<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q


             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


For the Quarter Ended June 30, 1998         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
 Incorporation or Organization)                            Number)

              20600 Chagrin Boulevard, Suite 1150, Cleveland, Ohio
                  44122 (Address of principal executive offices
                               including zip code)


                                 (216) 283-4800
               (Registrant's telephone number including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.01 par value


     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 ( ).

     The number of shares of common stock outstanding as of June 30, 1998 was
3,810,535.

<PAGE>   2


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                          BRANTLEY CAPITAL CORPORATION
                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                               JUNE 30,
                                                                                 1998       DECEMBER 31,
                                                                              (UNAUDITED)       1997
                                                                              -----------   -----------
<S>                                                                          <C>           <C>        
                                    ASSETS

Cash and cash equivalents(Note 2)                                             $24,996,256   $24,691,345
Investments, at market (Note 2)                                                19,649,804    18,791,178
Dividends and interest receivable                                                 206,146        70,722
Prepaid insurance                                                                  46,476        92,190
Other assets                                                                       44,519        49,194
Unamortized organization costs                                                    113,526       130,106
                                                                              -----------   -----------
         TOTAL ASSETS                                                         $45,056,727   $43,824,735
                                                                              ===========   ===========

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Advisory fee payable (Note 3)                                                 $   242,640   $   284,111
Administration fee payable                                                         12,694        18,750
Professional fee payable                                                           40,995       120,088
Distributions payable                                                                --         342,948
Custody and accounting fee                                                          6,967        10,500
Directors fee payable                                                               4,919         4,019
Organization costs payable                                                         42,627        42,627
Offering costs payable                                                             25,490        50,490
Transfer agent fee payable                                                          3,476         1,500
Accrued printing                                                                   30,087        18,000
Other liabilities                                                                   1,918        20,087
                                                                              -----------   -----------
         TOTAL LIABILITIES                                                    $   411,813   $   913,120
                                                                              ===========   ===========

STOCKHOLDERS' EQUITY:
         Common Stock, $0.01 par value;
         25,000,000 shares authorized and
         3,810,535 outstanding                                                $    38,105   $    38,105
         Additional paid in capital                                            37,611,421    37,611,421
         Retained earnings                                                      6,995,388     5,262,089
                                                                              -----------   -----------
         TOTAL STOCKHOLDERS' EQUITY                                            44,644,914    42,911,615
                                                                              ===========   ===========

         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $45,056,727   $43,824,735
                                                                              ===========   ===========
</TABLE>

                                       2

See accompanying notes to the financial statements.


<PAGE>   3

                          BRANTLEY CAPITAL CORPORATION
                            STATEMENTS OF OPERATIONS
                   FOR THREE MONTHS ENDED JUNE 30 (UNAUDITED)

<TABLE>
<CAPTION>

                                              1998            1997
                                              ----            ----

<S>                                      <C>            <C>        
INVESTMENT INCOME:
    Interest and dividend income         $   432,573    $   406,273
                                         -----------    -----------
OPERATING EXPENSES:
    Advisory fees                            317,223        270,182
    Administration fees                       17,968         19,946
    Custody and accounting fees               11,899          9,972
    Professional fees                         22,883         31,264
    Directors' fees                            8,691          9,349
    Amortization of organization costs         8,336          8,335
    Other                                     26,465         49,761
                                         -----------    -----------
   TOTAL EXPENSES                            413,465        398,809
                                         -----------    -----------

NET INVESTMENT INCOME                         19,108          7,464
                                         -----------    -----------

REALIZED AND UNREALIZED GAINS
(LOSS) ON INVESTMENT TRANSACTIONS
   Net realized gain (loss) on investment
   transactions                                9,201       (100,209)
   Net unrealized appreciation 
   (depreciation) during the period on
   investment transactions                  (161,381)     1,912,746
                                         -----------    -----------

NET GAIN (LOSS) ON INVESTMENT
TRANSACTIONS                                (152,180)     1,812,537
                                         -----------    -----------

NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS         $  (133,072)   $ 1,820,001
                                         ===========    ===========


INCOME (LOSS) PER SHARE                  $     (0.03)   $      0.48
                                         ===========    ===========

WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                      3,810,535      3,810,535
                                         ===========    ===========
</TABLE>

See accompanying notes to the financial statements.

