| Delaware                                                       |   | 94-3263974                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S. Employer Identification No.) |

----

| · | The Company's business plans and strategies, including its continued focus on acquiring used regional aircraft, any potential for acquiring and managing new types and models of regional aircraft, and its expectation that most of its future growth will be outside of North America; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Matters related to the Company's proposed merger with JetFleet Holding Corp. ("JHC"), including: the Company's ability to obtain the approval of its stockholders to issue shares of its common stock as partial merger consideration; the ability to complete, and the timing of, the closing of the merger; and the anticipated impact of the merger (if completed) on the Company and its performance, including the amount and nature of merger expenses payable by the Company, certain losses and other accounting effects of the merger, any changes to the Company's risk profile after the Company internalizes the management services presently performed for the Company by JetFleet Management Corp. ("JMC"), a subsidiary of JHC, and the expectation that the combination effected by the merger could be accretive to the Company and create value for the stockholders of the combined post-merger company; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Certain industry trends and their impact on the Company and its performance, including: increasing competition that results in higher acquisition prices for many of the aircraft types that the Company has targeted to buy and, at the same time, downward pressure on lease rates for these aircraft; relatively lower market demand for older aircraft types that are no longer in production, which could cause certain of the Company's aircraft to remain off lease for significant periods of time; and expectations of shakeouts of weaker carriers in economically troubled regions, which could impact the financial condition and viability of certain of the Company's customers, and as a result, their demand for the Company's aircraft and their ability to fulfill their lease commitments and other obligations to the Company under existing leases; |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Expectations about the Company's future liquidity, cash flow and capital requirements; |
|--------|----------------------------------------------------------------------------------------|

| · | The Company's continued compliance with its existing credit facility and other outstanding debt instruments, including making payments of principal and interest thereunder as and when required and complying with the financial and other covenants included in the credit facility; |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The expected impact of existing or known threatened legal proceedings; |
|--------|------------------------------------------------------------------------|

| · | The effect on the Company and its customers of complying with applicable government and regulatory requirements in the numerous jurisdictions in which the Company and its customers operate; |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The Company's cyber vulnerabilities and the anticipated effects on the Company if a cybersecurity threat or incident were to materialize; |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

| · | General economic, market, political and regulatory conditions, including anticipated changes in these conditions and the impact of such changes on customer demand and other facets of the Company's business; and |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | The impact of the foregoing on the prevailing market price and trading volume of the Company's common stock. |
|--------|--------------------------------------------------------------------------------------------------------------|

