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 June 30, 2001

[ ] 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 August 13, 2001 the Issuer has 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

Item 1.       Financial Statements

                                AeroCentury Corp.
                           Consolidated Balance Sheet

<TABLE>
<CAPTION>

                                     ASSETS
<S>                                                                               <C>
                                                                                      June 30,
                                                                                        2001

Assets:
     Cash and cash equivalents                                                    $       972,570
     Deposits                                                                           7,501,180
     Accounts receivable                                                                  413,510
     Aircraft and aircraft engines on operating leases,
        net of accumulated depreciation of $14,466,700                                 58,991,170
     Note receivable                                                                       93,120
     Prepaid expenses and other                                                           607,250
                                                                                  ---------------

Total assets                                                                      $    68,578,800
                                                                                  ===============


                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
     Accounts payable and accrued expenses                                        $       828,700
     Notes payable and accrued interest                                                38,003,080
     Maintenance reserves and accrued costs                                             6,450,230
     Security deposits                                                                  1,766,440
     Prepaid rent                                                                         315,600
     Deferred taxes                                                                     3,037,930
                                                                                  ---------------

Total liabilities                                                                      50,401,980
                                                                                  ---------------

Shareholders' equity:
     Preferred stock, $.001 par value, 2,000,000 shares
        authorized, no shares issued and outstanding                                            -
     Common stock, $.001 par value, 3,000,000 shares
        authorized, 1,606,557 shares issued                                                 1,610
     Paid in capital                                                                   13,821,200
     Retained earnings                                                                  4,858,080
                                                                                  ---------------
                                                                                       18,680,890
     Treasury stock at cost, 63,300 shares                                              (504,070)
                                                                                  ---------------

Total shareholders' equity                                                             18,176,820
                                                                                  ---------------

Total liabilities and shareholders' equity                                        $    68,578,800
                                                                                  ===============

</TABLE>

The accompanying notes are an integral part of this statement.


<PAGE>


                                AeroCentury Corp.
                        Consolidated Statements of Income
<TABLE>
<CAPTION>

                                          For the Six Months Ended June 30,    For the Three Months Ended June 30,
<S>                                     <C>                 <C>                 <C>                <C>
                                               2001             2000                2001                 2000
                                               ----             ----                ----                 ----
Revenues:

     Rent income                        $     5,391,420     $     5,216,600     $     2,632,330    $      2,612,560
     Other income                               184,350             183,630              73,510             109,460
                                        ---------------     ---------------     ---------------    ----------------

                                              5,575,770           5,400,230           2,705,840           2,722,020
                                        ---------------     ---------------     ---------------    ----------------
Expenses:

     Management fees                            890,810             826,720             442,800             411,020
     Depreciation                             1,395,400           1,282,110             697,700             641,060
     Interest                                 1,564,020           1,496,700             723,900             751,620
     Maintenance                               (12,130)                   -            (14,270)                   -
     Professional fees and
       general and administrative               221,400             314,350             112,400             159,940
                                        ---------------     ---------------     ---------------    ----------------

                                              4,059,500           3,919,880           1,962,530           1,963,640
                                        ---------------     ---------------     ---------------    ----------------

Income before taxes                           1,516,270           1,480,350             743,310             758,380

Tax provision                                   502,130             521,830             238,550             257,700
                                        ---------------     ---------------     ---------------    ----------------

Net income                              $     1,014,140     $       958,520     $       504,760    $        500,680
                                        ===============     ===============     ===============    ================

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

Basic earnings per share                $          0.66     $          0.62     $          0.33    $           0.32
                                        ===============     ===============     ===============    ================

</TABLE>

The accompanying notes are an integral part of this statement.





