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                                     
|EXHIBIT 23 CONSENT OF INDEPENDENT PUB. ACCOUNTANTS



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

| |            |  |  |                                                                                           |  |  |  | 
| | ---------- |  |  | ----------------------------------------------------------------------------------------- |  |  |  | 
|
|
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|
| | (Mark One) |  |  |                                                                                           |  |  |  | 
| |            |  |  | 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, 2000 | 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 No.)

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 

  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.

The aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 27, 2001 was
$20,024,576, based on the last sale price of such stock as
quoted by the NASDAQ National Market System 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 27, 2001 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).



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##### Table of Contents



TABLE OF CONTENTS

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|              |          |  |    | Page                                                                                  
|              |          |  |    |                                                                                       
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|PART I       
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|              | Item 1.  |  |    | Business                                                                               |  |  | 1  | 
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|              | Item 2.  |  |    | Properties                                                                             |  |  | 7  | 
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|             
|              | Item 3.  |  |    | Legal Proceedings                                                                      |  |  | 7  | 
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|              | Item 4.  |  |    | Submission of Matters to a Vote of Security Holders                                    |  |  | 7  | 
|             
|             
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|PART II      
|             
|             
|             
|             
|              | Item 5.  |  |    | Market for Registrants Common Equity and Related
	Stockholder Matters                 |  |  | 7  | 
|              | Item 6.  |  |    | Selected Financial Data                                                                |  |  | 8  | 
|             
|             
|             
|             
|              | Item 7.  |  |    | Managements Discussion and Analysis of Financial Condition
	and Results of Operations |  |  | 8  | 
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|              | Item 7A. |  |    | Quantitative and Qualitative Disclosures About Market Risk                             |  |  | 13 | 
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|              | Item 8.  |  |    | Financial Statements and Supplementary Data                                            |  |  | 14 | 
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|              | Item 9.  |  |    | Changes in and Disagreements with Accountants on Accounting and
	Financial Disclosure  |  |  | 26 | 
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|PART III     
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|              | Item 10. |  |    | Directors and Executive Officers of the Registrant                                     |  |  | 26 | 
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|              | Item 11. |  |    | Executive Compensation                                                                 |  |  | 28 | 
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|              | Item 12. |  |    | Security Ownership of Certain Beneficial Owners and Management                         |  |  | 30 | 
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|              | Item 13. |  |    | Certain Relationships and Related Transactions                                         |  |  | 31 | 
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|PART IV      
|             
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|              | Item 14. |  |    | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                       |  |  | 32 | 
|             
|             
|             
|             
|Signatures    |          |  | 33 |                                                                                       
|             
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|             
|Exhibit Index |          |  | 34 |                                                                                       

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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 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 principal 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.

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
analyzing 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
re-capitalization 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, L.L.C., 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 shares of capital
stock (including, in either instance, approval by Company
directors who are not interested persons). The Investment
Advisory Agreement is subject to renewal on November 26,
2001. The Investment

1



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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 generally 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
companies 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.

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 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.

Privately placed securities typically depend significantly on
the management talents and efforts of one person or a small
group of people. 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.

The Company 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 stockholders 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



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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 includes 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 that afford them a distinct competitive advantage. Such
companies might achieve growth either internally or by
acquisition. In addition, the Company invests in companies
seeking to consolidate fragmented industries. Often, such
consolidations can improve performance by bringing experienced
management, economies of scale and greater capital resources to
bear on businesses that might have lacked such management,
economies and resources in the past.

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 pays
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 making
acquisitions, 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 is attracted to
industries that it considers to be good candidates for
successful consolidation.

3



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##### Table of Contents



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 a result these companies often have stronger
management teams, better financial controls and significant
competitive advantages.

Potential Co-Investments

The Company has co-invested, 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 for all parties, 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.

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;
|
| | (iii)    | has total assets of not more than $4.0 million and capital and
	surplus of not less than $2.0 million; or                                               



| |      |                                                                    
| | ---- | -------------------------------------------------------------------
| | (iv) | meets other such criteria as may be established by the
	Commission.



| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | (2)  Securities of any eligible portfolio company which is
	controlled by a business development company.

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| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (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.

Tax Status

The Company is considered a regulated investment company
(RIC) for tax purposes. Its status as a RIC enables
it to avoid the cost of federal and state taxation, and as a
result achieve pre-tax investment returns.

In order to qualify as a RIC, the Company must, among other
things;



| |                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1)  Derive at least 90% of its gross income from
        dividends, interest payments with respect to securities loans,
        gains from the sale of stock or other securities or other income
        derived with respect to its business of investing in such stock
        or securities.
|
| | (2)  Diversify its holdings so that                                                                                                                                                                                                                                                             



| |     |                                                                                                                                                                                                                                                                                                                            
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | at least 50% of the value of the Companys assets consists
        of cash, cash items, Government securities and other securities
        if such other securities of any one issuer do not represent more
        than 5% of the Companys assets and 10% of the outstanding
        voting securities of the issuer, and



| |     |                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | no more than 25% of the value of the Companys assets are
        invested in securities of one issuer (other than
        U.S. Government securities), or of two or more issuers that
        are controlled by the Company.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (3)  Distribute at least 90% of its investment
        company taxable income each tax year to its stockholders.
        In addition, if a RIC distributes in a timely manner (or treats
        as deemed distributed) 98% of its capital gain net
        income for each one year period ending on December 31 and
        distributes 98% of its ordinary income for each calendar year,
        it will not be subject to the 4% nondeductible federal excise
        tax on certain undistributed income of RICs.

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 the investment terms the Company
offers in respect of the securities to be issued by its
portfolio companies. There can be no assurance that the Company
will be able to compete against these competitors for attracting
investments.

5



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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.

Risk Factors

The value of the Companys common stock may decline and may
be affected by numerous market conditions, which could result in
the loss of some or all of ones investment in the Companys
shares. The securities markets frequently experience extreme
price and volume fluctuations which affect market prices for
securities of companies. General economic conditions will also
affect the Companys stock price.

Investing in the Companys shares may be inappropriate for
the risk tolerance of some investors. The Company invests in
accordance with investment objectives and principal strategies
which may result in an above average amount of risk and
volatility or loss of principal. The Companys investments
in portfolio companies are somewhat aggressive and, therefore,
an investment in its shares may not be suitable for some
investors.

The Company faces substantial competition in its investing
activities from private equity capital funds, investment
affiliates of large operating and finance companies, small
business investment companies, wealthy individuals and foreign
investors. As a regulated business development company, the
Company is required to disclose certain information regarding
its significant portfolio securities. Most of the Companys
competitors are not subject to this disclosure requirement. The
Companys obligation to disclose this information could
hinder its ability to invest in certain portfolio companies.
Additionally, other regulations, current and future, may make
the Company less attractive as a potential investor to a given
portfolio company than a private equity capital fund not subject
to the same regulations.

Securities and tax laws and regulations governing the
Companys activities may change in ways negative to the
Companys and its stockholders interests and
interpretations of such laws and regulations may change with
unpredictable consequences.

The Company is dependent for the selection, structuring, closing
and monitoring of its investments on the diligence and skill of
its investment adviser. The future success of the Company
depends to a significant extent on the continued service and
coordination of its investment advisers senior management
team. The departure of any of the executive officers or key
employees of the investment adviser could materially adversely
affect the Companys ability to implement its business
strategy.

There are significant risks inherent in the Companys
private equity and equity-linked debt security portfolio. The
Company has invested a substantial portion of its assets in
privately held companies. These businesses tend to be less
capitalized, less proven, smaller companies than their public
counterparts. Because of the nature and the lack of a public
market for these investments, there is significantly greater
risk of loss than is the case with traditional investment
securities. The Company expects that some of its private
investments are likely to never realize their full potential.
Neither the Companys investments nor an investment in the
Company is intended to constitute a balanced investment program.

