##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTERLY PERIOD ENDED MARCH 31,
2003


OR

[     ] TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF
1934


FOR THE TRANSITION PERIOD FROM

TO


Commission File Number: 814-00127

BRANTLEY CAPITAL CORPORATION




(Exact name of registrant as specified in its
charter)


|                                |  |                                            
|------------------------------- |  | -------------------------------------------
|Maryland                        |  | 34-1838462                                 
|                                |  |                                            
|(State or other Jurisdiction of |  | (I.R.S. Employer Identification
    Number)
|Incorporation or Organization)  |  |                                            

3201 Enterprise Parkway, Suite 350,
Cleveland, Ohio 44122

(Address of principal executive offices
including zip code)


(216) 464-8400

(Registrants telephone number including
area code)


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 whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Yes [ ] No [X].

The number of shares of common stock, $.01 par
value, outstanding as of March 31, 2003 was 3,810,535.



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TABLE OF CONTENTS



|                                                  |                                                                                               |                                               |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | --------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                    
|                                                  | Item 1. Financial Statements                                                                 
|                                                  |                                                                                               | BALANCE SHEETS                               
|                                                  |                                                                                               | STATEMENTS OF OPERATIONS                     
|                                                  |                                                                                               | STATEMENTS OF CHANGES IN NET ASSETS          
|                                                  |                                                                                               | STATEMENTS OF CASH FLOWS                     
|                                                  |                                                                                               | STATEMENT OF INVESTMENTS -- (Unaudited)      
|                                                  |                                                                                               | NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
|                                                  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|                                                  | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION                       
|                                                  | Item 1. Legal Proceedings                                                                    
|                                                  | Items 2.-5.                                                                                  
|                                                  | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                       
|EX-99.1  CERTIFICATION OF CHIEF EXECUTIVE OFFICER
|EX-99.2  CERTIFICATION OF CHIEF FINANCIAL OFFICER



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##### Table of Contents



TABLE OF CONTENTS

|                              |             |                                     |                                                                                           |  |   |    | 
|----------------------------- | ----------- | ----------------------------------- | ----------------------------------------------------------------------------------------- |  | - | -- | 
|PART I. FINANCIAL INFORMATION |             |                                     |                                                                                           | 
|                              | Item 1.     |                                     | Financial Statements                                                                      |  |   | 2  | 
|                              |             | Balance Sheets                      |                                                                                           |  | 2 |   
|                              |             | Statements of Operations            |                                                                                           |  | 3 |   
|                              |             | Statements of Changes in Net Assets |                                                                                           |  | 4 |   
|                              |             | Statements of Cash Flows            |                                                                                           |  | 5 |   
|                              |             | Statements of Investments           |                                                                                           |  | 6 |   
|                              |             | Notes to the Financial Statements   |                                                                                           |  | 7 |   
|                              | Item 2.     |                                     | Managements Discussion and Analysis of
    Financial Condition and Results of Operations |  |   | 10 | 
|                              | Item 3.     |                                     | Quantitative and Qualitative Disclosures about
    Market Risk                            |  |   | 17 | 
|                              | Item 4.     |                                     | Control and Procedures                                                                    |  |   | 18 | 
|PART II. OTHER INFORMATION    |             |                                     |                                                                                           | 
|                              | Item 1.     |                                     | Legal Proceedings                                                                         |  |   | 18 | 
|                              | Items 2.-5. |                                     | 19                                                                                        | 
|                              | Item 6.     |                                     | Exhibits and Reports on Form 8-K                                                          |  |   | 20 | 
|Signatures                    |             |                                     | 21                                                                                        | 



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##### Table of Contents






PART I. FINANCIAL INFORMATION






|        |                     
|------- | --------------------
|Item 1. | Financial Statements

BRANTLEY CAPITAL CORPORATION






BALANCE SHEETS


|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |            |            | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ---------------------------------------------- | ---------- | ------------ | ---------- | - | ---------- | ---------- | ---------- | 
|                                                                                                                                                                      |                              | March 31,                                      |            | December 31,
|                                                                                                                                                                      |                              | 2003                                           |            | 2002        
|                                                                                                                                                                      |                              | (Unaudited)                                    |            | (Audited)   
|                                                                                                                                                                      |                              |                                                |            |             
|ASSETS                                                                                                                                                                |                              |                                                |            |              |            |   |            |           
|Investments, at fair value                                                                                                                                            |                              |                                                |            |              |            |   |            |           
|                                                                                                                                                                      | Companies 5% to 25% owned    |                                                | $          | 64,718,530   |            |   | $          | 59,602,279 |           
|                                                                                                                                                                      | Companies less than 5% owned |                                                |            | 2,481,556    |            |   |            | 2,481,556  |           
|Cash and cash equivalents                                                                                                                                             |                              |                                                | 633,389    |              |            |   | 237,154    |           
|Restricted cash                                                                                                                                                       |                              |                                                | 6,000,000  |              |            |   | 6,000,000  |           
|Dividends and interest receivable                                                                                                                                     |                              |                                                | 5,423,207  |              |            |   | 5,426,694  |           
|Other assets                                                                                                                                                          |                              |                                                | 202,278    |              |            |   |           |           
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|                                                                                                                                                                      |                              | Total Assets                                   |            | $            | 79,458,960 |   |            | $          | 73,747,683 | 
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|LIABILITIES AND
    STOCKHOLDERS EQUITY                                                                                                                              |                              |                                                |            |              |            |   |            |           
|Note payable                                                                                                                                                          |                              | $                                              | 7,500,000  |              |            | $ | 6,000,000  |           
|Advisory fee payable                                                                                                                                                  |                              |                                                | 461,057    |              |            |   | 477,860    |           
|Accrued professional fees                                                                                                                                             |                              |                                                | 1,133,723  |              |            |   | 1,095,505  |           
|Other liabilities                                                                                                                                                     |                              |                                                | 347,689    |              |            |   | 273,990    |           
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|                                                                                                                                                                      |                              | Total Liabilities                              |            |              | 9,442,469  |   |            |            | 7,847,355  | 
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|Stockholders Equity:                                                                                                                                                 |                              |                                                |            |              |            |   |            |           
|Common Stock, $0.01 par value; 25,000,000 shares
    authorized and 3,810,535 shares issued and outstanding at
    March 31, 2003 and December 31, 2002, respectively |                              |                                                | 38,105     |              |            |   | 38,105     |           
|Additional paid in capital                                                                                                                                            |                              |                                                | 34,506,838 |              |            |   | 34,506,838 |           
|Retained earnings                                                                                                                                                     |                              |                                                | 35,471,548 |              |            |   | 31,355,385 |           
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|                                                                                                                                                                      |                              | Total Stockholders Equity                     |            |              | 70,016,491 |   |            |            | 65,900,328 | 
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|                                                                                                                                                                      |                              | Total Liabilities and
    Stockholders Equity |            | $            | 79,458,960 |   |            | $          | 73,747,683 | 
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           
|Net Asset Value Per Share                                                                                                                                             |                              | $                                              | 18.37      |              |            | $ | 17.29      |           
|                                                                                                                                                                      |                              |                                                |            |              |            |   |            |           

The accompanying notes to the financial
statements are an integral part of these statements.

2



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BRANTLEY CAPITAL CORPORATION






STATEMENTS OF OPERATIONS


(Unaudited)

|                                                                            |                                     |                                                |           |                 |          |   |           |          |         | 
|--------------------------------------------------------------------------- | ----------------------------------- | ---------------------------------------------- | --------- | --------------- | -------- | - | --------- | -------- | ------- | 
|                                                                            |                                     | For the quarter                                |           | For the quarter
|                                                                            |                                     | ended                                          |           | ended          
|                                                                            |                                     | March 31,                                      |           | March 31,      
|                                                                            |                                     | 2003                                           |           | 2002           
|                                                                            |                                     |                                                |           |                
|Investment Income (Loss):                                                   |                                     |                                                |           |                 |          |   |           |         
|                                                                            | Interest and Dividends              |                                                |           |                 |          |   |           |          |        
|                                                                            |                                     | Companies owned 5% to 25%                      |           | $               | 510,994  |   |           | $        | 477,940 | 
|                                                                            |                                     | Companies less than 5% owned                   |           |                 |         |   |           |          |        | 
|                                                                            |                                     | Write off of Interest and Dividends Receivable |           |                 | (517,886 | ) |           |          |        | 
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|                                                                            | Total investment (loss) income      |                                                |           | (6,892          | )        |   |           | 477,940  |        
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|Operating Expenses:                                                         |                                     |                                                |           |                 |          |   |           |         
|                                                                            | Advisory fees                       |                                                |           | 466,122         |          |   |           | 488,124  |        
|                                                                            | Administration fees                 |                                                |           | 18,493          |          |   |           | 18,493   |        
|                                                                            | Professional fees                   |                                                |           | 38,218          |          |   |           | 45,616   |        
|                                                                            | Interest and other expense          |                                                |           | 217,519         |          |   |           | 204,003  |        
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|                                                                            | Total operating expenses            |                                                |           | 740,352         |          |   |           | 756,236  |        
|Investment Loss, net                                                        |                                     |                                                | (747,244  | )               |          |   | (278,296  | )       
|Net Realized and Unrealized Gains (Losses) on
    Investments:              |                                     |                                                |           |                 |          |   |           |         
|                                                                            | Net realized losses on investments  |                                                |           |                |          |   |           | (441,234 | )      
|                                                                            | Net unrealized gains on investments |                                                |           | 4,863,407       |          |   |           | 733,538  |        
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|Net realized and unrealized gains on
    investment transactions            |                                     |                                                | 4,863,407 |                 |          |   | 292,304   |         
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|Net increase in net assets resulting
    from operations                    |                                     | $                                              | 4,116,163 |                 |          | $ | 14,008    |         
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|Net increase in net assets from operations per
    share, basic and diluted |                                     | $                                              | 1.08      |                 |          | $ |          |         
|                                                                            |                                     |                                                |           |                 |          |   |           |         
|Weighted average number of shares outstanding,
    basic and diluted        |                                     |                                                | 3,810,535 |                 |          |   | 3,810,535 |         
|                                                                            |                                     |                                                |           |                 |          |   |           |         

The accompanying notes to the financial
statements are an integral part of these statements.

