TABLE OF CONTENTS




|                              |                                                                                               |                                    |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION
|                              | Item 1. Financial Statements                                                                 
|                              |                                                                                               | BALANCE SHEETS                    
|                              |                                                                                               | STATEMENTS OF OPERATIONS          
|                              |                                                                                               | STATEMENTS OF STOCKHOLDERS EQUITY
|                              |                                                                                               | STATEMENTS OF CASH FLOWS          
|                              |                                                                                               | NOTES TO THE FINANCIAL STATEMENTS 
|                              | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                              | Item 3. Quantitative and Qualitative Disclosures about Market Risk                           
|PART II. OTHER INFORMATION   
|                              | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                   
|EXHIBIT INDEX                



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##### 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 SEPTEMBER 30, 2001


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)  |  |                                         

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)


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, $.01 par
value, outstanding as of September 30, 2001 was 3,810,535.



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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 Stockholders Equity                                                            |    |  | 5  | 
|                              |  | Statements of Cash Flows                                                                      |    |  | 6  | 
|                              |  | Notes to the Financial Statements                                                             |    |  | 7  | 
|Item 2.                       |  | Managements Discussion and Analysis of
        Financial Condition and Results of Operations |    |  | 9  | 
|                              |  | Results of Operations                                                                         |    |  | 10 | 
|                              |  | Financial Condition, Liquidity and Capital
        Resources                                  |    |  | 10 | 
|                              |  | Recent Events                                                                                 |    |  | 15 | 
|                              |  | Impact of Inflation                                                                           |    |  | 15 | 
|                              |  | Disclosure Regarding ForwardLooking
        Statements                                       |    |  | 15 | 
|Item 3.                       |  | Quantitative and Qualitative Disclosures About
        Market Risk                            |    |  | 16 | 
|PART II. OTHER INFORMATION    |  |                                                                                               |    | 
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                              |    |  | 17 | 
|Signatures                    |  |                                                                                               | 18 | 
|Exhibit Index                 |  |                                                                                               | 19 | 



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##### Table of Contents






PART I.      FINANCIAL
INFORMATION




Item 1.  Financial
Statements

BRANTLEY CAPITAL CORPORATION






BALANCE SHEETS


|                                                                                                                                                                     |                                             |               |            |              |  |   |            |            | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------- | ---------- | ------------ |  | - | ---------- | ---------- | 
|                                                                                                                                                                     |                                             | September 30, |            |             
|                                                                                                                                                                     |                                             | 2001          |            | December 31,
|                                                                                                                                                                     |                                             | (Unaudited)   |            | 2000        
|                                                                                                                                                                     |                                             |               |            |             
|ASSETS                                                                                                                                                               |                                             |               |            |              |  |   |            |           
|Investments, at market                                                                                                                                               |                                             | $             | 46,120,199 |              |  | $ | 41,462,305 |           
|Cash and cash equivalents                                                                                                                                            |                                             |               | 10,978,220 |              |  |   | 14,882,432 |           
|Dividends and interest receivable                                                                                                                                    |                                             |               | 3,157,744  |              |  |   | 2,103,811  |           
|Other assets                                                                                                                                                         |                                             |               | 16,309     |              |  |   | 22,950     |           
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|                                                                                                                                                                     | Total Assets                                |               | $          | 60,272,472   |  |   | $          | 58,471,498 | 
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|                                                                                                                                                                     | LIABILITIES AND STOCKHOLDERS
	EQUITY       |               |            |              |  |   |            |            | 
|Note payable                                                                                                                                                         |                                             | $             | 6,000,000  |              |  | $ | 6,000,000  |           
|Advisory fee payable                                                                                                                                                 |                                             |               | 386,184    |              |  |   | 383,976    |           
|Accrued interest                                                                                                                                                     |                                             |               | 40,328     |              |  |   |           |           
|Accrued professional fees                                                                                                                                            |                                             |               | 94,707     |              |  |   | 68,370     |           
|Other liabilities                                                                                                                                                    |                                             |               | 45,351     |              |  |   | 76,133     |           
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|                                                                                                                                                                     | Total Liabilities                           |               |            | 6,566,570    |  |   |            | 6,528,479  | 
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|Stockholders Equity:                                                                                                                                                |                                             |               |            |              |  |   |            |           
|Common Stock, $0.01 par value; 25,000,000 shares
	authorized and 3,810,535 shares issued and outstanding at
	September  30, 2001 and December 31, 2000, respectively |                                             |               | 38,105     |              |  |   | 38,105     |           
|Additional paid in capital                                                                                                                                           |                                             |               | 37,484,895 |              |  |   | 37,484,895 |           
|Retained earnings                                                                                                                                                    |                                             |               | 16,182,902 |              |  |   | 14,420,019 |           
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|                                                                                                                                                                     | Total Stockholders Equity                  |               |            | 53,705,902   |  |   |            | 51,943,019 | 
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|                                                                                                                                                                     | Total Liabilities and Stockholders
	Equity |               | $          | 60,272,472   |  |   | $          | 58,471,498 | 
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           
|Net Asset Value Per Share                                                                                                                                            |                                             | $             | 14.09      |              |  | $ | 13.63      |           
|                                                                                                                                                                     |                                             |               |            |              |  |   |            |           

