U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549


                                  FORM 10-KSB/A

(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, 2000

                                       OR

[  ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT OF 1934
      For the transition period from ___________ to       ___________.

Commission File Number:  0-26588

                          BALTIC INTERNATIONAL USA, INC.
                 (Name of small business issuer in its charter)

                  Texas                                   76-0336843
     (State or other jurisdiction                      (IRS Employer
     of incorporation or organization)                Identification No.)

                           5151 San Felipe, Suite 1661
                               Houston, Texas 77056
           (Address of principal executive offices, including zip code)

                                 (713) 961-9299
                 (Issuer's telephone number, including area code)


     Securities registered under Section 12(b) of the Exchange Act:  None

     Securities registered under Section 12(g) of the Exchange Act:

                           Common Stock, $.01 par value
                                    Warrants
                                (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.  Yes [X]  No
[  ]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [X]

     Issuer's revenues for the year ended December 31, 2000 were $1,065,072.

     The aggregate market value of Common Stock held by non-affiliates of
the registrant at March 30, 2001, based upon the last sales price as
reported by the OTC Bulletin Board, was $748,101.

     As of March 30, 2001, there were 9,975,960 shares of Common Stock
outstanding.


     Transitional Small Business Disclosure Format (Check one):  Yes   ; No X .



                                TABLE OF CONTENTS
                                                                           Page

PART I
     Item 1.   Description of Business                                       3

     Item 2.   Description of Property                                       4

     Item 3.   Legal Proceedings                                             4

     Item 4.   Submission of Matters to a Vote of Security Holders           4


PART II
     Item 5.   Market for Common Equity and Related Stockholder Matters      5

     Item 6.   Management's Discussion and Analysis or Plan of Operation     5

     Item 7.   Financial Statements                                          7

     Item 8.   Changes In and Disagreements With Accountants on
                 Accounting and Financial Disclosure                         7


PART III
     Item 9.   Directors, Executive Officers, Promoters and Control
                 Persons; Compliance with Section 16(a) of the
                 Exchange Act                                                8

     Item 10.  Executive Compensation                                       10

     Item 11.  Security Ownership of Certain Beneficial Owners and
                 Management                                                 11

     Item 12.  Certain Relationships and Related Transactions               12

     Item 13.  Exhibits and Reports on Form 8-K                             13

SIGNATURES



                                     PART I

Item 1.  DESCRIPTION OF BUSINESS

     Baltic International USA, Inc. (the "Company" or "BIUSA") is a Texas
corporation that has provided capital, management, and technical services to
start-up and established private companies.  In most instances, the Company is
directly involved in management, and in all instances assists in allocation of
capital either directly from the Company or through the investment of third
parties. BIUSA has not taken significant profits or management fees from these
investments.

     During 1999, the Company decided to sell most of its business interests in
Eastern Europe and to focus on utilizing its assets to achieve profitability by
acquiring business operations based in the United States.  The Company has
limited cash resources available for investment purposes.

Advanced Reclamation Company

     In February 2000, the Company purchased the units of Advanced
Reclamation Company, L.L.C. ("ARC") from the Nicol Family Partnership.  The
Company purchased all of the units of ARC for cash of $400,000, a total of
500,000 common shares of the Company, a note payable to seller of an
additional $400,000 and an earnout agreement.  ARC is a complete refrigerant
management company.  ARC provides a full range of refrigerant services
including, but not limited to, recovery, reclamation, and the sale of new or
reclaimed refrigerants.

AIRO Catering Services

     In February 1996, the Company formed AIRO Catering Services ("AIRO") with
TOPflight Catering AB ("TOPflight").  TOPflight operates kitchens in Malmo,
Gothenburg and Stockholm, Sweden.  In this joint operation, the Company
contributed its management and operational expertise, its interest in Riga
Catering Services ("RCS"), market knowledge, knowledge of the regional customer
base and labor force for a 51% interest.  TOPflight contributed its technical
experience in building in-flight kitchens and its interest in RCS for a 49%
interest.  During 1997, LSG Lufthansa Services/Sky Chefs ("LSG") purchased 51%
of TOPflight.

     In December 1997, the Company sold a 5% interest in AIRO to Lufthansa
Services/Sky Chefs  for $600,000 in cash.  In July 1999, the Company sold a 23%
interest in AIRO to ORESA Ventures N.V. and Celox S.A. in exchange for an
aggregate of 6,250,000 shares of the Company's common stock, warrants to
purchase 6,250,000 shares of the Company's common stock and $250,000 in cash.
In October 1999, the Company sold the remaining 23% interest in AIRO to ORESA
Ventures N.V. and Celox S.A. for $1,145,000 in cash and forgiveness of about
$200,000 in debt.

Air Baltic Corporation

     In 1992, the Company developed Baltic International Airlines ("BIA") -
the first independent airline in the former Soviet Union.  In October 1995,
the Company sold the scheduled passenger service operations of its 49%
interest in BIA, to the newly created national airline of Latvia, Air
Baltic. The Company sold its remaining 8.02% interest in Air Baltic to SAS
in January 1999 for $2,144,333 cash under the terms of an option agreement
between the Company and SAS.  The Company used the proceeds from the sale to
repay the $2 million loan from a shareholder.

Competition

     The Company's business ventures face competition from other companies
and individuals.  Businesses that the Company currently operates, or may
operate in the future, presently compete and will compete with other
entities, many of which may have greater financial, marketing and technical
resources.

Employees

     The Company currently employs 10 persons on a full-time basis.  The
Company has in the past, and will continue in the future, to employ
independent contractors and to make extensive use of its outside directors
and others as consultants.  None of the employees of the Company and its
subsidiaries and joint operations are represented by a labor organization.
The Company believes its relationships with all of these employees are
satisfactory.

Item 2.  DESCRIPTION OF PROPERTY

     The Company leases office space in Houston, Texas and office and plant
facilities in League City, Texas.  The Company believes that its facilities
are adequate for its current operations.

Item 3.  LEGAL PROCEEDINGS

     None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.



PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's Common Stock is listed on the OTC Bulletin Board under
the symbol "BISA."  Effective May 23, 2001, the Company's Common Stock has
traded on the OTC Pinksheets.  The following table sets forth the high and low
sales prices of the Common Stock for the periods indicated:

                            2000                       1999
                    -------------------        ---------------------
                      High         Low           High           Low
                      ----         ---           ----           ---

First Quarter       $0.234       $0.125        $0.156         $0.125
Second Quarter       0.219        0.125         0.156          0.125
Third Quarter        0.203        0.094         0.141          0.063
Fourth Quarter       0.156        0.063         0.188          0.078

     On March 30, 2001, the last sales price for the Common Stock was
$0.1094, and the Company believes there were approximately 1,000 beneficial
holders of its Common Stock.

     The Company has not paid, and does not currently intend to pay, cash
dividends on its Common Stock.  The current policy of the Company's Board of
Directors is to retain earnings, if any, to provide funds for operation and
expansion of the Company's business.  Such policy will be reviewed by the
Board of Directors of the Company from time to time in light of, among other
things, the Company's earnings and financial position.

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The following discussions contain forward-looking information.  Readers
are cautioned that such information involves risks and uncertainties,
including those created by general market conditions, competition and the
possibility of events may occur which limit the ability of the Company to
maintain or improve its operating results or execute its primary growth
strategy.  Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could be
inaccurate, and there can therefore be no assurance that the forward-looking
statements included herein will prove to be accurate.  The inclusion of such
information should not be regarded as a representation by the Company or any
other person that the objectives and plans of the Company will be achieved.

     The following discussion should be read in conjunction with the
financial statements and notes thereto included elsewhere herein.

General

     In 1999, the Company shifted its focus to concentrate on operations in
the United States.  In January 1999, the Company sold its 8.02% of Air
Baltic stock to SAS for $2,144,333 under the terms of the option agreement
between the Company and SAS.  The Company used the proceeds from the sale to
repay the $2 million loan from a shareholder.  In July 1999, the Company sold
a 23% interest in AIRO to ORESA Ventures N.V. and Celox S.A. in exchange for an
aggregate of 6,250,000 shares of the Company's common stock, warrants to
purchase 6,250,000 shares of the Company's common stock and $250,000 in cash.
In October 1999, the Company sold the remaining 23% interest in AIRO to ORESA
Ventures N.V. and Celox S.A. for $1,145,000 in cash and forgiveness of
approximately $200,000 in debt.  In February 2000, the Company purchased ARC as
our first operation based in the United States.  In May 2001, the Company
received about $633,000 in cash for settlement of the receivables from AIRO.

Results of Operations

     Years Ended December 31, 2000 and 1999.  Revenues for 2000 increased by
$1,041,411 to $1,065,072 compared to $23,661 for 1999.  The increase is due
to acquisition of Advanced Reclamation Company in February 2000.
Additionally, the Company sold its interest in the catering operations of
AIRO in 1999 and ceased the beverage and food distribution operations of ADC
in June 2000.

     Operating expenses increased to $1,414,144 for 2000 compared to
$382,206 for 1999.  The increase is primarily due to the acquisition of ARC
in February 2000.  As a result of the purchase of ARC, the Company added the
refrigerant management business to our operations.

     As a result of the changes in revenues and expenses discussed above,
the operating loss for the Company decreased to $349,072 for 2000 from
$358,545 for 1999.  The Company had a net loss (including interest expense,
non-recurring gains and discontinued operations discussed below) of $413,840
for 2000 compared to a net income of $769,137 for 1999.

     Interest expense increased by $24,509 to $50,309 for 2000 from $25,800
in 1999, reflecting the additional debt of the Company resulting from the
acquisition of ARC.

     In January 1999, the Company sold its interest in Air Baltic for
$2,144,333.  A gain of $121 was recognized on this sale.

     In July 1999 and October 1999, the Company sold its interest in AIRO to
ORESA Ventures N.V. and Celox S.A. in exchange for an aggregate of 6,250,000
shares of the Company's common stock, warrants to purchase 6,250,000 shares of
the Company's common stock, $1,395,000 in cash and forgiveness of approximately
$200,000 in debt.  Aggregate gains of $1,457,059 were recognized on these
sales and included in gain from disposal of discontinued operations.  As a
result of the sale of the Company's interest in AIRO, the net equity in
losses of the catering operations of $192,947 is included in loss from
discontinued operations.  The loss of the catering operations is primarily
the result of the adoption of AICPA SOP 98-5, "Reporting on the Costs of
Start-Up Activities".  SOP 98-5 requires at adoption the Company to write-off
any unamortized start-up costs as a cumulative change in accounting principle
and, going forward, expense all start-up activity costs as they are incurred.
The Company's share of the write-off of AIRO's start-up costs as of
January 1, 1999 was $298,877.

