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 March 31, 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  May 14,  2002  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

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 adequacy of the Company's cash flow to make additional monthly
repayments on the Company's revolving credit facility through December 31, 2002;
the adequacy of the Company's cash flow to meet reasonably expected increases in
interest rates applicable to the Company's credit facility obligations; the
Company's expectation that certain aircraft will be returned to the Company
during the second quarter of 2002; and management's belief that the Company will
have adequate cash flow to meet its on-going operational needs, including
compensation for return conditions on two aircraft expected to be returned in
the second quarter; (ii) in Item 2 "Management's Discussion and Analysis or Plan
of Operation -- Outlook," statements regarding the Company's belief that it will
have sufficient flexibility to lease assets for terms which will enable the
Company to maintain compliance with its credit facility covenants; the Company's
anticipation that it will have sufficient cash flow to fund any necessary
principal payments on its credit facility through December 2002; the Company's
anticipation that the proceeds from the sale of any of the Company's aircraft
would be used to pay down the related principal balance on the Company's credit
facility while excess cash could be used toward acquisitions; management's
primary focus on efforts to remarket off-lease aircraft; the Company's
expectation that certain aircraft will be returned to the Company in the second
quarter of 2002; and the Company's belief that any sale of certain aircraft
would generate sufficient funds to pay the balloon payment due on its special
purpose asset-based bank financing; the Company's expectation regarding rental
income and net income for 2002 versus 2001; and (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 adequacy of the Company's
cash flow 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 and the likelihood that such replacement financing
would provide the Company with more favorable long-term repayment terms and
permit the Company to make further borrowings under the revolving credit
facility equal to the amount of revolving debt refinanced; 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
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 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.
                           Consolidated Balance Sheet

<table>
<S>   <c>                                                               <C>

                                     ASSETS
                                                                                      Unaudited
                                                                                      March 31,
                                                                                        2002
                                                                                      -----------
Assets:
     Cash and cash equivalents                                                    $     1,852,040
     Deposits                                                                           6,474,700
     Accounts receivable                                                                  858,900
     Aircraft and aircraft engines on operating leases,
        net of accumulated depreciation of $16,099,540                                 55,871,280
     Note receivable                                                                       56,080
     Prepaid expenses and other                                                           743,300
                                                                                  ---------------
Total assets                                                                      $    65,856,300
                                                                                  ===============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
     Accounts payable and accrued expenses                                        $     1,202,720
     Notes payable and accrued interest                                                34,978,930
     Maintenance reserves and accrued costs                                             5,034,120
     Security deposits                                                                  1,824,760
     Prepaid rent                                                                         190,360
     Deferred taxes                                                                     3,464,180
                                                                                  ---------------
Total liabilities                                                                      46,695,070
                                                                                  ---------------
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                                                                  5,842,490
                                                                                       19,665,300
                                                                                  ---------------
     Treasury stock at cost, 63,300 shares                                              (504,070)
                                                                                  ---------------
Total stockholders' equity                                                             19,161,230
                                                                                  ---------------
Total liabilities and stockholders' equity                                        $    65,856,300
                                                                                  ===============
The accompanying notes are an integral part of these statements.

</table>
<PAGE>



                                AeroCentury Corp.
                        Consolidated Statements of Income

<table>
<S>     <C>                                                                     <C>                     <C>

                                                                              For the Three Months Ended March 31,
                                                                                      2002                2001
                                                                                     ----------          ----------
                                                                                              Unaudited
Revenues:

     Rent income                                                                $     2,193,630    $      2,759,090
     Other income                                                                        31,460             110,840
                                                                                ---------------    ----------------
                                                                                      2,225,090           2,869,930
                                                                                ---------------    ----------------
Expenses:

     Management fees                                                                    420,660             448,010
     Depreciation                                                                       680,710             697,700
     Interest                                                                           467,510             843,870
     Maintenance                                                                         76,080                   -
     Professional fees and general and administrative                                   128,750             107,390
                                                                                ---------------     ---------------
                                                                                      1,773,710           2,096,970
                                                                                ---------------     ---------------
Income before taxes                                                                     451,380             772,960

Tax provision                                                                           151,760             263,580
                                                                                ---------------    ----------------
Net income                                                                      $       299,620    $        509,380
                                                                                ===============    ================
Weighted average common shares outstanding                                            1,543,257           1,543,257
                                                                                ===============    ================
Basic earnings per share                                                        $          0.19    $           0.33
                                                                                ===============    ================

The accompanying notes are an integral part of these statements.



