TABLE OF CONTENTS




|              |                                                                                               |  |  |  |  |  |  | 
|------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I       
|              | Item 1. Business                                                                             
|              | Item 2. Properties                                                                           
|              | Item 3. Legal Proceedings                                                                    
|              | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II      
|              | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|              | Item 6. Selected Financial Data                                                              
|              | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|              | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|              | Item 8. Financial Statements and Supplementary Data                                          
|              | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III     
|              | Item 10. Directors and Executive Officers of the Registrant                                  
|              | Item 11. Executive Compensation                                                              
|              | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|              | Item 13. Certain Relationships and Related Transactions                                      
|PART IV      
|              | Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                    
|SIGNATURES   
|EXHIBIT INDEX



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-K

| |            |  |  |                                                                                                  |  |  |  | 
| | ---------- |  |  | ------------------------------------------------------------------------------------------------ |  |  |  | 
|
|
|
|
| | (Mark One) |  |  |                                                                                                  |  |  |  | 
| | [X]        |  |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934     |  |  |  | 
| | [   ]      |  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934 |  |  |  | 



|                                            |                                  
|------------------------------------------- | ---------------------------------
|For the Fiscal Year Ended December 31, 1999 | Commission File Number: 814-00127

BRANTLEY CAPITAL CORPORATION

(Exact name of registrant as specified in its
charter)


|                                                                       |  |                                        
|---------------------------------------------------------------------- |  | ---------------------------------------
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Maryland                                                               |  | 34-1838462                             
|                                                                       |  |                                        
|(State or other Jurisdiction of
        Incorporation or Organization) |  | (I.R.S. Employer Identification Number)

20600 Chagrin Boulevard, Suite 1150, Cleveland, Ohio
44122

(Address of principal executive offices including zip code)


(216) 283-4800

(Registrants telephone number including area code)


Securities registered pursuant to Section 12(b) of the
Act: None

Securities registered pursuant to Section 12(g) of the
Act:

Common Stock, $.01 par value


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 [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained
 herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this
Form 10-K.  [X]

The aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 24, 2000 was
$32,749,030, based on the last sale price of such stock as quoted
 by NASDAQ on such date (officers, directors and 5% shareholders
are considered affiliates for purposes of this calculation).

The number of shares of common stock outstanding as of
March 24, 2000 was 3,810,535.

DOCUMENTS INCORPORATED BY REFERENCE

Brantley Capital Corporations Form 8-K dated
January 19, 2000 (incorporated into Part II of this
Form 10-K) and portions of Brantley Capital
Corporations Proxy Statement to be filed on or about
April 17, 2000 (incorporated into Part III of this
Form 10-K)



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##### Table of Contents



TABLE OF CONTENTS

|              |           |  |    |                                                                                        |  |  |    | 
|------------- | --------- |  | -- | -------------------------------------------------------------------------------------- |  |  | -- | 
|              |           |  |    | Page                                                                                  
|              |           |  |    |                                                                                       
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|PART I       
|             
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|              | Item  1.  |  |    | Business                                                                               |  |  | 1  | 
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|              | Item  2.  |  |    | Properties                                                                             |  |  | 5  | 
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|              | Item  3.  |  |    | Legal Proceedings                                                                      |  |  | 5  | 
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|              | Item  4.  |  |    | Submission of Matters to a Vote of Security Holders                                    |  |  | 5  | 
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|PART II      
|             
|             
|             
|             
|              | Item  5.  |  |    | Market for Registrants Common Equity and Related
	Stockholder Matters                 |  |  | 5  | 
|             
|             
|             
|             
|              | Item  6.  |  |    | Selected Financial Data                                                                |  |  | 5  | 
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|              | Item  7.  |  |    | Managements Discussion and Analysis of Financial Condition
	and Results of Operations |  |  | 5  | 
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|              | Item  7A. |  |    | Quantitative and Qualitative Disclosures About Market Risk                             |  |  | 10 | 
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|              | Item  8.  |  |    | Financial Statements and Supplementary Data                                            |  |  | 11 | 
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|              | Item  9.  |  |    | Changes in and Disagreements With Accountants on Accounting and
	Financial Disclosure  |  |  | 22 | 
|             
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|PART III     
|             
|             
|             
|             
|              | Item 10.  |  |    | Directors and Executive Officers of the Registrant                                     |  |  | 22 | 
|             
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|             
|              | Item 11.  |  |    | Executive Compensation                                                                 |  |  | 22 | 
|             
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|              | Item 12.  |  |    | Security Ownership of Certain Beneficial Owners and Management                         |  |  | 22 | 
|             
|             
|             
|             
|              | Item 13.  |  |    | Certain Relationships and Related Transactions                                         |  |  | 22 | 
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|PART IV      
|             
|             
|             
|             
|              | Item 14.  |  |    | Exhibits, Financial Statements Schedules, and Reports on Form 8-K                      |  |  | 23 | 
|             
|             
|             
|             
|Signatures    |           |  | 24 |                                                                                       
|             
|             
|             
|             
|Exhibit Index |           |  | 25 |                                                                                       

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##### Table of Contents






PART I




Item 1.  Business

Brantley Capital Corporation (the Company) is a
closed-end, non-diversified investment company incorporated on
August 1, 1996 under the General Corporation Law of the
State of Maryland, that has elected to be treated as a
business development company under the Investment
Company Act of 1940, as amended (the Act). The
Company invests primarily in the equity securities (for example,
common stock, preferred stock, convertible preferred stock, or
options, warrants or rights to acquire stock) and equity-linked
debt securities (for example, convertible debt or indebtedness
accompanied by warrants, options or rights to acquire stock) of
private companies. The Company also invests a portion of its
assets in small-cap public companies (as defined below). The
Companys investment objective is the realization of
long-term capital appreciation in the value of its investments.
In addition, whenever feasible in light of market conditions and
the cash flow characteristics of its portfolio companies, the
Company seeks to provide an element of current income primarily
from interest, dividends and fees paid by its portfolio
companies. Finally, the Company seeks to preserve the long-term
value for its shareholders through its investing and operating
policies.

With respect to its investments in private companies, the
Companys principal focus is on industries that it considers
 to be good candidates for successful consolidation. The Company
also favors investments in private companies that it believes can
 achieve the necessary size, profitability, management depth and
sophistication to become public companies or become candidates
for acquisition by merger or otherwise. The Company seeks to
enable its stockholders to participate in investments not
typically available to the public due to the private nature of a
substantial majority of the Companys portfolio companies,
the size of the financial commitment often required in order to
participate in such investments, and/or the experience, skill and
 time commitment required to identify and take advantage of these
 investment opportunities.

The Company, through its Investment Adviser (as defined below),
is a partner in the growth of its private portfolio companies,
rather than merely a financial participant. The Company offers
managerial assistance to its private portfolio companies and
expects that its representatives will play a role in setting
corporate strategies and advising such companies regarding
important decisions affecting their businesses, including
potential acquisitions, recruiting key managers, and securing
equity and debt financing.

With respect to its investments in post-venture small-cap public
companies, the Companys primary focus is on post-venture
companies that the Investment Adviser (as defined below) believes
 to have significant potential for growth in sales and earnings.
A post-venture company is a company that has received
 venture capital or private equity financing either
(a) during the early stages of the companys business
or the early stages of the development of a new product or
service, or (b) as part of a restructuring or
recapitalization of the company. The Company generally limits its
 post-venture investments to companies which, within the prior
ten (10) years, have received an investment of venture or
private equity capital, have sold or distributed securities to
venture or private equity capital investors, or have completed an
 initial public offering of equity securities.

The Company anticipates that its position as an investor in both
private companies and post-venture small-cap public companies
will benefit its ultimate returns on its investments. This
benefit will be derived from historic and future knowledge that
the Company and its managers have and will gain regarding
companies, technologies, management, markets and pricing in both
public and private markets. For example, knowledge of emerging
technologies and companies in the private markets can be
beneficial in selecting small-cap public stocks. Conversely,
knowledge of public companies and market performance can be
beneficial in pricing and structuring private investments.

Investment Adviser

Brantley Capital Management, Ltd., 20600 Chagrin Boulevard,
Suite 1150, Cleveland, Ohio 44122, serves as the investment
adviser (the Investment Adviser) to the Company
pursuant to an agreement (the Investment Advisory
Agreement) with an initial term of two (2) years,
renewable from year to year thereafter if it is approved annually
 by the Companys Board of Directors or by vote of a
majority of the Companys outstanding

1



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##### Table of Contents





Nature of Investments in Portfolio Companies

The Company is currently executing an investment strategy in
which investments in portfolio companies are, and will continue
to be, in the form of equity or some combination of debt with
equity, but will always include some equity feature through which
 the Company can participate in the growth in the value of the
underlying businesses. The Companys investment in a given
portfolio company may consist of common stock, preferred stock
(which may or may not be convertible into common stock),
debentures (which may or may not be convertible into common stock
 and may or may not be subordinated), warrants to purchase common
 stock, or some combination thereof. The Company generally
structures, and anticipates that it will continue to generally
structure, its investments in privately-owned portfolio with the
intention of having the investments achieve liquidity within
eighteen (18) months to three (3) years from the
respective dates of the investments, although there can be no
assurance that such time frame will be met and situations may
arise in which the Company may hold securities for a longer
period.

Temporary Investments

Pending investments in the types of securities described above,
the Company invests its cash in cash items, government securities
 or high quality debt securities maturing in one year or less
from the time of investment.

Operations

The Investment Adviser locates potential investment opportunities
 primarily by making use of an extensive network of investment
bankers, commercial bankers, accountants and other finance
professionals; venture capitalists and other investment
professionals; attorneys; business executives; and entrepreneurs.

The investment process includes the identification, evaluation,
negotiation, documentation and closing of the investment. The
evaluation of a potential investment includes due diligence,
which includes review of historical and prospective financial
information, and which, particularly in the case of a
privately-owned company, usually involves on-site visits;
interviews with management, employees, customers and vendors of
the potential portfolio company, and background checks and
research relating to its management, markets, products and
services.

