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, 2003

[ ] 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, 2003 the Issuer had 1,606,557 Shares of Common Stock outstanding,
of which 63,300 are held as Treasury Stock.

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








<PAGE>



                                     PART I

                              Financial Information

Forward-Looking Statements

This  Quarterly  Report on Form  10-QSB  includes  "forward-looking  statements"
within the meaning of Section 27A of the  Securities  Act and Section 21E of the
Exchange Act. All statements in this 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 1 "Financial Statements,"
statements regarding the Company's expectation regarding delivery of aircraft
for which lease term sheets have been signed; and the Company's expectations
regarding maintenance of covenant compliance through expiration of the credit
line facility; (ii) in Item 2 "Management's Discussion and Analysis or Plan of
Operation -- Liquidity and Capital Resources," statements regarding the
Company's expectation that it will be able to maintain compliance with its
credit facility covenants through the expiration of the credit facility on June
28, 2003; the Company's expectation that it will be able to obtain a new
revolving credit facility at reasonable market terms; the Company's belief that
it has adequate cash flow to fund reasonably expected increases in interest
rates applicable to its credit facility obligations; the Company's belief that
it will have sufficient funds to meet the reduced payment obligations required
by the lender if the lease for the AeroCentury II LLC aircraft is terminated;
the Company's belief that a six-month remarketing period for the AeroCentury II
LLC aircraft is a reasonable period for re-leasing; the Company's belief that it
will have adequate cash flow to meet its ongoing operational needs; the
Company's belief that it will have sufficient cash to fund any necessary
payments under its guaranty of certain payments to a third party vendor by a
lessee; (iii) in Item 6 "Management's Discussion and Analysis or Plan of
Operation -- Outlook," statements regarding the Company's belief that it has
sufficient cash to fund a repayment if a replacement lender is not found for one
of the current credit line participants; and the Company's belief that it will
be able to purchase and lease aircraft at prices and lease rates that will have
a positive effect on the Company's earnings; (iv) in Item 6 "Management's
Discussion and Analysis or Plan of Operation -- Factors that May Affect Future
Results," statements regarding the Company's belief that it has sufficient cash
to fund a repayment if a replacement lender is not found for one of the current
credit line participant; the Company's expectation that it will be able to
maintain compliance with its credit facility covenants through the expiration of
the credit facility on June 28, 2003; the Company's anticipated acquisition of
primarily used aircraft; the opportunities available in overseas markets; JMC's
competitiveness due to its experience and operational efficiency in financing
transaction types desired by regional air carriers and its global reputation,
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;  lack of any further disruptions to the air travel industry similar to
that which occurred on September 11, 2001 or the SARS  outbreak;  the success of
the Company's  efforts in remarketing or re-leasing  aircraft that are currently
or are about to come  off-lease  and in concluding  transactions  for which term
sheets have been executed; the Company's ability to obtain a new credit facility
on reasonable business terms at or prior to the expiration of its current credit
facility,  as well as locate a  replacement  lender for a departing  credit line
participant;  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.


<PAGE>



Item 1.       Financial Statements

                                AeroCentury Corp.
                      Condensed Consolidated Balance Sheet
                                    Unaudited
<TABLE>
<CAPTION>

                                     ASSETS

                                                                               <c>
                                                                                      March 31,
                                                                                        2003
                                                                                        ----

Assets:
     Cash and cash equivalents                                                    $     1,795,810
     Deposits                                                                           7,440,790
     Accounts receivable, net of allowance for doubtful accounts of $100,000            2,194,080
     Aircraft and aircraft engines on operating leases,
        net of accumulated depreciation of $19,111,490                                 64,661,210
     Note receivable                                                                        4,450
     Prepaid expenses and other                                                           373,480
                                                                                  ---------------
Total assets                                                                      $    76,469,820
                                                                                  ===============


                      LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
     Accounts payable and accrued expenses                                        $       761,750
     Notes payable and accrued interest                                                43,363,870
     Maintenance reserves and accrued costs                                             6,221,530
     Security deposits                                                                  2,260,270
     Prepaid rent                                                                         272,380
     Deferred taxes                                                                     3,543,790
                                                                                  ---------------
Total liabilities                                                                      56,423,590
                                                                                  ===============

Stockholders' equity:
     Preferred stock, $.001 par value, 2,000,000 shares
        authorized, no shares issued and outstanding                                            -
     Common stock, $.001 par value, 3,000,000 shares
        authorized, 1,606,557 shares issued and outstanding                                 1,610
     Paid in capital                                                                   13,821,200
     Retained earnings                                                                  6,727,490
                                                                                  ---------------
                                                                                       20,550,300
     Treasury stock at cost, 63,300 shares                                              (504,070)
                                                                                  ---------------

Total stockholders' equity                                                             20,046,230
                                                                                  ---------------

Total liabilities and stockholders' equity                                        $   76,469,820
                                                                                  ==============
</table>
The accompanying notes are an integral part of these statements.


