FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

For the quarterly period ended March 31, 1998

                                       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: 001-13387


                                AeroCentury Corp.
             (Exact name of Registrant as specified in its charter)

Delaware                                                     94-3263974
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

1440 Chapin Avenue, Suite 310
Burlingame, California 94010
(Address of principal executive offices)  (Zip code)

                                  650-340-1888
               (Registrant's telephone number including area code)

Not applicable (Former name, former address,  and former fiscal year, if changed
since last report)

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

   
              APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

         Check  whether  the  registrant  has filed all  documents  and  reports
required to be filed by Section 12, 13 or 15(d) of the  Securities  Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes ____  No ____
    


                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

         State the number of shares  outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

Title                                                        Outstanding

Common Stock                                                 1,606,557
Rights to Purchase Series A Preferred Stock                  0


Transitional Small Business Disclosure Format (check one);
Yes___ No X


<PAGE>


Part I.  Financial Information

Item 1.  Financial Statements


                                AeroCentury Corp.
                                 Balance Sheets

<TABLE>
<CAPTION>
                                     ASSETS
                                                                             March 31,            December 31,
                                                                               1998                   1997
                                                                            (Unaudited)
<S>                                                                      <C>                   <C>       

Cash and cash equivalents                                                $       835,700       $         7,980
Deposits                                                                         982,140                     -
Accounts receivable                                                               62,620                     -
Lease payments receivable                                                         60,000                     -
Aircraft and aircraft engines under operating leases
     and aircraft held for operating leases, net of
     accumulated depreciation of $15,269,110 in 1998                          17,099,640                     -
Organization costs, net                                                              430                   450
Prepaid expenses                                                                  33,130                 5,000
Deferred tax asset                                                                202,640               87,770
                                                                         ----------------      ---------------

Total assets                                                             $    19,276,300       $       101,200
                                                                         ===============       ===============

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
     Accounts payable                                                    $        86,630       $       207,690
     Payable to affiliates                                                        55,620               157,100
     Notes payable                                                               866,670                     -
     Accrued maintenance costs                                                 1,535,340                     -
     Security deposits                                                           143,100                     -
     Unearned interest income                                                     32,230                     -
     Prepaid rent received                                                       116,130                     -
     Deferred taxes                                                            2,844,330                     -
     Taxes payable                                                                        880               880
                                                                         --------------------  ----------------
Total liabilities                                                              5,680,930               365,670

Shareholders' Equity:
     Preferred stock, $.001 par value, 2,000,000 shares
        authorized, no shares issued and outstanding                                   -                     -
     Common stock, $.001 par value, 3,000,000 shares
        authorized, 1,606,557 and 150,000 shares issued
        and outstanding in 1998 and 1997, respectively                             1,610                   150
     Paid in capital                                                          13,750,200               149,850
     Accumulated deficit                                                          (156,440)           (414,470)
                                                                         -----------------       -------------
Total shareholders' equity                                                    13,595,370              (264,470)
                                                                         ---------------       ---------------

Total liabilities and shareholders' equity                               $    19,276,300       $       101,200
                                                                         ===============       ===============

See accompanying notes.

</TABLE>

<PAGE>


                                AeroCentury Corp.
                            Statements of Operations
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                            For the Period
                                                                                            from Inception
                                                                For the Quarter         (February 28, 1997) to
                                                             Ended March 31, 1998           March 31, 1997
                                                             --------------------           --------------
<S>                                                               <C>                       <C>    
Revenues:

     Rent income                                                  $      809,920             $           -
     Interest income                                                      12,000                         230
                                                                   -------------             ---------------

                                                                         821,920                         230

Expenses:

     Management fees                                                     141,110                         -
     Depreciation                                                        162,800                         -
     Amortization                                                             20                         -
     Interest                                                              8,090                         -
     Professional fees and general and administrative                     78,420                         -
     Consolidation offering costs                                              -                      18,010
     Franchise taxes                                                       3,000                         -
                                                                    -------------            ---------------


                                                                         393,440                      18,010
                                                                  --------------             ---------------

Income before taxes                                                      428,480                     (17,780)

Tax provision                                                            170,440                        -
                                                                  ----------------           ---------------

Net income/(loss)                                                 $      258,040             $       (17,780)
                                                                  ==============             ===============

Weighted average common shares outstanding                             1,606,557                     150,000
                                                                     ===========             ===============

Earnings/(loss) per share                                         $          0.16            $        (0.12)
                                                                  ===============            ==============






</TABLE>


See accompanying notes.