Upon the completion of due diligence and a decision to proceed
with an investment in a private company, the Investment Adviser
creates an investment memorandum containing information pertinent
 to the investment for presentation to the Companys Board
of Directors, which must approve the investment. Additional due
diligence with respect to any investment by the Company may be
conducted by the Companys attorneys and independent
accountants prior to the closing of the investment.

Selection of Investments

As a general rule, most of the Companys investments are,
and the Company anticipates that they will continue to be, in
small- to medium-sized companies with total assets or annual
sales under $500 million. Many of these companies may have
very limited operating histories. The Companys main
criterion for the selection of investments in portfolio companies
 has remained consistent since the Companys formation. Each
 investment involves a portfolio company that has the potential
for substantial growth in sales and earnings. The Company seeks
to identify companies which management believes have significant
opportunities in the markets they serve or that have devised
innovative products, services or ways of doing business which
afford them a distinct competitive advantage. Such companies
might achieve growth either internally or by acquisition. In
addition, the

2



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##### Table of Contents





In evaluating potential portfolio companies, the Company pays
particular attention to the following characteristics:

Management.The Company seeks investments in
companies whose management teams consist of talented individuals
of high integrity with significant experience. The Company
intends to pay particular attention to the depth of the
management team and the extent to which key managers have an
ownership interest in the company.

Opportunity for Significant Influence.The Company
favors investments in companies in which it has the opportunity
to become a partner in the building of the companies, rather than
 being merely a financial participant. In addition, the Company
wants investments in which its representatives will play a role
in setting corporate strategies for the portfolio companies, and
will advise such companies regarding important decisions
affecting their businesses, including acquisitions for such
companies, recruiting key managers, and securing equity and debt
financing.

Market Dynamics.The Company prefers investments in
 companies that are addressing a large, unfulfilled market demand
 with long-term high-growth prospects and that can reasonably
expect to achieve and maintain a significant market share through
 proprietary products and services. The Company also favors
investments in companies that deliver products and services with
significant performance and cost advantages and for which there
exist significant barriers to effective competition by others. In
 addition, with respect to its investments in private companies,
the Company will be attracted to industries that it considers to
be good candidates for successful consolidation.

Ability to Achieve Liquidity.With respect to its
investments in private companies, the Company considers the
potential and likely means for achieving the liquidity that would
 ultimately enable the Company to achieve cash value for its
equity investments. Possible ways of achieving liquidity include
an initial public offering of the portfolio company, a sale of
the portfolio company or a purchase by the portfolio company (or
its managers) of the Companys equity interest.

Growth at a Reasonable Price.With respect to
investments in post-venture small-cap public companies, the
Company targets companies whose current and projected
price/earnings (P/E) ratios are less than their
respective growth rates. This growth at a reasonable price
discipline is anticipated to result in attractive stock
appreciation as a result of both earnings growth and P/E multiple
 expansion. The majority of these post-venture public investments
 are expected to be in companies with prior financial support
from professional venture capitalists and private equity funds,
as these companies often have stronger management teams, better
financial controls and significant competitive advantages.

Potential Co-Investments and Follow-On Investments

The Company has, and anticipates, co-investing with
existing affiliates of the Company and the Investment Adviser, as
 well as with other future affiliates, in specified amounts and
on terms and conditions that are the same in all material
respects, subject to the availability of capital for investment
on the part of the Company and each such affiliate and certain
other conditions. At the present time, affiliates of the Company
and the Investment Adviser include certain venture capital
investment partnerships in which certain officers and directors
of the Company and officers of the Investment Adviser serve as
general partners of such investment partnerships general
partner. These investment partnerships include Brantley Venture
Partners II, L.P., Brantley Venture Partners III, L.P. and
Brantley Partners IV, L.P. On November 18, 1997, the Company
 received an exemptive order from the Securities and Exchange
Commission (the Commission) that, subject to certain
terms and conditions, relieves the Company from certain
provisions of the Act to permit certain joint transactions with
the investment partnerships.

3



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##### Table of Contents



Eligible Portfolio Companies

The Company, as a business development company under
the Act, may not acquire any assets other than Eligible
Assets unless, at the time the acquisition is made,
Eligible Assets represent at least 70% of the Companys
total assets (other than certain assets necessary for its
operation, such as office furniture, equipment and facilities).
Eligible Assets are defined in Section 55(a) of
the Act. The principal categories of Eligible Assets relevant to
the business of the Company are the following:



| |                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  Securities purchased in transactions not involving any
	public offering from the issuer of such securities, which issuer
	is an eligible portfolio company. An eligible portfolio
	company is defined in the Act as any issuer which:



| |     |                                                                                                
| | --- | -----------------------------------------------------------------------------------------------
| | (a) | is organized under the laws of, and has its principal place of
	business in, the United States;



| |     |                                                                                                                                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------
| | (b) | is not an investment company other than a small business
	investment company wholly-owned by the business development
	company; and



| |          |                                                                                                                                                            
| | -------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c)  (i) | does not have any class of securities with respect to which a
	broker or dealer may extend margin credit;                                                  
|
| | (ii)     | is actively controlled by a business development company and has
	an affiliate of a business development company on its board of
	trustees or directors; or
|
| | (iii)    | meets other such criteria as may be established by the
	Commission.                                                                                        



| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2)  Securities of any eligible portfolio company which is
	controlled by the business development company.                                                                                                       
|
| | (3)  Securities received in exchange for or distributed on
	or with respect to securities described in (1) or
	(2) above, or pursuant to the exercise of options, warrants
	or rights relating to such securities.
|
| | (4)  Cash, cash items, government securities, or high
	quality debt securities maturing in one year or less from the
	time of investment.                                                                         

In addition, the business development company must have been
organized (and have its principal place of business) in the
United States for the purpose of making investments in the types
of securities described in (1) or (2) above. Moreover,
in order for securities of portfolio companies to constitute
Eligible Assets for the purpose of the 70% test described above,
the Company must make available to the issuer of the securities
significant managerial assistance; except that, where the Company
 purchases such securities in conjunction with one or more other
persons acting together, one of the other persons in the group
may make available such managerial assistance.

The Company may invest up to 30% of its assets in portfolio
investments that are not Eligible Assets. This portion of the
Companys portfolio consists primarily of investments in
post-venture small-cap public companies.

Competition

The Companys primary competitors include financial
institutions, venture capital and private equity firms, mutual
funds concentrating on post-venture small-cap companies, and
other nontraditional investors. Many of these entities have
greater financial and managerial resources than the Company. The
Company competes with such entities primarily on the basis of the
 quality of its services, the quality of the investment entities
previously managed by affiliates of the Investment Adviser, the
Companys investment analysis and decision-making processes,
 and on the investment terms the Company offers in respect of the
 securities to be issued by its portfolio companies.

Employees

The Company has no employees. Pursuant to the terms of the
Investment Advisory Agreement, the Investment Adviser supplies
all of the personnel necessary to operate the Companys
business.

4



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##### Table of Contents






Item 2.  Properties

The Company does not own or lease any properties.




Item 3. Legal Proceedings

Neither the Company, nor any of its property are a party to, or
the subject of, any material pending legal proceedings, and no
such material proceedings are known by the Company to be
contemplated by governmental authorities.




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

No matters were submitted to a vote of security holders during
the quarter ended December 31, 1999.




PART II




Item 5. Market for Registrants Common Equity and
Related Stockholder Matters

Market Price

The Companys common stock, par value $0.01 per share (the
Common Stock) currently trades on the NASDAQ National
 Market System (NASDAQ) under the symbol
BBDC. Prior to September 23, 1999, the
Companys common stock traded on the NASDAQ Small Cap Market
 System (NASDAQSCM) under the same symbol. The
following table sets forth, for the period indicated, the range
of high and low bid prices per share:

|                                    |  |      |        |     |  |   |       | 
|----------------------------------- |  | ---- | ------ | --- |  | - | ----- | 
|                                    |  | High |        | Low
|                                    |  |      |        |    
|January 1, 1998  March 31, 1998    |  | $    | 10.875 |     |  | $ | 8.875 | 
|                                   
|                                   
|                                   
|                                   
|April 1, 1998  June 30, 1998       |  | $    | 11.50  |     |  | $ | 9.50  | 
|                                   
|                                   
|                                   
|                                   
|July 1, 1998  September 30, 1998   |  | $    | 9.813  |     |  | $ | 6.75  | 
|                                   
|                                   
|                                   
|                                   
|October 1, 1998  December 31, 1998 |  | $    | 8.125  |     |  | $ | 6.125 | 
|                                   
|                                   
|                                   
|                                   
|January 1, 1999  March 31, 1999    |  | $    | 8.625  |     |  | $ | 6.75  | 
|                                   
|                                   
|                                   
|                                   
|April 1, 1999  June 30, 1999       |  | $    | 8.50   |     |  | $ | 6.50  | 
|                                   
|                                   
|                                   
|                                   
|July 1, 1999  September 30, 1999   |  | $    | 8.625  |     |  | $ | 6.875 | 
|                                   
|                                   
|                                   
|                                   
|October 1, 1999  December 31, 1999 |  | $    | 8.00   |     |  | $ | 7.125 | 

At March 24, 2000, there were approximately 80 shareholders
of record of the Companys Common Stock with a market price
of $10.219 per share.

On December 28, 1999, the Company declared a $0.46 per share
 dividend payable on January 24, 2000 to shareholders of
record as of the close of business on December 30, 1999. No
other dividends were declared or paid in 1999. During the year
ended December 31, 1998, the Company declared a $0.01
dividend on July 31, 1998.






|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

See the information set forth under Item 8 on
pages 1121.






|        |                                                                                       
|------- | --------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
	Condition and Results of Operations

Brantley Capital Corporation (the Company) is a
closed end, non-diversified investment company that has elected
to be treated as a business development company under
 the Investment Company Act of 1940, as amended (the
Act). The Company invests primarily in the equity and
 equity-linked debt securities of private companies. The
Companys principal investment objective is the realization
of long-term capital appreciation in the value of its
investments.