3



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BRANTLEY CAPITAL CORPORATION






STATEMENTS OF CHANGES IN NET ASSETS


(Unaudited)


|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|------------------------------------------- |  | ------ | ------ | ---------- |  | -------- | ---------- | ------------ |  | - | ---------- | - |  | - | ---------- | -
|                                            |  |        |        | Additional |  |          |            | Total       
|                                            |  | Common |        | Paid in    |  | Retained |            | Stockholders
|                                            |  | Stock  |        | Capital    |  | Earnings |            | Equity      
|                                            |  |        |        |            |  |          |            |             
|Balance at
    December 31, 2000            |  | $      | 38,105 |            |  | $        | 37,484,895 |              |  | $ | 14,420,019 |   |  | $ | 51,943,019 |  
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations: |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net investment loss                         |  |        |       |            |  |          |           |              |  |   | (1,207,676 | ) |  |   | (1,207,676 | )
|Net realized gain                           |  |        |       |            |  |          |           |              |  |   | 1,155,843  |   |  |   | 1,155,843  |  
|Net unrealized gain                         |  |        |       |            |  |          |           |              |  |   | 16,851,583 |   |  |   | 16,851,583 |  
|Distributions from:                         |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net investment income                       |  |        |       |            |  |          |           |              |  |   |           |   |  |   |           |  
|Net realized gains                          |  |        |       |            |  |          |           |              |  |   | (736,455   | ) |  |   | (736,455   | )
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at
    December 31, 2001            |  | $      | 38,105 |            |  | $        | 37,484,895 |              |  | $ | 30,483,314 |   |  | $ | 68,006,314 |  
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net decrease in net assets from operations: |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net investment loss                         |  |        |       |            |  |          | (2,978,057 | )            |  |   | 819,660    |   |  |   | (2,158,397 | )
|Net realized loss                           |  |        |       |            |  |          |           |              |  |   | (402,012   | ) |  |   | (402,012   | )
|Net unrealized gain                         |  |        |       |            |  |          |           |              |  |   | 454,423    |   |  |   | 454,423    |  
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at
    December 31, 2002            |  | $      | 38,105 |            |  | $        | 34,506,838 |              |  | $ | 31,355,385 |   |  | $ | 65,900,328 |  
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations: |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net investment loss                         |  |        |       |            |  |          |           |              |  |   | (747,244   | ) |  |   | (747,244   | )
|Net unrealized gain                         |  |        |       |            |  |          |           |              |  |   | 4,863,407  |   |  |   | 4,863,407  |  
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at March 31, 2003                   |  | $      | 38,105 |            |  | $        | 34,506,838 |              |  | $ | 35,471,548 |   |  | $ | 70,016,491 |  
|                                            |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  

The accompanying notes to the financial
statements are an integral part of these statements.

4



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BRANTLEY CAPITAL CORPORATION






STATEMENTS OF CASH FLOWS


(Unaudited)

|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |            |          |            |  
|---------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------- | ------------------------------------ | ------------------------------------------ | --------------- | ---------- | -------- | ---------- | ---------- | -------- | ---------- | -
|                                                           |                                                                                                                  | For the quarter                      |                                            | For the quarter
|                                                           |                                                                                                                  | ended March 31,                      |                                            | ended March 31,
|                                                           |                                                                                                                  | 2003                                 |                                            | 2002           
|                                                           |                                                                                                                  |                                      |                                            |                
|Cash Flows from Operating
    Activities:                  |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|                                                           | Net change in net assets resulting from
    operations:                                                          |                                      | $                                          | 4,116,163       |            |          | $          | 14,008     |         
|                                                           | Adjustments to reconcile net change in net assets
    resulting from operations to net cash used for operations: |                                      |                                            |                 |            |          |            |            |         
|                                                           |                                                                                                                  | Net realized losses from investments |                                            |                 |           |          |            |            | 441,234  |           
|                                                           |                                                                                                                  | Net unrealized gains on investments  |                                            |                 | (4,863,407 | )        |            |            | (733,538 | )         
|                                                           |                                                                                                                  | Changes in assets and liabilities:   |                                            |                 |            |          |            |            |          |           
|                                                           |                                                                                                                  |                                      | Dividend and interest receivable           |                 |            | 3,487    |            |            |          | (456,574   | )
|                                                           |                                                                                                                  |                                      | Other assets                               |                 |            | (202,278 | )          |            |          | 2,189      |  
|                                                           |                                                                                                                  |                                      | Advisory fee payable                       |                 |            | (16,803  | )          |            |          | 103,193    |  
|                                                           |                                                                                                                  |                                      | Accrued professional fees                  |                 |            | 38,218   |            |            |          | 68,656     |  
|                                                           |                                                                                                                  |                                      | Distributions payable                      |                 |            |         |            |            |          | (736,455   | )
|                                                           |                                                                                                                  |                                      | Other liabilities                          |                 |            | 73,699   |            |            |          | 57,706     |  
|                                                           |                                                                                                                  |                                      | Purchases of investment securities         |                 |            | (252,844 | )          |            |          | (5,945,482 | )
|                                                           |                                                                                                                  |                                      | Sales/ Maturities of investment securities |                 |            |         |            |            |          | 1,815,718  |  
|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|                                                           | Net cash used for
    operating activities                                                                       |                                      |                                            | (1,103,765      | )          |          |            | (5,369,345 | )       
|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|Cash Flows from Financing
    Activities:                  |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|                                                           |                                                                                                                  | Proceeds from notes payable          |                                            |                 | 1,500,000  |          |            |            |         |           
|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|                                                           | Net cash provided by
    financing activities                                                                    |                                      |                                            | 1,500,000       |            |          |            |           |         
|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|Net change in cash and cash equivalents for
    the period |                                                                                                                  |                                      | 396,235                                    |                 |            |          | (5,369,345 | )         
|Cash and cash equivalents, beginning
    of period         |                                                                                                                  |                                      | 237,154                                    |                 |            |          | 5,369,345  |           
|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |           
|Cash and cash equivalents, end of
    the period           |                                                                                                                  | $                                    | 633,389                                    |                 |            | $        |           |           
|                                                           |                                                                                                                  |                                      |                                            |                 |            |          |            |           

The accompanying notes to the financial
statements are an integral part of these statements.

5



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION






STATEMENT OF INVESTMENTS 
(Unaudited)


