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


                                  FORM 10-K

(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, 2011

                                       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.)

                          6002 Rogerdale Road, Suite 500
                               Houston, Texas 77072
           (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)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.  Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.  Yes [ ] No [X]

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.  [X]

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

Large accelerated filer [ ]          Accelerated filer [ ]
Non-accelerated filer [ ]            Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act).  Yes [X] No [ ]

Aggregate market value of the voting and non-voting common equity held by non-
affiliates as of the last business day of the registrant's most recently
completed second fiscal quarter (June 30, 2011) was $156,142.

As of March 30, 2012, there were 10,975,760 shares of common stock outstanding.

<PAGE>
                                TABLE OF CONTENTS
                                                                           Page

PART I
     Item 1.   Business                                                      3

     Item 1A.  Risk Factors                                                  5

     Item 2.   Properties                                                    8

     Item 3.   Legal Proceedings                                             8

     Item 4.   Mine Safety Disclosures                                       9


PART II
     Item 5.   Market for Common Equity and Related Stockholder Matters      9

     Item 6.   Selected Financial Data                                       9

     Item 7.   Management's Discussion and Analysis or Plan of Operation    10

     Item 8.   Financial Statements                                         11

     Item 9.   Changes In and Disagreements With Accountants on
                 Accounting and Financial Disclosure                        12

     Item 9A.  Controls and Procedures                                      12

     Item 9B.  Other Information                                            12


PART III
     Item 10.  Directors, Executive Officers and Corporate Governance       13

     Item 11.  Executive Compensation                                       14

     Item 12.  Security Ownership of Certain Beneficial Owners and
                 Management and Related stockholder Matters                 15

     Item 13.  Certain Relationships and Related Transactions and
                 Director Independence                                      15

     Item 14.  Principal Accountant Fees and Services                       16

     Item 15.  Exhibits                                                     16

SIGNATURES                                                                  17




                                      2
<PAGE>
                                    PART I

Item 1.  BUSINESS

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

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

Current Status as a Shell Company

     Since March 2003, we have been classified as a "shell company".  Rule
12b-2 of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act") defines "shell company," as a company (other than an asset-backed
issuer), which has "no operations; and either no or nominal assets; assets
consisting of solely cash and cash equivalents; or assets consisting of any
amount of cash and cash equivalents and nominal other assets."

     We currently plan to investigate and, if such investigation warrants,
acquire a target company or business seeking the perceived advantages of being
a publicly held corporation.  Our principal business objective for the next 12
months and beyond, will be to achieve long-term growth potential through a
combination with a business rather than immediate, short-term earnings.  We
will not restrict our potential candidate target companies to any specific
business, industry or geographical location and, thus, may acquire any type of
business.

     The analysis of new business opportunities has and will be undertaken by
or under the supervision of our executive officers.  As of the date of this
filing, we have not entered into any definitive agreement with any party, nor
have there been any specific discussions with any potential business
combination candidate regarding business opportunities for us.  In our efforts
to analyze potential acquisition targets, we will consider the following kinds
of factors:

     (a)  Potential for growth, indicated by new technology, anticipated market
          expansion or new products;

     (b)  Competitive position as compared to other firms of similar size and
          experience within the industry segment as well as within the industry
          as a whole;

     (c)  Strength and diversity of management, either in place or scheduled
          for recruitment;

     (d)  Capital requirements and anticipated availability of required funds,
          to be provided by us or from operations, through the sale of
          additional securities, through joint ventures or similar arrangements
          or from other sources;

     (e)  The cost of participation by us as compared to the perceived tangible
          and intangible values and potentials;

     (f)  The extent to which the business opportunity can be advanced;

     (g)  The accessibility of required management expertise, personnel, raw
          materials, services, professional assistance and other required
          items; and

     (h)  Other relevant factors.

                                      3
<PAGE>
     In applying the foregoing criteria, no one of which will be controlling,
our management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries, and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex.  Due to the limited capital we have available
for investigation, we may not discover or adequately evaluate adverse facts
about the opportunity to be acquired.

Form of Acquisition

     The manner in which we participate in an opportunity will depend upon the
nature of the opportunity, our respective needs and desires as well as those of
the promoters of the opportunity, and the relative negotiating strength of us
and such promoters.

     It is likely that we will acquire our participation in a business
opportunity through the issuance of common stock or other securities.  This
could result in substantial additional dilution to the equity of those who were
our shareholders prior to such reorganization.  Our present shareholders will
likely not have control of a majority of our voting shares following a
reorganization transaction.  As part of such a transaction, all or a majority
of our directors may resign and new directors may be appointed without any vote
by shareholders.

     In the case of an acquisition, the transaction may be accomplished upon
the sole determination of our management without any vote or approval by
shareholders.  In the case of a statutory merger or consolidation directly
involving the Company, it will likely be necessary to call a shareholders'
meeting and obtain the approval of the holders of a majority of the outstanding
shares.  The necessity to obtain such shareholder approval may result in delay
and additional expense in the consummation of any proposed transaction and will
also give rise to certain appraisal rights to dissenting shareholders.  Most
likely, management will seek to structure any such transaction so as not to
require shareholder approval.

     It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial cost for accountants, attorneys
and others.  If a decision is made not to participate in a specific business
opportunity, the costs theretofore incurred in the related investigation would
not be recoverable.  Furthermore, even if an agreement is reached for the
participation in a specific business opportunity, the failure to consummate
that transaction may result in our loss of the related costs incurred.

Quality Resource Technologies

     In October 2010, we acquired 10% ownership of Quality Resource
Technologies, Inc.  Quality Resource Technologies is to develop, manufacture
and sell innovative light-weight fiber reinforced shipping container and
storage units.  We had announced a spin-off of our interest in Quality Resource
Technologies, Inc. to our shareholders.  However, we cancelled the spin-off and
continue to own 10% of Quality Resource Technologies, Inc.

Employees

     We currently employ no persons on a full-time basis and two persons on a
part-time basis.  We have in the past, and will continue in the future, to
employ independent contractors and to make extensive use of our outside
directors and others as consultants.  None of our employees and our
subsidiaries and joint operations are represented by a labor organization.