Liquidity and Capital Resources

     At December 31, 2000 the Company had a working capital deficit of
$697,773 compared to working capital of $405,729 at December 31, 1999.  The
decrease in the working capital is due primarily to the cash paid for the
purchase of ARC and operating losses.  The Company had shareholders' deficit
of $54,554 at December 31, 2000.

     Net cash used by operating activities was $354,016 for 2000, compared
to $642,091 for 1999.  The decrease in cash used by operating activities in
2000 was primarily due to the payment of accounts payable and accrued
liabilities in 1999 partially offset by the Company's continued efforts to
reduce its overhead expenses.  Net cash used by investing activities was
$513,754 for 2000, compared to net cash provided of $3,450,233 for 1999.  The
decrease in cash provided by investing activities was attributable to the
sale of assets in 1999.  Net cash provided by financing activities was
$31,045 for 2000, compared to net cash used of $2,050,000 for 1999 due
to the repayment of debt to ORESA Ventures N.V. in January 1999.

     In 2000, the Company issued 520,000 shares of treasury stock as part of
the purchase of ARC.  In 1999, the Company issued 119,175 shares of Common
Stock for payment of accounts payable and services rendered of $9,311.

     In connection with the private placements in 1997, the Company issued
warrants to purchase 6,800,000 shares at an exercise price of $0.65 per
share of Common Stock, which warrants were immediately exercisable and
expire in August 2002.  The Company reacquired an aggregate of 6,250,000
shares of the Company's common stock and 6,250,000 of these warrants were
cancelled in July 1999 as part of the consideration received from the sale
of a 23% interest in AIRO.

     The Company has incurred operating losses since inception through
December 31, 2000.  The Company incurred operating losses of $349,072 in
2000 and $358,545 in 1999.  At December 31, 2000, the Company had an
accumulated deficit of $13,991,403.  Net cash used in operating activities
was $354,016 in 2000 and $642,091 in 1999.

     Management believes that the Company will be able to achieve a
satisfactory level of liquidity to meet its business plan and capital needs
through December 31, 2001.  In May 2001, the Company received about $633,000
in cash for settlement of the receivables from AIRO.  During 2000 and 1999,
the Company borrowed an aggregate principal amount of $122,060 and $118,000,
respectively, as bridge financing from officers and directors of the Company.
In connection with these borrowings, the Company issued warrants to purchase
12,206 and 11,800 shares of common stock, respectively, at exercise prices of
$0.06 to $0.15 per share.  In July 1999, the Company sold a 23% interest in
AIRO to ORESA Ventures N.V. and Celox S.A. in exchange for an aggregate of
6,250,000 shares of the Company's common stock, warrants to purchase 6,250,000
shares of the Company's common stock and $250,000 in cash.  In October 1999,
the Company sold the remaining 23% interest in AIRO to ORESA Ventures N.V. and
Celox S.A. for $1,145,000 in cash and forgiveness of approximately $200,000 in
debt.  Additionally, management believes the Company has the ability to obtain
additional financing from key officers, directors and certain investors.
However, there can be no assurance that the Company will be able to generate
sufficient liquidity to maintain its operations.

     At December 31, 2000, the Company had cash of $31,797.  The Company has
limited cash resources available and has obligations due and past due.
However, in May 2001, the Company received about $633,000 for settlement of
the receivables from AIRO.

Inflation

     Inflation has not had a significant impact on the Company during the
last two years.  However, an extended period of inflation could be expected
to have an impact on the Company's earnings by causing operating expenses to
increase.  It is likely that the Company would attempt to pass increased
expenses to customers.  If the Company is unable to pass through increased
costs, its operating results could be adversely affected.

Item 7.  FINANCIAL STATEMENTS

     The information required hereunder is included in this report as set
forth in the "Index to Consolidated Financial Statements" on page F-1.

Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     The Company changed its accountants for 2000.  The Company has engaged
Mann Frankfort Stein & Lipp CPA's, L.L.P. for the audit of the 2000 financial
statements.  The Company had Arthur Andersen LLP as its accountants
previously.  There have been no disagreements with accountants on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.

PART III

Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

Executive Officers and Directors

     The following table gives certain information with respect to the
executive officers and directors of the Company:

     Name                    Age     Position
     ----                    ---     --------
     Robert L. Knauss (3)     70     Chairman of the Board and Chief Executive
                                      Officer, Director
     David A. Grossman        37     Chief Financial Officer, Corporate
                                      Secretary and Director
     Homi M. Davier (1)       52     Director
     James W. Goodchild (4)   45     Director
     Paul R. Gregory (2)      60     Director
     Juris Padegs (1)(2)(3)   69     Director
     Ted Reynolds (1)(2)      70     Director
___________________________
(1)  Member of the Audit Committee.
(2)  Member of the Compensation Committee.
(3)  Member of the Nominating Committee.
(4)  Mr. Goodchild resigned as President and Chief Operating Officer in
     March 1998.  He resigned as a director of the Company in December
     2000.

     Mr. Knauss has served as chief executive officer since January 1994.
Mr. Knauss served as Dean of the University of Houston Law Center from 1981
through December 1993.  Mr. Knauss was involved in establishing the
relationship between the University of Houston Law Foundation and the former
Soviet Union in 1991 whereby the University of Houston Law Foundation
assisted the former Soviet Union in creating the Petroleum Legislation
Project, and was involved with the government of Russia in the development
of privatization legislation.  Mr. Knauss has served as a director of Equus
Investments, Inc. since 1984 and as one of the two United States directors
for the Mexico Fund since 1985.  He was elected as a director of Philip
Services Corp. in 1997 following the merger of Allwaste, Inc. and Philip
Services Corp. and was elected chairman of the board of Philip Services
Corp. in May 1998.  Securities of the Mexico Fund, Philip Services Corp. and
Equus Investments, Inc. are registered under the Securities Exchange Act of
1934 (the "Exchange Act").  Mr. Knauss is a graduate of Harvard University
and the University of Michigan Law School.  Mr. Knauss has traveled
extensively to the former Soviet Union.  Mr. Knauss has served as chairman
of the board of the Company since its inception in March 1991.

     Mr. Grossman has served as chief financial officer since September 1997
and as corporate secretary since December 1996.  He served as president from
November 1998 until May 2000 when he resigned as a full-time employee of the
Company.  He served as comptroller from November 1995 until September 1997.
Mr. Grossman has been chief financial officer of LynkTel, Inc. since May
2000.  Prior to joining the Company, he was an audit senior manager for
Deloitte & Touche LLP.  Mr. Grossman is a certified public accountant and
graduated from Indiana University in 1985 with a BS degree in accounting.

     Mr. Davier served as president of the Company from March 1991 until
August 1995.  Mr. Davier has served as a director and as the Company's
managing director to BIA from June 1991 to August 1995.  He served as senior
traffic assistant of Air India from 1971 to 1975, and assisted in the start-
up of Gulf Air in Oman from 1975 to 1978 and in the start-up of the Middle
Eastern operations of Air Bangladesh and Sabena Belgian Airlines from 1978
to 1980.  Mr. Davier has served as chairman of the board and president of
Capricorn Travel and Tours, Inc. since April 1983.  He is the founder and
president of Capricorn Computers, established in 1985, which developed and
markets the Capri 2020, a revenue accounting and management report system
for travel agencies.  He has been chief executive officer of Travel Stop, a
Houston-based retail travel outlet, since 1990.  Mr. Davier graduated from
Hislop College in Nagpur, India.

     Mr. Goodchild has been senior credit officer of AMRESCO Builders Group,
Inc. since March 1998.  He served as president of the Company from September
1997 and as chief operating officer of the Company from October 1994 until
March 1998.  He served as chief financial officer of the Company from
September 1993 until September 1997.  Mr. Goodchild served as the Company's
vice president of finance and development from July 1992 to August 1993.
From August 1989 through June 1992, Mr. Goodchild attended the University of
Houston where he acquired a BA degree in Russian and Soviet Studies, and a
BA degree in International Relations.  Mr. Goodchild was project
administrator of the Russian Petroleum Legislation Project from July 1992 to
December 1992.  From 1984 to March 1989, he was employed with MCorp,
formerly a Dallas-based bank holding company, where he served as senior vice
president and manager of credit administration of MCorp's Collection Bank.
Additionally, Mr. Goodchild acquired a BS degree in finance from the
University of Houston in 1978.

     Dr. Gregory served as treasurer, on a part-time basis, of the Company
since its inception in March 1991 until August 1995.  Dr. Gregory is the
Cullen Professor of Economics and Finance at the University of Houston where
he has been a faculty member since 1972.  He was involved in creating the
Petroleum Legislation Project with Russia and he served as project
coordinator of the Russian Securities Project in conjunction with the
Russian State Committee for Property Management and the various Russian
stock exchanges.  He serves as advisor to a number of major United States
corporations on their Russian business activities, and has been active in
the former Soviet Union for 25 years.  He has served as chairman of the
board of Amsovco International Consultants, Inc. since 1988.  He has also
served as a consultant to the World Bank.  Dr. Gregory graduated from
Harvard University with a Ph.D. in economics and is fluent in Russian and
German.  Dr. Gregory is the author of a text on the Soviet and Russian
economies.

     Mr. Padegs served as a managing director of Scudder, Stevens & Clark,
an international investment management firm from 1985 to 1996, has been
employed with Scudder, Stevens & Clark since 1964 and is now Advisory
Managing Director at that firm now known as Zurich Scudder Investments, Inc.
Mr. Padegs is the chairman and director of the Korea Fund and the Brazil
Fund.  Mr. Padegs is the director of several other investment companies.
Mr. Padegs was born in Latvia and holds a Bachelor of Arts and a law degree
from Yale University.  Mr. Padegs is fluent in Latvian and German.  In July
1994, he was appointed by President Clinton to the board of the Baltic
American Enterprise Fund, a $50 million fund to promote private enterprise
in the Baltic States.

     Mr. Reynolds has been president of Houston Grain Company since 1983 and
vice president of Mid-America Grain Commodities since 1976.  He also formed
and is owner of Red River Grain Company.  He is actively involved in various
international business transactions.  Mr. Reynolds is a graduate of Texas
Christian University.

     Directors hold office until their successors are elected and qualified.
The Audit Committee reviews and reports to the Board on the financial
results of the Company's operations and the results of the audit services
provided by the Company's independent accountants, including the fees and
costs for such services.  The Compensation Committee reviews compensation
paid to management and recommends to the Board of Directors appropriate
executive compensation.  The Nominating Committee selects director nominees
for election to the Board of Directors.  Officers are elected annually and
serve at the discretion of the Board of Directors.  There is no family
relationship between or among any of the directors and executive officers of
the Company.