<PAGE>



                                AeroCentury Corp.
                   Condensed Consolidated Statements of Income

<table>
<caption>
                                                              For the Three Months Ended March 31,
                                                                  2003                2002
                                                                  ----                ----
                                                                         Unaudited


                                                         <c>                <c>
Revenues:

     Operating lease revenue                                $     2,451,940    $      2,193,630
     Other income                                                    23,930              31,460
                                                            ---------------    ----------------
                                                                  2,475,870           2,225,090
                                                            ---------------    ----------------
Expenses:
     Management fees                                                487,060             420,660
     Depreciation                                                   840,800             680,710
     Interest                                                       511,000             467,510
     Maintenance                                                    101,010              76,080
     Professional fees and general and administrative               315,760             128,750
                                                            ---------------    ----------------

                                                                  2,255,630           1,773,710
                                                            ---------------    ----------------

Income before taxes                                                 220,240             451,380

Tax provision                                                        45,120             151,760
                                                            ---------------    ----------------

Net income                                                  $       175,120    $        299,620
                                                            ===============    ================

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

Basic earnings per share                                    $          0.11    $           0.19
                                                            ===============    ================
</table>


The accompanying notes are an integral part of these statements.







<PAGE>



                                AeroCentury Corp.
                 Condensed Consolidated Statements of Cash Flows

<table>
<caption>
                                                                    For the Three Months Ended March 31,
                                                                           2003                2002
                                                                           ----                ----
                                                                                  Unaudited

                                                                  <c>                <c>

Net cash provided by operating activities                            $       891,810    $        863,850

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

Financing activities:
   Payments received on note receivable                                       13,150              12,490
   Repayment of notes payable                                              (816,800)         (1,679,830)
                                                                     ---------------    ----------------
Net cash used by financing activities                                      (803,650)         (1,667,340)

Net increase/(decrease) in cash and cash equivalents                          88,160           (828,120)

Cash and cash equivalents, beginning of period                             1,707,650           2,680,160
                                                                     ---------------    ----------------

Cash and cash equivalents, end of period                             $     1,795,810    $      1,852,040
                                                                     ===============    ================
</table>


The accompanying notes are an integral part of these statements.


<PAGE>



                                AeroCentury Corp.
              Notes to Condensed Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

1.       Organization and Summary of Significant Accounting Policies

(a)      Basis of Presentation

         AeroCentury Corp. ("AeroCentury"), a Delaware corporation, uses
leveraged financing to acquire leased aircraft assets. The Company purchases
used regional aircraft on lease to foreign and domestic regional carriers.
Financial information for AeroCentury and its two wholly-owned subsidiaries,
AeroCentury Investments LLC ("AeroCentury LLC") and AeroCentury Investments II
LLC ("AeroCentury II LLC") (collectively, the "Company"), is presented on a
consolidated basis. All intercompany balances and transactions have been
eliminated in consolidation.

         Although the Company believes that it has included all adjustments
necessary for a fair presentation of the interim periods presented and that the
disclosures are adequate to make the information presented not misleading, the
Company suggests that these condensed consolidated financial statements be read
in conjunction with the consolidated financial statements and related notes
included in the Company's annual report on Form 10-KSB for the fiscal year ended
December 31, 2002.

 (b)     Capitalization

         In 1998, in connection with the adoption of a stockholder rights plan,
the Company filed a Certificate of Designation, setting forth the rights,
preferences and privileges of a new Series A Preferred Stock. Pursuant to the
plan, the Company issued rights to its stockholders, giving each stockholder 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.

         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, 2003, the Company held security deposits of $2,260,270,
refundable maintenance reserves received from lessees of $953,810 and
non-refundable maintenance reserves of $4,226,710.

         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, upon satisfaction of all lease terms.



<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

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 from the date of acquisition), to an estimated
residual value based on appraisal.

(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 third party
valuations. In the event such valuations are less than 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, 2003, the Company had
accrued maintenance costs of approximately $251,000 related to several of its
aircraft.



<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

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 regard 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 quarters ended March
31, 2003 and 2002.

(l)      Recent Accounting Pronouncements

         In November 2002, the Financial Accounting Standards Board issued SFAS
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45").
FIN 45 is effective for guarantees issued or modified after December 31, 2002.
The Company has one guarantee, which was issued prior to December 31, 2002 (Note
6). The Company has not recorded a liability for the fair value of the
obligations it has assumed under this guarantee.


<PAGE>




                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

2.       Aircraft and Aircraft Engines On Operating Leases

         At March 31, 2003, the Company owned five deHavilland DHC-8s, two
deHavilland DHC-7s, three deHavilland DHC-6s, one Fairchild Metro III, two
Shorts SD 3-60s, six Fokker 50s, two Saab 340As and 26 turboprop engines. The
Company did not acquire or sell any aircraft during the first three months of
2003.

         At March 31, 2003, all but two of the Company's aircraft were subject
to operating lease agreements.

         In February 2003, the Company and the lessee for two of the Company's
deHavilland DHC-8 aircraft, the leases for which were due to expire in April
2003, signed lease amendments providing for a two-year extension of both leases
and for the deferral of certain amounts due under the leases.

         In March 2003, the Company and the lessee of one of the Company's
deHavilland DHC-8 aircraft agreed to extend the lease from April 15, 2003 to
November 15, 2003. The Company and the lessee are currently discussing a
long-term extension of the lease.

         The lease for one of the Company's Fokker 50 aircraft expired in
September 2002, but the lessee, which is in financial difficulty, is required to
continue to pay rent until the aircraft is returned and accepted by the Company,
which is expected to occur in the second quarter of 2003. The Company and the
lessee have signed an agreement regarding the return of the aircraft and the
amounts owed by the lessee. Although the Company holds a security deposit from
this lessee, the amount of the deposit is not sufficient to pay the rent accrued
at March 31, 2003 and reimburse the Company for the estimated maintenance work
which must be performed to meet the return conditions of the lease. Therefore,
the Company established an allowance for doubtful accounts in the amount of
$100,000 on March 31, 2003. In February 2003, the Company signed a term sheet
with a new customer for the re-lease of this aircraft and expects to deliver the
aircraft in the second quarter of 2003.