</table>

<PAGE>



                                AeroCentury Corp.
                      Consolidated Statements of Cash Flows

<table>
                                                                               For the Three Months Ended March 31,
<S><C>                                                                       <C>                     <C>
                                                                                        2002                2001
                                                                                     ----------          ----------
                                                                                             Unaudited

Net cash provided by operating activities                                       $       863,850    $         55,080

Investing activity -
   Purchase of aircraft and aircraft engines                                            (24,630)                  -
                                                                                ---------------    ----------------
 Net cash used in investing activity                                                    (24,630)                  -

Financing activities:
   Payments received on note receivable                                                  12,490              12,380
   Repayment of notes payable                                                        (1,679,830)         (1,932,250)
                                                                                ---------------    ----------------
Net cash used in financing activities                                                (1,667,340)         (1,919,870)

Net decrease in cash and cash equivalents                                              (828,120)         (1,864,790)

Cash and cash equivalents, beginning of period                                        2,680,160           3,184,470
                                                                                ---------------    ----------------
Cash and cash equivalents, end of period                                        $     1,852,040    $      1,319,680
                                                                                ===============    ================

The accompanying notes are an integral part of these statements.
</table>

<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 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. 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 March 31, 2002, the Company held security deposits of $1,824,760,
refundable maintenance reserves received from lessees of $2,378,250 and
non-refundable maintenance reserves of $2,271,690.



<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 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 March 31, 2002, the Company had
accrued maintenance costs of approximately $788,000 related to several of its
aircraft.
<page>

                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 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 ended
March 31, 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 Consolidated Financial Statements
                                 March 31, 2002

2.       Aircraft and Aircraft Engines On Operating Leases

         At March 31, 2002, the Company owned three 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, 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 or sell any aircraft during the first
three months of 2002, but did capitalize a total of $24,630 of equipment added
to two aircraft.

         During March 2002, one of the Company's Shorts SD 3-60 aircraft was
re-leased to an operator in the United Kingdom for a one-year term, with an
option to extend for a second year.

         During March 2002, the Company agreed to the terms for the lease of the
Company's two DHC-7 aircraft. The Company expects to deliver the aircraft to the
lessee during the second quarter of 2002.

         As discussed in Note 7, the lease for one of the Company's Fokker 50
aircraft has been extended and a second Fokker 50 aircraft, which had been off
lease, has been re-leased to the same lessee.

         The lease for the Company's Fairchild Metro III remains in effect from
its expiration date of March 30, 2002, until the pre-return inspection of the
aircraft is complete, which the Company expects to occur during the third
quarter of 2002.

         Under the terms provided therein, the leases for two of the Company's
other Fokker 50 aircraft remain in effect from their expiration date of January
13, 2002, until their pre-return inspections are complete, which is estimated to
occur during the second quarter of 2002; therefore, the lessee is continuing to
pay rent while the aircraft are being prepared for return. The Company has
conducted a preliminary inspection of the aircraft and concluded that certain
components will be in better condition than required by the return provisions of
the leases. In such a situation, the leases stipulate that the Company is
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.

3.       Note Receivable

         At March 31, 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.

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 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. The
changes are in effect through December 31, 2002. In return for granting such
changes, the Company's lenders changed 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.


<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2002

4.       Notes Payable and Accrued Interest (continued)

         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 March 31, 2002, the Company was in compliance with
all such covenants. The Company made a repayment on its revolving credit
facility in the amount of $1,400,000 during March 2002 because of certain
collateral borrowing base limitations and may be required to make additional
monthly repayments. As of March 31, 2002, $25,025,000 was outstanding under the
credit facility, and interest of $150,230 was accrued, using a combination of
prime and LIBOR rates.

         As discussed in Note 1, during 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. The balance
of the note at March 31, 2002 was $6,865,620 and interest of $11,020 was
accrued. 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 has agreed that the six month period will not
begin until the aircraft are returned and accepted by the Company because, under
the lease terms, the lessee continues to pay rent until redelivery. The Company
expects the aircraft to be returned during the second quarter of 2002. As of
March 31, 2002, the Company was in compliance with all covenants of the loan
agreements pertaining to the financing of these two aircraft.

         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 March 31, 2002 was $2,918,650
and interest of $8,400 was accrued. As of March 31, 2002, the Company was in
compliance with all covenants of the loan agreements pertaining to the financing
of this aircraft.