                                       3
<PAGE>   4

                          BRANTLEY CAPITAL CORPORATION
                            STATEMENTS OF OPERATIONS
                    FOR SIX MONTHS ENDED JUNE 30 (UNAUDITED)
<TABLE>
<CAPTION>

                                              1998          1997
                                              ----          ----
<S>                                      <C>           <C>        
INVESTMENT INCOME:
    Interest and dividend income         $   857,765   $   857,861
                                         -----------   -----------
OPERATING EXPENSES:
    Advisory fees                            591,862       534,042
    Administration fees                       37,694        39,672
    Custody and accounting fees               21,762        19,835
    Professional fees                         48,923        57,155
    Directors' fees                           17,938        18,596
    Amortization of organization costs        16,580        16,613
    Other                                     75,660       101,728
                                         -----------   -----------
   TOTAL EXPENSES                            810,419       787,641
                                         -----------   -----------

NET INVESTMENT INCOME                         47,346        70,220
                                         -----------   -----------

REALIZED AND UNREALIZED GAINS
(LOSS) ON INVESTMENT TRANSACTIONS
   Net realized gain (loss) on 
   investment transactions                    74,679      (100,209)
   Net unrealized appreciation
   during the period on
   investment transactions                 1,649,379     1,912,746
                                         -----------   -----------

NET GAIN ON INVESTMENT
TRANSACTIONS                               1,724,058     1,812,537
                                         -----------   -----------

NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS         $ 1,771,404   $ 1,882,757
                                         ===========   ===========


INCOME PER SHARE                         $      0.47   $      0.49
                                         ===========   ===========

WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                      3,810,535     3,798,172
                                         ===========   ===========
</TABLE>


See accompanying notes to the financial statements.


                                       4
<PAGE>   5


                          BRANTLEY CAPITAL CORPORATION
                            STATEMENTS OF CASH FLOWS
                    FOR SIX MONTHS ENDED JUNE 30 (UNAUDITED)
<TABLE>
<CAPTION>

CASH FLOWS FROM OPERATING ACTIVITIES:                                                   1998                1997
                                                                                  ---------------    ---------------

<S>                                                                               <C>                      <C>      
    NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS:                           $     1,771,404          1,882,757

    Adjustments to reconcile net change in net assets resulting from operations
         to net cash provided by (used for) operations:
         Purchases of investment securities                                       $(2,972,377,150)   $    (9,568,770)
         Sales/maturities of investment securities                                  2,973,258,790            446,506
         Amortization                                                                     (16,473)            78,358
         Net realized gain (loss) from investments                                        (74,679)           100,209
         Change in unrealized appreciation                                             (1,649,379)        (1,912,746)
              Changes in assets and liabilities:
                  Prepaid expenses                                                         45,714              4,065
                  Unamortized organization costs                                           16,569            (33,805)
                  Advisory fee payable                                                    (41,471)           184,485
                  Administration fee payable                                               (6,056)              --
                  Professional fee payable                                                (79,093)              --
                  Printing fee payable                                                     12,087               --
                  Custody and accounting                                                   (3,533)              --
                  Directors fee payable                                                       900               --
                  Transfer Agent fee payable                                                1,976               --
                  Distributions payable                                                  (342,948)              --
                  Organization costs payable                                                 --              (32,864)
                  Offering costs payable                                                  (25,000)           (26,375)
                  Payable to related party                                                   --              (88,436)
                  Dividend and interest receivable                                       (135,424)           (36,541)
                  Other assets                                                              4,292             (4,543)
                  Other liabilities                                                       (18,169)            28,946
                                                                                  ---------------    ---------------

                  NET CASH PROVIDED BY (USED FOR)
                  OPERATING ACTIVITIES                                                 (1,429,047)       (10,861,511)
                                                                                  ---------------    ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from shares issued subsequent to initial public offering                            --            1,500,000
Distribution from net investment income                                                   (37,446)           (38,105)
                                                                                  ---------------    ---------------

NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES                                      (37,446)         1,461,895
                                                                                  ---------------    ---------------

NET CHANGE IN CASH AND CASH EQUIVALENTS FOR THE PERIOD                                    304,911         (7,516,859)
                                                                                  ---------------    ---------------

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                         24,691,345         36,329,220
                                                                                  ---------------    ---------------

CASH AND CASH EQUIVALENTS, END OF THE PERIOD                                      $    24,996,256    $    28,812,361
                                                                                  ===============    ===============
</TABLE>

The Company paid no interest or federal income tax during the period.