                                      4
<PAGE>
Item 1A.  RISK FACTORS

     Our business is subject to numerous risk factors, including the following:

WE HAVE MINIMAL ASSETS AND HAVE HAD NO OPERATIONS AND GENERATED NO REVENUES FOR
APPROXIMATELY THE LAST THREE YEARS.

     We have had no operations nor any revenues or earnings from operations
since March 2003.  We have no significant assets or financial resources.  We
will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination.  This may
result in us incurring a net operating loss which will increase continuously
until we can consummate a business combination with a target company.  There is
no assurance that we can identify such a target company and consummate such a
business combination.

THERE MAY BE CONFLICTS OF INTEREST BETWEEN OUR MANAGEMENT AND OUR NON-
MANAGEMENT SHAREHOLDERS.

     Conflicts of interest create the risk that management may have an
incentive to act adversely to the interests of other investors.  A conflict of
interest may arise between our management's personal pecuniary interest and its
fiduciary duty to our shareholders.  Further, our management's own pecuniary
interest may at some point compromise its fiduciary duty to our shareholders.

THE NATURE OF OUR PROPOSED OPERATIONS IS HIGHLY SPECULATIVE.

     The success of our proposed plan of operation will depend to a great
extent on the operations, financial condition and management of the identified
target company.  While management will prefer business combinations with
entities having established operating histories, there can be no assurance that
we will be successful in locating candidates meeting such criteria.  In the
event we complete a business combination, of which there can be no assurance,
the success of our operations will be dependent upon management of the target
company and numerous other factors beyond our control.

THE COMPETITION FOR BUSINESS OPPORTUNITIES AND COMBINATIONS IS GREAT.

     We are and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of business entities.  A
large number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies which may be
merger or acquisition target candidates for us.  Nearly all such entities have
significantly greater financial resources, technical expertise and managerial
capabilities than us and, consequently, we will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination.  Moreover, we will also compete with
numerous other small public companies in seeking merger or acquisition
candidates.

IT WILL BE IMPRACTICABLE FOR US TO CONDUCT AN EXHAUSTIVE INVESTIGATION PRIOR TO
ANY BUSINESS COMBINATION, WHICH MAY LEAD TO A FAILURE TO MEET OUR FIDUCIARY
OBLIGATIONS TO OUR SHAREHOLDERS.

     Our limited funds and the fact that we only have two part-time officers
will likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a target company.  The decision to enter into a
business combination, therefore, will likely be made without detailed
feasibility studies, independent analysis, market surveys or similar
information which, if we had more funds available to it, would be desirable.
We will be particularly dependent in making decisions upon information provided
by the principals and advisors associated with the business entity seeking our
participation.  Management may not be able to meet its fiduciary obligation to
us and our shareholders due to the impracticability of completing thorough due
diligence of a target company.  By our failure to complete a thorough due

                                      5
<PAGE>
diligence and exhaustive investigation of a target company, we are more
susceptible to derivative litigation or other shareholder suits.  In addition,
this failure to meet our fiduciary obligations increases the likelihood of
plaintiff success in such litigation.

WE HAVE NO CURRENT AGREEMENTS IN PLACE FOR A BUSINESS COMBINATION OR OTHER
TRANSACTION, AND WE CURRENTLY HAVE NO STANDARDS FOR POTENTIAL BUSINESS
COMBINATIONS.

     We have no current arrangement, agreement or understanding with respect to
engaging in a business combination with a specific entity.  There can be no
assurance that we will be successful in identifying and evaluating suitable
business opportunities or in concluding a business combination.  Management has
not identified any particular industry or specific business within an industry
for evaluation by us.  There is no assurance that we will be able to negotiate
a business combination on terms favorable to us.  We have not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which we will require a target company to have
achieved, or without which we would not consider a business combination with
such business entity.  Accordingly, we may enter into a business combination
with a business entity having no significant operating history, losses, limited
or no potential for immediate earnings, limited assets, negative net worth or
other negative characteristics.

ANY FUTURE BUSINESS COMBINATION IS HIGHLY DEPENDENT ON THE ACTIONS OF OUR TWO
OFFICERS, WHO MAY ONLY HAVE A LIMITED AMOUNT OF TIME AVAILABLE TO CONCENTRATE
US.

     While seeking a business combination, management anticipates devoting only
a limited amount of time per month to our business.  Our officers have not
entered into a written employment agreement with us and they are not expected
to do so in the foreseeable future.  We have not obtained key man life
insurance on our officers.  Notwithstanding the combined limited experience and
time commitment of management, loss of the services of our officers would
adversely affect development of our business and likelihood of continuing
operations.

THERE IS SUBSTANTIAL DOUBT AS TO WHETHER WE CAN CONTINUE AS A GOING CONCERN.

     We have not generated any revenues since March 2003, nor have we had any
operations since March 2003.  We had an accumulated deficit of $16,561,721 as
of December 31, 2011.  These factors among others indicate that we may be
unable to continue as a going concern, particularly in the event that we cannot
obtain additional financing and/or attain profitable operations.  The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty and if we cannot continue as a
going concern, your investment in us could become devalued or even worthless.

REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE AN ACQUISITION.

     Section 13 of the Exchange Act requires companies subject thereto to
provide certain information about significant acquisitions including audited
financial statements for the company acquired and a detailed description of the
business operations and risks associated with such company's operations.  The
time and additional costs that may be incurred by some target companies to
prepare such financial statements and descriptive information may significantly
delay or essentially preclude consummation of an otherwise desirable
acquisition by us.  Additionally, acquisition prospects that do not have or are
unable to obtain the required audited statements may not be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable.

WE HAVE NOT CONDUCTED ANY MARKET RESEARCH REGARDING ANY POTENTIAL BUSINESS
COMBINATIONS.

     We have neither conducted, nor have others made available to it, market
research indicating that demand exists for the transactions contemplated by us.
Even in the event demand exists for a transaction of the type contemplated by
us, there is no assurance we will be successful in completing any such business
combination.

