are reasonable assumptions given our knowledge of the
      markets; however, our actual performance, results and
      achievements could differ materially from those expressed in,
      or implied by, these forward-looking statements.

Our fiscal year ends on
      December 31. References to a fiscal year refer to the
      calendar year in which such fiscal year ends.

OVERVIEW

The Company was organized in
      the State of New York on August 24, 1989. Its objective is to
      provide scheduled air transportation from the U.S. to Russia,
      and former Soviet Union countries.

Baltia is currently in Phase
      II of the FAA Air Carrier Certification process. Upon
      completion of the Air Carrier Certification, Baltia intends
      to commence scheduled non-stop service from its Base of
      Operations at Terminal 4, JFK Int'l Airport in New York to
      Pulkovo II Int'l Airport of St. Petersburg.

Baltia intends to provide
      full service, i.e. passenger, cargo and mail, and will not be
      dependent upon one or a few major customers. Baltia has two
      registered trademarks "BALTIA" and "VOYAGER CLASS" and five
      trademarks subject to registration.

The accompanying
      consolidated financial statements have been prepared on a
      going concern basis, which contemplates the realization of
      assets and the satisfaction of liabilities in the normal
      course of business. The Company has capital which management
      believes is sufficient to start revenue operations on the
      JFK-St. Petersburg route. The Company's operational success
      may be dependent upon its timely procuring significant
      external debt and/or equity financing to fund its immediate
      and nearer-term operations, and subsequently realizing
      operating cash flows from ticket sales sufficient to sustain
      its longer-term operations and growth initiatives.

PLAN OF OPERATION

We believe that we have
      financial capability to commence revenue flight operations.
      During 2012 and into 2013 we continued to finance our
      operations through the issuance of our common stock. Until
      revenue operations begin, our monthly expenditures for
      administrative and regulatory compliance can be controlled at
      about $200,000-$400,000. Approximately $1,500,000 is budgeted
      for certification tasks, and $500,000 for general and
      administrative expenses. At the time flight service is
      inaugurated the Company plans to have approximately 20
      management and 45 staff personnel.

There can be no assurance
      that additional financing will be available on terms
      favorable to us or at all. If adequate funds are not
      available or are not available on acceptable terms, we may
      not be able to fund operations.

CRITICAL ACCOUNTING
      POLICIES

Our discussion and analysis
      of our financial condition and results of operations are
      based upon our financial statements, which have been prepared
      in accordance with accounting principles generally accepted
      in the U.S. The preparation of our financial statements
      requires us to make certain estimates, judgments and
      assumptions that affect the reported amounts of assets and
      liabilities at the date of the consolidated financial
      statements and the reported amounts of revenues and expenses
      during the reporting period. Our estimates, judgments and
      assumptions are continually re-evaluated based upon available
      information and experience. Because of the use of estimates
      inherent in the financial reporting process, actual results
      could differ from those estimates. Areas in which significant
      judgment and estimates are used include, but are not limited
      to, valuation of long-lived assets and deferred income
      taxes.

Valuation of Long-Lived
      Assets: We review the recoverability of our long- lived
      assets, including buildings, equipment and intangible assets,
      when events or changes in circumstances occur that indicate
      that the carrying value of the asset may not be recoverable.
      The assessment of possible impairment is based on our ability
      to recover the carrying value of the asset from the expected
      future pre-tax cash flows (undiscounted and without interest
      charges) of the related operations. If these cash flows are
      less than the carrying value of such asset, an impairment
      loss is recognized for the difference between estimated fair
      value and carrying value. Our primary measure of fair value
      is based on discounted cash flows. The measurement of
      impairment requires management to make estimates of these
      cash flows related to long-lived assets, as well as other
      fair value determinations.

We amortize the costs of
      other intangibles (excluding goodwill) over their estimated
      useful lives unless such lives are deemed indefinite.
      Amortizable intangible assets are tested for impairment based
      on undiscounted cash flows and, if impaired, written down to
      fair value based on either discounted cash flows or appraised
      values. Intangible assets with indefinite lives are tested
      for impairment, at least annually, and written down to fair
      value as required.

The Company complies with
      FASB ASC Topic 718 "Compensation - Stock Compensation," which
      establishes standards for the accounting for transactions in
      which an entity exchanges its equity instruments for goods or
      services. It also addresses transactions in which an entity
      incurs liabilities in exchange for goods or services that are
      based on the fair value of the entity's equity instruments or
      that may be settled by the issuance of those equity
      instruments. FASB ASC Topic 718 focuses primarily on
      accounting for transactions in which an entity obtains
      employee services in share-based payment transactions. FASB
      ASC Topic 718 requires an entity to measure the cost of
      employee services received in exchange for an award of equity
      instruments based on the grant-date fair value of the award
      (with limited exceptions). That cost will be
      recognized

over the period during which
      an employee is required to provide service in exchange for
      the award the requisite service period (usually the vesting
      period). No compensation costs are recognized for equity
      instruments for which employees do not render the requisite
      service. The grant-date fair value of employee share options
      and similar instruments will be estimated using
      option-pricing models adjusted for the unique characteristics
      of those instruments (unless observable market prices for the
      same or similar instruments are available). If an equity
      award is modified after the grant date, incremental
      compensation cost will be recognized in an amount equal to
      the excess of the fair value of the modified award over the
      fair value of the original award immediately before the
      modification.

Our primary type of
      share-based compensation consists of stock-based awards. We
      use the fair value method in accordance with ASC 718. We also
      may use stock options. We use the Black-Scholes option
      pricing model in valuing options. The inputs for the
      valuation analysis of the options include the market value of
      the Company's common stock, the estimated volatility of the
      Company's common stock, the exercise price of the warrants
      and the risk free interest rate.

|Year | Interest Rate | Dividend Yield | Expected
            Volatility | Expected Life in
            Years
|---- | ------------- | -------------- | ------------------------------- | ----------------------------------
|2011 | 4.4%          | 0.00%          | 200%                            | 1                                 
|2012 | 3.0%          | 0.00%          | 200%                            | 5                                 

Income taxes: The Company
      accounts for income taxes in accordance with FASB ASC Topic
      740 "Income Taxes," which requires accounting for deferred
      income taxes under the asset and liability method. Deferred
      income tax asset and liabilities are computed for difference
      between the financial statement and tax bases of assets and
      liabilities that will result in taxable or deductible amounts
      in the future based on the enacted tax laws and rates
      applicable to the periods in which the differences are
      expected to affect taxable income. Valuation allowances are
      established, when necessary, to reduce the deferred income
      tax assets to the amount expected to be realized.

The determination of the
      Company's provision for income taxes requires significant
      judgment, the use of estimates, and the interpretation and
      application of complex tax laws. Significant judgment is
      required in assessing the timing and amounts of deductible
      and taxable items and the probability of sustaining uncertain
      tax positions. The benefits of uncertain tax positions are
      recorded in the Company's financial statements only after
      determining a more-likely-than-not probability that the
      uncertain tax positions will withstand challenge, if any,
      from tax authorities. When facts and circumstances change,
      the Company reassesses these probabilities and records any
      changes in the financial statements as appropriate.

In accordance with GAAP, the
      Company is required to determine whether a tax position of
      the Company is more likely than not to be sustained upon
      examination by the applicable taxing authority, including
      resolution of any related appeals or litigation processes,
      based on the technical merits of the position. The tax
      benefit to be recognized is measured as the largest amount of
      benefit that is greater than fifty percent likely of being
      realized upon ultimate settlement. De-recognition of a tax
      benefit previously recognized could result in the Company
      recording a tax liability that would reduce stockholders
      equity. This policy also provides guidance on thresholds,
      measurement, de-recognition, classification, interest and
      penalties, accounting in interim periods, disclosure, and
      transition that is intended to provide better financial
      statement comparability among different entities.
      Management's conclusions regarding this policy may be subject
      to review and adjustment at a later date based on factors
      including, but not limited to, on-going analyses of and
      changes to tax laws, regulations and interpretations thereof.
      Generally, the tax filings are no longer subject to income
      tax examinations by major taxing authorities for years before
      2007. Any potential examinations may include questioning the
      timing and amount of deductions, the nexus of income among
      various tax jurisdictions and compliance with U.S. federal,
      state and local tax laws. The Company's management does not
      expect that the total amount of unrecognized tax benefits
      will materially change over the next twelve months.

RESULTS OF OPERATIONS

We had no revenues during
      the fiscal years ended December 31, 2012 and 2011, because
      (1) we did not fly aircraft in passenger, charter, or freight
      service, and (2) we could not sell tickets for those
      services.

Our general and
      administrative expenses decreased by $13,197,702 to
      $11,125,526 during fiscal year ended December 31, 2012
      as compared to an increase of $5,762,390 during the fiscal
      year ended December 31,2011. This decrease resulted from the
      reduction in costs in connection with air carrier
      certification.

Primarily as a result of air
      carrier certification, we incurred a net loss of $13,623,873
      during the fiscal year ended December 31, 2012 as compared to
      a net loss of $25,075,497 during the fiscal year ended
      December 31, 2011.