5



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##### Table of Contents



This report contains certain statements of a forward-looking
nature relating to future events or the future financial
performance of the Company and its investment portfolio
companies. Words such as may, will,
expect, believe, anticipate,
intend, could, estimate,
might, or continue or the negative or
other variations thereof or comparable terminology are intended
to identify forward-looking statements. Forward-looking
statements are included in this report pursuant to the Safe
 Harbor provision of the Private Securities Litigation
Reform Act of 1995. Such statements are only predictions and the
actual events or results may differ materially from the results
discussed in the forward-looking statements. Factors that could
cause or contribute to such differences include, but are not
limited to, those relating to investment capital demand, pricing,
 market acceptance, the effect of economic conditions, litigation
 and the effect of regulatory proceedings, competitive forces,
the results of financing and investing efforts, the ability to
complete transactions and other risks identified below or in the
Companys filings with the Commission. Readers are cautioned
 not to place undue reliance on these forward-looking statements,
 which speak only as of the date hereof. The Company undertakes
no obligation to publicly revise these forward-looking statements
 to reflect events or circumstances occurring after the date
hereof or to reflect the occurrence of unanticipated events. The
following analysis of the financial condition and results of
operations of the Company should be read in conjunction with the
Financial Statements, the Notes thereto and the other financial
information included elsewhere in this report.

Results of Operations

The Company began operations upon the completion of an initial
public offering on December 3, 1996. Its principal
investment objective is the realization of long-term capital
appreciation from investing primarily in the equity and
equity-linked debt securities of private companies. In addition,
the Company can invest, and has invested, a portion of its assets
 in post-venture small-cap public companies.

Pending the completion of equity and equity-linked debt security
investments that meet the Companys investment objectives,
available funds are invested in short-term securities. In
addition, whenever feasible in light of market conditions and the
 cash flow characteristics of its portfolio companies, the
Company seeks to provide an element of current income primarily
from interest and dividends paid by its portfolio companies.
Dividend and interest income on investments for the twelve months
 ended December 31, 1999, 1998 and 1997 were $2,317,100,
$1,745,969 and $1,712,400 respectively. The significant
components of total operating expenses were fees of $1,436,345,
$1,325,320 and $1,126,741 to the Investment Adviser during the
twelve month periods ended December 31, 1999, 1998 and 1997
respectively, and other professional fees.

During the twelve months ended December 31, 1999,
December 31, 1998, and December 31, 1997 the
Companys equity and equity-linked debt security investments
 resulted in net realized and unrealized gains on investment
transactions of $3,932,077, $7,137,032, and $5,682,693
respectively. During 1999, 1998 and 1997, the Company has been
invested in small capitalization public stocks, which are subject
 to general stock market and business conditions, and the seven
private investments described below (See Liquidity and Capital
Resources). The 1999 and 1998 unrealized gains have been
significantly influenced by the general stock market and business
 conditions, as well as by the financing transaction at Corporate
 Wings, Inc. as more fully described below (See Liquidity and
Capital Resources  Corporate Wings, Inc.).
 The 1997 unrealized gains were significantly influenced by
general stock market and business conditions, as well as the
operating performance of Fitness Quest, Inc. as more fully
described below (See Liquidity and Capital Resources 
Fitness Quest, Inc.).

Liquidity and Capital Resources

At December 31, 1999, the Company had $19,127,039 in cash
and cash equivalents. The Company invested the proceeds of the
initial public offering on a short-term basis pending completion
of investments in equity and equity-linked debt securities of
private companies and post-venture small-cap public companies. At
 December 31, 1999, the cash was primarily invested in a
United States Treasury security. Management believes that cash
and cash equivalents together with proceeds from investments will
 provide the Company with the liquidity necessary to pay
operating expenses of the Company and make follow-on investments.

At December 31, 1999, the cost of equity and equity-linked
debt security investments made by the Company to date was
$20.2 million and their aggregate market value was
$34.5 million for an aggregate fair market value

6



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Business Essentials, Inc.

On April 22, 1999, the Company entered into a
$1.7 million commitment to invest with Brantley Partners IV,
 L.P. and Massey Burch Capital Corp. in a $10.0 million
preferred stock issue for Business Essentials, Inc.
(BEI). BEI is a $26.0 million office products
marketing and distribution company based in Nashville, Tennessee.
 The first $6.0 million of the commitment was funded to launch an
 acquisition strategy focused on office distribution companies
serving primarily commercial and industrial customers. The
remaining commitment will be funded upon the closing of
additional acquisitions. As a result of the initial closing, the
Company has purchased 510,000 shares of Class A 8%
Convertible Preferred Stock at $2.00 per share.

Corporate Wings, Inc.

On December 23, 1997, the Company completed a
$2.1 million investment with Brantley Venture Partners III,
L.P. to purchase a $6.0 million preferred stock issue for
Corporate Wings, Inc. (Corporate Wings). The
Companys investment consists of approximately 644,000
shares of Corporate Wings Series A 8% Convertible Preferred
Stock at $3.26 per share. Corporate Wings businesses
include fixed base operations, related flight management services
 and inertial navigation systems repair services for private and
commercial aircraft from six locations. The proceeds of the
transaction were used by Corporate Wings to continue to execute
an acquisition strategy. Corporate Wings has been in business
since 1978 and had sales of approximately $40 million at the
 time of the Companys investment.

On December 29, 1998, the Company announced the completion
of a second private equity investment in Corporate Wings. As a
result, the Company purchased $962,500 of a $5.5 million
preferred stock transaction led by The Provident Bank. The
Companys purchase represents approximately 65,034 shares of
 a Series A 8% Convertible Preferred Stock at $14.80 per
share. Proceeds will be used to fund the expansion of Corporate
Wings Flight Option program and to continue to execute
their acquisition strategy. During 1998, Corporate Wings
completed the acquisition of Miller Aviation and grew to over
$125 million in annual revenues. As a result of the price of
 this subsequent financing, which was led by The Provident Bank,
and the operating performance of Corporate Wings during 1998, the
 market value of the Companys original investment in
Corporate Wings was increased to $9,531,760 resulting in an
unrealized gain of $7,431,760. This valuation was based on the
$14.80 per share price negotiated by The Provident Bank and
approved by the Companys Board of Directors.

On August 31, 1999, the Company announced the completion of
a third private equity investment in Corporate Wings. As a
result, Corporate Wings sold $20 million of Series B 8%
 Preferred Stock to a third party private equity group at $17.46
per share. Consistent with the Companys investment
procedures, this transaction resulted in a valuation increase on
the Corporate Wings investment of $1,886,030 or $.50 per share.
At December 31, 1999 the financial statement value of the
investment in Corporate Wings was $12,379,730, representing over
a 300% increase from its original purchase price.

Disposable Products Company, LLC

On August 10, 1998, the Company entered into an investment
led by Banc One Capital to provide $1.0 million of a
$3.0 million subordinated debt facility with warrants for
Disposable Products Company, LLC (DPC). DPC is an
acquisition strategy company in the business of manufacturing and
 converting paper and nonwoven materials into wiping products for
 sale to commercial, institutional, industrial and government
markets. In addition, DPC is a converter and reseller of other
safety and industrial/janitorial products. Proceeds of the
transaction were used to complete the first acquisition. Upon
completion of this acquisition, DPC had revenues of approximately
 $25 million. The terms of the debt facility call for a 12%
interest rate per annum with a final maturity five years from the
 closing. Brantley also received a detachable capital stock
purchase warrant exercisable into 5% of the fully-diluted capital
 stock of the company at the time of exercise at a nominal
exercise price. The proceeds of the facility were used to finance
 acquisitions.

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Fitness Quest, Inc.

On December 16, 1997, the Company funded a
$1.35 million commitment to invest with Brantley Venture
Partners III, L.P. in a $3.85 million preferred stock issue
for Fitness Quest, Inc. (Fitness Quest). As a result,
 the Company purchased approximately 788,961 shares of Fitness
Quest Series A 10% Convertible Preferred Stock at $1.71 per
share. Fitness Quest is a direct marketing and distribution
company launching an acquisition strategy. A portion of the
proceeds were used by Fitness Quest for a management buy-out of
the company from its previous owner, The Time Warner Music Group,
 a 100% wholly owned subsidiary of Time Warner, Inc., and the
remainder was used for acquisitions. Fitness Quest has been in
the fitness promotional products business since 1994 and, at the
time of the purchase, had revenues at a $100 million annual sales
 rate level.

During 1997, Fitness Quest grew to $120 million in sales and
 improved its operating margins and profits. The Companys
Board of Directors, after a complete evaluation, made a
determination to increase the Companys market value in its
Fitness Quest investment in 1997 to $5,440,000 resulting in a
1997 unrealized gain of $4,090,000. This evaluation was based on
price to earnings ratios, cash flow multiples and other
appropriate financial measurements of similar private companies.
In 1998, the operating results of Fitness Quest were adversely
impacted by the cyclical nature of its business and one-time
expenses resulting from several acquisition transactions.
Consequently, 1998 sales were approximately $90 million
resulting in lower than expected profit margins.

In addition to the above Series A 10% Convertible Preferred
Stock, the Company has funded $1,751,300 to invest with Brantley
Venture Partners III, L.P. in a $ 3.5 million 10% senior
subordinated debt investment in Fitness Quest. In addition, the
Company received a warrant to purchase 181,172 shares of Fitness
Quest common stock for $.01 per share. The proceeds of the
investment were used to fund Fitness Quests working capital
 needs.

Health Care Solutions, Inc.

On September 30, 1997, the Company funded a
$1.5 million convertible junior subordinated promissory note
 facility for Health Care Solutions, Inc. (Health Care
Solutions). Health Care Solutions is an acquisition
strategy company in the home healthcare services market and is
currently at a $50 million annual sales rate level with a strong
presence in the Midwest and Great Lakes States region. The terms
of the notes call for an 18% interest rate per annum during the
first year and 12% per annum thereafter, with final maturity two
years from the closing. After the first year, the notes are
convertible into common stock at a price of $3.50 per share. In
connection with its commitment to provide this facility, the
Company received warrants to purchase up to $450,000 of common
stock valued at an exercise price of 10% of an initial public
offering (IPO) price completed during the term of the
 notes, or at $3.50 per share should the warrants be exercised
other than in connection with an IPO. The warrants are currently
exercisable. The proceeds of the notes were used by Health Care
Solutions to help finance acquisitions.

