SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-QSB
(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended September 30, 2002

[ ] Transition Report Under 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.
                 (Name of small business issuer in its charter)

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

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

Issuer's telephone number, including area code:  (650) 340-1888

Securities registered pursuant to Section 12(b) of the Act:

           Title of Each Class             Name of Exchange on Which Registered
     Common Stock, $0.001 par value               American Stock Exchange

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

Check whether the Issuer:  (1) 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
   ------   ------

As of November 14, 2002 the Issuer had 1,606,557 Shares of Common Stock
outstanding, of which 63,300 are held as Treasury Stock.

Transitional Small Business Disclosure Format (check one): Yes      No  X
                                                              -----   -----








<PAGE>



                                     PART I

                              Financial Information

Forward-Looking Statements

This Quarterly Report on Form 10-QSB includes "forward-looking statements"
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. All statements in this Quarterly Report other than statements of
historical fact are "forward-looking statements" for purposes of these
provisions, including any statements of plans and objectives for future
operations and any statements of assumptions underlying any of the foregoing.
Statements that include the use of terminology such as "may," "will," "expects,"
"plans," "anticipates," "estimates," "potential," or "continue," or the negative
thereof, or other comparable terminology are forward-looking statements.

Forward-looking statements include (i) in Item 2 "Management's Discussion and
Analysis or Plan of Operation -- Liquidity and Capital Resources," statements
regarding the lack of requirement for the Company to make monthly repayments on
the Company's revolving credit facility through December 31, 2002; the approval
of certain lessee lease amendments by the credit facility lenders; the adequacy
of the Company's cash flow to meet modest increases in interest rates applicable
to the Company's credit facility obligations; the adequacy of cash flow to meet
ongoing operational needs; and the sufficiency of the Company's cash to meet
certain guaranty payments under a guaranty delivered to a vendor to a lessee;
(ii) in Item 2 "Management's Discussion and Analysis or Plan of Operation --
Outlook," statements regarding the anticipated exclusive use of the revolving
credit facility to fund acquisitions in the remainder of 2002; the Company's
expectation that a certain aircraft will be delivered to a lessee in late
November 2002; the anticipated use of revolving credit facility financing to
repay special asset-based financing on such aircraft; the belief that a forced
sale of such aircraft, though at a loss, would result in proceeds sufficient to
repay the balloon payment due under its asset-based financing; the Company's
expectation regarding rental income and net income for the comparable periods in
2002 versus 2001; and the expectation that lease rates will remain below prior
market levels (iii) in Item 2 "Management's Discussion and Analysis or Plan of
Operation -- Factors that May Affect Future Results," statements regarding the
possibility that certain current economic conditions may favor the Company in
that there may be a greater likelihood of renewals by existing lessees and
increased demand for more economically operated turboprop aircraft (which make
up most of the Company's portfolio); an increased desire for short-term leases
by aircraft lessees; the anticipated lack of need by the Company to make
repayments on the Company's credit facility; the Company's intention to repay a
portion of the revolving loans from proceeds of subsequent debt or equity
financings; the Company's anticipated acquisition of primarily used aircraft;
the attractiveness of overseas markets; JMC's competitiveness due to its
experience and operational efficiency in financing transaction types desired by
regional air carriers and its global reputation; and the Company's ability to
obtain third party guaranties, letters of credit or other credit enhancements
from future lessees.

These forward-looking statements involve risks and uncertainties, and it is
important to note that the Company's actual results could differ materially from
those projected or assumed in such forward-looking statements. Among the factors
that could cause actual results to differ materially are the factors detailed
under the heading "Management's Discussion and Analysis or Plan of Operation --
Factors That May Affect Future Results," including general economic conditions,
particularly those that affect the demand for regional aircraft and engines and
the financial status of the Company's primary customers, regional passenger
airlines; the lack of any further disruptions to the air travel industry similar
to that which occurred on September 11, 2001; the success of the Company's
remarketing efforts with respect to aircraft that are returned upon expiration
or termination of leases; the Company's ability to remain in compliance with the
terms of its credit facility agreement or, if necessary, negotiate extensions of
waivers of such compliance; the financial performance of the Company's lessees
and their compliance with rental, maintenance and return conditions under their
respective leases; the availability of suitable aircraft acquisition
transactions in the regional aircraft market; and future trends and results
which cannot be predicted with certainty. The cautionary statements made in this
Quarterly Report should be read as being applicable to all related
forward-looking statements wherever they appear herein. All forward-looking
statements and risk factors included in this document are made as of the date
hereof, based on information available to the Company as of the date hereof, and
the Company assumes no obligation to update any forward-looking statement or
risk factor. You should consult the risk factors listed from time to time in the
Company's filings with the Securities and Exchange Commission and, in
particular, its Report on Form 10-KSB for the fiscal year ended December 31,
2001.



<PAGE>



Item 1.       Financial Statements

                                AeroCentury Corp.
                      Condensed Consolidated Balance Sheet


                                     ASSETS
                                                                     Unaudited
                                                                   September 30,
                                                                       2002
                                                                       ----

Assets:
     Cash and cash equivalents                                   $     1,954,670
     Deposits                                                          6,638,750
     Accounts receivable                                               1,178,200
     Aircraft and aircraft engines on operating leases,
        net of accumulated depreciation of $17,488,050                60,875,840
     Note receivable                                                      30,590
     Prepaid expenses and other                                          446,610
                                                                 ---------------
Total assets                                                     $    71,124,660
                                                                 ===============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
     Accounts payable and accrued expenses                       $       789,970
     Notes payable and accrued interest                               39,366,610
     Maintenance reserves and accrued costs                            5,341,540
     Security deposits                                                 1,942,870
     Prepaid rent                                                        269,560
     Deferred taxes                                                    3,701,460
                                                                 ---------------

Total liabilities                                                     51,412,010
                                                                 ---------------

Stockholders' 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 shares issued and outstanding                1,610
     Paid in capital                                                  13,821,200
     Retained earnings                                                 6,393,910
                                                                 ---------------
                                                                      20,216,720
     Treasury stock at cost, 63,300 shares                             (504,070)
                                                                 ---------------

Total stockholders' equity                                            19,712,650
                                                                 ---------------

Total liabilities and stockholders' equity                       $    71,124,660
                                                                 ===============

The accompanying notes are an integral part of these statements.


<PAGE>



                                AeroCentury Corp.
                   Condensed Consolidated Statements of Income
<table>
<caption>


                                                 For the Nine Months                   For the Three Months
                                                 Ended September 30,                    Ended September 30,
                                              2002               2001                 2002                2001
                                              ----               ----                 ----                ----
                                                      Unaudited                              Unaudited

  <c>                                <c>                 <c>                 <c>                <c>
Revenues:

     Rent income                        $     6,361,100     $     7,787,150     $     1,937,570    $      2,455,720
     Other income                                97,070             667,450              38,350             423,110
                                        ---------------     ---------------     ---------------    ----------------
                                              6,458,170           8,454,600           1,975,920           2,878,830
                                        ---------------     ---------------     ---------------    ----------------
Expenses:

     Management fees                          1,257,460           1,329,720             419,820             438,910
     Depreciation                             2,069,220           2,100,960             703,170             705,560
     Interest                                 1,417,570           2,234,490             480,320
        662,970
     Maintenance                                 40,200             143,330           (185,310)             155,460
     Professional fees and general
        and administrative                      414,300             327,700             155,970             113,800
                                        ---------------     ---------------     ---------------    ----------------

                                              5,198,750           6,136,200           1,573,970           2,076,700
                                        ---------------     ---------------     ---------------    ----------------

Income before taxes                           1,259,420           2,318,400             401,950             802,130

Tax provision                                   408,380             773,980             115,500             271,850
                                        ---------------     ---------------     ---------------    ----------------

Net income                              $       851,040     $     1,544,420     $       286,450    $        530,280
                                        ===============     ===============     ===============    ================

Weighted average common
   shares outstanding                         1,543,257           1,543,257           1,543,257           1,543,257
                                        ===============     ===============     ===============    ================

Basic earnings per share                $          0.55     $          1.00     $          0.19    $           0.34
                                        ===============     ===============     ===============    ================


The accompanying notes are an integral part of these statements.