Most of the investments of the Company are or will be equity and
equity linked debt securities acquired directly from private
companies. The Companys private portfolio is and will
usually be subject to restriction on resale or otherwise have no
established trading market. The liquidity of most of the
Companys portfolio of private securities may adversely
affect the ability of the Company to dispose of such securities
at times when it may be advantageous for the Company to
liquidate such investments.

There is typically no public market of equity and equity-linked
debt securities of the private companies in which the Company
invests. As a result, the valuation of the securities in the
Companys portfolio is subject to the good faith estimate
of the Companys Board of Directors. In the absence of a
readily ascertainable market value, the estimated value of the
Companys portfolio of private securities may differ
significantly from the values that would be placed on the
portfolio if a ready market for the securities existed. Any
changes in estimated net asset value are recorded in the
Companys statement of operations as Net unrealized
gain on investments.

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The companys quarterly operating results could fluctuate
as a result of a number of factors. These include, among others,
variations in and the timing of the recognition of realized and
unrealized gains or losses, the degree to which the Company
encounters competition in its markets and general economic
conditions. As a result of these factors, results for any one
quarter should not be relied upon as being indicative of
performance in future quarters.




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, 2000.




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) is traded on the NASDAQ National
Market System (NASDAQ) under the symbol
BBDC. The following table sets forth, for the period
indicated, the range of high and low bid prices per share:

|                                    |  |      |       |     |  |   |       | 
|----------------------------------- |  | ---- | ----- | --- |  | - | ----- | 
|                                    |  | High |       | Low
|                                    |  |      |       |    
|January 1, 1999  March 31, 1999    |  | $    | 8.625 |     |  | $ | 6.750 | 
|                                   
|                                   
|                                   
|                                   
|April 1, 1999  June 30, 1999       |  | $    | 8.500 |     |  | $ | 6.500 | 
|                                   
|                                   
|                                   
|                                   
|July 1, 1999  September 30, 1999   |  | $    | 8.625 |     |  | $ | 6.875 | 
|                                   
|                                   
|                                   
|                                   
|October 1, 1999  December 31, 1999 |  | $    | 8.000 |     |  | $ | 7.125 | 
|                                   
|                                   
|                                   
|                                   
|January 1, 2000  March 31, 2000    |  | $    | 12.00 |     |  | $ | 7.750 | 
|                                   
|                                   
|                                   
|                                   
|April 1, 2000  June 30, 2000       |  | $    | 10.75 |     |  | $ | 8.375 | 
|                                   
|                                   
|                                   
|                                   
|July 1, 2000  September 30, 2000   |  | $    | 10.25 |     |  | $ | 8.188 | 
|                                   
|                                   
|                                   
|                                   
|October 1, 2000  December 31, 2000 |  | $    | 9.875 |     |  | $ | 7.500 | 

At March 27, 2001, there were approximately 80 stockholders of
record of the Companys Common Stock with a market price of
$8.00 per share.

On December 19, 2000 the Company declared a dividend of
$0.62 per share payable on December 29, 2000 to
stockholders of record as of the close of business on
December 21, 2000. On December 28, 1999, the Company
declared a $0.46 per share dividend payable on January 24,
2000 to stockholders of record as of the close of business on
December 30, 1999. No other dividends were declared or paid
in 2000 or 1999.

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Item 6.

Selected Financial Data

(all figures in thousands except per share data)


|                                         |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |  |  |   |        |  
|---------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | - |  | - | ------ |  |  | - | ------ | -
|                                         |  | 2000 |        | 1999 |  | 1998 |        | 1997 |  | 1996
|                                         |  |      |        |      |  |      |        |      |  |     
|Financial Position                       |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |  |  |   |        |  
|(as of December 31)                      |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |  |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|Total assets                             |  | $    | 58,471 |      |  | $    | 54,991 |      |  | $    | 50,456 |   |  | $ | 43,825 |  |  | $ | 36,620 |  
|                                        
|                                        
|                                        
|                                        
|Note payable                             |  |      | 6,000  |      |  |      |       |      |  |      |       |   |  |   |       |  |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Net assets                               |  |      | 51,943 |      |  |      | 52,440 |      |  |      | 49,941 |   |  |   | 42,912 |  |  |   | 36,142 |  
|                                        
|                                        
|                                        
|                                        
|Changes in Net Assets                    |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |  |  |   |        |  
|(years ended December 31)                |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |  |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|Net investment income                    |  |      | 145    |      |  |      | 320    |      |  |      | (69    | ) |  |   | 31     |  |  |   | (7     | )
|                                        
|                                        
|                                        
|                                        
|Net gain on investments                  |  |      | 1,734  |      |  |      | 3,932  |      |  |      | 7,137  |   |  |   | 5,683  |  |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Net change in net assets from operations |  |      | 1,879  |      |  |      | 4,252  |      |  |      | 7,068  |   |  |   | 5,713  |  |  |   | (7     | )
|                                        
|                                        
|                                        
|                                        
|Dividends                                |  |      | 2,376  |      |  |      | 1,753  |      |  |      | 38     |   |  |   | 444    |  |  |   |       |  
|                                        
|                                        
|                                        
|                                        
|Net change in net assets                 |  |      | (497   | )    |  |      | 2,499  |      |  |      | 7,030  |   |  |   | 5,269  |  |  |   | (7     | )
|                                        
|                                        
|                                        
|                                        
|Per Share Data                           |  |      |        |      |  |      |        |      |  |      |        |   |  |   |        |  |  |   |        |  
|                                        
|                                        
|                                        
|                                        
|Net assets                               |  |      | 13.630 |      |  |      | 13.760 |      |  |      | 13.110 |   |  |   | 11.260 |  |  |   | 9.870  |  
|                                        
|                                        
|                                        
|                                        
|Closing market price                     |  |      | 8.625  |      |  |      | 8.000  |      |  |      | 7.125  |   |  |   | 9.630  |  |  |   | 10.000 |  
|                                        
|                                        
|                                        
|                                        
|Cash dividends                           |  |      | 0.620  |      |  |      | 0.460  |      |  |      | 0.010  |   |  |   | 0.120  |  |  |   |       |  




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

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 such 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.

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. 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 in the value of its investments.

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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 years ended
December 31, 2000, 1999 and 1998 were $2,252,497,
$2,317,100 and $1,745,969, respectively. The significant
components of total operating expenses were advisory fees of
$1,546,093, $1,436,345 and $1,325,320 to the Investment Adviser
during the three years ended December 31, 2000, 1999 and
1998, respectively.

During the twelve months ended December 31, 2000, 1999 and
1998, the Companys equity and equity-linked debt security
investments resulted in net realized and unrealized gains on
investment transactions of $1,734,233, $3,932,077 and
$7,137,032, respectively. The Company has invested in various
small capitalization public stocks which are subject to general
stock market and business conditions and the nine private
investments described below (See Financial Condition, Liquidity
and Capital Resources). The unrealized gains have been
significantly influenced by these general stock market and
business conditions, as well as the December 29, 1998 and
August 31, 1999 revaluations of Flight Options, Inc., as
more fully described below (See Financial Condition, Liquidity
and Capital Resources).

Financial Condition, Liquidity and Capital Resources

At December 31, 2000, the Company had $14,882,432 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, 2000, 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, 2000, the Company had
stockholders equity of $51,943,019, resulting in a net
asset value per share of $13.63.

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, 2000, the cost of equity and equity-linked
debt security investments made by the Company to date was
$26.8 million and their aggregate market value was
$41.5 million, for an aggregate fair market value
appreciation of 55%. Management believes the companies invested
in have significant potential for long-term growth in sales and
earnings. Since the completion of the Companys initial
public offering, management has focused its investment
activities on securing new investments for the Companys
portfolio. However, given the current nature of the portfolio
and the fact that the portfolio as a whole is maturing,
management is entering into a phase of the business plan which
emphasizes positioning the more mature portfolio companies for
appropriate liquidity events. As a result, the Company is
continuously monitoring portfolio company results and evaluating
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 stockholders and
the investing public until such time as the transactions are
publicly announced or completed, as

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The individually significant equity and equity-linked debt
security holdings of the Company at December 31, 2000 were
comprised of the following investments:

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 non-woven 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. The
terms of the debt facility call for a 12% interest rate per
annum with a final maturity in 2003. The Company also received a
detachable capital stock purchase warrant exercisable into 5% of
the fully-diluted capital stock of DPC at the time of exercise
at a nominal exercise price.