Health Care Solutions, Inc. recently completed a recapitalization
 plan including a 2 for 1 reverse stock split. As a result,
Brantley Capital Corporation, has agreed to exchange its
convertible junior subordinated promissory note and accrued
interest thereon for 246,994 shares of Series C 8%
Convertible Preferred Stock at an exchange rate of $7.50 per
share. The warrants to purchase up to $450,000 of common stock at
 an exercise price of 10% of an IPO price or at $3.50 per share
will remain outstanding and will be adjusted to reflect the
reverse stock split.

National Rehab Partners, Inc.

On August 10, 1999, the Company announced the completion of
a $1.5 million commitment to invest with Brantley Partners
IV, L.P. in a $12.0 million preferred stock issue for
National Rehab Partners, Inc. (NRP). NRP is a Brentwood,
Tennessee rehabilitation management service company providing
rehabilitation services through acute care hospitals and hospital
 systems throughout the United States. NRP is the only national
rehabilitation company focused exclusively on helping hospitals
develop their outpatient rehabilitation services. The first
$8.0 million of the commitment was funded to complete the
acquisition of a group of rehabilitation management service
providers, resulting in NRP having an annualized consolidated
revenue base of approximately $25.0 million. The remaining
commitments are being funded upon the successful closing of
additional acquisitions. As a

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Pediatric Physicians Alliance, Inc.

On January 28, 1999, the Company announced the completion of
 a $3.172 million commitment to invest with Brantley Venture
Partners III, L.P. in a $7.934 million preferred stock issue
 for Pediatric Physicians Alliance, Inc. (Pediatric
Physicians Alliance). Pediatric Physicians Alliance is a
physician practice management company that develops integrated
pediatric networks of care. The companys objective is to
develop the leading physician-based integrated pediatric
organization in the United States. The proceeds of the
transaction were used to complete the acquisition of a number of
physician practices. Upon acquiring these practices, Pediatric
Physicians Alliances annualized revenues were approximately
 $30 million. The Company also agreed to purchase 793,000
shares of Class A-2 10% Convertible Preferred Stock. In
addition to the above Class A-2 10% Convertible Preferred
Stock, the Company has funded $267,448 to invest with Brantley
Venture Partners III, L.P. in $668,619 of promissory notes, with
detachable warrants, in Pediatric Physicians Alliance, Inc. The
notes have a maturity date of September 29, 2001. The
detachable warrant is for the purchase of 30,000 shares of
Pediatric Physicians Alliance, Inc. common stock at $4.00 per
share.

Brantley Capital Corporation, continuously evaluates
opportunities to maximize the valuation of its investments. In
that regard, the Company periodically evaluates potential
acquisitions, financing transactions, initial public offerings,
strategic alliances, and sale opportunities involving its
portfolio companies. These transactions and activities are
generally not disclosed to the Companys shareholders and
the investing public until such time as the transactions are
publicly announced or completed, as the case may be. Any such
pending transaction could have an impact on the valuation of an
investment which is also generally not adjusted until the
transaction is publicly announced or completed.

Brantley Venture Partners II, L.P., Brantley Venture Partners
III, L.P. and Brantley Partners IV, L.P. (collectively, the
Partnerships) hold, in the aggregate, approximately
$200 million of venture capital private equity investments.
The Partnerships are related to the Investment Adviser in a
manner that requires the receipt, from the Commission, of an
exemption from certain provisions of the Act in order to permit,
under certain circumstances, the Company, the Investment Adviser
and the Partnerships to invest in the same portfolio companies.
As a result, the Company and the Partnerships filed an
application on March 6, 1997 with the Commission seeking an
exemptive order permitting the Company, under certain
circumstances, to invest in securities of issuers in which one of
 the Partnerships also intends to invest. The staff of the
Commission granted the exemptive order on November 18, 1997.

At December 31, 1999, the Company had stockholders
equity of $52,440,335, resulting in a net asset value per share
of $13.76.

Impact of Inflation

The Company does not believe that its business is materially
affected by inflation, other than the impact which inflation may
have on the securities markets, the valuations of business
enterprises and the relationship of such valuations to underlying
 earnings, all of which will influence the value of the
Companys investments.

Risks

Pursuant to Section 64(b)(1) of the Act, a business
development company is required to describe the risk factors
involved in an investment in the securities of such company due
to the nature of the companys investment portfolio.
Accordingly, the Company states that its objective is to achieve
capital appreciation through investments in businesses believed
to have favorable growth potential. Such businesses are often
undercapitalized small companies which can lack management depth
and have not yet attained levels of consistent profitability. The
 Companys private equity investments often include
securities which are subject to legal or contractual restrictions
 on resale, which restrictions adversely affect the liquidity and
 marketability of such securities.

9



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The Company considers the management of equity price risk
essential to conducting its business and maintaining its
profitability. The Company manages this risk by maintaining a
diverse portfolio of equity and equity-linked debt securities. A
portion of the Companys investment portfolio consists of
equity and equity-linked debt securities in private companies.
The Company would anticipate no impact on these investments from
modest changes in public market equity prices. However, should
significant changes in market prices occur, there could be a
longer-term effect on valuations of private companies, which
could affect the carrying value and the amount and timing of
gains realized on these investments. A portion of the
Companys investment portfolio also consists of common
stocks and warrants to purchase common stocks in publicly traded
companies. These investments are directly exposed to equity price
 risk, in that a hypothetical ten percent change in these equity
prices would result in a similar percentage change in the fair
market value of these investments.

Because of the speculative nature of the Companys
investments and the lack of any market for the securities
initially purchased by the Company, there is a significantly
greater risk of loss than is the case with traditional investment
 securities. The high-risk, long-term nature of the
Companys private equity investment activities may prevent
shareholders of the Company from achieving price appreciation and
 dividend distributions.






|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market Risk

See the information set forth under Item 7  Risks of
this Annual Report on Form 10-K.

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Item 8.  Financial Statements and Supplementary Data

BRANTLEY CAPITAL CORPORATION

BALANCE SHEETS

|                                                                                                                                                       |                                            |          |            |            |  |   |            |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | -------- | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                                                                                                                                       |                                            |         
|                                                                                                                                                       |                                            | December
|                                                                                                                                                       |                                            |         
|                                                                                                                                                       |                                            | 1999     |            | 1998      
|                                                                                                                                                       |                                            |          |            |           
|ASSETS                                                                                                                                                 |                                            |          |            |            |  |   |            |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Cash and cash equivalents (Note 2)                                                                                                                     |                                            | $        | 19,127,039 |            |  | $ | 22,973,379 |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Investments, at market                                                                                                                                 |                                            |          | 34,502,138 |            |  |   | 26,911,160 |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Dividends and interest receivable                                                                                                                      |                                            |          | 1,235,462  |            |  |   | 433,874    |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Other assets                                                                                                                                           |                                            |          | 126,793    |            |  |   | 137,113    |           
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|                                                                                                                                                       | Total Assets                               |          | $          | 54,991,432 |  |   | $          | 50,455,526 | 
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|                                                                                                                                                      
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                   |                                            |          |            |            |  |   |            |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Liabilities:                                                                                                                                           |                                            |          |            |            |  |   |            |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Payable for investments purchased                                                                                                                      |                                            | $        | 243,662    |            |  | $ |           |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Advisory fee payable (Note 3)                                                                                                                          |                                            |          | 365,884    |            |  |   | 361,153    |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Accrued professional fees                                                                                                                              |                                            |          | 85,720     |            |  |   | 51,819     |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Dividends payable                                                                                                                                      |                                            |          | 1,752,847  |            |  |   |           |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Other liabilities                                                                                                                                      |                                            |          | 102,984    |            |  |   | 101,026    |           
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|                                                                                                                                                       | Total Liabilities                          |          | $          | 2,551,097  |  |   | $          | 513,998    | 
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|Stockholders Equity (Note 7):                                                                                                                         |                                            |          |            |            |  |   |            |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Common Stock, $0.01 par value; 25,000,000 shares authorized and
	3,810,535 shares issued and outstanding at December 31, 1999
	 and 1998, respectively |                                            | $        | 38,105     |            |  | $ | 38,105     |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Additional paid in capital                                                                                                                             |                                            |          | 37,505,433 |            |  |   | 37,505,433 |           
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|                                                                                                                                                      
|Retained earnings                                                                                                                                      |                                            |          | 14,896,797 |            |  |   | 12,397,990 |           
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|                                                                                                                                                       | Total Stockholders Equity                 |          |            | 52,440,335 |  |   |            | 49,941,528 | 
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|                                                                                                                                                       | Total Liabilities and Stockholders Equity |          | $          | 54,991,432 |  |   | $          | 50,455,526 | 
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           
|Net Asset Value Per Share                                                                                                                              |                                            | $        | 13.76      |            |  | $ | 13.11      |           
|                                                                                                                                                       |                                            |          |            |            |  |   |            |           

The accompanying notes to the financial statements are an
integral part of these statements.