<PAGE>


                                AeroCentury Corp.
                            Statements of Cash Flows
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                          For the Period
                                                                                          from Inception
                                                           For the Quarter            (February 28, 1997) to
                                                        Ended March 31, 1998              March 31, 1997
                                                        --------------------              --------------
<S>                                                         <C>                           <C>   

Net cash provided by operating activities                   $     1,062,670               $            680

Investing activity -
     Purchase of aircraft                                        (1,124,480)                             -
                                                            ---------------               -----------------
Net cash used in investing activities                            (1,124,480)                             -

Financing activities:
     Issuance of secured note                                       866,670                              -
     Sale of common stock                                                 -                        150,000
     Organization costs                                                   -                           (450)
                                                            --------------------          ----------------
Net cash provided by investing activities                           866,670                        149,550

Net change from consolidation of partnerships                        22,860                              -

Net increase in cash and cash equivalents                           827,720                        150,230

Cash and cash equivalents, beginning of period                        7,980                              -
                                                            ------------------            -----------------

Cash and cash equivalents, end of period                      $     835,700                 $      150,230
                                                              =============                 ==============


</TABLE>















See accompanying notes.




<PAGE>


                                AeroCentury Corp.
                          Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)


1.       Basis of Presentation

         AeroCentury  Corp.  (the  "Company") was  incorporated  in the state of
Delaware on February 28, 1997.  The Company was formed solely for the purpose of
acquiring JetFleet Aircraft,  L.P. and JetFleet Aircraft II, L.P.,  partnerships
formed under  California  law for the purpose of  investing  in leased  aircraft
equipment,  (collectively,  the  "Partnerships")  in  a  statutory  merger  (the
"Consolidation").  A  Registration  Statement  on  Form  S-4  for  the  proposed
Consolidation  became effective on September 23, 1997 and the  Consolidation was
effective  January 1, 1998.  The Company  intends to  continue  in the  aircraft
leasing  business in which the  Partnerships  engaged and plans to use leveraged
financing to acquire additional aircraft assets on lease.

         Because  greater than 90% of the limited  partnership  units of each of
the  Partnerships  agreed  to  the  Consolidation,  it  has  been  treated  as a
pooling-of-interests  under generally  accepted  accounting  principles with the
assets and liabilities of the combining  entities recorded at historical cost on
the  Consolidation  date.  On January  16,  1998,  the Company was listed on the
American Stock Exchange under the symbol ACY.

         The accompanying balance sheets at March 31, 1998 and December 31, 1997
and statements of operations and cash flows for the quarter ended March 31, 1998
and the period from inception  (February 28, 1997) to March 31, 1997 reflect all
adjustments  (consisting of only normal  recurring  accruals)  which are, in the
opinion of the  Company,  necessary  for a fair  presentation  of the  financial
results.  The  results  of  operations  of  such  periods  are  not  necessarily
indicative of results of operations for a full year.

         Organization and Capitalization

         At December 31, 1997, all of the Company's  outstanding stock was owned
by JetFleet Management Corp. ("JMC"), a California corporation formed in January
1994. On January 1, 1998,  1,456,557  additional  common shares were issued as a
result of the Consolidation.

         JMC is an  integrated  aircraft  management,  marketing  and  financing
business.  Prior to the  Consolidation,  JMC managed the aircraft  assets of the
Partnerships on behalf of their general partners and limited partners.  JMC also
manages the aircraft assets of JetFleet III and AeroCentury IV, Inc., California
corporations which are subsidiaries of JMC.

     Aircraft and aircraft  engines under operating leases and aircraft held for
operating leases

         The Company's  interests in aircraft and aircraft  engines are recorded
at cost,  which  includes  acquisition  costs  and loan  fees.  Depreciation  is
computed using the straight-line  method over the aircraft's  estimated economic
life (generally assumed to be twelve years), to an estimated residual value. The
depreciable  base of the assets acquired by the Company in the  Consolidation is
equal to the net book value of the assets at December 31, 1997.



<PAGE>


                                AeroCentury Corp.
                          Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)


1.       Basis of presentation (continued)

         Investment in capital lease

         The  Company's  investment  in a  McDonnell  Douglas  DC-9  aircraft is
recorded as an  investment  in a capital  lease because the lessee has a bargain
purchase  option at the end of the lease term. The gross  investment is recorded
as lease payments receivable and the difference between the gross investment and
the acquisition cost is recorded as unearned interest income.