         The leases for one of the Company's Saab 340A aircraft and one of the
Company's turboprop engines remained in effect from their expiration dates of
December 31, 2002 and October 31, 2002, respectively, until the pre-return
inspections of the aircraft and engine were complete. Both were returned and
accepted by the Company in the first quarter of 2003. The Company has signed a
term sheet with a new customer for the re-lease of this aircraft, as well as
another Saab 340A which has been off lease since the third quarter of 2002 and
expects to deliver the aircraft in the second quarter of 2003.

         As discussed in Note 8, several of the Company's aircraft were
re-leased to new customers or were subject to leases which were amended in the
second quarter of 2003.



<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

3.       Note Receivable

         At March 31, 2003, the Company's note receivable consisted 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 original 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 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,
originally in effect through December 31, 2002, were extended through February
28, 2003. In return for granting such changes, the Company's lenders increased
the margin on the interest rates chosen by the Company from a floating margin to
a fixed margin of 275 basis points, effective March 31, 2002. On March 1, 2003,
the margin returned to its original floating rate. The Company expects that it
will be able to maintain compliance with its credit facility covenants,
including those which reverted on March 1, 2003, through the expiration of the
credit facility on June 28, 2003. The Company is currently discussing the terms
of a new credit facility with its agent bank.

         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, 2003, the Company was in compliance with
all such covenants, $40,705,000 was outstanding under the credit facility, and
interest of $183,340 was accrued, using a combination of prime and LIBOR rates.

         In November 1999 the Company acquired two aircraft using cash and bank
financing separate from its credit facility. During 2002, the Company used funds
from its revolving credit facility to repay the outstanding bank financing
related to both 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 a deHavilland DHC-8 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,
2003 was $2,468,650 and interest of $6,880 was accrued. As of March 31, 2003,
the Company was in compliance with all covenants of the loan agreement
pertaining to the financing of this aircraft. As discussed in Note 8, the lease
for the aircraft has been extended and the lender has agreed to extend the
financing.


<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

5.       Income Taxes

         The items comprising income tax expense are as follows:
<table>
<caption>
                                                                             For the Three Months Ended March 31,
                                                                                    2003                2002
                                                                                    ----                ----
         
                                                                 <c>                 <c>
         Current tax provision:
              Federal                                                        $        252,080    $             -
              State                                                                    12,090              4,100
              Foreign                                                                      -              39,580
                                                                             ----------------    ---------------
              Current tax provision                                                   264,170             43,680
                                                                             ----------------    ---------------

         Deferred tax provision/(benefit):
              Federal                                                              (183,000)             112,490
              State                                                                  (36,050)            (4,410)
                                                                             ----------------    ---------------
              Deferred tax provision                                                (219,050)            108,080
                                                                             ----------------    ---------------
         Total provision for income taxes                                    $         45,120    $       151,760
                                                                             ================    ===============

         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 Three Months Ended March 31,
                                                                                    2003                2002
                                                                                    ----                ----
         Income tax expense at
               statutory federal income tax rate                             $         74,880    $       153,470
         State taxes net of federal benefit                                             1,080              3,480
         Tax rate differences                                                        (30,840)            (5,190)
                                                                             ----------------    ---------------
         Total income tax expense                                            $         45,120    $       151,760
                                                                             ================    ===============
</table>

         Temporary differences and carryforwards that gave rise to a significant
portion of deferred tax assets and liabilities as of March 31, 2003 are as
follows:

         Deferred tax assets:
              Allowance for doubtful accounts                   $         34,490
              Maintenance reserves                                     1,649,100
              Deferred maintenance                                        99,570
              Prepaid rent and other                                      94,210
                                                                ----------------
                  Deferred tax assets                                  1,877,370
         Deferred tax liabilities:
              Depreciation on aircraft and aircraft engines          (5,151,850)
              Unearned income                                           (38,450)
              Other                                                    (230,860)
                                                                ----------------
                  Net deferred tax liabilities                  $    (3,543,790)
                                                                ================

         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.


<PAGE>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

6.       Commitments and Contingencies

         In connection with the re-lease of two of the Company's aircraft, the
Company has guaranteed, up to a maximum of $150,000, the lessee's payments under
a contract with a third party vendor for spare parts. The term of the guarantee
extends for 90 days after the expiration or termination of the leases in
November 2005. The lessee has agreed to reimburse the Company for any payments
made under the guarantee, upon demand by the Company. If the lessee does not
make such reimbursements or does not comply with any provisions of the parts
agreement, the Company may declare an event of default under the leases.

7.       Related Party Transactions

         Since the Company has no employees, the Company's portfolio of leased
aircraft assets is managed and administered under the terms of a management
agreement with JetFleet Management Corp. ("JMC"), which is an integrated
aircraft management, marketing and financing business and a subsidiary of
JetFleet Holding Corp. ("JHC"). Certain officers of the Company are also
officers of JHC and JMC and hold significant ownership positions in both JHC and
the Company. Under the management 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 $487,060 and
$420,660 during the three months ended March 31, 2003 and 2002, respectively.
Because the Company did not acquire any aircraft during the first three months
of 2003 or 2002, no acquisition fees were paid to JMC. No remarketing fees were
accrued to JMC during 2003 or 2002.