See accompanying notes to the financial statements

                                       5
<PAGE>   6

                          BRANTLEY CAPITAL CORPORATION
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                    FOR SIX MONTHS ENDED JUNE 30 (UNAUDITED)
<TABLE>
<CAPTION>

                                                     ADDITIONAL      RETAINED         TOTAL
                                        COMMON        PAID IN        EARNINGS     STOCKHOLDERS
                                        STOCK         CAPITAL       (DEFICIT)        EQUITY

<S>                                 <C>            <C>            <C>             <C>         
Balance At January 1, 1998          $     38,105   $ 37,611,421   $  5,262,089    $ 42,911,615

Net increase in net assets from
   operations                               --             --        1,771,404       1,771,404

Distributions from net investment
   income                                   --             --          (38,105)        (38,105)
                                    -----------    ------------   ------------    ------------

Balance at June 30, 1998            $     38,105   $ 37,611,421   $  6,995,388    $ 44,644,914
                                    ============   ============   ============    ============
</TABLE>


See accompanying notes to the financial statements









                                       6
<PAGE>   7


                          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 generally accepted
     accounting principles 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 1997
     Annual Report filed on Form 10-K dated March 31, 1998.

         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
     June 30, 1998, the results of its operations for the six month period ended
     June 30, 1998, the results of its operations for the three month period
     ended June 30, 1998, and its cash flows for the six month period ended June
     30, 1998. Interim results are not necessarily indicative of results to be
     expected for a full fiscal year.


2.  INVESTMENTS, CASH AND CASH EQUIVALENTS

         As of June 30, 1998 and December 31, 1997, the identified costs of
    investments were $12,739,468 and 13,530,220, 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:
<TABLE>
<CAPTION>

                                                       June 30,                   December 31,
                                                         1998                         1997
                                                      (Unaudited)                   (Audited)
                                                 ----------------------         ------------------

<S>                                              <C>                            <C>      
Cash                                             $              41,202          $           1,568

United States Treasury Bill
4.25%  7/2/98                                               24,955,054
1.00%  1/22/98                                                                         24,689,777

                                                 ----------------------         ------------------
                                                 $          24,996,256          $      24,691,345
                                                 ======================         ==================
</TABLE>



                                       7
<PAGE>   8


                          BRANTLEY CAPITAL CORPORATION
           NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED) - (CONTINUED)


3. INVESTMENT ADVISORY AGREEMENT

       The Company has entered into an investment advisory agreement (the
       "Advisory Agreement") with Brantley Capital Management, L.L.C. (the
       "Adviser") under which the 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 Advisory Agreement. For the six months ended June 30, 1998 the
       Adviser earned $591,862 under the Advisory Agreement. Certain officers of
       the Company are also officers of the Adviser. No officer of the Adviser
       receives any compensation from the Company for serving as officer of the
       Company.


4.  FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>

                                                SIX MONTHS   SIX MONTHS
                                                   ENDED       ENDED
                                                  JUNE 30,   JUNE 30,
        FOR THE PERIODS ENDED                      1998       1997
                                                ---------  ---------
<S>                                             <C>        <C>      
Net Asset Value, Beginning of the Period        $   11.26  $    9.87

Income from investment operations
Net increase in Net Assets resulting from
   operations                                        0.47       0.49
Distributions from Net Investment Income            (0.01)     (0.01)
                                                ---------  ---------
 Total from investment operations:                   0.46       0.48
                                                ---------  ---------
 Issuance of Shares Subsequent to Initial
   Public Offering at $10 per Share               --            0.01
                                                ---------  ---------

 Net Asset Value, End of the Period             $   11.72  $   10.36
                                                =========  =========

 Market Value, End of the Period                $    9.50  $    9.50
                                                =========  =========

 Total  Return, At Market Value                     (1.27)%    (4.90)%

 Total Return, At NAV                                4.17%      5.07%
</TABLE>




                                       8
<PAGE>   9

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

         Brantley Capital Corporation ( the "Company") is a closed end,
non-diversified investment company that has elected to be treated as a "business
development company" under the Investment Company Act of 1940, as amended (the
"Act"). The Company invests primarily in the equity and equity-linked debt
securities of private companies. The Company's principal investment objective is
the realization of long-term appreciation in the value of its investments.