         Income taxes

         The Company follows the liability method of accounting for income taxes
as required by the provisions of Statement of Financial Accounting Standards No.
109 - Accounting for Income Taxes.

         Cash and cash equivalents

         The Company  considers highly liquid  investments  readily  convertible
into known amounts of cash, with original maturities of 90 days or less, as cash
equivalents.

         Deposits

         As of  March  31,  1998  the  Company  held  deposits  which  represent
maintenance  reserves collected from lessees and interest earned on those funds,
as applicable.  This amount is not included in the cash balance for statement of
cash flow purposes.

         Use of estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

         Maintenance reserves

         All aircraft are operated pursuant to triple net leases under which the
lessee is responsible  for maintenance  and overhaul,  insurance,  and operating
costs. In some cases,  reserves are collected from the lessee based on estimated
maintenance cost. Annually, management reviews the level of maintenance reserves
collected  from  lessees for each asset,  as  applicable,  in order to determine
whether reserves  collected in the future should be adjusted based on changes in
estimated costs.




<PAGE>


                                AeroCentury Corp.
                          Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)


2. Aircraft and aircraft  engines under  operating  leases and aircraft held for
operating leases

         Upon  consummation of the  Consolidation,  the Company succeeded to the
ownership of the following aircraft assets:
<TABLE>
<CAPTION>

Asset                                             % Interest                    Year Acquired
<S>                                                     <C>                    <C>   

DHC-7-103 S/N 72                                         99.90  (*)                 1991
DHC-7-102 S/N 57                                         99.90  (*)                 1991
DHC-7-102 S/N 44                                        100.00                      1992
DHC-7-103 S/N 11                                        100.00                      1992
DHC-6-300 S/N 666                                       100.00                      1995
Metro III SA-227-AC                                     100.00                      1995
Metro II SA-226                                          50.00  (**)                1996
Turboprop Engines (24)                                  100.00                 1993-1994
PT6A-50 Engine                                          100.00                      1993
</TABLE>

(*)    0.1% owned by unrelated third party seller of aircraft.
(**) The other 50%  undivided  interest is owned by JetFleet  III, an affiliated
equipment program.

     On March 6, 1998 the Company acquired a Shorts SD-360 turboprop aircraft on
lease to a regional airline operating in the United Kingdom.

3.   Accounts receivable and accounts payable

     Accounts  receivable  at March 31, 1998 consists  primarily of  maintenance
reserves receivable from lessees and a refund for overpaid franchise taxes.

     Accounts payable and payable to affiliates  primarily  consist of trade
payables and management fees payable to JMC.

4.    Notes payable

      In connection  with its purchase of the Shorts SD-360 during March 1998
the Company borrowed $866,670 from an affiliate and issued a secured  promissory
note  which  bears  interest  at the rate of 12% per annum,  payable  monthly in
arrears, and is due on March 31, 1999, but may be prepaid without penalty at any
time.



<PAGE>


                                AeroCentury Corp.
                          Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)

<TABLE>
<CAPTION>

5.       Income Taxes

         The items comprising income tax expense are as follows:
<S>                                                                        <C>   

                                                                                    1997
     Current tax provision:
         Federal                                                           $                0
         State                                                                              0
                                                                           ------------------
         Current tax provision                                             $                0
                                                                           ==================

     Deferred tax provision:
         Federal                                                           $          145,480
         State                                                                         24,960
                                                                           ------------------
         Deferred tax provision                                            $          170,440

     Total provision for income taxes                                      $          170,440
                                                                           ==================


         Total  income  tax  expense  differs  from the  amount  which  would be
provided by applying the statutory federal income tax rate to pretax earnings as
illustrated below:

     Income tax expense at
           statutory federal income tax rate                               $          145,680
     State taxes net of federal benefit                                                25,000
     Nondeductible meals & entertainment                                                  (80)
     Other                                                                               (160)
                                                                           ------------------
     Total income tax expense                                               $         170,440
                                                                           ==================

         Temporary   differences  and   carryforwards   which  gave  rise  to  a
significant  portion of deferred tax assets and liabilities as of March 31, 1998
are as follows:
                                                                                         1997
     Deferred tax assets:
         Amortization of organizational costs                              $           87,170
         Prepaid rent                                                                  46,260
         Net operating loss carryforwards                                              69,210
                                                                           ------------------
              Subtotal                                                     $          202,640
              Less valuation allowance                                                      0
                                                                           ------------------
              Net deferred tax assets                                      $          202,640
     Deferred tax liabilities:
         Depreciation on aircraft and engines                                      (2,844,330)
                                                                           ------------------
              Net deferred tax liability                                   $       (2,641,690)
                                                                           ==================