                                      6
<PAGE>
WE DO NOT PLAN TO DIVERSIFY OUR OPERATIONS IN THE EVENT OF A BUSINESS
COMBINATION.

     Our proposed operations, even if successful, will in all likelihood result
in our engaging in a business combination with only one target company.
Consequently, our activities will be limited to those engaged in by the
business entity which we will merge with or acquire.  Our inability to
diversify its activities into a number of areas may subject us to economic
fluctuations within a particular business or industry and therefore increase
the risks associated with our operations.

ANY BUSINESS COMBINATION WILL LIKELY RESULT IN A CHANGE IN CONTROL AND IN OUR
MANAGEMENT.

     A business combination involving the issuance of our common stock will, in
all likelihood, result in shareholders of a target company obtaining a
controlling interest in the Company.  Any such business combination may require
our shareholder to sell or transfer all or a portion of their common stock.

REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS COMBINATION.

     Our primary plan of operation is based upon a business combination with a
business entity which, in all likelihood, will result in our issuing securities
to shareholders of such business entity.  The issuance of previously authorized
and unissued common stock would result in a reduction in percentage of shares
owned by our present shareholders and could therefore result in a change in
control of our management.

FEDERAL AND STATE TAXATION RULES COULD ADVERSELY EFFECT ANY BUSINESS
COMBINATION WE MAY UNDERTAKE.

     Federal and state tax consequences will, in all likelihood, be major
considerations in any business combination we may undertake.  Currently, such
transactions may be structured so as to result in tax-free treatment to both
companies, pursuant to various federal and state tax provisions.  We intend to
structure any business combination so as to minimize the federal and state tax
consequences to both us and the target company; however, there can be no
assurance that such business combination will meet the statutory requirements
of a tax-free reorganization or that the parties will obtain the intended tax-
free treatment upon a transfer of stock or assets.  A non-qualifying
reorganization could result in the imposition of both federal and state taxes
which may have an adverse effect on both parties to the transaction.

WE MAY BE FORCED TO RELY ON UNAUDITED FINANCIAL STATEMENTS IN CONNECTION WITH
ANY BUSINESS COMBINATION.

     We will require audited financial statements from any business entity we
propose to acquire.  No assurance can be given; however, that audited
financials will be available to us prior to a business combination.  In cases
where audited financials are unavailable, we will have to rely upon unaudited
information that has not been verified by outside auditors in making our
decision to engage in a transaction with the business entity.  The lack of the
type of independent verification which audited financial statements would
provide increases the risk that we, in evaluating a transaction with such a
target company, will not have the benefit of full and accurate information
about the financial condition and operating history of the target company.
This risk increases the prospect that a business combination with such a
business entity might prove to be an unfavorable one for us.

WE MAY BE SUBJECT TO FURTHER GOVERNMENT REGULATION WHICH WOULD ADVERSELY AFFECT
OUR OPERATIONS.

     Although we will be subject to the reporting requirements under the
Exchange Act, management believes we will not be subject to regulation under
the Investment Company Act of 1940, as amended (the "Investment Company Act"),
since we will not be engaged in the business of investing or trading in
securities.  If we engage in business combinations which result in our holding
passive investment interests in a number of entities, we could be subject to
regulation under the Investment Company Act.  If so, we would be required to
register as an investment company and could be expected to incur significant
registration and compliance costs.  We have obtained no formal determination
from the Securities and Exchange Commission as to our status under the

                                      7
<PAGE>
Investment Company Act and, consequently, violation of the Act could subject us
to material adverse consequences.

OUR BUSINESS WILL HAVE NO REVENUES UNLESS AND UNTIL WE MERGE WITH OR ACQUIRE AN
OPERATING BUSINESS.

     We have had no revenues from operations for approximately the past four
years.  We have had no operations for approximately the past four years.  We
may not realize any revenues unless and until we successfully merge with or
acquire an operating business.

THE COMPANY MAY ISSUE MORE SHARES IN CONNECTION WITH A MERGER OR ACQUISITION,
WHICH WOULD RESULT IN SUBSTANTIAL DILUTION.

     Our Certificate of Incorporation authorizes the issuance of a maximum of
40,000,000 shares of common stock and a maximum of 500,000 shares of preferred
stock.  Any merger or acquisition effected by us may result in the issuance of
additional securities without shareholder approval and may result in
substantial dilution in the percentage of our common stock held by our then
existing shareholders.  Moreover, the common stock issued in any such merger or
acquisition transaction may be valued on an arbitrary or non-arm's-length basis
by our management, resulting in an additional reduction in the percentage of
common stock held by our then existing shareholders.  Our Board of Directors
has the power to issue any or all of such authorized but unissued shares
without shareholder approval.  To the extent that additional shares of common
stock or preferred stock are issued in connection with a business combination
or otherwise, dilution to the interests of our shareholders will occur and the
rights of the holders of common stock might be materially adversely affected.

WE CANNOT ASSURE YOU THAT FOLLOWING A BUSINESS COMBINATION WITH AN OPERATING
BUSINESS, OUR COMMON STOCK WILL BE LISTED ON NASDAQ OR ANY OTHER SECURITIES
EXCHANGE.

     Following a business combination, we may seek the listing of our common
stock on NASDAQ or the American Stock Exchange.  However, we cannot assure you
that following such a transaction, we will be able to meet the initial listing
standards of either of those or any other stock exchange, or that we will be
able to maintain a listing of our common stock on either of those or any other
stock exchange.  After completing a business combination, until our common
stock is listed on the NASDAQ or another stock exchange, we expect that our
common stock would be eligible to trade on the OTC Bulletin Board, or another
over-the-counter quotation system," where our shareholders may find it more
difficult to dispose of shares or obtain accurate quotations as to the market
value of our common stock.  In addition, we would be subject to an SEC rule
that, if it failed to meet the criteria set forth in such rule, imposes various
practice requirements on broker-dealers who sell securities governed by the
rule to persons other than established customers and accredited investors.
Consequently, such rule may deter broker-dealers from recommending or selling
our common stock, which may further affect its liquidity.  This would also make
it more difficult for us to raise additional capital following a business
combination.  Additionally, there can be no assurances that we will be able to
obtain listing on the OTC Bulletin Board, which failure could cause our common
stock become worthless.