Our future ability to
      achieve profitability in any given future fiscal period
      remains highly contingent upon us beginning flight
      operations. Our ability to realize revenue from flight
      operations in any given future fiscal period remains highly
      contingent upon us obtaining significant equity infusions
      and/or long-term debt financing sufficient to fund initial
      operations. Even if we were to be successful in procuring
      such funding, there can be no assurance that we will be
      successful in commencing revenue operations or, if commenced,
      that such operations would be profitable.

LIQUIDITY AND CAPITAL
      RESOURCES

Since our inception, we have
      incurred substantial operating and net losses, as well as
      negative operating cash flows. As of December 31, 2012, we
      had cash of $12,326, decrease of $45,064 from the cash
      balance of $57,390 reported at December 31,2011. Our
      stockholders' equity was $147,187 at December 31, 2012, a
      decrease of $2,321,403 from the balance of $2,457,590
      reported at December 31, 2011.

Our operating activities
      utilized $3,683,065 in cash during the fiscal year ended
      December 31, 2012, a decrease of $3,540,116 from the
      $7,223,181 in cash utilized during the fiscal year ended
      December 31, 2011.

Our financing activities
      provided $3,626,882 and $7,807,242 in cash during the fiscal
      year ended December 31, 2012 and 2011, respectively.

Cash flows through investing
      activities was $11,119 for the year ended December 31, 2012,
      an increase of $590,629 from the net cash used by investing
      activities for the year ended December 31, 2011.  The
      increase is attributable to the proceeds of $144,164 received
      from the sale of a used 747 aircraft, partially offset by
      $133,045 used for the purchase of equipment.

Off-Balance Sheet
      Arrangements: We do not have any off-balance sheet
      arrangements which have, or are reasonably likely to have, an
      effect on our financial condition, financial statements,
      revenues or expenses.

Item
      7A. Quantitative and Qualitative Disclosures About Market
      Risk.

We are a smaller reporting
      company as defined by Rule 12b-2 of the Securities Exchange
      Act of 1934 and are not required to provide the information
      under this item.

Item
      8. Financial Statement Supplementary Data.

None.

Item
      9. Changes in and Disagreements with Accountants on
      Accounting And Financial Disclosures

None

Item
      9A(T). Controls and Procedures.

Evaluation of Disclosure
      Controls and Procedures. As of the end of the period covered
      by this report, we conducted an evaluation under the
      supervision and with the participation of our chief executive
      officer and chief financial officer of our disclosure
      controls and procedures (as defined in Rule 13a-15(e) and
      Rule 15d-15(e) of the Exchange Act). Based upon this
      evaluation, our chief executive officer and chief financial
      officer concluded that our disclosure controls and procedures
      are effective to ensure that information required to be
      disclosed by us in the reports that we file or submit under
      the Exchange Act is recorded, processed, summarized and
      reported, within the time periods specified in the
      Commission's rules and forms.

Management's Annual Report
      on Internal Control over Financial Reporting. Our management
      is responsible for establishing and maintaining adequate
      internal control over financial reporting (as defined in Rule
      13a-15(f) under the Exchange Act). Our internal control over
      financial reporting is a process designed to provide
      reasonable assurance regarding the reliability of financial
      reporting and the preparation of financial statements for
      external purposes of accounting principles generally accepted
      in the United States.

Because of its inherent
      limitations, internal control over financial reporting may
      not prevent or detect misstatements. Therefore, even those
      systems determined to be effective can provide only
      reasonable assurance of achieving their control
      objectives.

Our management evaluated the
      effectiveness of our internal control over financial
      reporting as of December 31, 2012.  Based on this
      evaluation, our management concluded that, as of December 31,
      2012, our internal control over financial reporting was
      effective.

This annual report does not
      include an attestation report of our registered public
      accounting firm regarding internal control over financial
      reporting. Management's report was not subject to attestation
      by our registered public accounting firm pursuant to
      temporary rules of the SEC that permit the company to provide
      only management's report in this annual report.

Changes in Internal Control
      Over Financial Reporting. There was no change in our internal
      controls or in other factors that could affect these controls
      during our last fiscal quarter that has materially affected,
      or is reasonably likely to materially affect, our internal
      control over financial reporting. While existing controls may
      be adequate at present, upon the commencement of flight
      revenue service we intend to implement controls appropriate
      for airline operations.

Item
      9B. Other Information.

Regulation FD
      Disclosure of Nonpublic Material Information

The Company has successfully
      completed Gate I requirements of FAA Air Carrier
      Certification process



On March 28, 2013, at the
      FAA East Michigan Flight Standards District Office Baltia Air
      Lines senior staff and their FAA counterparts conducted a
      Formal Meeting to review Baltia’s certification
      documentation and management readiness.

On April 10, 2013, Baltia
      received confirmation that Baltia’s management
      personnel, system design, and other supporting documentation
      were found to be satisfactory.



The FAA Certification Team
      has determined that Baltia meets the requirements of FAA
      Order 8900.1 Volume 10 Chapter 2 Section 6 and is fit to
      enter into Phase II of the ATOS Certification Process.



PART
      III

Item
      10. Directors and Executive Officers of the
      Registrant.

The following table
      summarizes certain information with respect to the executive
      officers and directors of the board :

|Name                          | Age | Position                                               | 
|----------------------------- | --- | ------------------------------------------------------ | 
|Igor Dmitrowsky               | 57  | President, CEO, CFO,
            Chairman of the Board
|Russell
            Thal      | 78  | Executive Vice
            President                   | 
|Barry Clare                   | 54  | Vice President
            Finance                     | 
|Walter
            Kaplinsky  | 75  | Secretary,
            Director                        | 
|Andris Rukmanis               | 51  | Vice President Europe,
            Director            | 
|Vick Luis
            Bolanos | 53  | Director                                               | 

Our directors serve until
      the next annual meeting and until their successors are
      elected and qualified. Our officers are appointed to serve
      for one year until the meeting of the board of directors
      following the annual meeting of stockholders and until their
      successors have been elected and qualified. There are no
      family relationships between any of our directors or
      officers.

A. Board of
      Directors:

Igor Dmitrowsky

Igor Dmitrowsky, Chairman
      and President, Chief Executive Officer and CFO, founded the
      Company in August 24, 1989. Guiding, directing and
      maintaining daily operations of the Company has been his full
      time occupation and executive profession throughout the
      years. Prior to founding Baltia Air Lines, Inc., in 1979, Mr.
      Dmitrowsky immigrated from Latvia, learned the English
      language, attended US university in engineering and business,
      founded American Kefir Corporation, a dairy distribution
      company, which completed a public offering in 1986 and from
      which he retired in 1987 and became a U.S. Citizen. As a
      hobby he designed and began construction of a personal flying
      machine, became a pilot and pursued an interest in
      securities.

As of December 2011, Mr.
      Dmitrowsky had the language, culture and social skills
      necessary to structure a business involving both the United
      States and Russia. His engineering and business education as
      well as the above stated experience enables him to manage the
      various aspects of an international airline.

No organization to which Mr.
      Dmitrowsky has been associated is a parent, subsidiary or
      other affiliate of Baltia Air Lines.

Walter
      Kaplinsky

Walter Kaplinsky, Director
      and Corporate Secretary since 1993, has been a retired
      engineer for the past six years, contributing his time to the
      Company. Together with Mr. Dmitrowsky, Mr. Kaplinsky was a
      co-founder of American Kefir Corporation, where he served
      full-time professionally as Secretary and Vice President. As
      an emigre from Russia, he has substantial knowledge of the
      culture which will be the primary destination of the
      Company.

As of December 2012, Mr.
      Kaplinsky has knowledge of the Company business operations
      and efforts, collaborating in the development of the Company
      business plan since inception, through its earlier efforts to
      commence operations and to date. In exercising the functions
      of a corporate Secretary, he served the Company diligently
      over many years, and provides institutional memory and
      experience with the problems and powers of the corporate
      structure.

No organization to which Mr.
      Kaplinsky has been associated is a parent, subsidiary or
      other affiliate of Baltia Air Lines, Inc..

Andris Rukmanis

Andris Rukmanis, Director
      and Vice President Europe, is and has been for more than
      twenty years a full-time qualified licensed attorney in
      Latvia, specializing in business law, and has been a Director
      of the Company since 1990. From 1988 through 1989, he was
      Senior Legal Counsel for the Town of Adazhi in Riga County,
      Latvia. From 1989 to 1990, he served as Deputy Mayor of
      Adazhi.



As of December 2012, Mr.
      Rukmanis had the political experience, legal education, and
      language as well as cultural skills that were needed by the
      Company in light of the Baltia's initial market in European
      foreign Soviet controlled countries.

No organization to which Mr.
      Rukmanis has been associated is a parent, subsidiary or other
      affiliate of Baltia Air Lines, Inc..

Vick Luis
      Bolanos

Vick Luis Bolanos, has
      served as Director since 2009. Mr. Bolanos is, and has been
      since 1992, full-time President of Eastern Construction &
      Electric, Inc. Since May 2005, Eastern has been the
      Simplified Acquisition Base Engineering Requirements (SABER)
      contractor. The USAF uses the SABER contractor to fulfill
      engineering requirements on a variety of projects, ranging
      from small renovations to large scale infrastructure needs
      involving pipelines, electrical substations, and life safety
      issues. Eastern is also working on McGuire AFB for the Corps
      of Engineers under a Basic Agreement to both design and build
      or install several projects and is currently working for the
      Air Force at Willow Grove Air Station and a Task Order
      Contract at Fort Monmouth, New Jersey.