</table>


<PAGE>



                                AeroCentury Corp.
                 Condensed Consolidated Statements of Cash Flows

<table>
<caption>
                                                                              For the Nine Months Ended September 30,
                                                                                      2002                2001
                                                                                      ----                ----
                                                                                             Unaudited

                                                                             <c>                <c>

Net cash provided by operating activities                                       $     2,964,410    $      2,613,190

Investing activity -
   Purchase of aircraft and aircraft engines                                        (6,417,710)           (275,380)
                                                                                ---------------    ----------------
Net cash used in investing activity                                                 (6,417,710)           (275,380)

Financing activities:
   Issuance of notes payable                                                          8,405,000                   -
   Payments received on note receivable                                                  37,980              36,640
   Repayment of notes payable                                                       (5,715,170)         (3,514,500)
                                                                                ---------------    ----------------
Net cash provided/(used) by financing activities                                      2,727,810         (3,477,860)

Net decrease in cash and cash equivalents                                             (725,490)         (1,140,050)

Cash and cash equivalents, beginning of period                                        2,680,160           3,184,470
                                                                                ---------------    ----------------

Cash and cash equivalents, end of period                                        $     1,954,670    $      2,044,420
                                                                                ===============    ================


The accompanying notes are an integral part of these statements.

</table>
<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

1.       Organization and Summary of Significant Accounting Policies

(a)      Basis of Presentation

         AeroCentury Corp. ("AeroCentury") was incorporated in the state of
Delaware on February 28, 1997. AeroCentury 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"), which was effective January 1, 1998. The Consolidation was
treated as a "pooling-of-interests" under accounting principles generally
accepted in the United States of America. AeroCentury is continuing in the
aircraft leasing business in which the Partnerships engaged and is using
leveraged financing to acquire additional aircraft assets on lease.

         During November 1999 and September 2000, AeroCentury Corp. formed two
wholly-owned subsidiaries, AeroCentury Investments LLC ("AeroCentury LLC") and
AeroCentury Investments II LLC ("AeroCentury II LLC"), respectively, for the
purpose of acquiring aircraft using a combination of cash and bank financing
separate from AeroCentury Corp.'s revolving credit facility. Financial
information for AeroCentury, AeroCentury LLC and AeroCentury II LLC
(collectively, the "Company") is presented on a consolidated basis. All
intercompany balances and transactions have been eliminated in consolidation.

         Certain amounts previously reported have been reclassified to conform
to the current year presentation. These reclassifications do not affect
previously reported net income or stockholders' equity.

 (b)     Capitalization

         In 1998, in connection with the adoption of a stockholder rights plan,
the Company filed a Certificate of Designation, designating the rights,
preferences and privileges of a new Series A Preferred Stock. Pursuant to the
plan, the Company issued rights to its stockholders, entitling each stockholder
to the right to purchase one one-hundredth of a share of Series A Preferred
Stock for each share of Common Stock held by the stockholder. Such rights are
exercisable only under certain circumstances concerning a proposed acquisition
or merger of the Company.

         The Company's Board of Directors adopted a stock repurchase plan in
1998, granting management the authority to repurchase up to 100,000 shares of
the Company's common stock, in privately negotiated transactions or on the
market, at such price and on such terms and conditions deemed satisfactory to
management. The Company has repurchased 63,300 shares in total and has not
repurchased any shares since 1999.

         As discussed above, AeroCentury is the sole member and manager of
AeroCentury LLC and AeroCentury II LLC.

(c)      Cash and Cash Equivalents/Deposits

         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 represent cash balances held related to maintenance
reserves and security deposits and generally are subject to withdrawal
restrictions.

         At September 30, 2002, the Company held security deposits of
$1,942,870, refundable maintenance reserves received from lessees of $1,729,900
and non-refundable maintenance reserves of $2,965,980.



<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

1.       Organization and Summary of Significant Accounting Policies (continued)

(c)      Cash and Cash Equivalents/Deposits (continued)

         The Company's leases are typically structured so that if any event of
default occurs under a lease, the Company may apply all or a portion of the
lessee's security deposit to cure such default. If such application of the
security deposit is made, the lessee typically is required to replenish and
maintain the full amount of the deposit during the remaining term of the lease.
All of the security deposits currently held by the Company are refundable to the
lessee at the end of the lease.

         Maintenance reserves which are refundable to the lessee at the end of
the lease may be retained by the Company if such amounts are necessary to meet
the return conditions specified in the lease and, in some cases, to satisfy any
other payments due under the lease.

         Non-refundable maintenance reserves held by the Company are accounted
for as a liability until the aircraft has been returned at the end of the lease,
at which time the Company evaluates the adequacy of the remaining reserves in
light of maintenance to be performed as a result of hours flown. At that time,
any excess is recorded as income. When an aircraft is sold, any excess
non-refundable maintenance reserves are recorded as income.

(d)      Aircraft and Aircraft Engines On Operating Leases

         The Company's interests in aircraft and aircraft engines are recorded
at cost, which includes acquisition costs. 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 based on appraisal.
The depreciable base of the assets acquired by the Company in the Consolidation
was equal to the net book value of the assets at December 31, 1997.

(e)      Impairment of Long-lived Assets

         In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets,"
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the book value of the asset may not be recoverable. Periodically,
the Company reviews its long-lived assets for impairment based on estimated
future nondiscounted cash flows attributable to the assets. In the event such
cash flows are not expected to be sufficient to recover the recorded value of
the assets, the assets are written down to their estimated realizable value.

 (f)     Loan Commitment and Related Fees

         To the extent that the Company is required to pay loan commitment fees
and legal fees in order to secure debt, such fees are amortized over the life of
the related loan.

(g)      Maintenance Reserves and Accrued Costs

         Maintenance costs under the Company's triple net leases are generally
the responsibility of the lessees. Maintenance reserves and accrued costs in the
accompanying balance sheet include refundable and non-refundable maintenance
payments received from lessees. The Company periodically reviews maintenance
reserves for adequacy in light of the number of hours flown, airworthiness
directives issued by the manufacturer or government authority, and the return
conditions specified in the lease. As a result of such review, when it is
probable that the Company has incurred costs for maintenance in excess of
amounts received from lessees, the Company accrues its share of costs for work
to be performed as a result of hours flown. At September 30, 2002, the Company
had accrued maintenance costs of approximately $217,000 related to several of
its aircraft.
<page>
                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

1.       Organization and Summary of Significant Accounting Policies (continued)

(h)      Income Taxes

         The Company follows the liability method of accounting for income
taxes. Under the liability method, deferred income taxes are recognized for the
tax consequences of "temporary differences" by applying enacted statutory tax
rates applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. The
effect on deferred taxes of a change in the tax rates is recognized in income in
the period that includes the enactment date.