8.       Subsequent Events

         In April 2003, the Company and the lessee for three of the Company's
aircraft signed lease amendments which cured the lessee's recent default for
rent and reserves due for the Company's two deHavilland DHC-7 aircraft. The
amendments provide for deferral of the overdue rent and reserves and for payment
of such amounts over time in installments. The Company and the lessee
also agreed to terminate the lease for the third aircraft, a Shorts SD 3-60. All
amounts due for this aircraft were paid by the lessee in April 2003 and the
Company anticipates accepting the aircraft in May 2003.

         In April 2003, the Company's Fairchild Metro III aircraft, which was
returned by the original lessee in October 2002 was delivered to a new lessee
for a term of one year, with options to extend for two additional one-year
periods.

         The lease for one of the Company's Fokker 50 aircraft, which had
previously been extended to March 31, 2003, was extended through May 31, 2003 in
April 2003. The Company and the lessee are currently discussing a long-term
extension of this lease as well as that for another Fokker 50 which expires in
June 2003.


<page>



                                AeroCentury Corp.
                   Notes to Consolidated Financial Statements
                                 March 31, 2003
                                    Unaudited

8.       Subsequent Events (continued)

         As discussed in Note 2, the Company and the lessee of one of the
Company's deHavilland DHC-8 aircraft have agreed to a short-term extension of
the lease through November 15, 2003, with periodic options to terminate the
lease, and are currently discussing a long-term extension of the lease. The
lender has agreed to extend the financing through March 19, 2006, with
prepayment options at June 30, 2003 and November 30, 2003. During the term of
the extension, the note bears interest at the rate of one-month LIBOR plus 3%,
with a balloon payment at maturity. The financing also provides for a six month
remarketing period at the expiration of the lease or if the lease is terminated
prior to its expiration date. Payments due on the financing are reduced during
this six month period and the balloon principal payment is due at the end of the
six month period.

         In May 2003, the Company and the lessee of one of the Company's
deHavilland DHC-6 aircraft agreed to a one-month extension of the lease to May
31, 2003 and are currently discussing a long-term extension.

         In May 2003, the Company and the lessee for one of the Company's Fokker
50 aircraft agreed to extend the lease, which had previously been extended
through May 8, 2003, through May 15, 2004.










<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 policies by considering
those that involve the most complex or subjective decisions or assessments. The
Company identified these policies to be those related to lease rental revenue
recognition, depreciation policies, valuation of aircraft and maintenance
reserves and accrued costs.

Revenue Recognition

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

Depreciation Policies

The Company's interests in aircraft and aircraft engines are recorded at cost,
which includes acquisition costs. Depreciation is computed using the
straight-line method over the aircraft's estimated economic life (generally
assumed to be twelve years from the date of acquisition), to an estimated
residual value based on appraisal.

Valuation of Aircraft

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

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.

Results of Operations

Revenues

The Company had revenues of $2,475,870 and net income of $175,120 for the three
months ended March 31, 2003 versus revenues of $2,225,090 and net income of
$299,620 for the three months ended March 31, 2002. Operating lease revenue was
approximately $258,000 higher in 2003 versus 2002 primarily because of an
increase in operating lease revenue from aircraft purchased during the second
half of 2002 and from the re-lease of several aircraft which had been off lease
during the first quarter of 2002. These increases more than offset a decrease in
operating lease revenue resulting from lower overall lease rates and aircraft
off lease during the quarter. Other income was lower by approximately $8,000
during 2003 versus 2002 because of lower interest rates on lower cash balances
during 2003 versus 2002.

<page>

Expense Items

Management fees, which are calculated on the net book value of the aircraft
owned by the Company, were approximately $66,000 higher in 2003 versus 2002 as a
result of the Company's purchase of two aircraft during the second half of 2002,
the effect of which was only partially offset by decreased net book value of the
Company's other aircraft as a result of depreciation. Depreciation was
approximately $160,000 higher in 2003 versus 2002 as a result of aircraft
purchased during 2002.

Interest expense was approximately $43,000 higher in 2003 versus 2002 because of
a higher average principal balance during 2003, the effect of which was only
partially offset by lower interest rates during 2003. Maintenance expense was
higher in 2003 primarily due to work to be performed on an off-lease aircraft.
Professional fees and general and administrative expenses were approximately
$187,000 higher in 2003 versus 2002, primarily due to an allowance for doubtful
accounts, higher legal and accounting expense, and higher premiums for aircraft
insurance.

The Company's effective tax rate in 2003 was approximately 20% versus
approximately 34% in 2002 primarily because of a change in the mix of domestic
and foreign leased assets and a related change in the proportion of revenue
generated within and outside of California.

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. The Company's assets, excluding those of AeroCentury LLC and
AeroCentury II LLC, serve as collateral under the revolving credit facility and,
in accordance with the credit agreement, the Company must maintain compliance
with certain financial covenants. The Company made a repayment on its facility
in the amount of $700,000 during the first quarter of 2003 because of certain
collateral borrowing base limitations.