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##### Table of Contents



BRANTLEY CAPITAL CORPORATION

STATEMENTS OF OPERATIONS

|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |           | 
|------------------------------------------------------------------------- | --------------------------------------- | ------------ | --------- | ------------ |  | ------------ | --------- | --------- | - | - | --------- | --------- | 
|                                                                          |                                         | For the      |           | For the      |  | For the     
|                                                                          |                                         | year ended   |           | year ended   |  | year ended  
|                                                                          |                                         | December 31, |           | December 31, |  | December 31,
|                                                                          |                                         | 1999         |           | 1998         |  | 1997        
|                                                                          |                                         |              |           |              |  |             
|Investment Income:                                                        |                                         |              |           |              |  |              |           |           |   |   |           |          
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Interest                                |              | $         | 1,546,395    |  |              | $         | 1,575,058 |   |   | $         | 1,709,924 | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Dividends                               |              |           | 770,705      |  |              |           | 170,911   |   |   |           | 2,476     | 
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|                                                                          | Total investment income                 |              |           | 2,317,100    |  |              |           | 1,745,969 |   |   |           | 1,712,400 | 
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Operating Expenses:                                                       |                                         |              |           |              |  |              |           |           |   |   |           |          
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Advisory fees                           |              |           | 1,436,345    |  |              |           | 1,325,320 |   |   |           | 1,126,741 | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Administration fees                     |              |           | 75,000       |  |              |           | 118,516   |   |   |           | 117,613   | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Professional fees                       |              |           | 144,514      |  |              |           | 98,705    |   |   |           | 150,930   | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Other                                   |              |           | 341,664      |  |              |           | 272,442   |   |   |           | 286,445   | 
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|                                                                          | Total expenses                          |              |           | 1,997,523    |  |              |           | 1,814,983 |   |   |           | 1,681,729 | 
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Net Income (Loss)                                                         |                                         | $            | 319,577   |              |  | $            | (69,014   | )         |   | $ | 30,671    |          
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Net Realized and Unrealized Gains (Losses) on Investments:                |                                         |              |           |              |  |              |           |           |   |   |           |          
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Net realized gain (loss) on investments |              |           | 2,106,117    |  |              |           | (57,414   | ) |   |           | 421,735   | 
|                                                                         
|                                                                         
|                                                                         
|                                                                         
|                                                                          | Net unrealized gain on investments      |              |           | 1,825,960    |  |              |           | 7,194,446 |   |   |           | 5,260,958 | 
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Net gain on investments                                                   |                                         |              | 3,932,077 |              |  |              | 7,137,032 |           |   |   | 5,682,693 |          
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Net change in net assets resulting from operations                        |                                         | $            | 4,251,654 |              |  | $            | 7,068,018 |           |   | $ | 5,713,364 |          
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Net Income per Share, Primary and Fully Diluted                           |                                         | $            | 1.11      |              |  | $            | 1.85      |           |   | $ | 1.50      |          
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          
|Weighted Average Number of Shares Outstanding, Primary and
	Fully Diluted |                                         |              | 3,810,535 |              |  |              | 3,810,535 |           |   |   | 3,810,535 |          
|                                                                          |                                         |              |           |              |  |              |           |           |   |   |           |          

The accompanying notes to the financial statements are an
integral part of these statements.

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##### Table of Contents



BRANTLEY CAPITAL CORPORATION

STATEMENTS OF CASH FLOWS

|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |           |                |          |  
|------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | --------------------------------- | ------------ | -------------- | ------------ | ---------- | --------- | -------------- | -------- | ----------- | --------- | -------------- | -------- | -
|                                                       |                                                                                                                             | For the                                                |                                   | For the      |                | For the     
|                                                       |                                                                                                                             | year ended                                             |                                   | year ended   |                | year ended  
|                                                       |                                                                                                                             | December 31,                                           |                                   | December 31, |                | December 31,
|                                                       |                                                                                                                             | 1999                                                   |                                   | 1998         |                | 1997        
|                                                       |                                                                                                                             |                                                        |                                   |              |                |             
|Cash Flows from Operating Activities:                  |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net change in net assets resulting from operations:                                                                         |                                                        | $                                 | 4,251,654    |                |              | $          | 7,068,018 |                |          | $           | 5,713,364 |               
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Adjustments to reconcile net change in net assets resulting from
	operations to net cash (used for) provided by operations: |                                                        |                                   |              |                |              |            |           |                |          |             |           |               
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Net realized (gain) loss on investments                |                                   |              | (2,106,117     | )            |            |           | 57,414         |          |             |           | (421,735       | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Net Unrealized Gain on Investments                     |                                   |              | (1,825,960     | )            |            |           | (7,194,446     | )        |             |           | (5,260,958     | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Changes in assets and liabilities:                     |                                   |              |                |              |            |           |                |          |             |           |                |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             |                                                        | Dividends and interest receivable |              |                | (801,588     | )          |           |                | (363,152 | )           |           |                | (70,722  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             |                                                        | Other assets                      |              |                | 10,319       |            |           |                | 134,377  |             |           |                | 19,326   |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             |                                                        | Advisory fee payable              |              |                | 4,731        |            |           |                | 77,042   |             |           |                | 202,213  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             |                                                        | Accrued Professional fees         |              |                | 33,901       |            |           |                | (87,019  | )           |           |                | 113,838  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             |                                                        | Dividends payable                 |              |                |             |            |           |                | (342,948 | )           |           |                |         |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             |                                                        | Other liabilities                 |              |                | 1,958        |            |           |                | (46,197  | )           |           |                | (223,611 | )
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|                                                       |                                                                                                                             | Net cash (used for) provided by operating activities   |                                   |              | (431,102       | )            |            |           | (696,911       | )        |             |           | 71,715         |         
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|Cash Flows from Investing Activities:                  |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Purchases of investment securities                     |                                   |              | (15,837,437    | )            |            |           | (2,663,800     | )        |             |           | (18,040,089    | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Sales/ Maturities of investment securities             |                                   |              | 12,426,225     |              |            |           | 1,726,021      |          |             |           | 2,526,788      |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Purchases of short-term investments                    |                                   |              | (4,566,012,157 | )            |            |           | (5,933,395,842 | )        |             |           | (7,752,694,628 | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Sales/ Maturities of short-term investments            |                                   |              | 4,566,008,131  |              |            |           | 5,933,350,671  |          |             |           | 7,755,099,444  |         
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|                                                       |                                                                                                                             | Net cash (used for) investing activities               |                                   |              | (3,415,238     | )            |            |           | (982,950       | )        |             |           | (13,108,485    | )       
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|Cash Flows from Financing Activities:                  |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Proceeds from shares issued in initial public offering |                                   |              |               |              |            |           |               |          |             |           |               |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Subsequent shares issued to initial public offering    |                                   |              |               |              |            |           |               |          |             |           | 1,500,000      |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                                             | Distributions                                          |                                   |              |               |              |            |           | (38,105        | )        |             |           | (101,105       | )       
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|                                                       |                                                                                                                             | Net cash (used for) provided by financing activities   |                                   |              |               |              |            |           | (38,105        | )        |             |           | 1,398,895      |         
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|Net change in cash and cash equivalents for the period |                                                                                                                             |                                                        | (3,846,340                        | )            |                |              | (1,717,966 | )         |                |          | (11,637,875 | )        
|                                                      
|                                                      
|                                                      
|                                                      
|Cash and cash equivalents, beginning of the period     |                                                                                                                             |                                                        | 22,973,379                        |              |                |              | 24,691,345 |           |                |          | 36,329,220  |          
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          
|Cash and cash equivalents, end of the period           |                                                                                                                             | $                                                      | 19,127,039                        |              |                | $            | 22,973,379 |           |                | $        | 24,691,345  |          
|                                                       |                                                                                                                             |                                                        |                                   |              |                |              |            |           |                |          |             |          

The accompanying notes to the financial statements are an
integral part of these statements.

13



---



##### Table of Contents



BRANTLEY CAPITAL CORPORATION

STATEMENTS OF STOCKHOLDERS EQUITY

|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|---------------------------------------------------------------- |  | ------ | ------ | ---------- |  | --------- | ---------- | ------------ |  | - | ---------- | - |  | - | ---------- | -
|                                                                 |  |        |        | Additional |  | Retained  |            | Total       
|                                                                 |  | Common |        | Paid in    |  | Earnings  |            | Stockholders
|                                                                 |  | Stock  |        | Capital    |  | (Deficit) |            | Equity      
|                                                                 |  |        |        |            |  |           |            |             
|Balance at January 1, 1997                                       |  | $      | 36,605 |            |  | $         | 36,112,921 |              |  | $ | (7,222     | ) |  | $ | 36,142,304 |  
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations                       |  |        |       |            |  |           |           |              |  |   | 5,713,364  |   |  |   | 5,713,364  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Distributions from:                                              |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|                                                                
|                                                                
|                                                                
|                                                                
|Net investment income                                            |  |        |       |            |  |           |           |              |  |   | (23,084    | ) |  |   | (23,084    | )
|                                                                
|                                                                
|                                                                
|                                                                
|Net realized gains                                               |  |        |       |            |  |           |           |              |  |   | (420,969   | ) |  |   | (420,969   | )
|                                                                
|                                                                
|                                                                
|                                                                
|Issuance of 150,000 shares subsequent to initial public offering |  |        | 1,500  |            |  |           | 1,498,500  |              |  |   |           |   |  |   | 1,500,000  |  
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 1997                                     |  | $      | 38,105 |            |  | $         | 37,611,421 |              |  | $ | 5,262,089  |   |  | $ | 42,911,615 |  
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations                       |  |        |       |            |  |           |           |              |  |   | 7,068,018  |   |  |   | 7,068,018  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Net investment loss reclassification                             |  |        |       |            |  |           | (105,988   | )            |  |   | 105,988    |   |  |   |           |  
|                                                                
|                                                                
|                                                                
|                                                                
|Distributions from net investment income                         |  |        |       |            |  |           |           |              |  |   | (38,105    | ) |  |   | (38,105    | )
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 1998                                     |  | $      | 38,105 |            |  | $         | 37,505,433 |              |  | $ | 12,397,990 |   |  | $ | 49,941,528 |  
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations                       |  |        |       |            |  |           |           |              |  |   | 4,251,654  |   |  |   | 4,251,654  |  
|                                                                
|                                                                
|                                                                
|                                                                
|Distributions from:                                              |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|                                                                
|                                                                
|                                                                
|                                                                
|Net investment income                                            |  |        |       |            |  |           |           |              |  |   | (495,370   | ) |  |   | (495,370   | )
|                                                                
|                                                                
|                                                                
|                                                                
|Net realized gains                                               |  |        |       |            |  |           |           |              |  |   | (1,257,477 | ) |  |   | (1,257,477 | )
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 1999                                     |  | $      | 38,105 |            |  | $         | 37,505,433 |              |  | $ | 14,896,797 |   |  | $ | 52,440,335 |  
|                                                                 |  |        |        |            |  |           |            |              |  |   |            |   |  |   |            |  

The accompanying notes to the financial statements are an
integral part of these statements.

14



---



##### Table of Contents



BRANTLEY CAPITAL CORPORATION

NOTES TO THE FINANCIAL STATEMENTS

1.  Organization

Brantley Capital Corporation (the Company), a
Maryland corporation, is a closed-end, non-diversified investment
 company which has elected to be treated as a business
development company under the Investment Company Act of 1940, as
amended (the Act). The Company was organized on
August 1, 1996 and commenced operations on December 3,
1996. The Companys investment objective is the realization
of long-term capital appreciation in the value of its
investments. To achieve this objective, the Company intends to
invest primarily in privately placed equities and debt and, to a
lesser extent, in post venture small-cap public companies.