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. 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. After a complete
evaluation, the Companys Board of Directors re-valued its
Fitness Quest investment 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. Since 1998, the
Company has shown significant improvement in its core operating
results with 2000 annual sales of approximately
$145 million.

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. During the fourth quarter of
2000, the Company exchanged the senior subordinated debt
investment and related unpaid interest for 679,641 of Fitness
Quest, Inc. common stock.

Flight Options International, Inc.
(Formerly 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
Flight Options, Inc. (Flight Options). The
Companys investment consists of approximately 2,576,000
shares of Flight Options Series A 8% Convertible Preferred
Stock at $0.8152 per share. Flight Options provides complete
private air travel service through the sale of fractional
interests in pre-owned jet aircraft. The proceeds of the
transaction were used by Flight Options to continue to execute
an acquisition strategy. Flight Options has been in business
since 1978 and had sales of approximately $40 million at
the time of the Companys investment.

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On December 29, 1998, the Company announced the completion
of a second private equity investment in Flight Options. 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 260,135 shares
of a Class A 8% Convertible Preferred Stock at $3.70 per
share. Proceeds were used to fund the expansion of the Flight
Options program and to continue to execute their acquisition
strategy. During 1998, Flight Options completed the acquisition
of Miller Aviation. As a result of the price of this subsequent
financing and the operating performance of Flight Options during
1998, the market value of the Companys original investment
was increased to $9,531,760, resulting in an unrealized gain of
$7,431,760. This valuation was based on the $3.70 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 Flight Options. As a
result, Flight Options sold $20 million of Series B 8%
Preferred Stock to a third party private equity group at $4.365
per share. Consistent with the Companys investment
procedures, this transaction resulted in a valuation increase on
the Flight Options investment of $1,886,030 or $0.50 per share.

On July 11, 2000, the Company guaranteed a portion of
Flight Options third-party borrowings. As a result, the
Company was issued a warrant to purchase 36,000 shares of common
stock of Flight Options at a price of $0.01 per share.
Management believes, based on current facts and circumstances
and Flight Options financial position, that the likelihood
of a payment pursuant to such guarantee is remote.

On December 12, 2000 the Company purchased
$2.5 million, or 469,925 shares, of Class C 8%
Preferred Stock at $5.32 per share. Proceeds of the
transaction were used to fund the continued expansion of the
fractional ownership program.

At December 31, 2000, the financial statement value of the
investment in Flight Options was $15,036,511, representing over
a 170% increase from its original purchase price. The commentary
above reflects a four-for-one stock split executed in 2000. All
share and per share amounts have been adjusted to reflect such
stock split.

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 with a
strong presence in the Midwest and Great Lakes region. The terms
of the notes called 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 were
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. has completed a re-capitalization
plan, including a two-for-one reverse stock split. As a result,
the Company 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.

In addition to the above Series C 8% Convertible Preferred
Stock, the Company has funded a $500,000 12% Convertible
Subordinated Note. As part of this transaction, the Company
received a warrant to purchase up to $50,000 of Health Care
Solutions, Inc. Common Stock at an exercise price equal to the
lower of a price as determined by an initial public offering or
$7.50 per share. On March 7, 2001, the Company agreed to
exchange the Convertible Subordinated Note for 71,880 shares of
Series D Convertible Preferred Stock.

The Holland Group, Inc.

On July 13, 2000, the Company closed on a $2.1 million
commitment to invest with Brantley Partners IV, L.P. in a
$8.5 million preferred stock issue of The Holland Group,
Inc. (Holland). Holland is a provider of

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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. The remaining commitments are
being funded upon the successful closing of additional
acquisitions. As a result of this commitment, the Company
purchased 2.2 million shares of Class A 8% Convertible
Preferred Stock.

Pediatric Physicians Alliance, Inc.

On January 28, 1999, the Company announced the completion
of a $3.2 million commitment to invest with Brantley
Venture Partners III, L.P. in a $7.9 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. As a result
of this commitment, the Company purchased 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 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. The notes have a
maturity date of September 29, 2001. The detachable
warrants are for the purchase of 30,000 shares of Pediatric
Physicians Alliance common stock at $4.00 per share.

Prime Office Products, Inc. (Formerly
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 Prime Office Products, Inc.
(Prime). Prime is an 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 purchased 510,000 shares of Class A 8% Convertible
Preferred Stock at $2.00 per share.

Value Creation Partners, Inc.

On June 14, 2000, the Company completed a $2.1 million
commitment to invest with Brantley Partners IV, L.P. in a
$23.8 million preferred stock issue for Value Creation
Partners, Inc. (VCP). VCP is an acquisition strategy
investment in the food and beverage industry. The proceeds of
the transaction were used to complete the acquisition of Best
Brands, Inc., one of the six largest manufacturers and
distributors of a complete line of premium ingredients, mixes
and products, including equipment, for all segments of the
baking industry. Its products are sold primarily to retail
bakeries, bakery distributors, supermarket in-store bakeries,
food wholesalers and food service establishments. As a result of
this transaction, the Company has purchased approximately 35,000
and 269,989 shares of 8% Convertible Preferred stock at $5.00
and $7.30 per share, respectively.

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.

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

A business development company is required to describe the risk
factors involved in an investment in the securities of a
business development company due to the nature of the
companys investment portfolio and capital structure.
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
small, undercapitalized companies that can lack management depth
and have not yet attained consistent levels of profitability.
The Companys private equity and equity-linked debt
security investments often include securities that are subject
to legal or contractual restrictions on resale, that adversely
affect the liquidity and marketability of such securities.

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 anticipates 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
long-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 stock and warrants
to purchase common stock 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.

The portion of the Companys investment portfolio
consisting of equity and equity-linked debt securities in
private companies is also subject to valuation risk. Investments
are stated at fair value as defined in the Act and
in the applicable regulations of the Commission. All assets are
valued at fair value as determined in good faith by, or under
the direction of, the Board of Directors. Because there is
typically no public market for the equity and equity-linked debt
securities in which the Company invests, the valuation of the
equity interests in the Companys portfolio is subject to
the estimates of the Companys Board of Directors in
accordance with the Companys Investment Valuation
Guidelines. In the absence of a readily ascertainable market
value, the estimated value of the Companys portfolio of
equity and equity-linked debt securities may differ
significantly from the values that would be placed on the
portfolio if a ready market for the investments existed. Any
changes in valuation are recorded in the Companys
consolidated statements of operations as Net unrealized
gain (loss) on 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
stockholders of the Company from achieving price appreciation
and dividend distributions.

