SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q


           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                  For the Quarterly Period Ended June 30, 2000

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                        Commission File Number: 000-23309
                               LINC CAPITAL, INC.
             (Exact name of registrant as specified in its charter)


                               Delaware 06-0850149
      (State or other jurisdiction of (I.R.S. Employer Identification No.)
                         incorporation or organization)

                 303 East Wacker Drive, Chicago, Illinois 60601
               (Address of principal executive offices) (Zip Code)

                                 (312) 946-1000
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 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 [ ]


At June 30,  2000,  5,265,050  shares  of the  Registrant's  Common  Stock  were
outstanding.
<PAGE>

<TABLE>

                                                     LINC CAPITAL, INC.

                                                      TABLE OF CONTENTS


PART I.                                            FINANCIAL INFORMATION                               PAGE

<S>          <C>
             Item 1.  Financial Statements:
                      Consolidated Balance Sheets
                           June 30, 2000 and December 31, 1999 (unaudited)................               3
                      Consolidated Statements of Operations -
                           Three and six months ended June 30, 2000 and 1999 (unaudited)..               4
                      Consolidated Statements of Cash Flows -
                           Three and six months ended June 30, 2000 and 1999 (unaudited)..               5
                      Notes to Consolidated Financial Statements (unaudited)..............               7

             Item 2.  Management's Discussion and Analysis of Financial
                      Condition and Results of Operations.................................              16

             Item 3.  Quantitative and Qualitative Disclosures About Market Risk..........              22


PART II.                                             OTHER INFORMATION
             Item 1.  Legal Proceedings...................................................              22

             Item 2.  Changes in Securities and Use of Proceeds...........................              22

             Item 3.  Defaults Upon Senior Securities.....................................              23

             Item 4.  Submission of Matters to a Vote of Security Holders.................              23

             Item 5.  Other Information...................................................              23

             Item 6.  Exhibits and Reports on Form 8-K....................................              23

SIGNATURES            ....................................................................              24
</TABLE>


                       LINC Capital, Inc. and Subsidiaries
                     Consolidated Balance Sheets (Unaudited)
                    (Dollars in thousands, except share data)

<TABLE>


                                                                               June 30,       December  31,
<S>                                                                              <C>              <C>
                                                                                 2000             1999
ASSETS
Net investment in direct finance leases and loans........                      $372,041         $436,820
Equipment held for rental and operating leases, net......                        27,407           26,115
Accounts receivable......................................                        11,102           13,354
Restricted cash..........................................                         9,284           11,254
Other assets.............................................                        17,251           17,726
Goodwill.................................................                         1,629            3,225
Cash and cash equivalents................................                         5,166            4,394
                                                                          ------------------ ----------------
Total assets.............................................                      $443,880         $512,888
                                                                          ================== ================


LIABILITIES AND STOCKHOLDERS EQUITY
Senior credit facility and other senior notes payable....                       $87,180         $102,754
Recourse debt............................................                         2,302            3,152
Nonrecourse debt.........................................                       309,871          348,098
Accounts payable.........................................                        14,625           15,208
Accrued expenses.........................................                         6,907            8,795
Customer holdbacks.......................................                         5,459            7,607
Subordinated debentures..................................                         6,266            6,059
                                                                          ------------------ ----------------
Total liabilities........................................                      $432,610        $491,673
                                                                          ------------------ ----------------


Redeemable preferred stock, $25,000 par value, 225
  shares authorized, issued and
  outstanding, stated at redemption value................                        5,827                -

STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 15,000,000 shares
  authorized; 5,330,953 shares issued;
  5,265,050 shares outstanding...........................                            5                5
Additional paid-in capital...............................                       29,595           29,797
Deferred compensation from issuance of options...........                         (11)             (12)
Stock note receivable....................................                        (182)            (182)
Treasury stock, at cost; 65,903 shares...................                        (287)            (287)
Accumulated other comprehensive income...................                           80              932
Accumulated deficit......................................                     (23,757)          (9,038)
                                                                          ------------------ ----------------
                              Total stockholders' equity                        $5,443          $21,215

                                                                          ------------------ ----------------
              Total liabilities and stockholders' equity                      $443,880         $512,888

                                                                          ================== ================


                                 See accompanying notes to consolidated financial statements.

</TABLE>


<TABLE>

                                             LINC Capital, Inc. and Subsidiaries
                                      Consolidated Statements of Operations (Unaudited)
                                        (Dollars in thousands, except per share data)



                                                                              Three Months ended           Six Months ended
                                                                                   June 30,                       June 30,
<S>                                                                           <C>            <C>              <C>        <C>
                                                                              2000           1999             2000       1999
REVENUES:
      Sales of equipment.................................                   $11,535        $9,110         $20,623      $16,009
      Direct finance lease income........................                     9,221         7,095          19,658       12,933
      Interest income....................................                       842           819           1,789        1,638
      Rental and operating lease revenue.................                     2,094         2,678           4,258        5,377
      Servicing fees and other income....................                       868         1,317           1,690        3,948
      Gain (loss) on sale of lease receivables...........                     (175)           284             (9)          355
      Gain on equipment residual values..................                       304           312             441          563
      Net gain on equity participation rights............                       380         1,004             328        1,238
                                                                      -------------- ------------- --------------- ------------
Total revenues                                                               25,069        22,619          48,778       42,061

                                                                      -------------- ------------- --------------- ------------

EXPENSES:
      Cost of equipment sold.............................                    $9,172         $7,569        $16,575      $13,067
      Selling, general and administrative................                     7,520          5,362         13,609       11,561
      Interest...........................................                     8,216          4,999         16,662        9,030
      Depreciation of equipment under rental agreements
        and operating leases.............................                     1,436          1,770          3,011        3,553
      Amortization of intangibles........................                       439            252            865          510
      Provision for credit losses........................                     7,069          1,802          8,266        2,888
      Impairment loss on assets..........................                     4,509          - - -          4,509        - - -
                                                                       ------------- -------------- -------------- ------------
                                                                             38,361         21,754         63,497       40,609
Total expenses
                                                                       ------------- -------------- -------------- ------------
Earnings (loss) before income taxes......................                  (13,292)            865       (14,719)        1,452
Income tax expense.......................................                     - - -            244          - - -          406
                                                                       ------------- -------------- -------------- ------------

Net earnings (loss)......................................                 $(13,292)           $621      $(14,719)       $1,046

Net earnings (loss) per common share:
       Basic.............................................                   $(2.55)          $ .12        $(2.83)        $ .20
       Diluted...........................................                   $(2.55)          $ .12        $(2.83)        $ .19


                                 See accompanying notes to consolidated financial statements.
</TABLE>








                       LINC Capital, Inc. and Subsidiaries
                Consolidated Statements of Cash Flows (Unaudited)
                             (Dollars in thousands)