(i)      Revenue Recognition

         Revenue from leasing of aircraft assets is recognized as operating
lease revenue on a straight-line basis over the terms of the applicable lease
agreements.

(j)      Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

         The most significant estimates with regards to these financial
statements are the residual values of the aircraft, the useful lives of the
aircraft, and the estimated amount and timing of cash flow associated with each
aircraft that are used to evaluate impairment, if any.

(k)      Comprehensive Income

         The Company does not have any comprehensive income other than the
revenue and expense items included in the consolidated statements of income. As
a result, comprehensive income equals net income for the three months and nine
months ended September 30, 2002 and 2001.

(l)      Recent Accounting Pronouncements

     In August 2001, the Financial  Accounting  Standards  Board issued SFAS No.
144,  "Accounting  for the  Impairment or Disposal of Long-lived  Assets," which
supercedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and
Long-lived  Assets to Be Disposed  Of." SFAS No. 144 is effective  for financial
statements  issued for fiscal years  beginning  after  December  15,  2001,  and
interim  periods within those fiscal years.  The Company adopted SFAS No. 144 on
January 1, 2002. Because SFAS No. 144 retains the fundamental provisions of SFAS
No. 121 for (a)  recognition  and  measurement  of the  impairment of long-lived
assets  to be held and used  and (b)  measurement  of  long-lived  assets  to be
disposed of by sale, the adoption of SFAS No. 144 has not had a material  effect
on the Company's results of operations or financial position.



<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

2.       Aircraft and Aircraft Engines On Operating Leases

         At September 30, 2002, the Company owned four deHavilland DHC-8s, two
deHavilland DHC-7s, three deHavilland DHC-6s, one Fairchild Metro III, two
Shorts SD 3-60, six Fokker 50s, two Saab 340As and 26 turboprop engines. During
the third quarter of 2002, the Company acquired one of its deHavilland DHC-8
aircraft, in a purchase and leaseback with a new customer for a term of 38
months. The Company also capitalized $316,600 of equipment added to several
aircraft during the first nine months of 2002. During the quarter, an engine
which had been held in inventory was exchanged, along with a cash payment, for
another engine which subsequently was leased to a customer for use on one of the
Company's aircraft while an engine was being repaired.

         The lease for one of the Company's Saab 340A aircraft expired on June
30, 2002 and the aircraft was returned to and accepted by the Company during
August after the lessee had met the return conditions of the lease. The Company
is seeking re-lease opportunities for this aircraft.

         The lease for the Company's Fairchild Metro III remained in effect from
its expiration date of March 30, 2002 until the pre-return inspection of the
aircraft was complete. The aircraft was returned and accepted by the Company in
November 2002.

         The lease for one of the Company's Fokker 50 aircraft remains in effect
from its expiration date of September 4, 2002 until the pre-return inspection of
the aircraft is complete, which the Company expects to occur during the fourth
quarter of 2002.

         Under the terms provided therein, the leases for two of the Company's
other Fokker 50 aircraft remained in effect from their expiration date of
January 13, 2002, until their pre-return inspections were completed in July
2002. The lessee continued to pay rent through mutually-agreed dates in June. In
late 2001, the Company conducted a preliminary inspection of the aircraft and
concluded that, upon return, certain components would likely be in better
condition than required by the return provisions of the leases. In such a
situation, the leases stipulated that the Company was required to compensate the
lessee. As a result, during 2001, the Company accrued an estimate of $609,000 of
compensation related to these two aircraft. Both aircraft were returned to the
Company in July 2002, and the Company and the lessee agreed on the final
compensation. At that time, the Company recorded a credit to maintenance expense
of $213,690, which represented the amount of the Company's estimate which was in
excess of the final compensation amount.

         During the third quarter of 2002, the Company re-leased one of the
Fokker 50 aircraft which had been returned during July to a new customer for a
term of 38 months. As discussed in Note 8, during the fourth quarter of 2002,
the Company and a new lessee signed a term sheet for the lease of the second
Fokker 50 aircraft which had been returned in July 2002.

3.       Note Receivable

         At September 30, 2002, the Company's note receivable consists of a loan
to one of the Company's long-standing lessees in connection with a
manufacturer-required inspection of the aircraft and repair of certain
components. The Company and the lessee agreed to a cost sharing arrangement
whereby a portion of the cost was funded by maintenance reserves previously paid
by the lessee and the remaining cost was allocated between the Company and the
lessee. The Company recorded a note receivable for the lessee's portion, net of
interest to be received at a rate of 5%, which is being repaid through increased
rent during the remainder of the lease term, which expires on April 30, 2003.



<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

4.       Notes Payable and Accrued Interest

         The Company has a revolving credit facility totaling $50 million. The
facility, which expires on June 28, 2003, bore interest through March 30, 2002,
at the Company's option, at either (i) prime or (ii) LIBOR plus a margin of 200
to 250 basis points depending on certain financial ratios. On March 7, 2002, the
Company and its lenders agreed to modify certain financial covenants contained
in the loan agreement for the facility in order to enable the Company to
continue to take advantage of business opportunities in the current industry
environment of increased market demand for shorter-term leases. The changes are
in effect through December 31, 2002. In return for granting such changes, the
Company's lenders increased the margin on the interest rates chosen by the
Company from a floating margin to a fixed margin of 275 basis points, effective
March 31, 2002.

         The Company's assets, excluding those of AeroCentury LLC and
AeroCentury II LLC, serve as collateral under the facility and, in accordance
with the credit agreement, the Company must maintain compliance with certain
financial covenants. As of September 30, 2002, the Company was in compliance
with all such covenants, $33,330,000 was outstanding under the credit facility,
and interest of $175,010 was accrued, using a combination of prime and LIBOR
rates.

         As discussed in Note 1, in November 1999 the Company acquired two
aircraft using cash and bank financing separate from its credit facility. The
financing consisted of a note in the amount of $9,061,000. This note is
collateralized by these aircraft and is non-recourse to the Company. During the
third quarter of 2002, the Company used funds from its revolving credit facility
to repay the outstanding bank financing related to one of the aircraft and
transferred title to the aircraft from AeroCentury LLC to AeroCentury Corp. The
balance of the note at September 30, 2002 was $3,149,650 and interest of $4,650
was accrued. As of September 30, 2002, the Company was in compliance with all
covenants of the loan agreement pertaining to the financing of the second
aircraft.

         Payments due under the note consist of monthly principal and interest,
and a balloon principal payment due at the end of a six month remarketing
period, which was originally August 15, 2002. Under the provisions of the loan
agreement, payments due on the financing are reduced during this six month
period. The note bears fixed interest at 8.04% through February 15, 2002 and a
floating rate thereafter. The bank agreed that the six month period would not
begin until the aircraft were returned and accepted by the Company because,
under the lease terms, the lessee continued to pay rent after the original
expiration date. The lessee redelivered the aircraft to the Company during July
2002.