<PAGE>


                                AeroCentury Corp.
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                          For the Six Months Ended June 30,
<S>                                                                  <C>                       <C>
                                                                             2001                    2000
                                                                             ----                    ----

Net cash provided by operating activities                            $     1,233,350           $     1,722,500

Investing activity -
   Purchase of aircraft and aircraft engines                               (275,380)                  (50,480)
                                                                     ---------------           ---------------
Net cash used by investing activities                                      (275,380)                  (50,480)

Financing activity -
   Repayment of notes payable                                            (3,169,870)                 (632,820)
                                                                     ---------------           ---------------
Net cash used by financing activities                                    (3,169,870)                 (632,820)

Net (decrease)/increase in cash and cash equivalents                     (2,211,900)                 1,039,200

Cash and cash equivalents, beginning of period                             3,184,470                 1,251,730
                                                                     ---------------           ---------------

Cash and cash equivalents, end of period                             $       972,570           $     2,290,930
                                                                     ===============           ===============

</TABLE>

The accompanying notes are an integral part of this statement.


<PAGE>


                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

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. 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 August 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.

 (b)     Capitalization

         On April 17, 1998, in connection with the adoption of a shareholder
rights plan, the Company filed a Certificate of Designation, designating the
rights, preferences and privileges of a new Series A Preferred Stock. Pursuant
to the plan, the Company issued rights to its shareholders of record as of April
23, 1998, entitling each shareholder to the right to purchase one one-hundredth
of a share of Series A Preferred Stock for each share of Common Stock held by
the shareholder. Such rights are exercisable only under certain circumstances
concerning a proposed acquisition or merger of the Company.

         On October 23, 1998, the Company's Board of Directors adopted a stock
repurchase plan, granting management the authority to purchase 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 purchased 63,300 shares in total and has not
purchased 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 June 30, 2001, the Company held security deposits of $1,766,440,
refundable maintenance reserves received from lessees of $3,494,190 and
non-refundable maintenance reserves of $2,240,550.

         The Company's leases are typically structured so that if any event of
default occurs under the lease, the Company may apply all or a portion of the
lessee's security deposit to cure such default. If such an 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.
<PAGE>


                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

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

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

         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. 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. 121, "Accounting for the Impairment of Long-lived Assets and Long-lived
Assets to Be Disposed Of," 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 June 30, 2001, the Company had
accrued costs of approximately $528,000 related to three of its aircraft.



<PAGE>




                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

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

(h)      Income Taxes

         The Company follows the liability method of accounting for income taxes
as required by the provisions of SFAS No. 109, 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 certain reported amounts, disclosures and
contingent assets and liabilities. Accordingly, actual results could differ from
those estimates.

(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 six
months ended June 30, 2001 and 2000.

(l)      Recent Accounting Pronouncements

         SFAS No. 137, which amended the effective date of SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, was issued in June
1999. The Company adopted SFAS No. 133 on January 1, 2001. This statement
establishes accounting and reporting standards requiring that all derivative
instruments are recorded on the balance sheet as either an asset or a liability,
measured at fair value. The statement requires that changes in the derivative's
fair value be recognized currently in earnings unless specific hedge accounting
criteria are met and such hedge accounting treatment is elected. Because the
Company does not hold any derivatives as defined in SFAS No. 133, the adoption
of SFAS No. 133 did not have a material impact on its results of operations or
financial position.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
("SAB 101"). SAB 101, as amended, summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue recognition in
financial statements. SAB 101 was adopted by the Company in 2000. The adoption
of the provisions of SAB 101 did not have a material effect on the Company's
results of operations or financial position.



<PAGE>





                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

2.       Aircraft and Aircraft Engines On Operating Leases

         At June 30, 2001, the Company owned three deHavilland DHC-8s, two
deHavilland DHC-7s, three deHavilland DHC-6s, one Fairchild Metro III, three
Shorts SD 3-60, six Fokker 50s, two Saab 340As and 26 turboprop engines, one of
which is held in inventory as a spare and is not subject to a lease or to
depreciation. The Company did not acquire any aircraft during the first six
months of 2001, but did capitalize a total of $275,380 of equipment added to
three aircraft.

         In 2001, the Company and the lessee of two of the Company's DHC-6
aircraft agreed to the terms pertaining to the early termination of the leases
for the two aircraft. Under the agreement, the lessee paid all rent and reserves
through the return dates in April 2001, and performed certain maintenance
procedures prior to such return. At the same time, the Company reversed the
$66,000 allowance against a portion of the receivables it had recorded at
December 31, 2000. Both aircraft have been re-leased to a regional airline.
Prior to delivery of the aircraft, however, the Company incurred approximately
$7,000 of maintenance work in addition to estimates accrued during 2000. In
addition, the Company capitalized approximately $36,000 of equipment added to
the aircraft.