<TABLE>
                                                                               Three Months ended         Six Months ended
                                                                                     June 30,                  June 30,
<S>                                                                            <C>             <C>             <C>           <C>
                                                                               2000            1999            2000          1999
Cash flows from operating activities:
   Net earnings (loss)........................................                 (13,292)          $621      $(14,719)       $1,046
         Adjustments to reconcile net earnings (loss) to net cash
          provided by operations:
             Depreciation and amortization....................                  2,154           2,223          4,450        4,475
             Direct finance lease income......................                (9,221)         (7,095)       (19,658)     (12,933)
             Payments on direct finance leases................                 59,729          37,364        118,281       58,406
             Deferred income taxes............................                  - - -             550          - - -          712
             Provision for credit losses......................                  7,069           1,802          8,266        2,888
             (Gain) loss on sale of lease receivables.........                    175           (284)              9        (355)
             Gain on equity participation rights..............                  (380)         (1,004)          (328)      (1,238)
             Impairment loss on assets........................                  4,509           - - -          4,509        - - -
             Amortization of discount.........................                    106              89            207          175
             Deferred compensation............................                  - - -               7              1         (19)
  Changes in assets and liabilities:
             Decrease (increase) in receivables...............                     16           (997)          2,252      (2,246)
             Decrease (increase) in restricted cash...........                  3,733         (2,947)          1,970      (4,369)
             Decrease (increase) in other assets and goodwill.                (4,871)           (616)        (4,682)          143
             Increase (decrease) in accounts payable..........                  5,225           1,537          (583)        5,226
             Increase (decrease) in accrued expenses..........                    840             829        (1,889)        (152)
             Increase (decrease) in customer holdbacks........                (3,892)           (268)        (2,148)      (1,418)
                                                                             ---------        --------       --------     --------
Cash provided by operating activities.........................                 51,900          31,811         95,938       50,341
                                                                             ---------        --------       --------     --------
Cash flows from investing activities:
      Cost of equipment acquired for lease and rental.........                (3,743)       (100,639)       (63,131)    (197,604)
      Cash used in acquisitions, net of cash acquired.........                  - - -           - - -          - - -      (1,497)
      Receipts on securitization retained interest............                  - - -           2,507             88        4,895
      Fixed assets purchased..................................                  (184)           (205)          (630)        (679)
      Proceeds from sale of investments.......................                    440           - - -            440          234
                                                                             ---------      ---------      ---------    ---------
Net cash used in investing activities.........................                (3,487)        (98,337)       (63,233)    (194,651)
                                                                             ---------      ---------      ---------    ---------
</TABLE>


          See accompanying notes to consolidated financial statements.




<TABLE>

                                             LINC Capital, Inc. and Subsidiaries
                               Consolidated Statements of Cash Flows (Unaudited) - (Continued)
                                                    (Dollars in thousands)



                                                                            Three Months ended             Six Months ended
<S>                                                                                <C>                           <C>
                                                                                   June 30,                      June 30,
                                                                               2000      1999                 2000           1999
Cash flows from financing activities:
      Net increase (decrease) in notes payable....................           (15,945)      (4,378)         (15,110)        7,555
      Proceeds from recourse and nonrecourse debt.................              - - -       92,435           63,803      178,535
      Repayments of recourse and nonrecourse debt.................           (47,257)     (24,906)        (103,344)     (47,800)
      Proceeds from sales of lease receivables....................             15,926        3,257           17,093        4,197
      Proceeds from issuance of redeemable preferred stock........              - - -        - - -            5,625        - - -
      Sale of stock...............................................              - - -        - - -            - - -          395
                                                                             --------      --------       ---------     ---------
Net cash provided by financing activities.........................           (47,276)       66,408         (31,933)      142,882
                                                                             --------      --------       ---------     ---------
Net increase (decrease) in cash...................................              1,137        (118)              772      (1,428)
Cash at beginning of period.......................................              4,029          118            4,394        1,428
                                                                             --------      --------       ---------     ---------
Cash at end of period.............................................             $5,166       $- - -           $5,166       $- - -
                                                                             ========      ========       =========     =========
Supplemental disclosures of cash flow information:
      Interest paid...............................................             $8,677       $2,620          $17,201       $5,326
      Income taxes paid...........................................                $14         $282             $286         $569



                                 See accompanying notes to consolidated financial statements.
</TABLE>
                      LINC Capital, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (Unaudited)



(1)       The Company

     LINC  Capital,  Inc.  (the  "Company")  is a finance  company that provides
leasing,  asset-based financing,  and equipment rental and distribution services
to businesses. The Company's principal activities are (i) the direct origination
of leases and accounts  receivable and other asset-backed  financing to emerging
growth   companies   primarily   serving   the   telecommunications,   high-tech
manufacturing,  Internet-related and information  technology industries ("Select
Growth  Finance"),  (ii) the financing of leases generated by smaller  equipment
lessors  ("Portfolio  Finance"),  (iii) the rental,  leasing and distribution of
analytical   instruments  and  related   equipment  to  companies   serving  the
environmental,  pharmaceutical and biotechnology  industries and the leasing and
distribution   of  equipment  to   Internet-related   businesses   ("Rental  and
Distribution"), and (iv) the establishment of leasing programs for manufacturers
and distributors ("Vendor Finance").

     The Company has ceased lease  originations  in its Select  Growth  Finance,
Portfolio  Finance and Vendor Finance  business units. The Company is continuing
the operations of the largest portion of its Rental and  Distribution  business.
As  a  consequence  of  the  cessation  of  substantially  all  of  its  leasing
activities,  the Company has reduced overall employment to 99 at August 10, 2000
from 221 at December 31, 1999. See Note 3.

(2)   Significant Accounting Policies

         Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with generally  accepted  accounting  principles and the
rules and  regulations  of the  Securities  and Exchange  Commission for interim
financial statements.  Accordingly, the interim statements do not include all of
the information and disclosures required for annual financial statements. In the
opinion of the  Company's  management,  all  adjustments  (consisting  solely of
adjustments of a normal recurring  nature)  necessary for a fair presentation of
these  interim   results  have  been   included.   Inter-company   accounts  and
transactions  have  been  eliminated.  For  further  information,  refer  to the
consolidated  financial  statements and notes thereto  included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999. The results for
the  three-month  and six-month  periods ended June 30, 2000 are not necessarily
indicative of the results that may be expected for the full year ending December
31, 2000.

     The  balance  sheet  at  December  31,  1999  has  been  derived  from  the
consolidated  financial  statements  included in the Company's  Annual Report on
Form 10-K for the year ended December 31, 1999.

         Reclassifications

     Certain  reclassifications  have been made in the 1999 financial statements
to conform to the 2000 presentation.



                      LINC Capital, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (Unaudited) - (Continued)


(3)   Debt Covenant Violations and Continuance of the Company as a Going Concern

     At June 30, 2000 and December 31, 1999, the Company was in violation of the
minimum tangible net worth,  minimum  earnings,  leverage and interest  coverage
covenants under its senior revolving credit facility (the "Loan Agreement"). The
violations under the Loan Agreement have also resulted in  cross-defaults in the
agreements  relating to the Company's  commercial  paper conduit  securitization
facility (the "Conduit Facility") and its term securitization  completed in July
1999 (the "Term  Securitization").  Since  March  2000,  the Company has been in
discussions  with  the  lenders  under  the  Loan  Agreement  and the  liquidity
providers under the Conduit Facility  regarding  forbearance from enforcement of
remedies  available  to such  parties  as a result of the  Company's  failure to
comply with the applicable covenants. During these forbearance discussions,  the
Company is not permitted to borrow  additional  funds under its Loan  Agreement.
New lease  originations  have therefore been suspended,  with the exception of a
small number of leases  originated as a by-product  of the Company's  rental and
distribution  activities.  The  Company  continues  to  operate  its  analytical
instrument  rental  and  distribution  business  in  the  ordinary  course.  The
commercial  paper liquidity  facility  available to support the Conduit Facility
has been  extended by the liquidity  providers to October 17, 2000.  The Company
has been precluded from funding new lease transactions into the Conduit Facility
since March 31, 2000.  Should liquidity not be available to the Conduit Facility
beyond October 17, 2000,  the interest rate on this facility  would  immediately
increase by approximately  300 basis points,  with further  increases over time,
and the Company may be required  by the  liquidity  providers  to sell the lease
portfolio held by the Conduit Facility.