March 31, 2003

|                                           |                                                                          |            |  |           |  |   |            |            | 
|------------------------------------------ | ------------------------------------------------------------------------ | ---------- |  | --------- |  | - | ---------- | ---------- | 
|Name of Issuer and Title of Issue          |                                                                          | Shares/Par |  | Value    
|                                           |                                                                          |            |  |          
|Avionics                                   |                                                                          |            |  |           |  |   |            |           
|                                           | Flight Options International Inc. Preferred Stock
    and Warrants*#@    |            |  | 3,342,060 |  |   | $          | 32,500,000 | 
|                                           |                                                                          |            |  |           |  |   |            |           
|Business Services                          |                                                                          |            |  |           |  |   |            |           
|                                           | Disposable Products Company, LLC Subordinated
    Debt with Warrants#    |            |  | 2,662,201 |  |   |            | 2,655,541  | 
|                                           | The Holland Group, Inc. Convertible Preferred
    Stock#@                |            |  | 282,530   |  |   |            | 2,125,000  | 
|                                           | International Total Services, Inc.
    Common Stock                      |            |  | 104,250   |  |   |            | 104        | 
|                                           | Prime Office Products, Inc. Convertible Preferred
    Stock#@            |            |  | 750,000   |  |   |            | 1,500,000  | 
|                                           |                                                                          |            |  |           |  |   |            |           
|                                           |                                                                          |            |  |           |  |   | 6,280,645  |           
|                                           |                                                                          |            |  |           |  |   |            |           
|Drugs & Health Care                        |                                                                          |            |  |           |  |   |            |           
|                                           | Integrated Physician Solutions, Inc. Convertible
    Preferred Stock#@   |            |  | 793,000   |  |   |            | 3,172,000  | 
|                                           | Integrated Physician Solutions, Subordinated Debt
    with Warrants#     |            |  | 297,448   |  |   |            | 292,348    | 
|                                           | Health Care Solutions, Subordinated Debt with
    Warrants*#             |            |  | 3,677,572 |  |   |            | 3,578,401  | 
|                                           | National Rehabilitation Partners, Inc.
    Convertible Preferred Stock#@ |            |  | 2,218,375 |  |   |            | 1,454,285  | 
|                                           | National Rehabilitation Partners, Inc.
    Subordinated Debt#            |            |  | 27,228    |  |   |            | 27,228     | 
|                                           |                                                                          |            |  |           |  |   |            |           
|                                           |                                                                          |            |  |           |  |   | 8,524,262  |           
|                                           |                                                                          |            |  |           |  |   |            |           
|Miscellaneous                              |                                                                          |            |  |           |  |   |            |           
|                                           | Streamline Foods, Inc. Convertible Preferred
    Stock#@                 |            |  | 897,572   |  |   |            | 700,000    | 
|                                           | Streamline Foods, Inc. Subordinated Debt with
    Warrants#              |            |  | 122,500   |  |   |            | 95,000     | 
|                                           | Value Creation Partners, Inc. Convertible
    Preferred Stock#@          |            |  | 304,989   |  |   |            | 2,225,960  | 
|                                           | Waterlink, Inc. Warrants                                                 |            |  | 53,550    |  |   |            |           | 
|                                           |                                                                          |            |  |           |  |   |            |           
|                                           |                                                                          |            |  |           |  |   | 3,020,960  |           
|                                           |                                                                          |            |  |           |  |   |            |           
|Oil                                        |                                                                          |            |  |           |  |   |            |           
|                                           | Petroleum Partners, Inc. Convertible Preferred
    Stock#@               |            |  | 850,000   |  |   |            | 0          | 
|                                           | Petroleum Partners, Inc. Subordinated Debt with
    Warrants#            |            |  | 1,953,125 |  |   |            | 1,874,219  | 
|                                           |                                                                          |            |  |           |  |   |            |           
|                                           |                                                                          |            |  |           |  |   | 1,874,219  |           
|                                           |                                                                          |            |  |           |  |   |            |           
|Retail Trade                               |                                                                          |            |  |           |  |   |            |           
|                                           | Fitness Quest, Inc. Convertible Preferred Stock#@*                       |            |  | 788,961   |  |   |            | 7,174,372  | 
|                                           | Fitness Quest, Inc. Common Stock#@*                                      |            |  | 679,641   |  |   |            | 6,180,276  | 
|                                           | Fitness Quest, Inc. Warrants#@                                           |            |  | 181,172   |  |   |            | 1,645,352  | 
|                                           |                                                                          |            |  |           |  |   |            |           
|                                           |                                                                          |            |  |           |  |   | 15,000,000 |           
|                                           |                                                                          |            |  |           |  |   |            |           
|Total Investments  (Cost
    $30,499,890) |                                                                          |            |  |           |  | $ | 67,200,086 |           
|                                           |                                                                          |            |  |           |  |   |            |           



---

All investments are U.S. companies



|  |                                                                        
|- | -----------------------------------------------------------------------
|* | Represents 5% or more of total stockholders
    equity.                
| 
|# | Represents privately held securities which are
    considered illiquid.

@ Represents more than 5% but less than 25% of
the voting class of securities.

The accompanying notes to the financial
statements are an integral part of these statements.

6



---



##### Table of Contents



BRANTLEY CAPITAL CORPORATION






NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)


1. Significant Accounting
Policies



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The interim financial statements have been
    prepared by Brantley Capital Corporation (the
    Company) pursuant to the rules and regulations of the
    Securities and Exchange Commission applicable to quarterly
    reports on Form 10-Q. Certain information and footnote
    disclosures normally included in financial statements prepared
    in accordance with accounting principles generally accepted in
    the United States of America have been condensed or omitted
    pursuant to such rules and regulations, although management
    believes that the disclosures are adequate to make the
    information presented not misleading. These financial statements
    should be read in conjunction with the audited financial
    statements and related notes and schedules included in the
    Companys 2002 Annual Report filed on Form 10-K dated
    December 31, 2002.
|
| | The unaudited financial statements reflect, in
    the opinion of management, all adjustments, all of which are of
    a normal recurring nature, necessary to present fairly the
    financial position of the Company as of March 31, 2003, the
    results of its operations for the quarters ended March 31,
    2003 and 2002, and its cash flows for the quarters ended
    March 31, 2003 and 2002. Interim results are not
    necessarily indicative of results to be expected for a full
    fiscal year.                                                                                                                                                                                                                                                                                                                                                                                  
|
| | Privately placed securities are carried at fair
    value as determined in good faith by or under the direction of
    the Board of Directors. Generally, the fair value of each
    security will initially be based primarily upon its original
    cost to the Company. Cost will be the primary factor used to
    determine fair value on an ongoing basis until significant
    developments or other factors affecting the investment (such as
    results of the portfolio companys operations, changes in
    the general market conditions, subsequent financings or the
    availability of market quotations) provide a basis for value
    other than cost valuation.                                                                                                                                                                                                                  
|
| | Portfolio investments listed on an exchange or
    traded on NASDAQ National Market are valued at the closing price
    listed on their respective exchange or system on the date of
    valuation. Securities traded in the over-the-counter market will
    be valued on the average of the closing bid and asked prices on
    the day of valuation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| | Debt securities with 60 days or less
    remaining to maturity will be valued at amortized cost.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

2. Investments, Cash and Cash
Equivalents



| |                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of March 30, 2003 and December 31,
    2002, the identified costs of investments were $30,499,890 and
    $30,274,890, respectively.                                                                                           
|
| | Cash equivalents consist of highly liquid
    investments with insignificant interest rate risk and original
    maturities of three months or less at acquisition date. Cash and
    cash equivalents consisted of the following:

|                |  |             |           |              |  |   |           | 
|--------------- |  | ----------- | --------- | ------------ |  | - | --------- | 
|                |  | March 31,   |           | December 31,
|                |  | 2003        |           | 2002        
|                |  | (Unaudited) |           | (Audited)   
|                |  |             |           |             
|Cash            |  | $           | 633,389   |              |  | $ | 237,154   | 
|                |  |             |           |              |  |   |           | 
|Restricted Cash |  | $           | 6,000,000 |              |  | $ | 6,000,000 | 
|                |  |             |           |              |  |   |           | 

3. Investment Advisory
Agreement



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company has entered into an investment
    advisory agreement (the Investment Advisory
    Agreement) with Brantley Capital Management, L.L.C. (the
    Investment Adviser) under which the Investment
    Adviser is entitled to an annual management fee of 2.85% of the
    Companys net assets, determined at the end of each
    calendar quarter, and payable quarterly in arrears throughout
    the term of the Investment Advisory Agreement. For the three
    months ended March 31, 2003, the Investment Adviser earned
    $466,122 under the Investment Advisory Agreement. Certain
    officers of the Company are also officers of the Investment
    Adviser. No officer of the Investment Adviser receives any
    compensation from the Company for serving as officer of the
    Company. (See Note 5).

7



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION


NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)

4. Financial Highlights

|                                          |                                                 |                                           |       |                 |       |       |       |       |       |      
|----------------------------------------- | ----------------------------------------------- | ----------------------------------------- | ----- | --------------- | ----- | ----- | ----- | ----- | ----- | -----
|                                          |                                                 | For the quarter                           |       | For the quarter
|                                          |                                                 | ended                                     |       | ended          
|                                          |                                                 | March 31, 2003                            |       | March 31, 2002 
|                                          |                                                 |                                           |       |                
|Net Asset Value, Beginning of the Period  |                                                 | $                                         | 17.29 |                 |       | $     | 17.85 |      
|                                          |                                                 |                                           |       |                 |       |       |       |      
|Income (loss) from investment operations: |                                                 |                                           |       |                 |       |       |       |      
|                                          | Net investment loss                             |                                           |       | (0.20           | )     |       |       | (0.07 | )    
|                                          | Net realized and unrealized gain on investments |                                           |       | 1.28            |       |       |       | 0.07  |      
|                                          |                                                 |                                           |       |                 |       |       |       |      
|                                          |                                                 | Total from investment operations          |       |                 | 1.08  |       |       |       | 0.00  |      
|                                          |                                                 |                                           |       |                 |       |       |       |      
|Net Asset Value, End of Period            |                                                 | $                                         | 18.37 |                 |       | $     | 17.85 |      
|                                          |                                                 |                                           |       |                 |       |       |       |      
|Market Value, End of Period               |                                                 | $                                         | 8.35  |                 |       | $     | 10.34 |      
|                                          |                                                 |                                           |       |                 |       |       |       |      
|                                          |                                                 | Total return, at Market Value             |       |                 | 8.44  | %(1)  |       |       | (5.05 | )%(1)
|                                          |                                                 |                                           |       |                 |       |       |       |      
|                                          |                                                 | Total return, at Net Asset Value          |       |                 | 6.25  | %(1)  |       |       | 0.00  | %(1) 
|                                          |                                                 |                                           |       |                 |       |       |       |      
|                                          |                                                 | Total Expenses/ Average net assets        |       |                 | 4.36  | %(2)  |       |       | 4.45  | %(2) 
|                                          |                                                 |                                           |       |                 |       |       |       |      
|                                          |                                                 | Net Investment Income/ Average net assets |       |                 | (4.40 | )%(2) |       |       | (1.64 | )%(2)
|                                          |                                                 |                                           |       |                 |       |       |       |      



---



|    |                
|--- | ---------------
|(1) | Not annualized.
|   
|(2) | Annualized.    