         The lease for one of the Company's two DHC-7 aircraft has been extended
from September 30, 2000 to its pre-return inspection completion. The inspection
was completed and the aircraft was returned during July. The Company is
currently seeking re-lease or sale opportunities for both DHC-7 aircraft.

         At the time of purchase, one of the Company's Shorts SD 3-60 aircraft
was subject to a 48-month lease, expiring in March 2002, with a British regional
airline. The original lease, entered into in 1998, did not require that the
lessee pay maintenance reserves based on usage because, at the time, the lessee
was considered creditworthy. Subsequently, the airline experienced financial
difficulties and, on February 24, 2000, filed for reorganization. The lessee
continued to operate the aircraft, and, under the reorganization plan, the
lessee agreed to continue leasing the Company's aircraft on a month to month
basis, at the same rent. Upon its return to the Company during the fourth
quarter of 2000, the Company was able to inspect the aircraft in order to
identify its maintenance requirements and estimate the funds needed to complete
such maintenance. Based on this inspection, the Company accrued $521,000 of
maintenance costs in 2000, related to hours flown prior to the reorganization
filing, which the Company did not anticipate receiving from the lessee or from
the reorganization administrator. During the second quarter of 2001, the Company
received approximately $9,300 of rent which had not been paid by the lessee
during the fourth quarter of 2000 and which the Company had not accrued. In
addition, the reorganization administrator paid approximately $210,000 for
maintenance work on the aircraft. Therefore, the Company reversed $210,000 of
its maintenance accrual made during 2000. During the second quarter, the
aircraft was re-leased to a new lessee. In connection with the delivery of the
aircraft to the new lessee, however, the Company incurred approximately $166,000
of additional maintenance expenses. In addition, based on its periodic review of
the adequacy of maintenance reserves, the Company accrued an additional $50,000
of maintenance expense for the aircraft. Therefore, at June 30, 2001, the
reserve balance for this lessee was $361,000. The Company also capitalized
approximately $239,000 of equipment added to the aircraft.

         The leases for the Company's other two Shorts SD 3-60 aircraft were
extended from March 31, 2001 to their pre-return inspection completion. The
inspections were completed and the aircraft were returned during May. The
Company is currently seeking re-lease or sale opportunities for both aircraft.

         The lease for one of the Company's Fokker 50 aircraft has been extended
from June 30, 2001 to December 31, 2001.


<PAGE>


                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

2.       Aircraft and Aircraft Engines On Operating Leases (continued)

         During June 2001, one of the Company's deHavilland DHC-8 aircraft
sustained significant damage while landing. The lessee is continuing to pay rent
under the lease and the Company is negotiating a settlement with the lessee and
the insurance company.

3.       Note Receivable

         At June 30, 2001, 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 to 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 will be repaid through increased
rent during the remainder of the lease term, which expires on April 30, 2003.

4.       Notes Payable and Accrued Interest

         The Company had a $35 million revolving credit facility, which expired
on June 30, 2000. On June 28, 2000, all outstanding principal and accrued
interest was paid and the Company signed an agreement with a new agent for a
revolving line of credit totaling $50 million. The new facility, which expires
on June 28, 2003, bears interest, at the Company's option, at either (i) prime
or (ii) LIBOR plus a margin ranging from 200 to 250 basis points, depending on
certain financial ratios. 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 June 30, 2001, the Company was in compliance
with all such covenants. As of June 30, 2001, $27,225,000 was outstanding under
the credit facility, and interest of $12,660 was accrued, using a combination of
prime and LIBOR rates.

         During November 1999 the Company acquired two aircraft using cash and
bank financing separate from its credit facility, as discussed in Note 1(a). The
financing consisted of a note in the amount of $9,061,000, due February 15,
2002, which bears fixed interest at 8.04%. 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 June 30, 2001 was $7,523,820.
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. 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 June 30, 2001 was $3,232,600
and interest of $9,000 was accrued. As of June 30, 2001, the Company was in
compliance with all covenants of the loan agreements pertaining to the financing
of these three aircraft.