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

2



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION






STATEMENTS OF OPERATIONS


(Unaudited)

|                                                                                         |                                           |                 |            |                 |   |   |           |         | 
|---------------------------------------------------------------------------------------- | ----------------------------------------- | --------------- | ---------- | --------------- | - | - | --------- | ------- | 
|                                                                                         |                                           | For the quarter |            | For the quarter
|                                                                                         |                                           | ended           |            | ended          
|                                                                                         |                                           | September 30,   |            | September 30,  
|                                                                                         |                                           | 2001            |            | 2000           
|                                                                                         |                                           |                 |            |                
|Investment Income:                                                                       |                                           |                 |            |                 |   |   |           |        
|                                                                                         | Interest                                  |                 | $          | 103,383         |   |   | $         | 303,365 | 
|                                                                                         | Dividends                                 |                 |            | 287,651         |   |   |           | 326,326 | 
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|                                                                                         | Total investment income                   |                 |            | 391,034         |   |   |           | 629,691 | 
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Operating Expenses:                                                                      |                                           |                 |            |                 |   |   |           |        
|                                                                                         | Advisory fees                             |                 |            | 401,335         |   |   |           | 382,576 | 
|                                                                                         | Administration fees                       |                 |            | 18,905          |   |   |           | 18,853  | 
|                                                                                         | Professional fees                         |                 |            | 135,859         |   |   |           | 36,198  | 
|                                                                                         | Interest on note payable                  |                 |            | 123,170         |   |   |           |        | 
|                                                                                         | Other                                     |                 |            | 117,941         |   |   |           | 74,162  | 
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|                                                                                         | Total expenses                            |                 |            | 797,210         |   |   |           | 511,789 | 
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Investment (Loss) Income, Net                                                            |                                           |                 | (406,176   | )               |   |   | 117,902   |        
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Net Realized and Unrealized Gains (Losses) on
	Investments:                              |                                           |                 |            |                 |   |   |           |        
|                                                                                         | Net realized gain on investments          |                 |            | 564,915         |   |   |           | 215,534 | 
|                                                                                         | Net unrealized gain (loss) on investments |                 |            | (1,881,782      | ) |   |           | 447,782 | 
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Net gain (loss) on investments                                                           |                                           |                 | (1,316,867 | )               |   |   | 663,316   |        
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Net change in net assets resulting from
	operations                                      |                                           | $               | (1,723,043 | )               |   | $ | 781,218   |        
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Net change in net assets resulting from
	operations per share, primary and fully diluted |                                           | $               | (0.46      | )               |   | $ | 0.21      |        
|                                                                                         |                                           |                 |            |                 |   |   |           |        
|Weighted average number of shares outstanding,
	primary and fully 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 OPERATIONS