Director Compensation

     Outside directors are entitled to receive options to purchase 10,000
shares of Common Stock in their first year of service and options to purchase
5,000 shares of Common Stock per year thereafter as compensation in addition to
reimbursement of out-of-pocket expenses to attend board meetings.  In December
2000, Messrs. Davier, Goodchild, Gregory, Padegs and Reynolds each received
options to purchase 5,000 shares of common stock at a price of $0.0938 per
share.  Such options expire in December 2005.  In December 1999, Messrs.
Davier, Goodchild, Gregory, Padegs and Reynolds each received options to
purchase 5,000 shares of common stock at a price of $0.10 per share.  Such
options expire in December 2004.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file
reports with the Securities and Exchange Commission relating to transactions
and holdings in the Company's common stock.  The Company believes that during
the fiscal year ended December 31, 2000 all such filing requirements were
satisfied.

Item 10.  EXECUTIVE COMPENSATION

     The following table sets forth information with respect to the chief
executive officer and the only other executive officer of the Company who
received total annual salary and bonus for the fiscal year ended December 31,
2000 in excess of $100,000:

<TABLE>
<CAPTION>
                                 Summary Compensation Table


                                                                      Long-Term Compensation
                                                                    --------------------------
                                     Annual Compensation (1)                       Securities
                                ---------------------------------                  Underlying
Name and Principal    Fiscal                         All Other      Restricted      Options
Position               Year      Salary    Bonus     Compensation   Stock Awards  and Warrants
<S>                    <C>     <C>        <C>            <C>            <C>         <C>
Robert Knauss,         2000     $      0   $     0          $0       $     0               0
 Chief Executive       1999       24,000         0           0             0         174,000
  Officer              1998      100,000         0           0             0               0

David Grossman,        2000     $ 42,091   $     0     $     0       $     0         100,000
 Chief Financial       1999       85,000         0           0             0         174,000
  Officer (2)          1998       82,500    25,000 (3)       0             0               0
</TABLE>

 (1)  None of the named executive officers received perquisites or other
      benefits valued in excess of 10% of the total of reported annual salary
      and bonus.
 (2)  Mr. Grossman resigned as President in May 2000.
 (3)  The Company paid the 1998 bonus to Mr. Grossman in 2000.

Stock Options

     In September 1992, the Company adopted its 1992 Equity Incentive Plan
("Plan"), which was amended effective March 1995, December 1995 and September
1997.  The Plan provides for the issuance of incentive stock options and non-
qualified options.  An aggregate of 1,500,000 shares of the Company's Common
Stock may be issued pursuant to options granted under the Plan to employees,
non-employee directors and consultants, subject to evergreen provisions
included in the Plan.  The compensation committee of the Company's Board of
Directors administers the Plan. The compensation committee has the authority to
determine, among other things, the size, exercise price and other terms and
conditions of awards made under the Plan.  Subject to certain restrictions, the
exercise price of incentive stock options may be no less than 100% of fair
market value of a share of Common Stock on the date of grant.  As of March 30,
2001, options to purchase an aggregate of 1,229,700 shares were outstanding
under the Plan.

     The following table shows, as to the named executive officers, information
concerning individual grants of stock options during 2000.

<TABLE>
<CAPTION>
                       Option Grants in Last Fiscal Year

                      Number of     Percentage of Total
                      Securities      Options/Warrants
                      Underlying         Granted to
                   Options/Warrants     Employees in    Exercise Price   Expiration
Name                   Granted              1999          Per Share         Date
<S>                  <C>                <C>             <C>             <C>
Robert L. Knauss            0               0.0%             N/A               N/A
David A. Grossman     100,000              30.0%          $ 0.12        February 2, 2007
</TABLE>

     The following table shows, as to the named executive officers,
information concerning aggregate stock option and warrant exercises
during 2000 and the stock option and warrant values as of December 31,
2000.

<TABLE>
<CAPTION>
      Aggregated Option and Warrant Exercises in Last Fiscal Year
                 and Year End Option and Warrant Values

                                           Number of Securities
                                               Underlying        Value of Unexercised
                                              Unexercised            In-the-Money
                                           Options/Warrants at   Options/Warrants at
                   Shares                  December 31, 1999    December 31, 1999
                 Acquired on      Value       Exercisable/          Exercisable/
Name               Exercise      Realized    Unexercisable         Unexercisable
<S>                <C>             <C>      <C>                   <C>
Robert L. Knauss         0          $0       454,100 / 0              $0 / $0
David A. Grossman        0           0       342,273 / 58,333         $0 / $0
</TABLE>

     The Company has not established, nor does it provide for, long-term
incentive plans or defined benefit or actuarial plans.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of March 30, 2001, certain
information with respect to the beneficial ownership of the Company's Common
Stock by (i) each person known to the Company who beneficially owns more
than 5% of the Company's outstanding Common Stock; (ii) each director; (iii)
each named executive officer; and (iv) all directors and officers as a
group:

                                              Shares Beneficially Owned
Name of Beneficial Owner                    Number                Percent

Robert L. Knauss                         1,382,167  (2)            13.08%
Citibank (Switzerland) (1)               1,000,000                 10.02%
Paul R. Gregory                            791,369  (3)             7.72%
Nicol Family Partnership                   500,000                  5.01%
David A. Grossman                          448,973  (4)             4.34%
Homi M. Davier                             323,624  (5)             3.21%
Juris Padegs                               307,859  (6)             3.05%
Ted Reynolds                               109,000  (7)             1.09%
All 6 directors and executive officers   3,362,992  (8)            29.38%

 (1)  The business address for Citibank (Switzerland) is P. O. Box 244,
      Zurich, Switzerland CH-8021.  The business address for the Nicol Family
      Partnership is P.O. Box 278, Grapeland, Texas 75844.
 (2)  Includes an aggregate of 593,963 shares subject to options, warrants
      and Series A Preferred Stock that are exercisable within 60 days.
 (3)  Includes an aggregate of 276,000 shares subject to options, warrants
      and Series A Preferred Stock that are currently exercisable.
 (4)  Includes 364,306 shares subject to options that are exercisable within
      60 days.  Excludes an aggregate of 37,500 shares subject to options that
      are not currently exercisable.
 (5)  Includes an aggregate of 100,195 shares subject to options, warrants
      and Series A Preferred Stock that are currently exercisable.
 (6)  Includes 110,418 shares subject to options, warrants and Series A
      Preferred Stock that are currently exercisable.
 (7)  Includes 26,000 shares subject to options and warrants that are
      currently exercisable.
 (8)  Includes an aggregate of 1,470,882 shares subject to options, warrants
      and Series A Preferred Stock that are exercisable within 60 days.
      Excludes an aggregate of 37,500 shares subject to options that are not
      currently exercisable.

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In October 1997, ORESA Ventures N.V. advanced $2,000,000 to the
Company, bearing interest at a rate of 13% per annum.  This loan was repaid
in January 1999.

     In July 1999, the Company sold a 23% interest in AIRO to ORESA Ventures
N.V. and Celox S.A. in exchange for an aggregate of 6,250,000 shares of the
Company's common stock, warrants to purchase 6,250,000 shares of the Company's
common stock and $250,000 in cash.  In October 1999, the Company sold the
remaining 23% interest in AIRO to ORESA Ventures N.V. and Celox S.A. for
$1,145,000 in cash and forgiveness of approximately $200,000 in debt.

     Management believes that all prior related party transactions are on
terms no less favorable to the Company as could be obtained from
unaffiliated third parties.  All ongoing and future transactions with such
persons, including any loans to such persons, will be approved by a majority
of disinterested, independent outside members of the Company's Board of
Directors.



Item 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits.

     Exhibits identified in parentheses below, on file with the Securities and
Exchange Commission, are incorporated herein by reference as exhibits
hereto.

   Exhibit No.     Identification of Exhibit

     2.1        Plan and Agreement of Recapitalization   (Exhibit 2.1 to
                Form SB-2, No. 33-74654-D)

     3.1(a)     Restated Articles of Incorporation   (Exhibit 3.1(a) to
                Form SB-2, No. 33-74654-D)

     3.1(b)     Amended Articles of Incorporation   (Exhibit 3.1(b) to
                Form SB-2, No. 33-74654-D)

     3.1(c)     Articles of Correction   (Exhibit 3.1(c) to Form SB-2,
                No. 33-74654-D)

     3.2        Bylaws   (Exhibit 3.2 to Form SB-2, No. 33-74654-D)

     3.3        Statement of Resolution Establishing and Designating a
                Series of Shares of the Company, Series A Cumulative
                Preferred Stock, $10.00 par value   (Exhibit 3.3 to Form
                SB-2, No. 33-74654-D)

     3.4        Certificate of Elimination of Shares Designated as Series A
                Cumulative Preferred Stock   (Exhibit 3.4 to Form 10-QSB for
                the quarter ended June 30, 1995, File No. 0-26588)

     3.5        Certificate of the Designation, Preference, Rights and
                Limitations of Convertible Redeemable Series A Preferred
                Stock   (Exhibit 3.5 to Form 10-QSB for the quarter ended
                June 30, 1995, File No. 0-26588)

     4.1        Common Stock Specimen   (Exhibit 4.1 to Form SB-2, No. 33-
                74654-D)

     10.1       1992 Equity Incentive Plan, as amended   (Exhibit 10.3 to
                Form S-8, No. 33-90030)

     10.2       Employment Agreement between the Company and Robert L.
                Knauss   (Exhibit 10.4 to Form SB-2, No. 33-74654-D)

     10.3       Baltic International Airlines Joint Venture Limited
                Liability Company Agreement between the Latvian Civil
                Aviation Board and the Company   (Exhibit 10.7 to Form SB-2,
                No. 33-74654-D)

     10.4       Settlement Agreement between the Company and Latvian
                Airlines and Ministry of Transportation of the Republic of
                Latvia   (Exhibit 10.12 to Form SB-2, No. 33-74654-D)

     10.5       Air Baltic Joint Venture Agreement   (Exhibit 10.36 to Form
                8-K dated August 29, 1995, File No. 0-26588)

     10.6       Amendment to Air Baltic Joint Venture Agreement   (Exhibit
                10.40 to Form SB-2, File No. 333-860)

     10.7       Share Purchase Agreement with SAS   (Exhibit 10.41 to Form
                8-K dated January 10, 1996, File No. 0-26588)

     10.8       AIRO Catering Services Joint Venture Agreement   (Exhibit
                10.42 to Form 10-KSB for the year ended December 31, 1997,
                File No. 0-26588)


   Exhibit No.     Identification of Exhibit

     10.9       Statement of the Designation, Preferences, Rights and
                Limitations of Series B Convertible Redeemable Preferred
                Stock, as amended   (Exhibit 10.45 to Form SB-2, File No.
                333-860)

     10.10      Compensatory Plan for Robert Knauss, James Goodchild and
                David Grossman   (Exhibit 10.46 to Form 10-QSB for the
                quarter ended September 30, 1997, File No. 0-26588)

     10.11      Promissory Note Agreement with ORESA Ventures N.V.
                (Exhibit 10.47 to Form 10-QSB for the quarter ended
                September 30, 1997, File No. 0-26588)

     10.12      Share Purchase Agreement with SAS   (Exhibit 10.48 to Form
                8-K dated January 4, 1999, File No. 0-26588)

     10.13      Share Purchase Agreement with ORESA Ventures and Celox
                (Exhibit 10.1 to Form 8-K dated July 12, 1999, File No. 0-
                26588)

     10.14      Unit Purchase Agreement for Advanced Reclamation Company,
                L.L.C.   (Exhibit 10.1 to Form 8-K dated February 2, 2000,
                File No. 0-26588)

     23.1       Consent of Mann Frankfort Stein & Lipp CPA's, L.L.P.

     23.2       Consent of Arthur Andersen LLP

 (b)     Reports on Form 8-K

No reports on Form 8-K were filed during the fourth quarter of 2000.