<PAGE>


                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

5.       Income Taxes

         The items comprising income tax expense are as follows:
<TABLE>
<CAPTION>

                                                                               For the Six Months Ended June 30,
<S>                                                                          <C>                 <C>
                                                                                    2001                2000
                                                                                    ----                ----
         Current tax provision:
              Federal                                                        $         99,870    $        81,820
              State                                                                     1,890             11,290
              Foreign                                                                  79,160             79,160
                                                                             ----------------    ---------------

              Current tax provision                                                   180,920            172,270
                                                                             ----------------    ---------------

         Deferred tax provision/(benefit):
              Federal                                                                330,930             342,140
              State                                                                   (9,720)              7,420
                                                                             ----------------    ---------------

              Deferred tax provision                                                  321,210            349,560
                                                                             ----------------    ---------------

         Total provision for income taxes                                    $        502,130    $       521,830
                                                                             ================    ===============

         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:
                                                                               For the Six Months Ended June 30,
                                                                                    2001                2000
                                                                                    ----                ----
         Income tax expense at
               statutory federal income tax rate                             $        515,530    $       503,320
         State taxes net of federal benefit                                            14,160             13,780
         Tax refunds                                                                 (15,470)                  -
         Other                                                                       (12,090)              4,730
                                                                             ----------------    ---------------

         Total income tax expense                                            $        502,130    $       521,830
                                                                             ================    ===============

         Temporary differences and carryforwards that gave rise to a significant
portion of deferred tax assets and liabilities as of June 30, 2001 are as
follows:
</TABLE>
<TABLE>
<S>                                                                          <C>

         Deferred tax assets:
              Organizational costs                                           $         23,140
              Maintenance reserves                                                    588,660
              Prepaid rent                                                            110,250
              Deferred maintenance                                                    368,620
              Other                                                                     1,670
                                                                             ----------------
                  Deferred tax assets                                               1,092,340
         Deferred tax liabilities:
              Depreciation on aircraft and engines                                 (3,839,560)
              Other                                                                  (290,710)
                                                                             ----------------

                  Net deferred tax liabilities                               $     (3,037,930)
                                                                             ================
</TABLE>
<PAGE>

                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                  June 30, 2001

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.

6.       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 $890,810 and $826,720 during the six months ended June 30, 2001 and
2000, respectively, and $442,800 and $411,020 during the quarters ended June 30,
2001 and 2000, respectively. Because the Company did not acquire any aircraft
during the first six months of 2001 or 2000, no acquisition fees were paid to
JMC. No remarketing fees were paid to JMC during the first six months of 2001 or
2000.

         Certain employees of JMC participate in an employee stock incentive
plan which grants options to purchase shares of the Company held by JHC. As of
June 30, 2001, 8,833 such options had been exercised.






<PAGE>



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

Forward-Looking Statements

Certain statements contained in this report and, in particular, the discussion
regarding the Company's beliefs, plans, objectives, expectations and intentions
contained in this "Item 2 -- Management's Discussion and Analysis or Plan of
Operation" section (particularly the "Outlook" section hereof) regarding: the
use, application and replenishment of lessee security deposits; the adequacy of
the Company's cash flow to meet interest rate increases under its revolving
credit facility; the adequacy of the Company's cash flow to meet ongoing
operational needs; the Company's ability to fund repayments under the credit
line in the event off-lease aircraft are not remarketed; the Company's ability
to remain in compliance with credit line covenants if off-lease aircraft are
remarketed; the Company's expectations regarding rent income and earnings for
fiscal year 2001; the unavailability of special purpose asset-based financing
for acquisitions; the Company's intention to repay a portion of the revolving
loans from proceeds of subsequent debt or equity financings; the slowing of
certain sectors of the aircraft industry; the supply of suitable transaction
opportunities for the Company; the use of proper asset and lessee selection to
reduce the impact of industry downturns; 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 the Company's
ability to obtain third party guaranties, letters of credit or other credit
enhancements from future lessees; are forward-looking statements. While the
Company believes that such statements are accurate, they are dependent upon
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 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 line agreement; the financial performance of the Company's
lessees and their compliance with rental, maintenance and return conditions
under their respective leases; the Company's ability to maintain the collateral
base to prevent required repayments under the credit line; the availability of
suitable aircraft acquisition transactions in the regional aircraft market; and
future trends and results which cannot be predicted with certainty. The
Company's actual results could differ materially from those discussed in such
forward-looking statements. The cautionary statements made in this Report should
be read as being applicable to all related forward-looking statements wherever
they appear in this Report. Factors that could cause or contribute to such
differences also include those discussed below in the section entitled "Factors
that May Affect Future Results."