         No valuation allowance is deemed necessary,  as the Company anticipates
generating  adequate  future  taxable  income to  realize  the  benefits  of all
deferred tax assets on the balance sheet. The Company's net operating losses may
be carried forward for fifteen years and expire in 2012.
</TABLE>


<PAGE>



                                AeroCentury Corp.
                          Notes to Financial Statements
                                 March 31, 1998
                                   (Unaudited)

6.       Related party transactions

         The  Company's  portfolio  of leased  aircraft  assets is  managed  and
administered  under the terms of a  management  agreement  with JMC.  Under this
agreement, JMC receives a monthly management fee based on the net asset value of
the assets under  management.  In addition,  JMC may receive a brokerage fee for
locating  assets for the  Company,  provided  that such fee is not more than the
customary and usual  brokerage fee that would be paid to an  unaffiliated  party
for such a transaction,  and provided further that the aggregate  purchase price
including  chargeable  acquisition  costs and any brokerage fee shall not exceed
the fair market value of the asset based on appraisal.

         On March 6, 1998, the Company  acquired an aircraft on lease using cash
and a loan of $866,670 from an affiliate.

7.       Pro forma selected financial information for 1997

         Following  is pro forma  condensed  information  giving  effect to the
January 1, 1998  Consolidation  as if it had been completed  on January 1, 1997.
<TABLE>
<CAPTION>
 
                                                                           Quarter ended
Summary of Operations:                                                    March 31, 1997
<S>                                                                       <C>    

Revenues                                                                        $848,300
Net income                                                                      $283,400
Earnings per share                                                                 $0.18
Number of common shares outstanding                                            1,606,557

Summary Balance Sheet:                                                    March 31, 1997
Total assets                                                                 $18,857,000
Total liabilities                                                              3,668,000
Shareholders' equity                                                         $15,189,000

         The above results include pro forma adjustments for management fees and
for depreciation expense.
</TABLE>

8.       Subsequent event

         On April 17, 1998,  in  connection  with the adoption of a  shareholder
rights plan,  the Company filed a Certificate  of  Designation  designating  the
rights,  preferences  and  privileges  of a new Series A  Preferred  Stock.  The
Certificate  of  Designation  created  a series  of  100,000  shares of Series A
Preferred Stock,  $.001 par value, out of the total class of 2,000,000 shares of
Preferred  Stock.  Pursuant to the  shareholder  rights plan, the Company issued
rights  to its  shareholders  of record as of April  23,  1998,  entitling  each
shareholder to the right to purchase one  one-hundredth of a share (a "Unit") of
Series A Preferred Stock for each share of Common Stock held by the shareholder.
The  purchase  price  of  $66.00  per  Unit  is  subject  to  adjustment  and is
exercisable only upon the occurrence of certain events.

Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operation

         Liquidity and Capital Resources

         During the quarter ended March 31, 1998,  the Company's  primary source
of  liquidity  was cash flow  from  operating  leases.  In  connection  with the
purchase of an aircraft in March 1998, the Company borrowed  $866,667 and issued
a 12% note due March 31, 1999. The Company plans to use its net cash flow to pay
the note  interest  and  principal,  which may be prepaid  without  penalty.  In
addition,  the Company is seeking bank financing in order to acquire  additional
assets  under  lease and  expects  to use any excess  cash flow to  provide  any
required equity.

Results of Operations

         The Company had no  significant  operations  during first  quarter 1997
other than incurring costs in connection with the proposed Consolidation.

         On  a  pro  forma  basis,   giving   effect  to  the  January  1,  1998
Consolidation  as if it had been completed on January 1, 1997, the Company would
have had revenues of $848,300  and net income of $283,400  ($0.18 per share) for
the quarter  ended March 31, 1997 versus  revenues of $821,920 and net income of
$258,040  ($0.16 per share) for the quarter ended March 31, 1998. Pro forma 1997
interest  income is higher by  approximately  $30,000  versus 1998  because of a
finance lease which expired in June 1997. The 1997 higher revenues are partially
offset by increased rent income of approximately  $3,000 in 1998 versus 1997 due
to the  purchase  of an  additional  aircraft  on  lease in  early  March  1998.
Depreciation and management fees are approximately  $8,000 higher in 1998 versus
pro forma amounts for 1997 also because of the 1998 aircraft acquisition.