The Company invests in securities classified as restricted
securities under the Securities Act of 1933. The value of
restricted stock investments for which no public market exists
cannot be precisely determined. These securities will usually be
subject to restrictions on resale or otherwise have no
established trading market. The lack of liquidity of these
securities may adversely affect the ability of the Company to
dispose of them in a timely manner and at a fair price when the
Company deems it necessary or advantageous.

Privately placed securities typically depend significantly on the
 management talents and efforts of one person or a small group of
 persons. The loss of the services of one or more of these
persons could have a material adverse affect on the portfolio
company. In addition, due to their size and sometimes limited
product diversity, these companies may be more vulnerable to
economic downturns and often require additional capital to expand
 or compete.

Brantley Capital Corporation, continuously evaluates
opportunities to maximize the valuation of their investments. In
that regard, the Company periodically evaluates potential
acquisitions, financing transactions, initial public offerings,
strategic alliances, and sale opportunities involving its
portfolio companies. These transactions and activities are
generally not disclosed to the Companys shareholders and
the investing public until such time as the transactions are
publicly announced or completed, as the case may be. Any such
pending transaction could have an impact on the valuation of an
investment which is also generally not adjusted until the
transaction is publicly announced or completed.

Post venture small-cap public companies may also display more
sensitivity to changes in company, industry and market conditions
 than more established public companies. Because small-cap public
 companies often have fewer outstanding shares than larger
companies, it may be more difficult for the Company to buy or
sell significant amounts of shares without an unfavorable impact
on the prevailing prices.

The Company operates as a non-diversified investment company
within the meaning of the Act and, therefore, the Companys
investments are likely to not be substantially diversified.

2.  Significant Accounting Policies

The following is a summary of significant accounting policies in
conformity with generally accepted accounting principles followed
 by the Company in preparation of its financial statements.

A.  Security Valuation

Privately placed securities are carried at fair value as
determined in good faith by or under the direction of the Board
of Directors. Generally, the fair value of each security will
initially be based primarily upon its original cost to the
Company. Cost will be the primary factor used to determine fair
value on an ongoing basis until significant developments or other
 factors affecting the investment (such as results of the
portfolio companys operations, changes in the general
market conditions, subsequent financings or the availability of
market quotations) provide a basis for value other than cost
valuation.

Portfolio investments listed on an exchange or traded on NASDAQ
will be valued at the closing price listed on their respective
exchange or system on the date of valuation. Securities traded in
 the over-the-counter market will be valued on the average of the
 closing bid and asked prices on the day of valuation.

15



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






B.  Repurchase Agreements

The Company may invest in repurchase agreements with institutions
 which Brantley Capital Management, Ltd (the Investment
Adviser) has determined are creditworthy. Each repurchase
agreement is recorded at cost. The Company requires that the
securities purchased in a repurchase agreement be transferred to
the Companys custodian in a manner which will enable the
Company to obtain those securities in the event of counter-party
default. The seller is required to maintain the value of the
securities held at not less than the repurchase price, including
interest.

C.  Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with
minimal interest rate risk and original maturities of three
months or less at acquisition date. At December 31, 1999,
cash and cash equivalents consisted of the following:

|                                             |  |   |            | 
|-------------------------------------------- |  | - | ---------- | 
|                                            
|                                            
|                                            
|                                            
|Cash                                         |  | $ | 4,891      | 
|                                            
|                                            
|                                            
|                                            
|United States Treasury Bill 4.85%, 2/17/2000 |  |   | 19,122,148 | 
|                                             |  |   |            | 
|                                             |  | $ | 19,127,039 | 
|                                             |  |   |            | 

D.  Security Transactions and Related Income

Security transactions are accounted for on a trade date basis.
Net realized gains or losses on sales of securities are
determined on the specific identification method. Interest income
 and expenses are recognized on the accrual basis. Dividends are
recorded on the ex-dividend date for publicly traded securities
and in accordance with the security agreement for private
securities.

E.  Dividends and Distributions to
Stockholders

The Company intends to make quarterly distributions to its
stockholders of substantially all of its investment company
taxable income. The Company may choose to distribute net realized
 long-term capital gains, or to retain such gains to supplement
the Companys equity capital and support growth in its
portfolio. Income distributions and capital gain distributions
are determined in accordance with income tax regulations, which
may differ from generally accepted accounting principles.

F.  Federal Income Taxes

The Company intends to continue to qualify as a regulated
investment company by complying with the applicable provisions
available to certain investment companies as defined in
applicable sections of the Internal Revenue Code. The Company has
 elected for Federal income tax purposes to defer a $72,785
current year post October 31 capital loss as though the loss
 was incurred on the first day of the next year.

G.  Organization Costs

Costs incurred by the Company in connection with its organization
 had originally been deferred and were being amortized on a
straight line basis over their estimated useful lives. In
accordance with The American Institute of Certified Public
Accountants Statement of Position 98-5, the Company fully
expensed the remaining deferred balance of $96,376 in 1999.

H.  Reclassifications

Certain previously reported amounts have been reclassified to
conform to the current year presentation.

16



---



##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






3.  Investment Advisory Agreement

The Company has entered into an investment advisory agreement
(the Advisory Agreement) with Brantley Capital
Management, L.L.C. (the Investment Adviser) under
which the Investment Adviser is entitled to an annual management
fee of 2.85% of the Companys net assets, determined at the
end of each calendar quarter, and payable quarterly in arrears
throughout the term of the Advisory Agreement. Certain officers
of the Company are also officers of the Adviser. No officer of
the Adviser receives any compensation from the Company for
serving as officer of the Company.

4.  Investments

At December 31, 1999, the cost of investments for federal
income tax purposes was the same as that used for financial
reporting purposes.

5.  Transactions with Related Parties

The Company has obtained exemptive relief from certain provisions
 of the Act which permit the Company to invest in an offering
which affiliates of the Investment Adviser also intend to invest
in. The Company anticipates that, subject to certain terms and
conditions, current and future affiliates of the Adviser may
frequently invest in the same portfolio companies.

Certain offering and organization costs were paid by officers of
the Company and the Investment Adviser. No amounts were due to
the officers of the Company as of December 31, 1999 or
December 31, 1998. At December 31, 1999 and 1998, the
Company owed $365,884 and $361,153 respectively to the Investment
 Adviser for management advisory services.

6.  Use of Estimates

The preparation of financial statements in accordance with
generally accepted accounting principles requires management to
make estimates and assumptions, including the valuation of
privately held securities, that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.

7.  Stockholders Equity

The Company is authorized to issue 25,000,000 shares of Common
Stock with a par value $0.01 per share. Shares totaling 3,660,535
 were issued through the organization and initial public offering
 of the Company at $10.00 per share on December 3, 1996. On
January 15, 1997, the underwriters of the initial offering
of the Companys shares exercised an option to purchase an
additional 150,000 shares of Common Stock at $10 per share
resulting in total shares outstanding of 3,810,535. The proceeds
of the offerings were reduced by offering costs of $455,824.

Under the Companys Dividend Reinvestment and Cash Purchase
Plan (the Plan), all cash dividends and cash
distributions to stockholders are automatically reinvested unless
 the stockholder elects to receive their distributions in cash.
If the market value per share of the Common Stock on the record
date equals or exceeds the net asset value per share of Common
Stock on that date, the Company will issue new shares at the net
asset value.

If the net asset value exceeds the market price, shares will be
purchased on the open market or in private transactions as soon
as is practicable after such date. If before the open market
purchases have been completed, the market price exceeds the net
asset value, the Company will issue new shares at net asset value
 to fulfill the purchase requirements.

17



---



##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






8.  Stock Option Plans

Concurrent with the initial public offering on December 3,
1996, the Company adopted the 1996 Stock Option Plan (the
Plan), which authorizes the issuance of options to
purchase up to 1,175,000 shares of Common Stock to officers and
employees of the Company. Options to purchase 350,000 and 175,002
 shares of Common Stock of the Company (the Option
Shares) were granted to the Companys executive
officers on December 3, 1999 and May 18, 1999,
respectively. These options will become exercisable as to
one-third of the Option Shares on the first anniversary of the
option grant, as to an additional one third of the Option Shares
on the second anniversary of the option grant and as to the
remaining one-third on the third anniversary of the option grant.
 Options granted under the Plan will be exercisable at a price
not less than the greater of (i) the current market value on
 the date of option grant and (ii) the current net asset
value of the shares of Common Stock. No option may be exercised
more than 10 years after the date on which it is granted.
The exercise price of the granted options is $10.00 and $12.77,
respectively.

In addition, the Company has adopted a stock option plan relating
 to 75,000 shares of Common Stock to be granted to the
disinterested directors of the Company (the Directors
 Plan). Upon receipt of an order from the Securities and
Exchange Commission approving such a plan as fair and reasonable
and not overreaching of the Company or its stockholders, options
to purchase 22,000 shares of Common Stock were granted to the
disinterested directors on May 18, 1999. These options will
become exercisable on the first anniversary of the option grant
and will be exercisable at a price not less than the greater of
(i) the current market value on the date of option grant and
 (ii) the current net asset value of the shares of Common
Stock. No option may be exercised more than 10 years after
the date on which it is granted. The exercise price of the
granted options is $12.77.

In order to facilitate the purchase of shares under the Plan or
Directors Plan, the Company may make arms-length loans to
each plans participants, under the terms required by
Section 57 (j)(2) of the Act. No loans were outstanding as
of December 31, 1999.

In October 1995, the Financial Accounting Standards Board
issued Statement No. 123, Accounting for Stock Based
Compensation (the Statement). The Statement
encourages companies to recognize expenses for stock based
compensation awards based on their fair value on the date of
grant. Under the Statement, companies may continue following the
existing accounting rules, provided that pro forma disclosures
are made of what net income and earnings per share would have
been had the new fair value method been used. The Company has
elected to continue the existing accounting method and to not
adopt the fair value method. Management has assessed the impact
of this pro forma disclosure requirement and determined that it
is not material to the operations of the Company in 1999, 1998
and 1997. Management used the Black Scholes model to perform this
 assessment. Key assumptions included an estimated volatility of
 .245, expected option life of 5 years, an expected dividend
yield of 2.00 and a risk free interest rate of 5.63%. None of the
 outstanding options were dilutive as of December 31, 1999,
1998 or 1997.