Results of Operations

Revenues

The Company had revenues of $5,575,770 and $5,400,230 and net income of
$1,014,140 and $958,520 for the six months ended June 30, 2001 and 2000,
respectively, and revenues of $2,705,840 and $2,722,020 and net income of
$504,760 and $500,680 for the quarters ended June 30, 2001 and 2000,
respectively.

Rent income is approximately $175,000 and $20,000 higher in the six month and
three month periods of 2001 versus 2000 primarily due to the purchases of
additional aircraft on lease during the latter half of 2000, which effect was
only partially offset by a decrease in rent from assets sold during the fourth
quarter of 2000 and assets which came off-lease during the second quarter of
2001.

Other income is lower by approximately $36,000 for the three month period of
2001 versus 2000 because of lower interest rates and lower cash balances.

Expense Items

Management fees were approximately $64,000 and $32,000 higher, in the six month
and three month periods, respectively, of 2001 versus 2000 because of the
aircraft acquisitions noted above, net of the aircraft sold during 2000. Such
acquisitions had a similar effect on depreciation, which was approximately
$113,000 and $57,000 higher in the six month and three month periods,
respectively, in 2001 versus 2000 and on interest expense which was
approximately $67,000 higher in the six month period of 2001. Interest expense
was approximately $28,000 lower in the three month period of 2001 versus 2000
because of lower interest rates during 2001.

The Company recorded negative maintenance expense during 2001 as a result of the
effect of the reversal of certain expenses accrued during the fourth quarter of
2000, which more than offset expenses incurred during 2001. Professional fees
and general and administrative expenses were lower by approximately $93,000 and
$48,000 in the six month and three month periods, respectively, of 2001 versus
2000 primarily because of lower legal and accounting expenses, the effect of
which was partially offset by higher insurance expense for off-lease aircraft.

The Company's effective tax rates in the six month and three month periods ended
June 30, 2001 were approximately 33% and 32%, respectively, versus 35% and 34%
for the same periods of 2000. 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 had a $35 million revolving credit
facility, which expired on June 30, 2000. On June 28, 2000, all outstanding
principal and accrued interest was paid and the Company signed an agreement with
a new agent for a revolving line of credit totaling $50 million. The new
facility, which expires on June 28, 2003, bears interest, at the Company's
option, at either (i) prime or (ii) LIBOR plus a margin ranging from 200 to 250
basis points, depending on certain financial ratios. 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 June 30, 2001,
the Company was in compliance with all such covenants. As of June 30, 2001,
$27,225,000 was outstanding under the credit facility, and interest of $12,660
was accrued, using a combination of prime and LIBOR rates. Because of the
collateral limitations discussed below in "Outlook", approximately $3,600,000 of
the unused portion of the credit facility was available for borrowing at June
30, 2001.

The prime rate increased by 25 basis points in each of February, March and May
2000. The prime rate then decreased by 50 basis points in each of January,
February, March, April and May 2001 and 25 basis points in June 2001. The
majority of the Company's borrowings continue to be financed using one-month
LIBOR rates, which have decreased since the Company began financing pursuant to
such rates during June 1999. The Company believes it has adequate cash flow to
meet any increases in interest rates applicable to its credit line obligations.
A sudden, severe and prolonged increase in such rates, however, could adversely
affect the Company's cash flow by increasing the Company's interest expense
almost immediately. Any increase in such interest rates is likely to be the
result of increased prevailing interest rates. Increased prevailing interest
rates generally result in higher lease rates as well, and so, an increase in
credit line payments may be offset at least partially in the future by higher
revenues on new leases and renewals of leases. A continued decline in interest
rates, however, would have a positive effect on the Company's results, which
effect may be partially offset by a corresponding decrease in lease rates.