5.       Income Taxes

         The items comprising income tax expense are as follows:
<table>
                                                                             For the Three Months Ended March 31,
<S>      <c>  <c>                                                            <c>                 <c>
                                                                                     2002               2001
                                                                                 ------------     --------------
         Current tax provision:
              Federal                                                        $              -    $         7,660
              State                                                                     4,100              4,800
              Foreign                                                                  39,580             39,580
                                                                             ----------------    ---------------
              Current tax provision                                                    43,680             52,040
                                                                             ----------------    ---------------
         Deferred tax provision/(benefit):
              Federal                                                                 112,490            213,930
              State                                                                    (4,410)            (2,390)
                                                                             ----------------    ---------------
              Deferred tax provision/(benefit)                                        108,080            211,540
                                                                             ----------------    ---------------
         Total provision for income taxes                                    $        151,760    $       263,580
                                                                             ================    ===============
</table>
<page>
                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2002

5.       Income Taxes (continued)

         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 Three Months Ended March 31,

<S>      <c>  <c>                                                            <c>                 <c>
                                                                                       2002                2001
                                                                                 --------------   --------------
         Income tax expense at
               statutory federal income tax rate                             $        153,470    $       262,810
         State taxes net of federal benefit                                             3,480              7,400
         Tax rate differences                                                          (5,190)            (6,630)
                                                                             ----------------    ---------------
         Total income tax expense                                            $        151,760    $       263,580
                                                                             ================    ===============

         Temporary differences and carryforwards that gave rise to a significant
portion of deferred tax assets and liabilities as of March 31, 2002 are as
follows:

         Deferred tax assets:
              Organizational costs                                           $         11,510
              Maintenance reserves                                                    670,750
              Foreign tax credit carryover                                            106,780
              Deferred maintenance                                                    200,930
              Net operating loss carryover                                             33,430
              Prepaid rent and other                                                   66,460
                                                                             ----------------
                  Deferred tax assets                                               1,089,860
         Deferred tax liabilities:
              Depreciation on aircraft and aircraft engines                        (4,288,990)
              Other                                                                  (265,050)
                                                                             ----------------
                  Net deferred tax liabilities                               $     (3,464,180)
                                                                             ================
</table>
         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.       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 $420,660 and $448,010 during the three months ended March 31, 2002 and
2001, respectively. Because the Company did not acquire or sell any aircraft
during the first three months of 2002 or 2001, no acquisition or remarketing
fees were paid to JMC.


<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2002

6.       Related Party Transactions (continued)

         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
March 31, 2002, 37,833 such options had been exercised.

7.       Subsequent Events

         During May 2002, the lessee for two of the Company's Fokker 50 aircraft
extended one lease from April 30, 2002 to November 30, 2002, with an option to
extend for an additional year, and re-leased the second aircraft, which had been
off lease, for a one-year term.





<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. These accounting policies are stated in the notes to the
financial statements and relevant sections in this discussion and analysis.

Results of Operations

Revenues

The Company had revenues of $2,225,090 and net income of $299,620 for the three
months ended March 31, 2002 versus revenues of $2,869,930 and net income of
$509,380 for the three months ended March 31, 2001. Rent income was
approximately $565,000 lower in 2002 versus 2001 primarily due to the decrease
in rent from assets re-leased at lower rates and assets which came off lease
during 2001 and remained off lease during the first three months of 2002. Other
income was lower by approximately $79,000 during 2002 versus 2001 primarily due
to lower interest rates on lower cash balances.

Expense Items

Management fees, which are calculated on the net book value of the aircraft
owned by the Company, and depreciation were approximately $27,000 and $17,000
lower, respectively, in 2002 versus 2001 because the Company did not purchase
any aircraft during 2001 or the first three months of 2002. In addition, the
Company sold one aircraft during the fourth quarter of 2001. Interest expense
was approximately $376,000 lower in 2002 versus 2001 because of lower interest
rates and a lower average principal balance during 2002. Professional fees and
general administrative expense were approximately $21,000 higher in 2002,
primarily due to higher legal and insurance expense, the effect of which was
partially offset by decreases in certain other expense categories. Maintenance
expense was approximately $76,000 higher in 2002 versus 2001, due to maintenance
performed on one of the Company's aircraft in connection with its re-lease to a
new lessee during March 2002.

The Company's effective tax rate was approximately 34% in the first three months
of 2002 and 2001. The Company's tax rate is subject to changes in the mix of
domestic and foreign leased assets, the proportion 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 banks changed 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, or if
business results to 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 facility and, in accordance with the credit
agreement, the Company must maintain compliance with certain financial
covenants. The Company made repayments on its revolving credit facility in the
amount of $1,400,000 and $100,000 during March and April 2002, respectively,
because of certain collateral borrowing base limitations and may be required to
make additional monthly repayments. The Company believes it will have sufficient
cash to make such repayments through December 31, 2002. At March 31, 2002,
$25,025,000 was outstanding under the credit facility, and interest of $150,230
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 primary source of the Company's acquisition financing is the credit
facility, which carries a floating interest rate. The majority of the Company's
borrowings are financed using one-, three- or six-month LIBOR rates. The Company
believes it has adequate cash flow to meet reasonably expected 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
hedges. 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 remains 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.