                         BALTIC INTERNATIONAL USA, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                        Page

Independent auditors' report                                             F-2

Report of independent public accountants                                 F-3

Consolidated balance sheets at December 31, 2000 and 1999                F-4

Consolidated statements of operations for the years ended
     December 31, 2000 and 1999                                          F-5

Consolidated statements of shareholders' equity (deficit) for the
     years ended December 31, 2000 and 1999                              F-6

Consolidated statements of cash flows for the years ended
     December 31, 2000 and 1999                                          F-8

Notes to consolidated financial statements                               F-9





INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
Baltic International USA, Inc.

We have audited the accompanying consolidated balance sheets of Baltic
International USA, Inc. (a Texas corporation) and subsidiaries as of
December 31, 2000, and the related consolidated statements of operations,
shareholders' deficit and cash flows for the year then ended.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  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.  We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Baltic
International USA, Inc. and subsidiaries as of December 31, 2000, and the
consolidated results of their operations and their cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States.



/s/ Mann Frankfort Stein & Lipp CPA's, L.L.P.


Houston, Texas
September 20, 2001



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders of
Baltic International USA, Inc.

We have audited the accompanying consolidated balance sheet of Baltic
International USA, Inc. (a Texas corporation) and subsidiaries as of
December 31, 1999, and the related consolidated statements of operations,
shareholders' equity and cash flows for the year then ended.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States.  Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement.  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.  We believe that our audit provides a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Baltic
International USA, Inc. and subsidiaries as of December 31, 1999, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States.

Our opinion, as expressed above, is based on the facts and circumstances
existing on April 13, 2000, the date of our original report.  Subsequent to
that date, the Company has operated as a going concern through September 30,
2001.  As such, our auditors' report on the December 31, 1999 financial
statements is no longer qualified as being subject to the ultimate outcome of
that uncertainty.



/s/ ARTHUR ANDERSEN LLP


Houston, Texas
April 13, 2000 (except for the matters discussed in the "Financial Condition"
portion of footnote 1 and the effect of the Discontinued Operations on the
December 31, 1999 financial statements as discussed in footnote 4, as to which
the date is September 30, 2001)





                        BALTIC INTERNATIONAL USA, INC.
                         Consolidated Balance Sheets



                                                 December 31,      December 31,
                                                     2000               1999
ASSETS

CURRENT ASSETS
 Cash and cash equivalents                         $    31,797    $   868,522
 Accounts receivable:
  Trade, net of allowance for doubtful accounts
   of $0 and $10,274                                    52,930         42,377
  Affiliates                                                 -          3,448
 Note receivable                                       100,000         89,100
 Inventory                                              19,611         50,638
 Prepaids and deposits                                  17,348         10,352
                                                   -----------    -----------
    Total current assets                               221,686      1,064,437

PROPERTY AND EQUIPMENT, net                            174,237         14,229
INVESTMENT IN AND ADVANCES TO JOINT OPERATIONS          23,610          1,500
GOODWILL, net                                          804,482              -
OTHER ASSETS                                            49,908         33,524
                                                   -----------    -----------
    Total assets                                   $ 1,273,923    $ 1,113,690
                                                   ===========    ===========


LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
 Accounts payable and accrued liabilities          $   243,328    $   270,076
 Dividends payable                                     546,728        388,632
 Short-term debt                                       101,584              -
 Net liabilities of discontinued operations             27,819              -
                                                   -----------    -----------
    Total current liabilities                          919,459        658,708

LONG-TERM DEBT, net of current portion                 409,018              -
                                                   -----------    -----------
    Total liabilities                                1,328,477        658,708
                                                   -----------    -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)
 Warrants                                              252,793        256,793
 Preferred stock:
  Series A, convertible, $10 par value,
   499,930 shares authorized, 123,000 shares
   issued and outstanding                            1,230,000      1,230,000
  Series B, convertible, $10 par value,
   $25,000 stated value, 70 shares authorized,
   14 shares issued and outstanding                    350,000        350,000
 Common stock, $.01 par value, 40,000,000 shares
  authorized, 15,629,229 shares issued and
  9,975,960 and 9,455,960 shares outstanding           156,292        156,292
 Additional paid-in capital                         12,752,337     12,763,943
 Accumulated deficit                               (13,991,403)   (13,419,467)
 Treasury stock, at cost                              (804,573)      (878,579)
                                                   -----------    -----------
    Total shareholders' equity (deficit)               (54,554)       454,982
                                                   -----------    -----------
    Total liabilities and shareholders' equity
     (deficit)                                     $ 1,273,923    $ 1,113,690
                                                   ===========    ===========


     See accompanying notes to consolidated financial statements.


                        BALTIC INTERNATIONAL USA, INC.
                    Consolidated Statements of Operations


                                                    Year Ended December 31,

                                                    2000              1999
REVENUES:
 Refrigerant revenue                           $ 1,054,658       $         -
 General sales agency revenue                       10,414            23,661
                                                ----------        ----------
    Total operating revenues                     1,065,072            23,661
                                                ----------        ----------

OPERATING EXPENSES:
 Cost of revenue                                   759,043                 -
 Personnel and consulting                          348,924           214,375
 Legal and professional                             45,088            85,675
 Other general and administrative                  261,089            82,156
                                                ----------        ----------
    Total operating expenses                     1,414,144           382,206
                                                ----------        ----------

LOSS FROM OPERATIONS                              (349,072)         (358,545)
                                                ----------        ----------

OTHER INCOME (EXPENSE):
 Interest expense                                  (50,309)          (25,800)
 Interest income                                    19,924            10,360
 Other income (expense)                                  -               709
                                                ----------        ----------
     Total other income (expense)                  (30,385)          (14,731)
                                                ----------        ----------

LOSS BEFORE INCOME TAXES AND DISCONTINUED
 OPERATIONS                                       (379,457)         (373,276)

INCOME TAX EXPENSE                                       -                 -
                                                 ----------        ----------
LOSS FROM CONTINUING OPERATIONS                   (379,457)         (373,276)

DISCONTINUED OPERATIONS:
 Loss from operations of catering, freight and
  beverage distribution operations                 (34,383)         (314,646)
 Gain on disposal of catering and
  freight operations                                     -         1,457,059
                                                ----------        ----------
NET INCOME (LOSS)                              $  (413,840)      $   769,137
                                                ==========        ==========



INCOME (LOSS) PER SHARE AMOUNTS:
Basic and Diluted:
  Continuing operations                        $     (0.06)      $     (0.04)
  Discontinued operations                      $      0.00       $      0.09
  Total                                        $     (0.06)      $      0.05



     See accompanying notes to consolidated financial statements.


<TABLE>
<CAPTION>
                        BALTIC INTERNATIONAL USA, INC.
           Consolidated Statements of Shareholders' Equity (Deficit)



                                                            Preferred Stock
                                                    Series A                  Series B              Common Stock
                                Warrants      Shares        Amount       Shares      Amount         Shares         Amount
<S>                           <C>            <C>         <C>            <C>       <C>            <C>           <C>
Balance, January 1, 1999       $1,306,610     123,000     $1,230,000       14      $  350,000     15,629,229    $ 156,292
Common shares issued
Cancellation of warrants       (1,053,817)
Net income
Dividends on preferred stock:
 Series A, $1.00 per share
 Series B, $2500 per share
                               ----------    --------     ----------      ---      ----------     ----------      -------
Balance, December 31, 1999     $  252,793     123,000     $1,230,000       14      $  350,000     15,629,229      156,292
Common shares issued
Net income
Dividends on preferred stock:
 Series A, $1.00 per share
 Series B, $2500 per share
                               ----------    --------     ----------      ---      ----------     ----------      -------
Balance, December 31, 2000     $  252,793     123,000     $1,230,000       14      $  350,000     15,629,229      156,292
                               ==========    ========     ==========      ===      ==========     ==========      =======
</TABLE>










     See accompanying notes to consolidated financial statements.


<TABLE>
<CAPTION>
                        BALTIC INTERNATIONAL USA, INC.
           Consolidated Statements of Shareholders' Equity (Deficit)
                                (Continued)



                                   Additional
                                     paid-in      Accumulated           Treasury stock
                                     capital         deficit         Shares        Amount        Total
<S>                              <C>            <C>              <C>           <C>          <C>
Balance, January 1, 1999         $11,717,776    $(14,030,604)         42,444    $ (20,540)   $   454,982
Purchase of treasury stock                                         6,250,000     (875,000)      (875,000)
Common shares issued                  (7,650)                       (119,175)      16,961          9,311
Cancellation of warrants           1,053,817                                                           -
Net income                                           769,137                                     769,137
Dividends on preferred stock:
 Series A, $1.00 per share                          (123,000)                                   (123,000)
 Series B, $2500 per share                           (35,000)                                    (35,000)
                                  -----------    ------------     -----------    ---------    -----------
Balance, December 31, 1999       $12,763,943    $(13,419,467)      6,173,269    $(878,579)   $   454,982
Common shares issued                 (11,606)                       (520,000)      74,006         62,400
Net loss                                            (413,840)                                   (413,840)
Dividends on preferred stock:
 Series A, $1.00 per share                          (123,000)                                   (123,000)
 Series B, $2507 per share                           (35,096)                                    (35,096)
                                  -----------    ------------     -----------    ---------    -----------
Balance, December 31, 2000       $12,752,337    $(13,991,403)      5,653,269    $(804,573)   $   (54,554)
                                  ===========    ============     ===========    =========    ===========
</TABLE>







     See accompanying notes to consolidated financial statements.