On March 7, 2002, the Company and its lenders agreed to modify certain financial
covenants contained in the loan agreement for the facility in order to enable
the Company to continue to take advantage of business opportunities in the
industry environment of increased market demand for shorter-term leases. The
changes, originally in effect through December 31, 2002, were extended through
February 28, 2003. In return for granting such changes, the Company's lenders
increased the margin on the interest rates chosen by the Company from a floating
margin to a fixed margin of 275 basis points, effective March 31, 2002. On March
1, 2003, the margin returned to its original floating rate. The Company expects
that it will be able to maintain compliance with its credit facility covenants,
including those which reverted on March 1, 2003, through the expiration of the
credit facility on June 28, 2003. The Company is currently discussing the terms
of a new credit facility with its agent bank and expects to be able to obtain
such facility at reasonable market terms.

At March 31, 2003, principal of $40,705,000 was outstanding under the credit
facility and interest of $183,340 was accrued. The Company is currently in
compliance with all covenants of the revolving credit facility. The majority of
the Company's borrowings are currently financed using one-month LIBOR rates. The
Company believes it has adequate cash flow to fund reasonably expected increases
in interest rates applicable to its credit facility obligations.

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

<page>

In November 1999, AeroCentury LLC acquired two aircraft using cash and bank
financing separate from its credit facility. During 2002, the Company used funds
from its revolving credit facility to repay the outstanding bank financing
related to both aircraft.

A similar special purpose entity financing for AeroCentury II LLC 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, 2003 was $2,468,650 and interest of $6,880 was
accrued. At March 31, 2003, the Company was in compliance with all covenants of
the loan agreement pertaining to the financing of this aircraft.

The Company and the lessee of the aircraft have agreed to a short-term extension
of the lease through November 15, 2003, with periodic options to terminate the
lease, and are currently discussing a long-term extension of the lease. The
lender has agreed to extend the financing through March 19, 2006, with
prepayment options at June 30, 2003 and November 30, 2003. During the term of
the extension, the note bears interest at the rate of one-month LIBOR plus 3%,
with a balloon payment at maturity. The financing also provides for a six month
remarketing period at the expiration of the lease or if the lease is terminated
prior to its expiration date. Payments due on the financing are reduced during
this six month period and the balloon principal payment is due at the end of the
six month period. The Company believes it will have sufficient cash to meet the
reduced payment obligations required by the lender if the lease is terminated,
assuming that the aircraft is re-leased within six months, which the Company
believes is a reasonable period.

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

In connection with the re-lease of two of the Company's aircraft during 2002,
the Company has guaranteed, up to a maximum of $150,000, the lessee's payments
under a contract with a third party vendor for spare parts. The lessee has
agreed to reimburse the Company for any payments made under the guarantee, upon
demand by the Company. If the lessee does not make such reimbursements or does
not comply with any provisions of the parts agreement, the Company may declare
an event of default under the leases. During the fourth quarter of 2002 and
April 2003, the Company and the lessee agreed to lease amendments which deferred
certain overdue rent and reserve payments. The Company is monitoring this
lessee's performance very closely. If the Company does have to perform, the
Company believes it will have sufficient cash to fund any necessary payments.

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 quarter ended March 31, 2002
versus 2001 increased by approximately $28,000. The increase was due primarily
to the effect of the change in accounts payable and accrued expenses and
maintenance deposits and accrued costs. The effect of these changes was only
partially offset by the negative effect of the change in deposits and deferred
taxes.

No cash flow was used for equipment purchases during 2003. Equipment purchases
of $24,630, for equipment added to aircraft already owned, were made in 2002.
The decrease in cash flow used by financing activities from year to year was
primarily a result of lower repayments on the Company's revolving credit
facility in 2003 versus 2002.



<PAGE>



Outlook

The Company's credit facility expires on June 28, 2003. The Company and its
agent bank have begun discussing the terms of a new credit facility. The Company
expects to be able to obtain such facility at reasonable market terms. The agent
bank and one of the participating banks, which account for a total of $40
million of the current $50 million credit facility, have expressed their
willingness to provide financing to the Company under a new credit facility. The
third bank, representing the remaining $10 million of the current credit
facility, has notified the Company that it will not participate in a new credit
facility because it no longer wishes to participate in aviation finance. If the
Company and the agent bank are unable to find a new participant or participants
by June 28, 2003, the Company would be required to repay approximately $800,000
on the credit facility in order to reduce the outstanding principal to an amount
less than $40 million. The Company believes that it will have sufficient cash to
fund such a repayment.

The Company has previously used special purpose asset-based financing for the
acquisition of three aircraft and will continue to seek such financing as
transactions suitable for such special purpose financing become available.

In order to increase earnings, the Company will need to add aircraft to its
portfolio. Such growth will be possible only with additional financing, such as
an increased credit facility, additional special purpose non-recourse financing,
or the issuance of debt and/or equity securities, all of which the Company is
considering.

While the Company's revenues would increase with the purchase of additional
aircraft, management fees, depreciation and interest expense, as well as other
operating expenses, would also increase. It is likely that market lease rates
will remain significantly below prior market levels as a result of downward
pressure from low interest rates and the slowdown in the air carrier industry in
particular and the worldwide economy in general. The Company nonetheless
believes that it will be able to purchase and lease such aircraft at prices and
lease rates that will have a positive effect on the Company's earnings. While
additional aircraft acquisitions would likely add to earnings, whether the
Company will show an overall increase in the Company's earnings in the near term
will be affected by the success and timeliness of remarketing of aircraft that
were off lease at March 31, 2003 and those with leases due to expire during
2003.