During 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. The balance of the note at March 31, 2002 was
$6,865,620 and interest of $11,020 was accrued. 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, originally August 15, 2002.
However, because the lessee has not returned the aircraft and, under the terms
of the lease, is continuing to make rental payments, the bank has agreed that
the six month period will not begin until the aircraft are returned and accepted
by the Company. The Company expects the aircraft to be returned during the
second quarter of 2002. The note bears fixed interest at 8.04% through February
15, 2002 and a floating rate thereafter. The Company is in compliance with all
covenants of the loan agreements pertaining to the financing of these aircraft.
See "Outlook" below, for a discussion of the Company's prospects for these two
aircraft.

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 March 31, 2002 was $2,918,650
and interest of $8,400 was accrued. The Company is in compliance with all
covenants of the loan agreements 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 October 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, including the
$609,000 of compensation which will be payable to the lessee of two of the
Company's aircraft when they are returned, which is estimated to occur during
the second quarter of 2002. 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 three months ended March 31,
2002 versus 2001 increased by approximately $809,000. The increase from year to
year was due primarily to the effect of the change in deposits, accounts payable
and accrued expenses, and accrued interest on notes payable. The effect of these
changes was only partially offset by the negative effect of the change in net
income, accounts receivable, prepaid expenses and other assets, and deferred
taxes during 2002 versus 2001.

Specifically, the Company's cash flow from operations for the three months ended
March 31, 2002 consisted of net income of $299,620 and adjustments consisting
primarily of depreciation of $680,710, increases in accounts receivable, prepaid
expenses and other assets, accrued interest on notes payable, security deposits
and deferred taxes of $263,030, $92,040, $148,640, $106,990 and $108,080,
respectively, and decreases in deposits, accounts payable and accrued expenses,
maintenance deposits and accrued costs, and prepaid rent of $512,160, $439,410,
$175,040 and $22,830, respectively.

Specifically, the Company's cash flow from operations for the three months ended
March 31, 2001 consisted of net income of $509,380 and adjustments consisting
primarily of depreciation of $697,700, increases in deposits, security deposits,
and deferred taxes of $105,460, $119,970 and $211,550, respectively, and
decreases in accounts payable and accrued expenses, as well as maintenance
reserves and accrued costs, of $1,256,480 and $91,210, respectively.

The decrease in cash flow used by financing activities from year to year was a
result of lower principal repayments on the Company's indebtedness. The increase
in cash flow used for investing activities during 2002 was due to equipment
added to aircraft already owned by the Company, versus no such spending or
acquisitions during the first three months of 2001.

Outlook

Based on the revised terms of the 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. The Company anticipates having
sufficient cash flow to fund any necessary principal repayments through December
2002. If the Company elects to sell any of its aircraft, the Company anticipates
that the proceeds would be used to pay down the related principal balance and
excess cash, if any, could be used toward acquisitions.

The Company has previously used special purpose asset-based financing for the
acquisition of three aircraft. Currently, however, the Company does not have
sufficient cash flow to fund the equity portion of a special purpose financing.
Therefore, until such equity funding becomes available for special purpose
financing, the revolving credit facility is the Company's only funding source
for new acquisitions. Until some portion of its aircraft that are off lease are
re-leased or sold, there is not sufficient borrowing base collateral to permit
use of the credit facility for acquisition funding. Thus, the Company's
management is continuing to make remarketing of off-lease aircraft the primary
focus of its efforts in the remainder of 2002.

As discussed above, during November 1999, the Company acquired two aircraft
using cash and special purpose asset-based bank financing. 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. However, because the lessee has not returned the aircraft and,
under the terms of the lease, is continuing to make rental payments, the bank
has agreed that the six month period will not begin until the aircraft are
returned and accepted by the Company. The Company expects the aircraft to be
returned during the second quarter of 2002. The Company is currently discussing
the sale or re-lease of both aircraft with several potential customers. The
sales prices under consideration are in excess of net book value, which would
generate more than enough funds to pay the balloon payment due on the financing.
Even if the Company is not able to sell the aircraft for the amounts being
discussed, the Company believes any sale would result in sufficient funds to pay
the balloon payment. Alternatively, if the Company re-leases the aircraft to a
new lessee, the bank has indicated it would be willing to extend the term of the
financing through such re-lease term.