                        BALTIC INTERNATIONAL USA, INC.
                   Consolidated Statements of Cash Flows


                                                    Year Ended December 31,

                                                    2000              1999
Cash flows from operating activities:
 Net income (loss)                              $  (413,840)    $     769,137
 Noncash adjustments:
  Net equity in losses of discontinued joint
   operations                                             -           192,947
  Gain on disposal of discontinued
   operations                                             -        (1,457,059)
  Depreciation and amortization                      72,851            20,982
  Gain on sale of assets                                  -              (121)
  Increase/decrease in current assets and
   current liabilities:
   Accounts receivable                               58,067            42,426
   Prepaid and other                                  6,634            (1,833)
   Inventory                                         36,771            15,951
   Accounts payable and accrued liabilities        (114,499)         (224,521)
                                                -----------     -------------
     Net cash used by operating activities         (354,016)         (642,091)
                                                -----------     -------------

Cash flows from investing activities:
Distributions and repayments from joint
  operations                                          1,500                 -
 Advances paid on note receivable                   (20,392)          (89,100)
 Acquisition cost for purchase of Advanced
  Reclamation, net of cash received of $3,721      (477,437)                -
 Proceeds from sale of assets                             -         3,539,333
 Acquisition of property and equipment              (17,425)                -
                                                -----------     -------------
     Net cash provided (used) by investing
      activities                                   (513,754)        3,450,233
                                                -----------     -------------

Cash flows from financing activities:
 Borrowings of debt                                 122,060           142,000
 Repayment of debt and long-term obligations        (91,015)       (2,192,000)
                                                -----------     -------------
     Net cash provided (used) by financing
      activities                                     31,045        (2,050,000)
                                                -----------     -------------

Net increase (decrease) in cash and cash
 equivalents                                       (836,725)          758,142
Cash and cash equivalents, beginning of period      868,522           110,380
                                                -----------     -------------
Cash and cash equivalents, end of period        $    31,797     $     868,522
                                                ===========     =============







     See accompanying notes to consolidated financial statements.


                        BALTIC INTERNATIONAL USA, INC.
                 Notes to Consolidated Financial Statements



NOTE 1 - BUSINESS OPERATIONS AND FINANCIAL CONDITION

Business operations

Baltic International USA, Inc. (the "Company" or "BIUSA"), a Texas
corporation, was organized on March 1, 1991 to identify, form and
participate in aviation-related and other business ventures in the former
Soviet Union.

The Company initially pursued its plans to participate in airline service in
Latvia through a 49% interest in a newly formed start-up airline - Baltic
International Airlines ("BIA"), a limited liability company registered in
the Republic of Latvia.  The Company made significant investments in and
advances to BIA, which has incurred losses since inception.  On October 1,
1995, the routes and passenger service operations of BIA were transferred as
part of its capital contribution to a new Latvian carrier, Air Baltic
Corporation SIA ("Air Baltic").  The Company owned an 8.02% interest in Air
Baltic.  The Company sold its interest in Air Baltic in January 1999 to SAS
for $2,144,333 in cash under the terms of the option agreement between the
Company and SAS.  The Company used the proceeds from the sale to repay the
$2 million loan from ORESA Ventures N.V.  BIA has no current operations and
has not conducted any substantial business operations since October 1995.

The Company was also engaged in providing aviation catering services to Air
Baltic and other airlines through its interest in AIRO Catering Services
("AIRO").  As discussed in Note 5, the Company sold a 23% interest in AIRO
to ORESA Ventures N.V. and Celox S.A. in July 1999.  In October 1999, the
Company sold the remaining 23% of AIRO to ORESA Ventures N.V. and Celox S.A.
for $1,145,000 in cash and forgiveness of approximately $200,000 in debt.  In
June 2000, the Company ceased the operations as a food and beverage
distribution company through its wholly owned subsidiary, American
Distributing Company ("ADC").  In August 1998, the Company ceased operations
as a cargo marketer to Air Baltic and other airlines through its wholly
owned subsidiary, Baltic World Air Freight ("BWAF").

In February 2000, the Company purchased Advanced Reclamation Company, L.L.C.
("ARC") from the Nicol Family Partnership.  The Company purchased all of the
units of ARC for cash of $400,000, a total of 500,000 common shares of the
Company, a note payable to seller of an additional $400,000 and an earnout
agreement.  ARC is a complete refrigerant management company.  ARC provides
a full range of refrigerant services including, but not limited to,
recovery, reclamation, the sale of new or reclaimed refrigerants.  These
services are performed at the Company's facility and at customer sites and
consist of system decontamination to remove moisture, oils and other
contaminants and recovery and reclamation of the refrigerants used in
commercial air conditioning and refrigeration systems.  Most of the off-site
services are provided to the petrochemical industry throughout South Texas.

Financial condition

The Company has incurred operating losses since inception through
December 31, 2000.  The Company incurred operating losses of $349,072 in
2000 and $358,545 in 1999.  At December 31, 2000, the Company had an
accumulated deficit of $13,991,403.  Net cash used in operating activities
was $354,016 in 2000 and $642,091 in 1999.  At December 31, 2000, the Company
had cash of $31,797.  The Company currently has limited cash resources
available and has obligations due and past due.  However, the Company received
about $633,000 for settlement of the receivables from AIRO.

Management believes that the Company will be able to achieve a satisfactory
level of liquidity to meet its business plan and capital needs through
December 31, 2001.  During 2000 and 1999, the Company borrowed an aggregate
principal amount of $122,060 and $118,000, respectively, as bridge financing
from officers and directors of the Company.  In connection with these
borrowings, the Company issued warrants to purchase 12,206 and 11,800 shares
of common stock at exercise prices of $0.06 to $0.15 per share.
Additionally, management believes the Company has the ability to obtain
additional financing from key officers, directors and certain investors.
However, there can be no assurance that the Company will be able to generate
sufficient liquidity to maintain its operations.  In addition, management
believes that the Company can continue to defer certain amounts payable by
the Company that are either currently due or past due.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary (ARC).  All significant intercompany
accounts and transactions have been eliminated.  The Company accounted for
its investment in AIRO using the equity method until the Company sold its
remaining interest in AIRO in October 1999.  The Company's interest in Air
Baltic was accounted for using the cost method because the Company owned
only 8.02% of Air Baltic and had no control, voting or otherwise, over Air
Baltic.  The Company's interest in BIA is accounted for using the cost
method because BIA has no current operations.  The Company's interest in
Lithuanian Aircraft Maintenance Corporation ("LAMCO") was accounted for
using the cost method because the Company owned only 2.6% of LAMCO and it
had no operations since its inception.

Revenue recognition

Revenues are recognized when realizable and earned and expenses are recognized
when the goods and services are acquired or provided.

Inventory

Inventory is stated at the lower of cost or market.  Cost is determined
using the weighted average cost method.  Inventory at December 31, 2000
consists of refrigerants and cylinders and drums.

Property, equipment and depreciation

Property and equipment are recorded at cost.  Depreciation is computed over
the estimated useful lives of the assets using the straight-line method for
financial reporting purposes and accelerated methods for income tax
purposes.  Maintenance and repairs are charged to operations as incurred.

Debt issuance costs

Debt issuance costs are amortized using the interest method until the
maturity date of the related note payable.

Goodwill

Goodwill is the result of the purchase of ARC.  Goodwill is being amortized
over 20 years.  The accumulated amortization at December 31, 2000 was $40,631.

Long-lived assets

The Company periodically evaluates the carrying value of long-lived assets,
including goodwill, for potential impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable.

Income taxes

Deferred income taxes result from temporary differences between the
financial statements and tax basis of assets and liabilities.

Income (loss) per common share

Basic earnings per share is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding
during the period.  Diluted earnings per share reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings.  Stock warrants
and options are considered to be dilutive for earnings per share purposes if
the average market price during the period ending on the balance sheet date
exceeds the exercise price and the Company had earnings from continuing
operations for the period.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with original maturities of three months
or less to be cash equivalents.

Use of estimates

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

Concentration of credit risk

At December 31, 2000 and 1999, the Company's cash in financial institutions
exceeded the federally insured deposits limit by $0 and $766,507,
respectively.  An investment of $760,000 in a reverse repurchase agreement
is included in cash and cash equivalents at December 31, 1999.  The
collateral for this investment consisted of a collateralized mortgage
obligation with a market value of approximately $761,000 at December 31,
1999.

Financial instruments that potentially subject the Company to concentrations
of credit risk consist of cash, cash equivalents and trade receivables.  The
Company considers such risk in placing its cash and cash equivalents in
financial institutions and other instruments.  The Company performs ongoing
credit evaluations of its customers' financial condition.

Contingencies

Liabilities for loss contingencies, including environmental remediation
costs, arising from claims, assessments, litigation, fines and penalties and
other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment and/or remediation can be
reasonably estimated.

Foreign currency translation

Portions of the Company's operations were conducted in convertible foreign
currencies and are translated into U.S. dollars at average current rates during
each period reported.  Foreign currency transaction gains and losses are
included in operations.  Net exchange gains or losses resulting from the
translation of assets and liabilities are accumulated as a separate component
of joint venture partners' equity.  Any translation gains or losses are not
significant and therefore have not been recorded on the Company's consolidated
balance sheets as of December 31, 2000 and 1999.

New accounting pronouncements

In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities" which requires at adoption the Company to write-off any unamortized
start-up costs as a cumulative change in accounting principle and, going
forward, expense all start-up activity costs as they are incurred.  The Company
adopted SOP 98-5 in the first quarter of 1999 and resulted in a negative effect
on its net equity in earnings of joint operations of $298,877 as a result of
the write-off of AIRO's unamortized start-up costs.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value.  Changes in the derivative's fair value will be
accounted for based upon their intended use and designation.  Since the
Company's holdings in such instruments are minimal, adoption of this standard
is not expected to have a material effect on the consolidated financial
statements.  The Company is required to adopt SFAS No. 133 no later than the
first quarter of fiscal 2001.