Factors that May Affect Future Results

         Certain  statements  contained in this report and, in  particular,  the
discussion in the  "Management's  Discussion  and Analysis or Plan of Operation"
are  forward-looking  statements.  These  include  statements  of the  Company's
beliefs, plans, objectives,  expectations and intentions regarding the Company's
ability to meet cash flow  requirements,  obtain acquisition  indebtedness,  and
acquire additional  assets.  While the Company believes that such statements are
accurate,  the Company's business is dependent upon general economic conditions,
particularly  those that affect the demand for  turboprop  aircraft and engines,
and future trends and results cannot be predicted with certainty.  The Company's
actual  results  could differ  materially  from those  discussed in such forward
looking statements. The cautionary statements made in this Report should be read
as being  applicable  to all related  forward-looking  statements  wherever they
appear  in  this  Report.  Factors  that  could  cause  or  contribute  to  such
differences include those discussed below.

         Availability  of  Financing.  The  Company's  ability  to  achieve  its
business  objectives  is  dependent,  in part,  on the ability of the Company to
obtain debt and/or equity financing for acquisition of additional assets.  While
the Company is in discussions with financial  institutions  regarding financing,
the Company has not yet received any enforceable agreement for an institution to
provide such financing.  There can be no assurance that the necessary  amount of
capital will be available to the Company on favorable  terms,  or at all. If the
Company  were unable to continue to obtain any portion of required  financing on
favorable terms, the Company's ability to add new leased assets to its portfolio
would be limited,  which would have a material  adverse  effect on the Company's
business objective of increasing its revenue.

         Additional  debt financing will subject the Company to increased  risks
of leveraging.  Such financing may have to be secured by the Company's currently
unleveraged assets as well as any assets acquired with the acquisition financing
proceeds.  Additional  equity  financing  may dilute the equity  holdings of the
shareholders. In any event, due to the cyclical nature of the aircraft industry,
there is no  assurance  that assets  acquired by the Company  will retain  their
anticipated  resale  value or will  generate the income  anticipated  over their
useful life.

         Acquisition of Additional Assets by the Company. The Company intends to
seek debt financing which may be secured by the existing  and/or  to-be-acquired
assets of the  Company.  The  Company  intends to use the  proceeds  of any such
financing to acquire  additional assets for the purpose of generating income for
the Company.  The Company  anticipates  it will be able to expend the entire net
financing proceeds on the acquisition of additional assets on terms favorable to
the Company,  but the Company has not entered into any contracts and there is no
assurance  that the Company  will be able to  purchase  assets and sell or lease
assets on favorable terms.

         Reliance on JMC. All management of the Company will be performed by JMC
pursuant to a  Management  Agreement  between  JMC and the  Company  which has a
20-year term and provides for an asset-based  management  fee. JMC will not be a
fiduciary  to the  Company or its  stockholders.  The Board of  Directors  will,
however,  have ultimate control and supervisory  responsibility over all aspects
of  the  Company  and  will  owe  fiduciary   duties  to  the  Company  and  its
stockholders.  In addition,  while JMC may not owe any  fiduciary  duties to the
Company by virtue of the  Management  Agreement,  the  officers  of JMC are also
officers  of the  Company,  and in that  capacity  owe  fiduciary  duties to the
Company  and the  stockholders  by virtue of holding  such  offices.  There may,
however, be conflicts of interest arising from such dual roles.

         The  Management  Agreement  may be  terminated  upon a  default  in the
obligations of JMC to the Company,  and provides for  liquidated  damages in the
event of a wrongful  termination  of the  agreement by the Company.  Many of the
officers of JMC are also officers of the Company,  and certain  directors of the
Company are also directors of JMC.  Consequently,  the directors and officers of
JMC may have a conflict of interest in the event of a dispute  over  obligations
between the Company and JMC.