----

| ASSETS                                                                                                                                                                                                      |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                        |   | June 30, |   |   | December 31, |   |
|                                                                                                                                                                                                        |   | 2018 |   |   | 2017 |   |
| Assets:                                                                                                                                                                                                     |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                                                                                                                   |   | $ | 4,378,000 |   |   | $ | 8,657,800 |   |
| Accounts receivable, including deferred rent of $228,100 and $707,300 at      June 30, 2018 and December 31, 2017, respectively                                                    |   |   | 3,151,600 |   |   |   | 3,825,100 |   |
| Finance leases receivable                                                                                                                                                                                   |   |   | 22,066,100 |   |   |   | 23,561,000 |   |
| Aircraft and aircraft engines held for lease, net of accumulated    depreciation of $38,219,000 and $33,234,200 at     June 30, 2018 and December 31, 2017, respectively |   |   | 210,592,000 |   |   |   | 195,098,200 |   |
| Assets held for sale                                                                                                                                                                                        |   |   | 4,736,100 |   |   |   | 4,966,500 |   |
| Prepaid expenses and other                                                                                                                                                                                  |   |   | 312,700 |   |   |   | 301,300 |   |
| Total assets                                                                                                                                                                                                |   | $ | 245,236,500 |   |   | $ | 236,409,900 |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                        |   |
| Liabilities:                                                                                                                                                                                                |   |   |   |   |   |   |   |   |
| Accounts payable and accrued expenses                                                                                                                                                                       |   | $ | 2,277,900 |   |   | $ | 645,200 |   |
| Notes payable and accrued interest, net of unamortized debt issuance    costs of $1,483,500 and $2,216,000 at June 30, 2018 and    December 31, 2017, respectively            |   |   | 147,642,500 |   |   |   | 145,598,200 |   |
| Maintenance reserves                                                                                                                                                                                        |   |   | 30,342,000 |   |   |   | 26,942,800 |   |
| Accrued maintenance costs                                                                                                                                                                                   |   |   | 359,800 |   |   |   | 1,275,300 |   |
| Security deposits                                                                                                                                                                                           |   |   | 3,434,800 |   |   |   | 3,147,900 |   |
| Unearned revenues                                                                                                                                                                                           |   |   | 4,764,200 |   |   |   | 2,447,500 |   |
| Deferred income taxes                                                                                                                                                                                       |   |   | 8,503,000 |   |   |   | 8,533,700 |   |
| Income taxes payable                                                                                                                                                                                        |   |   | 309,400 |   |   |   | 452,600 |   |
| Total liabilities                                                                                                                                                                                           |   |   | 197,633,600 |   |   |   | 189,043,200 |   |
|  Commitments and contingencies (Note 5)                                                                                                                                                                |   |   |   |   |   |   |   |   |
|  Stockholders' equity:                                                                                                                                                                                 |   |   |   |   |   |   |   |   |
| Preferred stock, $0.001 par value, 2,000,000 shares    authorized, no shares issued and outstanding                                                                                          |   |   | - |   |   |   | - |   |
| Common stock, $0.001 par value, 10,000,000 shares authorized,    1,629,999 shares issued, 1,416,699 shares outstanding                                                                       |   |   | 1,600 |   |   |   | 1,600 |   |
| Paid-in capital                                                                                                                                                                                             |   |   | 14,780,100 |   |   |   | 14,780,100 |   |
| Retained earnings                                                                                                                                                                                           |   |   | 35,858,000 |   |   |   | 35,621,800 |   |
|                                                                                                                                                                                                        |   |   | 50,639,700 |   |   |   | 50,403,500 |   |
| Treasury stock at cost, 213,300 shares                                                                                                                                                                      |   |   | (3,036,800 | ) |   |   | (3,036,800 | ) |
| Total stockholders' equity                                                                                                                                                                                  |   |   | 47,602,900 |   |   |   | 47,366,700 |   |
| Total liabilities and stockholders' equity                                                                                                                                                                  |   | $ | 245,236,500 |   |   | $ | 236,409,900 |   |

----

|                                                                               |   | For the Six Months EndedJune 30, |       |   | For the Three Months Ended June 30, |   |
|------------------------------------------------------------------------------------|--------|----------------------------------|------------|--------|-------------------------------------|--------|
|                                                                               |   | 2018                             |       |   | 2017                                |   |   | 2018 |   |   | 2017 |   |
| Revenues and other income:                                                         |   |                             |       |   |                                |   |   |   |   |   |   |   |
| Operating lease revenue                                                            |   | $                                | 13,286,800 |   |                                | $      | 14,427,000 |   |   | $ | 6,823,900 |   |   | $ | 7,110,100 |   |
| Finance lease revenue                                                              |   |                             | 740,400    |   |                                |   | 757,700 |   |   |   | 361,300 |   |   |   | 432,300 |   |
| Maintenance reserves revenue                                                       |   |                             | -          |   |                                |   | 686,000 |   |   |   | - |   |   |   | 686,000 |   |
| Net gain on sales-type finance leases                                              |   |                             | -          |   |                                |   | 297,400 |   |   |   | - |   |   |   | - |   |
| Net gain/(loss) on disposal of assets                                              |   |                             | 9,900      |   |                                |   | (133,900 | ) |   |   | 18,100 |   |   |   | (147,700 | ) |
| Other income                                                                       |   |                             | 1,631,600  |   |                                |   | 600 |   |   |   | 580,200 |   |   |   | 400 |   |
|                                                                          |   |                             | 15,668,700 |   |                                |   | 16,034,800 |   |   |   | 7,783,500 |   |   |   | 8,081,100 |   |
|  Expenses:                                                                    |   |                             |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                                                                       |   |                             | 6,092,300  |   |                                |   | 5,879,100 |   |   |   | 3,150,400 |   |   |   | 2,943,000 |   |
| Interest                                                                           |   |                             | 4,619,400  |   |                                |   | 3,353,000 |   |   |   | 2,365,100 |   |   |   | 1,742,800 |   |
| Management fees                                                                    |   |                             | 2,948,800  |   |                                |   | 3,005,100 |   |   |   | 1,502,100 |   |   |   | 1,498,300 |   |
| Professional fees, general and   administrative and other           |   |                             | 954,000    |   |                                |   | 924,100 |   |   |   | 376,900 |   |   |   | 418,000 |   |
| Maintenance                                                                        |   |                             | 160,200    |   |                                |   | 661,400 |   |   |   | 68,900 |   |   |   | 405,300 |   |
| Provision for impairment in value of aircraft                                      |   |                             | 298,200    |   |                                |   | 454,300 |   |   |   | 298,200 |   |   |   | 454,300 |   |
| Insurance                                                                          |   |                             | 157,700    |   |                                |   | 130,900 |   |   |   | 78,000 |   |   |   | 57,700 |   |
| Other taxes                                                                        |   |                             | 45,100     |   |                                |   | 45,200 |   |   |   | 22,500 |   |   |   | 22,500 |   |
|                                                                               |   |                             | 15,275,700 |   |                                |   | 14,453,100 |   |   |   | 7,862,100 |   |   |   | 7,541,900 |   |
|  Income/(loss) before income tax provision                                    |   |                             | 393,000    |   |                                |   | 1,581,700 |   |   |   | (78,600 | ) |   |   | 539,200 |   |
|  Income tax provision                                                         |   |                             | 156,800    |   |                                |   | 584,500 |   |   |   | 2,500 |   |   |   | 183,500 |   |
|  Net income/(loss)                                                            |   | $                                | 236,200    |   |                                | $      | 997,200 |   |   | $ | (81,100 | ) |   | $ | 355,700 |   |
|  Earnings/(loss) per share:                                                   |   |                             |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                                                  |   | $                                | 0.17       |   |                                | $      | 0.67 |   |   | $ | (0.06 | ) |   | $ | 0.25 |   |
|   Diluted                                                                |   | $                                | 0.17       |   |                                | $      | 0.67 |   |   | $ | (0.06 | ) |   | $ | 0.25 |   |
| Weighted average shares used in  earnings/(loss) per share computations: |   |                             |       |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                                                  |   |                             | 1,416,699  |   |                                |   | 1,482,997 |   |   |   | 1,416,699 |   |   |   | 1,416,699 |   |
|   Diluted                                                                |   |                             | 1,416,699  |   |                                |   | 1,482,997 |   |   |   | 1,416,699 |   |   |   | 1,416,699 |   |