     The Company has entered  into  agreements  providing  for the  servicing of
substantially  all of its lease portfolio by a third party,  effective in August
2000. As a consequence of the transfer of servicing of lease  portfolios held by
the Term  Securitization  and the  Conduit  Facility  to this third  party,  the
Company   will  no  longer   receive   servicing   fees  from  either  the  Term
Securitization  or the Conduit  Facility.  Such servicing fees for the first six
months of 2000 were $783,000.

     As a result of the  defaults  in the Term  Securitization  and the  Conduit
Facility, all cash flow from the leases owned by the Term Securitization and the
Conduit Facility is being used to amortize the debt  certificates  issued by the
Term  Securitization and the amount owed to the Conduit Facility,  respectively.
As a  consequence,  recovery  of the  Company's  retained  interest  in the Term
Securitization  and the Conduit  Facility has been deferred from its  originally
expected  recovery period.  This deferral has the effect of further limiting the
Company's liquidity position.

     The Company is in the process of selling portfolios of leases to repay debt
under the Loan Agreement and to repay amounts owed under the Conduit Facility as
well as to  provide  working  capital,  consistent  with a plan  that  has  been
presented  to its Loan  Agreement  lenders.  The  outsourcing  of  servicing  of
substantially  all of its remaining  portfolio of leases will permit the Company
to substantially  reduce its overhead.  Employee headcount has been reduced from
221  at  December  31,  1999,  including  53  in  the  rental  and  distribution
operations,  to 99 at August 10, 2000,  including 50 in rental and distribution.
Lenders  under the Loan  Agreement  have  been  asked to  forebear  to allow the
Company to implement its plans in an orderly fashion. At this time, such Lenders
have  continued to reserve their rights under the Loan Agreement and the Company
is  in  continuing  discussions  with  such  Lenders  intended  to  lead  to  an
out-of-court restructuring and refinancing of the Company's operations.


                      LINC Capital, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (Unaudited) - (Continued)


     The  Company  is also in the  process  of  soliciting  proposals  to either
refinance its Analytical  Instrument Rental and Distribution business or to sell
this business to a third party.

     In  addition  to its  lease  portfolios  and its  Rental  and  Distribution
business,  the Company holds warrants and other equity interests in 55 companies
who are lessees of its Select  Growth  business.  Based on the closing  price of
publicly held  securities in this portfolio at August 10, 2000, the value of the
Company's warrants in publicly held securities was $30.3 million,  substantially
all of  which  was  attributable  to  warrants  held by the  Company  in  Corvis
Corporation (the "Corvis Warrants"). In July 2000, Corvis Corporation,  in which
the company holds  warrants to purchase  327,972 shares at a price of $0.762 per
share  completed  its  initial  public  offering.  The  Company  is subject to a
"lock-up"  agreement  that  restricts the  Company's  ability to sell the Corvis
Warrants prior to late January 2001. The unrealized  gain on the Corvis Warrants
has not been  included  in income or  stockholders'  equity.  See Item 5 - Other
Information.

     In the event that the Company is unable to successfully  obtain forbearance
from its secured  creditors for a period that enables it to sell elements of its
lease  portfolio,  to  refinance  or sell its Rental and  Distribution  business
and/or to liquidate  its  portfolio of warrants,  the Company may be required to
seek protection under the Bankruptcy Code. Also, if various unsecured  creditors
whose obligations are past due, were to enforce their claims,  the Company could
be forced into bankruptcy. In addition, even if the Company were to successfully
obtain  forbearance from its secured lenders,  forestall action by its unsecured
creditors,  successfully sell elements of its lease portfolio, refinance or sell
its Rental and  Distribution  Business and  liquidate its portfolio of warrants,
there can be no assurance  that the proceeds of the sale or refinancing of these
assets would provide the Company with sufficient liquidity to continue operating
as a going  concern.  These  circumstances  raise  substantial  doubt  about the
Company's  ability to continue as a going concern.  The  consolidated  financial
statements at June 30, 2000 and December 31, 1999 do not include any adjustments
that might result from the outcome of this uncertainty.

(4)      Impairment of Assets

     At June 30,  2000,  as a result  of the  substantial  decline  in new lease
originations  and  downsizing,  the Company  recognized  an  impairment  loss of
$4,509,000.  Included  in the  impairment  loss is  $1,600,000  relating  to the
estimated  net  excess  cost of the  space  lease  for the  Company's  corporate
headquarters,  which the Company is actively attempting to sublease.  Due to the
downsizing of its  operations,  the Company  recognized  an  impairment  loss of
$1,240,000 on furniture,  fixtures, computer and related equipment for assets no
longer in use equal to the difference between the net book value of these assets
and  their  estimated  fair  value.  Also  included  in the  impairment  loss is
$1,669,000 relating to the goodwill associated with the acquisition of LINC IF+E
in August 1999,  part of the Company's  Rental and  Distribution  business unit,
since the  Company  expects to either sell LINC IF+E at  approximately  tangible
book value or liquidate its operations.

                      LINC Capital, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (Unaudited) - (Continued)

<TABLE>

(5)  Net Investment in Direct Finance Leases and Loans

         Net investment in direct finance leases and loans is as follows:

<S>                                                                               <C>               <C>
                                                                                  June 30,      December 31,
                                                                                    2000            1999

                                                                                      (In thousands)

      Lease and loan contracts receivable in installment...............           $431,819         $501,557
      Estimated residual value of leased equipment.....................             15,651           17,386
      Broker fees......................................................              4,175            3,857
      Initial direct costs.............................................              4,201            4,482
      Unearned lease income............................................           (66,694)         (78,544)
      Allowance for doubtful receivables...............................           (17,111)         (11,918)
                                                                          ----------------- ----------------
      Net Investment...................................................           $372,041         $436,820
                                                                          ================= ================


(6) Equipment Held for Rental and Operating Leases, Net

         The net book value of equipment held for rental and operating leases is as follows:

                                                                                    June 30,       December 31,
                                                                                      2000             1999

                                                                                          (In thousands)

      Equipment under operating leases................................               $6,589           $6,993
      Equipment under rental agreements...............................               20,818           19,122
                                                                          ------------------ ----------------
      Net book value..................................................              $27,407          $26,115
                                                                          ================== ================
</TABLE>


     The  book  values  presented  in the  above  table  are net of  accumulated
depreciation  of $11,131,000  and  $10,128,000 at June 30, 2000 and December 31,
1999, respectively.  Equipment under rental agreements is comprised primarily of
analytical instruments.


(7)      Loss Experience Reserves

     The  following  table sets forth  delinquencies  as a  percentage  of gross
remaining  receivables  on leases  included in the  Company's  owned and managed
lease portfolio and the allowance for doubtful receivables  provided, as well as
holdback  reserves  on  portfolios  acquired,  as of the  ends  of  the  periods
indicated.