It is likely that rent income and net income for 2002 will be substantially
lower than in 2001, because one aircraft was sold during 2001, several aircraft
have been off-lease or re-leased at lower rates, and the borrowing limitations
imposed by aircraft currently off-lease or coming off-lease will continue if
remarketing efforts are not reasonably successful during the remainder of 2002.
The extent of the reduction will depend not only on the success of such
remarketing, but also on how quickly those efforts are completed.

In addition, while the Company leases primarily to regional airlines that
operate outside the U.S., management recognizes that some customers may be
adversely impacted by the September 11, 2001 terrorist attacks in the U.S., in
addition to the worldwide economic downturn. The Company has already agreed with
two of its lessees to reduce and/or defer rent in light of these events. If the
downturn persists, it is possible that other lessees may request concessions
such as these as an alternative to default and return of the aircraft. Such
concessions could have a negative effect on the Company's earnings.

The Company also 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, would 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 appeared to be experiencing the beginnings of a cyclical downturn
early in the third quarter, and 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. It is not clear what effect the downturn will have on non-U.S. regional
carriers and consequently on the Company's results. 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.

At this time, it appears that large, major carriers have been most affected by
these adverse events. To the extent that the Company's regional lessees depend
on passenger traffic from the major carriers, they may also be adversely
affected. Those regional carriers that are less dependent on the major carriers,
however, may be less affected. Nevertheless, 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. Further, if there is substantial excess capacity for regional air
carriers, the supply of regional aircraft may become out of balance with demand.
If this were to occur, the Company's off-lease periods for its aircraft may
significantly increase, and the value of its portfolio of aircraft could be
adversely impacted.

One anticipated result of the economic situation is that lessees are likely to
desire shorter-term leases which will give those lessees more short-term
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 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. Further, as discussed above in "Outlook", if
the aircraft which are off-lease or will come off-lease during 2002 remain
either unsold or off-lease for an extended period of time, the Company will be
required to make significant principal repayments to bring its credit facility
covenants into compliance. While the Company believes it has sufficient cash to
make such repayments, this belief is based on certain assumptions regarding
renewal of existing leases, a lack of extraordinary interest rate increases, no
further 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 its 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 credit facility, 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.

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.

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.

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 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, 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
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, 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.

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.

Risks Pertaining to Arthur Andersen. On March 14, 2002, the Company's
independent public accountant, Arthur Andersen, was indicted on federal
obstruction of justice charges arising from the government's investigation of
Enron. Arthur Andersen has indicated that it intends to vigorously contest the
indictment. The SEC has said that it will continue accepting financial
statements audited by Arthur Andersen, and interim financial statements reviewed
by it, so long as Arthur Andersen is able to make certain representations to its
clients. The Company's access to the capital markets and its ability to make
timely SEC filings could be impaired if the SEC ceases accepting financial
statements audited by Arthur Andersen, if Arthur Andersen becomes unable to make
the required representations to the Company or if for any other reason Arthur
Andersen is unable to perform required audit-related services for the Company.
In such a case, the Company would promptly seek to engage a new independent
public accounting firm or take such other action as may be necessary to enable
the Company to maintain access to the capital markets and to file its financial
reports in a timely manner.

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

On April 26, 2002, the Company held its annual stockholder's meeting in San
Carlos, California. At that meeting, Maurice J. Averay and Toni M. Perazzo were
re-elected to the Board of Directors.

The vote tally was as follows:

                                 FOR ELECTION                  WITHHELD

Mr. Averay                1,032,671     (98.1%)        20,131      (1.9%)
Ms. Perazzo               1,033,208     (98.1%)        19,594      (1.9%)

In addition to the election of directors, the stockholders ratified the
selection of Arthur Andersen LLP as auditors for the Company.

The vote tally was as follows:

In Favor                    955,877     (90.8%)
Against                      86,905      (8.2%)
Abstaining                   10,020      (1.0%)



<PAGE>



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

(a)      Exhibits.
<table>
                        <S>             <C>
                          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.
</table>
----------

* 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.

The Company filed a Report on Form 8-K on March 12, 2002 filing a copy of the
Amendment to Amended and Restated Credit Agreement between the Company and
National City Bank.




<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:    May 14, 2002     By:    /s/ Toni M. Perazzo
                                    -------------------------------
                                    Toni M. Perazzo

                             Title: Senior Vice President-Finance and
                                    Chief Financial Officer