As of December 2012, Mr.
      Bolanos had the specific experience of developing a company
      from the start as 8a. He understands managing large projects
      to produce growth and profit. He is familiar with working
      with government agencies and has specific experience working
      projects in the aviation field. These skills are critical to
      the Company in light of Baltia's being a start-up company in
      aviation with the need to initiate and bring to fruition many
      projects to enable the Company to grow profitably.

No organization to which Mr.
      Bolanos has been associated is a parent, subsidiary or other
      affiliate of Baltia Air Lines, Inc..

B. Executive Officers In
      Addition to Mr. Dmitrowsky and Mr. Rukmanis:

Russell Thal

Russell Thal, Executive Vice
      President, joined the Company in year 2000 and his full time
      occupation has been as Executive Vice President of the
      Company where he has maintained his executive profession. In
      1958, he left the US Army and entered the civilian human
      relations field. In 1964, he joined Ceabord World Airlines as
      Personnel Manager. Soon was moved to Director of Crew
      Scheduling and Dispatch and finished as interface with
      Military Airlift Command for Ceabord. From 1980 to 1981 he
      was Director of Stations with responsibility for hiring and
      outfitting all stations for the start-up New York Air. In
      1981, Mr. Thal started Compuflight, Inc., and served as
      President and Chairman until he retired in 2001. Compuflight
      provided both flight planning and engineering services to the
      airline industry.

As of December 2012, Mr.
      Thal had the specific experience in airline operations and
      management to assist Baltia President Igor Dmitrowsky. He
      functions as head of human resources, purchasing and provide
      all management services required by the Company. Mr. Thal's
      experience and skills is particularly needed as Baltia is
      starting up. A limited number of people are required with
      skills in many fields.

No organization to which Mr.
      Thal has been associated is a parent, subsidiary or other
      affiliate of Baltia Air Lines, Inc.

Barry Clare

Barry Clare, Vice President
      of Finance joined the Company in 2006 and it has been his
      full-time occupation and profession for the past five years.
      From 2004 to 2006 Mr. Clare owned his own business as a
      full-time and profession investment banker. From 2001 to 2004
      Mr. Clare had been Chief Operating Officer for Advance Plant
      Pharmaceuticals, Inc. From 1995 to 1996, Mr. Clare served as
      Vice President of Intermediaries, Inc., an investment banking
      firm.

As of December 2012, Mr.
      Clare had the specific experience in raising capital that has
      been absolutely critical to the Company's being able to
      purchase aircraft, hire specialized experts for pursuing
      certifications, to enlarge the staff and physical workplace,
      create and maintain a station in St. Petersburg, Russia, and
      support the extensive travel required to

prepare for commencing
      international scheduled flights. All this has been maintained
      financially over the past five years with zero operating
      revenue.

No organization to which Mr.
      Clare has been associated is a parent, subsidiary or other
      affiliate of Baltia Air Lines, Inc.

C. Nominations for
      Director:

Baltia Air Lines, Inc., has
      had only one recent nomination for director, Vick Luis
      Bolanos, who was nominated and chosen as a director in 2009
      because Baltia sought someone with the skills stated above.
      The Baltia has four Board members. Each has direct access to
      others and "hands on" opportunities to advance the Company.
      Mr. Bolanos was unanimously selected to replace the retiring
      Board member because he brought insight, experience, and
      skills that had enabled him to bring Eastern Construction
      & Electric, Inc. from inception to a large company
      operating in several geographic locations. Similar to the
      operations which Mr. Bolanos has been a part of, Baltia is a
      start-up with plans to become a large company with stations
      in Russia and in several former Soviet controlled
      countries.

Item
      11. Executive Compensation.

No base salary has been paid
      to our executive officers during the fiscal years ended
      December 31, 2012 and 2011.

During the fiscal year ended
      December 31, 2012, no executive options were granted.

During the fiscal year ended
      December 31, 2012, no executive stock options were
      exercised.

In 2012, the Company issued
      194,000,000 of its $.0001 par value common stock to its
      executive offices. These shares were awarded as bonus fully
      earned and non-assessable, and containing no future earned
      performance or forfeiture requirements. Of this, 140,000,000
      of the shares, valued at $3,220,000 were issued to the
      Company's President and CEO, Igor Dmitrowsky.

During the year ended
      December 31, 2011, the Company issued 245,749,998 shares of
      its $.0001 par value common stock to its executive officers;
      the shares were recorded at fair value and were awarded as
      bonus fully earned and non-assessable, and containing no
      future earned performance of forfeiture requirements. Of this
      245,749,998 total, 208,500,000 shares, valued at $10,712,000,
      was issued to Igor Dmitrowsky, president and CEO.

**SUMMARY COMPENSATION TABLE**

|Name & Principal 
Position          | Year       | Bonus      | Stock Awards*             | Option Awards* | Non-Equity  Incentive Plan Compensation  Earnings | Change in Pension 
Value and 
Non-qualified 
Incentive Plan 
Compensation | All Other
Compensation ** | Total                  
|----------------------------------- | ---------- | ---------- | ------------------------- | -------------- | ------------------------------------------------- | ------------------------------------------------------------------------- | ------------------------- | -----------------------
|Igor Dmitrowsky President, CEO      | 2012  2011 | $ 0   0    | $ 3,888,000    10,712,000 | $ 0   0        | $ 0      0                                        | $ 0      0                                                                | $ 50,957    75,106        | $ 3,938,957  10,787,106
|Barry Clare      Vice-President     | 2012  2011 | 0     0    | 858,000    1,426,000      | 0           0  | 0             0                                   | 0           0                                                             | 198,285  347,948          | 1,056,285   1,773,948  
|Rusell Thal          Vice-President | 2012  2011 | 0        0 | 289,000    362,000        | 0     0        | 0       0                                         | 0     0                                                                   | 30,500      51,000        | 319,500  413,000       
|Walter Kaplinsky         Secretary  | 2012  2011 | 0        0 | 76,000    214,000         | 0     0        | 0       0                                         | 0     0                                                                   | 15,960     0              | 91,960  214,000        
|Andris Rukmanis        VP, Europe   | 2012  2011 | 0        0 | 20,000   0                | 0     0        | 0       0                                         | 0     0                                                                   | 0      0                  | 20,000  0              

* These columns represent
      the grant date fair value of the awards as calculated in
      accordance with FASB ASC Topic 718,  Compensation
      – Stock Compensation.   The fair value of these equity
      awards on the date of grant was approximately
      $5,131,000 and $12,714,000 for stock awards for the
      years ended December 31, 2012 and 2011. The fair value was
      estimated using the Black-Sholes option pricing model with
      the following assumptions: risk free interest rate of 3.0%
      and 4.4%, for the years ended December 31, 2012 and 2011,
      respectively, no dividend yield, expected lives between one
      and five years, and volatility of 200%. The expected term of
      the equity instruments granted is based on the
      “simplified method for “plain vanilla”
      options discussed in SEC Staff Accounting Bulletin
      (“SAB”) No. 107, as amended by SAB No. 110. The
      expected volatility is derived from historic volatility of
      the Company’s stock on the OTCBB for a period that
      matches the expected term of the equity award. The risk-free
      interest rate is the yield from a Treasury note corresponding
      to the expected term of the equity awards.

** Mr. Dmitrowsky was
      charged additional compensation of $15,000 and $15,000, which
      represents one-hundred percent of the rent the Company paid
      for its original corporate headquarters during the years
      ended December 31, 2012 and 2011, respectively. In addition,
      during the years ended December 31, 2012 and 2011, Mr.
      Dmitrowsky received other compensation of $35,957 and
      $60,106, respectively, for services provided to the Company
      in lieu of salary.

Mr. Clare was paid
      additional compensation of $198,285 and $347,948 for the
      years ended December 31, 2012 and 2011, respectively, which
      represents amounts paid him for negotiating services in
      connection with the raise of new equity capital.

Russell Thal was paid
      additional compensation of $30,500 and 51,000 for services
      provided the Company during the years ended December 31, 2012
      and 2011.

Mr. Kaplinsky was paid
      additional compensation of $15,960 and $-0- for services
      provided the Company during the years ended December 31, 2012
      and 2011.

EMPLOYMENT AGREEMENTS

The Company has no
      individual employment agreements with any of its executive
      officers or employees.

Future Compensation of
      Executive Officers

The board of directors
      approves salaries for the Company's executive officers as
      well as the Company's overall salary structure. For year one
      following the closing of financing sufficient to commence
      flight operations, the rate of compensation for the Company's
      executive officers is expected to be:(i) President $198,000,
      Executive Vice President $130,000, Vice

President Finance $120,000,
      (ii) Vice President Marketing $110,000,and (iii) Vice
      President Europe $90,000. Board directors are not presently
      compensated and shall receive no compensation prior to
      commencement of revenue service.

Item    12. Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholder Matters.