13



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##### Table of Contents








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

BRANTLEY CAPITAL CORPORATION

BALANCE SHEETS

|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |            | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------ | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                                                                                                                                                    |                                            |                   
|                                                                                                                                                                    |                                            | As of December 31,
|                                                                                                                                                                    |                                            |                   
|                                                                                                                                                                    |                                            | 2000               |            | 1999      
|                                                                                                                                                                    |                                            |                    |            |           
|ASSETS                                                                                                                                                              |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Investments, at market                                                                                                                                              |                                            | $                  | 41,462,305 |            |  | $ | 34,502,138 |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Cash and cash equivalents                                                                                                                                           |                                            |                    | 14,882,432 |            |  |   | 19,127,039 |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Dividends and interest receivable                                                                                                                                   |                                            |                    | 2,103,811  |            |  |   | 1,235,462  |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Other assets                                                                                                                                                        |                                            |                    | 22,950     |            |  |   | 126,793    |           
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                    | Total Assets                               |                    | $          | 58,471,498 |  |   | $          | 54,991,432 | 
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                   
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Note payable                                                                                                                                                        |                                            | $                  | 6,000,000  |            |  | $ |           |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Payable for investments purchased                                                                                                                                   |                                            |                    |           |            |  |   | 243,662    |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Advisory fee payable                                                                                                                                                |                                            |                    | 383,976    |            |  |   | 365,884    |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Accrued professional fees                                                                                                                                           |                                            |                    | 68,370     |            |  |   | 85,720     |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Distributions payable                                                                                                                                               |                                            |                    |           |            |  |   | 1,752,847  |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Other liabilities                                                                                                                                                   |                                            |                    | 76,133     |            |  |   | 102,984    |           
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                    | Total Liabilities                          |                    | $          | 6,528,479  |  |   | $          | 2,551,097  | 
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|Stockholders Equity:                                                                                                                                               |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Common Stock, $0.01 par value; 25,000,000 shares authorized and
        3,810,535 shares issued and outstanding at December 31,
        2000 and 1999, respectively |                                            | $                  | 38,105     |            |  | $ | 38,105     |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Additional paid in capital                                                                                                                                          |                                            |                    | 37,484,895 |            |  |   | 37,505,433 |           
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|                                                                                                                                                                   
|Retained earnings                                                                                                                                                   |                                            |                    | 14,420,019 |            |  |   | 14,896,797 |           
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                    | Total Stockholders Equity                 |                    |            | 51,943,019 |  |   |            | 52,440,335 | 
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|                                                                                                                                                                    | Total Liabilities and Stockholders Equity |                    | $          | 58,471,498 |  |   | $          | 54,991,432 | 
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           
|Net Asset Value Per Share                                                                                                                                           |                                            | $                  | 13.63      |            |  | $ | 13.76      |           
|                                                                                                                                                                    |                                            |                    |            |            |  |   |            |           

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

14



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION

STATEMENTS OF OPERATIONS

|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |           |  
|---------------------------------------------------------------------------------------- | --------------------------------------- | -------------------------------- | --------- | --------- |  | ---- | --------- | --------- |  | - | --------- | --------- | -
|                                                                                         |                                         |                                 
|                                                                                         |                                         | For the years ended December 31,
|                                                                                         |                                         |                                 
|                                                                                         |                                         | 2000                             |           | 1999      |  | 1998
|                                                                                         |                                         |                                  |           |           |  |     
|Investment Income:                                                                       |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Interest                                |                                  | $         | 1,240,683 |  |      | $         | 1,546,395 |  |   | $         | 1,575,058 |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Dividends                               |                                  |           | 1,011,814 |  |      |           | 770,705   |  |   |           | 170,911   |  
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|                                                                                         | Total investment income                 |                                  |           | 2,252,497 |  |      |           | 2,317,100 |  |   |           | 1,745,969 |  
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|Operating Expenses:                                                                      |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Advisory fees                           |                                  |           | 1,546,093 |  |      |           | 1,436,345 |  |   |           | 1,325,320 |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Administration fees                     |                                  |           | 75,001    |  |      |           | 75,000    |  |   |           | 118,516   |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Professional fees                       |                                  |           | 191,002   |  |      |           | 144,514   |  |   |           | 98,705    |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Other                                   |                                  |           | 295,319   |  |      |           | 341,664   |  |   |           | 272,442   |  
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|                                                                                         | Total expenses                          |                                  |           | 2,107,415 |  |      |           | 1,997,523 |  |   |           | 1,814,983 |  
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|Investment Income (Loss), net                                                            |                                         |                                  | 145,082   |           |  |      | 319,577   |           |  |   | (69,014   | )        
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|Net Realized and Unrealized Gains (Losses) on Investments:                               |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Net realized gain (loss) on investments |                                  |           | 1,564,206 |  |      |           | 2,106,117 |  |   |           | (57,414   | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                         | Net unrealized gain on investments      |                                  |           | 170,027   |  |      |           | 1,825,960 |  |   |           | 7,194,446 |  
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|Net gain on investments                                                                  |                                         |                                  | 1,734,233 |           |  |      | 3,932,077 |           |  |   | 7,137,032 |          
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|Net change in net assets resulting from operations                                       |                                         | $                                | 1,879,315 |           |  | $    | 4,251,654 |           |  | $ | 7,068,018 |          
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|Net change in net assets resulting from operations per share,
	primary and fully diluted |                                         | $                                | 0.49      |           |  | $    | 1.11      |           |  | $ | 1.85      |          
|                                                                                         |                                         |                                  |           |           |  |      |           |           |  |   |           |          
|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.

15



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION

STATEMENTS OF CASH FLOWS

|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |           |                |          |  
|------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------- | --------- | -------------- | ---------- | ---------- | --------- | -------------- | -------- | ---------- | --------- | -------------- | -------- | -
|                                                       |                                                                                                               |                                                     
|                                                       |                                                                                                               | For the years ended December 31,                    
|                                                       |                                                                                                               |                                                     
|                                                       |                                                                                                               | 2000                                                 |                                   | 1999      |                | 1998      
|                                                       |                                                                                                               |                                                      |                                   |           |                |           
|Cash Flows from Operating Activities:                  |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Net change in net assets resulting from operations:                                                           |                                                      | $                                 | 1,879,315 |                |            | $          | 4,251,654 |                |          | $          | 7,068,018 |               
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       | Adjustments to reconcile net change in net assets resulting from
	operations to net cash used for operations: |                                                      |                                   |           |                |            |            |           |                |          |            |           |               
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Net realized (gain) loss from investments            |                                   |           | (1,564,206     | )          |            |           | (2,106,117     | )        |            |           | 57,414         |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Net unrealized (gain) on investments                 |                                   |           | (170,027       | )          |            |           | (1,825,960     | )        |            |           | (7,194,446     | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Changes in assets and liabilities:                   |                                   |           |                |            |            |           |                |          |            |           |                |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               |                                                      | Dividends and interest receivable |           |                | (868,349   | )          |           |                | (801,588 | )          |           |                | (363,152 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               |                                                      | Other assets                      |           |                | 103,843    |            |           |                | 10,319   |            |           |                | 134,377  |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               |                                                      | Advisory fee payable              |           |                | 18,092     |            |           |                | 4,731    |            |           |                | 77,042   |  
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               |                                                      | Accrued professional fees         |           |                | (17,350    | )          |           |                | 33,901   |            |           |                | (87,019  | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               |                                                      | Dividends payable                 |           |                | (1,752,847 | )          |           |                |         |            |           |                | (342,948 | )
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               |                                                      | Other liabilities                 |           |                | (26,191    | )          |           |                | 1,958    |            |           |                | (46,197  | )
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|                                                       |                                                                                                               | Net cash used for operating activities               |                                   |           | (2,398,380     | )          |            |           | (431,102       | )        |            |           | (696,911       | )       
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|Cash Flows from Investing Activities:                  |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Purchases of investment securities                   |                                   |           | (18,013,911    | )          |            |           | (15,837,437    | )        |            |           | (2,663,800     | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Sales/ Maturities of investment securities           |                                   |           | 12,552,541     |            |            |           | 12,426,225     |          |            |           | 1,726,021      |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Purchases of short-term investments                  |                                   |           | (3,707,778,089 | )          |            |           | (4,566,012,157 | )        |            |           | (5,933,395,842 | )       
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Sales/ Maturities of short-term investments          |                                   |           | 3,707,769,863  |            |            |           | 4,566,008,131  |          |            |           | 5,933,350,671  |         
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|                                                       |                                                                                                               | Net cash used for investing activities               |                                   |           | (5,469,596     | )          |            |           | (3,415,238     | )        |            |           | (982,950       | )       
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|Cash Flows from Financing Activities:                  |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Borrowings under note payable                        |                                   |           | 6,000,000      |            |            |           |               |          |            |           |               |         
|                                                      
|                                                      
|                                                      
|                                                      
|                                                       |                                                                                                               | Distributions                                        |                                   |           | (2,376,631     | )          |            |           |               |          |            |           | (38,105        | )       
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|                                                       |                                                                                                               | Net cash provided by (used for) financing activities |                                   |           | 3,623,369      |            |            |           |               |          |            |           | (38,105        | )       
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|Net change in cash and cash equivalents for the period |                                                                                                               |                                                      | (4,244,607                        | )         |                |            | (3,846,340 | )         |                |          | (1,717,966 | )        
|                                                      
|                                                      
|                                                      
|                                                      
|Cash and cash equivalents, beginning of period         |                                                                                                               |                                                      | 19,127,039                        |           |                |            | 22,973,379 |           |                |          | 24,691,345 |          
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          
|Cash and cash equivalents, end of period               |                                                                                                               | $                                                    | 14,882,432                        |           |                | $          | 19,127,039 |           |                | $        | 22,973,379 |          
|                                                       |                                                                                                               |                                                      |                                   |           |                |            |            |           |                |          |            |          