The Company continues to review its asset valuations in light of the worldwide
economic downturn. Although the Company did not make any valuation adjustments
during 2002 or the first quarter of 2003, any future adjustments, if necessary,
could negatively affect the Company's financial results and the collateral
available for the Company's revolving credit facility. In addition, the
Company's periodic review of the adequacy of its maintenance reserves, as well
as routine and manufacturer-required maintenance for off-lease aircraft, may
result in changes to estimated maintenance expense, further reducing earnings.

Factors that May Affect Future Results

Renewal or Replacement of the Credit Facility. As discussed in "Outlook" above,
the Company's credit facility will expire on June 28, 2003. If the Company is
not able to renew the credit facility for the full outstanding amount, and
cannot find suitable alternative financing, it may be required to make a
principal repayment of the outstanding balance, or that portion of the balance
for which replacement financing is not obtained. The Company does not have
sufficient cash reserves to make a repayment of a significant portion of the
outstanding credit facility indebtedness and would be forced to sell assets in
order to raise funds to make such repayment. Such sales would likely not be on
favorable terms to the Company as the full market value of the assets sold may
not be realized by the Company in order to expedite the consummation of the
sales.

Even if the Company is able to successfully sell a portion of its assets and use
the proceeds to repay the credit line facility, if a renewed or replacement
facility is not obtained, the Company's future ability to acquire assets would
be significantly impaired, as the credit facility is the Company's primary means
of financing acquisitions and no other sources of acquisition financing are
immediately available. Thus the renewal or replacement of the Company's credit
line facility in an amount equal or greater than the current $50 million limit
will be critical to the Company's liquidity as well as the potential for asset
and revenue growth.

<page>

Non-renewal by Credit Line Participant. One of the participating banks in the
credit line facility has indicated that it will not participate in the
anticipated renewal of the Company's credit line. Therefore, unless a new
participating bank is found to replace the departing bank in the lending
syndicate, the maximum credit line amount available under a renewed credit line
may be decreased by $10 million. The Company currently believes it has
sufficient funds to repay any outstanding indebtedness in excess of $40 million,
but such repayment will significantly reduce the Company's available cash and
working capital. The reduced credit line facility maximum will make further
aircraft acquisitions under the credit line much more difficult, as the Company
will be fully drawn under the new reduced credit line indebtedness limit. A
reduced credit line would make the Company more dependent on special purpose
financing for acquisitions.

Credit Facility Repayment Obligations. As discussed in "Outlook", above, 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 could trigger a covenant default and an obligation to repay a portion of
the outstanding indebtedness under the credit facility. The Company believes it
will remain in compliance with its covenants through the expiration of the
facility on June 28, 2003. In all events, the Company's beliefs regarding the
future collateral base repayment obligations are based on certain assumptions
regarding renewal of existing leases, a lack of extraordinary interest rate
increases, no lessee defaults or bankruptcies, and certain other matters that
the Company deems reasonable in light of its experience in the industry. There
can be no assurance that these assumptions will turn out to be correct. If the
assumptions do not prove to be true, and the Company has not obtained an
applicable waiver or amendment of applicable 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.

General Economic Conditions. The Company's business is dependent upon general
economic conditions and the strength of the travel and transportation industry.
The industry is experiencing a cyclical downturn which began in mid-2001. This
downturn was exacerbated by the terrorist attacks of September 11, 2001. More
recently, fears surrounding Severe Acute Respiratory Syndrome ("SARS") have
caused a reduction in airline passenger loads, particularly in markets where the
outbreak is concentrated. As a result, there has been a severe reduction in air
travel and less demand for aircraft capacity by the major air carriers. The
duration of the downturn is uncertain.

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

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

At this time, in response to lower passenger loads, many carriers have reduced
capacity, and as a result there has been a reduced demand for aircraft. As a
result, market lease rental rates have decreased. This reduced market value for
aircraft could affect the Company's results if the market value of an asset or
assets in the Company's aircraft portfolio falls below book value, and the
Company determines that a writedown of the value on the Company's book is
appropriate.

<page>

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

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

In order to achieve optimal benefit from the revolving credit facility, the
Company intends to seek subordinated debt or equity financings. Such financing
would permit the Company to optimize use of its revolving credit facility. There
can be no assurance that the Company will be able to obtain the necessary amount
of supplemental subordinated debt or equity financing on favorable terms so as
to permit optimal use of its 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. Interest rates are currently at historically low levels and this has
partially offset the effect of falling market lease rates. If interest rates
rise, and lease rates do not increase at the same time, the Company would
experience lower net revenues and, if the interest rate increase were great
enough, may not be able to cover its interest expense with lease revenue.

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. The 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 reflects economic conditions and the strength of the
travel and transportation industry. The demand for and value of many types of
used 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 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 seventh 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 Company's 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. In addition, certain officers of the
Company hold significant ownership positions in JHC and the Company. JMC is also
the management company for two other aircraft portfolio owners, JetFleet III,
which raised approximately $13,000,000 from investors, and AeroCentury IV, Inc.
("AeroCentury IV"), which raised approximately $5,000,000 from investors.
JetFleet III and AeroCentury IV are in the liquidation or wrap-up phase. In the
first quarter of 2002, AeroCentury IV defaulted on certain obligations to
noteholders. The indenture trustee for AeroCentury IV's noteholders has
foreclosed and has taken over management of the remaining two assets. JetFleet
III is in compliance with the terms of its trust indenture.