WE HAVE PREFERRED STOCK AUTHORIZED, WHICH PREFERRED STOCK MAY BE ISSUED BY OUR
BOARD OF DIRECTORS WITHOUT FURTHER SHAREHOLDER APPROVAL AND WHICH MAY HAVE
RIGHTS AND PREFERENCES GREATER THAN OUR COMMON STOCK.

     Our Certificate of Incorporation authorizes the issuance of up to 500,000
shares of preferred stock with designations, rights and preferences determined
from time to time by its Board of Directors.  Accordingly, our Board of
Directors is empowered, without shareholder approval, to issue preferred stock
with dividend, liquidation, conversion, voting, or other rights which could
adversely affect the voting power or other rights of the holders of the common
stock.  In the event of issuance, the preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company.  Although we have no present intention to
issue any shares of its authorized preferred stock, there can be no assurance
that the Company will not do so in the future.

Item 2.  PROPERTIES

     Our corporate office is currently at the offices of our chief executive
officer in Houston, Texas.

Item 3.  LEGAL PROCEEDINGS

     We are not aware of any material pending legal proceeding by or about us.

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Item 4.  MINE SAFETY DISCLOSURES

     Not applicable.


PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Due to our inability to timely file our Form 10-KSB for fiscal 2001, our
common stock was delisted from the OTC Bulletin Board effective with the open
of business on May 22, 2002.  Our common stock is currently traded on the over-
the-counter (OTC) market and is quoted on the Pink Sheets under the symbol
"BISA."  The following table sets forth the high and low sales prices of the
Common Stock for the years ended December 31, 2011 and 2010:

                            2011                       2010
                    -------------------        ---------------------
                      High         Low           High           Low
                      ----         ---           ----           ---

First Quarter       $0.03        $0.0012       $0.03          $0.007
Second Quarter       0.0278       0.0068        0.05           0.01
Third Quarter        0.024        0.0011        0.035          0.009
Fourth Quarter       0.0025       0.0012        0.04           0.0011

     As of March 23, 2012, the last sales price for the common stock was
$0.0025 and we believe there were approximately 1,000 beneficial holders of our
common stock.

     We have not paid, and do not currently intend to pay, cash dividends on
our common stock.  The current policy of our Board of Directors is to retain
earnings, if any, to provide funds for operation and expansion of our business.
Such policy will be reviewed by our Board of Directors from time to time in
light of, among other things, our earnings and financial position.

Item 6.  SELECTED FINANCIAL DATA

     As a smaller reporting company, we are not required to provide the
information required by this Item.

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Item 7.  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 our ability to maintain or improve our operating
results or execute our primary growth strategy.  Although we believe 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
us or any other person that our objectives and plans will be achieved.

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

CURRENT PLAN OF OPERATIONS

     Our current business objective for the next 12 months is to investigate
and, if such investigation warrants, acquire a target company or business
seeking the perceived advantages of being a publicly held corporation.  Our
principal business objective for the next 12 months and beyond will be to
achieve long-term growth potential through a combination with a business rather
than immediate, short-term earnings.  We will not restrict our potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business.

     We do not currently engage in any business activities that provide us with
positive cash flows.  As such, the costs of investigating and analyzing
business combinations for the next approximately 12 months and beyond will be
paid with our current cash on hand and through funds from financing to be
obtained.

     During the next 12 months we anticipate incurring costs related to filing
of Exchange Act reports and costs relating to consummating an acquisition.

     We believe we will be able to meet these costs with our current cash on
hand and additional amounts, as necessary, to be loaned to or invested in us by
our stockholders or other investors.

     We may consider a business which has recently commenced operations, is a
developing company in need of additional funds for expansion into new products
or markets, is seeking to develop a new product or service, or is an
established business which may be experiencing financial or operating
difficulties and is in need of additional capital.  In the alternative, a
business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital, but which desires to
establish a public trading market for its shares, while avoiding, among other
things, the time delays, significant expense, and loss of voting control which
may occur in a public offering.

     Any target business that is selected may be a financially unstable company
or an entity in its early stages of development or growth, including entities
without established records of sales or earnings.  In that event, we will be
subject to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies.
In addition, we may effect a business combination with an entity in an industry
characterized by a high level of risk, and, although our management will
endeavor to evaluate the risks inherent in a particular target business, there
can be no assurance that we will properly ascertain or assess all significant
risks.

     We anticipate that the selection of a business combination will be complex
and extremely risky.  Because of general economic conditions, rapid
technological advances being made in some industries and shortages of available
capital, our management believes that there are numerous firms seeking even the
limited additional capital which we will have and/or the perceived benefits of
becoming a publicly traded corporation.  Such perceived benefits of becoming a
publicly traded corporation include, among other things, facilitating or
improving the terms on which additional equity financing may be obtained,
providing liquidity for the principals of and investors in a business, creating
a means for providing incentive stock options or similar benefits to key
employees, and offering greater flexibility in structuring acquisitions, joint
ventures and the like through the issuance of stock.  Potentially available
business combinations may occur in many different industries and at various
stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.

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<PAGE>
Liquidity and Capital Resources

     At December 31, 2011, we had a working capital deficit of $2,600,473
compared to working capital deficit of $1,702,544 at December 31, 2010.  The
increase in the working capital deficit is due primarily to the increase in
accrued liabilities.  We had shareholders' deficit of $2,600,473 at
December 31, 2011.

     Net cash used in operating activities was $82 for 2011, compared to $300
for 2010.

     We have incurred operating losses from inception through December 31,
2011.  We incurred operating losses of $15,426 in 2011 and $14,185 in 2010.  At
December 31, 2011, we had an accumulated deficit of $16,561,721.

     Management believes that we will be able to achieve a satisfactory level
of liquidity to meet our business plan and capital needs through December 31,
2012.  Management believes we have the ability to obtain additional financing
from key officers, directors and certain investors.  However, there can be no
assurance that we will be able to generate sufficient liquidity to maintain our
operations.