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

16



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##### Table of Contents



BRANTLEY CAPITAL CORPORATION

STATEMENTS OF STOCKHOLDERS EQUITY

|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|------------------------------------------ |  | ------ | ------ | ---------- |  | -------- | ---------- | ------------ |  | - | ---------- | - |  | - | ---------- | -
|                                           |  |        |        | Additional |  |          |            | Total       
|                                           |  | Common |        | Paid in    |  | Retained |            | Stockholders
|                                           |  | Stock  |        | Capital    |  | Earnings |            | Equity      
|                                           |  |        |        |            |  |          |            |             
|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   | )
|                                          
|                                          
|                                          
|                                          
|Realized gains                             |  |        |       |            |  |          |           |              |  |   | (1,257,477 | ) |  |   | (1,257,477 | )
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 1999               |  | $      | 38,105 |            |  | $        | 37,505,433 |              |  | $ | 14,896,797 |   |  | $ | 52,440,335 |  
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Net increase in net assets from operations |  |        |       |            |  |          |           |              |  |   | 1,879,315  |   |  |   | 1,879,315  |  
|                                          
|                                          
|                                          
|                                          
|Distributions from:                        |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|                                          
|                                          
|                                          
|                                          
|Net investment income                      |  |        |       |            |  |          | (20,538    | )            |  |   | (112,831   | ) |  |   | (133,369   | )
|                                          
|                                          
|                                          
|                                          
|Realized gains                             |  |        |       |            |  |          |           |              |  |   | (2,243,262 | ) |  |   | (2,243,262 | )
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  
|Balance at December 31, 2000               |  | $      | 38,105 |            |  | $        | 37,484,895 |              |  | $ | 14,420,019 |   |  | $ | 51,943,019 |  
|                                           |  |        |        |            |  |          |            |              |  |   |            |   |  |   |            |  

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

17



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##### 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 principal 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. To achieve this objective, the
Company invests 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.

The Company 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 stockholders 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 accounting principles generally accepted in the
United States followed by the Company in preparation of its
financial statements.

A.  Investment 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.

18



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






Portfolio investments listed on an exchange or traded on the
NASDAQ National Market are 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 are valued on
the average of the closing bid and asked prices on the day of
valuation.

B.  Repurchase Agreements

The Company may invest in repurchase agreements with
institutions that Brantley Capital Management, L.L.C. (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. The stated value of these
instruments approximates fair market value due to their
short-term nature. At December 31, 2000, cash and cash
equivalents consisted of the following:

|                                             |  |   |            | 
|-------------------------------------------- |  | - | ---------- | 
|                                            
|                                            
|                                            
|                                            
|Cash                                         |  | $ | 6,152,253  | 
|                                            
|                                            
|                                            
|                                            
|United States Treasury Bill, 5.25%, 1/4/2001 |  |   | 8,730,179  | 
|                                             |  |   |            | 
|                                             |  | $ | 14,882,432 | 
|                                             |  |   |            | 

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 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
accounting principles generally accepted in the United States.

F.  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. Therefore, no
provision for income taxes has been recorded.

G.  Reclassifications

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

H.  Segments

The company operates as one segment as defined by Statement of
Financial Accounting Standard No. 131 Disclosures
about Segments of an Enterprise and Related Information.

19



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##### 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 Investment Adviser. No
officer of the Investment Adviser receives any compensation from
the Company for serving as officer of the Company.

4.  Investments

At December 31, 2000 and 1999, the cost of investments for
federal income tax purposes was the same 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 in which affiliates of the Investment Adviser also
intend to invest. The Company anticipates that, subject to
certain terms and conditions, current and future affiliates of
the Investment Adviser may frequently invest in the same
portfolio companies.

At December 31, 2000 and 1999, the Company owed $383,976
and $365,884, respectively, to the Investment Adviser for
management and advisory services.

6.  Use of Estimates

The preparation of financial statements in accordance with
accounting principles generally accepted in the United States
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 a per share price of $10.00.
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 are recorded net of offering costs.

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 his or her
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, as permitted by applicable
regulations. 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.

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 325,000, 175,000
and 350,000

20



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued








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
Directors 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 are exercisable on the first anniversary of
the option grant and are exercisable at a price not less than
the greater of (i) the current market value on the date of
the option grant or (ii) the current net asset value of the
shares of Common Stock on the date of the option grant. No
options 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
the Directors Plan, the Company may make arms-length
loans to each plans participants, under the terms required
by Section 57 (j)(2) of the Investment Company Act of 1940.
No loans were outstanding as of December 31, 2000 and 1999,
respectively.

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 expense 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 2000, 1999
and 1998. Management used the Black Scholes model to perform
this assessment. Key assumptions included an estimated
volatility of .253, expected option life of 5 years, an
expected dividend yield of 2.08 and a risk free interest rate of
6.82%.

21



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






9.  Financial Highlights

(per share
amounts)

|                                                |                                   |              |       |              |   |   |       |       |  
|----------------------------------------------- | --------------------------------- | ------------ | ----- | ------------ | - | - | ----- | ----- | -
|                                                |                                   | Year         |       | Year        
|                                                |                                   | ended        |       | ended       
|                                                |                                   | December 31, |       | December 31,
|                                                |                                   | 2000         |       | 1999        
|                                                |                                   |              |       |             
|Net Asset Value, Beginning of the Period        |                                   | $            | 13.76 |              |   | $ | 13.11 |      
|                                               
|                                               
|                                               
|                                               
|Income from investment operations:              |                                   |              |       |              |   |   |       |      
|                                               
|                                               
|                                               
|                                               
|Net Investment Income                           |                                   |              | 0.04  |              |   |   | 0.08  |      
|                                               
|                                               
|                                               
|                                               
|Net Realized And Unrealized Gain on Investments |                                   |              | 0.45  |              |   |   | 1.03  |      
|                                                |                                   |              |       |              |   |   |       |      
|                                                | Total from investment operations: |              |       | 0.49         |   |   |       | 1.11  |  
|                                                |                                   |              |       |              |   |   |       |      
|Less Distributions:                             |                                   |              |       |              |   |   |       |      
|                                               
|                                               
|                                               
|                                               
|Distributions from net investment income        |                                   |              | (0.03 | )            |   |   | (0.13 | )    
|                                               
|                                               
|                                               
|                                               
|Distributions from net realized gains           |                                   |              | (0.59 | )            |   |   | (0.33 | )    
|                                                |                                   |              |       |              |   |   |       |      
|                                                | Total distributions               |              |       | (0.62        | ) |   |       | (0.46 | )
|                                                |                                   |              |       |              |   |   |       |      
|Net Asset Value, End of the Period              |                                   | $            | 13.63 |              |   | $ | 13.76 |      
|                                                |                                   |              |       |              |   |   |       |      
|Market Value, End of the Period                 |                                   | $            | 8.625 |              |   | $ | 8.000 |      
|                                                |                                   |              |       |              |   |   |       |      
|Total return, at Market Value                   |                                   |              | 15.61 | %            |   |   | 17.94 | %    
|                                               
|                                               
|                                               
|                                               
|Total return, at NAV                            |                                   |              | 5.78  | %            |   |   | 10.27 | %    