<page>

The management agreement may be terminated upon a default in the obligations of
JMC to the Company, and provides for liquidated damages in the event of a
wrongful termination of the agreement by the Company. All of the officers of JMC
are also officers of the Company, and certain directors of the Company are also
directors of JMC. Consequently, the directors and officers of JMC may have a
conflict of interest in the event of a dispute over obligations between the
Company and JMC. Although the Company has taken steps to prevent conflicts of
interest arising from such dual roles, such conflicts may still occur.

Ownership Risks. Most of the Company's portfolio is leased under operating
leases, where the terms of the leases are less than the entire anticipated
useful life of an asset. The Company's ability to recover its purchase
investment in an asset subject to an operating lease is dependent upon the
Company's ability to profitably re-lease or sell the asset after the expiration
of the initial lease term. Some of the factors that have an impact on the
Company's ability to re-lease or sell include worldwide economic conditions,
general aircraft market conditions, regulatory changes that may make an asset's
use more expensive or preclude use unless the asset is modified, changes in the
supply or cost of aircraft equipment and technological developments which cause
the asset to become obsolete. In addition, a successful investment in an asset
subject to an operating lease depends in part upon having the asset returned by
the lessee in serviceable condition as required under the lease. If the Company
is unable to remarket its aircraft equipment on favorable terms when the
operating lease for such equipment expires, the Company's business, financial
condition, cash flow, ability to service debt and results of operation could be
adversely affected.

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

International Risks. The Company has focused on leases in overseas markets,
which the Company believes present 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.

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

<page>

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 and
cost of complying with such requirements will fall primarily upon lessees of
equipment, there can be no assurance that the cost will not fall on the Company.
Furthermore, future government regulations could cause the value of any
non-complying equipment owned by the Company to decline substantially.

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

Casualties, Insurance Coverage. The Company, as owner of transportation
equipment, may be named in a suit claiming damages for injuries or damage to
property caused by its assets. As a triple net lessor, the Company is generally
protected against such claims, since the lessee would be responsible for, insure
against and indemnify the Company for, such claims. Further, some protection may
be provided by the United States Aviation Act with respect to its aircraft
assets. It is, however, not clear to what extent such statutory protection would
be available to the Company and such act may not apply to aircraft operated in
foreign countries. Also, although the Company's leases generally require a
lessee to insure against likely risks, there may be certain cases where the loss
is not entirely covered by the lessee or its insurance. Though this is a remote
possibility, an uninsured loss with respect to the equipment, or an insured loss
for which insurance proceeds are inadequate, would result in a possible loss of
invested capital in and any profits anticipated from, such equipment, as well as
a potential claim directly against the Company.

Risks Related to Regional Air Carriers. Because the Company has concentrated its
existing leases and intends to concentrate on leases to regional air carriers,
it is subject to certain risks. First, some of the lessees in the regional air
carrier market are companies that are start-up, low capital, low margin
operations. Often, the success of such carriers is dependent upon arrangements
with major trunk carriers, which may be subject to termination or cancellation
by such major carrier. Leasing transactions with these types of lessees result
in a generally higher lease rate on aircraft, but may entail higher risk of
default or lessee bankruptcy. The Company evaluates the credit risk of each
lessee carefully, and attempts to obtain a third party guaranty, letters of
credit or other credit enhancement, if it deems them necessary. There is no
assurance, however, that such enhancements will be available or that even if
obtained will fully protect the Company from losses resulting from a lessee
default or bankruptcy. Second, a significant area of growth of this market is in
areas outside of the United States, where collection and enforcement are often
more difficult and complicated than in the United States.

Possible Volatility of Stock Price. The market price of the Company's common
stock could be subject to fluctuations in response to operating results of the
Company, changes in general conditions in the economy, the financial markets,
the airline industry, changes in accounting principles or tax laws applicable to
the Company or its lessees, or other developments affecting the Company, its
customers or its competitors, some of which may be unrelated to the Company's
performance. Also, because the Company has a relatively small capitalization of
approximately 1.5 million shares, there is a correspondingly limited amount of
trading of the shares. Consequently, a single or small number of trades could
result in a market fluctuation not related to any business or financial
development relating to the Company.

<page>


Item 3. Controls and Procedures

Quarterly evaluation of the Company's Disclosure Controls and Internal Controls.
Within the 90 days prior to the date of this quarterly report on Form 10-QSB,
the Company evaluated the effectiveness of the design and operation of its
"disclosure controls and procedures" ("Disclosure Controls"), and its "internal
controls and procedures for financial reporting" ("Internal Controls"). This
evaluation (the "Controls Evaluation") was done under the supervision and with
the participation of management, including the Company's Chief Executive Officer
(CEO) and Chief Financial Officer (CFO). Rules adopted by the SEC require that
in this section of the Annual Report the Company present the conclusions of the
CEO and the CFO about the effectiveness of our Disclosure Controls and Internal
Controls based on and as of the date of the Controls Evaluation.

CEO and CFO Certifications. Appearing immediately following the Signatures
section of this annual report there are two separate forms of "Certifications"
of the CEO and the CFO. The first form of Certification is required in
accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302
Certification). This section of the annual report which you are currently
reading is the information concerning the Controls Evaluation referred to in the
Section 302 Certifications and this information should be read in conjunction
with the Section 302 Certifications for a more complete understanding of the
topics presented.