(Unaudited)

|                                                                                         |                                           |               |           |               |  |   |           |           |  
|---------------------------------------------------------------------------------------- | ----------------------------------------- | ------------- | --------- | ------------- |  | - | --------- | --------- | -
|                                                                                         |                                           | For the nine  |           | For the nine 
|                                                                                         |                                           | months        |           | months       
|                                                                                         |                                           | ended         |           | ended        
|                                                                                         |                                           | September 30, |           | September 30,
|                                                                                         |                                           | 2001          |           | 2000         
|                                                                                         |                                           |               |           |              
|Investment Income:                                                                       |                                           |               |           |               |  |   |           |          
|                                                                                         | Interest                                  |               | $         | 396,521       |  |   | $         | 1,031,867 |  
|                                                                                         | Dividends                                 |               |           | 848,394       |  |   |           | 766,722   |  
|                                                                                         |                                           |               |           |               |  |   |           |          
|                                                                                         | Total investment income                   |               |           | 1,244,915     |  |   |           | 1,798,589 |  
|                                                                                         |                                           |               |           |               |  |   |           |          
|Operating Expenses:                                                                      |                                           |               |           |               |  |   |           |          
|                                                                                         | Advisory fees                             |               |           | 1,124,410     |  |   |           | 1,157,586 |  
|                                                                                         | Administration fees                       |               |           | 55,891        |  |   |           | 56,148    |  
|                                                                                         | Professional fees                         |               |           | 287,358       |  |   |           | 107,806   |  
|                                                                                         | Interest on note payable                  |               |           | 351,826       |  |   |           |          |  
|                                                                                         | Other                                     |               |           | 286,400       |  |   |           | 220,874   |  
|                                                                                         |                                           |               |           |               |  |   |           |          
|                                                                                         | Total expenses                            |               |           | 2,105,885     |  |   |           | 1,542,414 |  
|                                                                                         |                                           |               |           |               |  |   |           |          
|Investment (Loss) Income, Net                                                            |                                           |               | (860,970  | )             |  |   | 256,175   |          
|                                                                                         |                                           |               |           |               |  |   |           |          
|Net Realized and Unrealized Gains (Losses) on
	Investments:                              |                                           |               |           |               |  |   |           |          
|                                                                                         | Net realized gain on investments          |               |           | 998,050       |  |   |           | 1,506,459 |  
|                                                                                         | Net unrealized gain (loss) on investments |               |           | 1,625,803     |  |   |           | (180,133  | )
|                                                                                         |                                           |               |           |               |  |   |           |          
|Net gain (loss) on investments                                                           |                                           |               | 2,623,853 |               |  |   | 1,326,326 |          
|                                                                                         |                                           |               |           |               |  |   |           |          
|Net change in net assets resulting from
	operations                                      |                                           | $             | 1,762,883 |               |  | $ | 1,582,501 |          
|                                                                                         |                                           |               |           |               |  |   |           |          
|Net change in net assets resulting from
	operations per share, primary and fully diluted |                                           | $             | 0.46      |               |  | $ | 0.42      |          
|                                                                                         |                                           |               |           |               |  |   |           |          
|Weighted average number of shares outstanding,
	primary and fully diluted                |                                           |               | 3,810,535 |               |  |   | 3,810,535 |          
|                                                                                         |                                           |               |           |               |  |   |           |          

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

4



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION






STATEMENTS OF STOCKHOLDERS
EQUITY


(Unaudited)