The Quarterly Report on Form 10-Q contains certain statements of a
forward-looking nature relating to future events or the future financial
performance of the Company and its investment portfolio companies. Such
statements are only predictions and the actual events or results may differ
materially from the results discussed in the forward-looking statements. Factors
that could cause or contribute to such differences include, but are not limited
to, those relating to investment capital demand, pricing, market acceptance, the
effect of economic conditions, litigation and the effect of regulatory
proceedings, competitive forces, the results of financing and investing efforts,
the ability to complete transactions and other risks identified below or in the
Company's filings with the Securities and Exchange Commission. The following
analysis of the financial condition and results of operation of the Company
should be read in conjunction with the Financial Statements, the Notes thereto
and the other financial information included elsewhere in this report.

RESULTS OF OPERATIONS

         The Company began operations upon the completion of an initial public
offering on December 3, 1996. Its principal investment objective is the
realization of long-term capital appreciation from investing primarily in the
equity and equity-linked debt securities of private companies. In addition, the
Company can invest a portion of its assets in post-venture small-cap public
companies.

         Pending the completion of equity and equity-linked debt securities that
meet the Company's investment objectives, available funds are invested in
short-term securities. In addition, as more fully described below, the Company
has entered into several investments in equity and equity-linked debt securities
of private companies which earn regular dividends and interest. Dividend and
interest income on short-term investments was $432,573 and $857,765,
respectively, for the quarter and six months ended June 30, 1998 compared to
$406,273 and $857,861, respectively, for the quarter and six months ended June
30, 1997. The significant components of total operating expenses for the quarter
and six months ended June 30, 1998 were fees of $317,223 and $591,862,
respectively, to Brantley Capital Management, L.L.C., the Company's Investment
Adviser (the "Adviser"), and other professional fees.

         The Company's equity and equity-linked debt security investments
resulted in net realized and unrealized gains(losses) on investment transactions



                                       9
<PAGE>   10

for the quarter and six months ended June 30, 1998 of ($152,180) and $1,724,058,
respectively, and $1,812,537 for both the quarter and six months ended June 30,
1997. Beginning in the second quarter of 1997, the Company invested in a number
of small capitalization public stocks which are subject to general stock market
conditions. The 1998 unrealized gains (losses) were significantly influenced by
general market conditions and the operating performance of the small
capitalization public stocks as well as the performance of the Waterlink, Inc.
common stock as more fully described below.

         Like other business development companies, mutual funds, financial and
business organizations and individuals around the world, the Company could be
adversely affected if the computer systems used by the Company's Adviser, third
party administrator, custodian and transfer agent do not properly process and
calculate date-related information from and after January 1, 2000. Accounting
and custodial services are provided to the Company by State Street Bank & Trust
Company. Transfer agency services are provided by Boston Equiserv. The Company
has made inquiries to the Adviser, State Street Bank & Trust Company, and Boston
Equiserv regarding whether they expect to have their respective computer systems
adjusted for the year 2000 transition. While there can be no assurances that the
steps being taken by these service providers will be sufficient to avoid any
adverse impact on the Company, all of these service providers have reported that
they expect their systems to be in compliance with year 2000 requirements prior
to that time.




FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         The Company completed an initial public offering of common stock of
$36.5 million on December 3, 1996 and a related over-allotment option of $1.5
million on January 15, 1997. The Company believes that the net proceeds of this
offering will be adequate to fund the growth of the Company's investment
portfolio through 1998.

         At June 30, 1998, the Company had $24,996,256 in cash and cash
equivalents. The Company invested the proceeds of the initial public offering on
a short-term basis pending completion of investments in equity and equity-linked
debt securities of private companies and post-venture small-cap public
companies. At June 30, 1998, the cash was primarily invested in a United States
Treasury security.


         At June 30, 1998, the cost of equity and equity-linked debt security
investments was $12,739,468 and their aggregate market value was $19,649,804.
Original equity and equity-linked debt security investments that individually
represent more than 3% of the total assets of the Company at June 30, 1998 were
comprised of the following transactions:

         On April 21, 1997, in connection with the Company's commitment to
provide $2.1 million of a $10 million senior subordinated note facility for
Waterlink, Inc. ("Waterlink"), 


                                       10
<PAGE>   11

the Company received warrants to purchase 26, 250 shares of Waterlink common
stock at an exercise price of $4.50 per share (the "Waterlink Warrants").
Waterlink is a consolidation strategy company in the industrial water and
wastewater treatment market. On June 27, 1997, Waterlink completed its initial
public offering of common stock pursuant to which Waterlink sold 4,500,000
shares at an $11.00 per share price. Following the Waterlink initial public
offering, Waterlink terminated its senior subordinated note facility. At its
termination, the facility had not been drawn down and no notes were issued to
the Company. The Company still holds the Waterlink Warrants. At June 30, 1998,
the market price of Waterlink common stock (NYSE:WLK) closed at $8.625 compared
with a $16.5 closing price at March 31, 1998.