As of December 31, 2012,
      there were 2,465,538,050 shares of common stock, par value
      $0.0001 outstanding. The following table sets forth, as of
      December 31, 2012, the ownership of the Company's Common
      Stock by (i)each director and officers of the Company, (ii)
      all executive officers and directors of the Company as a
      group, and (iii) all other persons known to the Company to
      own more than 5% of the Company's Common Stock. Each person
      named in the table has or shares voting and investment power
      with respect to all shares shown as beneficially owned by
      such person.

|Directors and
            Officers                                                            | Common Shares
            Beneficially Owned | Percent of Total
            Outstanding, %
|--------------------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------
|Igor Dmitrowsky 63-26
            Saunders St., Suite 7I Rego Park, NY 11374                  | 779,662,766                                  | 31.62                                      
|Russell Thal 26 Ridge
            Drive
 Port Washington, NY 11050                            | 20,468,750                                   | 0.83                                       
|Barry Clare 4319 215th
            St. Bayside, NY 11361                                      | 114,849,998                                  | 4.65                                       
|Vick Luis Bolanos
 633
            Monroe St.
 Riverside, NJ 08075                            | 223,325,001                                  | 9.05                                       
|Walter Kaplinsky 2000
            Quentin Rd. Brooklyn, NY 11229                              | 15,500,000                                   | 0.62                                       
|Andris  Rukmanis
Kundzinsala,
            8 Linija 9. Riga, Latvia LV-1005                    | 6,468,750                                    | 0.26                                       
|Shares of all
            directors and executive officers as a group (6
            persons) | 1,160,275,265                                | 47                                         

Item
      13. Certain Relationships and Related Transactions.

Mr. Vick Luis Bolanos was
      elected to the Baltia Board of Directors while he was, and
      remains, President and Chairman of Eastern Construction &
      Electric, Inc. The transaction between Baltia and Eastern was
      made in the ordinary course of business on substantially the
      same terms, including interest rates and collateral, as those
      prevailing at the time for comparable loans with persons not
      related to the lender; and did not involve more than the
      normal risk of collectibility or present other unfavorable
      features. This transaction is discussed further in Note 6 to
      the Financial Statements infra.

Item
      14. Principal Accountant Fees and Services.

In 2011, 2010, 2009 and 2008
      the Company paid its independent accountant $7,000 for
      services in providing an audit of the previous year. In 2012,
      the Company paid $11,500 for audit services. All other
      Company accounting and tax preparations have been done in
      house.























---

PART
      IV.



Item
      15. Exhibits and Financial Statements.

APPENDIX
      A - Financial Statements for the Years Ended December 31,
      2012 ad 2011

|Report of Independent
            Registered Accounting firm                                                                                                                | F-1        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
|Balance Sheet as of
            December 31, 2012 and 2011                                                                                                                  | F-2        
|Statement of
            Operations for the years ended December 31, 2012 and
            2011, and the period August 29, 1989 (inception) to
            December 31, 2012 | F-3        
|Statement of Cash
            Flows for the years ended December 31, 2012 and 2011,
            and the period August 9, 1989 (inception) to December
            31, 2012  | F-4        
|Statement of Changes
            of Stockholders' Equity for the years ended December
            31, 2012, 2011, 2010, 2009, and 2008                                      | F-5        
|Notes to Financial
            Statements                                                                                                                                   | F-6 to F-26



































---

REPORT OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMYears Ended December 31, 2012 and
      2011

Board of Directors and
      Shareholders Baltia Air Lines, Inc. New York, NY

I have audited the
      accompanying balance sheets of Baltia Air Lines, Inc. ("the
      Company") as of December 31, 2012 and 2011 and the statements
      of operations, stockholders' equity, and cash flows for the
      years then ended and for the period from January 1, 2008 to
      December 31, 2012. The financial statements for the period
      from inception to December 31, 2007 were audited by other
      auditors whose reports included an explanatory paragraph that
      expressed substantial doubt about the Company’s ability
      to continue as a going concern.   My opinion on the
      statements of operations, stockholders’ deficit and
      cash flows for the period from inception to December 31,
      2007, insofar as it relates to amounts for prior periods
      through December 31, 2007, is based solely on the report of
      the other auditors.  These financial statements are
      the responsibility of the Company's management. My
      responsibility is to express an opinion on these financial
      statements based on my audit.

I conducted my audits in
      accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards
      require that I plan and perform the audit to obtain
      reasonable assurance about whether the financial statements
      are free of material misstatements. I was not engaged to
      perform an audit of its internal control over financial
      reporting. My audits included consideration of internal
      control over financial reporting as a basis for designing
      audit procedures that are appropriate in the circumstances,
      but not for the purpose of expressing an opinion on the
      effectiveness of the Company's internal control over
      financial reporting. Accordingly, I express no such opinion.
      An audit includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting
      principles used and significant estimates made by management,
      as well as evaluating the overall financial statement
      presentation. I believe that my audits provide a reasonable
      basis for my opinion. In my opinion, these financial
      statements present fairly, in all material respects, the
      financial position of Baltia Air Lines, Inc. as of December
      31, 2012 and 2011 and the results of its operations and its
      cash flows for the years then ended in conformity with
      accounting principles generally accepted in the United
      States.

In my opinion, the financial
      statements referred to above present fairly, in all material
      respects, the financial position of Baltia Air Lines, Inc. as
      of December 31, 2012 and the results of its operations and
      its cash flows for the year period ended December 31, 2012 in
      conformity with accounting principles generally accepted in
      the United States.

The accompanying financial
      statements have been prepared assuming that the Company will
      continue as a going concern. As discussed in Note 9 of the
      financial statements, the Company has incurred a deficit
      during its development stage of approximately $88 million and
      consumed approximately $24 million of cash due to its
      operating activities. The Company may not have adequate
      readily available resources to fund operations through
      December 31, 2012. This raises substantial doubt about the
      Company's ability to continue as a going concern.
      Management's plans in regard to these matters are also
      described in Note 9. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.

/s/ Patrick Rodgers, CPA, PA
      Patrick Rodgers, CPA, P

Altamonte Springs,
      FloridaApril 15, 2013























F-1

---

Baltia Air Lines, Inc.

(A Development Stage Company)

BALANCE
            SHEETS

|                                                 | December
            31,                              
|------------------------------------------------ | ------------------------------------------------------
|                                                 | 2012                                                  
|                                                 |                                                       
|                                                 | Current
            assets                            
|                                                 | Cash                                                  
|                                                 |                                                       
|                                                 | Property
            and equipment, net               
|                                                 | Other
            assets:                             
|                                                 |                                                       
|                                                 |                                                       
|LIABILITIES
            AND STOCKHOLDERS' EQUITY |                                                       
|                                                 | Current
            liabilities                       
|                                                 |                                                       
|                                                 |                                                       
|                                                 |                                                       
|                                                 | Long-term
            debt, net of discount           
|                                                 |                                                       
|                                                 | Stockholders'
            equity                      
|                                                 |                                                       
|                                                 |                                                       
|                                                 |                                                       
|                                                 |                                                       
|                                                 |                                                       
|                                                 | Total
            liabilities and stockholders' equity

The
      accompanying footnotes are an integral part of these
      financial statements.



























F-2

---

|Baltia
            Air Lines, Inc.
          (A
            Development Stage Company)
         STATEMENT
            OF OPERATIONS
|-----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
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|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   
|                                                                                                                                   



The accompanying footnotes
      are an integral part of these financial statements.



F-3

---

|Baltia
            Air Lines, Inc,(A
            Development Stage Company)
          STATEMENT
            OF CASH FLOWS
|-------------------------------------------------------------------------------------------------------------------------
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|Cash
            flows from operations                                                                                   
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|Adjustment to
            reconcile deficit accumulated during                                                           
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|Cash
            flows from investing activities                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|Cash
            flows from financing activities                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|                                                                                                                         
|Supplemental
            cash flow disclosures:                                                                          
|                                                                                                                         
|                                                                                                                         





The accompanying footnotes
      are an integral part of these financial statements.





















F-4

---

Baltia
              Air Lines, Inc.(A
              Development Stage Company)