|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|------------------------------------------ |  | ------ | ------ | ---------- |  | -------- | ---------- | ------------ |  | - | ---------- | - |  | - | ---------- | -
|                                           |  |        |        | Additional |  |          |            | Total       
|                                           |  | Common |        | Paid in    |  | Retained |            | Stockholders
|                                           |  | Stock  |        | Capital    |  | Earnings |            | Equity      
|                                           |  |        |        |            |  |          |            |             
|Balance at December 31, 1998               |  | $      | 38,105 |            |  | $        | 37,505,433 |              |  | $ | 12,397,990 |   |  | $ | 49,941,528 |  
|Net increase in net assets from operations |  |        |       |            |  |          |           |              |  |   | 4,251,654  |   |  |   | 4,251,654  |  
|Distributions from:                        |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net investment income                      |  |        |       |            |  |          |           |              |  |   | (495,370   | ) |  |   | (495,370   | )
|Net realized gains                         |  |        |       |            |  |          |           |              |  |   | (1,257,477 | ) |  |   | (1,257,477 | )
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 1999               |  | $      | 38,105 |            |  | $        | 37,505,433 |              |  | $ | 14,896,797 |   |  | $ | 52,440,335 |  
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations |  |        |       |            |  |          |           |              |  |   | 1,879,315  |   |  |   | 1,879,315  |  
|Distributions from:                        |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net investment income                      |  |        |       |            |  |          | (20,538    | )            |  |   | (112,831   | ) |  |   | (133,369   | )
|Net realized gains                         |  |        |       |            |  |          |           |              |  |   | (2,243,262 | ) |  |   | (2,243,262 | )
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 2000               |  | $      | 38,105 |            |  | $        | 37,484,895 |              |  | $ | 14,420,019 |   |  | $ | 51,943,019 |  
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations |  |        |       |            |  |          |           |              |  |   | 1,762,883  |   |  |   | 1,762,883  |  
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at September 30, 2001              |  | $      | 38,105 |            |  | $        | 37,484,895 |              |  | $ | 16,182,902 |   |  | $ | 53,705,902 |  
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  

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






STATEMENTS OF CASH FLOWS


(Unaudited)

|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |            |                |            |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -------------------------------- | ------------------- | ------------ | ---------- | ---------- | ---------- | -------------- | ---------- | -
|                                                        |                                                                                                               | For the nine months                        |                                  | For the nine months
|                                                        |                                                                                                               | ended September 30,                        |                                  | ended September 30,
|                                                        |                                                                                                               | 2001                                       |                                  | 2000               
|                                                        |                                                                                                               |                                            |                                  |                    
|Cash Flows from Operating
	Activities:                  |                                                                                                               |                                            |                                  |                     |              |            |            |           
|                                                        | Net change in net assets resulting from
	operations:                                                          |                                            | $                                | 1,762,883           |              |            | $          | 1,582,501  |               
|                                                        | Adjustments to reconcile net change in net assets
	resulting from operations to net cash used for operations: |                                            |                                  |                     |              |            |            |            |               
|                                                        |                                                                                                               | Net realized (gain) from investments       |                                  |                     | (998,050     | )          |            |            | (1,506,459     | )         
|                                                        |                                                                                                               | Net unrealized (gain) loss on investments  |                                  |                     | (1,625,803   | )          |            |            | 180,133        |           
|                                                        |                                                                                                               | Changes in assets and liabilities:         |                                  |                     |              |            |            |            |                |           
|                                                        |                                                                                                               |                                            | Dividend and interest receivable |                     |              | (1,053,933 | )          |            |                | (809,489   | )
|                                                        |                                                                                                               |                                            | Other assets                     |                     |              | 6,642      |            |            |                | 76,894     |  
|                                                        |                                                                                                               |                                            | Advisory fee payable             |                     |              | 2,208      |            |            |                | 17,283     |  
|                                                        |                                                                                                               |                                            | Accrued professional fees        |                     |              | 26,337     |            |            |                | (68,887    | )
|                                                        |                                                                                                               |                                            | Dividends payable                |                     |              |           |            |            |                | (1,752,847 | )
|                                                        |                                                                                                               |                                            | Accrued interest                 |                     |              | 40,328     |            |            |                |           |  
|                                                        |                                                                                                               |                                            | Other liabilities                |                     |              | (30,782    | )          |            |                | (23,112    | )
|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |           
|                                                        | Net cash used for operating
	activities                                                                       |                                            |                                  | (1,870,170          | )            |            |            | (2,303,983 | )             
|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |           
|Cash Flows from Investing
	Activities:                  |                                                                                                               |                                            |                                  |                     |              |            |            |           
|                                                        |                                                                                                               | Purchases of investment securities         |                                  |                     | (5,441,940   | )          |            |            | (5,904,402     | )         
|                                                        |                                                                                                               | Sales/Maturities of investment securities  |                                  |                     | 3,404,077    |            |            |            | 3,302,689      |           
|                                                        |                                                                                                               | Purchases of short-term investments        |                                  |                     | (514,412,500 | )          |            |            | (2,996,432,616 | )         
|                                                        |                                                                                                               | Sales/Maturities of short-term investments |                                  |                     | 514,416,321  |            |            |            | 2,996,424,588  |           
|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |           
|                                                        | Net cash provided by (used for) investing
	activities                                                         |                                            |                                  | (2,034,042          | )            |            |            | (2,609,741 | )             
|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |           
|Net change in cash and cash equivalents for
	the period |                                                                                                               |                                            | (3,904,212                       | )                   |              |            | (4,913,724 | )         
|Cash and cash equivalents, beginning of
	period         |                                                                                                               |                                            | 14,882,432                       |                     |              |            | 19,127,039 |           
|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |           
|Cash and cash equivalents, end of the
	period           |                                                                                                               | $                                          | 10,978,220                       |                     |              | $          | 14,213,315 |           
|                                                        |                                                                                                               |                                            |                                  |                     |              |            |            |           