LINC Capital, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited) - (Continued)



<TABLE>

                                                                                   June 30,       December 31,
<S>                                                                                  <C>              <C>
                                                                                     2000             1999

                                                                                   (Dollars in thousands)
Select Growth Finance:
           Gross Receivable Balance                                                 $50,020          $79,980
           31 -  60 days past due                                                     2.28%            1.08%
           61 -  90 days past due                                                     1.15%            0.66%
           Over 90 days past due                                                      2.58%            1.20%
Portfolio Finance:
           Gross Receivable Balance                                                $174,009         $223,538
           31 -  60 days past due                                                     3.08%            2.65%
           61 -  90 days past due                                                     1.39%            1.60%
           Over 90 days past due                                                      1.90%            0.08%
Rental and Distribution:
           Gross Receivable Balance                                                 $16,041          $12,450
           31 -  60 days past due                                                     5.84%            6.48%
           61 -  90 days past due                                                     0.28%              - -
           Over 90 days past due                                                      0.23%            0.07%
Vendor Finance:
           Gross Receivable Balance                                                $219,234         $224,253
           31 -  60 days past due                                                     4.89%            3.31%
           61 -  90 days past due                                                     2.03%            1.34%
           Over 90 days past due                                                      3.75%            1.70%
Totals:
           Gross Receivable Balance                                                $459,304         $540,221
           31 -  60 days past due                                                     3.95%            2.78%
           61 -  90 days past due                                                     1.63%            1.31%
           Over 90 days past due                                                      2.80%            0.92%



Allowance for doubtful receivables included in:
              Net investment in direct finance leases and loans                     $17,111          $11,918
              Securitization retained interest                                        - - -               78
                                                                          ------------------ ----------------
                                                                                    $17,111          $11,996

Holdback reserves on portfolios acquired                                              1,535            2,386
                                                                          ------------------ ----------------
Total allowance and holdbacks                                                       $18,646          $14,382
                                                                          ================== ================

Recourse to Portfolio Finance customers in addition
                                                                          ------------------ ----------------
to holdback reserves on portfolios acquired                                         $17,063          $18,333
                                                                          ================== ================
</TABLE>




                      LINC Capital, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (Unaudited) - (Continued)

<TABLE>

(8)      Debt

     Notes Payable

     Notes Payable to banks and others were as follows:
<S>                                                                                <C>              <C>
                                                                                   June 30,        December 31,
                                                                                     2000             1999

                                                                                        (In thousands)

      Senior credit facility...................................                     $85,065          $99,700
      Other....................................................                       2,115            3,054
                                                                          ------------------ ----------------
                         Total.................................                     $87,180         $102,754
                                                                          ================== ================

</TABLE>

     At June 30,  2000 and  December  31,  1999,  $85,065,000  and  $99,700,000,
respectively,  was  outstanding  under  a  senior  credit  facility  (the  "Loan
Agreement").  The  weighted-average  interest rate on the Loan Agreement at June
30, 2000 and December 31, 1999 was 8.10% and 7.65%,  respectively.  The facility
is secured by substantially all of the assets of the Company and was used by the
Company to finance the acquisition of equipment pending  completion of permanent
financing  and for normal  working  capital  purposes.  As of June 30,  2000 and
December  31, 1999,  the Company was in  violation of the  covenants of its Loan
Agreement relating to minimum earnings, minimum tangible net worth, leverage and
interest  coverage.  It was also in  violation  of  covenants  contained  in the
agreements  relating to the Conduit  Facility and the Term  Securitization.  For
further information, see Note 3.

     Nonrecourse and Recourse Debt

     At June 30, 2000 and December 31, 1999,  the Company had  $155,694,000  and
$134,228,000  of  nonrecourse  debt recorded on its  consolidated  balance sheet
under its Conduit Facility,  with  weighted-average  interest rates of 8.09% and
6.26%,  respectively.  Additionally,  at June 30, 2000 and  December  31,  1999,
$134,677,000  and  $179,891,000  was recorded as nonrecourse debt under the Term
Securitization. The weighted-average interest rate on the Term Securitization is
6.24%. The Company also permanently finances leases with financial institutions,
on either a nonrecourse or partial recourse basis. At June 30, 2000 and December
31, 1999, the Company had $21,802,000 and $37,131,000, respectively, outstanding
under these financings.


                      LINC Capital, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (Unaudited) - (Continued)


(9)      Earnings (Loss) per Share
<TABLE>


     The following table sets forth the computation of basic and diluted earnings (loss) per share.

                                                                       Three months ended               Six months ended
<S>                                                                         <C>                           <C>
                                                                            June 30,                      June 30,
                                                                        2000              1999          2000       1999
                                                                                (In thousands, except share data)

  Net earnings (loss) from operations.........................          $(13,292)              $621      $(14,719)       $1,046
  Preferred stock dividends...................................                127             - - -            202        - - -
                                                                   --------------- ----------------- -------------- ------------
       Numerator for basic and diluted earnings (loss) per share

     Net earnings (loss) available to common
     stockholders.............................................          $(13,419)              $621      $(14,921)       $1,046
                                                                   --------------- ----------------- -------------- ------------
       Denominator for basic earnings per share - weighted
             average shares outstanding.......................          5,265,050         5,265,050      5,265,050    5,243,486

         Effect of dilutive stock options.....................              - - -           120,872          - - -      128,003
                                                                   --------------- ----------------- -------------- ------------

  Denominator for diluted earnings (loss) per share...........          5,265,050         5,385,922      5,265,050    5,371,489

  Net earnings (loss)

         Basic earnings (loss) per share......................            $(2.55)              $.12        $(2.83)         $.20
                                                                   =============== ================= ============== ============
                    Diluted earnings (loss) per share.........            $(2.55)              $.12        $(2.83)         $.19
                                                                   =============== ================= ============== ============

     Contingent  shares  issuable in connection  with the  acquisition  of Monex
Leasing, Ltd. and stock options that could potentially dilute earnings per share
in the future, that were not included in the computation of diluted earnings per
share because to do so would have been  antidilutive were 355,610 and 32,352 for
the year six months ended June 30, 2000 and 1999, respectively.


(10)     Comprehensive Income

         The  components of comprehensive income (loss) for the six months ended June 30, 2000 and 1999 are as follows:

                                                                              Six months ended June 30,
                                                                                 2000             1999
                                                                                      (In thousands)

        Net earnings (loss)..................................                 $(14,719)            $1,046

       Other comprehensive income (loss), net of tax:
                   Unrealized loss on securities.............                     (877)               401
                   Foreign currency translation adjustment...                        25               131
                                                                              ----------           -------
        Comprehensive income (loss)...........................                 $(15,571)           $1,578
                                                                              ==========           =======

         Accumulated  other  comprehensive  income  (loss),  net of tax, at June 30, 2000 and  December  31, 1999  consists of
     unrealized  gains  (losses) on  securities  of  $(106,000)  and $771,000 and  accumulated  foreign  currency  translation
     adjustments of $186,000 and $161,000, respectively.
</TABLE>


                      LINC Capital, Inc. and Subsidiaries
      Notes to Consolidated Financial Statements (Unaudited) - (Continued)


(11)  Segment Information

     The Company has four reportable segments: Select Growth Finance,  Portfolio
Finance,  Rental and  Distribution,  and Vendor  Finance.  The  following  table
presents certain information by segment.