5. Recent Developments

On March 19, 2003, we entered into a
Memorandum of Understanding with Phillip Goldstein, a director
of the Company, pursuant to which Mr. Goldstein agreed to
dismiss the lawsuit he filed against us in September 2002,
subject to compliance with the Investment Company Act of 1940.
See Item 3. Legal Proceedings. Under the
memorandum, we agreed, among other things:



| |   |                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | that Mr. Bryan would resign from the board
    of directors and to appoint Mr. Gerald Hellerman to serve
    on the board of directors and that if Mr. Hellerman resigns
    or is unable to serve that a representative of
    Mr. Goldsteins choosing will be appointed to the
    board;
|
| |  | to pursue a plan to orderly dispose of assets and
    distribute proceeds to stockholders, or, in the alternative, to
    pursue a merger or a sale of assets of the Company;                                                                                                               
|
| |  | that Mr. Goldstein will not engage in a
    proxy contest against the Company;                                                                                                                                                                                                              
|
| |  | to enter into a new investment advisory agreement
    that would:                                                                                                                                                                                                                           



| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reduce the fee payable to our adviser from 2.85%
    of our net assets to 2.5%;                                                                                                                                                                    
|
| |  | entitle our adviser to receive a fee of 20% of
    the proceeds distributed to stockholders in excess of $10.00 per
    share, provided that none of this amount shall be paid until
    distributions of at least $13.00 per share have been made;



| |   |                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to terminate all currently outstanding stock
    options and not to grant any further stock options;                                                                                                                                                                                                             
|
| |  | that the parties will refrain from disparaging
    each other; and                                                                                                                                                                                                                                               
|
| |  | to reimburse Mr. Goldstein for expenses not
    to exceed $275,000 (such expenses are to be reimbursed before
    any further advisory fees are paid). The Company has accrued
    such expenses at December 31, 2002, however payment will be
    subject to compliance with the Investment Company Act of 1940.

8



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION


NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)  (Continued)

On March 18, 2003, our Board of Directors
approved the transaction contemplated by the Memorandum of
Understanding. Upon the resignation of Mr. Bryan on
March 19, 2003, Mr. Hellerman was appointed to the
board of directors. In order to consummate the transactions
contemplated by the Memorandum of Understanding, we intend to
seek stockholder approval at the 2003 Annual Meeting of
Stockholders and receive an exemptive order from the Securities
and Exchange Commission.

If we receive all necessary government and
stockholder approvals, the effect of the Memorandum of
Understanding will be that we intend to make only follow-on
investments, and any remaining proceeds we receive from
liquidity events are intended to be distributed to shareholders
after retaining sufficient cash for operations.

9



---



##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of
    Financial Condition and Results of Operations

General

Overview

We are a non-diversified investment company that
is regulated as a business development company under the
Investment Company Act of 1940. We provide equity and long-term
debt financing to small and medium-sized private companies in a
variety of industries throughout the United States. Our
investment objective is to achieve long-term capital
appreciation in the value of our investments and to provide
current income primarily from interest, dividends and fees paid
by our portfolio companies.

Historically, we have focused our investing
activities on private equity securities. We generally structure
our private equity investments as participating preferred stock
with an 8% to 10% dividend yield that accumulates and is paid
upon a liquidity event. Our private equity investments typically
range from $1 million to $5 million, and we generally
expect these investments to achieve liquidity within three to
five years. We typically do not receive a cash return on our
private equity investments until a liquidity event occurs, but
instead seek to achieve long-term capital appreciation in net
asset value through such investments.

On March 19, 2003, we entered into a
Memorandum of Understanding with Phillip Goldstein, a director
of the Company, pursuant to which Mr. Goldstein agreed to
dismiss the lawsuit he filed against us in September 2002,
subject to compliance with the Investment Company Act of 1940.
See Item 3. Legal Proceedings. Under the
memorandum, we agreed, among other things:



| |   |                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | that Mr. Bryan would resign from the board
    of directors and to appoint Mr. Gerald Hellerman to serve
    on the board of directors and that if Mr. Hellerman resigns
    or is unable to serve that a representative of
    Mr. Goldsteins choosing will be appointed to the
    board;
|
| |  | to pursue a plan to orderly dispose of assets and
    distribute proceeds to stockholders, or, in the alternative, to
    pursue a merger or a sale of assets of the Company;                                                                                                               
|
| |  | that Mr. Goldstein will not engage in a
    proxy contest against the Company;                                                                                                                                                                                                              
|
| |  | to enter into a new investment advisory agreement
    that would:                                                                                                                                                                                                                           



| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | reduce the fee payable to our adviser from 2.85%
    of our net assets to 2.5%;                                                                                                                                                                    
|
| |  | entitle our adviser to receive a fee of 20% of
    the proceeds distributed to stockholders in excess of $10.00 per
    share, provided that none of this amount shall be paid until
    distributions of at least $13.00 per share have been made;



| |   |                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to terminate all currently outstanding stock
    options and not to grant any further stock options;                                                                                                                                                                                                             
|
| |  | that the parties will refrain from disparaging
    each other; and                                                                                                                                                                                                                                               
|
| |  | to reimburse Mr. Goldstein for expenses not
    to exceed $275,000 (such expenses are to be reimbursed before
    any further advisory fees are paid). The Company has accrued
    such expenses at December 31, 2002, however payment will be
    subject to compliance with the Investment Company Act of 1940.

On March 18, 2003, our Board of Directors
approved the transaction contemplated by the Memorandum of
Understanding. Upon the resignation of Mr. Bryan on
March 19, 2003, Mr. Hellerman was appointed to the
board of directors. In order to consummate the transactions
contemplated by the Memorandum of Understanding, we intend to
seek stockholder approval at the 2003 Annual Meeting of
Stockholders and receive an exemptive order from the Securities
and Exchange Commission.

If we receive all necessary government and
stockholder approvals, the effect of the Memorandum of
Understanding will be that we intend to make only follow-on
investments, and any remaining proceeds we receive from
liquidity events are intended to be distributed to shareholders
after retaining sufficient cash for operations.

10



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##### Table of Contents



Critical
Accounting Policies and Estimates

Privately placed equity and mezzanine securities
are carried at fair value as determined in good faith by our
board of directors. Initially, the fair value of each such
security is based upon its original cost. Cost is also the
primary factor used to determine fair value on an ongoing basis
until significant developments or other factors affecting the
investment (such as results of subsequent financings, the
availability of market quotations, the portfolio companys
operations and changes in general market conditions) provide a
basis for value other than cost.

Portfolio investments listed on a securities
exchange or traded on the Nasdaq Stock Market are valued at the
closing price listed on the relevant exchange or quotation
system on the date of valuation. Securities traded in the
over-the-counter market are valued based on the average of the
closing bid and asked prices on the date of valuation. Interest
income is recorded on mezzanine investments when the payment is
contractually due unless a loan is more than 30 days past due.
Interest is not accrued on any loans that are more than
30 days past due. Dividend income is recorded on cumulative
preferred equity securities on an accrual basis to the extent
that such amounts are expected to be collected and on common
equity securities on the record date for private companies or on
the ex-dividend date for publicly traded companies. We assess
the collectibility of dividends and interest income receivables
in connection with our determination of the fair value of the
related security. To the extent that there are adverse future
developments, previously recognized dividend and interest income
may not be realized.

We account for our operations utilizing
accounting principles generally accepted in the United States
for investment companies. On this basis, the principal measure
of our financial performance is captioned Net change in
net assets resulting from operations, which is the sum of
two elements. The first element is Investment income
(loss), net, which is the difference between (1) our
income from interest, dividends and fees, and (2) our
operating expenses. The second element is Net gain
(loss) on investments, which is the sum of (1) the
difference between the proceeds received from our dispositions
of portfolio securities and their stated cost (Net
realized gain (loss) on investments), and
(2) the net change in the fair value of our investment
portfolio (Net unrealized gain (loss) on
investments). Net realized gain (loss) on
investments and Net unrealized gain (loss) on
investments are directly related. For example, in the
period during which a security is sold to realize a gain, net
unrealized gain on investments decreases, and net realized gain
on investments increases.

Historically, we have focused our investing
activities on private equity securities. We began making such
investments in 1997 and are now entering into a phase of the
business plan which emphasizes positioning our more mature
portfolio companies for appropriate liquidity events. As a
result, we are continuously monitoring portfolio company results
and evaluating opportunities to maximize the valuation of our
investments. In that regard, we periodically evaluate potential
acquisitions, financing transactions, initial public offerings,
strategic alliances, and sale opportunities involving our
portfolio companies. Any such transaction could have an impact
on the valuation of our investments. These transactions and
activities are generally not disclosed to our stockholders and
the investing public until such time as the transactions are
publicly announced or completed, as the case may be.

Results of Operations

Dividend
and Interest Income

Dividend and interest income on investments for
the three months ended March 31, 2003, and 2002 were
$510,994, and $477,940, respectively. The increase in interest
and dividend income during the three months ended March 31, 2003
was primarily due to the private equity portfolio being fully
invested during 2003 thereby generating additional dividend
income. Dividend and interest income for the three months ending
March 31, 2003 was offset by the $517,886 write-off of
accrued interest and dividends relating to our investment in
Petroleum Partners, Inc. as more fully described below.

Operating
Expenses

Total operating expenses during the three months
ended March 31, 2003, and 2002 were $740,352 and $756,236,
respectively. A significant component of total operating
expenses was advisory fees of $466,122 and

11



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##### Table of Contents



$488,124 earned by our investment adviser during
the three months ended March 31, 2003 and 2002,
respectively. The second significant component of total
operating expenses was interest and other expenses of $217,519
and $204,003 during the three months ended March 31, 2003
and 2002 respectively. The increase in interest and other
expenses during 2003 reflect the increased interest costs
associated with the increased note payable balance and increased
directors and officer liability insurance costs.