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

6



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION








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 (the 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 2000 Annual Report filed on Form 10-K dated
	December 31, 2000.
|
| | 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 September 30, 2001,
	the results of its operations for the quarter ended
	September 30, 2001, the results of its operations for the
	nine months ended September 30, 2001, and its cash flows
	for the nine months ended September 30, 2001. 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 initially will 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.                                                                                                                                                                                                   
|
| | 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 September 30, 2001 and
	December 31, 2000, the identified costs of investments,
	cash, and cash equivalents were $40,959,573 and $41,673,688,
	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:

|                                            |  |               |            |              |  |   |            | 
|------------------------------------------- |  | ------------- | ---------- | ------------ |  | - | ---------- | 
|                                            |  | September 30, |            | December 31,
|                                            |  | 2001          |            | 2000        
|                                            |  | (Unaudited)   |            | (Audited)   
|                                            |  |               |            |             
|Cash                                        |  | $             | 10,978,220 |              |  | $ | 6,152,253  | 
|United States Treasury Bill 5.25%, 1/4/2001 |  |               |           |              |  |   | 8,730,179  | 
|                                            |  |               |            |              |  |   |            | 
|                                            |  | $             | 10,978,220 |              |  | $ | 14,882,432 | 
|                                            |  |               |            |              |  |   |            | 

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 nine
	months ended September 30, 2001, the Investment Adviser
	earned $1,124,410 under the Investment Advisory Agreement.
	Certain officers of the Company are also officers of the
	Investment Adviser.

7



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION


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



| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | No officer of the Investment Adviser receives any
	cash compensation from the Company for serving as an officer of
	the Company.

4.  Financial Highlights

|                                         |                                                 |                                  |       |                     |       |       |       |      |      |     
|---------------------------------------- | ----------------------------------------------- | -------------------------------- | ----- | ------------------- | ----- | ----- | ----- | ---- | ---- | ----
|                                         |                                                 | For the nine months              |       | For the nine months
|                                         |                                                 | ended                            |       | ended              
|                                         |                                                 | September 30, 2001               |       | September 30, 2000 
|                                         |                                                 |                                  |       |                    
|Net Asset Value, Beginning of the Period |                                                 | $                                | 13.63 |                     |       | $     | 13.76 |     
|Income from investment operations:       |                                                 |                                  |       |                     |       |       |       |     
|                                         | Net investment (loss) income                    |                                  |       | (0.23               | )     |       |       | 0.07 |     
|                                         | Net realized and unrealized gain on investments |                                  |       | 0.69                |       |       |       | 0.35 |     
|                                         |                                                 |                                  |       |                     |       |       |       |     
|                                         |                                                 | Total from investment operations |       |                     | 0.46  |       |       |      | 0.42 |     
|                                         |                                                 |                                  |       |                     |       |       |       |     
|Net Asset Value, End of Period           |                                                 | $                                | 14.09 |                     |       | $     | 14.18 |     
|                                         |                                                 |                                  |       |                     |       |       |       |     
|Market Value, End of Period              |                                                 | $                                | 8.42  |                     |       | $     | 8.63  |     
|                                         |                                                 |                                  |       |                     |       |       |       |     
|                                         |                                                 | Total Return, at Market Value    |       |                     | (2.37 | )%(1) |       |      | 7.81 | %(1)
|                                         |                                                 |                                  |       |                     |       |       |       |     
|                                         |                                                 | Total Return, at Net Asset Value |       |                     | 3.37  | %(1)  |       |      | 3.02 | %(1)
|                                         |                                                 |                                  |       |                     |       |       |       |     