STATEMENT
              OF CHANGES IN STOCKHOLDERS’ EQUITY

|                             |                                       | Shares | Amount        | Shares      | Amount       | Capital        | Stage        | Total       
|---------------------------- | ------------------------------------- | ------ | ------------- | ----------- | ------------ | -------------- | ------------ | ------------
|                             |                                       |        |               |             |              |                |              |             
|Balance,
  December 31, 2008 | 66,500                                | $ 665  | 355,767,159   | $ 35,577    | $ 18,716,994 | $ (18,002,863) | $ 750,375   
|                             |                                       |        |               |             |              |                |              |             
|                             | Exercise
  of warrants and options    |        |               | 32,000,000  | 3,200        |                |              | 3,200       
|                             | Shares
  issued and issuable for cash |        |               | 154,034,244 | 15,403       | 3,686,497      |              | 3,701,900   
|                             | Shares
  issued for services          |        |               | 200,778,636 | 20,078       | 9,430,413      |              | 9,450,491   
|                             | Options
  issued for services         |        |               |             |              | 243,787        |              | 243,787     
|                             | Stock
  issued to purchase airplane   |        |               | 1,000,000   | 100          | 24,900         |              | 25,000      
|                             | Net
  loss                            |        |               |             |              |                | (12,175,550) | (12,175,550)
|                             |                                       |        |               |             |              |                |              |             
|Balance,
  December 31, 2009 | 66,500                                | 665    | 743,580,039   | 74,358      | 32,102,591   | (30,178,413)   | 1,999,201   
|                             |                                       |        |               |             |              |                |              |             
|                             | Stock
  issued and issuable for cash  |        |               | 115,776,464 | 11,578       | 4,365,876      |              | 4,377,454   
|                             | Stock
  issued for services           |        |               | 252,658,491 | 25,266       | 14,984,584     |              | 15,009,850  
|                             | Fair
  value of options issued as     |        |               |             |              |                |              | -           
|                             | loan incentive                        |        |               |             |              | 92,745         |              | 92,745      
|                             | Stock
  issued as loan incentive      |        |               | 6,800,000   | 680          | 201,552        |              | 202,232     
|                             | Net
  loss                            |        |               |             |              |                | (19,394,527) | (19,394,527)
|                             |                                       |        |               |             |              |                |              |             
|Balance,
  December 31, 2010 | 66,500                                | 665    | 1,118,814,994 | 111,881     | 51,747,348   | (49,572,940)   | 2,286,954   
|                             |                                       |        |               |             |              |                |              |             
|                             | Stock
  issued and issuable for cash  |        |               | 241,369,947 | 24,137       | 7,783,105      |              | 7,807,242   
|                             | Stock
  issued for services           |        |               | 357,846,441 | 35,786       | 17,403,106     |              | 17,438,892  
|                             | Net
  loss                            |        |               |             |              |                | (25,075,498) | (25,075,498)
|                             |                                       |        |               |             |              |                |              |             
|Balance,
  December 31, 2011 | 66,500                                | 665    | 1,718,031,382 | 171,804     | 76,933,559   | (74,648,438)   | 2,457,590   
|                             |                                       |        |               |             |              |                |              |             
|                             | Stock
  issued and issuable for cash  |        |               | 271,270,882 | 27,127       | 3,599,755      |              | 3,626,882   
|                             | Stock
  issued for services           |        |               | 329,248,482 | 32,925       | 7,653,663      |              | 7,686,588   
|                             | Net
  loss                            |        |               |             |              |                | (13,623,873) | (13,623,873)
|                             |                                       |        |               |             |              |                |              |             
|Balance,
  December 31, 2012 | 66,500                                | $ 665  | 2,318,550,746 | $ 231,856   | $ 88,186,977 | $ (88,272,311) | $ 147,187   
|                             |                                       |        |               |             |              |                |             

















---

BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012





1.
      Summary of Significant Accounting Policies



Basis
      of Presentation :   The financial statements have been
      presented in a “development stage” format. Since
      inception, our primary activities have been raising of
      capital, obtaining financing and of obtaining route authority
      and approval from the DOT and the FAA. We have not commenced
      our principal revenue producing activities.

Use
      of Estimates:  The preparation of financial
      statements in conformity with generally accepted accounting
      principles requires our management to make estimates and
      assumptions that affect reported amounts of assets and
      liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statement and the
      reported amounts of revenues and expenses during the
      reporting period. Actual results could differ from the
      estimates.



Cash
      and Cash Equivalents:   For financial statement
      presentation purposes, we consider those short-term, highly
      liquid investments with original maturities of three months
      or less to be cash or cash equivalents. There are no cash
      equivalents at December 31, 2012 and 2011.



Fair
      Value of Financial Instruments:   FASB ASC 825, “ Financial
      Instruments ,”
      requires entities to disclose the fair value of financial
      instruments, both assets and liabilities recognized and not
      recognized on the balance sheet, for which it is practicable
      to estimate fair value. FASB ASC 825 defines fair value of a
      financial instrument as the amount at which the instrument
      could be exchanged in a current transaction between willing
      parties. At December 31, 2012 and 2011, the carrying
      value of certain financial instruments (cash and cash
      equivalents, accounts payable and accrued expenses.)
      approximates fair value due to the short-term nature of the
      instruments or interest rates, which are comparable with
      current rates.



Fair
      Value Measurements:  FASB ASC 820 defines fair value
      and establishes a framework for measuring fair value and
      establishes a fair value hierarchy which prioritizes the
      inputs to the inputs to the valuation techniques. Fair value
      is the price that would be received to sell an asset or
      amount paid to transfer a liability in an orderly transaction
      between market participants at the measurement date. A fair
      value measurement assumes that the transaction to sell the
      asset or transfer the liability occurs in the principal
      market for the asset or liability or, in the absence of a
      principal market, the most advantageous market. Valuation
      techniques that are consistent with the market, income or
      cost approach, as specified by FASB ASC 820, are used to
      measure fair value.



Fair
      Value Hierarchy:  FASB
      ASC 820 specifies a hierarchy of valuation techniques based
      upon whether the inputs to those valuation techniques reflect
      assumptions other market participants would use based upon
      market data obtained from independent sources (observable
      inputs), or reflect the Company’s own assumptions of
      market participant valuation (unobservable inputs). In
      accordance with FASB ASC 820, these two types of inputs have
      created the following fair value hierarchy:

- Level 1 – Quoted
            prices in active markets that are unadjusted and
            accessible at the measurement date for identical,
            unrestricted assets or liabilities.
- Level 2 – Quoted
            prices for identical assets and liabilities in markets
            that are not active, quoted prices for similar assets
            and liabilities in active markets or financial
            instruments for which significant inputs are
            observable, either directly or indirectly.
- Level 3 – Prices
            or valuations that require inputs that are both
            significant to the fair value measurement and
            unobservable.



FASB ASC 820 requires the
      use of observable market data if such data is available
      without undue cost and effort.





F-6









BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012





1.  Summary of Significant Accounting Policies (continued)



Measurement of Fair
      Value



The Company
      measures fair value as an exit price using the procedures
      described below for all assets and liabilities measured at
      fair value. When available, the Company uses unadjusted
      quoted market prices to measure fair value and classifies
      such items within Level 1. If quoted market prices are not
      available, fair value is based upon internally developed
      models that use, where possible, current market-based or
      independently-sourced market parameters such as interest
      rates and currency rates. Items valued using internally
      generated models are classified according to the lowest level
      input or value driver that is significant to the valuation.
      Thus, an item may be classified in Level 3 even though there
      may be inputs that are readily observable. If quoted market
      prices are not available, the valuation model used generally
      depends on the specific asset or liability being valued. The
      determination of fair value considers various factors
      including interest rate yield curves and time value
      underlying the financial instruments.



Property
      and Equipment:  Property and equipment are
      recorded at cost. Depreciation is computed using the
      straight-line method over the estimated useful lives of the
      assets, generally 5-15 years. Expenditures for renewals and
      betterments are capitalized. Expenditures for minor items,
      repairs and maintenance are charged to operations as
      incurred. Gain or loss upon sale or retirement due to
      obsolescence is reflected in the operating results in the
      period the event takes place.



Valuation
      of Long-Lived Assets:  We review the recoverability of
      our long-lived assets, including buildings, equipment and
      intangible assets, when events or changes in circumstances
      occur that indicate that the carrying value of the asset may
      not be recoverable. The assessment of possible impairment is
      based on our ability to recover the carrying value of the
      asset from the expected future pre-tax cash flows
      (undiscounted and without interest charges) of the related
      operations. If these cash flows are less than the carrying
      value of such asset, an impairment loss is recognized for the
      difference between estimated fair value and carrying value.
      Our primary measure of fair value is based on discounted cash
      flows. The measurement of impairment requires management to
      make estimates of these cash flows related to long-lived
      assets, as well as other fair value determinations.



We amortize the costs of other
      intangibles (excluding goodwill) over their estimated useful
      lives unless such lives are deemed indefinite. Amortizable
      intangible assets are tested for impairment based on
      undiscounted cash flows and, if impaired, written down to
      fair value based on either discounted cash flows or appraised
      values. Intangible assets with indefinite lives are tested
      for impairment, at least annually, and written down to fair
      value as required.



Stock-Based
      Compensation Plans:  Stock-based awards are accounted
      for using the fair value method in accordance with ASC
      718,  Share-Based
      Payments.   Our
      primary type of share-based compensation consists of stock
      options. We use the Black-Scholes option pricing model in
      valuing options. The inputs for the valuation analysis of the
      options include the market value of the Company’s
      common stock, the estimated volatility of the Company’s
      common stock, the exercise price of the warrants and the risk
      free interest rate.

















F-7











BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012





1.
      Summary of Significant Accounting Policies (continued)



Earnings
      per Common Share:  Basic earnings per share is
      computed by dividing income available to common shareholders
      (the numerator) by the weighted-average number of common
      shares outstanding (the denominator) for the period. Diluted
      earnings per share assume that any dilutive convertible
      securities outstanding were converted, with related preferred
      stock dividend requirements and outstanding common shares
      adjusted accordingly. It also assumes that outstanding common
      shares were increased by shares issuable upon exercise of
      those stock options for which market price exceeds the
      exercise price, less shares which could have been purchased
      by us with the related proceeds. In periods of losses,
      diluted loss per share is computed on the same basis as basic
      loss per share as the inclusion of any other potential shares
      outstanding would be anti-dilutive. All options have
      either expired or been cancelled during 2012. No adjustment
      has been made to the weighted-average number of shares
      outstanding in the calculation of earnings per share. For
      2011, the earnings per share calculation excluded options of
      5,556,818 because they were anti-dilutive.