Net
Realized and Unrealized Gains on Investment
Transactions

During the three months ended March 31, 2003
and 2002, valuation of our equity and mezzanine investments
resulted in net realized and unrealized gains on investments of
$4,863,407 and $292,304, respectively. At March 31, 2003
and December 31, 2002, we had investments in eleven
privately-held companies which are subject to general stock
market and business conditions. The unrealized gains
(losses) during such periods were significantly influenced
by general business conditions, as well as the March 31,
2003 revaluations of Fitness Quest, Inc. and Petroleum Partners,
Inc. as more fully discussed below.

Financial Condition, Liquidity and Capital
Resources

At March 31, 2003 and December 31,
2002, we had $633,389 and $237,154, respectively, in cash and
cash equivalents which were primarily invested in United States
Treasury securities. Restricted cash is held under direction of
the lender and is not readily available to fund investments or
pay operating expenses.

Our management generally believes that our cash
and cash equivalents, together with proceeds from our
investments, will provide us with the liquidity necessary to pay
our operating expenses and make follow-on investments as
necessary. However, because of the inherent uncertainty with
respect to the timing of liquidity events, the Company entered
into a $1.5 million short-term note arrangement with
Huntington National Bank in March 2003 for the purpose of
paying operating expenses pending potential liquidity events.
The note is unsecured and carries an interest rate of prime plus
1% (5.25% at March 31, 2003). As of March 31, 2003,
$1.5 million has been drawn down on the note.

At March 31, 2003 and December 31,
2002, we had stockholders equity of $70,016,491 and
$65,900,328, respectively, resulting in a net asset value per
share of $18.37 and $17.29, respectively. At March 31, 2003
and December 31, 2002, we had $7,500,000 and $6,000,000 of
outstanding indebtedness, respectively. For the three months
ended March 31, 2003, the weighted average interest rate on
this indebtedness was 4.85%.

Brantley Venture Partners II, L.P., Brantley
Venture Partners III, L.P. and Brantley Partners IV, L.P. hold,
in the aggregate, approximately $156 million of private equity
investments. These partnerships are related to our investment
adviser in a manner that required the receipt, from the
Securities and Exchange Commission, of an exemption from certain
provisions of the Investment Company Act of 1940 in order to
permit us, under certain circumstances, to invest in the same
portfolio companies as the other private investment funds
managed by our investment adviser.

We intend to use our cash to fund operations,
make follow on investments in our existing portfolio companies,
and distribute any remaining proceeds from liquidity events to
stockholders (see overview).

At March 31, 2003 and December 31,
2002, the aggregate cost of the investments we made to date was
$30.5 million and $30.3 million, respectively, and
their aggregate market value was $67.2 million and
$62.1 million, respectively, for an aggregate fair value
appreciation of 120% and 105%, respectively. Our management
believes that our portfolio companies have significant potential
for long-term growth in sales and earnings.

12



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##### Table of Contents



Private
Portfolio Company Investments

The following is a list of the private companies
in which we had an investment and the cost and fair value of
such securities at March 31, 2003.

|                                     |  |                                               |  |      |            |            |  |   |            | 
|------------------------------------ |  | --------------------------------------------- |  | ---- | ---------- | ---------- |  | - | ---------- | 
|Name of Company                      |  | Nature of its Principal Business              |  | Cost |            | Fair Value
|                                     |  |                                               |  |      |            |           
|Disposable Products Company, LLC     |  | Non-Woven Paper Products Manufacturer         |  |      | 2,662,201  |            |  |   | 2,655,541  | 
|Fitness Quest, Inc.                  |  | Fitness Products Direct Marketer              |  |      | 3,846,358  |            |  |   | 15,000,000 | 
|Flight Options International, Inc.   |  | Private Air Travel Services                   |  |      | 5,562,500  |            |  |   | 32,500,000 | 
|Health Care Solutions, Inc.          |  | Home Health Care Provider                     |  |      | 3,549,000  |            |  |   | 3,578,401  | 
|The Holland Group, Inc.              |  | Temporary Staffing                            |  |      | 2,125,000  |            |  |   | 2,125,000  | 
|National Rehab Partners, Inc.        |  | Rehabilitation Services                       |  |      | 1,481,513  |            |  |   | 1,481,513  | 
|Integrated Physician Solutions, Inc. |  | Pediatric Physician Practice Management Group |  |      | 3,439,448  |            |  |   | 3,464,348  | 
|Petroleum Partners, Inc.             |  | Petroleum Distribution Maintenance Services   |  |      | 3,325,000  |            |  |   | 1,874,219  | 
|Prime Office Products, Inc.          |  | Office Products Distributor                   |  |      | 1,500,000  |            |  |   | 1,500,000  | 
|Streamline Foods, Inc.               |  | Food Products Manufacturer and Distributor    |  |      | 795,000    |            |  |   | 795,000    | 
|Value Creation Partners, Inc.        |  | Food Products Manufacturer and Distributor    |  |      | 2,145,460  |            |  |   | 2,225,960  | 
|International Total Services, Inc.   |  | Security                                      |  |      | 68,410     |            |  |   | 104        | 
|                                     |  |                                               |  |      |            |            |  |   |            | 
|                                     |  | Total                                         |  | $    | 30,499,890 |            |  | $ | 67,200,086 | 
|                                     |  |                                               |  |      |            |            |  |   |            | 

Our individually significant equity and mezzanine
investments at March 31, 2003 are described below:

Disposable
Products Company, LLC

On August 10, 1998, we entered into an
investment led by Banc One Capital to provide $1.0 million
of a $3.0 million subordinated debt facility with warrants
for Disposable Products Company, LLC. Disposable Products is an
acquisition strategy company in the business of manufacturing
and converting paper and non-woven materials into wiping
products for sale to commercial, institutional, industrial and
government markets. In addition, Disposable Products is a
converter and reseller of other safety and industrial/janitorial
products. Proceeds of the transaction were used to complete
Disposable Products first acquisition. The terms of the
debt facility call for a 12% interest rate per annum with a
final maturity in 2003. We also received a detachable capital
stock purchase warrant exercisable for 5% of the fully-diluted
capital stock of Disposable Products at the time of exercise at
a nominal exercise price. On January 26, 2001, we funded a
$166,667 12% promissory note from Disposable Products. In
addition, through March 31, 2003 we funded additional 12%
promissory notes of $1,495,534 from Disposable Products.

Fitness
Quest, Inc

On December 16, 1997, we funded a
$1.35 million commitment to invest with Brantley Venture
Partners III, L.P. in a $3.85 million preferred stock issue
for Fitness Quest, Inc. As a result, we purchased approximately
788,961 shares of Fitness Quest Series A 10% Convertible
Preferred Stock at $1.71 per share. Fitness Quest is a direct
marketing and distribution company. The proceeds were used by
Fitness Quest for a management buy-out of the company from its
previous owner, The Time Warner Music Group, a 100% wholly owned
subsidiary of Time Warner, Inc., and for other acquisitions.
Fitness Quest has been in the fitness promotional products
business since 1994. Fitness Quest operates in a highly
competitive industry and is dependent on the management talent
and efforts of key personnel for its success. We do not believe
that Fitness Quest is dependent on a single or small number of
customers, possesses significant intellectual property, or is
operating in an unusually regulated industry.

During 1997, Fitness Quest increased its revenue
and improved its operating margins and profits. After a complete
evaluation, our board of directors re-valued our Fitness Quest
investment to $5,440,000, resulting in a

13



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##### Table of Contents



1997 unrealized gain of $4,090,000. This
evaluation was based on price to earnings ratios, cash flow
multiples and other appropriate financial measurements of
similar private companies. In addition to the above
Series A 10% Convertible Preferred Stock, we funded
$1,751,300 to invest with Brantley Venture Partners III, L.P. in
a $3.5 million 10% senior subordinated debt investment in
Fitness Quest in 2000. In addition, we received a warrant to
purchase 181,172 shares of Fitness Quest common stock for $0.01
per share. The proceeds of the most recent investment were used
to fund Fitness Quests working capital needs. During the
fourth quarter of 2000, we exchanged the senior subordinated
debt investment and related unpaid interest for 679,641 shares
of Fitness Quest common stock.


Through March 31, 2003, Fitness Quest has
continued to increase its revenues, improve its operating
margins, and reduce its debt. As a result, the Board of
Directors re-valued the investment to $15,000,000 resulting in
an unrealized gain of $6,341,959 for the quarter.

Flight
Options International, Inc. (Formerly Corporate Wings,
Inc.)

On December 23, 1997, we funded
$2.1 million to invest with Brantley Venture Partners III,
L.P. in a $6.0 million preferred stock issue for Flight
Options International, Inc. Our investment consists of
approximately 2,576,000 shares of Flight Options Series A
8% Convertible Preferred Stock at $0.8152 per share. Flight
Options provides complete private air travel service through the
sale of fractional interests in pre-owned jet aircraft. The
proceeds of the transaction were used by Flight Options to
continue to execute an acquisition strategy. We believe Flight
Options is one of the top five providers of fractional interests
in aircraft in the United States, a highly competitive industry
and is dependent on the management talent and efforts of key
personnel for its success. Flight Options is subject to certain
regulations of the Federal Aviation Administration. We do not
believe it is dependent on a single or small number of customers
or possesses significant intellectual property.