         A similar financing was concluded in September 2000, consisting of a
note in the amount of $3,575,000, due April 18, 2003, which bears fixed interest
at 8.36% for the acquisition of one aircraft. The note is collateralized by this
aircraft and is non-recourse to the Company. Payments due under the note consist
of monthly principal and interest and a balloon principal payment due on the
maturity date. The balance of the note payable at September 30, 2002 was
$2,699,280 and interest of $8,020 was accrued. As of September 30, 2002, the
Company was in compliance with all covenants of the loan agreement pertaining to
the financing of this aircraft.



<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

5.       Income Taxes

         The items comprising income tax expense are as follows:
<table>
<caption>
                                                                            For the Nine Months Ended September 30,
                                                                                    2002                2001
                                                                                    ----                ----
         
  <c>                                                            <c>                 <c>
         Current tax provision:
              Federal                                                        $       (17,020)    $        97,670
              State                                                                     7,910              8,280
              Foreign                                                                  72,130            118,750
                                                                             ----------------    ---------------
              Current tax provision                                                    63,020            224,700
                                                                             ----------------    ---------------

         Deferred tax provision/(benefit):
              Federal                                                                 360,500            563,960
              State                                                                  (15,140)           (14,680)
                                                                             ----------------    ---------------

              Deferred tax provision                                                  345,360            549,280
                                                                             ----------------    ---------------

         Total provision for income taxes                                    $        408,380    $       773,980
                                                                             ================    ===============
</table>

         Total income tax expense differs from the amount that would be provided
by applying the statutory federal income tax rate to pretax earnings as
illustrated below:
<table>
<caption>
                                                                            For the Nine Months Ended September 30,
                                                                                    2002                2001
                                                                                 ----                ----
         
                                                                 <c>                 <c>
         Income tax expense at
               statutory federal income tax rate                             $        428,200    $       788,250
         State taxes net of federal benefit                                             9,760             20,880
         Tax refunds                                                                 (19,560)           (15,470)
         Tax rate differences                                                        (10,020)           (19,680)
                                                                             ----------------    ---------------

         Total income tax expense                                            $        408,380    $       773,980
                                                                             ================    ===============
</table>

         Temporary differences and carryforwards that gave rise to a significant
portion of deferred tax assets and liabilities as of September 30, 2002 are as
follows:

         Deferred tax assets:
              Organizational costs                              $          3,840
              Maintenance reserves                                       908,610
              Foreign tax credit carryover                               118,640
              Deferred maintenance                                       143,940
              Net operating loss carryover                               138,950
              Prepaid rent and other                                      94,060
                                                                ----------------
                  Deferred tax assets                                  1,408,040
         Deferred tax liabilities:
              Depreciation on aircraft and aircraft engines          (4,843,440)
              Other                                                    (266,060)
                                                                ----------------

                  Net deferred tax liabilities                  $    (3,701,460)
                                                                ================
<PAGE>




                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

5.       Income Taxes (continued)

         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 excess foreign tax credits may be
carried back to the two preceding tax years and then forward to the five
succeeding tax years, expiring at the end of 2006. Net operating losses may be
carried back to the five preceding tax years and then forward to the twenty
succeeding tax years, expiring at the end of 2022.

6.       Commitments and Contingencies

         In connection with the re-lease of two of the Company's aircraft, the
Company has guaranteed, up to a maximum of $150,000, the lessee's payments under
a contract with a third party vendor for spare parts. The lessee has agreed to
reimburse the Company for any payments made under the guarantee, upon demand by
the Company. If the lessee does not make such reimbursements or does not comply
with any provisions of the parts agreement, the Company may declare an event of
default under the leases.

7.       Related Party Transactions

         Since the Company has no employees, the Company's portfolio of leased
aircraft assets is managed and administered under the terms of a management
agreement with JetFleet Management Corp. ("JMC"). Under this agreement, JMC
receives a monthly management fee based on the net asset value of the assets
under management. JMC may also receive an acquisition fee for locating assets
for the Company, provided that the aggregate purchase price including chargeable
acquisition costs and any acquisition fee does not exceed the fair market value
of the asset based on appraisal, and a remarketing fee in connection with the
sale or re-lease of the Company's assets. The management fees, acquisition fees
and remarketing fees may not exceed the customary and usual fees that would be
paid to an unaffiliated party for such services. The Company recorded management
fees of $1,257,460 and $1,329,720 during the nine months ended September 30,
2002 and 2001, respectively, and $419,820 and $438,910 during the quarters ended
September 30, 2002 and 2001, respectively. During the nine months ended
September 30, 2002, the Company paid a total of $165,420 in acquisition fees,
which are included in the capitalized cost of the aircraft. Because the Company
did not acquire any aircraft during the first nine months of 2001, no
acquisition fees were paid to JMC. No remarketing fees were paid to JMC during
the first nine months of 2002 or 2001.

         Certain employees of JMC participate in an employee stock incentive
plan which grants options to purchase shares of the Company held by JetFleet
Holding Corp., the parent company of JMC. As of September 30, 2002, 37,833 such
options had been exercised.



<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                               September 30, 2002

8.       Subsequent Events

         The lease for one of the Company's aircraft expired in September 2002,
but the lessee is required to continue to pay rent until the aircraft is
returned and accepted by the Company, which is expected to occur in late
November or early December. At November 5, the lessee owed the Company three
months of rent. However, the Company holds a security deposit from this lessee,
which is substantially in excess of the amount the lessee is expected to owe the
Company at the time of return. In order to enforce its ability to use a portion
of the security deposit toward unpaid rent, the Company recently sent a default
notice to the lessee.

         In October 2002, the Company and a new customer signed a term sheet for
a 36-month lease for the second of two Fokker 50 aircraft which were returned by
the original lessee in July 2002. Delivery of the aircraft is anticipated to
occur in the fourth quarter of 2002.

         On November 7, 2002 the Company acquired a deHavilland DHC-8 aircraft
in a purchase and leaseback transaction. The aircraft is on lease for a 36 month
term with the same lessee as the deHavilland DHC-8 purchased in September.

         On November 13, 2002, the Company and the lessee for three of the
Company's aircraft signed lease amendments which cured the lessee's recent
default for rent and reserves due. The amendments provide for deferral of the
overdue rent and reserves. The arrearages are to be paid over time in
installments. The amendments also defer payment of the final security deposit
installment related to two of the aircraft. In accordance with the Company's
credit facility, the lease amendment must be approved by the facility banks. The
Company believes that such approval will be obtained.





<PAGE>



Item 2.  Management's Discussion and Analysis or Plan of Operation.

Critical Accounting Policies

In response to the Securities and Exchange Commission's Release No. 33-8040,
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies", the
Company has identified the most critical accounting policies upon which its
financial status depends. It determined the critical principles by considering
accounting policies that involve the most complex or subjective decisions or
assessments. The Company identified its most critical accounting policies to be
those related to lease rental revenue recognition, depreciation policies and
valuation of aircraft.

Revenue Recognition

Revenue from leasing of aircraft assets is recognized as operating lease revenue
on a straight-line basis over the terms of the applicable lease agreements.

Depreciation Policies

The Company's interests in aircraft and aircraft engines are recorded at cost,
which includes acquisition costs. 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 based on appraisal.