Income
      Taxes: We have
      adopted ASC 740,  Accounting for
      Income Taxes.  Pursuant to ASC 740, we are
      required to compute tax asset benefits for net operating
      losses carried forward. The potential benefits of net
      operating losses have not been recognized in these financial
      statements because the Company cannot be assured it is more
      likely than not it will utilize the net operating losses
      carried forward in future years.

We must make certain
      estimates and judgments in determining income tax expense for
      financial statement purposes. These estimates and judgments
      occur in the calculation of certain tax assets and
      liabilities, which arise from differences in the timing of
      recognition of revenue and expense for tax and financial
      statement purposes.

Deferred tax assets and
      liabilities are determined based on the differences between
      financial reporting and the tax basis of assets and
      liabilities using the tax rates and laws in effect when the
      differences are expected to reverse. ASC 740 provides for the
      recognition of deferred tax assets if realization of such
      assets is more likely than not to occur. Realization of our
      net deferred tax assets is dependent upon our generating
      sufficient taxable income in future years in appropriate tax
      jurisdictions to realize benefit from the reversal of
      temporary differences and from net operating loss, or NOL,
      carryforwards. We have determined it more likely than not
      that these timing differences will not materialize and have
      provided a valuation allowance against substantially all of
      our net deferred tax asset. Management will continue to
      evaluate the realizability of the deferred tax asset and its
      related valuation allowance. If our assessment of the
      deferred tax assets or the corresponding valuation allowance
      were to change, we would record the related adjustment to
      income during the period in which we make the determination.
      Our tax rate may also vary based on our results and the mix
      of income or loss in domestic and foreign tax jurisdictions
      in which we operate.



Effective
      January 1, 2007, the Company adopted FASB guidelines that
      address the determination of whether tax benefits claimed or
      expected to be claimed on a tax return should be recorded in
      the financial statements. Under this guidance, we may
      recognize the tax benefit from an uncertain tax position only
      if it is more likely than not that the tax position will be
      sustained on examination by the taxing authorities, based on
      the technical merits of the position. The tax benefits
      recognized in the financial statements from such a position
      should be measured based on the largest benefit that has a
      greater than fifty percent likelihood of being realized upon
      ultimate settlement. This guidance also provides guidance on
      derecognition, classification, interest and penalties on
      income taxes, accounting in interim periods and requires
      increased disclosures. At the date of adoption, and as of
      December 31, 2012 and 2011, the Company did not have a
      liability for unrecognized tax benefits, and no adjustment
      was required at adoption.



The
      Company’s policy is to record interest and penalties on
      uncertain tax provisions as income tax expense. As of
      December 31, 2012 and 2011, the Company has not accrued
      interest or penalties related to uncertain tax positions.
      Additionally, tax years 2007 through 2012 remain open to
      examination by the major taxing jurisdictions to which the
      Company is subject.



Upon the
      attainment of taxable income by the Company, management will
      assess the likelihood of realizing the tax benefit associated
      with the use of the carryforwards and will recognize a
      deferred tax asset at that time.



F-8









BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012



1.
      Summary of Significant Accounting Policies (continued)



Recent
      Accounting Pronouncements:



Recently
      Adopted Standards

In December 2011, the FASB
      issued ASU No. 2011-11, “Balance Sheet (Topic 210):
      Disclosures about Offsetting Assets and

Liabilities.” This ASU
      requires an entity to disclose information about offsetting
      and related arrangements to enable users of its financial
      statements to understand the effect of those arrangements on
      its financial position. ASU No. 2011-11 will be applied
      retrospectively and is effective for annual and interim
      reporting periods beginning on or after January 1, 2013. The
      Company does not expect adoption of this standard to have a
      material impact on its results of operations, financial
      condition, or liquidity.



Other recent accounting
      pronouncements issued by the FASB (including its Emerging
      Issues Task Force), the AICPA, and the Securities Exchange
      Commission (the "SEC") did not or are not believed by
      management to have a material impact on the Company's present
      or future financial statements.

2.
      Organization and Operations

The Company
      was formed as a U.S. airline on August 24, 1989 in the State
      of New York. Our objective is to provide scheduled air
      transportation from the U.S. to Russia, the Baltic States and
      Ukraine. In 1991, the Department of Transportation (DOT)
      granted the Company routes to provide non-stop passenger,
      cargo and mail service from JFK to St. Petersburg and from
      JFK to Riga, with online service to Minsk, Kiev and Tbilisi
      as well as back up service to Moscow. We have two registered
      trademarks "BALTIA" and "VOYAGER CLASS," and five trademarks
      subject to registration. Our activities to date have been
      devoted principally to raising capital, obtaining route
      authority and approval from the DOT and the FAA, training
      crews, and conducting market research to develop the
      Company's marketing strategy.

Regulatory
      Compliance



We intend to
      operate as a Part 121 carrier, a heavy jet operator. As such,
      following certification we will be required to maintain our
      air carrier standards as prescribed by DOT and FAA regulation
      and as specified in the FAA approved Company manuals. As part
      of its regulatory compliance we will be required to submit
      periodic reports of our operations to the DOT.



3.
      Property and Equipment



|A summary of property
            and equipment is as follows: |                                   |             |            
|-------------------------------------------------------------- | --------------------------------- | ----------- | -----------
|                                                               | Estimated Useful
            Life | 2012        | 2011       
|Airplane                                                       | 10-15 years                       | $1,505,738  | $ 3,257,085
|Office equipment and
            other                         | 5-7 years                         | 425,986     | 256,441    
|Less accumulated
            depreciation                      |                                   | (124,268)   | (109,268)  
|                                                               |                                   |             |            
|Net                                                            |                                   | $ 1,807,456 | $ 3,404,258
|Current
            depreciation                               |                                   | $ 15,000    | $ 16,486   







F-9





BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012



4.
      Stockholders' Equity

Description of
      Securities

Common
      Stock:  We have
      2,850,000,000 authorized shares of Common Stock at
      $.0001 par value per share. As of   December 31, 2012, a total of
      2,464,456,384 shares of Common Stock were   issued and outstanding and held by
      over 1000 shareholders. Holders of Common Stock are entitled
      to receive   dividends, when and if declared by
      the board of directors, subject to prior rights of holders of
      any Preferred Stock then outstanding and to share ratably in
      the net assets of the company upon liquidation. Holders of
      Common Stock do not have preemptive or other rights to
      subscribe   for
      additional shares. The Certificate of Incorporation does not
      provide for cumulative voting. Shares of   Common Stock have equal voting,
      dividend, liquidation and other rights, and have no
      preference, exchange or appraisal rights.

Preferred
      Stock:  We are
      authorized to issue up to a maximum of 2 million shares
      (66,500 shares outstanding) of Preferred Stock. We can issue
      these shares as our board of directors shall from time to
      time fix by resolution. Our Preferred Stock is not entitled
      to share in any dividends declared on the Common Stock and
      has no voting rights. Each share is convertible in to 3
      shares of Common. The liquidation preference is set by this
      conversion formula and results in a pro rata claim on the
      Company’s assets based upon the underlying common
      shares issuable (199,500) upon conversion.

Recent
      Issuance of Unregistered Securities

2012:

Stock Issued
      for Cash

We issued 271,270,882 shares
      of our common stock in exchange for receiving a total of
      $3,626,882 in cash net of offering expenses. The shares were
      deemed to have been issued pursuant to an exemption provided
      by Section 4(2) of the Act, which exempts from registration
      “transactions by an issuer not involving any public
      offering.”

Stock
        Issued for Services

We issued 329,248,482 shares
      of our common stock in exchange for services. The shares were
      valued at $7,686,588 or about $0.023 per share which
      reflected the weighted average market value at the time of
      issuance. 158,100,000 of the shares valued at approximately
      $3,888,000 were issued to Igor Dmitrowsky our
      president.

2011:

Stock Issued
      for Cash

We issued 241,369,947 shares
      of our common stock in exchange for receiving a total of
      $7,807,242 in cash net of offering expenses. The shares were
      deemed to have been issued pursuant to an exemption provided
      by Section 4(2) of the Act, which exempts from registration
      “transactions by an issuer not involving any public
      offering.”

Stock
        Issued for Services

We issued 357,846,441 shares
      of our common stock in exchange for services. The shares were
      valued at $17,438,892 or about $0.049 per share which
      reflected the weighted average market value at the time of
      issuance. 148,500,000 of the shares valued at approximately
      $7.2 million were issued to Igor Dmitrowsky our
      president.

Summary
      of Option Activity

All existing
      options were cancelled in 2012.







F-10

---

BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012



5. Income
      Taxes



The Company has
      approximately $30.8 million in available net operating loss
      carryovers available to reduce future income taxes. These
      carryovers expire at various dates through the year 2032. The
      Company has adopted ASC 740,  Accounting for
      Income Taxes   which
      provides for the recognition of a deferred tax asset based
      upon the value the loss carry-forwards will have to reduce
      future income taxes and management's estimate of the
      probability of the realization of these tax benefits. We have
      determined it more likely than not that these timing
      differences will not materialize and have provided a
      valuation allowance against our entire net deferred tax asset
      of approximately $6.1 million.