----

|                                                                                                      |   | For the Six Months Ended June 30, |        |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                                                                      |   | 2018                              |        |   | 2017 |   |
| Net cash provided by operating activities                                                                 |   | $                                 | 11,191,500  |   |   | $ | 8,706,500 |   |
| Investing activities:                                                                                     |   |                              |        |   |   |   |   |   |
| Proceeds from sale of aircraft and aircraft engines held for lease,    net of re-sale fees |   |                              | 3,186,800   |   |   |   | 1,397,300 |   |
| Proceeds from sale of assets held for sale, net of re-sale fees                                           |   |                              | 2,644,900   |   |   |   | 112,600 |   |
| Investment in direct financing leases                                                                     |   |                              | -           |   |   |   | (7,614,200 | ) |
| Investment in aircraft parts and acquisition costs                                                        |   |                              | (22,606,000 | ) |   |   | (21,735,900 | ) |
| Net cash used in investing activities                                                                     |   |                              | (16,774,300 | ) |   |   | (27,840,200 | ) |
| Financing activities:                                                                                     |   |                              |        |   |   |   |   |   |
| Issuance of notes payable – Credit Facility                                                         |   |                              | 21,000,000  |   |   |   | 26,000,000 |   |
| Repayment of notes payable – Credit Facility                                                        |   |                              | (17,500,000 | ) |   |   | (2,800,000 | ) |
| Repayment of notes payable – special purpose financing                                              |   |                              | (2,127,000  | ) |   |   | (2,033,900 | ) |
| Debt issuance costs                                                                                       |   |                              | (70,000     | ) |   |   | (65,000 | ) |
| Net cash provided by financing activities                                                                 |   |                              | 1,303,000   |   |   |   | 21,101,100 |   |
| Net (decrease)/increase in cash and cash equivalents                                                      |   |                              | (4,279,800  | ) |   |   | 1,967,400 |   |
| Cash and cash equivalents, beginning of period                                                            |   |                              | 8,657,800   |   |   |   | 2,194,400 |   |
| Cash and cash equivalents, end of period                                                                  |   | $                                 | 4,378,000   |   |   | $ | 4,161,800 |   |