<TABLE>
<S>                                            <C>        <C>              <C>         <C>          <C>          <C>
                                          Select                      Rental
                                               Growth      Portfolio         and        Vendor
          (Dollars in thousands)               Finance     Finance       Distribution   Finance     Corporate    Consolidated

Three months ended June 30, 2000
    Total revenues.......................       $1,500      $3,778         $13,906       $5,885          $ -          $25,069
    Depreciation and
         amortization expense............          155         111           1,304          305            -            1,875
    Interest expense.....................        1,004       3,205             563        3,444            -            8,216
    Loss before income taxes*............       (1,716)     (2,662)         (1,159)      (5,816)      (1,939)         (13,292)
    Total assets.........................       37,240     155,882          50,129      193,749        6,880          443,880
    Lease fundings.......................         $796        $774          $3,103       $1,217          $ -           $5,890

Three months ended June 30, 1999
    Total revenues.......................       $3,714      $4,477         $10,981       $3,447          $ -          $22,619
    Depreciation and
         amortization expense............          103         552           1,143          224            -            2,022
    Interest expense.....................        1,365       2,359             367          908            -            4,999
    Earnings (loss) before income taxes..          308         375             361           35        (214)              865
    Total assets.........................       78,434     174,163          34,498      115,907        2,871          405,873
    Lease fundings.......................      $13,421     $36,275          $2,133      $46,296          $ -          $98,125

Six months ended June 30, 2000
    Total revenues.......................       $3,055      $7,699         $25,252      $12,772          $ -          $48,778
    Depreciation and
        amortization expense.............          287         357           2,530          702            -            3,876
    Interest expense.....................        2,062       6,460           1,124        7,016            -           16,662
    Loss before income taxes*............      (2,381)     (2,987)         (1,108)      (5,818)      (2,425)         (14,719)
    Total assets.........................       37,240     155,882          50,129      193,749        6,880          443,880
    Lease fundings.......................       $3,305      $6,511          $6,890      $38,145          $ -          $54,851

Six months ended June 30, 1999
    Total revenues.......................       $6,490      $9,874         $19,765       $5,932          $ -          $42,061
    Depreciation and
        amortization expense.............          214       1,123           2,296          430            -            4,063
    Interest expense.....................        2,448       4,215             684        1,683            -            9,030
    Earnings (loss) before income taxes..          545       2,279             517      (1,381)        (508)            1,452
    Total assets.........................       78,434     174,163          34,498      115,907        2,871          405,873
    Lease fundings.......................      $19,778     $99,368          $4,774      $70,301          $ -         $194,221

     * Included in loss before  income taxes for the three months and six months
ended  June 30,  2000 is an  impairment  loss on assets as  follows:  Rental and
Distribution - $1,669 of goodwill  associated  with LINC IF+E,  Vendor Finance -
$123 of furniture,  fixtures,  computers and related equipment,  and Corporate -
$2,717 of furniture,  fixtures,  computers  and related  equipment and estimated
loss on lease agreement.
</TABLE>

<PAGE>
                       LINC Capital, Inc. and Subsidiaries
       Notes to Consolidated Financial Statements (Unaudited) - (Continued)



(12)  Redeemable Preferred Stock

     On  February  1,  2000,  the  Company  issued  $5,625,000  of  Series  A 8%
Cumulative  Redeemable Preferred Stock. The issuance of this series of preferred
stock was coupled  with  warrants to purchase  326,250  shares of the  Company's
common stock at $5.49 per share.  Additional  warrants for up to 652,500  shares
may be issued on a pro-rata  basis through  September 30, 2000, if the preferred
shares are not  redeemed  as a result of a change of  control  or a  refinancing
prior to that time. The Preferred  Stock bears dividends at 8% per annum through
December 31, 2000, 10% per annum from January 1, 2001 through  December 31, 2001
and 12% per annum thereafter.  At June 30, 2000,  $202,000 of accrued but unpaid
dividends are included in the preferred stock amount on the consolidated balance
sheet. The Preferred Stock is mandatorily redeemable upon a change of control or
on January  31,  2005,  whichever  occurs  first.  The  Company  has not paid or
declared the dividends payable as a result of defaults under the Loan Agreement.
As a consequence, the dividend rate has been increased to 9%.


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

   Three Months ended June 30, 2000 compared to Three Months ended June 30, 1999

     Sales of equipment increased to $11.5 million from $9.1 million, while cost
of  equipment  sold  increased  to $9.2  million  from $7.6  million  due to the
acquisition of Internet Finance & Equipment, Inc. in August 1999 (now LINC IF+E)
which distributes and leases  telecommunications,  routing and Internet enabling
equipment.  This  increase was  partially  offset by a 5.4% and 6.1% decrease in
sales  of  analytical  instruments  and  cost of  analytical  instruments  sold,
respectively,  in the  Company's  other Rental and  Distribution  business.  The
increase  in net  margins on sales of  equipment  increased  to 20.5% from 16.9%
primarily due to higher margins obtained by LINC IF+E compared to margins on the
sale of analytical instruments.

     Direct finance lease income  increased to $9.2 million from $7.1 million as
a  result  of  a  substantially   higher  level  of  finance  lease  receivables
outstanding,   arising  from  acquired   companies   and  from  internal   lease
originations,  a greater portion of which are retained on the Company's  balance
sheet. Average finance lease receivables outstanding increased 44%.

     Interest income was $0.8 million for both periods due to a consistent level
of  interest-bearing  notes receivable held by the Company during those periods.
Direct finance lease income and interest  income,  minus interest  expense,  was
$1.8 million,  or 18.4% of direct finance lease income and interest  income (the
"Interest Margin") compared to $2.9 million, or 36.8%, in the prior year period.
The  decrease in the  Interest  Margin is due to an  increase in interest  rates
beginning in the second half of 1999 and a decrease in interest  income recorded
on the Company's securitization retained interest, resulting from the repurchase
of lease  receivables  from the Company's  commercial  paper conduit facility in
connection with completion of a term securitization.

     Rental and  operating  lease  revenue  decreased  to $2.1 million from $2.7
million primarily due to the maturing of operating leases acquired in 1998.

     Servicing  fees and  other  income  decreased  to $0.9  million  from  $1.3
million. Servicing fees and other income primarily consists of fees received for
servicing  off-balance  sheet  securitized  leases,  fees received for servicing
third party lease  portfolios,  interim rents received by Select Growth Finance,
and late fees.  The decrease over the prior year period  primarily  relates to a
decrease in fees  received for servicing  securitized  leases  resulting  from a
reduction in off-balance sheet securitized leases.  Additionally,  interim rents
received by Select  Growth  Finance and late fees  collected  by Vendor  Finance
decreased between periods.

     Gain  (loss)  on  sale of  lease  receivables  decreased  to a loss of $0.2
million from a gain of $0.3 million.  These amounts represent gains or losses on
lease  receivables  sold to third parties and  fluctuate  based on the volume of
lease receivables sold in a given period.

     Gains on equipment residual values were $0.3 million for each period. Gains
on equipment  residual  values  fluctuate  based on the dollar  volume of leases
maturing in a given period and the economics of those sales.

     During the second  quarter of 2000,  the Company  recognized a gain of $0.4
million on certain equity  participation rights versus a gain of $1.0 million in
the  comparable  prior  year  period.  Equity  participation  gains  and  losses
fluctuate  from  period  to  period  based  on the  value of  securities  in the
Company's  portfolio  and the  timing of the sale of these  securities.  In July
2000,  Corvis  Corporation,  in which the  company  holds  warrants  to purchase
327,972  shares at a price of $0.762  per share  completed  its  initial  public
offering.  On the basis of the closing  price of such shares at August 10, 2000,
the Company's unrealized gain on such warrants was $30.0 million. The Company is
subject to a "lock-up"  agreement that  restricts the Company's  ability to sell
the Corvis  Warrants prior to late January 2001.  This  unrealized  gain has not
been recorded in income, nor has it been reflected in stockholders' equity.