         Ownership  Risks.  Most of the  Company's  portfolio  is  leased  under
operating leases, where the terms of the leases do not take up the entire useful
life of an asset. The Company's ability to recover its purchase investment in an
asset subject to an operating  lease is dependent upon the Company's  ability to
re-lease or resell the asset  after the  expiration  of the initial  lease term.
Some of the factors that have an impact on the  Company's  ability to release or
re-sell include general market  conditions,  regulatory changes that may make an
asset's use more expensive or preclude use unless the asset is modified, changes
in the supply or cost of aircraft equipment and technological developments which
cause the asset to become obsolete.  In addition, a successful  investment in an
asset  subject  to an  operating  lease  depends  in part upon  having the asset
returned by the lessee in marketable  condition as required under the lease.  If
the Company is unable to remarket or sell its  aircraft  equipment  on favorable
terms  when the  operating  lease  for such  equipment  expires,  the  Company's
business, financial condition, cash flow, ability to service debt and results of
operation could be adversely affected.

         Raytheon  Lease  Renewal.  Three of the  four  Dash-7  aircraft  in the
Company's  portfolio are leased to a subsidiary of Raytheon  Service Company and
used by Raytheon to provide transportation and support services to the U.S. Army
under a government contract.  This aircraft lease expires in September 1998, but
Raytheon has a two-year renewal option,  exercisable on or before July 30, 1998.
If the  contract is not  renewed,  then the Company will be required to remarket
those aircraft. Any re-lease may require some refurbishment, which may be at the
Company's  expense  even if the  aircraft  is  returned  by lessee  in  complete
compliance with the lease. While such refurbishment is being performed and until
an aircraft is delivered to a new lessee,  the Company may  experience a loss of
revenue.  The Company  believes that in the event of non-renewal with respect to
any of the leases,  the notice  period will provide the Company with  sufficient
time to locate a new lessee on favorable lease terms. There can be no assurance,
however, that the Company will not experience some adverse effect on its revenue
and expenses as a result of the non-renewal of the Raytheon lease.

         Lessee Credit Risk. If a lessee defaults upon his  obligations  under a
lease,  the Company may be limited in its ability to enforce  remedies.  Most of
the  Company's  lessees  are  small  domestic  and  foreign  regional  passenger
airlines, which may be even more sensitive to airline industry market conditions
than the major airlines.  As a result,  the Company's  inability to collect rent
under a significant lease or to repossess equipment in the event of a default by
a lessee could have a material  adverse  effect on the Company's  revenue.  If a
lessee that is a certified U.S.  airline is in default under the lease and seeks
protection under Chapter 11 of the United States  Bankruptcy Code, under Section
1110 of the Bankruptcy Code, the Company would be  automatically  prevented from
exercising  any  remedies  for a  period  of 60  days.  By the end of the 60 day
period,  the lessee must agree to perform the obligations and cure any defaults,
or the Company would have the right to repossess the  equipment.  This procedure
under the  Bankruptcy  Code has been subject to significant  recent  litigation,
however,  and it is possible that the Company's  enforcement rights may still be
further  adversely  affected by a  declaration  of  bankruptcy  by a  defaulting
lessee.

         International  Risks.  Leases with foreign lessees may present somewhat
greater  credit risks because  certain  foreign laws,  regulations  and judicial
procedures may not be as protective of lessor rights as those which apply in the
United  States.  Although the Company's  current  leases are all payable in U.S.
dollars,  in the future,  it may agree to leases which permit payment in foreign
currency.  The Company could also experience  collection problems related to the
enforcement of its lease  agreements  under foreign local laws and the attendant
remedies  in  foreign  jurisdictions.  The  protections  potentially  offered by
Section 1110 of the Bankruptcy  Code would not apply to non-U.S.  carriers,  and
applicable local law may not offer similar protections. Certain countries do not
have a reliable  registration  or other  recording  system with which to locally
establish the Company's  interest in equipment,  and related leases.  This could
add  difficulty  in  recovering  an engine in the  event  that a foreign  lessee
defaults.

         Government Regulation.  There are a number of areas in which government
regulation  may  result  in  costs  to  the  Company.   These  include  aircraft
registration,   safety  requirements,   required  equipment  modifications,  and
aircraft  noise  requirements.  Although it is  contemplated  that the burden of
complying with such  requirements will fall primarily upon lessees of equipment,
there  can be no  assurance  that the cost of  complying  with  such  government
regulations  will  not  fall  on the  Company.  Furthermore,  future  government
regulations  could cause the value of any  non-complying  equipment owned by the
Company to substantially decline.