During November 1999, the Company acquired two aircraft using cash and bank
financing separate from its credit facility. The financing consists of a note in
the amount of $9,061,000, due February 15, 2002, which bears fixed interest at
8.04%. Payments due under the note consist of monthly principal and interest and
a balloon principal payment due on the maturity date.

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. Payments due under the note consist of
monthly principal and interest and a balloon principal payment due on the
maturity date.

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
between July 2001 and June 2004. 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.

The Company's cash flow from operations for the six months ended June 30, 2001
versus 2000 decreased by approximately $489,000. The decrease from year to year
was due to the effect of the change in accounts payable and accrued expenses,
prepaid rent, security deposits, maintenance reserves and accrued costs, and
deferred taxes. The effect of these changes was only partially offset by an
increase in net income, excluding depreciation, and the positive effect of the
change in deposits, accounts receivable, notes receivable, prepaid expenses and
other assets, and accrued interest on notes payable during 2001 versus 2000.

Specifically, the Company's cash flow from operations for the six months ended
June 30, 2001 consisted of net income of $1,014,140 and adjustments consisting
primarily of depreciation of $1,395,400, an increase in deposits of $637,610, a
decrease in accounts receivable of $157,650, a decrease in accounts payable and
accrued expenses of $1,056,640, and increases in maintenance reserves and
accrued costs and deferred taxes of $140,030 and $321,210, respectively.

Specifically, the Company's cash flow from operations for the six months ended
June 30, 2000 consisted of net income of $958,520 and adjustments consisting
primarily of depreciation of $1,282,110, increases in accounts receivable,
deposits, and prepaid expenses and other assets of $125,090, $893,730 and
$180,010, respectively, decreases in accounts payable and accrued expenses and
accrued interest on notes payable of $401,720 and $217,560, respectively, a net
increase in deferred taxes of $525,260 and an increase of $767,160 in
maintenance reserves collected from lessees.

During 2001, the decrease in cash flow provided by financing activities was a
result of principal repayments on the Company's indebtedness. The only cash flow
used for investing activities during the first six months of both 2001 and 2000
was for equipment added to aircraft already owned by the Company.

Outlook

Under the provisions of the Company's revolving credit facility, aircraft which
are off-lease or coming off-lease within a certain period of time limit the
amount of collateral which is required to secure borrowings under the facility.
Although the Company successfully remarketed four aircraft during the second
quarter, the six aircraft which are off lease or will come off lease by December
31, 2001 precluded and continue to preclude the Company from utilizing the
entire $23 million of unused credit on its facility at June 30, 2001. Further,
as time passes, the re-lease or sale of these aircraft will be required in order
for the Company to remain in compliance with its line of credit covenants. If
all the aircraft that are currently off lease or due to be returned to the
Company upon termination of leases during 2001 remain unleased, the Company will
be required to make additional repayments on its revolving credit facility
beginning November 30, 2001. It is unlikely that the Company would have
sufficient cash flow to fund the repayment which would be necessary on December
31, 2001, if this worst-case scenario were to occur.

If, however, the Company is able to re-lease some or all of such aircraft before
year end, and there are no other unanticipated events with respect to other
aircraft currently on lease, the Company will be able to remain in compliance
with its covenants and have sufficient collateral to permit additional
borrowings. The amount of such borrowings would be dependent upon the net book
value of the re-leased assets.

While the Company has previously used special purpose asset-based financing for
the acquisition of three aircraft and may have such financing available again in
the future, the revolving credit facility is currently the Company's only
funding source for new acquisitions because the Company does not have sufficient
cash flow to fund the equity portion of a special purpose financing. Therefore,
the Company's management has made remarketing of off-lease aircraft the focus of
its efforts in 2001 in order to resolve the credit line limitations discussed
above.

In addition, a balloon principal payment in connection with the special purpose
financing of two aircraft is due at the time the leases expire during the first
quarter of 2002. Funding the payment or extending the financing will be
dependent on the Company's ability to sell or re-lease the aircraft which serve
as collateral.