         On September 30, 1997, the Company entered into a $1.5 convertible
junior subordinated promissory note facility for Health Care Solutions, Inc.
("Health Care Solutions"). Health Care Solutions is an acquisition strategy
company in the home healthcare services market and is currently at a $50 million
annual sales rate level with a strong presence in the Midwest and Great Lakes
States region. The terms of the notes call 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 are convertible into
common stock at a price of $3.50 per share. In connection with its commitment to
provide this facility, the Company received warrants to purchase up to $450,000
of common stock valued at an exercise price of 10% of an initial public offering
("IPO") 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 IPO. The
warrant may not be exercised until the earlier of September 30, 1998 or the
occurrence of certain events. The warrants are currently not exercisable. The
proceeds of the notes will be used by Health Care Solutions to help finance
current and future acquisitions.

         On December 16, 1997, pursuant to an exemptive order from the
Securities and Exchange Commission as previously disclosed, the Company funded a
$1.35 million commitment to invest with Brantley Venture Partners III, L.P. (an
affiliate) in a $3.85 million preferred stock issue for Fitness Quest, Inc.
("Fitness Quest"). As a result the Company purchased 788,961 shares of Fitness
Quest Series A Convertible Preferred Stock at $1.71 per share. Fitness Quest is
a direct marketing and distribution company launching an acquisition strategy. A
portion of 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 the remainder will be used for
potential acquisitions. Fitness Quest has been in the fitness promotional
products business since 1994 and, at the time of the purchase, had revenues at a
$120 million annual sales rate level. The terms of the Preferred Stock provide
for payment of a 10% dividend, payable quarterly.

         During 1997, Fitness Quest grew to $120 million in sales and improved
its operating margins and profits. In addition, it is planning for 1998 sales
growth rates of approximately 40% with continued improvement in operating
margins and profits. The Company's Board of Directors, after a complete
evaluation, made a determination to increase the Company's market value in its
Fitness Quest investment in 1997 to $5,440,000 resulting in a 1997 unrealized
gain of $4,090,000. This evaluation was based 


                                       11
<PAGE>   12

on P/E ratios, cash flow multiples and other appropriate financial measurements
of similar private companies.

         On December 23, 1997, pursuant to an exemptive order from the
Securities and Exchange Commission as previously disclosed, the Company funded a
$2.1 million commitment to investment with Brantley Venture Partners III, L.P.
(an affiliate) in a $6.0 million preferred stock issue for Corporate Wings, Inc.
("Corporate Wings"). The Company's investment consists of approximately 644,000
shares of Corporate Wings Series A Convertible Preferred Stock at $3.26 per
share. The terms of the transaction provide for an 8% dividend, payable
quarterly. Corporate Wings' businesses include fixed base operations, related
flight management services and inertial navigation systems repair services for
private and commercial aircraft from six locations. Corporate Wings has been in
business since 1978 and had approximately $40 million in sales in 1997. Recently
Corporate Wings completed the acquisition of a $60 million fixed based operator
in the northeastern United States putting the Company over the $100 million 
revenue level.

         On August 13, 1998, the Company entered into an investment led by Banc
One Capital to provide $1.0 million of a $3.0 million Subordinated Debt Facility
with Warrants to Disposable Products Company, LLC. ("DPC"). DPC is an
acquisition strategy company in the business of manufacturing and converting of
paper and nonwoven materials into wiping products for sale to commercial,
institutional, industrial and government markets. In addition, DPC is a
converter and reseller of other safety and industrial/janitorial products. Upon
completion of a pending acquisition, DPC will have revenues of approximately
$25.0 million. The terms of the debt facility calls for an 11% interest rate per
annum with a final maturity five years from the closing. The Company will also
receive a detachable common stock purchase warrant exercisable into 5% of the
fully-diluted common stock of DPC at the time of exercise at a nominal exercise
price. The proceeds of the facility will be used to finance current and future
acquisitions.