Utilization of federal and
      state NOL and tax credit carry-forwards may be subject to a
      substantial annual limitation due to the ownership change
      limitations provided by the Internal Revenue Code of 1986, as
      amended, and similar state provisions. The annual limitation
      may result in the expiration of NOL and tax credit
      carry-forwards before full utilization.

6.
      Commitments and Contingencies

Facilities:
       The Company leases office
      space for its administrative offices, under three month to
      month agreements, at a combined monthly rental of
      approximately $27,000. In 2012 and 2011 expense was $618,544
      and $336,979 respectively.



7.
      Long-Term Debt-Related Party:

On December 1, 2010, the
      Company entered into a loan arrangement with a company owned
      or controlled by one of our directors for a total amount of
      $1,150,000. The Company issued a note bearing interest at 9%
      per annum payable quarterly and a maturity date of March 31,
      2013. The Company will be obligated to repay the note prior
      to the maturity date upon raising $4 million or from the
      proceeds of operating revenue. As a loan inducement the
      Company issued 6.8 million shares of common stock and 3.4
      million warrants. A placement fee of $50,000 was paid from
      the proceeds of this loan. The note is secured by both
      aircraft up to a limit of $2.9 million.

The
      Company recorded the relative fair value of the shares and
      warrants of $294,297 as additional paid-in capital and
      established a discount on the debt. The discount is being
      amortized over the life of the note (27 months) at an
      effective rate of 14.98%. The note is carried net of the
      discount.



8.
      Management's Plan of Operation



We believe we currently have
      sufficient capital to commence revenue flight operations and
      to maintain our current level of operations. During 2012 and
      into 2013 we continue to finance our operations through the
      issuance of our common stock and the continued exercise of
      warrants. Until revenue operations begin, our monthly
      expenditures for administrative and regulatory compliance can
      be controlled at about $200,000-$400,000.  Based on
      current reserves we have sufficient capital to support our
      development stage operations through the most of 2013.



In 2012 we raised $3.6
      million in a private placement in order to start revenue
      flight operations. Based on our prior experience with
      certification and current preparations the management
      believes that the launch budget, previously reviewed by the
      DOT, will be adequate to complete certification and to
      commence flight service. Approximately $300,000 is budgeted
      for aircraft, $450,000 for certification tasks, and $300,000
      for general and administrative expenses. At the time flight
      service is inaugurated the company plans to have
      approximately 15 management and 45 staff
      personnel.



Management has considered
      the overall pipeline effect that enhances the initial cash
      position of a startup carrier. It is the industry practice
      for passengers to purchase tickets in advance of their
      flights while service vendors bill the carrier later.



F-11

---



BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012



8.
      Management's Plan of Operation (continued)



In order that a new airline
      would not fly empty on day one, approximately 30 days prior
      to the expected inaugural date the DOT authorizes sales of
      tickets and cargo. Such funds from advance sales, estimated
      at approximately $3 mm for the company, accumulate in an
      escrow account, and are released upon the issuance of the air
      carrier certificate.



There can be no assurance
      that additional financing will be available on terms
      favorable to us or at all. If adequate funds are not
      available or are not available on acceptable terms, we may
      not be able to fund expansion.

9. Going
      Concern

The accompanying financial
      statements have been prepared assuming that the company will
      continue as a going concern, which contemplates the
      recoverability of assets and the satisfaction of liabilities
      in the normal course of business. Currently, the Company has
      a minimum cash balance available for the payment of ongoing
      operating expenses, and its operations has not of yet
      produced any revenue, which would allow it to cover its
      operational costs and allow it to continue as a going
      concern. Since inception, the Company has incurred a deficit
      during its development stage of approximately $88.0 million
      and consumed approximately $21.0 million. The continued
      operations of the Company is dependent upon implementing
      airline service that would generate profits and raising
      sufficient capital through placement of its common stock or
      issuance of debt securities, which would enable the Company
      to carry out its business plan.

In the event we do not
      generate sufficient funds from revenues or financing through
      the issuance of our common stock or from debt financing, we
      may be unable to fully implement our business plan and pay
      our obligations as they become due, any of which
      circumstances would have a material adverse effect on our
      business prospects, financial condition, and results of
      operations. The accompanying financial statements do not
      include any adjustments that might be required should the
      Company be unable to recover the value of its assets or
      satisfy its liabilities.

During 2012 and into 2011,
      we continue to finance our operations through the issuance of
      our common stock and the continued exercise of warrants.
      Until revenue operations begin, our monthly expenditures for
      administrative and regulatory compliance can be controlled at
      about $200,000-$400,000.

In 2012, we raised $3.6
      million a private placement in order to start revenue flight
      operations. Revenue services did not start in 2011 as
      planned, and, as of April 15, 2013, we still have not
      implemented revenue producing services. At the time flight
      service is inaugurated, the company plans to have
      approximately 15 management and 45 staff personnel.

Management has considered
      the overall pipeline effect that enhances the initial cash
      position of a startup carrier. It is the industry practice
      for passengers to purchase tickets in advance of their
      flights while service vendors bill the carrier later.

In order that a new airline
      would not fly empty on day one, approximately 30 days prior
      to the expected inaugural date the DOT authorizes sales of
      tickets and cargo. Such funds from advance sales, estimated
      at approximately $3 million for the company, accumulate in an
      escrow account, and are released upon the issuance of the air
      carrier certificate.

There can be no assurance
      that additional financing will be available on terms
      favorable to us or at all. If adequate funds are not
      available or are not available on acceptable terms, we may
      not be able to fund expansion.







F-12

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BALTIA
      AIR LINES, INC. NOTES TO FINANCIAL STATEMENTS

DECEMBER
      31, 2012



10.
      Related Party

During the year ended
      December 31, 2012 and 2011, the Company issued 194,000,000
      and 245,749,998, respectively, restricted shares of its
      $0.001 par value common stock to officers and directors.
      These restricted shares were valued at $5,131,000 and
      $12,714,000, respectively, or a weighted average price of
      approximately $0.026 and $0.50 per share, respectively. Its
      president and CEO was charged additional compensation of
      $15,000 and $15,000, which represents one hundred percent of
      the rent the Company paid for its original corporate
      headquarters during the years ended December 31, 2012 and
      2011, respectively. Also, during the years ended December 31,
      2012 and 2011, this officer received other compensation of
      $35,957 and $60,106, respectively, for services provided the
      Company in lieu of salary. A second officer, Vice President
      – Finance, was paid additional compensation of $198,285
      and $347,948 for the years ended December 31, 2012 and 2011,
      respectively, which represents amounts paid him for
      negotiating services in connection with the raise of new
      equity capital. A third officer, Vice President, was paid
      additional compensation of $30,500 and $51,000 for services
      provided the Company during the years ended December 31, 2012
      and 2011, respectively. A fourth officer, Corporate
      Secretary, was additional compensation of $15,960 for
      services provided the Company during the year ended December
      31, 2012.

11.
      Subsequent events

The Company has successfully
      completed Gate I requirements of FAA Air Carrier
      Certification process

On March 28, 2013, at the
      FAA East Michigan Flight Standards District Office Baltia Air
      Lines senior staff and their FAA counterparts conducted a
      Formal Meeting to review Baltia’s certification
      documentation and management readiness.

On April 10, 2013, Baltia
      received confirmation that Baltia’s management
      personnel, system design, and other supporting documentation
      were found to be satisfactory.



The FAA Certification Team
      has determined that Baltia meets the requirements of FAA
      Order 8900.1 Volume 10 Chapter 2 Section 6 and is fit to
      enter into Phase II of the ATOS Certification Process.

























F-13



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OTHER
      EXHIBITS

3.1
      Certificate of Incorporation of Baltia Air Lines, Inc.
      Incorporated by reference to Exhibit 3.1 to Baltia Air Lines
      Inc.'s reported on Form 10-K, 21 Dec 2011 from the year ended
      December 31, 2010.

3.1.1
      Certificate of Incorporation amendment of Baltia Air Lines,
      Inc. (as amended and filed on June 24, 2011)

3.1.2
      Certificate of Incorporation amendment of Baltia Air Lines,
      Inc. (as amended and filed on May 25, 2012)

3.1.3
      Certificate of Incorporation amendment of Baltia Air Lines,
      Inc. (as amended and filed on December 27, 2012).

3.2
      Bylaws of Baltia Air Lines, Inc. (amended and ratified
      November 7, 2011) Incorporated by reference to Exhibit 3.2.2
      to Baltia Air Lines Inc.'s reported on Form 10-K, 21 Dec 2011
      from the year ended December 31, 2010.

10.
      MATERIAL CONTRACTS

10.1. - Fuel supply
      Agreement between Joint Stock Company “SOVEX” and
      Baltia Air Lines, Inc. of January 1, 2012 with confidential
      portion omitted and filed separately with the Commission
      pursuant to a request for confidential
      treatment.  Incorporated
      by reference to Exhibit 10.1 to Company’s 10-Q for
      1 st quarter 2012 as filed May 15, 2012.