Valuation of Aircraft

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets," assets are
reviewed for impairment whenever events or changes in circumstances indicate
that the book value of the asset may not be recoverable. Periodically, the
Company reviews its long-lived assets for impairment based on estimated future
nondiscounted cash flows attributable to the assets. In the event such cash
flows are not expected to be sufficient to recover the recorded value of the
assets, the assets are written down to their estimated realizable value.

Results of Operations

Revenues

Rent income is approximately $1,426,000 lower in the nine months ended September
30, 2002 versus the nine months ended September 30, 2001 primarily due to assets
which came off lease during 2001 and the first nine months of 2002, some of
which were subsequently re-leased at lower rates, and some of which remained off
lease during a portion of the first nine months of 2002. Rent income for the
three months ended September 30, 2002 was lower by approximately $518,000 versus
the three months ended September 30, 2001 for the same reasons. The negative
effect in both the nine month and three month periods was only partially offset
by the additional rent from the aircraft purchased by the Company during
September 2002.

Other income was lower by approximately $570,000 and $385,000 during the nine
months and three months ended September 30, 2002 versus the nine months and
three months ended September 30, 2001, respectively, due to the net insurance
proceeds received during 2001 as a result of damage to one of the Company's
aircraft and lower interest rates on lower cash balances during 2002.


Expense Items

Management fees, which are calculated on the net book value of the aircraft
owned by the Company, were approximately $72,000 and $19,000 lower in the nine
months and three months ended September 30, 2002 versus the nine months and
three months ended September 30, 2001, respectively, because the Company did not
purchase any aircraft during 2001 and the one aircraft purchase during 2002 was
made in September. In addition, the Company sold one aircraft during the fourth
quarter of 2001. Depreciation was approximately $32,000 and $2,000 lower in the
nine months and three months ended September 30, 2002 versus the nine months and
three months ended September 30, 2001, respectively, for the same reasons.
<page>

Interest expense was approximately $817,000 and $183,000 lower in the nine
months and three months ended September 30, 2002 versus the nine months and
three months ended September 30, 2001, respectively, because of lower interest
rates and a lower average principal balance during 2002. Professional fees and
general administrative expenses were approximately $87,000 and $42,000 higher in
the nine months and three months ended September 30, 2002, versus the nine
months and three months ended September 30, 2001, primarily due to additional
aircraft insurance expense as a result of higher insurance premiums, as well as
higher legal and accounting expense. The effect of such increases was partially
offset by decreases in certain other expense categories.

Excluding the reversal of a portion of certain maintenance expenses estimated
and accrued in prior periods, discussed below, maintenance expense was
approximately $153,000 and $126,000 lower in the nine months and three months
ended September 30, 2002 versus the nine months and three months ended September
30, 2001, respectively, primarily because of lower expenses incurred in
connection with preparing aircraft for re-lease to new customers.

During 2002, the Company reversed approximately $214,000 of the $609,000
estimate which had been accrued in the fourth quarter of 2001, related to
compensation to the lessee in accordance with the return provisions of the
leases for two aircraft. During 2001, the Company reversed a total of $291,000,
which was paid by the lessees of two aircraft subsequent to the accruals which
had been made by the Company in the fourth quarter of 2000.

The Company's effective tax rates in the nine months and three months ended
September 30, 2002 were approximately 32% and 29%, respectively, versus 33% and
34% for the nine months and three months ended September 30, 2001, respectively.
The Company's tax rate is subject to changes in the mix of domestic and foreign
leased assets, the proportions of revenue generated within and outside of
California and numerous other factors, including changes in tax laws.

Liquidity and Capital Resources

The Company is currently financing its assets primarily through credit facility
borrowings and excess cash flow. The Company has a revolving credit facility
totaling $50 million. The facility, which expires on June 28, 2003, bore
interest through March 30, 2002, at the Company's option, at either (i) prime or
(ii) LIBOR plus a margin of 200 to 250 basis points depending on certain
financial ratios. On March 7, 2002, the Company and its lenders agreed to
modify, through December 31, 2002, certain financial covenants contained in the
loan agreement for the revolving credit facility in order to enable the Company
to continue to take advantage of business opportunities in the current industry
environment of increased market demand for shorter-term leases. In return for
granting such changes, the Company's lenders increased the margin on the
interest rates chosen by the Company from a floating margin to a fixed margin of
275 basis points, effective March 31, 2002. To the extent the Company is unable
to successfully negotiate continuing waivers of these covenants beyond December
31, 2002, and if business results do not enable the Company to meet the prior
financial covenants, the Company's financial condition and operating results
could be adversely affected.

The Company's assets, excluding those of AeroCentury LLC and AeroCentury II LLC,
serve as collateral under the revolving credit facility and, in accordance with
the credit agreement, the Company must maintain compliance with certain
financial covenants. The Company made repayments on its facility in the amount
of $1,400,000 and $100,000 in March and April 2002, respectively, because of
certain collateral borrowing base limitations. Based on the current and
projected lease status of the Company's aircraft, the Company does not believe
it will be required to make any additional repayments through December 31, 2002.
On November 13, 2002, the Company and the lessee for three of the Company's
aircraft signed lease amendments which cured the lessee's recent default for
rent and reserves due. The amendments provide for deferral of the overdue rent
and reserves. The arrearages are to be paid over time in installments. The
amendments also defer payment of the final security deposit installment related
to two of the aircraft. In accordance with the Company's credit facility, the
lease amendment must be approved by the facility banks. The Company believes
that such approval will be obtained. If such approval is not obtained, however,
the three aircraft would not be eligible to serve as collateral for the
Company's revolving credit facility and the Company would not have sufficient
cash to fund the required repayments.
<page>

At September 30, 2002, $33,330,000 was outstanding under the credit facility,
and interest of $175,010 was accrued, using a combination of prime and LIBOR
rates. The Company is currently in compliance with all covenants of the
revolving credit facility. The majority of the Company's borrowings are
currently financed using one- or three-month LIBOR rates. The Company believes
it has adequate cash flow to fund modest increases in interest rates applicable
to its credit facility obligations.

The Company's interest expense will generally move up or down with the
prevailing interest rates, as the Company has not entered into any interest rate
hedge transactions. Because aircraft owners seeking financing generally can
obtain financing through either leasing transactions or traditional secured debt
financings, prevailing interest rates are a significant factor in determining
market lease rates, and market lease rates generally move up or down with
prevailing interest rates, assuming supply and demand of the desired equipment
remain constant. However, because lease rates for the Company's assets typically
are fixed under existing leases, the Company usually does not experience any
positive or negative impact in revenue from changes in market lease rates due to
interest rate changes until such leases have terminated.

In November 1999, the Company acquired two aircraft using cash and bank
financing separate from its credit facility. The financing, which consisted of a
note in the amount of $9,061,000, was collateralized by these aircraft and is
non-recourse to the Company. The note bore fixed interest at 8.04% through
February 15, 2002 and a floating rate thereafter. Amounts due under the note
consist of fixed monthly principal and interest payments, and a balloon
principal payment due at the end of a six month remarketing period, which was
originally August 15, 2002. Under the provisions of the loan agreement, payments
due on the financing are reduced during this six month period. The Company's
lender agreed that the six month period would not begin until the aircraft were
returned and accepted by the Company because, under the lease terms, the lessee
continued to pay rent after the original expiration date. The lessee redelivered
the aircraft to the Company in July 2002. Also in July 2002, the Company used
funds from its revolving credit facility to repay the outstanding bank financing
related to one of the aircraft and transferred title to the aircraft from
AeroCentury LLC to AeroCentury Corp. At the same time, the Company re-leased
this aircraft to a new customer for a term of 38 months. The balance of the note
at September 30, 2002 was $3,149,650 and interest of $4,650 was accrued. The
Company is in compliance with all covenants of the loan agreement pertaining to
the financing of the second aircraft. See "Outlook" below for a discussion of
the status of the second aircraft.