         Competition.  The aircraft leasing industry is highly competitive.  The
Company will compete with  aircraft  manufacturers,  distributors,  airlines and
other  operators,  equipment  managers,  leasing  companies,  equipment  leasing
programs,  financial institutions and other parties engaged in leasing, managing
or remarketing  aircraft,  many of which have  significantly  greater  financial
resources and more experience than the Company. The Company,  however,  believes
that it has a  competitive  advantage  in its  niche  market of  financing  used
turbo-prop  aircraft to regional air  carriers.  This market  segment,  which is
characterized  by transaction  sizes of less than $10 million and lessee credits
that are strong,  but generally  unrated and more  speculative  than that of the
major air carriers,  is not well served by the Company's  larger  competitors in
the  aircraft  industry.  JMC,  the  management  company  for the  Company,  has
developed a reputation  as a global  participant  in this segment of the market,
and the Company  believes  this will benefit the Company.  There is no assurance
that the  lack of  significant  competition  from the  larger  aircraft  leasing
companies will continue or that the reputation of JMC will continue to be strong
in this market segment and benefit the Company.

         Casualties, Insurance Coverage. The Company, as owner of transportation
equipment  could be held liable for injuries or damage to property caused by its
assets. Though some protection may be provided by the United States Aviation Act
with  respect  to its  aircraft  assets,  it is not  clear to what  extent  such
statutory  protection would be available to the Company.  Though the Company may
carry insurance or require a lessee to insure against a risk, some risks of loss
may not be  insurable.  An uninsured  loss with  respect to the  Equipment or an
insured  loss for which  insurance  proceeds are  inadequate,  would result in a
possible  loss of  invested  capital in and any  profits  anticipated  from such
equipment.

         Leasing   Risks.   The  Company's   successful   negotiation  of  lease
extensions,  re-leases  and sales may be  critical to its ability to achieve its
financial objectives, and will involve a number of substantial risks. Demand for
lease or purchase of the assets depends on the economic condition of the airline
industry. Ability to re-lease or resell equipment at acceptable rates may depend
on the demand and market  values at the time of re-lease or resale.  The Company
anticipates  that the bulk of the  equipment it acquires  will be used  aircraft
equipment.  The market for used  aircraft is cyclical,  and  generally,  but not
always,  reflects  economic  conditions  and  the  strength  of the  travel  and
transportation  industry. The demand for and resale value of many types of older
aircraft  in the  recent  past has been  depressed  by such  factors  as airline
financial  difficulties,  increased  fuel costs,  the number of new  aircraft on
order and the number of older aircraft coming off lease. The Company's  expected
concentration  in a  limited  number  of  airframe  and  aircraft  engine  types
(generally, turboprop equipment) subjects the Company to economic risks if those
aircraft  engine  types  should  decline in value.  The recent  introduction  of
"regional  jets" to serve on short routes  previously  thought to be  economical
only for turboprop  aircraft  operation  could decrease the demand for turboprop
aircraft,  while at the same  increasing the supply of used turboprop  aircraft.
This could  result in lower  lease rates and values for the  Company's  existing
turboprop aircraft.

         Risks  Related to  Regional  Air  Carriers.  Because  the  Company  has
concentrated  its  existing  leases  and  intends  to  concentrate  on leases to
regional air carriers,  it will be subject to certain risks.  First,  lessees in
the regional air carrier market include a number of companies that are start-up,
low  capital,  low margin  operations.  Often,  the success of such  carriers is
dependent upon arrangements  with major trunk carriers,  which may be subject to
termination or cancellation  by such major carrier.  This market segment is also
characterized by low entry costs, and thus, there is strong  competition in this
industry  segment  from  start-ups  as well as  major  airlines.  Thus,  leasing
transactions  with these types of lessees  results in a generally  higher  lease
rate on aircraft,  but may entail  higher risk of default or lessee  bankruptcy.
The Company  will  evaluate the credit risk of each lessee  carefully,  and will
attempt to obtain  third  party  guaranties,  letters of credit or other  credit
enhancements,  if it deems such is necessary.  There is no  assurance,  however,
that such  enhancements  will be available  or that even if obtained  will fully
protect the Company from losses  resulting  from a lessee default or bankruptcy.
Second,  a significant  area of growth of this market is in areas outside of the
United States,  where  collection and  enforcement  are often more difficult and
complicated than the United States.