     At December 31, 2011, we had cash of $300.  We have limited cash resources
available and have obligations due and past due.

Critical Accounting Policies

     Our financial statements have been prepared in accordance with accounting
principals generally accepted in the United States.  The preparation of these
financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of any contingent assets and liabilities.  On an on-going basis, we
evaluate our estimates, including those related to uncollectible receivable,
investment values, income taxes, the recapitalization and contingencies.  We
base our estimates on various assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about carrying values of assets and liabilities that are not readily
apparent from other sources.  Actual results may differ from these estimates
under different assumptions or conditions.

Item 8.  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.

                                     11
<PAGE>
Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

Item 9A.  CONTROLS AND PROCEDURES.

(a)  As of December 31, 2011, we carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rule 13a-15. This evaluation was done under the supervision and
with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer. Based on his evaluation of our disclosure controls
and procedures (as defined in the Exchange Act Rule 13a-15e), our Chief
Executive Officer and Chief Financial Officer has concluded that as of
December 31, 2011 such disclosure controls and procedures were effective.

     Our management is responsible for establishing and maintaining adequate
internal control over financial reporting for the Company. Internal control
over financial reporting is a process to provide reasonable assurance regarding
the reliability of our financial reporting for external purposes in accordance
with accounting principles generally accepted in the United States of America.
Internal control over financial reporting includes maintaining records that in
reasonable detail accurately and fairly reflect the transactions and
dispositions of our assets; provide reasonable assurance that transactions are
recorded as necessary for preparation of our financial statements; provide
reasonable assurance that receipts and expenditures of company assets are made
in accordance with management authorization; and provide reasonable assurance
that unauthorized acquisition, use or disposition of company assets that could
have a material effect on our financial statements would be prevented or
detected on a timely basis. Because of its inherent limitations, internal
control over financial reporting is not intended to provide absolute assurance
that a misstatement of our financial statements would be prevented or detected.

     Pursuant to Rule 13a-15d of the Exchange Act, management conducted an
evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control - Integrated Framework
(1992) and Internal Control Over Financial Reporting - Guidance for Smaller
Public Companies (2006), issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on this evaluation, management concluded that
our internal control over financial reporting was effective as of December 31,
2011.


(b)  There have been no changes in internal control over financial reporting
that occurred during the last fiscal quarter that have materially affected, or
are reasonably likely to materially affect our internal controls over financial
reporting.


Item 9B.  OTHER INFORMATION.

       None.



                                     12
<PAGE>
PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Executive Officers and Directors

     The following table gives certain information with respect to our
executive officers and directors:

     Name                    Age     Position
     ----                    ---     --------
     Robert L. Knauss (1)(4)  81     Chairman of the Board and Director
     David A. Grossman (1)    48     Chief Executive Officer, Chief Financial
                                      Officer, Corporate Secretary and Director
     Paul R. Gregory (2)(3)   71     Director
     Ted Reynolds (2)(3)      81     Director
___________________________
(1) Effective February 26, 2010, Mr. Knauss resigned as Chief Executive Officer
    and Mr. Grossman was named Chief Executive Officer.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Nominating Committee.

     Mr. Knauss has served as Chairman of the Board since our inception in
March 1991, and as Chief Executive Officer from January 1994 to February
2010.  Mr. Knauss currently serves as an Independent Director on the Boards of
the Equus Total Return Inc. and The Mexico Fund. He previously served as
Chairman of Philip Services Corporation from 1998 to 2000, and from 2002 to
2003, and as a Director of Seitel Inc. from June 2002 to June 2004. Mr. Knauss
also previously served as the Dean of the University of Houston Law Center, and
of the Vanderbilt University Law School.  Mr. Knauss holds a JD from the
University of Michigan, and BA from Harvard College.

     Mr. Grossman has served as Chief Financial Officer since September 1997
and as Corporate Secretary since December 1996.  He was appointed Chief
Executive Officer in February 2010.  He served as President from November 1998
until May 2000 when he resigned as a full-time employee of Baltic.  He served
as comptroller from November 1995 until September 1997.  Mr. Grossman was chief
financial officer of LynkTel, Inc. from May 2000 to January 2003.  From
February 2003 to January 2005, he served as operations controller of BHP
Billiton.  He was an audit partner of Malone & Bailey, PC from 2005 to 2007.
Mr. Grossman is currently an audit partner with GBH CPAs, PC.  Prior to joining
Baltic, 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.

     Dr. Gregory served as our treasurer, on a part-time basis, since our
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.


                                     13
<PAGE>
     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 our operations and the results of the audit services provided by our
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 our
directors and executive officers.

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.  No such
options were granted in 2011 and 2010.

Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Exchange Act requires our directors and executive
officers and persons who own more than ten percent of a registered class of our
equity securities to file reports with the Securities and Exchange Commission
relating to transactions and holdings in our common stock.  We believe that
during the fiscal year ended December 31, 2011 all such filing requirements
were satisfied.

Item 11.  EXECUTIVE COMPENSATION

     The following table sets forth information with respect to our chief
executive officer and chief financial officer.  No other employee received
total annual salary and bonus for the fiscal year ended December 31, 2011 in
excess of $100,000.

<TABLE>
<CAPTION>
                                 Summary Compensation Tab


                                                                      Long-Term Compensation
                                                                    ------------------------
                                    Annual Compensation (1)(2)                     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 (3)      2010     $      0   $     0     $     0       $     0            0
 Former Chief
  Executive Officer

David Grossman (3)     2011     $      0   $     0     $     0       $     0            0
 Chief Executive       2010            0         0           0             0            0
  Officer and Chief
  Financial Officer
</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)  Unpaid salaries of $6,000 and $6,000 for Mr. Knauss and Mr. Grossman,
      respectively, for each of the years 2010 and 2011 have been accrued.
 (3)  Effective February 26, 2010, Mr. Knauss resigned as Chief Executive
      Officer and Mr. Grossman was named Chief Executive Officer.

Stock Options

     As of March 26, 2012, no options were outstanding.

                                     14
<PAGE>
     The following table shows, as to the named executive officers, information
concerning individual grants of stock options during 2011.