On December 29, 1998, we completed a second
private equity investment in Flight Options. In this investment,
we purchased $962,500 of a $5.5 million preferred stock
transaction led by The Provident Bank. Our purchase represents
approximately 260,135 shares of Class A 8% Convertible
Preferred Stock at $3.70 per share. The proceeds were used by
Flight Options to fund the expansion of its fractional ownership
program and to continue to execute its acquisition strategy.
During 1998, Flight Options completed the acquisition of Miller
Aviation. Based upon the price of this subsequent financing and
the operating performance of Flight Options during 1998, the
fair value of our original investment was increased to
$9,531,760, resulting in an unrealized gain of $7,431,760. This
valuation was based on the $3.70 per share price negotiated by
The Provident Bank and was approved by our board of directors.

On August 31, 1999, Flight Options sold
$20 million of Series B 8% Preferred Stock to a third
party private equity group at $4.365 per share. Consistent with
our investment valuation guidelines, this transaction resulted
in a valuation increase on our Flight Options investment of
$1,886,030 or $0.50 per share.

On July 11, 2000, we guaranteed a portion of
Flight Options third-party borrowings. As a result, we
were issued a warrant to purchase 36,000 shares of Flight
Options common stock at a price of $0.01 per share. This
guarantee was terminated prior to December 12, 2000.

On December 12, 2000 we purchased 469,925
shares of Flight Options Class C 8% Preferred Stock at
$5.32 per share for a total investment of $2.5 million. The
proceeds of the transaction were used by Flight Options to fund
the continued expansion of its fractional ownership program.

On June 30, 2001, Flight Options received
offers from institutional investors to purchase convertible
preferred stock or subordinated debt securities of Flight
Options which support the valuation used to complete the
December 12, 2000 Class C 8% Preferred Stock
transaction described in the preceding paragraph. As a result,
and consistent with our investment valuation guidelines, our
board of directors approved a valuation increase on the Flight
Options investment which resulted in our reporting an unrealized
gain of $2,742,889 or $0.72 per share for the quarter ended
June 30, 2001.

On December 21, 2001, Flight Options, Inc.
and Raytheon Travel Air, a Wichita, Kansas-based unit of
Raytheon Company, a Lexington, Mass. based defense contractor,
agreed to combine operations into one fractional aircraft
ownership program to be known as Flight Options. Under the terms
of the transaction, Flight

14



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Options, Inc. holds 50.1% ownership of the new
business with Raytheon holding 49.9%. The transaction was
completed during the quarter ended March 31, 2002.


As a result of the transaction described above,
our board of directors met to review the terms of the
transaction including, among other things, a valuation review
prepared by an investment banking firm working on the
transaction. Consistent with our valuation guidelines, the board
used a private market method to value our investment in Flight
Options, Inc. and approved an increase in the value of our
investment in Flight Options, Inc. to $32.5 million. At
March 31, 2003, the financial statement value of our
investment in Flight Options represents an increase of more than
484% from its original purchase price. The commentary above
reflects a four-for-one stock split executed in 2000. All share
and per share amounts have been adjusted to reflect such stock
split.

Health
Care Solutions, Inc.

On September 30, 1997, we funded a
$1.5 million convertible junior subordinated promissory
note facility for Health Care Solutions, Inc. Health Care
Solutions is an acquisition strategy company in the home
healthcare services market with a strong presence in the Midwest
and Great Lakes regions. The terms of the notes called for an
18% interest rate per annum during the first year and 12% per
annum thereafter, with final maturity two years from the
closing. After the first year, the notes were convertible into
common stock at a price of $3.50 per share. In connection with
our commitment to provide this facility, we received warrants to
purchase up to $450,000 of common stock valued at an exercise
price of 10% of an initial public offering price completed
during the term of the notes, or at $3.50 per share should the
warrants be exercised other than in connection with an initial
public offering. The warrants are currently exercisable. The
proceeds of the notes were used by Health Care Solutions to help
finance acquisitions.

In 2000, Health Care Solutions completed a
re-capitalization plan, including a two-for-one reverse stock
split. As a result, we agreed to exchange our convertible junior
subordinated promissory note and accrued interest thereon for
246,994 shares of Series C 8% Convertible Preferred Stock
at an exchange rate of $7.50 per share. The warrants to purchase
up to $450,000 of common stock at an exercise price of 10% of an
initial public offering price or at $3.50 per share remain
outstanding and have been adjusted to reflect the reverse stock
split.

In addition to the above Series C 8%
Convertible Preferred Stock, we funded $500,000 and $299,000 12%
Convertible Subordinated Notes from Health Care Solutions in
2000. As part of this transaction, we received a warrant to
purchase up to $50,000 of Health Care Solutions common stock at
an exercise price equal to the lower of the price determined by
an initial public offering or $7.50 per share. On March 7,
2001, we agreed to exchange the $500,000 Convertible
Subordinated Note for 71,880 shares of Series D Convertible
Preferred Stock. On January 29, 2002, we funded a
$1,250,000 12% Convertible Subordinated Note from Health Care
Solutions.

On May 1, 2003, Health Care Solutions sold
its respiratory division assets. As a result of this
transaction, we will receive approximately $3,130,000 in
proceeds. The remaining assets of Health Care Solutions are
presently being marketed for a projected sale. The current
valuation is expected to approximate the total proceeds expected
to be received from these sales.

The
Holland Group, Inc.

On July 13, 2000, we funded a
$2.1 million commitment to invest with Brantley Partners
IV, L.P. in a $8.5 million preferred stock issue of The
Holland Group, Inc. The Holland Group is a provider of temporary
staffing and human resource management services that currently
operates 35 branches in five states. In this transaction, we
purchased 282,530 shares of The Holland Groups
Series A 8% Convertible Preferred Stock. In
February 2002 we purchased a $50,000 12% convertible
subordinated note from The Holland Group which was repaid with
interest in December 2002.

National
Rehab Partners, Inc.

On August 10, 1999, we funded
$1.4 million of a $1.5 million commitment to invest
with Brantley Partners IV, L.P. and a third party equity group
in a $12.0 million preferred stock issue for National Rehab
Partners, Inc. Pursuant to this commitment, we purchased
2.2 million shares of Class A 8% Convertible Preferred
Stock. The proceeds of this transaction were used to complete
the acquisition of a group of rehabilitation management service
providers. The remainder of the commitment has been funded upon
the successful closing of additional

15



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acquisitions. National Rehab Partners is a
Brentwood, Tennessee rehabilitation management service company
providing rehabilitation services through acute care hospitals
and hospital systems throughout the United States. National
Rehab Partners is the only national rehabilitation company
focused exclusively on helping hospitals develop their
outpatient rehabilitation services.


On January 10, 2001, we funded a $26,126 10%
promissory note from National Rehab Partners. On June 13,
2001, the $26,126 note and the related accrued interest were
cancelled and replaced with a $27,228 10% promissory note.

Integrated
Physician Solutions, Inc. (Formerly Pediatric Physicians
Alliance, Inc.)

On January 28, 1999, we funded a
$3.2 million commitment to invest with Brantley Venture
Partners III, L.P. in a $7.9 million preferred stock issue
for Integrated Physician Solutions, Inc. Pursuant to our
commitment, we purchased 793,000 shares of Class A-2 10%
Convertible Preferred Stock. Integrated Physician Solutions is a
physician practice management systems provider. Their objective
is to develop the leading integrated physician practice
management system in the United States. Integrated Physician
Solutions is dependent on the management talent and effort of
key personnel for its success in this highly competitive
industry. We do not believe it is dependent on a single or small
number of customers, possesses significant intellectual property
or that it is subject to significant regulations. The proceeds
of the transaction were used to complete the acquisition of a
number of physician practices.

In addition to the above Class A-2 10%
Convertible Preferred Stock, in 2000 we funded $267,448 to
invest with Brantley Venture Partners III, L.P. in $668,619 of
promissory notes, with detachable warrants, in Integrated
Physician Solutions. The detachable warrants are for the
purchase of 30,000 shares of Integrated Physician Solutions
common stock at $4.00 per share.

Petroleum
Partners, Inc.

On June 7, 2001, we entered into a
$2.7 million commitment to invest with Brantley Partners
IV, L.P. in a $15.0 million preferred stock and
subordinated debt issue for Petroleum Partners, Inc. In
connection with this commitment, we purchased 250,000 shares of
Class A 8% Convertible Preferred Stock at $1.00 per share,
600,000 shares of Class B 8% Convertible Preferred Stock at
$2.00 per share, and funded a $1,250,000 10% Convertible
Subordinated Note with a detachable warrant for the purchase of
78,125 shares of common stock at $0.01 per share. Petroleum
Partners, based in Cleveland, Ohio, is a provider of outsourced
maintenance services to the petroleum industrys retailers
and refineries. The proceeds from the transaction were used to
acquire a company which is a leading provider of petroleum and
petrochemical handling equipment and outsourced facilities
maintenance services to providers of fuel delivery systems such
as gasoline retailers and refineries. The equipment distributed
by the company includes petroleum storage tanks, pumps, fuel
dispensers, flexible piping, tank valves, leak detection gauges,
canopies, air compressors and service station lighting equipment.

In addition to the above investment, we funded
$1,875,000 of 10% Convertible Subordinated Notes through
December 31, 2002. The proceeds of the notes were used for
operating purposes.