22



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






10.  Schedule of Investments

|                                  |                                                              |                                      |                                        |           |           |  |            |            |           |            | 
|--------------------------------- | ------------------------------------------------------------ | ------------------------------------ | -------------------------------------- | --------- | --------- |  | ---------- | ---------- | --------- | ---------- | 
|                                  |                                                              |                                     
|                                  |                                                              | December 31, 2000                   
|                                  |                                                              |                                     
|                                  |                                                              | Shares/Par/                          |                                        | Market   
|Name of Issuer and Title of Issue |                                                              | Warrants                             |                                        | Value    
|                                  |                                                              |                                      |                                        |          
|Avionics                          |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Airport Services, Inc. #                                     |                                      |                                        | 43,750    |           |  | $          | 43,750     |          
|                                 
|                                 
|                                 
|                                 
|                                  | Flight Options International Inc. *#                         |                                      |                                        | 1,214,959 |           |  |            | 15,036,511 |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|                                  |                                                              |                                      |                                        |           |           |  | 15,080,261 |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Beverages                         |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Constellation Brands, Inc.                                   |                                      |                                        | 7,400     |           |  |            | 434,750    |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Business Services                 |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Ameripath Incorporated                                       |                                      |                                        | 47,283    |           |  |            | 1,182,075  |          
|                                 
|                                 
|                                 
|                                 
|                                  | Barra Incorporated                                           |                                      |                                        | 9,428     |           |  |            | 444,271    |          
|                                 
|                                 
|                                 
|                                 
|                                  | Disposable Products Company, LLC #                           |                                      |                                        | 1,000,000 |           |  |            | 1,000,000  |          
|                                 
|                                 
|                                 
|                                 
|                                  | The Holland Group, Inc. #                                    |                                      |                                        | 282,530   |           |  |            | 2,124,946  |          
|                                 
|                                 
|                                 
|                                 
|                                  | International Total Services, Incorporated                   |                                      |                                        | 104,250   |           |  |            | 62,550     |          
|                                 
|                                 
|                                 
|                                 
|                                  | NCO Group, Incorporated                                      |                                      |                                        | 11,750    |           |  |            | 356,906    |          
|                                 
|                                 
|                                 
|                                 
|                                  | Prime Office Products, Inc. #                                |                                      |                                        | 510,000   |           |  |            | 1,020,000  |          
|                                 
|                                 
|                                 
|                                 
|                                  | Rent-A-Center, Incorporated                                  |                                      |                                        | 18,300    |           |  |            | 631,350    |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|                                  |                                                              |                                      |                                        |           |           |  | 6,822,098  |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Drugs & Health Care               |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | ESC Medical Systems, Limited                                 |                                      |                                        | 13,675    |           |  |            | 164,955    |          
|                                 
|                                 
|                                 
|                                 
|                                  | Health Care Solutions, Inc. #                                |                                      |                                        | 2,427,572 |           |  |            | 2,328,401  |          
|                                 
|                                 
|                                 
|                                 
|                                  | National Rehabilitation Partners, Incorporated #             |                                      |                                        | 2,218,375 |           |  |            | 1,434,137  |          
|                                 
|                                 
|                                 
|                                 
|                                  | Pediatric Physicians Alliance, Incorporated *#               |                                      |                                        | 793,000   |           |  |            | 3,172,000  |          
|                                 
|                                 
|                                 
|                                 
|                                  | Pediatric Physicians Alliance, Subordinated Debt/ Warrants # |                                      |                                        | 297,448   |           |  |            | 267,448    |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|                                  |                                                              |                                      |                                        |           |           |  | 7,366,941  |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Electronics                       |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Cambridge Technology Partners, Incorporated                  |                                      |                                        | 14,900    |           |  |            | 39,112     |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Leisure Time                      |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Action Performance, Incorporated                             |                                      |                                        | 16,000    |           |  |            | 38,000     |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Miscellaneous                     |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Avocent Corporation                                          |                                      |                                        | 16,357    |           |  |            | 441,639    |          
|                                 
|                                 
|                                 
|                                 
|                                  | SLI, Incorporated  Lighting products                        |                                      |                                        | 16,350    |           |  |            | 105,253    |          
|                                 
|                                 
|                                 
|                                 
|                                  | Value Creation Partners, Incorporated #                      |                                      |                                        | 304,989   |           |  |            | 2,225,901  |          
|                                 
|                                 
|                                 
|                                 
|                                  | Waterlink, Incorporated, Warrants                            |                                      |                                        | 53,550    |           |  |            |           |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|                                  |                                                              |                                      |                                        |           |           |  | 2,772,793  |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Oil                               |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  | Petroleum Partners #                                         |                                      |                                        | 250,000   |           |  |            | 250,000    |          
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|Retail Trade                      |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  |                                                              | Fitness Quest Inc *#                 |                                        |           | 1,468,602 |  |            |            | 7,410,956 |           
|                                 
|                                 
|                                 
|                                 
|                                  |                                                              | Fitness Quest Inc, Warrants #        |                                        |           | 181,172   |  |            |            | 1,247,394 |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|                                  |                                                              |                                      |                                        |           |           |  | 8,658,350  |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|U.S. Government Securities        |                                                              |                                      |                                        |           |           |  |            |           
|                                 
|                                 
|                                 
|                                 
|                                  |                                                              | U. S. Treasury Bill 5.25%, 1/04/01 * |                                        |           | 8,734,000 |  |            |            | 8,730,179 |           
|                                  |                                                              |                                      |                                        |           |           |  |            |           
|                                  |                                                              |                                      | Total Investments  (Cost $35,521,435) |           |           |  |            |            | $         | 50,192,484 | 
|                                  |                                                              |                                      |                                        |           |           |  |            |           




All investments are U.S. companies



|  |                                                   
|- | --------------------------------------------------
|* | Represents 5% or more of total stockholders equity
| 
|# | Represents privately held securities              

23



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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS  Continued






11.  Debt

The note payable to bank at December 31, 2000 was an
unsecured $6,000,000 note with interest payable at 9.50%. Under
the terms of the agreement, the Bank may request repayment on
demand. The unpaid principal balance of the note bears interest
at a fluctuating rate equal to the Banks Prime rate.
Interest is paid monthly.

12.  Commitments and Contingencies

The Company has an investment in Flight Options, Inc., an
aviation company providing complete private air travel service
through the sale of fractional interests in pre-owned jet
aircraft. The Company guaranteed a portion of Flight Options,
Inc.s third-party borrowings. Management believes, based
on current facts and circumstances and Flight Options,
Inc.s financial position, that the likelihood of a payment
pursuant to such guarantee is remote.

24



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##### Table of Contents



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and



We have audited the accompanying balance sheets of Brantley
Capital Corporation (a Maryland corporation) as of
December 31, 2000 and 1999, and the related statements of
operations, stockholders equity and cash flows for the
years 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 audits. The financial statements of
Brantley Capital Corporation as of December 31, 1998 were
audited by other auditors whose report, dated March 5,
1999, expressed an unqualified opinion on those statements.

We conducted our audits 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, 2000 and 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 audits provide 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, 2000 and
1999 and the results of its operations and its cash flows for
the years then ended in conformity with accounting principles
generally accepted in the United States.