     Selling,  general and administrative  expenses, net of initial direct costs
capitalized,  increased to $7.5 million from $5.4 million. The increase resulted
primarily from an increase in personnel and operating costs  associated with the
acquisition of LINC IF+E in August 1999 in the Company's Rental and Distribution
business unit,  professional fees incurred related to the Company's violation of
covenants under its Loan Agreement,  Conduit Facility,  and Term Securitization,
and a decrease in initial  direct  costs  capitalized  due to an 94% decrease in
lease  originations  between periods.  The number of people employed,  including
employees of companies acquired,  decreased 36% to 117 between June 30, 1999 and
June 30,  2000.  The  Company  believes  that as a result  of the  cessation  of
substantially all leasing activities and the reduction of its employee headcount
to 99 at August 10, 2000 from 221 at December  31,  2000,  it has  substantially
reduced its selling, general and administrative expenses commencing in the third
quarter of 2000.

     Interest expense increased to $8.2 million from $5.0 million, due primarily
to increased  borrowings  resulting from growth in lease  originations and lease
portfolios acquired, with the resulting increase in borrowings,  and an increase
of over 100 basis points in the Company's  weighted  average  interest  rates on
outstanding  debt. In addition,  interest expense increased over the same period
in the prior  year as a result  of the  repurchase  by the  Company  during  the
quarter  ended  September  30,  1999  of  $99.0  million  in  lease  receivables
previously sold to its commercial paper conduit facility utilizing proceeds of a
term  securitization  which  increased the level of  nonrecourse  debt.  Average
finance lease receivables outstanding increased 44%.

     Depreciation  of equipment  decreased to $1.4 million from $1.8 million due
to a decrease in operating leases,  partially offset by an increase in equipment
under rental agreements. The average net book value of equipment held for rental
and operating leases decreased approximately 9% over the prior year period.

     Amortization of intangibles increased to $0.4 million from $0.3 million due
to the  amortization  of issuance  costs  resulting  from a term  securitization
completed  during the third quarter of 1999,  partially  offset by a decrease in
goodwill  amortization  due to the  write-off  of goodwill  associated  with the
acquisitions of Comstock Leasing Inc., Monex Leasing,  Ltd.,  Spectra  Precision
Credit Corp. and Connor Capital Corporation at December 31, 1999.

     The  provision  for  credit  losses  increased  to $7.1  million  from $1.8
million.  The portion of the Company's  lease portfolio that was delinquent more
than 60 days increased to 4.4% of the gross receivable  balance at June 30, 2000
from 2.6 % of the gross  receivable  balance at March 31, 2000. As a consequence
of this  increase,  in the  second  quarter  of 2000,  the  Company  recorded  a
provision to increase its allowance for doubtful receivables to 4.6 % of its net
investment  in leases and loans at June 30,  2000 as  compared to 2.7 % at March
31, 2000. In addition to the allowance for doubtful receivables, the Company has
retained  holdbacks  and  recourse  obligations  from  certain of its  portfolio
finance customers totaling approximately $18.6 million at June 30, 2000.

     At June 30, 2000, the Company  recorded an impairment  loss of $4.5 million
primarily related to the impairment of goodwill  associated with the acquisition
of LINC IF+E in August 1999,  the impairment of furniture,  fixtures,  computers
and  related  equipment,  and  an  estimated  loss  on the  Company's  corporate
headquarters' lease agreement. See Note 4 to Consolidated Financial Statements

     The Company did not record a tax benefit on the pre-tax loss for the second
quarter of 2000 since  realization  of the tax benefit  cannot be  assured.  The
Company  recorded  income tax expense of $0.2 million on pre-tax  income of $0.9
million for the same period of the prior year.

Six Months ended June 30, 2000 compared to Six Months ended June 30, 1999

     Sales of equipment  increased to $20.6  million from $16.0 million and cost
of equipment sold increased to $16.6 million from $13.1 million.  Net margins on
sales of equipment  increased to 19.6% from 18.4% due to higher margins obtained
by LINC IF+E compared to margins on the sale of analytical instruments.  The net
margin on sales of  equipment  during  the six months  ended  June 30,  1999 was
positively impacted by manufacturer incentives received on equipment sold during
the first quarter of that year.

     Direct  finance lease income  increased to $19.7 million from $12.9 million
as a result  of a  substantially  higher  level  of  finance  lease  receivables
outstanding,   arising  from  acquired   companies   and  from  internal   lease
originations,  a greater portion of which are retained on the Company's  balance
sheet. Average finance lease receivables outstanding increased 68%.

     Interest income  increased to $1.8 million from $1.6 million  primarily due
to an increase in  interest-bearing  notes receivable held by the Company during
the first  quarter of 2000.  Direct  finance  lease income and interest  income,
minus  interest  expense,  was $4.8  million,  or 22.3% of direct  finance lease
income and interest income (the "Interest Margin") compared to $5.5 million,  or
38.0%,  in the prior year period.  The decrease in the Interest Margin is due to
an  increase  in  interest  rates  beginning  in the  second  half of 1999 and a
decrease in interest  income recorded on the Company's  securitization  retained
interest,  resulting from the repurchase of lease receivables from the Company's
commercial  paper  conduit  facility in  connection  with  completion  of a term
securitization.

     Rental and  operating  lease  revenue  decreased  to $4.3 million from $5.4
million primarily due to the maturing of operating leases acquired in 1998.

     Servicing  fees and  other  income  decreased  to $1.7  million  from  $3.9
million. Servicing fees and other income primarily consists of fees received for
servicing  off-balance  sheet  securitized  leases,  fees received for servicing
third party lease  portfolios,  interim rents received by Select Growth Finance,
and late fees. The decrease over the prior year period primarily relates to $1.2
million in deferred  incentive  fees realized in connection  with servicing of a
portfolio  owned by a third party during the first quarter of the prior year and
a decrease in fees received for servicing  securitized  leases  resulting from a
reduction in off-balance sheet securitized leases.  Additionally,  interim rents
received by Select  Growth  Finance and late fees  collected  by Vendor  Finance
decreased between periods.

     Gain (loss) on the sale of lease  receivables  decreased  to less than $0.1
million from $0.4  million.  These  amounts  represent  gains or losses on lease
receivables  sold to third  parties and  fluctuate  based on the volume of lease
receivables sold in a given period and the economics of those sales.

     Gains on  equipment  residual  values  decreased  to $0.4 million from $0.6
million. Gains on equipment residual values fluctuate based on the dollar volume
of leases maturing in a given period.

     During  the  first  half of 2000,  the  Company  recognized  a gain of $0.3
million on certain equity  participation rights versus a gain of $1.2 million in
the  comparable  prior  year  period.  Equity  participation  gains  and  losses
fluctuate  from  period  to  period  based  on the  value of  securities  in the
Company's  portfolio  and the  timing of the sale of these  securities.  In July
2000,  Corvis  Corporation,  in which the  company  holds  warrants  to purchase
327,972  shares at a price of $0.7625 per share  completed  its  initial  public
offering.  On the basis of the closing  price of such shares at August 10, 2000,
the Company's unrealized gain on such warrants was $30.0 million. The Company is
subject to a "lock-up"  agreement that  restricts the Company's  ability to sell
the Corvis  Warrants prior to late January 2000.  This  unrealized  gain has not
been recorded in income, nor has it been reflected in stockholders' equity.