---



|    |               
|--- | --------------
|(1) | Not annualized

8



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##### Table of Contents






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

General



| |         
| | --------
| | Overview

We are a closed-end, 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. In addition, we invest a portion of our assets in
small-capitalization public companies. 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 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.

In the past year, we have explored various
strategic alternatives to enhance our growth and stockholder
value. We determined that continuing to operate at our current
size or attempting to realize premature liquidity events within
our current portfolio would not enhance the market value of our
common stock and would limit our ability to generate recurring
income sought by the investment community and our stockholders.
Shares of business development companies that invest primarily
in mezzanine investments tend to trade at a premium to net asset
value per share due to the expectation of current income
produced by such investments. Thus, we decided to raise capital
through a secondary offering to expand our origination of
mezzanine investments.

We are currently seeking stockholder approval to
authorize the sale, for a period of one year, of up to
12,500,000 shares of common stock below the then-current net
asset value per share. A special meeting of the stockholders is
set for November 26, 2001.

Currently, mezzanine investments represent
approximately 7% of our investment portfolio. To the extent we
invest the proceeds from an offering of our common stock, we
expect that mezzanine investments would represent a much larger
percentage of our assets. The mezzanine investments are expected
to provide a current cash return to us in the form of interest
and origination fees. Although we will typically participate in
any increase in the equity value of the companies to whom we
provide mezzanine financing through warrants or other equity
rights, we anticipate that our mezzanine investments will
provide less potential for appreciation in our net asset value
than our private equity investments, but will instead provide
higher current income that may be distributed to our
stockholders.

Our future mezzanine investments are expected to
range in size from $2 to $7 million. We expect to structure
these investments, similar to our existing mezzanine
investments, as subordinated notes with a fixed interest rate
ranging from 12% to 18%, an equity feature such as warrants to
buy equity in the portfolio company at a nominal price, and
maturities of five to seven years. Upon the closing of new
mezzanine investments, we expect to receive an origination fee
from the portfolio company, typically 2% of our investment. Our
mezzanine investment activities target companies that have
demonstrated predictable and sustainable cash flows from
operations, strong tangible assets, reasonable financial
leverage relative to cash flows from operations, and reasonable
prospects to retire at least 50% of their senior indebtedness
within three years of our investment.

In the future we may also seek to further
leverage our portfolio by utilizing additional borrowings to
fund our investments.

Certain Accounting Policies

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.

9



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##### Table of Contents



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.

Origination fees are recognized as income during
the period in which they are received. 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.

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.

Results of Operations

Dividend and Interest Income

Dividend and interest income on investments for
the nine months ended September 30, 2001 and 2000 were
$1,244,915, and $1,798,589, respectively. Dividend and interest
income on investments comes primarily from portfolio investments
that include a current dividend payment option and interest from
cash and cash equivalents.