----

----

|                                    |   | June 30,2018 |       |   | December 31,2017 |   |
|-----------------------------------------|--------|--------------|------------|--------|------------------|--------|
| Gross minimum lease payments receivable |   | $            | 24,839,100 |   |             | $      | 27,074,400 |   |
| Less unearned interest                  |   |         | (2,773,000 | )      |             |   | (3,513,400 | ) |
| Finance leases receivable               |   | $            | 22,066,100 |   |             | $      | 23,561,000 |   |
| Years ending      |   |   |       |
|-------------------|--------|--------|------------|
|              |   |   |       |
| Remainder of 2018 |   | $      | 4,026,900  |   |
| 2019              |   |   | 7,087,600  |   |
| 2020              |   |   | 5,036,600  |   |
| 2021              |   |   | 5,381,000  |   |
| 2022              |   |   | 3,307,000  |   |
|              |   | $      | 24,839,100 |   |
|                  |   | June 30, 2018 |   |   | December 31, 2017   |   |
|-----------------------|--------|---------------|--------|--------|---------------------|--------|
| Type                  |   | NumberOwned   |   |   | % of net book value |   |   | Numberowned |   |   | % of net book value |   |
| Regional jet aircraft |   |          | 13     |   |                |   | 73 | % |   |   | 13 |   |   |   | 82 | % |
| Turboprop aircraft    |   |          | 10     |   |                |   | 26 | % |   |   | 10 |   |   |   | 17 | % |
| Engines               |   |          | 1      |   |                |   | 1 | % |   |   | 1 |   |   |   | 1 | % |
| Years ending      |   |   |        |
|-------------------|--------|--------|-------------|
|              |   |   |        |
| Remainder of 2018 |   | $      | 13,858,100  |   |
| 2019              |   |   | 27,460,200  |   |
| 2020              |   |   | 25,821,900  |   |
| 2021              |   |   | 18,720,500  |   |
| 2022              |   |   | 16,762,900  |   |
| Thereafter        |   |   | 34,732,900  |   |
|              |   | $      | 137,356,500 |   |

----

|                                              |   | June 30,2018 |        |   | December 31,2017 |   |
|---------------------------------------------------|--------|--------------|-------------|--------|------------------|--------|
| Credit Facility:                                  |   |         |        |   |             |   |
|    Principal                       |   | $            | 137,500,000 |   |             | $      | 134,000,000 |   |
|    Unamortized debt issuance costs |   |         | (1,483,500  | )      |             |   | (2,216,000 | ) |
|    Accrued interest                |   |         | 223,000     |   |             |   | 278,900 |   |
| Special purpose financing:                        |   |         |        |   |             |   |   |   |
|    Principal                       |   |         | 11,384,800  |   |             |   | 13,511,900 |   |
|    Accrued interest                |   |         | 18,200      |   |             |   | 23,400 |   |
|                                              |   | $            | 147,642,500 |   |             | $      | 145,598,200 |   |

----

|                                               |   | For the Six MonthsEnded June 30, |      |   | For the Three MonthsEnded June 30, |   |
|----------------------------------------------------|--------|----------------------------------|-----------|--------|------------------------------------|--------|
|                                               |   | 2018                             |      |   | 2017                               |   |   | 2018 |   |   | 2017 |   |
| Net income/(loss)                                  |   | $                                | 236,200   |   |                               | $      | 997,200 |   |   | $ | (81,100 | ) |   | $ | 355,700 |   |
| Weighted average shares outstanding for the period |   |                             | 1,416,699 |   |                               |   | 1,482,997 |   |   |   | 1,416,699 |   |   |   | 1,416,699 |   |
| Basic earnings/(loss) per share                    |   | $                                | 0.17      |   |                               | $      | 0.67 |   |   | $ | (0.06 | ) |   | $ | 0.25 |   |
| Diluted earnings/(loss) per share                  |   | $                                | 0.17      |   |                               | $      | 0.67 |   |   | $ | (0.06 | ) |   | $ | 0.25 |   |
|             |   | For the Six Months Ended June 30, |      |   | For the Three MonthsEnded June 30, |   |
|------------------|--------|-----------------------------------|-----------|--------|------------------------------------|--------|
|             |   | 2018                              |      |   | 2017                               |   |   | 2018 |   |   | 2017 |   |
| Management fees  |   | $                                 | 2,948,800 |   |                               | $      | 3,005,100 |   |   | $ | 1,502,100 |   |   | $ | 1,498,300 |   |
| Acquisition fees |   |                              | 494,400   |   |                               |   | 641,900 |   |   |   | 494,400 |   |   |   | 421,400 |   |
| Remarketing fees |   |                              | -         |   |                               |   | 51,100 |   |   |   | - |   |   |   | - |   |