     Selling,  general and administrative  expenses, net of initial direct costs
capitalized,  increased  to $13.6  million  from  $11.6  million.  The  increase
resulted  primarily from an increase in personnel and operating costs associated
with the  acquisition  of LINC IF+E in August 1999 in the  Company's  Rental and
Distribution business unit,  professional fees incurred related to the Company's
violation of covenants  under its Loan  Agreement,  Conduit  Facility,  and Term
Securitization, and a decrease in initial direct costs capitalized due to an 44%
decrease in lease originations  between periods.  The number of people employed,
including employees of companies acquired, decreased 36% to 117 between June 30,
1999 and June 30, 2000.  The Company  believes that as a result of the cessation
of  substantially  all leasing  activities  and the  reduction  of its  employee
headcount  to 99 at  August  10,  2000 from 221 at  December  31,  2000,  it has
substantially   reduced  its  selling,   general  and  administrative   expenses
commencing in the third quarter of 2000.

     Interest  expense  increased  to  $16.7  million  from  $9.0  million,  due
primarily to increased  borrowings  resulting from growth in lease  originations
and lease portfolios acquired, with the resulting increase in borrowings, and an
increase of over 100 basis points in the  Company's  weighted  average  interest
rates on outstanding debt. In addition, interest expense increased over the same
period in the prior year as a result of the repurchase by the Company during the
quarter  ended  September  30,  1999  of  $99.0  million  in  lease  receivables
previously sold to its commercial paper conduit facility utilizing proceeds of a
term  securitization  which  increased the level on  nonrecourse  debt.  Average
finance lease receivables outstanding increased 68%.

     Depreciation  of equipment  decreased to $3.0 million from $3.6 million due
to a decrease in operating leases,  partially offset by an increase in equipment
under rental agreements. The average net book value of equipment held for rental
and operating leases decreased approximately 13% over the prior year period.

     Amortization of intangibles increased to $0.9 million from $0.5 million due
to the  amortization  of issuance  costs  resulting  from a term  securitization
completed  during the third quarter of 1999,  partially  offset by a decrease in
goodwill  amortization  due to the  write-off  of goodwill  associated  with the
acquisitions of Comstock Leasing Inc., Monex Leasing,  Ltd.,  Spectra  Precision
Credit Corp. and Connor Capital Corporation at December 31, 1999.

     The  provision  for  credit  losses  increased  to $8.3  million  from $2.9
million.  The portion of the Company's  lease portfolio that was delinquent more
than 60 days increased to 4.4% of the gross receivable  balance at June 30, 2000
from 2.6 % of the gross  receivable  balance at March 31, 2000. As a consequence
of this  increase,  in the  second  quarter  of 2000,  the  Company  recorded  a
provision to increase its allowance for doubtful receivables to 4.6 % of its net
investment  in leases and loans at June 30,  2000 as  compared to 2.7 % at March
31, 2000. In addition to the allowance for doubtful receivables, the Company has
retained  holdbacks  and  recourse  obligations  from  certain of its  portfolio
finance customers totaling approximately $18.6 million at June 30, 2000.

     At June 30, 2000, the Company  recorded an impairment  loss of $4.5 million
related to the impairment of goodwill  associated  with the  acquisition of LINC
IF+E in August 1999,  the  impairment  of  furniture,  fixtures,  computers  and
related   equipment,   and  an  estimated   loss  on  the  Company's   corporate
headquarters' lease agreement. See Note 4 to Consolidated Financial Statements.

     The  Company  did not  record a tax  benefit on the  pre-tax  loss of $14.7
million  for the six months  ended June 30,  2000 since  realization  of the tax
benefit  cannot be  assured.  The  Company  recorded  income tax expense of $0.4
million on pre-tax income of $1.5 million for the same period of the prior year.


Liquidity and Capital Resources

         General

     The  Company's  activities  are capital  intensive  and  require  access to
substantial  amounts of credit to fund new  equipment  leases.  The  Company has
financed its  operations to date  primarily  through cash flow from  operations,
borrowings  under its Loan  Agreement  with its senior  lenders  and its Conduit
Facility, other non-recourse and recourse loans, the Term Securitization and the
sale of equity.

        Cash Flow

     Cash flows from operating and financing  activities are generated primarily
from  receipts on direct  finance and  operating  leases,  rentals of analytical
instruments, gross profit on the sale of analytical instruments,  realization of
equipment residual values,  and financing of new lease  origination's and rental
inventory  through  credit  facilities  and  securitizations.  Cash  flows  from
operating  and financing  activities  for the six months ended June 30, 2000 and
1999 were $64.0 million and $193.2 million,  respectively.  The decrease between
2000 and 1999 results  primarily from no new debt  financing or  securitizations
during  the  second  quarter  of 2000 as well as a  decrease  in the  volume  of
securitizations  completed in the first quarter of 2000,  partially offset by an
increase in payments received on direct finance leases.

         Credit Facilities

     In the past, the Company  utilized its secured  revolving  credit  facility
provided  by a  syndicate  of  banks  under  the  Loan  Agreement  to  fund  the
acquisition   and   origination  of  leases  and  the  purchase  of  rental  and
distribution  inventory.  As of June 30, 2000,  the Company had  borrowed  $85.1
million,   with  a   weighted-average   interest  rate  of  8.10%.  For  further
information, see Note 3 to Consolidated Financial Statements.

         Commercial Paper Conduit Securitization Facilities

     The Company,  through a special purpose subsidiary,  has a commercial paper
conduit  securitization  facility  in an amount of $289  million  (the  "Conduit
Facility").

     At the time of placing leases in the securitization facilities, the Company
enters  into  interest  rate cap and  interest  rate swap  agreements  to manage
interest  rate  risk.  For  further  information,  see  Note  3 to  Consolidated
Financial Statements.

        Term Securitization

     In July 1999, the Company, through a special purpose subsidiary,  completed
a term securitization in the amount of $237 million (the "Term Securitization").
$199  million of A-1  Certificates  rated AAA by  Standard  and Poor's and Fitch
IBCA,  Inc.  and Aaa by  Moody's  Investor  Service,  Inc.,  $9  million  of B-1
Certificates  rated BBB by Fitch IBCA,  Inc., and $9 million of B-2 Certificates
rated BB by Fitch IBCA,  Inc., were issued in the private  market.  A portion of
the B-2  Certificates  (approximately  $3 million) and the C Certificate  of $17
million  were  retained  by the  Company.  The  remaining  balance  of  the  A-1
Certificates, the B-1 Certificates, the B-2 Certificates, and the C Certificates
at June 30, 2000 was $121.7  million,  $6.4  million,  $8.9  million,  and $12.0
million,  respectively.  For  further  information,  see Note 3 to  Consolidated
Financial Statements.

        Preferred Stock

     On  February  1,  2000,  the  Company  issued  $5,625,000  of  Series  A 8%
Cumulative  Redeemable  Preferred  Stock (the "Series A Preferred  Stock").  The
issuance of this series of preferred stock was coupled with warrants to purchase
326,250 shares of the Company's  common stock at $5.49 per share (the "Preferred
Stock Warrants").  Additional  Preferred Stock Warrants for up to 652,500 shares
may be issued on a pro-rata  basis  through  September 30, 2000, if the Series A
Preferred  Stock  is not  redeemed  as a  result  of a change  of  control  or a
refinancing  prior to that time.  At June 30, 2000  additional  Preferred  Stock
Warrants for 372,857 shares are issuable.  The Series A Preferred  Stock accrues
cumulative  preferred  dividends at 8% per annum through  December 31, 2000, 10%
per annum  from  January 1, 2001  through  December  31,  2001 and 12% per annum
thereafter.  The Series A  Preferred  Stock is  required  to be  redeemed by the
Company upon a change of control or on January 31, 2005, whichever occurs first.
As a result of the violation of certain covenants under the Loan Agreement,  the
Company  was unable to declare or make  payment of the  dividend on the Series A
Preferred Stock due on March 31 or June 30, 2000. As a consequence,  the Company
is in default of certain  provisions of the terms and conditions of the Series A
Preferred  Stock and the dividend rate on such  preferred  stock  accruing after
March 31, 2000 has been increased by 1 percentage point.