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

                      Number of     Percentage of Total
                      Securities      Options/Warrants
                      Underlying         Granted
                   Options/Warrants     Employees in    Exercise Price   Expiration
Name                   Granted              2011          Per Share         Date
<S>                  <C>                <C>             <C>             <C>
David A. Grossman           0               0.0%             N/A             N/A
</TABLE>

     The following table shows, as to the named executive officers, information
concerning aggregate stock option and warrant exercises during 2011 and the
stock option and warrant values as of December 31, 2011.

<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, 2011    December 31, 2011
                 Acquired on      Value       Exercisable/          Exercisable/
Name               Exercise      Realized    Unexercisable         Unexercisable
<S>                <C>             <C>      <C>                   <C>
David A. Grossman        0           0             0 / 0                $0 / $0
</TABLE>

     We have not established, nor does it provide for, long-term incentive
plans or defined benefit or actuarial plans.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth, as of March 26, 2010, certain information
with respect to the beneficial ownership of our Common Stock by (i) each person
known to us who beneficially owns more than 5% of our 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

Nicol Family Partnership (1)             1,500,000                 13.67%
Robert L. Knauss                         1,072,431  (2)             9.52
Citibank (Switzerland) (1)               1,000,000                  9.11
Paul R. Gregory                            515,369                  4.70
David A. Grossman                          220,084  (4)             1.98
Ted Reynolds                                83,000                  0.76
All directors and executive officers     2,177,611  (5)            18.96

 (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 284,227 shares subject to warrants and Series A
      Preferred Stock that are currently exercisable/convertible.
 (3)  Includes an aggregate of 89,286 shares subject to Series A Preferred
      Stock that are currently convertible.
 (4)  Includes an aggregate of 135,417 shares subject to warrants and Series A
      Preferred Stock that are currently exercisable/convertible.
 (5)  Includes an aggregate of 508,930 shares subject to warrants and Series A
      Preferred Stock that are currently exercisable/convertible.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Management believes that all prior related party transactions are on terms
no less favorable to us 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 our Board of Directors.




                                     15
<PAGE>

Item 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

     We qualify as an inactive entity pursuant to Sec. 210.3-11 of Regulation
S-X.  Therefore, we have not engaged an independent registered public
accountant for any services for the years ended December 31, 2011 and 2010.

Item 15.  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       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)

     31 *       Chief Executive Officer and Chief Financial Officer
                Certification pursuant to Section 302 of the Sarbanes-Oxley Act
                of 2002

     32 *       Chief Executive Officer and Chief Financial Officer
                Certification pursuant to Section 906 of the Sarbanes-Oxley Act
                of 2002

* Attached hereto.


                                     16
<PAGE>
                                  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 March 30, 2012.

                              BALTIC INTERNATIONAL USA, INC.


                              /s/ David A. Grossman
                              -------------------------------------------------
                              DAVID A. GROSSMAN
                              Chief Executive Officer and
                                Chief Financial 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                 March 30, 2012
-----------------------
ROBERT L. KNAUSS

/s/ David A. Grossman     Chief Executive Officer,              March 30, 2012
-----------------------    Chief Financial Officer
DAVID A. GROSSMAN          Corporate Secretary and Director
                           (Principal Executive Officer and
                           Principal Financial and Accounting
                           Officer)


/s/ Paul R. Gregory       Director                              March 30, 2012
-----------------------
PAUL R. GREGORY


/s/ Ted Reynolds          Director                              March 30, 2012
-----------------------
TED REYNOLDS






                                     17
<PAGE>
                         BALTIC INTERNATIONAL USA, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)
                                                                        Page

Consolidated balance sheets at December 31, 2011 and 2010                F-2

Consolidated statements of operations for the years ended
  December 31, 2011 and 2010                                             F-3

Consolidated statements of shareholders' deficit for the
  years ended December 31, 2011 and 2010                                 F-4

Consolidated statements of cash flows for the years ended
  December 31, 2011 and 2010                                             F-6

Notes to consolidated financial statements                               F-7



FINANCIAL STATEMENTS OF AN INACTIVE REGISTRANT

Pursuant to Sec. 210.3-11 of Regulation S-X, Baltic International USA, Inc.
qualifies as an inactive entity, meeting all of the following conditions:

(a)  Gross receipts from all sources for the fiscal year are not in excess of
     $100,000;

(b)  We have not purchased or sold any of our own stock, granted options
     therefore, or levied assessments upon outstanding stock;

(c)  Expenditures for all purposes for the fiscal year are not in excess of
     $100,000;

(d)  No material change in the business has occurred during the fiscal year,
     including any bankruptcy, reorganization, readjustment or succession or
     any material acquisition or disposition of plants, mines, mining
     equipment, mine rights or leases; and

(e)  No exchange upon which the shares are listed, or governmental authority
     having jurisdiction, requires the furnishing to it or the publication of
     audited financial statements.

Accordingly, the consolidated financial statements of Baltic International USA,
Inc. are unaudited.



                                    F-1
<PAGE>
                        BALTIC INTERNATIONAL USA, INC.
                         Consolidated Balance Sheets
                                (Unaudited)


                                                   December 31,    December 31,
                                                       2011             2010
ASSETS

CURRENT ASSETS
 Cash and cash equivalents                         $       300    $       117
                                                   -----------    -----------
    Total current assets                                   300            117

Reimbursable acquisition costs                          50,000         50,000
                                                   -----------    -----------
    Total assets                                   $    50,300    $    50,117
                                                   ===========    ===========


LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES
 Accounts payable and accrued liabilities          $   328,872    $   309,844
 Dividends payable                                   2,284,920      2,216,920
 Short-term debt                                        36,981         34,908
                                                   -----------    -----------
    Total current liabilities                        2,650,773      2,471,672
                                                   -----------    -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
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, 16,629,229 shares issued and
  10,975,760 shares outstanding                        166,292        166,292
 Additional paid-in capital                         13,019,530     13,019,530
 Accumulated deficit                               (16,561,721)   (16,382,803)
 Treasury stock, at cost                              (804,574)      (804,574)
                                                   -----------    -----------
    Total shareholders' deficit                     (2,600,473)    (2,421,555)
                                                   -----------    -----------
    Total liabilities and shareholders' deficit    $    50,300    $    50,117
                                                   ===========    ===========

     See accompanying notes to consolidated financial statements.