----

----

|                                          |   | June 30, 2018 |        |   | December 31, 2017 |   |
|-----------------------------------------------|--------|---------------|-------------|--------|-------------------|--------|
| Number of aircraft and engines held for lease |   |          | 24          |   |              |   | 24 |   |
|                                          |   |          |        |   |              |   |   |   |
| Weighted average fleet age                    |   | 11.5 years    |        |   | 11.4 years        |   |
| Weighted average remaining lease term         |   | 57 months     |        |   | 58 months         |   |
| Aggregate fleet net book value                |   | $             | 210,592,000 |   |              | $      | 195,098,200 |   |
|                                |   | For the Six MonthsEnded June 30, |   |   | For the Three MonthsEnded June 30, |   |
|-------------------------------------|--------|----------------------------------|--------|--------|------------------------------------|--------|
|                                |   | 2018                             |   |   | 2017                               |   |   | 2018 |   |   | 2017 |   |
|  Average portfolio utilization |   |                             | 90     | %      |                               |   | 95 | % |   |   | 91 | % |   |   | 94 | % |
|                                 |   | June 30, 2018 |   |   | December 31, 2017   |   |
|--------------------------------------|--------|---------------|--------|--------|---------------------|--------|
| Type                                 |   | Numberowned   |   |   | % of net book value |   |   | Numberowned |   |   | % of net book value |   |
| Turboprop aircraft:                  |   |          |   |   |                |   |   |   |   |   |   |   |
|   Bombardier Dash-8-400    |   |          | 4      |   |                |   | 18 | % |   |   | 2 |   |   |   | 7 | % |
|   Bombardier Dash-8-300    |   |          | 3      |   |                |   | 5 | % |   |   | 3 |   |   |   | 6 | % |
|   Saab 340B Plus           |   |          | 2      |   |                |   | 2 | % |   |   | 4 |   |   |   | 3 | % |
|   Saab 340B                |   |          | 1      |   |                |   | 1 | % |   |   | 1 |   |   |   | 1 | % |
|                                 |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Regional jet aircraft:               |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
|   Canadair 900 (*)         |   |          | 5      |   |                |   | 35 | % |   |   | 5 |   |   |   | 38 | % |
|   Embraer 175              |   |          | 3      |   |                |   | 14 | % |   |   | 3 |   |   |   | 16 | % |
|   Canadair 1000            |   |          | 2      |   |                |   | 13 | % |   |   | 2 |   |   |   | 15 | % |
|   Canadair 700             |   |          | 3      |   |                |   | 11 | % |   |   | 3 |   |   |   | 13 | % |
|                                 |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Engines:                             |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
|   Pratt & Whitney 150A |   |          | 1      |   |                |   | 1 | % |   |   | 1 |   |   |   | 1 | % |
|                                 |   |          |   |   |                |   |   |   |   |   |   |   |   |   |   |   |

----

|          |   | June 30, 2018  |        |   | December 31, 2017  |   |
|---------------|--------|----------------|-------------|--------|--------------------|--------|
| Region        |   | Net book value |        |   | % ofnet book value |   |   | Net book value |   |   | % ofnet book value |   |
| Europe        |   | $              | 113,905,000 |   |               |   | 54 | % |   | $ | 92,108,500 |   |   |   | 47 | % |
| North America |   |           | 70,378,100  |   |               |   | 33 | % |   |   | 72,270,700 |   |   |   | 37 | % |
| Asia          |   |           | 5,854,400   |   |               |   | 3 | % |   |   | 6,082,100 |   |   |   | 3 | % |
| Off lease     |   |           | 20,454,500  |   |               |   | 10 | % |   |   | 24,636,900 |   |   |   | 13 | % |
|          |   | $              | 210,592,000 |   |               |   | 100 | % |   | $ | 195,098,200 |   |   |   | 100 | % |
|          |   | For the Three Months Ended June 30, |   |
|---------------|--------|-------------------------------------|--------|
|          |   | 2018                                |   |   | 2017 |   |
| Region        |   | Numberof lessees                    |   |   | % ofoperatinglease revenue |   |   | Numberof lessees |   |   | % ofoperatinglease revenue |   |
| Europe        |   |                                | 4      |   |   |   | 58 | % |   |   | 4 |   |   |   | 53 | % |
| North America |   |                                | 4      |   |   |   | 37 | % |   |   | 4 |   |   |   | 24 | % |
| Africa        |   |                                | -      |   |   |   | - |   |   |   | 1 |   |   |   | 15 | % |
| Asia          |   |                                | 1      |   |   |   | 5 | % |   |   | 1 |   |   |   | 4 | % |
| Australia     |   |                                | -      |   |   |   | - |   |   |   | 1 |   |   |   | 4 | % |