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

Cleveland, Ohio



25



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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 public accountants and engaged
Arthur Andersen LLP to act as its independent public
accountants. 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
disclosures, 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 following information was furnished to the Company by each
director or executive officer currently serving, and sets forth
the name, age, principal occupation or employment of each such
person and the period during which he has served as a director
or executive officer of the Company. Except as otherwise noted
below, each director or executive officer has held his principal
occupation or employment for at least five years.

Directors whose terms expire in 2001

Paul H. Cascio,* 39, a director of the Company, serves as
Vice President and Secretary of the Company and as Vice
President and Secretary of the Investment Adviser.
Mr. Cascio also serves as a general partner of the general
partner of Brantley Venture Partners II, L.P. (BVP
II), Brantley Venture Partners III, L.P. (BVP
III) and Brantley Partners IV, L.P. (BVP IV).
Prior to joining BVP II and BVP III in May, 1996,
Mr. Cascio was a Managing Director and head of the General
Industrial Manufacturing and Services Group in the Corporate
Finance Department at Dean Witter Reynolds Inc. Before joining
Dean Witter in 1986, Mr. Cascio was employed in the
Corporate Finance Department at E.F. Hutton & Company Inc.
Mr. Cascio has been Vice President, Secretary, and a
director of the Company since 1998.

Peter Saltz, 57, a director of the Company, is a
consultant to KraftMaid Cabinetry, Inc., the second largest
cabinet manufacturer in the United States. Mr. Saltz served
as Vice Chairman of Finance from 1997 to 1999 and Senior
Executive Vice President and Chief Financial Officer of
KraftMaid from 1980 to 1997 and has over 29 years of
experience as a certified public accountant in the United States
and South Africa. Mr. Saltz holds a limited partnership
interest in BVP III and BVP IV. Mr. Saltz has been a
director of the Company since 1998.

Directors whose terms expire in 2002

James P. Oliver,* 56, a director of the Company, is a
partner with the law firm of Squire, Sanders & Dempsey
L.L.P. and is a past member of the firms Management
Committee. Mr. Olivers practice focuses on general
corporate and board matters with substantial experience in high
net worth individuals and their succession wealth issues.
Mr. Oliver is a graduate of Bowling Green State University
and the University of Cincinnati College of Law. Mr. Oliver
has been a director of the Company since he was appointed by the
Board of Directors in 1998 to fill a vacancy on the Board. The
law firm of Squire, Sanders & Dempsey L.L.P. has represented
the Company as general counsel since shortly after its formation
in 1996.

Benjamin F. Bryan, 47, a director of the Company, is
President of Owl Properties Company, a real estate management
company. He is also a partner in Synergy Capital LLC, a real
estate investment and development entity. From 1992 to 1997,
Mr. Bryan served as Executive Vice President and a director
of The Tower Properties Company, a publicly owned, Kansas City,
Missouri-based developer, owner and manager of real estate. From
1980 to 1991, Mr. Bryan held a series of public policy and
public administration positions, including Executive Assistant
to the Mayor of Cleveland, Public Affairs Manager with the
Denver Chamber of Commerce and Executive Director of the Metro
Denver Transportation Development Commission. Mr. Bryan has
been a director of the Company since its formation in 1996.

26



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##### Table of Contents



Directors whose terms expire in 2003

Robert P. Pinkas,* 47, is Chairman of the Board, Chief
Executive Officer, Treasurer and a director of the Company; and
Chairman of the Board, Chief Executive Officer, Treasurer and a
manager of Brantley Capital Management, L.L.C., which serves as
the investment adviser to the Company (the Investment
Adviser). Mr. Pinkas was the founding partner of
Brantley Venture Partners, L.P., a venture capital fund started
in 1987 (BVP I), and led the formation of three
related venture capital funds, BVP II, BVP III and
BVP IV. A family limited partnership of which
Mr. Pinkas is the sole general partner serves as a general
partner of the sole general partner of each of BVP I,
BVP II, BVP III and BVP IV. Each of BVP I,
BVP II, BVP III and BVP IV has made venture
capital investments similar to the investments the Company makes
in private companies. From 1981 to 1987, Mr. Pinkas was
active in venture capital management and financing as a founding
director and investor in seven early-stage companies. He serves
on the board of directors of several portfolio companies in
which one or more of BVP I, BVP II, BVP III and
BVP IV have invested, including Gliatech, Inc., Pediatric
Services of America, Inc., Medirisk, Inc., Quad Systems
Corporation and Waterlink, Inc. Mr. Pinkas has been
Chairman of the Board, Chief Executive Officer, Treasurer and a
director of the Company since its formation in 1996.

L.  Patrick Bales, 58, a director of the Company, is
a partner with the firm of Bales Associates, an executive search
consulting firm that services smaller growth companies as well
as major corporations in both the private and public sector. The
firm conducts executive search assignments both domestically and
internationally and has affiliate offices in London and Tokyo.
Previously, Mr. Bales was employed with Paul R. Ray &
Company from 1981 to 1983 in their Chicago office and was on the
professional staff of two other search firms in the Chicago area
from 1975 to 1981. He spent five years with Weber Marking
Systems prior to embarking upon his career in executive search.
Mr. Bales has been a director of the Company since its
formation in 1996.

Directors whose terms expire in 2004

Michael J. Finn,* 51, is President and a director of the
Company and is President and a manager of the Investment
Adviser. Mr. Finn also serves as a general partner of the
general partner of BVP II, BVP III and BVP IV. From 1987 to
1995, Mr. Finn served as portfolio manager and vice
president of the Venture Capital Group of Sears Investment
Management Company (SIMCO) in Chicago. In this
capacity, Mr. Finn managed the development of a
$150 million portfolio of private equity investments,
including the investment of over $24 million directly in 25
operating companies. From 1983 to 1987, he led the development
of a $250 million venture capital program for the State of
Michigan Department of Treasury as its deputy director. In 1982,
Mr. Finn founded and served as president of the Michigan
Certified Development Corporation, a small business development
corporation which financed over $50 million of investments
in six companies in Michigan during the period 1982 to 1984. In
1976, he launched the Forward Development Corporation, an entity
sponsored by the U.S. Small Business Administration for small
business financing. He serves on the board of directors of
several portfolio companies in which one or more of BVP I, BVP
II, BVP III and BVP IV have invested, including Medirisk, Inc.
and Pediatric Services of America, Inc. Mr. Finn has been a
director and the President of the Company since its formation in
1996.

James M. Smith, 52, a director of the Company, is
employed by Pilgrim Baxter & Associates where he co-manages
the PGHG Strategic Small Company Fund. In addition,
Mr. Smith leads the investment team responsible for
management of Pilgrim Baxters Hybrid Partners I and II and
holds additional small cap growth portfolio management
responsibilities. Mr. Smith possesses over twenty years of
investment experience in equity portfolio management and
research. Mr. Smith is a Chartered Financial Analyst and a
graduate of Washington & Lee University. He earned his MBA
from Northwestern University. Mr. Smith was appointed in
1998 by the Board of Directors to fill a vacancy on the Board.

Director whose term expires in 2005

Richard Moodie, 51, a director of the Company, is a
founder, President and Chief Executive Officer of KraftMaid
Cabinetry, Inc. He has over 29 years of experience in
growing and managing a manufacturing and marketing business. In
1990, Mr. Moodie sold his majority interest in KraftMaid to
Masco Corporation of Taylor,

27



---



##### Table of Contents





Non-Director Executive Officer

Tab A. Keplinger, 40, has served as Vice President and
Chief Financial Officer of the Company since its inception in
1996. Prior to joining the Company, Mr. Keplinger was Vice
President and Chief Financial Officer of Victoria Financial
Corporation. Before joining Victoria Financial Corporation in
1990, Mr. Keplinger was a senior audit manager in the
manufacturing and service sectors for KPMG Peat Marwick.

Section 16(a) Beneficial Ownership Reporting
Compliance

Section 16(a) of the Securities Exchange Act of 1934
requires the officers and directors of the Company and persons
who beneficially own more than 10% of the Common Stock to file
reports of securities ownership and changes in such ownership
with the Securities and Exchange Commission (the
Commission). Officers, directors and 10%
stockholders are also required by the rules promulgated by the
Commission to furnish to the Company copies of all
Section 16(a) reports they file.