Because of the loss of revenue from assets sold during the fourth quarter of
2000, which has been only partially offset by acquisitions made during the
latter half of 2000, and because of the lease terminations and expirations
discussed above, it is likely that rent income for the year in total will be
somewhat lower than in 2000. Projected earnings for the remainder of 2001,
although positive, will likely be lower than 2000 unless the Company sells
assets at a gain during the remainder of the year.

Factors that May Affect Future Results

Risks of Debt Financing. The Company's use of acquisition financing under its
revolving credit facility subjects the Company to increased risks of leveraging.
The revolving 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 repay a portion of the revolving loans from proceeds of
subsequent term debt or equity financings. Such replacement financing would
likely provide the Company with more favorable long-term repayment terms and
also 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.

As discussed above, in "Liquidity and Capital Resources," the Company's ability
to draw on its $50 million credit line is dependent upon the status of its asset
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 line will be a critical factor to enable
the Company to continue its asset and revenue growth.

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 substantial risks. Demand for lease or
purchase of the assets depends on the economic condition of the airline industry
which is, in turn, highly 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. The
demand for and value of many types of older aircraft in the recent past has been
depressed by such factors as airline financial difficulties, increased fuel
costs, the number of new aircraft on order and the number of older aircraft
coming off-lease. The Company's expected concentration in a limited number of
airframe and aircraft engine types (generally, turboprop equipment) subjects the
Company to economic risks if those 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.

General Economic Conditions. The market for used aircraft has been cyclical, and
usually reflects economic conditions and the strength of the travel and
transportation industry. The Company believes that the air transport industry is
experiencing some slowing in certain sectors. A weaker domestic and
international economic situation could lead to less air travel, less revenue,
and less demand for aircraft capacity by the air carriers who are the Company's
customers. In addition, at any time, the market for used aircraft may be
adversely affected by such factors as airline financial difficulties, higher
fuel costs, and improved availability and economics of new replacement aircraft.

The last two years have seen a dramatic rise in the cost of fuel. Because of the
current strong demand for air transport, some carriers have been able to pass
the increased cost on to passengers, while others have experienced decreased
profitability. If fuel prices remain higher, this could weaken the aircraft and
air transport industry generally.

The Company believes that the current aircraft market still provides transaction
opportunities for the Company, primarily in overseas markets, as well as
domestically. There are currently some disparities between geographic regions
with respect to the condition of the air transport industry, with certain areas
of South America, in particular, experiencing economic difficulties. There have
also been disruptions in the currency markets in certain geographic areas. To
the extent that such disruptions adversely affect a region's economic growth,
suitable transactions may be more difficult for the Company to find in that
region and the Company's lessees in that area may be adversely affected.

An adverse change in the global air travel industry could result in reduced
carrier revenue and excess capacity and increase the risk of failure of some
weaker regional air carriers. While the Company believes that with proper asset
and lessee selection in the current climate, as well as during such downturns,
the impact of such changes on the Company can be reduced, there is no assurance
that the Company's business will escape the effects of such a global downturn,
or a regional downturn in an area where the Company has placed a significant
amount of its assets.

Reliance on JMC. All management of the Company is performed by JMC under a
management agreement which is in its fourth 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.

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 do not take up the entire useful life of
an asset. The Company's ability to recover its purchase investment in an asset
subject to an operating lease is dependent upon the Company's ability to
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 still be further adversely affected by a
declaration of bankruptcy by a defaulting lessee.

International Risks. The Company has focused recently 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.

Leases with foreign lessees are subject to risks related to the economy of the
country or region in which such lessee is located, even if the U.S. economy
remains strong. 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
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 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
financing 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 no assurance that the lack of significant
competition from the larger aircraft leasing companies will continue or that the
reputation of JMC will continue to be strong in this market segment and benefit
the Company.

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

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.

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>


                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on August 13, 2001.


                                AEROCENTURY CORP.


                         By:    /s/ Neal D. Crispin
                                Neal D. Crispin
                         Title: President


                                /s/ Toni M. Perazzo
                                Toni M. Perazzo
                         Title: Senior Vice President - Finance and Secretary
                                the Registrant (Principal Financial and
                                Accounting Officer)