----

| (A) | Payments for other income |
|-----|---------------------------|

| (B) | Payments for operating lease revenue |
|-----|--------------------------------------|

| (C) | Payments for management fees |
|-----|------------------------------|

| (D) | Payments for interest |
|-----|-----------------------|

| (E) | Payments for maintenance |
|-----|--------------------------|

----

----

----

----

----

----

----

----

----

Item 4.        Controls and Procedures. 

 

CEO and CFO Certifications.  Attached as exhibits to this Quarterly Report on Form 10-Q (the “Report”) are certifications of the Company’s Chief Executive Officer (the “CEO”) and the Company’s Chief Financial Officer(the “CFO”), which are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This section of the Report includes information concerning the evaluation of disclosure controls and procedures referred to in the Section 302 Certifications and this should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented. 

  

Evaluation of the Company’s Disclosure Controls and Procedures.  Disclosure controls and procedures (“Disclosure Controls”) are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Securities Exchange Act of 1934, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and 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. 

  

In the course of the review of the consolidated financial results of the Company for the three months and six months ended June 30, 2018, we identified a material weakness in our internal control over financial reporting at June 30, 2018 related to the Company’s incorrect accounting for management fees and acquisition fees associated with the management agreement between JetFleet Holding Corp (“JHC”) and the Company.  

  

Management has determined that this deficiency constitutes a material weakness as of June 30, 2018.  Management is in the process of conducting the controls related to the acquisition accounting over the JHC Merger as the transaction has not been consummated and therefore the control has not been finalized.  Management believes that it will operate effectively once the Merger is finalized and the material weakness relating to the recognition of expenses subject to the Waiver Agreement is included in management’s internal controls over the final acquisition accounting in future periods. 

  

The Company’s management, with the participation of the CEO and CFO, evaluated the effectiveness of the Company’s Disclosure Controls and concluded that the Company’s Disclosure Controls were not effective as of June 30, 2018 due to the material weakness described above. 

  

Changes in Internal Control Over Financial Reporting.  Except for the material weakness note above, no change in the Company’s internal control over financial reporting occurred during the fiscal quarter ended June 30, 2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 

 

Inherent Limitations of Disclosure Controls and Internal Control Over Financial Reporting.  In designing its Disclosure Controls and internal control over financial reporting, the Company’s management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives.  In addition, the design of the Company’s controls and procedures must reflect the fact that there are resource constraints, and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.  Because of these inherent limitations, the Company’s Disclosure Controls and internal control over financial reporting may not prevent or detect all instances of fraud, misstatements or other control issues.  In addition, projections of any evaluation of the effectiveness of disclosure or internal controls to future periods are subject to risks, including, among others, that controls may become inadequate because of changes in conditions or that compliance with policies or procedures may deteriorate. 

 

 

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| ExhibitNumber |  Description                                                                                                    |
|---------------|---------------------------------------------------------------------------------------------------------------------------|
| 31.1          | Certification of Michael G. Magnusson, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2          | Certification of Toni M. Perazzo, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002      |
| 32.1*         | Certification of Michael G. Magnusson, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2*         | Certification of Toni M. Perazzo, Chief Financial Officer, pursuant toSection 906 of the Sarbanes-Oxley Act of 2002       |
| 101.INS       | XBRL Instance Document                                                                                                    |
| 101.SCH       | XBRL Schema Document                                                                                                      |
| 101.CAL       | XBRL Calculation Linkbase Document                                                                                        |
| 101.LAB       | XBRL Label Linkbase Document                                                                                              |
| 101.PRE       | XBRL Presentation Linkbase Document                                                                                       |
| 101.DEF       | XBRL Definition Linkbase Document                                                                                         |

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|                  | AEROCENTURY CORP. |
|-----------------------|-------------------|
| Date: August 10, 2018 | By:               | /s/ Toni M. Perazzo |
|                  |              | Name: Toni M. Perazzo |
|                  |              | Title: Senior Vice President-Finance and |
|                  |              | Chief Financial Officer |