In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" ("SAB
101").  SAB 101 provides guidance on the recognition, presentation and
disclosure of revenue in the financial statements and requires adoption no
later than the fourth quarter of 2000.  The implementation of SAB 101 did
not have a significant impact on the Company's financial condition or
results of operations.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill and Other Intangible Assets", which requires that goodwill no longer
be amortized.  Instead, goodwill will be tested for impairment and written down
if its fair value declines below its carrying amount.  Goodwill amortization
ceases as of the date of the required adoption of this standard that will be
January 1, 2002.  The Company has not yet determined the impact the adoptions
of this statement will have on its consolidated results of operations.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current
presentation.

NOTE 3 - ACQUISITION

In February 2000, the Company purchased Advanced Reclamation Company ("ARC")
from the Nicol Family Partnership for $400,000 in cash, a total of 500,000
common shares of the Company, a note payable to seller of an additional
$400,000 and an earnout agreement. The note payable matures on January 1,
2005, has an interest rate of 10% with interest due quarterly and is
collateralized by the fixed assets of ARC.  The note payable has a
prepayment provision such that prepayments of principal are to be made equal
to the ARC's annual pretax profits in excess of $225,000.  However, the
prepayments are not to exceed $120,000 for any year.  The earnout agreement
provides for an equal split of ARC's annual pretax profits in excess of
$225,000 between the Company and the Nicol Family Partnership for a period
of three years ending December 31, 2002.  This transaction was recorded as a
purchase.  Operations of ARC are included in the consolidated financial
statements from January 1, 2000.  See Note 17 for the condensed pro forma
information for the unaudited pro forma condensed financial statements for 1999
assuming this transaction occurred in 1999.

NOTE 4 - DISCONTINUED OPERATIONS

American Distributing Company

In June 2000, the Company ceased the operations of ADC.  The consolidated
statements reflect the operating results of the discontinued operations
separately from continuing operations.  Amounts for prior periods have been
restated.  Operating results for the discontinued operations of ADC were:


                                                     Year ended December 31,
                                                      2000             1999

Operating revenues                               $    51,039      $   238,039
Loss from operations                             $   (26,487)     $   (91,805)
Net loss                                         $   (33,833)     $  (115,891)

At December 31, 2000, ADC had net liabilities of $27,819 that are included
as part of the net liabilities of discontinued operations in the Company's
consolidated financial statements.

AIRO Catering Services

In July 1999, the Company sold a 23% interest in AIRO to ORESA Ventures N.V.
and Celox S.A. in exchange for an aggregate of 6,250,000 shares of the
Company's common stock, warrants to purchase 6,250,000 shares of the Company's
common stock and $250,000 in cash.  In October 1999, the Company sold the
remaining 23% of AIRO to ORESA Ventures N.V. and Celox S.A. for $1,145,000 in
cash and forgiveness of approximately $200,000 in debt.  The Company recognized
a gain of $1,457,059 on these sales.  At December 31, 2000, the Company has
receivables from AIRO aggregating $833,274, which have been fully reserved.
The Company received about $633,000 as settlement of these receivables and
recorded the amount as additional gain in May 2001.  The consolidated
statements reflect the operating results of the discontinued operations
separately from continuing operations.  Amounts for prior periods have been
restated.  The net equity in losses from joint operations in 1999 has been
included in discontinued operations.

Summarized financial information for AIRO during the nine months ended
September 30, 1999 is as follows (100%):


                                               Nine Months Ended
                                               September 30, 1999

Revenues                                        $  5,031,519
Income from operations                          $    908,540
Cumulative effect of change in accounting
for start-up costs                              $   (651,574)
Net income (loss)                               $   (548,328)

Baltic Catering Services

BCS was formed on March 26, 1993 as a joint operation between ARVO, Ltd., a
Latvian limited liability company, and the Company.  On April 2, 1996, the
catering operations of BCS were acquired by RCS in exchange for shares in RCS.
BCS ceased its operations in 1998 and was liquidated by the Company in 2000.

NOTE 5 - JOINT OPERATIONS

Pembrooke Calox

In February 2000, the Company acquired a 10% interest in Pembrooke Calox.
Pembrooke Calox owns about 350 acres in Indiana containing high calcium
limestone.  The Company acquired this interest in exchange for its efforts
during 1999 and 2000 to develop the business plan and negotiate operating
agreements and debt financing for Pembrooke Calox.  The note receivable in the
consolidated balance sheet is from Pembrooke Calox, Inc., a start-up company
intending to begin limestone operations in the near future.  The note bears
interest at 10% and was due on January 31, 2000.  The note is collateralized by
common shares of another public company and a 10% interest in Pembrooke Calox.
These common shares were sold in 2001 and the proceeds in excess of $200,000
are being held in an escrow pending the outcome of litigation involving
Pembroke Calox.  In December 2000, the Company entered into a settlement
agreement with Pembrooke Calox for this note.  The Company is to receive
$100,000 and forgive the remaining balance on the note and accrued interest in
exchange for an additional 5% interest in Pembrooke Calox.  At December 31,
2000, the gross amount of the note is $109,492 and accrued interest is
$14,118.  The excess of $23,610 (above the $100,000 cash to be received) was
recorded as investment in Pembrooke Calox in December 2000 as a result of the
settlement agreement.

Baltic International Airlines

The Company entered into a joint venture agreement with the Latvian Civil
Aviation Department, an agency of the Government of Latvia, on June 6, 1991 to
create BIA as a limited liability company in the Republic of Latvia.  The
Company currently owns an 89% interest in BIA.

As discussed in Note 1, BIA experienced significant losses that have been
recognized in the Company's financial statements through a reserve of its
investment in BIA.  In conjunction with the transfer of BIA's passenger service
operations to Air Baltic, the Company entered into negotiations with its
partner to restructure BIA and obtain full ownership.  The Company also made
advances on behalf of BIA in 1996 to facilitate the termination of operations
of BIA.  In March 1997, the Company's Latvian partner in BIA agreed to
contribute real estate and a promissory note with a combined value of at least
$1,000,000 to BIA.  In May 1997, the Company capitalized $6.3 million of BIA's
debt to the Company that was previously reserved by the Company.  BIA will
assign the promissory note from the Latvian partner to the Company.  Management
believes that the Latvian partner's contribution will be made in the future.
The Company has agreed with the Latvian partner that it will forgive the
promissory note of the Latvian partner in exchange for the transfer of the
Latvian partner's ownership in BIA and satisfactory resolution of certain other
obligations of the Latvian partner.  BIA will then become a wholly owned
subsidiary of the Company.

The Company recorded a reserve against the investment in BIA of $1,143,115
in 1998 as a result of the uncertainty of the characteristics of the
contribution from the Latvian partner and the length of time that has
transpired since the Latvian partner committed to make the contribution.

Lithuanian Aircraft Maintenance Corporation

On September 28, 1995, the Company entered into a joint operation with a
joint stock company, Siauliai Aviacija, presently 100% owned by the Ministry
of Transportation of the Republic of Lithuania and the Municipality of
Siauliai City for the establishment of an aircraft maintenance facility,
LAMCO.  The Company's initial investment totaled $40,000 for 2.6% of LAMCO.
LAMCO was liquidated in 1998.  The Company received cash of $8,673,
equipment with an estimated value of $3,700 and Lithuanian government
securities with a face value of approximately $28,000 from the liquidation
in 1998.  These government securities bear no interest, mature beginning in
April 2003 and have been included in other assets in the consolidated
balance sheet.

NOTE 6 - DEBT

Debt consists of the following:

Debt consists of the following:

                                                           December 31,
                                                      2000             1999

Note payable for purchase of ARC, interest
payable quarterly at 10% per annum, secured
by the fixed assets of ARC, due
December 31, 2003                                $   400,000      $         -

Notes payable to an officer, unsecured,
interest rate of 13%, due on demand                   50,000                -

Note payable to a bank, secured by a vehicle,
interest rate of 7.5%, due September 21, 2001          6,359                -

Note payable to a bank, secured by a vehicle,
interest rate of 8.5%, due on demand                  40,071                -

Capital lease to a financing company, secured
by equipment, due December 6, 2003                    14,172                -

                                                  ----------       ----------
Total debt                                           510,602                -
Less short-term debt                                (101,584)               -
                                                  ----------       ----------
Long-term debt, net                              $   409,018      $         -
                                                  ==========       ==========

NOTE 7 - INCOME TAXES

The components of net deferred tax assets consists of the following:

                                                           December 31,
                                                      2000             1999

Deferred tax assets:
 Net operating loss carryforward                 $ 2,574,137      $ 2,435,923
 Capital loss carryforward                            26,705                -
 Reserve on investment                               221,894           98,090
 Losses from joint operations and subsidiaries        76,686           91,884
 Amortization and depreciation                        48,741           54,315
                                                  ----------       ----------
Total deferred tax assets                          2,948,163        2,680,212
                                                  ----------       ----------

Deferred tax liabilities:
 Earnings of subsidiaries                              3,507                -
 Other                                                 1,977            1,977
                                                  ----------       ----------
Total deferred tax liabilities                         5,484            1,977
                                                  ----------       ----------
Net deferred tax assets before valuation
 allowance                                         2,942,679        2,678,235
Valuation allowance                               (2,942,679)      (2,678,235)
                                                  ----------       ----------
Net deferred tax assets                          $         -      $         -
                                                  ==========       ==========

Provisions for income taxes in the statements of operations were as follows:

                                                     Year ended December 31,
                                                      2000             1999

Current expense:
  U.S.                                           $         -      $         -
  Foreign                                                  -                -
Deferred expense                                           -                -
                                                  ----------       ----------
Total expense                                    $         -      $         -
                                                  ==========       ==========

Differences between the effective income tax rate and the statutory federal
income tax rate were primarily the result of net operating losses for which
valuation reserves have been fully provided.

In 1999, the Company utilized approximately $1,700,000 of the net operating
loss carryforwards primarily due to the gain on the sale of the interest in
AIRO.  As of December 31, 2000, the Company had net operating loss
carryforwards of approximately $7,600,000 available to offset future taxable
income and capital loss carryforwards of approximately $79,000 available to
offset future capital gains.  These carryforwards will expire at various dates
beginning in 2009.

NOTE 8 - COMMON STOCK

In August and September 1997, the Company sold an aggregate of 6,250,000
shares of common stock to Celox S.A. and ORESA Ventures N.V. for $2,500,000.
In connection with these private placements, the Company issued warrants to
purchase 6,250,000 shares at an exercise price of $0.65 per share, which
warrants are currently exercisable and expire in August 2002.  As discussed
in Note 5, the Company reacquired all of these shares and warrants in July
1999 as part of the consideration received from the sale of a 23% interest
in AIRO.