Operating Expenses

Total operating expenses for the nine months
ended September 30, 2001 and 2000 were $2,105,885 and
$1,542,414 respectively. The significant component of total
operating expenses was advisory fees of $1,124,410 and
$1,157,586 earned by the investment adviser during the nine
months ended September 30, 2001 and 2000, respectively.



| |                                                              
| | -------------------------------------------------------------
| | Net Realized and Unrealized Gains on
	Investment Transactions

During the nine months ended September 30,
2001 and 2000, our equity and mezzanine investments resulted in
net realized and unrealized gains on investments of $2,623,853
and $1,326,326, respectively. At September 30, 2001, and
2000, we had investments in twelve and ten privately-held
companies, respectively, as well as in various
small-capitalization public stocks which are subject to general
stock market and business conditions. The realized and
unrealized gains during such periods were significantly
influenced by these general market conditions and the additional
financing transactions of Flight Options International, Inc., as
more fully described under   Financial
Condition, Liquidity and Capital Resources.

In addition on September 11, 2001, the World
Trade Center in New York City and the Pentagon near Washington
D.C. were the targets of terrorist attacks. As a result of these
events and other general economic conditions, the United States
equity markets experienced declines. For the quarter ended
September 30, 2001, the Nasdaq Composite Index declined
31%. Our small-capitalization public stock portfolio experienced
similar declines. For the quarter ended September 30, 2001 we
experienced a net unrealized loss on investments of $1,881,782
or $0.49 per share.

Financial Condition, Liquidity and Capital
Resources

At September 30, 2001 we had $10,978,220 in
cash and cash equivalents. Our management believes that our cash
and cash equivalents, together with proceeds from our
investments, will provide us with the liquidity

10



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##### Table of Contents



necessary to pay our operating expenses and make
follow-on investments. At September 30, 2001 we had
stockholders equity of $53,705,902, resulting in a net
asset value per share of $14.09.


At September 30, 2001, we had
$6.0 million of outstanding indebtedness. For the nine
months ended September 30, 2001, the weighted average
interest rate on this indebtedness was 7.91%. In order for us to
cover interest payments on our indebtedness at such weighted
average interest rate, we must achieve annual returns on our
portfolio of at least 1.2%.

Brantley Venture Partners II, L.P., Brantley
Venture Partners III, L.P. and Brantley Partners IV, L.P. hold,
in the aggregate, approximately $211 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.

Consistent with our current long-term objectives,
our board of directors has recently asked our investment adviser
to consider ways to maximize stockholder value in the event that
our net asset value has not appreciated by a minimum of 15% per
annum for the seven-year period ending December 31, 2003.
Such actions could include, but are not limited to, a possible
recommendation to consider the sale of some or all of our
investments. Our management has been pleased with the
performance of our portfolio companies since inception and
believes that liquidity opportunities that generally start
presenting themselves several years into a portfolio of this
nature may create gains for us over the next few years. Our
portfolio is just beginning to enter a period of possible
liquidity events. However, in light of the market price of our
common stock relative to its net asset value, our management has
reiterated our planned goals and objectives and has reassured
our stockholders that our management intends to take action if
those goals and objectives are not met. Nevertheless, our
management expects to meet our net asset value appreciation
target.

At September 30, 2001 the cost of the
investments we made to date was $29.9 million and their
aggregate market value was $46.1 million for an aggregate
fair value appreciation of 54%. Our management believes that our
portfolio companies have significant potential for long-term
growth in sales and earnings. Since the completion of our
initial public offering, our management has focused its
investment activities on securing new investments for our
portfolio. However, given the nature of our current portfolio
and the fact that this portfolio as a whole is maturing, our
management is seeking to position the more mature portfolio
companies for appropriate liquidity events. We are continuously
monitoring portfolio company results and evaluating
opportunities to maximize the value 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. 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. Any such transaction could have
an impact on the valuation of our investments. However, these
revised valuations would generally not be adjusted until the
transaction is publicly announced or completed.