Note on Forward Looking Information

     Certain  statements  in this Form  10-Q and in the  future  filings  by the
Company with the Securities and Exchange Commission and in the Company's written
and oral  statements  made by or with the  approval of an  authorized  executive
officer  constitute  "forward looking  statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, and the Company intends that such forward-looking statements be subject
to the safe harbors created thereby. The words and phrases "expects", "intends",
"believe:,  "will  seek",  and "will  realize" and similar  expressions  as they
relate  to  the  Company  or  its  management  are  intended  to  identify  such
forward-looking   statements.   These  forward-looking  statements  reflect  the
Company's current view with respect to future events and financial  performance,
but are  subject to many  uncertainties  and factors  relating to the  Company's
operations  and business  environment  which may cause the actual results of the
Company to be  materially  different  from results  expressed or implied by such
forward-looking statements. Examples of such uncertainties, include, but are not
limited to, the Company's plans for reducing overhead and for selling portfolios
of leases,  the  Company's  plans and  intentions  with regard to its rental and
distribution  operations,  and the  availability  of  financial  resources.  The
Company   undertakes   no   obligation   to   publicly   update  or  revise  any
forward-looking statements whether as a result of new information, future events
or otherwise.

<PAGE>

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     There have been no material  changes  from the 1999  Annual  Report on Form
10-K related to the Company's  exposure to market risk from interest  rates.  At
December 31, 1999,  termination  of the $354.1  million  interest  rate swap and
interest rate cap agreements would have resulted in a credit to earnings of $2.1
million. At June 30, 2000,  termination of the $296.0 million interest rate swap
and interest rate cap agreements  would have resulted in a credit to earnings of
$1.6 million.

Part II - Other Information

Item 1.  Legal Proceedings

     The Company is the subject of  lawsuits  alleging  that the Company has not
made timely payment of amounts owed for services  provided to the Company or for
equipment  purchased by the Company in the ordinary course. The aggregate amount
owed with respect to these claims is approximately $200,000.

     The  Company  is in  default  of its  obligations  relating  to its  Senior
Revolving  Credit  Facility  and  negotiations  are in progress  to  implement a
standstill agreement under that facility.

     The  Company is in default of certain of its  obligations  relating  to the
acquisition  of one  of its  Vendor  Finance  origination  units  and  has  been
threatened  with  litigation as a consequence  of such default.  The Company has
been advised by the former owner of one of its Vendor Finance  origination units
that  certain   claims   asserted  by  those  owners  have  been  submitted  for
arbitration. A Demand For Arbitration and Statement of Claim has been filed with
the American  Arbitration  Association  in Chicago,  Illinois by Monex  Leasing,
Ltd., Monex Group, Inc.,  Catherine Ross and Monex Finance. The aggregate amount
alleged to be due and owing to such former  owner is  approximately  $3,649,584.
The Company is in the process of defending such claims.

Item 2.  Changes in Securities and Use of Proceeds

     On  February  1,  2000,  the  Company  issued  $5,625,000  of  Series  A 8%
Cumulative  Redeemable  Preferred  Stock (the "Series A Preferred  Stock").  The
issuance of this series of preferred stock was coupled with warrants to purchase
326,250  shares of the  Company's  common  stock at $5.49 per share.  Additional
warrants  for up to 652,500  shares may be issued on a  pro-rata  basis  through
September 30, 2000, if the Series A Preferred  Stock is not redeemed as a result
of a change  of  control  or a  refinancing  prior to that  time.  The  Series A
Preferred Stock accrues cumulative  preferred  dividends at 8% per annum through
December 31, 2000, 10% per annum from January 1, 2001 through  December 31, 2001
and 12% per annum  thereafter.  The Series A  Preferred  Stock is required to be
redeemed  by the  Company  upon a change of  control  or on  January  31,  2005,
whichever occurs first. As a result of the violation of certain  covenants under
the Loan  Agreement,  the Company has been unable to declare or make  payment of
the dividends on the Series A Preferred Stock. As a consequence, the Company may
be in default of certain  provisions of the terms and conditions of the Series A
Preferred  Stock and the dividend rate on such  preferred  stock  accruing after
March 31, 2000 has been increased by 1 percentage  point. The total arrearage in
the payment of dividends on August 10, 2000 was $0.2 million.

Item 3.  Defaults Upon Senior Securities

     The Company was in  violation of the minimum  tangible  net worth,  minimum
earnings,  leverage and interest coverage  covenants under its Loan Agreement at
June 30, 2000 and December 31, 1999.  The  violations  under the Loan  Agreement
have also resulted in cross-defaults  in the agreements  relating to the Conduit
Facility  and the Term  Securitization.  The amount  outstanding  under the Loan
Agreement at August 7, 2000 was $80.8 million.  The amount outstanding under the
Conduit Facility and the Term  Securitization  at July 20, 2000, the most recent
settlement  date,  was $153.4  million  and $128.3  million,  respectively.  For
further  information,  see  Note  3 to  Consolidated  Financial  Statements  and
Management's Discussion and Analysis - Liquidity and Capital Resources.

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

Annual Meeting

     The Company has not  scheduled an Annual  Meeting of  Shareholders  at this
time due to the time commitment and costs associated with such a meeting.

Item 5.   Other Information

Subsequent Events

     Unrealized Gain on Warrants

     The Company holds warrants for 327,972 common shares of Corvis  Corporation
(Corvis) with a per share exercise price of $0.762. Corvis Corporation completed
its initial  public  offering on July 28, 2000. At August 10, 2000,  the closing
price of the  Corvis  Common  Shares  was  $92.19  per  share,  resulting  in an
unrealized  gain at the then current  market of $30.0  million.  The Company has
entered into Lockup  Agreement  with Corvis  pursuant to which it is  materially
restricted from selling or otherwise  realizing proceeds from these shares until
late January 2001.

     Delisting from Nasdaq Stock Market

     On August 1, 2000, the Company's  common stock was delisted from the Nasdaq
Stock Market because the Company was not in compliance with a rule that requires
annual reports to contain audited financial  statements and a rule that requires
the stock to maintain a minimum bid price of $1.00 over the last 30  consecutive
trading days.

     Resignation of Directors

     On August 9, 2000,  Mr.  Stanley Green and Mr. Curtis S. Lane resigned from
the Board of Directors.

Item 6.  Exhibits and Reports on Form 8-K

         Exhibits

         Exhibit Number                  Document Description
        ----------------               ------------------------
             27.1                       Financial Data Schedule

         Reports on Form 8-K

     On April 11, 2000, the Company filed a current report on Form 8-K reporting
under Item 5 and Item 7. The filing  contained  information  relating  to fourth
quarter  results and the Company's  violations of covenants  under its revolving
credit and other borrowing agreements.

<PAGE>

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned,  thereunto duly authorized.  LINC CAPITAL,  INC. Dated:  August 14,
2000
                                                 By: /s/ Allen P. Palles
                                                 ------------------------
                                                 Allen P. Palles

                                                 Executive Vice President
                                                 and Chief Financial Officer
                                                 (Principal Financial Officer)



                                                 By: /s/ Mark A. Arvin
                                                 ------------------------
                                                 Mark A. Arvin

                                                 Senior Vice President,  Finance
                                                 (Principal Accounting Officer)