A similar special purpose entity financing was concluded in September 2000,
consisting of a note in the amount of $3,575,000, due April 18, 2003, which
bears fixed interest at 8.36% for the acquisition of one aircraft. The note is
collateralized by this aircraft and is non-recourse to the Company. Payments due
under the note consist of monthly principal and interest and a balloon principal
payment due on the maturity date. The balance of the note payable at September
30, 2002 was $2,699,280 and interest of $8,020 was accrued. The Company is in
compliance with all covenants of the loan agreement pertaining to the financing
of this aircraft.

The Company's primary source of revenue is lease rentals collected from lessees
of its aircraft assets. It is the Company's policy to monitor each lessee's
needs in periods before leases are due to expire. If it appears that a lessee
will not be renewing its lease, the Company immediately initiates marketing
efforts to locate a potential new lessee or purchaser for the aircraft. This
procedure helps the Company reduce the time that an asset will be "off-lease."
The Company's aircraft are subject to leases with varying expiration dates
through November 2005. Given the varying lease terms and expiration dates for
the aircraft in the Company's portfolio, management believes that the Company
will have adequate cash flow to meet its on-going operational needs.

In connection with the re-lease of two of the Company's aircraft, the Company
has guaranteed, up to a maximum of $150,000, the lessee's payments under a
contract with a third party vendor for spare parts. The lessee has agreed to
reimburse the Company for any payments made under the guarantee, upon demand by
the Company. If the lessee does not make such reimbursements or does not comply
with any provisions of the parts agreement, the Company may declare an event of
default under the leases. During the fourth quarter of 2002, the Company and the
lessee agreed to lease amendments which deferred certain overdue rent and
reserve payments. Because of these events, the Company is currently re-analyzing
the extent to which it may have to perform under the guaranty. If the Company
does have to perform, the Company believes it will have sufficient cash to fund
any necessary payments.

<page>

See "Outlook" below for a discussion of factors which may affect the Company's
cash flow.

The Company's cash flow from operations for the nine months ended September 30,
2002 versus the nine months ended September 30, 2001 increased by approximately
$351,000. The increase from year to year was due primarily to the effect of the
change in deposits, accounts payable and accrued expenses, accrued interest on
notes payable and security deposits. The effect of these changes was only
partially offset by the negative effect of the change in net income, accounts
receivable, maintenance deposits and accrued costs, and deferred taxes during
2002 versus 2001.

Specifically, the Company's cash flow from operations for the nine months ended
September 30, 2002 consisted of net income of $851,040 and adjustments
consisting primarily of depreciation of $2,069,220, increases in accounts
receivable, accrued interest on notes payable, maintenance deposits and accrued
costs, security deposits, prepaid rent and deferred taxes of $582,330, $166,660,
$132,390, $225,100, $56,370 and $345,360, respectively, and decreases in
deposits, prepaid expenses and other assets, and accounts payable and accrued
expenses of $348,110, $204,650 and $852,160, respectively.

Specifically, the Company's cash flow from operations for the nine months ended
September 30, 2001 consisted of net income of $1,544,420 and adjustments
consisting primarily of depreciation of $2,100,960, an increase in deposits of
$541,750, a decrease in accounts receivable of $125,020, decreases in accounts
payable and accrued expenses and security deposits of $1,096,860 and $124,030,
respectively, an increase in maintenance reserves and accrued costs of $112,850
and a net increase in deferred taxes of $549,290.

The increase in cash flow provided by financing activities from year to year was
a result of borrowings on the Company's revolving credit facility to fund the
Company's aircraft purchase during September 2002 and the repayment of the
special purpose asset-based financing of one aircraft. The increase in cash flow
used for investing activities during 2002 was due to equipment added to aircraft
already owned by the Company and the purchase of an aircraft during September
2002, versus a smaller amount of such spending the first nine months of 2001.

Outlook

Based on the revised terms of the revolving credit facility discussed under
"Liquidity and Capital Resources" above, the Company believes that it will have
sufficient flexibility to lease assets for terms which will enable the Company
to maintain compliance with its credit facility covenants through December 31,
2002. Because the Company believes that the protracted worldwide economic
downturn continues to create increased demand for shorter term leases, the
Company has approached its agent bank to request an extension of the credit
facility terms which were granted in March 2002 and are effective through
December 31, 2002.

The Company has previously used special purpose asset-based financing for the
acquisition of three aircraft. However, because assets which have been re-leased
during 2002 have increased the collateral available on its revolving credit
facility, the Company anticipates using that facility for any acquisitions it
may make during the remainder of 2002, rather than using special purpose asset
based financing.

As discussed above, one aircraft which is currently off lease is financed with
special purpose asset based financing, which is now subject to the six-month
remarketing provisions. The balance of the note was $3,149,650 as of September
30, 2002. The note is due on December 15, 2002. In October 2002, the Company
signed a term sheet with a new customer for a 36-month lease and expects to
deliver the aircraft to the lessee in late November. Once the aircraft is
delivered to the lessee, the Company anticipates using its revolving credit
facility to fund the balloon payment due under the special purpose asset based
financing and transferring title of the second aircraft from AeroCentury LLC to
AeroCentury Corp. If the Company does not deliver the aircraft as expected and,
instead, is forced to sell the aircraft in repayment of the loan, the Company
believes such forced sale, which likely would be at a loss, would result in
sufficient proceeds to fund the balloon payment.
<page>

It is likely that rent income and net income for the remainder of 2002 will be
substantially lower than the comparable period in 2001, because several aircraft
have been off-lease or re-leased at lower rates and one aircraft was sold during
2001. The negative impact of such factors will be only partially offset by the
rent received from the aircraft purchased by the Company in September 2002 and
the remainder of the year. It is likely that market lease rates will remain
significantly below prior market levels as a result of downward pressure from
low interest rates, a slowdown in the air carrier industry and the worldwide
economy. The extent of the reduction in revenue and net income will depend on
the success of remarketing aircraft with leases due to expire and how quickly
those efforts are completed.

The Company continues to review its asset valuations in light of the worldwide
economic downturn. Although the Company did not make any valuation adjustments
during 2001, any future adjustments, if necessary, could negatively affect the
Company's financial results and the collateral available for the Company's
revolving credit facility. In addition, the Company's periodic review of the
adequacy of its maintenance reserves, as well as routine and
manufacturer-required maintenance for off-lease aircraft, may result in changes
to estimated maintenance expense, further reducing earnings.

Factors that May Affect Future Results

General Economic Conditions. The Company's business is dependent upon general
economic conditions and the strength of the travel and transportation industry.
The industry is experiencing a cyclical downturn which began in mid-2001. This
downturn was exacerbated by the terrorist attacks of September 11, 2001 and
their aftermath. As a result, there has been a severe reduction in air travel,
and less revenue and less demand for aircraft capacity by the major air
carriers, particularly those that serve U.S. markets. The duration of the
downturn is uncertain.