As a result of our intention to expand our
origination of mezzanine investments through an offering of our
common stock, we expect that mezzanine investments will
represent a much larger percentage of our assets in the future.
The mezzanine investments are expected to provide a current cash
return to us in the form of interest and origination fees.
Although we will typically participate in any increase in the
equity value of the companies to whom we provide mezzanine
financing through warrants or other equity rights, we anticipate
that our mezzanine investments will provide less potential for
appreciation in our net asset value than our private equity
investments, but will instead provide higher current income that
may be distributed to our stockholders.



| |                                       
| | --------------------------------------
| | Private Portfolio Company
	Investments

Our individually significant equity and mezzanine
investments at September 30, 2001 are more fully 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

11



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##### Table of Contents



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 Products 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 $169,667 12% promissory note
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 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 1998, the
operating results of Fitness Quest were adversely impacted by
the cyclical nature of its business and one-time expenses
resulting from several acquisition transactions. Since 1998,
Fitness Quest has shown significant improvement in its core
operating results with increases in annual revenues.

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.



| |                                                                     
| | --------------------------------------------------------------------
| | 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. Flight Options has
been in business since 1978. 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

12



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##### Table of Contents



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. Our
management believes, based on the current facts and
circumstances and Flight Options financial position, that
the likelihood of a payment pursuant to such guarantee is remote.

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.

At June 30, 2001, the financial statement
value of our investment in Flight Options was $17,779,400,
representing an increase of more than 220% 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 exchanged the $500,000 for Convertible Subordinated
Note for 71,880 shares of Series D Convertible Preferred
Stock.



| |                        
| | -----------------------
| | 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

13



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##### Table of Contents



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.




| |                              
| | -----------------------------
| | National Rehab Partners, Inc.

On August 10, 1999, we entered into 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 will be funded upon the successful
closing of additional 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.



| |                                    
| | -----------------------------------
| | 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 Pediatric Physicians Alliance, Inc. Pursuant to our
commitment, we purchased 793,000 shares of Class A-2 10%
Convertible Preferred Stock in 2000. Pediatric Physicians
Alliance is a physician practice management company that
develops integrated pediatric networks of care. Their objective
is to develop the leading physician-based integrated pediatric
organization in the United States. Pediatric Physicians Alliance
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 Pediatric
Physicians Alliance. The notes have an original maturity date of
September 29, 2001 which were extended to
September 30, 2002. The detachable warrants are for the
purchase of 30,000 shares of Pediatric Physicians Alliance
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.



| |                                                                  
| | -----------------------------------------------------------------
| | 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

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companies serving primarily commercial and
industrial customers. The remainder of the commitment will be
funded upon the closing of additional acquisitions.




| |                              
| | -----------------------------
| | 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.

Recent Events

On October 23, 2001, one of our portfolio
companies entered into a non-binding letter of intent with one
of its competitors for the formation of a joint venture entity
to which each party would contribute all of its assets in
exchange for a 50% equity interest in the new entity. The
proposed transaction, if consummated, could cause a substantial
increase in the value of our investment in our portfolio
company. There can be no assurance, however, that the parties
will ultimately reach a definitive agreement on the terms of ,
or succeed in consummating, the proposed transaction, or that
any increase in the value of our investment in the portfolio
company will occur as a result of the transaction or otherwise.
Thus, we cannot predict what impact, if any, the announcement or
consummation of such transaction, if it were to occur, would
have on our net asset value, the market price of our shares, or
any possible discount between the net asset value and the market
price of our shares.

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.

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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.

We consider the management of equity price risk
essential to conducting our business and maintaining our
profitability. A portion of 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 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. A
portion of our investment portfolio also consists of shares of
common stock of small-capitalization public companies. These
investments are directly exposed to market price risk.

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.

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PART II.      OTHER
INFORMATION




Item 6.  Exhibits and Reports on
Form 8-K

a.  Exhibits

Reference is made to the Exhibit Index that
is found on page 19 of this Form 10-Q.

b.  Reports on Form 8-K

During the quarter ended September 30, 2001,
the Company filed no reports on Form 8-K.

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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: November 14, 2001 |  | By: /s/ ROBERT P. PINKASRobert P. Pinkas
	Chairman of the Board and
	Chief Executive Officer
|                       
|Date: November 14, 2001 |  | By: /s/ TAB A. KEPLINGERTab A. Keplinger
	Vice President and
	Chief Financial Officer       

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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 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)                         

19