                                    F-2
<PAGE>
                        BALTIC INTERNATIONAL USA, INC.
                    Consolidated Statements of Operations
                                (Unaudited)


                                                    Year Ended December 31,

                                                    2011              2010

REVENUES                                       $         -       $         -
                                                ----------        ----------

OPERATING EXPENSES:
 Personnel and consulting                           13,763            13,763
 Other general and administrative                    1,663            19,928
                                                ----------        ----------
    Total operating expenses                        15,426            33,691
                                                ----------        ----------

LOSS FROM OPERATIONS                               (15,426)          (33,691)
                                                ----------        ----------

OTHER INCOME (EXPENSE):
 Interest expense                                   (5,492)           (2,928)
                                                ----------        ----------
     Total other income (expense)                   (5,492)           (2,928)
                                                ----------        ----------

LOSS BEFORE INCOME TAXES                           (20,918)          (36,619)

INCOME TAX EXPENSE                                       -                 -
                                                ----------        ----------
NET LOSS                                       $   (20,918)      $   (36,619)
                                                ==========        ==========


INCOME (LOSS) PER SHARE AMOUNTS:
Basic and diluted                              $     (0.02)      $     (0.02)

WEIGHTED AVERAGE OUTSTANDING SHARES:
Basic and diluted                               10,975,760        10,975,760



     See accompanying notes to consolidated financial statements.


                                    F-3
<PAGE>
<TABLE>
<CAPTION>
                        BALTIC INTERNATIONAL USA, INC.
           Consolidated Statements of Shareholders' Deficit
                                (Unaudited)


                                                            Preferred Stock
                                                    Series A                  Series B              Common Stock
                                Warrants      Shares        Amount       Shares      Amount         Shares         Amount
<S>                           <C>            <C>         <C>            <C>       <C>            <C>           <C>
Balance, December 31, 2009     $        -     123,000     $1,230,000       14      $  350,000     16,629,229      166,292
Net loss
Dividends on preferred stock:
 Series A, $1.00 per share
 Series B, $2500 per share
                               ----------    --------     ----------      ---      ----------     ----------      -------
Balance, December 31, 2010     $        -     123,000     $1,230,000       14      $  350,000     16,629,229      166,292
Net loss
Dividends on preferred stock:
 Series A, $1.00 per share
 Series B, $2500 per share
                               ----------    --------     ----------      ---      ----------     ----------      -------
Balance, December 31, 2011     $        -     123,000     $1,230,000       14      $  350,000     16,629,229      166,292
                               ==========    ========     ==========      ===      ==========     ==========      =======
</TABLE>







     See accompanying notes to consolidated financial statements.


                                    F-4
<PAGE>
<TABLE>
<CAPTION>
                        BALTIC INTERNATIONAL USA, INC.
           Consolidated Statements of Shareholders' Deficit
                                (Continued)
                                (Unaudited)


                                   Additional
                                     paid-in      Accumulated           Treasury stock
                                     capital         deficit         Shares        Amount        Total
<S>                              <C>            <C>              <C>           <C>          <C>
Balance, December 31, 2009       $13,019,530    $(16,188,184)      5,653,469    $(804,574)   $(2,226,936)
Net loss                                             (36,619)                                    (36,619)
Dividends on preferred stock:
 Series A, $1.00 per share                          (123,000)                                   (123,000)
 Series B, $2,500 per share                          (35,000)                                    (35,000)
                                  -----------    ------------     -----------    ---------    -----------
Balance, December 31, 2010       $13,019,530    $(16,382,803)      5,653,469    $(804,574)   $(2,421,555)
Net loss                                             (20,918)                                    (20,918)
Dividends on preferred stock:
 Series A, $1.00 per share                          (123,000)                                   (123,000)
 Series B, $2,500 per share                          (35,000)                                    (35,000)
                                  -----------    ------------     -----------    ---------    -----------
Balance, December 31, 2011       $13,019,530    $(16,561,721)      5,653,469    $(804,574)   $(2,600,473)
                                  ===========    ============     ===========    =========    ===========
</TABLE>







     See accompanying notes to consolidated financial statements.



                                    F-5
<PAGE>
                        BALTIC INTERNATIONAL USA, INC.
                   Consolidated Statements of Cash Flows
                                (Unaudited)

                                                    Year Ended December 31,

                                                    2011              2010
Cash flows from operating activities:
 Net loss                                       $   (20,918)      $   (36,619)
 Noncash adjustments:
  Increase/decrease in current assets and
   current liabilities:
   Accounts payable and accrued liabilities          19,028            21,273
                                                -----------     -------------
     Net cash used by operating activities           (1,890)          (15,346)
                                                -----------     -------------

Cash flows from financing activities:
Borrowings of debt from officers and directors        2,073            20,438
Repayments of debt from officers and directors            -            (5,000)
                                                -----------     -------------
     Net cash provided by operating activities        2,073            15,438
                                                -----------     -------------

Net increase in cash and cash equivalents               183                92
Cash and cash equivalents, beginning of year            117                25
                                                -----------     -------------
Cash and cash equivalents, end of year          $       300       $       117
                                                ===========     =============


Supplemental disclosures:
 Interest paid                                  $         -     $           -
 Income taxes paid                              $         -     $           -

Noncash investing and financing activities:
 Dividends declared and unpaid                  $   158,000     $     158,000



     See accompanying notes to consolidated financial statements.



                                    F-6
<PAGE>
                        BALTIC INTERNATIONAL USA, INC.
                  Notes to Consolidated Financial Statements
                                (Unaudited)


NOTE 1 - BUSINESS OPERATIONS AND FINANCIAL CONDITION

Business operations

Baltic International USA, Inc. ("Baltic"), 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.