9.  Yearly Data

Financial results for year ended December 31, 1999 are
summarized below:

|                                           |  |   |           | 
|------------------------------------------ |  | - | --------- | 
|                                          
|                                          
|                                          
|                                          
|Total investment income                    |  | $ | 2,317,100 | 
|                                          
|                                          
|                                          
|                                          
|Net investment gain                        |  |   | 3,932,077 | 
|                                          
|                                          
|                                          
|                                          
|Net increase in net assets from operations |  |   | 4,251,654 | 
|                                          
|                                          
|                                          
|                                          
|Income per share                           |  | $ | 1.11      | 

18



---



##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






10.  Financial Highlights

|                                                 |                                   |              |       |              |   |   |        |       |  
|------------------------------------------------ | --------------------------------- | ------------ | ----- | ------------ | - | - | ------ | ----- | -
|                                                 |                                   | Year         |       | Year        
|                                                 |                                   | ended        |       | ended       
|                                                 |                                   | December 31, |       | December 31,
|                                                 |                                   | 1999         |       | 1998        
|                                                 |                                   |              |       |             
|Net Asset Value, Beginning of the Period         |                                   | $            | 13.11 |              |   | $ | 11.26  |      
|                                                
|                                                
|                                                
|                                                
|Income from investment operations:               |                                   |              |       |              |   |   |        |      
|                                                
|                                                
|                                                
|                                                
|Net Income (Loss)                                |                                   |              | 0.08  |              |   |   | (.02   | )    
|                                                
|                                                
|                                                
|                                                
|Net Realized And Unrealized Gains on Investments |                                   |              | 1.03  |              |   |   | 1.88   |      
|                                                 |                                   |              |       |              |   |   |        |      
|                                                 | Total from investment operations: |              |       | 1.11         |   |   |        | 1.86  |  
|                                                 |                                   |              |       |              |   |   |        |      
|Less Distributions:                              |                                   |              |       |              |   |   |        |      
|                                                
|                                                
|                                                
|                                                
|Dividends from net investment income             |                                   |              | (0.13 | )            |   |   | (0.01  | )    
|                                                
|                                                
|                                                
|                                                
|Dividends from net realized gains                |                                   |              | (0.33 | )            |   |   |       |      
|                                                 |                                   |              |       |              |   |   |        |      
|                                                 | Total Distributions               |              |       | (0.46        | ) |   |        | (0.01 | )
|                                                
|                                                
|                                                
|                                                
|Net Asset Value, End of the Period               |                                   | $            | 13.76 |              |   | $ | 13.11  |      
|                                                 |                                   |              |       |              |   |   |        |      
|Market Value, End of the Period                  |                                   | $            | 8.00  |              |   | $ | 7.125  |      
|                                                 |                                   |              |       |              |   |   |        |      
|Total Return, At Market Value                    |                                   |              | 17.94 | %            |   |   | (25.89 | )%   
|                                                
|                                                
|                                                
|                                                
|Total Return, At NAV                             |                                   |              | 10.27 | %            |   |   | 16.63  | %    

19



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






11.  Schedule of Investments

|                                  |                                                                  |                                        |  |              |  |  |           |            |            | 
|--------------------------------- | ---------------------------------------------------------------- | -------------------------------------- |  | ------------ |  |  | --------- | ---------- | ---------- | 
|                                  |                                                                  |                                       
|                                  |                                                                  | December 31, 1999                     
|                                  |                                                                  |                                       
|                                  |                                                                  | Shares/Par/                            |  |             
|Name of Issuer and Title of Issue |                                                                  | Warrants                               |  | Market Value
|                                  |                                                                  |                                        |  |             
|Avionics                          |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Corporate Wings, Inc. *#                                         |                                        |  | 709,034      |  |  | $         | 12,379,730 |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Business Services                 |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Ameripath Incorporated                                           |                                        |  | 47,283       |  |  |           | 387,130    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Barra Incorporated                                               |                                        |  | 21,285       |  |  |           | 675,799    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Business Essentials, Incorporated #                              |                                        |  | 510,000      |  |  |           | 1,020,000  |           
|                                 
|                                 
|                                 
|                                 
|                                  | Disposable Products Company, LLC #                               |                                        |  | 1,000,000    |  |  |           | 1,000,000  |           
|                                 
|                                 
|                                 
|                                 
|                                  | International Total Services, Incorporated                       |                                        |  | 104,250      |  |  |           | 123,797    |           
|                                 
|                                 
|                                 
|                                 
|                                  | NCO Group, Incorporated                                          |                                        |  | 11,750       |  |  |           | 353,969    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Rent-A-Center, Incorporated                                      |                                        |  | 18,300       |  |  |           | 362,569    |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|                                  |                                                                  |                                        |  |              |  |  | 3,923,264 |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Chemicals                         |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Nova Corp. GA                                                    |                                        |  | 24,000       |  |  |           | 757,500    |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Drugs & Health Care               |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Barr Labs, Incorporated                                          |                                        |  | 16,100       |  |  |           | 505,137    |           
|                                 
|                                 
|                                 
|                                 
|                                  | ESC Medical Systems, Limited                                     |                                        |  | 13,675       |  |  |           | 130,767    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Health Care Solutions, Inc. Subordinated Debt with Warrants #    |                                        |  | 1,628,571    |  |  |           | 1,500,000  |           
|                                 
|                                 
|                                 
|                                 
|                                  | National Rehabilitation Partners, Incorporated #                 |                                        |  | 2,218,375    |  |  |           | 1,195,000  |           
|                                 
|                                 
|                                 
|                                 
|                                  | Pediatric Physicians Alliance, Incorporated *#                   |                                        |  | 793,000      |  |  |           | 3,172,000  |           
|                                 
|                                 
|                                 
|                                 
|                                  | Pediatric Physicians Alliance, Inc. Subordinated Debt/Warrants # |                                        |  | 297,448      |  |  |           | 267,448    |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|                                  |                                                                  |                                        |  |              |  |  | 6,770,352 |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Electronics                       |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Apex Incorporated                                                |                                        |  | 15,000       |  |  |           | 483,750    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Cambridge Technology Partners, Incorporated                      |                                        |  | 14,900       |  |  |           | 391,125    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Performance Technologies, Incorporated                           |                                        |  | 28,500       |  |  |           | 495,187    |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|                                  |                                                                  |                                        |  |              |  |  | 1,370,062 |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Leisure Time                      |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Action Performance, Incorporated                                 |                                        |  | 16,000       |  |  |           | 184,000    |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Miscellaneous                     |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Canandaigua Brands, Incorporated  Branded Beverages             |                                        |  | 7,400        |  |  |           | 377,400    |           
|                                 
|                                 
|                                 
|                                 
|                                  | SLI, Incorporated  Lighting products                            |                                        |  | 16,350       |  |  |           | 221,747    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Value Creation Partners, Incorporated  Branded Foods #          |                                        |  | 35,000       |  |  |           | 175,000    |           
|                                 
|                                 
|                                 
|                                 
|                                  | Waterlink, Incorporated, Warrants  Water treatment
	systems     |                                        |  | 53,550       |  |  |           |           |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|                                  |                                                                  |                                        |  |              |  |  | 774,147   |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|Retail Trade                      |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | Fitness Quest, Incorporated *#                                   |                                        |  | 788,961      |  |  |           | 5,439,996  |           
|                                 
|                                 
|                                 
|                                 
|                                  | Fitness Quest, Inc. Subordinated Debt with Warrants *#           |                                        |  | 1,932,472    |  |  |           | 2,903,087  |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|                                  |                                                                  |                                        |  |              |  |  | 8,343,083 |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|U.S Government Securities         |                                                                  |                                        |  |              |  |  |           |           
|                                 
|                                 
|                                 
|                                 
|                                  | U.S. Treasury Bill 4.85%, 2/17/00 *                              |                                        |  | 19,244,000   |  |  |           | 19,122,148 |           
|                                  |                                                                  |                                        |  |              |  |  |           |           
|                                  |                                                                  | Total Investments  (Cost $39,342,923) |  |              |  |  |           | $          | 53,624,286 | 
|                                  |                                                                  |                                        |  |              |  |  |           |           




All investments are U.S. companies



|  |                                                    
|- | ---------------------------------------------------
|* | Represents 5% or more of Total Stockholders Equity
| 
|# | Represents privately held securities               

20



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##### Table of Contents



REPORT OF INDEPENDENT AUDITORS

To The Board of Directors and



We have audited the accompanying balance sheet of Brantley
Capital Corporation (a Maryland corporation) as of
December 31, 1999, and the related statements of operations,
 stockholders equity and cash flows for the year then
ended. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on the financial statements based on our audit. The
financial statements of Brantley Capital Corporation as of
December 31, 1998 and December 31, 1997, were audited
by other auditors whose report, dated March 5, 1999,
expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards
generally accepted in the United States. These standards require
that we plan and perform the audit to obtain reasonable assurance
 about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities
owned as of December 31, 1999. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Brantley Capital Corporation as of December 31, 1999 and
the results of its operations and its cash flows for the year
then ended in conformity with accounting principles generally
accepted in the United States.



| |                     
| | --------------------
| | ARTHUR ANDERSEN, LLP

Cleveland, Ohio,



21



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##### Table of Contents








|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
	and Financial Disclosure

On January 12, 2000, the Company dismissed Ernst & Young
 LLP as its independent auditors and engaged Arthur Andersen LLP
to act as its independent auditors. The change in accountants was
 based upon a review of fee proposals for the upcoming fiscal
year and was not based on any disagreements with Ernst &
Young LLP on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures.
The information set forth in the Companys Form 8-K
dated January 19, 2000 is incorporated herein by reference.