         At June 30, 1998, the Company had stockholders' equity of $44,644,914,
resulting in a net asset value per share of $11.72.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

           Not Applicable

                           PART II. OTHER INFORMATION

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

           The 1998 Annual Meeting of Shareholders of Brantley Capital
Corporation was convened on Tuesday, May 26, 1998 at 2:00 PM. At the meeting
Ernst & Young LLP was selected to continue as the Company's independent public
accountants and five directors were elected, namely Robert P. Pinkas, L. Patrick
Bales, Benjamin F. Bryant, Peter Saltz, and Paul H. Cascio. Each of Michael J.
Finn's and Richard Moodie's term as a director continued after the meeting. The
following table sets forth the name and expiration date for each member of the
Board of Directors after such election.




                                       12
<PAGE>   13
<TABLE>
<CAPTION>


                                                             TERM
                                   NAME                    EXPIRES

<S>                                                         <C> 
                        Michael J. Finn                     1999
                        Richard Moodie                      2000
                        Paul H. Cascio                      2001
                        Peter Saltz                         2001
                        Benjamin F. Bryan                   2002
                        Robert P. Pinkas                    2003
                        L. Patrick Bales                    2003
</TABLE>


Subsequent to the above election, the annual meeting was adjourned and then
reconvened on July 15, 1998 for the sole purpose of voting on the final item of
business, a proposal to amend and restate the charter. The proposal was
approved and the annual meeting was then adjourned. The following table sets for
the final tabulation of votes for all issues presented before the shareholders.
<TABLE>
<CAPTION>

                                                                     AUTHORITY                BROKER
                PROPOSAL                       FOR         AGAINST    WITHHELD    ABTAIN     NON-VOTES

<S>                                         <C>            <C>         <C>      <C>         <C>      
DIRECTORS:
     Robert P. Pinkas                       3,697,697         -        10,213       -            -
     L. Patrick Bales                       3,697,497         -        10,413       -            -
     Benjamin F. Bryant                     3,697,697         -          -          -            -
     Peter Saltz                            3,697,697         -          -          -            -
     Paul H. Cascio                         3,697,697         -          -          -            -

CHARTER AMENDMENT                           1,909,800      58,024        -       172,724     1,598,534

INDEPENDENT PUBLIC ACCOUNTANTS              3,682,062       9,882        -        15,966         -
</TABLE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.         Exhibits
                  Reference is made to the Exhibit Index that is found on page
15 of this Form 10-Q.

         b.       Reports on Form 8-K
                  No reports on Form 8-K have been filed during the quarter for
                  which this Form 10-Q is filed



                                       13
<PAGE>   14

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:  August 14, 1998                             By: /s/ Robert P. Pinkas
                                                         Robert P. Pinkas
                                                         Chief Executive Officer


Date: August 14, 1998                              By: /s/ Tab A. Keplinger
                                                         Tab A. Keplinger
                                                         Chief Financial Officer




                                       14
<PAGE>   15
 
                                 EXHIBIT INDEX
 
     The following exhibits are filed with this report or are incorporated
herein by reference to a prior filing, in accordance with Rule 12b-32 under the
Securities Exchange Act of 1934. (Asterisk denotes exhibits filed with this
report.)
 
EXHIBIT 3  Articles of Incorporation and By-laws
 
       (1) Articles of Incorporation and Articles of Amendment and Restatement
           of the Charter of Company (Exhibit 2.a.1 to the Company's
           Registration Statement on Form N-2 (Reg. No. 333-10785) filed on
           August 23, 1996 (the "Registration Statement") and Exhibit 2.a.2 to
           Amendment No. 2 to the Registration Statement filed on November 22,
           1996, which exhibits are incorporated herein by reference)
 
       (2) Bylaws of the Company (Exhibit 2.b.2 to Amendment No. 2 to the
           Registration Statement filed on November 22, 1996, 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 30, 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 exhibits are incorporated herein by reference)
 
       (2) Form of Investment Advisory Agreement between the Registrant and the
           Investment Advisor (Exhibit 2.g to Amendment No. 3 to the
           Registration Statement filed on November 26, 1996, which exhibits are
           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 exhibits are 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 exhibits are 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 exhibits are
           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 exhibits are 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 exhibits
           are 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 exhibits are incorporated herein by
           reference)
 
 
 
                                       15