At December 31, 2000 and 1999, the Company has 5,653,269 and 6,173,269
treasury shares, respectively.

NOTE 9 - OPTIONS

In 1992, the Company adopted an Equity Incentive Plan (the "Plan") under
which an aggregate of 800,000 shares of common stock may be issued.  In
December 1995, the board of directors adopted a resolution subject to
shareholder approval to increase the number of shares that may be issued
under the Plan to 1,500,000 shares.  The Plan provides for the grant of
options or rights, including incentive stock options and nonqualified stock
options to officers, directors, employees and consultants to the Company for
the purpose of providing incentive to those persons to work for or provide
services to the Company.

The Company follows the provisions of SFAS No. 123, "Accounting for Stock-
Based Compensation" which allow the Company to continue to apply the
provisions of APB No. 25 to determine compensation expense.  Had
compensation expense for the Plan been determined using a stock-based, fair
value method as prescribed by SFAS No. 123, the Company's net income (loss) and
income (loss) per common share would have changed to the following pro forma
amounts:

<TABLE>
<CAPTION>
                                                               Year ended December 31,
                                                                2000             1999
<S>                                       <C>              <C>             <C>
Net income (loss)                          As Reported     $  (413,840)     $   769,137
                                           Pro Forma          (448,700)         704,287
Income (loss) per common share             As Reported           (0.06)            0.05
                                           Pro forma             (0.06)            0.04
</TABLE>

The resulting pro forma compensation cost may not be representative of that
to be expected in future years because the method of accounting under SFAS
No. 123 has not been applied to options granted prior to January 1, 1995.

At December 31, 2000, the Company had 1,237,700 shares of common stock
reserved for issuance upon exercise of outstanding options, and 262,300
options were available for future grant under the Plan.  A summary of
changes in outstanding options is as follows:

<TABLE>
<CAPTION>

                                               Year Ended December 31,
                                           2000                         1999
                                                  Weighted                   Weighted
                                                   Average                    Average
                                     Shares    Exercise Price     Shares   Exercise Price
<S>                              <C>             <C>           <C>          <C>
Shares under option, beginning
 of period                        1,190,700       $  0.46      1,102,366     $  0.76
Changes during the period:
  Granted                           329,000          0.12        421,000        0.14
  Canceled                         (282,000)         0.87       (332,666)       1.03
  Exercised                               -             -              -           -
                                  ---------                    ---------
Shares under option, end of
 period                           1,237,700       $  0.28      1,190,700     $  0.46
                                  =========                    =========
Options exercisable, end of
 period                           1,113,283       $  0.30      1,025,700     $  0.52
                                  =========                    =========
</TABLE>

The exercise prices of the options outstanding at December 31, 2000 range
from $0.09 to $0.81.  The weighted average contractual life of the options
outstanding at December 31, 2000 was 3.8 years.  The options granted in 2000
and 1999 were issued to officers, directors and employees with an exercise
price equal to the market price of the Company's common stock on the grant
date.  The weighted-average grant-date fair value of options granted during
2000 was $0.11 and during 1999 was $0.13.  The fair value of each option
grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for
grants in 2000 and 1999:  risk-free interest rate of 7.0% and, 6.0%,
respectively; expected dividend yield of 0% and 0%, respectively; expected
lives of 7 years and 6 years, respectively; and expected volatility of 120%
and 118%, respectively.

NOTE 10 - WARRANTS

At December 31, 2000, the Company had 2,922,356 shares of common stock
reserved for issuance upon exercise of outstanding warrants.  A summary of
changes in outstanding warrants is as follows:

<TABLE>
<CAPTION>

                                               Year Ended December 31,
                                           2000                         1999
                                                  Weighted                    Weighted
                                                   Average                     Average
                                     Shares    Exercise Price     Shares   Exercise Price
<S>                             <C>            <C>            <C>           <C>
Shares under warrant,
beginning of period               3,422,650     $  1.38        9,911,849     $  1.00
Changes during the period:
  Granted                            12,206        0.13           11,800        0.14
  Canceled                         (512,500)       1.13       (6,500,999)       0.80
  Exercised                               -           -                -           -
                                 ----------                   ----------
Shares under warrant, end of
period                            2,922,356     $  1.42        3,422,650     $  1.38
                                 ==========                   ==========
Warrants exercisable, end of
period                            2,922,356     $  1.42        3,422,650     $  1.38
                                 ==========                   ==========
</TABLE>

The exercise prices of the warrants outstanding at December 31, 2000 range
from $0.09 to $6.00.  The weighted average contractual life of the warrants
outstanding at December 31, 2000 was 1.3 years.  The weighted-average grant-
date fair value of warrants granted during 2000 was $0.11.  During 2000 and
1999, the Company issued warrants to purchase 12,206 and 11,800 shares of
common stock, respectively, at exercise prices of $0.09 to $0.15 per share
in connection with bridge financing aggregating $122,060 and $118,000,
respectively, from officers and directors of the Company.

NOTE 11 - PREFERRED STOCK

Effective June 30, 1995, the Company created its Convertible Redeemable
Series A Preferred Stock ("Series A Preferred Stock"), 500,000 shares
authorized $10 par value, and issued 123,000 shares thereof upon conversion
of $1,230,000 in aggregate principal amount of long-term indebtedness.  The
Series A Preferred Stock: (i) is redeemable only at the option of the
Company and only during the thirty day period beginning on December 31 and
June 30 of each year that the Series A Preferred Stock is outstanding; (ii)
is convertible at any time by the holders thereof at the initial conversion
price of $2 per share; (iii) carries a liquidation preference of $10 per
share; (iv) is non-voting; and (v) accrues cumulative cash dividends per
share at an annual rate equal to 10% of the stated value per share, payable
in equal quarterly installments.  The voting rights of the holders of the
Company's common stock will be diluted upon conversion of the Series A
Preferred Stock and the holders of the Series A Preferred Stock will have
preferential dividend and liquidation rights over the holders of common
stock.  The conversion price of the Series A Preferred Stock is adjustable
for certain issuances of securities at less than 90% of the conversion
price.  At December 31, 2000, the conversion price was $0.91 per share.

Effective February 22, 1996, the Company created its Series B Convertible
Redeemable Preferred Stock ("Series B Preferred Stock"), 70 shares
authorized $25,000 stated value per share and $10 par value, and issued 50
shares thereof for net proceeds of $1,090,200 in February and March 1996.
The Series B Preferred Stock:  (i) is not entitled to receive dividends;
(ii) is convertible at any time by the holders thereof on or after the 55th
day after the date that the shares were issued at the conversion price of
the lesser of $2 per share or 82% of the 5-day average closing bid price of
the Company's common stock; (iii) is non-voting; (iv) carries a liquidation
preference of $25,000 per share and an amount equal to 10% per annum since
the issuance date after payment in full of the Series A Preferred Stock; and
(v) is redeemable only at the option of the Company if the conversion price
is $0.75 or less per share.  In October 1996, the Company amended the
conversion price to the lesser of $0.55 per share or 82% of the 5-day average
closing bid price of the Company's Common Stock.  During 1999 and 2000, there
were no conversions of Series B Preferred Stock into shares of the Company's
common stock.

NOTE 12 - INCOME (LOSS) PER SHARE

Supplemental disclosures for income (loss) per share are as follows:

                                                     Year ended December 31,
                                                      2000             1999
Basic and diluted
Net income (loss) to be used to compute income
 (loss) per share:
 Net income (loss)                               $  (413,840)     $   769,137
 Less preferred dividends                           (158,096)        (158,000)
                                                  ----------       ----------
Net income (loss) attributable to common
 shareholders                                    $  (571,936)     $   611,137
                                                  ==========       ==========

Weighted average number of shares:
 Average common shares outstanding                 9,929,075       12,683,372
                                                  ==========       ==========

Basic and diluted income (loss) per common share $     (0.06)     $      0.05
                                                  ==========       ==========

NOTE 13 - RELATED PARTY TRANSACTIONS

The following is a summary of related party transactions that have occurred
during 2000 and 1999, other than those disclosed elsewhere in the notes to
the accompanying consolidated financial statements.

The Company earns general sales agency revenue by operating the North
American sales and marketing office of Air Baltic.  The Company earned
$10,414 and $23,661 of such revenue for each of the years ended December 31,
2000 and 1999, respectively.

NOTE 14 - COMMITMENTS AND CONTINGENCIES

The Company leases certain equipment and office space under operating leases
that expire over the next five years.  Rental expense under operating leases
was $65,854 and $18,189 for 2000 and 1999, respectively.  Future minimum
lease payments under noncancelable operating leases are as follows:

     Year                                  Amount
     2001                               $   42,313
     2002                                   13,600
                                        ----------
     Total                              $   55,913
                                        ==========

The Company is from time to time party to litigation in the ordinary course
of business.  There are currently no pending legal proceedings that, in
management's opinion, would have a material adverse effect on the Company's
operating results or financial position

Some of the Company's products and services are regulated by the Federal
Clean Air Act (the "Clean Air Act") and the regulations promulgated
thereunder by the Environmental Protection Agency ("EPA"), as well as
certain state environmental regulations.  As such, the Company's business is
affected by the requirements of the Clean Air Act, the EPA and other
regulations and the degree of enforcement thereof.

NOTE 15 - SUPPLEMENTAL CASH FLOW DISCLOSURES

Supplemental cash flow information is as follows:

                                                     Year ended December 31,
                                                      2000             1999

Noncash investing and financing activities:
 Dividends declared and unpaid                   $   158,096      $   158,000
 Capital lease for equipment                          16,460                -
 Common shares and warrants received for sale
  of AIRO                                                  -        1,928,817
 Forgiveness of debt                                       -          200,123
 Common stock issued for services                          -            9,311

Supplemental disclosures:
 Interest paid                                   $    28,426      $   151,927
 Income taxes paid                               $         -      $         -

NOTE 16 - SEGMENT INFORMATION

Reportable segments are based on internal organizational structure and are
comprised of Refrigerants, Catering, Airlines, and Distribution.  As a
result of the acquisition of ARC in 2000, the Company added the segment of
Refrigerants for the operations of ARC.  The Company's catering products
were primarily sold to airlines.  Airline services are promoted to the
general public.  Distribution products are sold principally to wholesalers,
food stores and food and drink establishments.