As a result of adverse operating performance, the
Board of Directors approved a valuation reduction of our
investment to $1,874,219 thereby generating a $1,450,781
unrealized loss the quarter ended March 31, 2003. In
addition, the Board of Directors approved a write-off of all
interest and dividends receivable relating to this investment of
$517,886.

Prime
Office Products, Inc. (Formerly Business Essentials,
Inc.)

On April 22, 1999, we entered into a
$1.7 million commitment to invest with Brantley Partners
IV, L.P. and Massey Burch Capital Corp. in a $10.0 million
preferred stock issue for Prime Office Products, Inc. Pursuant
to our commitment, we purchased 510,000 shares of Class A
8% Convertible Preferred Stock at $2.00 per share. Prime Office
Products is an office products marketing and distribution
company based in Nashville, Tennessee. The first part of the
commitment was funded to launch an acquisition strategy focused
on office distribution companies serving primarily commercial
and industrial customers. The remainder of the commitment is
being

16



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funded upon the closing of additional
acquisitions. On January 8, 2002, we purchased an
additional 200,000 shares of Class A 8% Convertible
Preferred Stock at $2.00 per share. On July 31, 2002, we
purchased an additional 40,000 shares of Class A 8%
Convertible Preferred Stock at $2.00 per share.


Streamline
Foods, Inc.

On February 7, 2002 we funded a $795,000
commitment to invest with Brantley Partners IV, L.P. in a
$7,950,000 preferred stock and subordinated debt issue for
Streamline Foods, Inc. Pursuant to our commitment we purchased
approximately 898,000 shares of Series A 8% Convertible
Preferred Stock at $0.78 per share and a $95,000 13% Convertible
Subordinated Note with warrants to purchase 27,500 shares of
common stock at $0.01 per share. The proceeds were used by
Streamline Foods for a buy-out of the Company from its previous
owner. Streamline Foods, Inc. sources, blends, packages and
distributes high sugar content food products for branded
multi-national food companies and private label manufacturers.

Value
Creation Partners, Inc.

On June 14, 2000, we completed a
$2.1 million commitment to invest with Brantley Partners
IV, L.P. and several other private equity investors in a
$23.8 million preferred stock issue for Value Creation
Partners, Inc. Pursuant to this commitment, we purchased
approximately 35,000 shares and 269,989 shares of 8% Convertible
Preferred Stock at $5.00 and $7.30 per share, respectively.
Value Creation Partners is an acquisition strategy company in
the food industry. The proceeds of the transaction were used to
complete the acquisition of Best Brands, Inc., one of the six
largest manufacturers and distributors of a complete line of
premium ingredients, mixes and products, including equipment,
for all segments of the baking industry. Their products are sold
primarily to retail bakeries, bakery distributors, supermarket
in-store bakeries, food wholesalers and food service
establishments.

Impact of Inflation

We do not believe that our business is materially
affected by inflation, other than the impact that inflation may
have on the securities markets, the valuations of business
enterprises and the relationship of such valuations to
underlying earnings, all of which will influence the value of
our investments.

Disclosure Regarding Forward-Looking
Statements

Information contained in this Quarterly Report on
Form 10-Q may contain forward-looking statements
which can be identified by the use of forward-looking
terminology such as may, will,
expect, intend, anticipate,
estimate or continue or the negative
thereof or other variations or similar words or phrases. The
matters described throughout this Quarterly Report on Form 10-Q
and in any exhibits of which this Quarterly Report is a part
constitute cautionary statements identifying important factors
with respect to any such forward-looking statements, including
certain risks and uncertainties, that could cause actual results
to differ materially from those in such forward-looking
statements.






|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures about
    Market Risk

We invest in small and medium-sized companies,
and our investments are considered speculative in nature. Our
investments often include securities that are subject to legal
or contractual restrictions on resale that adversely affect the
liquidity and marketability of such securities. As a result, we
are subject to risk of loss which may prevent our stockholders
from achieving price appreciation and dividend distributions.
The portion of our portfolio consisting of investments in
private companies is also subject to valuation risk. We value
our privately held investments based on a determination of their
fair value made in good faith by our board of directors on a
quarterly basis in accordance with our established guidelines.
In the absence of a readily ascertainable market value, the
estimated values of our investments may differ significantly
from the values that would exist if a ready market for these
securities existed. Any changes in valuation are recorded in our
consolidated statements of operations as Net unrealized
gain (loss) on investments.

We consider the management of equity price risk
essential to conducting our business and maintaining our
profitability. Our portfolio consists of investments in private
companies. We anticipate no impact on these investments from
modest changes in public market equity prices. However, should
significant changes in market

17



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##### Table of Contents



prices occur, there could be a long-term effect
on valuations of private companies, which could affect the
carrying value and the amount and timing of gains realized on
these investments. This could also affect our ability to
generate cash through the sale of private equity investments,
since there may not be realistic initial public offering
opportunities.







|        |                        
|------- | -----------------------
|Item 4. | Controls and Procedures

(a) Within the 90-day period prior to the
filing date of this quarterly report, the Companys chief
executive officer and chief financial officer conducted an
evaluation of the Companys disclosure controls and
procedures (as defined in Rules 13a-14 and 15d-14 of the
Securities Exchange Act of 1934). Based upon this evaluation,
the Companys chief executive officer and chief financial
officer concluded that the Companys disclosure controls
and procedures are effective in timely alerting them of any
material information relating to the Company that is required to
be disclosed by the Company in the reports it files or submits
under the Securities Exchange Act of 1934.

(b) There have not been any significant
changes in the Companys internal controls or in other
factors that could significantly affect these controls
subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.




PART II. OTHER INFORMATION






|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

On September 25, 2002, Phillip Goldstein, a
director and shareholder of the Company filed a lawsuit in the
District Court for the Northern District of Ohio against us,
Robert Pinkas, James Oliver, Benjamin Bryan and IVS Associates,
Inc. alleging, among other things, that the Company engaged in
wrongdoing and that the individual defendants breached their
fiduciary duties during the Annual Meeting of Stockholders held
on September 17, 2002. Mr. Goldstein alleges that the
Companys actions surrounding the closing of the polls
disenfranchised certain shareholders. Mr. Goldstein sought
to have votes for which he had proxies, which were submitted
after the polls were closed, counted. He also sought an order
declaring his nominees to be directors of the Company. The
Company also asserted a counterclaim against Mr. Goldstein
alleging violations of the proxy rules and the failure to
disclose his participation in a group as required by
Regulation 13D. Mr. Goldstein denied the allegations
of the counterclaims. Mr. Goldsteins motion for a
temporary restraining order was denied, and a hearing for a
preliminary injunction was held on November 18-21, 2002. On
December 18, 2002, Magistrate Jack B. Streepy issued a
report and recommendation that Mr. Goldsteins motion
for a preliminary injunction be granted. Both parties filed
objections to the Magistrates report. No order has been
issued by the Court to date. On February 13, 2003, the
judge set a trial date of March 19, 2003, and on
March 19, 2003, the judge issued a 60 day stay of the
proceeding.

On March 19, 2003, we entered into a
Memorandum of Understanding with Phillip Goldstein, a director
of the Company, pursuant to which Mr. Goldstein agreed to
dismiss the lawsuit he filed against us in September 2002,
subject to compliance with the Investment Company Act of 1940.
Under the memorandum, we agreed, among other things:



| |   |                                                                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | that Mr. Bryan would resign from the board
    of directors and to appoint Mr. Gerald Hellerman to serve
    on the board of directors and that if Mr. Hellerman resigns or
    is unable to serve that a representative of
    Mr. Goldsteins choosing will be appointed to the
    board;
|
| |  | to pursue a plan to orderly dispose of assets and
    distribute proceeds to stockholders, or, in the alternative, to
    pursue a merger or a sale of assets of the Company;                                                                                                               
|
| |  | that Mr. Goldstein will not engage in a
    proxy contest against the Company;                                                                                                                                                                                                              
|
| |  | to enter into a new investment advisory agreement
    that would:                                                                                                                                                                                                                           



| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | reduce the fee payable to our adviser from 2.85%
    of our net assets to 2.5%;

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| |   |                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | entitle our adviser to receive a fee of 20% of
    the proceeds distributed to stockholders in excess of $10.00 per
    share, provided that none of this amount shall be paid until
    distributions of at least $13.00 per share have been made;



| |   |                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | to terminate all currently outstanding stock
    options and not to grant any further stock options;                                                                                                                                                                                                             
|
| |  | that the parties will refrain from disparaging
    each other; and                                                                                                                                                                                                                                               
|
| |  | to reimburse Mr. Goldstein for expenses not
    to exceed $275,000 (such expenses are to be reimbursed before
    any further advisory fees are paid). The Company has accrued
    such expenses at December 31, 2002, however payment will be
    subject to compliance with the Investment Company Act of 1940.

On March 18, 2003, our Board of Directors
approved the transaction contemplated by the Memorandum of
Understanding. Upon the resignation of Mr. Bryan,
Mr. Hellerman was appointed to the board of directors. In
order to consummate the transactions contemplated by the
Memorandum of Understanding, we intend to seek stockholder
approval at the 2003 Annual Meeting of Stockholders.

If we receive all necessary government and
stockholder approvals, the effect of the Memorandum of
Understanding will be that we intend to make only follow-on
investments, and any remaining proceeds we receive from
liquidity events are intended to be distributed to shareholders.

As a result of the Memorandum of Understanding,
we intend to make only follow-on investments in our portfolio
companies. Otherwise, we will seek to orderly dispose of our
assets and distribute any proceeds to our stockholders.