The Company's lessees and targeted potential lessees have been primarily outside
the U.S. If those lessees experience financial difficulties, this could, in
turn, affect the Company's financial performance. It appears that the downturn
has had an impact on some non-U.S. regional carriers, but it remains to be seen
how widespread the impact will be and how severely such carriers will be
affected. It is possible that in certain instances, current economic
circumstances may favor the Company, in that planned aircraft replacements for
the Company's leased aircraft by its lessees may be cancelled or postponed,
resulting in greater likelihood of renewals by existing lessees. Further, demand
for more economically operated turboprop aircraft, which make up the Company's
portfolio, relative to the more expensive new regional jets, may increase (see
"Leasing Risks" below). However, there can be no assurance that the Company will
realize any increase in renewals of existing leases or experience an increase in
demand for turboprop aircraft.

Since regional carriers are generally not as well-capitalized as major air
carriers, the downturn may result in the increased possibility of an economic
failure of one or more of the Company's lessees. The combined effect of all or
any decreased air travel, further weakening of the industry as a result of
subsequent threats of attacks similar to the September 11 events, an increase in
the price of jet fuel due to fears of hostilities, and increased costs and
reduced operations by air carriers due to new security directives, depending on
their scope and duration, could have a material adverse impact on the Company's
lessees and thus the Company's results.

At this time, in response to lower passenger loads, many carriers have reduced
capacity, and as a result there has been a reduced demand for aircraft. As a
result, market lease rental rates have decreased across all aircraft types,
including regional aircraft. If reduced demand remains unchanged for an extended
period of time, there could be a negative effect on aircraft values. Even if the
aircraft are not sold by the Company, a reduced market value for aircraft in the
Company's portfolio could affect the Company's results if the market value falls
below the asset's book value, and the Company determines that a writedown of the
asset's value on the Company's book is appropriate.
<page>

Another anticipated result of the economic situation is that lessees are likely
to desire shorter-term leases which will give those lessees more flexibility to
deal with the current downturn. The Company's ability to enter into such
short-term leases is somewhat limited by credit facility covenants that govern
to what extent aircraft on short-term leases can be added to the collateral base
that determines how much the Company can draw under the revolving credit
facility (see "Credit Facility Availability and Repayments Based on Collateral
Base" below).

Credit Facility Availability and Repayments Based on Collateral Base. As
discussed above, in "Outlook" the Company's ability to draw on its $50 million
credit facility is dependent upon the status of its collateral base. If a
significant portion of the collateral base is off-lease for an extended period
of time (see "Ownership Risks" below), this may affect the amount the Company
can borrow under its credit line. Since the Company currently does not have
additional, immediately available sources of acquisition funding, the ability to
draw fully on its credit facility will be critical to the continuation of the
Company's asset and revenue growth. While the Company believes it will not be
required to make additional repayments under its revolving credit facility due
to collateral base limitations, this belief is based on certain assumptions
regarding bank approval of lease amendments with a certain lessee (see
"Liquidity and Capital Resources" above), renewal of existing leases, a lack of
extraordinary interest rate increases, no lessee defaults or bankruptcies and
certain other matters that the Company deems reasonable in light of its
experience in the industry. There can be no assurance that these assumptions
will turn out to be correct. If the assumptions do not prove to be true, and the
Company has not obtained an additional waiver or amendment of such covenants
from its lenders to deal with the situation, the Company may have to sell a
significant portion of its portfolio in order to maintain compliance with the
covenants, or, if that is not possible, default on its credit facility.

Risks of Debt Financing. The Company's use of acquisition financing under its
revolving credit facility and its special purpose financings subject the Company
to increased risks of leveraging. If, due to a lessee default, the Company is
unable to repay the debt secured by the aircraft acquired, then the Company
could lose title to the acquired aircraft in a foreclosure proceeding. With
respect to the revolving credit facility, the loans are secured by the Company's
existing assets as well as the assets acquired with each financing. Any default
under the revolving credit facility could result in foreclosure upon not only
the asset acquired using such financing, but also the existing assets of the
Company securing the revolving loan.

In order to achieve optimal benefit from the revolving credit facility, the
Company intends to seek debt or equity financings. Such replacement financing
would permit the Company to make further borrowings under the revolving credit
facility equal to the amount of revolving debt refinanced. There can be no
assurance that the Company will be able to obtain the necessary amount of
replacement term debt or equity financing on favorable terms so as to permit
multiple draws on the revolving credit facility.

All of the Company's current credit facility indebtedness carries a floating
interest rate based upon either the lender's prime rate or a floating LIBOR
rate. If the applicable index rate increases, and the Company has not entered
into a mitigating hedge transaction, then the Company's payment obligations
under the credit facility would increase and could result in lower net revenues
for the Company. As discussed above, however, the Company may also have
available to it financing separate from its credit facility, which financing has
carried a fixed rate of interest in the past.

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 involves a number of risks. Demand for lease or purchase of the
assets depends on the economic condition of the airline industry which is, in
turn, sensitive to general economic conditions. Ability to remarket equipment at
acceptable rates may depend on the demand and market values at the time of
remarketing. 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, which is currently experiencing a severe
downturn. The demand for and value of many types of older aircraft in the recent
past have 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 airframe or engine
types should decline in value. If "regional jets" were to be used on short
routes previously served by turboprops, even though regional jets are more
expensive to operate than turboprops, the demand for turboprops could be
decreased. This could result in lower lease rates and values for the Company's
existing turboprop aircraft.
<page>

Reliance on JMC. All management of the Company is performed by JMC under a
management agreement which is in its fifth year of a 20-year term and provides
for an asset-based management fee. JMC is not a fiduciary to the Company or its
stockholders. The Board of Directors, however, has ultimate control and
supervisory responsibility over all aspects of the Company and owes 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 with the Company. JMC is also management company for two other aircraft
portfolio owners, JetFleet III and AeroCentury IV, Inc. ("AeroCentury IV").
JetFleet III and AeroCentury IV are in the liquidation or wrap-up phase. In the
first quarter of 2002, AeroCentury IV defaulted on certain obligations to
noteholders. The indenture trustee for AeroCentury IV's noteholders has
foreclosed and has taken over management of the remaining two assets. JetFleet
III is compliance with the terms of its trust indenture.

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. All 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. Although the Company has taken steps to prevent conflicts of
interest arising from such dual roles, such conflicts may still occur.

Ownership Risks. Most of the Company's portfolio is leased under operating
leases, where the terms of the leases are less than the entire anticipated
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 profitably re-lease or sell the asset after the expiration
of the initial lease term. Some of the factors that have an impact on the
Company's ability to re-lease or sell include worldwide economic conditions,
general aircraft 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 serviceable condition as required under the lease. If the Company
is unable to remarket 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.

Lessee Credit Risk. If a lessee defaults upon its obligations under a lease, the
Company may be limited in its ability to enforce remedies. Most of the Company's
lessees are small 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 be further adversely affected by a declaration
of bankruptcy by a defaulting lessee.

International Risks. The Company has focused on leases in overseas markets,
which are currently dynamic and which the Company believes present attractive
opportunities. Leases with foreign lessees, however, may present somewhat
different credit risks than those with domestic lessees.