10.2 - Letter evidencing
      agreement that engines identified in Exhibit 10.3 below may
      be removed from N705BL and installed on
      N706BL.  Incorporated
      by reference to Exhibit 10.5 to Company’s 10-K/A for
      year 2010 as filed December 21, 2011.

10.3 - Product and
      Services Agreements between Navtech Systems Support Inc. and
      Baltia Airt Lines, Inc. Dated January 15, 2010 with
      confidential portion omitted and filed separately with the
      Commission pursuant to a request for confidential
      treatment.  Incorporated
      by reference to Exhibit 10.7 to Company’s 10-K/A for
      year 2010 as filed December 21, 2011.

10.4 - Ground Handling
      Agreement at Pulkovo Airport between ZAO Cargo Terminal
      Pulkovo and Baltia Air Lines, Inc. effective June 1, 2011,
      with amendment validating contract through June 1, 2014, with
      confidential portion omitted and filed separately with the
      Commission pursuant to a request for confidential treatment
      of April 15, 2013. Original agreement  incorporated
      by reference to Exhibit 10.9.2 to Company’s 10-K/A for
      year 2010 as corrected and filed March 2, 2012.

10.5 - Ground Handling
      Agreement at Pulkovo Airport between ZAO Cargo Terminal
      Pulkovo and Baltia Air Lines, Inc. effective June 1, 2012
      with confidential portion omitted and filed separately with
      the Commission pursuant to a request for confidential
      treatment of April 15, 2013

10.6 - First Amendment to
      Product and Services Agreements between Navtech Systems
      Support Inc. and Baltia Air Lines, Inc. dated January 15,
      2010.  Incorporated
      by reference to Exhibit 10.10 to Company’s 10-Q/A for
      3 rdquarter 2011, corrected and filed March 29,
      2012.

10.7 Aircraft Bill of Sale
      for Boeing 747 aircraft N705BL.  Incorporated
      by reference to Exhibit 10.9 to Company’s 10-Q for
      1 st quarter 2012 as filed May 15, 2012.

10.8 JLT Certificate of
      Insurance BA-12-009 – Hull and
      Liability  Incorporated
      by reference to Exhibit 10.10 to Company’s 10-Q for
      1 st quarter 2012 as filed May 15, 2012.

10.9 JLT Insurance Binder
      – Hull, Spares and Liability.  Incorporated
      by reference to Exhibit 10.11 to Company’s 10-Q for
      1 st quarter 2012 as filed May 15, 2012.

10.10 JLT Insurance Binder
      – Airline Hull War and Allied Perils.  Incorporated
      by reference to Exhibit 10.12 to Company’s 10-Q for
      1 st quarter 2012 as filed May 15, 2012.

10.11 JLT Insurance Binder
      – Aviation Hull Deductible.  Incorporated
      by reference to Exhibit 10.13 to Company’s 10-Q for
      1 st quarter 2012 as filed May 15, 2012.

10.12 John F. Kennedy
        Airport - Terminal 4, Lease Agreement between JFK
        International Air Terminal, LLC and Baltia Air Lines, dated
        November 17, 2008, effective until terminated by either
        party.

10.13 JFK Airport Building
      151 Lease Agreement, between Japan Airlines Management Corp.
      and Baltia Air Lines, effective on September 1, 2011, valid
      through November 30, 2015.

10.14 Willow Run Airport
      facility lease between Wayne County Airport Authority and
      Baltia Air Lines, effective from November 1, 2012 until April
      30, 2013.

10.15 Pulkovo Airport
      facility Lease Agreement between Northern Capital Gateway,
      LLC and Baltia Air Lines, effective from April 29, 2010 until
      terminated by either party.Incorporated by reference to
      Exhibit 10.2 to Baltia Air Lines’ report on Form 10K
      for the year ended December 31, 2010.

10.16 Contract affirmed by Board resolution
      affirming Agreements between Baltia Air Lines and its
      officers agreeing not to sell the shares issued to them until
      the Company receives FAA Certification and commence its
      revenue flights.

31.1 Certification by Chief
      Executive Officer and Chief Financial Officer pursuant to
      Sarbanes-Oxley Section 302, provided herewith.

32.1 Certification by Chief
      Executive Officer and Chief Financial Officer pursuant to 18
      U.S. C. Section 1350, provided herewith.

NOTE: Pursuant to 17 CFR
      240.24b-2, confidential information has been omitted from
      certain of the appended exhibits and has been filed
      separately with the Securities and Exchange Commission
      pursuant to a Confidential Treatment Request filed with the
      Commission.

SIGNATURES

In accordance with Section
      13 or 15(d) of the Exchange Act, the registrant caused this
      report to be signed on its behalf by the undersigned,
      thereunto duly authorized.

Baltia Air Lines,
      Inc.

Date: April 16,
      2013

/s/ Igor Dmitrowsky By: Igor
      Dmitrowsky, President, CEO and CFO

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

|SIGNATURE                                           | TITLE                                                                                                        | DATE          
|--------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | --------------
|/s/ Igor Dmitrowsky
            Igor Dmitrowsky     | Chairman, CEO and
            CFO (Principal Executive Officer and
            Principal Accounting Officer) | April 16, 2013
|/s/ Walter Kaplinsky
            Walter Kaplinsky   | Secretary and
            Director                                                                           | April 16, 2013
|/s/ Andris Rukmanis
            Andris Rukmanis     | V.P. Europe and
            Director                                                                         | April 16, 2013
|/s/ Vick Luis Bolanos
            Vick Luis Bolanos | Director                                                                                                     | April 16, 2013





Exhibit
      31.1

BALTIA
      AIR LINES INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
      1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE
      SARBANES-OXLEY ACT OF 2002

I, Igor Dmitrowsky, certify
      that:

1. I have reviewed this
      annual report on Form 10-K of Baltia Air Lines, Inc.;

2. Based on my knowledge,
      this report does not contain any untrue statement of a
      material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under
      which such statements were made, not misleading with respect
      to the period covered by this report;

3. Based on my knowledge,
      the financial statements, and other financial information
      included in this report, fairly present in all material
      respects the financial condition, results of operations and
      cash flows of the registrant as of, and for, the periods
      presented in this report;

4. The registrant's other
      certifying officer(s) and I are responsible for establishing
      and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
      internal controls over financial reporting (as defined in
      Exchange Act Rules 13a- 15(f) and 15d-15(f))for the
      registrant and have:

(a) Designed such disclosure
      controls and procedures, or caused such disclosure controls
      and procedures to be designed under our supervision, to
      ensure that material information relating to the registrant,
      including its consolidated subsidiaries, is made known to us
      by others within those entities, particularly during the
      period in which this report is being prepared;

(b) Designed such internal
      control over financial reporting, or caused such internal
      control over financial reporting to be designed under our
      supervision, to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of
      financial statements for external purposes in accordance with
      generally accepted accounting principles;

(c) Evaluated the
      effectiveness of the registrant's disclosure controls and
      procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures,
      as of the end of the period covered by this report based on
      such evaluation; and

(d) Disclosed in this report
      any change in the registrant's internal control over
      financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth fiscal
      quarter in the case of an annual report) that has materially
      affected, or is reasonably likely to materially affect, the
      registrant's internal control over financial reporting;
      and

5. The registrant's other
      certifying officer(s) and I have disclosed, based on our most
      recent evaluation of internal control over financial
      reporting, to the registrant's auditors and the audit
      committee of the registrant's board of directors (or persons
      performing the equivalent functions):

(a) All significant
      deficiencies and material weaknesses in the design or
      operation of internal control over financial reporting which
      are reasonably likely to adversely affect the registrant's
      ability to record, process, summarize and report financial
      information; and

(b) Any fraud, whether or
      not material, that involves management or other employees who
      have a significant role in the registrant's internal control
      over financial reporting.

Date: April 16,
      2013

/s/ Igor Dmitrowsky
      Chairman, CEO and CFO April 16, 2013 Igor Dmitrowsky
      (Principal Executive Officer)

/s/ Igor Dmitrowsky
      Chairman, CEO and CFO April 16, 2013 Igor Dmitrowsky
      (Principal Accounting Officer)



EXHIBIT
      32.1

BALTIA
      AIR LINES, INC. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION
      1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
      SARBANES-OXLEY ACT OF 2002

In connection with the
      Quarterly Report Baltia Air Lines, Inc. (the "Company") on
      Form 10-K for the period ended December 31, 2012 as filed
      with the Securities and Exchange Commission on the date
      hereof (the Report),

I, Igor Dmitrowsky, certify,
      pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully
      complies with the requirements of section 13(a) or 15(d) of
      the Securities Exchange Act of 1934; and

(2) The information
      contained in the Report fairly presents, in all material
      respects, the financial condition and results of operations
      of the Company.

A signed original of this
      written statement required by Section 906 has been provided
      to Baltia Air Lines, Inc. and will be retained by Baltia Air
      Lines, Inc. and furnished to the Securities and Exchange
      Commission or its staff upon request.

Date: April 16,
      2013

/s/ Igor Dmitrowsky
      Chairman, CEO and CFO April 16, 2013 Igor Dmitrowsky
      (Principal Executive Officer)

/s/ Igor Dmitrowsky
      Chairman, CEO and CFO April 16, 2013 Igor Dmitrowsky
      (Principal Accounting Officer)