On October 8, 2002, Thomas Kornfeld and
Robert Strougo filed a purported class action lawsuit against
the Company, the directors of the Company excluding Phillip
Goldstein, IVS Associates, Inc. and JMP Securities LLC, alleging
a series of derivative and direct claims that the directors have
breached their fiduciary duties and that the Company engaged in
wrongdoing with respect to the Annual Meeting of Stockholders
held on September 17, 2002. The factual allegations are
substantially similar to the complaint filed by Mr. Goldstein
and also include allegations of conversion of corporate funds.
The complaint seeks, among other things, an order declaring
Mr. Goldsteins nominees to be directors of the
Company, an order declaring that the investment advisory
agreement be terminated and damages for breach of fiduciary
duty. On January 12, 2003, the plaintiffs filed a motion to
consolidate this lawsuit with the lawsuit by Goldstein discussed
above, which was subsequently denied.

On October 4, 2002, the Company received
notice from the Midwest Regional Office (MRO) of the
SEC that they were inquiring into activities involving the
Annual Meeting. The Company has and will cooperate with the
inquiry. The letter from the MRO states that the inquiry should
not be construed as an indication by the staff of that office
that any violation of law has occurred, or as a reflection upon
any person or entity that may be involved.




Items 2.-5.

Not Applicable

19



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##### Table of Contents








|        |                                     
|------- | ------------------------------------
|Item 6. | Exhibits and Reports on
    Form 8-K

a. Exhibits

| |             |  |  |                                                                                                                                                                                                                                                  
| | ----------- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exhibit  3  |  |  | Articles of Incorporation and By-laws                                                                                                                                                                                                            
| | (1)         |  |  | Articles of Amendment and Restatement of the
    Charter of the Company (Exhibit 3.1 to the Annual Report on
    Form 10-K filed on March 31, 1999, which exhibit is
    incorporated herein by reference)                                       
| | (2)         |  |  | Amended and Restated Bylaws of the Company
    (Exhibit 3.2 to the Annual Report on Form 10-K filed
    on March 31, 1999, which exhibit is incorporated herein by
    reference)                                                                
| | (3)         |  |  | Amendment to the Charter of the Company
    (Exhibit 3.3 to the Registration Statement filed on
    October 26, 2001, which exhibit is incorporated herein by
    reference)                                                                     
| | Exhibit  4  |  |  | Form of Share Certificate (Exhibit 2.d to
    amendment No. 1 to the Registration Statement filed on
    October 31, 1996, which exhibit is incorporated herein by
    reference)                                                                
| | Exhibit  10 |  |  | Material Contracts                                                                                                                                                                                                                               
| | (1)         |  |  | Dividend Reinvestment and Cash Purchase Plan
    (Exhibit 2.e to Amendment No. 3 to the Registration
    Statement filed on November 26, 1996, which exhibit is
    incorporated herein by reference)                                            
| | (2)         |  |  | Form of Investment Advisory Agreement between the
    Company and the Investment Adviser (Exhibit 2.g to
    Amendment No. 3 to the Registration Statement filed on
    November 26, 1996, which exhibit is incorporated herein by
    reference)
| | (3)         |  |  | Stock Option Plan and Form of Option Grants
    (Exhibit 2.i.1 to Amendment No. 2 to the Registration
    Statement filed on November 22, 1996, which exhibit is
    incorporated herein by reference)                                           
| | (4)         |  |  | Disinterested Director Option Plan and Form of
    Option Grants (Exhibit 2.i.2 to Amendment No. 2 to the
    Registration Statement filed on November 22, 1996, which
    exhibit is incorporated herein by reference)                          
| | (5)         |  |  | Form of Custodian Contract (Exhibit 2.j to
    Amendment No. 2 to the Registration Statement filed on
    November 22, 1996, which exhibit is incorporated herein by
    reference)                                                              
| | (6)         |  |  | Form of Registrar, Transfer Agency and Service
    Agreement (Exhibit 2.k.1 to Amendment No. 2 to the
    Registration Statement filed on November 22, 1996, which
    exhibit is incorporated herein by reference)                              
| | (7)         |  |  | Form of Administration Agreement
    (Exhibit 2.k.2 to Amendment No. 2 to the Registration
    Statement filed on November 22, 1996, which exhibit is
    incorporated herein by reference)                                                      
| | (8)         |  |  | Form of Indemnification Agreement for Directors
    and Officers (Exhibit 2.s to Amendment No. 2 to the
    Registration Statement filed on November 22, 1996, which
    exhibit is incorporated herein by reference)                            
| | (9)         |  |  | Memorandum of Understanding dated March 19, 2003
    (Exhibit 99.1 to Form 80K filed March 20, 2003.                                                                                                                                             
| | Exhibit  99 |  |  | Other                                                                                                                                                                                                                                            
| | (1)         |  |  | Certification Pursuant to
    18 U.S.C. 1350, As Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                          
| | (2)         |  |  | Certification Pursuant to
    18 U.S.C. 1350, As Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                          

b. Reports on Form 8-K

| |  |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  |  | A Form 8-K was filed on March 20, 2003 which
    announced that on March 19, 2003, Brantley Capital Corporation
    (the Company), Robert P. Pinkas, Benjamin F. Bryan,
    James P. Oliver and Phillip Goldstein entered into a Memorandum
    of Understanding with respect to Goldstein v. Brantley
    Capital Corp. et al.,a civil action pending in the United
    States District Court for the Northern District of Ohio
    (1:02CV1903).

20



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SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto duly
authorized.



| |                             
| | ----------------------------
| | BRANTLEY CAPITAL CORPORATION

|                   |  |                                                                                                   
|------------------ |  | --------------------------------------------------------------------------------------------------
|                  
|Date: May 15, 2003 |  | By: /s/ ROBERT P. PINKASRobert P. Pinkas
    Chairman of the Board and
    Chief Executive Officer
|                  
|Date: May 15, 2003 |  | By: /s/ TAB A. KEPLINGERTab A. Keplinger
    Vice President and
    Chief Financial Officer       

21



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CERTIFICATION OF CHIEF EXECUTIVE
OFFICER

I, Robert P. Pinkas, Chief Executive Officer,
certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this quarterly report on
    Form 10-Q of Brantley Capital Corporation;                                                                                                                                                                                                                                                           
|
| | 2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                              



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;
|
| | b) | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) | presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all significant deficiencies in the design or
    operation of internal controls which could aversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                   



| |    |                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this quarterly report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.

Date: May 15, 2003



| |                        
| | -----------------------
| | /s/ ROBERT P. PINKAS   
| |                        
| | Robert P. Pinkas       
| | Chief Executive Officer

22



---



##### Table of Contents



CERTIFICATION OF CHIEF FINANCIAL
OFFICER

I, Tab A. Keplinger, Chief Financial Officer,
certify that:



| |    |                                                                                                                                                                                                                                                                                                                                                   
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | I have reviewed this quarterly report on
    Form 10-Q of Brantley Capital Corporation;                                                                                                                                                                                                                                                           
|
| | 2. | Based on my knowledge, this quarterly report does
    not contain any untrue statement of a material fact or omit to
    state a material fact necessary to make the statements made, in
    light of the circumstances under which such statements were
    made, not misleading with respect to the period covered by this
    quarterly report;
|
| | 3. | Based on my knowledge, the financial statements,
    and other financial information included in this quarterly
    report, fairly present in all material respects the financial
    condition, results of operations and cash flows of the
    registrant as of, and for, the periods presented in this
    quarterly report;                   
|
| | 4. | The registrants other certifying officer
    and I are responsible for establishing and maintaining
    disclosure controls and procedures (as defined in Exchange Act
    Rules 13a-14 and 15d-14) for the registrant and we have:                                                                                                              



| |    |                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | designed such disclosure controls and procedures
    to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by
    others within those entities, particularly during the period in
    which this quarterly report is being prepared;
|
| | b) | evaluated the effectiveness of the
    registrants disclosure controls and procedures as of a
    date within 90 days prior to the filing date of this
    quarterly report (the Evaluation Date); and                                                                                                      
|
| | c) | presented in this quarterly report our
    conclusions about the effectiveness of the disclosure controls
    and procedures based on our evaluation as of the Evaluation Date;                                                                                                                                



| |    |                                                                                                                                                                                                                                                               
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | The registrants other certifying officer
    and I have disclosed, based on our most recent evaluation, to
    the registrants auditors and the audit committee of
    registrants board of directors (or persons performing the
    equivalent functions):



| |    |                                                                                                                                                                                                                                                                                                                  
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | a) | all significant deficiencies in the design or
    operation of internal controls which could aversely affect the
    registrants ability to record, process, summarize and
    report financial data and have identified for the
    registrants auditors any material weaknesses in internal
    controls; and
|
| | b) | any fraud, whether or not material, that involves
    management or other employees who have a significant role in the
    registrants internal controls; and                                                                                                                                                   



| |    |                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 6. | The registrants other certifying officer
    and I have indicated in this quarterly report whether there were
    significant changes in internal controls or in other factors
    that could significantly affect internal controls subsequent to
    the date of our most recent evaluation, including any corrective
    actions with regard to significant deficiencies and material
    weaknesses.

Date: May 15, 2003



| |                        
| | -----------------------
| | /s/ TAB A. KEPLINGER   
| |                        
| | Tab A. Keplinger       
| | Chief Financial Officer

23