Foreign laws, regulations and judicial procedures may be more or less protective
of lessor rights than those which apply in the United States. The Company could
experience collection problems related to the enforcement of its lease
agreements under foreign local laws and the 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 central registration or recording
system with which to locally establish the Company's interest in equipment and
related leases. This could add difficulty in recovering an aircraft in the event
that a foreign lessee defaults.
<page>

Leases with foreign lessees are subject to risks related to the economy of the
country or region in which such lessee is located, which may be weaker than the
U.S. economy. On the other hand, a foreign economy may remain strong even though
the U.S. economy does not. A foreign economic downturn may impact a foreign
lessee's ability to make lease payments, even though the U.S. and other
economies remain stable. Furthermore, foreign lessees are subject to risks
related to currency conversion fluctuations. Although the Company's current
leases are all payable in U.S. dollars, the Company may agree in the future to
leases that permit payment in foreign currency, which would subject such lease
revenue to monetary risk due to currency fluctuations. Even with U.S.
dollar-denominated lease payment provisions, the Company could still be affected
by a devaluation of the lessee's local currency which would make it more
difficult for a lessee to meet its U.S. dollar-denominated lease payments,
increasing the risk of default of that lessee, particularly if that carrier's
revenue is primarily derived in the local currency.

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 decline substantially.

Competition. The aircraft leasing industry is highly competitive. The Company
competes 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 is competitive because of JMC's experience and operational efficiency in
identifying and obtaining financing for the transaction types desired by
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 the major air carriers, is not
well served by the Company's larger competitors in the aircraft industry. JMC
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,
however, 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, may be named in a suit claiming damages for injuries or damage to
property caused by its assets. As a triple net lessor, the Company is generally
protected against such claims, since the lessee would be responsible for, insure
against and indemnify the Company for, such claims. Further, some protection may
be provided by the United States Aviation Act with respect to its aircraft
assets. It is, however, not clear to what extent such statutory protection would
be available to the Company and such act may not apply to aircraft operated in
foreign countries. Also, although the Company's leases generally require a
lessee to insure against likely risks, there may be certain cases where the loss
is not entirely covered by the lessee or its insurance. Though this is a remote
possibility, 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, as well as
a potential claim directly against the Company.

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 is subject to certain risks. First, some of the lessees in the regional air
carrier market are 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. Leasing transactions with these types of lessees result
in a generally higher lease rate on aircraft, but may entail higher risk of
default or lessee bankruptcy. The Company evaluates the credit risk of each
lessee carefully, and attempts to obtain a third party guaranty, letters of
credit or other credit enhancement, if it deems them 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 in the United States.

<page>

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 1.5 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.



<PAGE>



Item 3. Controls and Procedures

An evaluation was performed under the supervision and with the participation of
the Company's management, including the Chief Executive Officer (CEO) and Chief
Financial Officer (CFO), of the effectiveness of the design and operation of the
Company's disclosure controls and procedures within 90 days before the filing
date of this quarterly report. Based on that evaluation, the Company's
management, including the CEO and CFO, concluded that the Company's disclosure
controls and procedures were effective. There have been no significant changes
in the Company's internal controls or in other factors that could significantly
affect internal controls subsequent to their evaluation.

                                     PART II

                                OTHER INFORMATION

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

(a)      Exhibits.

                   Exhibit
                   Number                                  Description

                    3.1*     Amended and Restated Bylaws of the Company dated
                             January 22, 1999.

                    3.2*     Certificate of Designation of the Company dated
                             April 15, 1998.

                    3.3**    Amended and Restated Stockholder  Rights Agreement
                             dated January 22, 1999.

                    4.1      Reference is made to Exhibits 3.1, 3.2 and 3.3.

                    99.1     Certification of Neal D. Crispin, Chief Executive
                             Officer, pursuant to Section 906 of the
                             Sarbanes-Oxley Act of 2002.

                    99.2     Certification of Toni M. Perazzo, Chief Financial
                             Officer, pursuant to Section 906 of the
                             Sarbanes-Oxley Act of 2002.

----------

* Incorporated by reference to the same numbered exhibit previously filed with
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998.

** Incorporated by reference to Exhibit 1 previously filed with the Company's
Form 8-A/A filed with the Securities and Exchange Commission on February 4,
1999.

(b)      Reports on Form 8-K.

Report on Form 8-K filed August 7, 2002, as amended by Form 8-KA on August 19,
2002 disclosing the termination of the Company's former auditors, Arthur
Andersen LLP, and the engagement of PricewaterhouseCoopers LLP as the Company's
new auditors.




<PAGE>



                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                AEROCENTURY CORP.


Date:    November 14, 2002             By:    /s/ Toni M. Perazzo
                                              -------------------------------
                                              Toni M. Perazzo

                                       Title: Senior Vice President-Finance and
                                              Chief Financial Officer




<PAGE>



                                  CERTIFICATION


I, Neal D. Crispin, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of AeroCentury Corp.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;
b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
c)   presented in this quarterly report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;
5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):
a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and
b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and
6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002                    /s/ Neal D. Crispin
                                            -----------------------
                                            Neal D. Crispin
                                            Chief Executive Officer




<PAGE>



                                  CERTIFICATION


I, Toni M. Perazzo, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of AeroCentury Corp.;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a)   designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;
b)   evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
c)   presented in this quarterly report our conclusions about the effectiveness
     of the disclosure controls and procedures based on our evaluation as of the
     Evaluation Date;
5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):
a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and
b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and
6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  November 14, 2002                    /s/ Toni M. Perazzo
                                            ------------------------
                                            Toni M. Perazzo
                                            Chief Financial Officer


<PAGE>





                                                                    Exhibit 99.1

                                AEROCENTURY CORP.

                    Certification of Chief Executive Officer
                  pursuant to 18 U.S.C. Section 1350 as adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


In connection with this quarterly report of AeroCentury Corp. (the "Company") on
Form 10-QSB for the period ended September 30, 2002 (the "Report"), I, Neal D.
Crispin, Chief Executive Officer of the Company, hereby certify as of the date
hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United
States Code, that to the best of my knowledge:

              (1) the Report fully complies with the requirements of Section
              13(a) or 15(d), as applicable, of the Securities Exchange Act of
              1934, and

              (2) the information contained in the Report fairly presents, in
              all material respects, the financial condition and results of
              operations of the Company at the dates and for the periods
              indicated.



Date: November 14, 2002             /s/  Neal D. Crispin
                                    -----------------------
                                    Neal D. Crispin
                                    Chief Executive Officer



<PAGE>



                                                                    Exhibit 99.2

                                AEROCENTURY CORP.

                    Certification of Chief financial Officer
                  pursuant to 18 U.S.C. Section 1350 as adopted
            pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


In connection with this quarterly report of AeroCentury Corp. (the "Company") on
Form 10-QSB for the period ended September 30, 2002 (the "Report"), I, Toni M.
Perazzo, Chief Financial Officer of the Company, hereby certify as of the date
hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United
States Code, that to the best of my knowledge:

              (1) the Report fully complies with the requirements of Section
              13(a) or 15(d), as applicable, of the Securities Exchange Act of
              1934, and

              (2) the information contained in the Report fairly presents, in
              all material respects, the financial condition and results of
              operations of the Company at the dates and for the periods
              indicated.



Date: November 14, 2002             /s/ Toni M. Perazzo
                                    -----------------------
                                    Toni M. Perazzo
                                    Chief Financial Officer