Segment financial information is summarized as follows:

<TABLE>
<CAPTION>
                                                                                            Corporate
                                        Refrigerants   Catering     Airlines  Distribution  and Other       Total
<S>                                   <C>           <C>           <C>         <C>         <C>           <C>
2000
Revenues                               $ 1,054,658   $         -   $  10,414   $       -   $         -   $ 1.065.072
Income (loss) before income taxes
 and discontinued operations               (96,727)            -      10,414           -      (293,144)     (379.457)
Discontinued operations                          -             -           -     (34,383)            -       (34,383)
Net income (loss)                          (96,727)            -      10,414     (34,383)     (293,144)     (413.840)

Other disclosures:
 Depreciation and amortization         $    27,958   $         -   $       -   $   3,463   $    41,520   $    72.851
 Capital expenditures                       17,425             -           -                         -        17.425
 Investment in and advances to joint
  operations at end of year                      -             -           -           -        23,610        23,610
 Total assets at end of year               312,122             -           -           -       961,801     1,273.923

1999
Revenues                               $         -   $         -   $  23,661   $       -   $         -   $    23,661
Income (loss) before income taxes
 and discontinued operations                     -             -      13,338           -      (386,614)     (373,276)
Discontinued operations                          -     1,264,112           -    (115,890)       (5,809)    1,142,413
Net income (loss)                                -     1,264,112      13,338    (115,890)     (392,423)      769,137

Other disclosures:
 Depreciation and amortization         $         -   $         -   $       -   $  20,193   $       789   $    20,982
 Capital expenditures                            -             -           -                         -             -
 Investment in and advances to joint
  operations at end of year                      -         1,500           -           -             -         1,500
 Total assets at end of year                     -         1,500           -     101,964     1,010,226     1,113,690
</TABLE>

Total assets for corporate and other includes goodwill recorded in the purchase
of ARC amounting to $804,482 at December 31, 2000.

Information concerning principal geographic areas was as follows:

                                      North America   Eastern Europe    Total
2000
Revenues                                $ 1,065,072   $         -   $ 1,065,072
Long-term assets at end of year           1,020,910        31,327     1,052,237

1999
Revenues                                $    23,661   $         -   $    23,661
Long-term assets at end of year                 578        48,675        49,253

NOTE 17 - PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma condensed financial statements are based
upon our historical consolidated financial statements and those of ARC.  You
should read this pro forma financial information in connection with the
historical financial statements.

With respect to our acquisition of ARC, the unaudited pro forma condensed
financial statements give effect to our acquisition of ARC applying the
purchase method of accounting and adjustments that are directly attributable
to the ARC acquisition and are anticipated to have a continuing impact.

We have prepared the unaudited pro forma condensed financial statements
based upon currently available information and assumptions that we have
deemed appropriate.  This pro forma information may not be indicative of
what actual results would have been, nor does the data purport to represent
our and ARC's combined financial results for future periods.

Condensed financial information for the unaudited pro forma consolidated
balance sheet as of December 31, 1999 assuming this transaction occurred on
December 31, 1999 is as follows:

<TABLE>
<CAPTION>
                                     Actual            ARC                                Pro Forma
                                  December 31,     December 31,     Pro Forma        December 31,
                                      1999             1999         Adjustments       1999
<S>                             <C>              <C>              <C>            <C>    <C>
ASSETS
CURRENT ASSETS
 Cash and cash equivalents       $    868,522     $      3,721     $   (400,000) (a)     $    472,243
 Accounts receivable                   45,825           49,452                -                 5,277
 Note receivable                       89,100                -                -                89,100
 Inventory                             50,638           15,870                -                66,508
 Prepaids and deposits                 10,352           16,943           (1,220) (b)           26,075
                                 ------------     ------------     ------------          ------------
     Total current assets           1,064,437           85,986         (401,220)              749,203
PROPERTY AND EQUIPMENT, net            14,229          168,072                -               182,301
INVESTMENTS IN AND ADVANCES
 TO JOINT OPERATIONS                    1,500                -                -                 1,500
GOODWILL                                    -                -          761,555  (c)          761,555
OTHER ASSETS                           33,524           20,748                -                54,272
                                 ------------     ------------     ------------          ------------
     Total assets                $  1,113,690     $    274,806     $    360,335          $  1,748,831
                                 ============     ============     ============          ============

LIABILITIES AND
SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable and
  accrued liabilities            $    270,076     $    112,044     $          -          $    382,120
 Dividends payable                    388,632                -                -               388,632
 Short-term debt, net                       -           58,746           (2,000) (b)           56,746
                                 ------------     ------------     ------------          ------------
     Total current liabilities        658,708          170,790           (2,000)              827,498
LONG-TERM DEBT                              -            6,351          400,000  (a)          406,351
                                 ------------     ------------     ------------          ------------
     Total liabilities                658,708          177,141          398,000             1,233,849
                                 ------------     ------------     ------------          ------------

SHAREHOLDERS' EQUITY
 Warrants                             252,793                -                -               252,793
 Preferred stock:
  Series A                          1,230,000                -                -             1,230,000
  Series B                            350,000                -                -               350,000
 Common stock                         156,292                -                -               156,292
 Additional paid-in capital        12,763,943                -          (11,160) (a)       12,752,783
 Accumulated deficit              (13,419,467)               -                -           (13,419,467)
 Treasury stock, at cost             (878,579)               -           71,160  (a)         (807,419)
 Member's equity                            -           97,665          (97,665) (d)                -
                                 ------------     ------------     ------------          ------------
     Total shareholders' equity       454,982           97,665          (37,665)              514,982
                                 ------------     ------------     ------------          ------------
     Total liabilities and
      shareholders' equity       $  1,113,690     $    274,806     $    360,335          $  1,748,831
                                 ============     ============     ============          ============
</TABLE>

Condensed financial information for the unaudited pro forma consolidated income
statement for the year ended December 31, 1999 assuming this transaction
occurred on January 1, 1999 is as follows:


<TABLE>
<CAPTION>
                                     Actual            ARC                                Pro Forma
                                  December 31,     December 31,     Pro Forma        December 31,
                                      1999             1999         Adjustments       1999
<S>                             <C>              <C>              <C>            <C>    <C>
REVENUES:

 Refrigerant revenue             $          -     $    805,736     $          -          $    805,736
 General sales agency revenue          23,661                -                -                23,661
                                 ------------     ------------     ------------          ------------
     Total operating revenues          23,661          805,736                -               829,397
                                 ------------     ------------     ------------          ------------

OPERATING EXPENSES:
 Cost of revenue                            -          432,284                -               432,284
 Personnel and consulting             214,375          164,566                -               378,941
 Legal and professional                85,675              401                -                86,076
 Other general and administrative      82,156          256,856          (52,468) (e)          286,544
                                 ------------     ------------     ------------          ------------
     Total operating expenses         382,206          854,107          (52,468)            1,183,845
                                 ------------     ------------     ------------          ------------

INCOME (LOSS) FROM OPERATIONS        (358,545)         (48,371)          52,468              (354,448)
                                 ------------     ------------     ------------          ------------

OTHER INCOME (EXPENSE):
 Interest expense                     (25,800)          (2,709)         (40,000) (f)          (68,509)
 Interest income                       10,360                -                -                10,360
 Other income (expense)                   709                -                -                   709
                                 ------------     ------------     ------------          ------------
     Total other income (expense)     (14,731)          (2,709)         (40,000)              (57,440)
                                 ------------     ------------     ------------          ------------

INCOME (LOSS) BEFORE INCOME
 TAXES AND DISCONTINUED
 OPERATIONS                          (373,276)         (51,080)          12,468              (411,888)

INCOME TAX EXPENSE                          -                -                -                     -

DISCONTINUED OPERATIONS             1,142,413                -                -             1,142,413

                                 ------------     ------------     ------------          ------------
NET INCOME                       $    769,137     $    (51,080)    $     12,468          $    730,525
                                 ============     ============     ============          ============


INCOME PER SHARE AMOUNTS:
Basic and diluted                $       0.05                                            $       0.05
</TABLE>


NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

The following pro forma adjustments have been made to the unaudited pro
forma financial statements:

(a)  Reflects the purchase of ARC for cash of $400,000, a total of
     500,000 Baltic common shares, a note payable to seller of an
     additional $400,000.

(b)  Reflects the elimination of receivables from and payables to related
     parties of ARC that were eliminated as part of the acquisition of ARC.

(c)  Reflects the goodwill for the purchase of ARC.

(d)  Reflects the elimination of ARC's equity account.

(e)  Reflects the impact of goodwill amortization of $38,078 for the year
     less the elimination of $5,800 of administrative costs reimbursed to a
     related party of the former owner and $84,746 of personal expenses
     incurred by the former owner.

(f)  Reflects the interest expense accrual for the loan used to purchase
     ARC.




                                  SIGNATURES

     In accordance with the requirements of Section 13 or 15(d) of the Exchange
Act, the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 27th day of September, 2001.

                              BALTIC INTERNATIONAL USA, INC.


                              /s/ Robert L. Knauss
                              -------------------------------------------------
                              ROBERT L. KNAUSS
                              Chairman of the Board and Chief Executive Officer


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

Signature                         Title                               Date


/s/ Robert L. Knauss      Chairman of the Board and Chief     September 27, 2001
-----------------------    Executive Officer (Principal
ROBERT L. KNAUSS           Executive Officer)

/s/ David A. Grossman     Chief Financial Officer, Corporate  September 27, 2001
-----------------------    Secretary and Director
DAVID A. GROSSMAN          (Principal Financial and
                           Accounting Officer)

/s/ Homi M. Davier        Director                            September 27, 2001
-----------------------
HOMI M. DAVIER


/s/ Paul R. Gregory       Director                            September 27, 2001
-----------------------
PAUL R. GREGORY


/s/ Juris Padegs          Director                            September 27, 2001
-----------------------
JURIS PADEGS


/s/ Ted Reynolds          Director                            September 27, 2001
-----------------------
TED REYNOLDS



                                                                    EXHIBIT 23.1


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


     As independent public accountants, we hereby consent to the incorporation
by reference of our report included in this Annual Report on Form 10-KSB, into
the Company's previously filed registration statement on Form S-8 (33-90030).


/s/ Mann Frankfort Stein & Lipp CPA's, LLP

Houston, Texas
October 22, 2001



                                                                    EXHIBIT 23.2


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


     As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 10-KSB of our report dated April 13, 2000
(except for the matters discussed in the "Financial Condition" portion of
footnote 1 and the effect of the Discontinued Operations on the December 31,
1999 financial statements as discussed in footnote 4, as to which the date is
September 30, 2001) into the Company's previously filed registration statement
on Form S-8 (33-90030).  It should be noted that we have not audited any
financial statements of the Company subsequent December 31, 1999 or performed
any audit procedures subsequent to the date of our report.


/s/ ARTHUR ANDERSEN LLP

Houston, Texas
October 25, 2001