Financial condition

We have incurred operating losses since inception through December 31, 2011.
We incurred operating losses of $20,918 in 2011 and $36,619 in 2010.  At
December 31, 2011, we had an accumulated deficit of $16,561,721.  Net cash used
in operating activities was $1,890 in 2011 and $15,346 in 2010.  At
December 31, 2011, we had cash of $300.  We currently have limited cash
resources available and have obligations due and past due.

Management believes that we will be able to achieve a satisfactory level of
liquidity to meet our business plan and capital needs through December 31,
2011.  Management believes we have the ability to obtain additional financing
from key officers, directors and certain investors.  However, there can be no
assurance that we will be able to generate sufficient liquidity to maintain our
operations.  In addition, management believes that we can continue to defer
certain amounts payable by us 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 Baltic and our
wholly owned subsidiary, Advanced Reclamation Company, L.L.C. ("ARC").  All
significant intercompany accounts and transactions have been eliminated.  Our
interest in Baltic International Airlines ("BIA") is accounted for using the
cost method because BIA has no current operations.  Our interest in Lithuanian
Aircraft Maintenance Corporation ("LAMCO") was accounted for using the cost
method because we owned only 2.6% of LAMCO and it had no operations since our
inception.

Revenue recognition

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


                                    F-7
<PAGE>
Cash and cash equivalents

For purposes of the statement of cash flows, we consider 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 affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Concentration of credit risk

Financial instruments that potentially subject us to concentrations of credit
risk consist of cash, cash equivalents and trade receivables.  We consider such
risk in placing our cash and cash equivalents in financial institutions and
other instruments.  We perform ongoing credit evaluations of our 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.

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 we had earnings from continuing operations for the period.

Subsequent events

We evaluated events occurring from the end of our fiscal year, December 31,
2011, through the date when the financial statements were issued.

New accounting pronouncements

Recently issued or adopted accounting pronouncements are not expected to have
have, or did not have, a material effect on our financial position or results
of operations.

                                    F-8
<PAGE>
Reclassifications

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

NOTE 3 - JOINT OPERATIONS

Quality Resource Technologies

In October 2010, we acquired 10% ownership of Quality Resource Technologies,
Inc.  Quality Resource Technologies is to develop, manufacture and sell
innovative light-weight fiber reinforced shipping container and storage units.
We had announced a spin-off of our interest in Quality Resource Technologies,
Inc. to our shareholders.  However, we cancelled the spin-off and continue to
own 10% of Quality Resource Technologies, Inc.

As part of the merger, the former owners of Quality Resource Technologies, Inc.
agreed to reimburse us for $50,000 in costs related to the merger.  This amount
has been included as reimbursable acquisition costs on the balance sheet at
December 31, 2011 and 2010.

NOTE 4 - DEBT

Debt consists of the following:


                                                           December 31,
                                                      2011             2010

Notes payable to officers and directors,
unsecured, interest rate of 13%, due on demand   $    36,981      $    34,908
                                                  ----------       ----------
Total debt                                            36,981           34,908
Less short-term debt                                 (36,981)         (34,908)
                                                  ----------       ----------
Long-term debt, net                              $         -      $         -
                                                  ==========       ==========


                                    F-9
<PAGE>
NOTE 5 - INCOME TAXES

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

                                                           December 31,
                                                      2011             2010

Deferred tax assets:
 Net operating loss carryforward                 $ 2,903,289      $ 2,835,265
Valuation allowance                               (2,903,289)      (2,835,265)
                                                  ----------       ----------
Net deferred tax assets                          $         -      $         -
                                                  ==========       ==========

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.

As of December 31, 2011, we had net operating loss carryforwards of
approximately $8,500,000 available to offset future taxable income.  These
carryforwards will expire at various dates beginning in 2012.



                                    F-10
<PAGE>
NOTE 7 - WARRANTS

At December 31, 2011, we had 399,975 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,
                                           2011                         2010
                                                  Weighted                    Weighted
                                                   Average                     Average
                                     Shares    Exercise Price     Shares   Exercise Price
<S>                             <C>            <C>            <C>          <C>
Shares under warrant
beginning of period                 399,975     $  6.00          399,975     $  6.00
Changes during the period
  Granted                                 -           -                -           -
  Canceled                                -           -                -           -
  Exercised                               -           -                -           -
                                 ----------                   ----------
Shares under warrant, end of
period                              399,975     $  6.00          399,975     $  6.00
                                 ==========                   ==========
Warrants exercisable, end of
period                              399,975     $  6.00          399,975     $  6.00
                                 ==========                   ==========
</TABLE>

The exercise price of the warrants outstanding at December 31, 2011 is $6.00.
The weighted average contractual life of the warrants outstanding at
December 31, 2011 was 0.5 years.

NOTE 8 - PREFERRED STOCK

Effective June 30, 1995, we created our 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 our option 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 our 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, 2011, the conversion price was $0.84 per
share.

Effective February 22, 1996, we created our 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 our 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 our option if the
conversion price is $0.75 or less per share.  In October 1996, we amended the
conversion price to the lesser of $0.55 per share or 82% of the 5-day average
closing bid price of our Common Stock.  During 2011 and 2010, there were no
conversions of Series B Preferred Stock into shares of our common stock.


                                    F-11
<PAGE>
NOTE 9 - LOSS PER SHARE

Supplemental disclosures for loss per share are as follows:

                                                     Year ended December 31,
                                                      2011             2010
Basic and diluted
Net loss to be used to compute loss per share:
  Net loss                                        $  (20,918)     $   (36,619)
  Less preferred dividends                          (158,000)        (158,000)
                                                  ----------       ----------
Net loss attributable to common shareholders      $ (178,918)     $  (194,619)
                                                  ==========       ==========

Weighted average number of shares:
  Average common shares outstanding               10,975,760       10,975,760
                                                  ==========       ==========

Basic and diluted loss per common share              $ (0.02)        $  (0.02)
                                                  ==========       ==========

NOTE 10 - COMMITMENTS AND CONTINGENCIES

Rent expense under operating leases was $0 and $0 for 2011 and 2010,
respectively.  We have no future minimum lease payments under noncancelable
operating leases as of December 31, 2011.

We are 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 our operating
results or financial position.





                                    F-12