Disclosure Controls and Internal Controls. Disclosure Controls are procedures
that are designed with the objective of ensuring that information required to be
disclosed in the Company's reports filed under the Securities Exchange Act of
1934 (Exchange Act), such as this annual report, is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's (SEC) rules and forms. Disclosure Controls are also
designed with the objective of ensuring that such information is accumulated and
communicated to the Company's management, including the CEO and CFO, as
appropriate to allow timely decisions regarding required disclosure. Internal
Controls are procedures which are designed with the objective of providing
reasonable assurance that (1) the Company's transactions are properly
authorized; (2) the Company's assets are safeguarded against unauthorized or
improper use; and (3) the Company's transactions are properly recorded and
reported, all to permit the preparation of the Company's financial statements in
conformity with generally accepted accounting principles.

Limitations on the Effectiveness of Controls. The Company's management,
including the CEO and CFO, does not expect that its Disclosure Controls or its
Internal Controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

Scope of the Controls Evaluation. The CEO/CFO evaluation of the Company's
Disclosure Controls and the Company's Internal Controls included a review of the
controls objectives and design, the controls implementation by the company and
the effect of the controls on the information generated for use in this annual
report. In the course of the Controls Evaluation, we sought to identify data
errors, controls problems or acts of fraud and to confirm that appropriate
corrective action, including process improvements, were being undertaken. This
type of evaluation will be done on a quarterly basis so that the conclusions
concerning controls effectiveness can be reported in the Company's quarterly
reports on Form 10-QSB and annual report on Form 10-KSB. The Company's Internal
Controls are also evaluated on an ongoing basis by other personnel in the
Company's finance organization and by the Company's independent auditors in
connection with their audit and review activities. The overall goals of these
various evaluation activities are to monitor the Company's Disclosure Controls
and the Company's Internal Controls and to make modifications as necessary; the
Company's intent in this regard is that the Disclosure Controls and the Internal
Controls will be maintained as dynamic systems that change (including with
improvements and corrections) as conditions warrant.

<page>

Among other matters, the Company sought in its evaluation to determine whether
there were any "significant deficiencies" or "material weaknesses" in the
Company's Internal Controls, or whether the Company had identified any acts of
fraud involving personnel who have a significant role in the Company's Internal
Controls. This information was important both for the Controls Evaluation
generally and because items 5 and 6 in the Section 302 Certifications of the CEO
and CFO require that the CEO and CFO disclose that information to the Audit
Committee of the Company's Board and to the Company's independent auditors and
to report on related matters in this section of the Annual Report. In the
professional auditing literature, "significant deficiencies" are referred to as
"reportable conditions"; these are control issues that could have a significant
adverse effect on the ability to record, process, summarize and report financial
data in the financial statements. A "material weakness" is defined in the
auditing literature as a particularly serious reportable condition where the
internal control does not reduce to a relatively low level the risk that
misstatements caused by error or fraud may occur in amounts that would be
material in relation to the financial statements and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. The Company also sought to deal with other controls matters in the
Controls Evaluation, and in each case if a problem was identified, the Company
considered what revision, improvement and/or correction to make in accordance
with our on-going procedures.

In accordance with SEC requirements, the CEO and CFO note that, since the date
of the Controls Evaluation to the date of this report, there have been no
significant changes in Internal Controls or in other factors that could
significantly affect Internal Controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Conclusions. Based upon the Controls Evaluation, the Company's CEO and CFO have
concluded that, subject to the limitations noted above, the Company's Disclosure
Controls are effective to ensure that material information relating to the
Company and its consolidated subsidiaries is made known to management, including
the CEO and CFO, particularly during the period when periodic reports are being
prepared, and that the Company's Internal Controls are effective to provide
reasonable assurance that the Company's financial statements are fairly
presented in conformity with generally accepted accounting principles.



<PAGE>



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

(a) Exhibits.

    Exhibit
    Number                                       Description

     10.14         Employment Agreement between the Company and Neal D.
                   Crispin, dated April 24, 2003.

     10.15         Employment Agreement between the Company and Marc J.
                   Anderson, dated April 24, 2003.

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

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

*These certificates are furnished to, but shall not be deemed to be filed with,
the Securities and Exchange Commission ("SEC").



----------

 (b) Reports on Form 8-K.

Report on Form 8-K disclosing the Second Amendment to Amended and Restated
Credit Agreement between the Company, National City Bank, as Agent, and
participating lenders, filed with the SEC on February 20, 2003.


<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, 2003           By:     /s/ Toni M. Perazzo
                                        -------------------------------
                                        Toni M. Perazzo

                                Title:  Senior Vice President-Finance and
                                        Chief Financial Officer




<PAGE>



                                  CERTIFICATION


I, Neal D. Crispin, certify that:

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

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

Date:  May 14, 2003                         /s/ Neal D. Crispin
                                            ---------------------------
                                            Neal D. Crispin
                                            Chief Executive Officer




<PAGE>



                                  CERTIFICATION


I, Toni M. Perazzo, certify that:

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

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

Date:  May 14, 2003                         /s/ Toni M. Perazzo
                                            ----------------------------
                                            Toni M. Perazzo
                                            Chief Financial Officer