         Possible  Volatility of Stock Price.  The market price of the Company's
Common Stock could be subject to fluctuations  in response to operating  results
of the Company,  changes in general  conditions  in the economy,  the  financial
markets,  the airline  industry,  changes in  accounting  principles or tax laws
applicable to the Company or its lessees,  or other  developments  affecting the
Company, its customers or its competitors, some of which may be unrelated to the
Company's  performance.  Also,  because  the  Company  has  a  relatively  small
capitalization of approximately  1.6 million shares,  there is a correspondingly
limited amount of trading of the shares.  Consequently, a single or small number
of trades  could result in a market  fluctuation  not related to any business or
financial development relating to the Company.

         Year 2000  Considerations.  The Company's  internal and  administrative
operations are not highly dependent on advanced  technological computer or other
electronic systems,  and,  consequently,  management believes that the Company's
exposure  to loss as a result of Year 2000 issues is not significant.  Further,
management  believes that the electronic systems used in the equipment leased by
the  Company  to  lessees  will not be  affected  by the Year 2000  issue,  and,
therefore,  this  issue  should not  directly  affect  the  Company's  financial
performance  or the  lessees'  ability  to comply  with their  respective  lease
obligations.  Of course, to the extent that a lessee has Year 2000 problems that
significantly  adversely  affect its overall  financial  status,  such  material
problems may affect the lessee's  operations and increase the risk of default by
a lessee  under its lease with the  Company.  Furthermore,  Year 2000 issues may
have a material  impact on FAA  operations  and the  operations  of certain  air
carriers,  which in turn  would  negatively  affect  the  aircraft  industry  in
general.


Part II.  Other Information

Item 1.  Legal Proceedings

         No disclosure required.

Item 2.  Changes in Securities

         On April 17, 1998,  in  connection  with the adoption of a  shareholder
rights plan,  the Company filed a Certificate  of  Designation  designating  the
rights,  preferences  and  privileges  of a new Series A  Preferred  Stock.  The
Certificate  of  Designation  created  a series  of  100,000  shares of Series A
Preferred Stock,  $.001 par value, out of the total class of 2,000,000 shares of
Preferred  Stock.  Pursuant to the  shareholder  rights plan, the Company issued
rights  to its  shareholders  of record as of April  23,  1998,  entitling  each
shareholder to the right to purchase one  one-hundredth of a share (a "Unit") of
Series A Preferred Stock for each share of Common Stock held by the shareholder.
The  purchase  price  of  $66.00  per  Unit  is  subject  to  adjustment  and is
exercisable only upon the occurrence of certain events.

Item 3.  Defaults Upon Senior Securities

         No disclosure required.



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

         No disclosure required.


Item 5.  Other Information

         No disclosure required.


Item 6.  Exhibits and Reports on Form 8-K

         a. Exhibits

<TABLE>
<CAPTION>
Exhibit Index              Description
<S>                        <C>   
3.9                        Certificate of Designation for AeroCentury Corp.             

10.5                       Rights  Agreement  between  AeroCentury  Corp. and
                           Continental Stock  Transfer  & Trust  Company,  as 
                           rights  agent  dated as of April 8, 1998.
                           Incorporated by reference to Exhibit 1 of the
                           Company's  Registration  Statement on Form 8-A12B 
                           (Commission File No.  001-13387),  filed with the 
                           Securities and Exchange Commission on April 17, 1998.

27                         Financial Data Schedule.
</TABLE>
  
        b. Reports Filed on Form 8-K

         On January 16,  1998,  the Company  filed a Report on Form 8-K with the
Securities and Exchange Commission  disclosing the consummation of the merger of
the Company with  JetFleet  Aircraft,  L.P.  and JetFleet  Aircraft II, L.P. The
Report on Form 8-K was amended on March 16, 1998 to incorporate by reference the
financial  statements of JetFleet Aircraft,  L.P. and JetFleet Aircraft II, L.P.
and the pro forma financial statements of the Company contained in the Company's
S-4 Registration Statement for the merger.

                                   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.

                                AeroCentury Corp.

May 12, 1998                          By: /s/ Neal D. Crispin    
Date                                     -----------------------------------
                                         Neal D. Crispin, Director, President 
                                         and Chairman of the Board of Directors
                                         of the Registrant
                                         (Principal Executive Officer)



May 12, 1998                          By: /s/ Toni M. Perazzo
Date                                     -----------------------------------
                                         Toni M. Perazzo, Director,
                                         Vice President - Finance and Secretary
                                         of the Registrant(Principal Financial 
                                         and Accounting Officer)



May 12, 1998                          By:/s/ Marc J. Anderson
Date                                     -----------------------------------
                                        Marc J. Anderson, Director, Chief 
                                        Operating Officer, Senior Vice President