PART III




Item 10.  Directors and Executive Officers of the
Registrant

The information set forth under the caption ELECTION OF
DIRECTORS in the Companys definitive Proxy Statement,
 to be dated on or about April 17, 2000, for its Annual
Meeting of Stockholders to be held May 24, 2000, filed
pursuant to Regulation 14A under the Securities Exchange Act
 of 1934 (the 2000 Proxy Statement), is incorporated
herein by reference.




Item 11.  Executive Compensation

The information set forth under the caption EXECUTIVE
COMPENSATION in the 2000 Proxy Statement is incorporated
herein by reference.






|         |                                                               
|-------- | --------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and Management

The information set forth under the caption ELECTION OF
DIRECTORS in the 2000 Proxy Statement is incorporated
herein by reference.




Item 13.  Certain Relationships and Related
Transactions

The Investment Adviser, pursuant to the terms of the Investment
Advisory Agreement, is responsible, on a day-to-day basis, for
the selection and supervision of portfolio investments.
Transactions between the Company and the Investment Adviser,
including operational responsibilities, duties and compensation,
are governed by the Investment Advisory Agreement. Throughout the
 term of the Investment Advisory Agreement, the Company will pay
to the Investment Adviser an annual management fee of 2.85% of
the Companys net assets, determined at the end of each
calendar quarter and payable in arrears. For the year ended
December 31, 1999, the Investment Adviser was owed an
investment advisory fee in the aggregate amount of $365,884.
Robert P. Pinkas, Chairman of the Board, Chief Executive Officer,
 Treasurer and a director, and Michael J. Finn, President and a
director of the Company, are officers and managers of the
Investment Adviser, and together own 100% of the Investment
Adviser.

As stated above in Item 1 (BusinessPotential
Co-Investments and Follow-On Investments) and in Item 8
(Note 5 of the notes accompanying the financial statements in
Financial Statements and Supplementary Data), the
Company co-invests in portfolio companies from time to time with
affiliates of the Company and the Investment Adviser, including
certain venture capital investment partnerships. Certain officers
 and directors of the Company and officers of the Investment
Adviser also serve as general partners of the investment
partnerships general partner. The Companys
co-investments with such affiliates are subject to the terms and
conditions of the exemptive order granted by the Commission,
which relieves the Company from certain provisions of the Act and
 permits certain joint transactions with the investment
partnerships.

The Company is an investor in DPC as discussed in the
Companys Management Discussion and Analysis of this Annual
Report on Form 10-K. Grand River Industries, Ltd.
(Grand River) owns 85% of DPC. Grand River is a
limited liability company that is 100% owned by Objective
Industrial Investments Partners, L.P. (Objective).
Robert P. Pinkas, Chairman and Chief Executive Officer of the
Company, is a general partner in Objective. Mr. Pinkas, as a
 result of this investment commitment in Objective, owns 20% of
Grand River and approximately 17% of DPC.

22



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##### Table of Contents



James P. Oliver has been a director of the Company since 1998 and
 is a partner with the law firm of Squire Sanders & Dempsey
L.L.P., which has represented the Company as general counsel
since shortly after its formation in 1996.




PART IV






|         |                                                                  
|-------- | -----------------------------------------------------------------
|Item 14. | Exhibits, Financial Statement Schedules, and Reports on
	Form 8-K

|    |  |                                                                                                                                                              
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | The following documents are filed as part of this report:                                                                                                    
|   
|1.  |  | Financial Statements  The following financial
	statements of the Company are contained in Item 8 of this
	Form 10-K:                                        
|    |  | Balance Sheets  December 31, 1999 and
	December 31, 1998                                                                                                    
|    |  | Statements of Operations  For the years ended
	December  31, 1999, 1998 and 1997                                                                            
|    |  | Statements of Cash Flows  For the years ended
	December  31, 1999, 1998 and 1997                                                                            
|    |  | Statements of Stockholders Equity  For the years
	 ended December 31, 1999, 1998 and 1997                                                                  
|    |  | Notes to the Financial Statements                                                                                                                            
|    |  | Report of Independent Auditors                                                                                                                               
|   
|2.  |  | Financial Statement Schedules were omitted as they are not
	required or not applicable, or the required information is
	included in the Financial Statements.
|   
|3.  |  | Exhibits  Reference is made to the Exhibit Index
	which is found on page 25 of this Form 10-K.                                                              
|   
|(a) |  | No reports on Form 8-K were filed by the Company during the
	quarter ended December 31, 1999.                                                                
|   
|(b) |  | Exhibits  Reference is made to the Exhibit Index
	which is found on page 25 of this Form 10-K.                                                              
|   
|(c) |  | Financial Statement Schedules were omitted as they are not
	required or not applicable, or the required information is
	included in the Financial Statements.

23



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Company has duly caused
this Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.



| |                             
| | ----------------------------
| | BRANTLEY CAPITAL CORPORATION



| |     |                     
| | --- | --------------------
| | By: | /s/ ROBERT P. PINKAS

| | 
| | 
| | 

| |        |                  
| | ------ | -----------------
| | Title: | Robert P. Pinkas,

| |                        
| | -----------------------
| | Chairman of the Board, 
| | Chief Executive Officer
| | and Treasurer          
|
| | Date: March 30, 2000   

Pursuant to the requirements of the Securities Exchange Act of
 1934, this Report on Form 10-K has been signed below by the
 following persons on behalf of the Company in the capacities and
 on the dates indicated.

|                                       |  |                                                                                                                                         |  |               
|-------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Signature                              |  | Title                                                                                                                                   |  | Date          
|                                       |  |                                                                                                                                         |  |               
|/s/ ROBERT P. PINKASRobert P. Pinkas   |  | Chairman of the Board, Chief Executive Officer, Treasurer and
	Director (principal executive officer and principal accounting
	officer) |  | March 30, 2000
|                                      
|/s/ TAB A. KEPLINGERTab A. Keplinger   |  | Vice President and Chief Financial Officer (principal financial
	officer)                                                               |  | March 30, 2000
|/s/ MICHAEL J. FINNMichael J. Finn     |  | President and Director                                                                                                                  |  | March 30, 2000
|/s/ L. PATRICK BALESL. Patrick Bales   |  | Director                                                                                                                                |  | March 30, 2000
|/s/ BENJAMIN F. BRYANBenjamin F. Bryan |  | Director                                                                                                                                |  | March 30, 2000
|/s/ RICHARD MOODIERichard Moodie       |  | Director                                                                                                                                |  | March 30, 2000
|/s/ PETER SALTZPeter Saltz             |  | Director                                                                                                                                |  | March 30, 2000
|/s/ JAMES P. OLIVERJames P. Oliver     |  | Director                                                                                                                                |  | March 30, 2000
|/s/ JAMES M. SMITHJames M. Smith       |  | Director                                                                                                                                |  | March 30, 2000

24



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##### Table of Contents






EXHIBIT INDEX

The following exhibits are filed with this report or are
incorporated herein by reference to a prior filing, in accordance
 with Rule 12b-32 under the Securities Exchange Act of 1934.
 (Asterisk denotes exhibits filed with this report.)

| |             |   |  |                                                                                                                                                                                                                                           
| | ----------- | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Exhibit  3  |   |  | Articles of Incorporation and By-laws                                                                                                                                                                                                     
| |             |   |  | (1) Articles of Amendment and Restatement of the Charter of
	the Company (Exhibit 3.1 to the Annual Report on
	Form 10-K filed on March 31, 1999, which exhibit is
	incorporated herein by reference)                                     
| |             |   |  | (2) Amended and Restated Bylaws of the Company
	(Exhibit  3.2 to the Annual Report on Form 10-K filed
	on March 31, 1999, which exhibit is incorporated herein by
	reference)                                                             
|
| | Exhibit  4  |   |  | Form of Share Certificate (Exhibit 2.d to amendment
	No. 1 to the Registration Statement filed on
	October 31, 1996, which exhibit is incorporated herein by
	reference)                                                                  
|
| | Exhibit  10 |   |  | Material Contracts                                                                                                                                                                                                                        
| |             |   |  | (1) Dividend Reinvestment and Cash Purchase Plan
	(Exhibit  2.e to Amendment No. 3 to the Registration
	Statement filed on November 27, 1996, which exhibit is
	incorporated herein by reference)                                         
| |             |   |  | (2) Form of Investment Advisory Agreement between the
	Company and the Investment Adviser (Exhibit 2.g to Amendment
	 No. 3 to the Registration Statement filed on
	November 27, 1996, which exhibit is incorporated herein by
	reference)
| |             |   |  | (3) Stock Option Plan and Form of Option Grants
	(Exhibit  2.i.1 to Amendment No. 2 to the Registration
	Statement filed on November 22, 1996, which exhibit is
	incorporated herein by reference)                                        
| |             |   |  | (4) Disinterested Director Option Plan and Form of Option
	Grants (Exhibit 2.i.2 to Amendment No. 2 to the
	Registration Statement filed on November 22, 1996, which
	exhibit is incorporated herein by reference)                        
| |             |   |  | (5) Form of Custodian Contract (Exhibit 2.j to
	Amendment No. 2 to the Registration Statement filed on
	November 22, 1996, which exhibit is incorporated herein by
	reference)                                                            
| |             |   |  | (6) Form of Registrar, Transfer Agency and Service Agreement
	 (Exhibit 2.k.1 to Amendment No. 2 to the Registration
	Statement filed on November 22, 1996, which exhibit is
	incorporated herein by reference)                           
| |             |   |  | (7) Form of Administration Agreement (Exhibit 2.k.2 to
	Amendment No. 2 to the Registration Statement filed on
	November 22, 1996, which exhibit is incorporated herein by
	reference)                                                    
| |             |   |  | (8) Form of Indemnification Agreement for Directors and
	Officers (Exhibit 2.s to Amendment No. 2 to the
	Registration Statement filed on November 22, 1996, which
	exhibit is incorporated herein by reference)                          
|
|
|
|
|
| | Exhibit  23 |   |  | Consent of Experts and Counsel                                                                                                                                                                                                            
| |             |   |  | (1) Consent of Arthur Andersen, LLP                                                                                                                                                                                                       
| |             |   |  | (2) Consent of Ernst & Young, LLP                                                                                                                                                                                                         
|
|
|
|
|
| | Exhibit  27 | * |  | Financial Data Schedule                                                                                                                                                                                                                   

25