Based solely upon a review of the copies of such forms furnished
to the Company, the Company believes that each of its officers
and directors complied with all Section 16(a) filing
requirements applicable to them during the fiscal year ended
December 31, 2000.




Item 11.  Executive Compensation

Organization and Compensation of the Board of Directors

The Companys Board of Directors held four regularly
scheduled meetings during the last fiscal year. The standing
committees of the Board of Directors include the Audit
Committee, the Compensation Committee and the Nominating
Committee.

The function of the Audit Committee is to make recommendations
to the Board of Directors concerning selection of the
Companys independent public accountant, oversee the
Companys accounting methods and implement and review the
audit and findings of the Companys independent public
accountant for the purpose of reporting to the Board of
Directors. The Audit Committee, currently composed of
Messrs. Bales, Bryan and Moodie, held five meetings during
2000.

The function of the Compensation Committee is to assist the
Board of Directors in evaluating and recommending compensation
of the senior executives of the Company and to administer the
Companys Stock Option Plan in accordance with the terms
thereof, including the designation of which officers and
employees of the Company shall receive stock options, and the
number of shares which should be subject to each option so
granted. The Compensation Committee, currently composed of
Messrs. Bales, Bryan and Moodie, held one meeting in
connection with a Board meeting during 2000.

The function of the Nominating Committee is to recommend
candidates for the Board of Directors. The Nominating Committee,
currently composed of Messrs. Pinkas(*), Finn(*) and Bales, held
one meeting in conjunction with a Board meeting during 2000.
Stockholders also may submit written recommendations to the
Nominating Committee for consideration.






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Directors who are interested persons with respect to
	the Company, as defined in Section 2(a)(19) of the
	Investment Company Act of 1940, as amended (the Investment
	Company Act). Messrs. Pinkas and Finn are
	interested persons with respect to the Company
	because of their positions as directors and executive officers
	of the Company and executive officers and managers of the
	Investment Adviser. Mr. Cascio is an interested
	person with respect to the Company because of his position
	as a director and executive officer of the Company and an
	executive officer of the Investment Adviser. Mr.  Oliver is
	an interested person with respect to the Company
	because his law firm serves as the Companys legal counsel.

28



---



##### Table of Contents



Each director who is not an officer or an employee of the
Company receives a monthly fee of $500 and an attendance fee of
$1,000 for each Board and committee meeting attended.

Compensation

The following table sets forth the compensation of the
Companys directors, none of whom is an employee of the
Company. Except as set forth in such table, no other
compensation was paid to any director (including those who also
serve as executive officers) by the Company or any other entity
in the Companys fund complex during 2000. No information
has been provided with respect to executive officers of the
Company (other than those who also serve as directors), since
none of them receives aggregate compensation from the Company
and the Companys fund complex in excess of $60,000.

COMPENSATION TABLE

|                     |  |                        |        |                            |  |   |        | 
|-------------------- |  | ---------------------- | ------ | -------------------------- |  | - | ------ | 
|                     |  | Aggregate Compensation |        | Total Compensation        
|Name of Director     |  | From the Company       |        | From Fund and Fund Complex
|                     |  |                        |        |                           
|L. Patrick Bales(1)  |  | $                      | 10,000 |                            |  | $ | 10,000 | 
|                    
|                    
|                    
|                    
|Benjamin F. Bryan(1) |  |                        | 10,000 |                            |  |   | 10,000 | 
|                    
|                    
|                    
|                    
|Paul H. Cascio       |  |                        |       |                            |  |   |       | 
|                    
|                    
|                    
|                    
|Michael J. Finn      |  |                        |       |                            |  |   |       | 
|                    
|                    
|                    
|                    
|Richard Moodie(1)    |  |                        | 10,000 |                            |  |   | 10,000 | 
|                    
|                    
|                    
|                    
|James P. Oliver      |  |                        |       |                            |  |   |       | 
|                    
|                    
|                    
|                    
|Robert P. Pinkas     |  |                        |       |                            |  |   |       | 
|                    
|                    
|                    
|                    
|Peter Saltz(1)       |  |                        | 10,000 |                            |  |   | 10,000 | 
|                    
|                    
|                    
|                    
|James M. Smith(1)    |  |                        | 10,000 |                            |  |   | 10,000 | 



---



|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Compensation consists of amounts received for service as a
	director. See Organization and Compensation of the Board
	of Directors above.

The following table sets forth information regarding individual
grants of stock options made during the last fiscal year to each
of the named individuals.

OPTION GRANTS IN LAST FISCAL YEAR

|                 |  |            |         |              |  |          |      |            |  |                      |       |     |  |  |         |  |  |  |         |  |  |  |           | 
|---------------- |  | ---------- | ------- | ------------ |  | -------- | ---- | ---------- |  | -------------------- | ----- | --- |  |  | ------- |  |  |  | ------- |  |  |  | --------- | 
|                 |  |            |         |              |  |          |      |            |  |                     
|                 |  |            |         |              |  |          |      |            |  | Potential Realizable
|                 |  |            |         |              |  |          |      |            |  | Value at Assumed    
|                 |  | Number     |         |              |  |          |      |            |  | Annual Rates of     
|                 |  | of         |         | % of Total   |  |          |      |            |  | Stock Price         
|                 |  | Securities |         | Options      |  | Exercise |      |            |  | Appreciation for    
|                 |  | Underlying |         | Granted to   |  | or Base  |      |            |  | Option Term         
|                 |  | Options    |         | Employees in |  | Price    |      | Expiration |  |                     
|Name             |  | Granted    |         | Fiscal Year  |  | ($/Sh)   |      | Date       |  | 5%                   |       | 10%
|                 |  |            |         |              |  |          |      |            |  |                      |       |    
|Robert P. Pinkas |  |            | 150,000 |              |  |          | 18.0 | %          |  |                      | 13.42 |     |  |  | 2/23/10 |  |  |  | 384,529 |  |  |  | 1,804,665 | 
|                
|                
|                
|                
|Michael J. Finn  |  |            | 50,000  |              |  |          | 6.0  | %          |  |                      | 13.42 |     |  |  | 2/23/10 |  |  |  | 128,176 |  |  |  | 601,555   | 
|                
|                
|                
|                
|Paul H. Cascio   |  |            | 50,000  |              |  |          | 6.0  | %          |  |                      | 13.42 |     |  |  | 2/23/10 |  |  |  | 128,176 |  |  |  | 601,555   | 
|                
|                
|                
|                
|Tab A. Keplinger |  |            | 50,000  |              |  |          | 6.0  | %          |  |                      | 13.42 |     |  |  | 2/23/10 |  |  |  | 128,176 |  |  |  | 601,555   | 

The exercise of the options granted in 2000 to
Messrs. Pinkas, Finn, Cascio, and Keplinger is governed by
a multi-year vesting schedule, as described below under the
caption Stock Options.

Stock Options

The Companys 1996 Stock Option Plan (the Stock
Option Plan) permits the granting of nonqualified stock
options to officers and employees of the Company. All officers
of the Company are eligible to be selected to participate in the
Stock Option Plan. At present, the Company has no employees. The
Stock Option Plan is administered by the Compensation Committee
of the Board of Directors, which selects the persons who are
eligible to participate and determines the number of options to
be granted.

29



---



##### Table of Contents



The number of shares of Common Stock available for grant under
the Stock Option Plan is 1,175,000, subject to certain
adjustments. Options granted under the Stock Option Plan are
exercisable at a price not less than the greater of (i) the
current market value (as defined in the Stock Option Plan) on
the date of option grant and (ii) the current net asset
value of the shares of Common Stock. Options become exercisable
to the extent of one-third of the subject shares after one year
from the grant date, two-thirds of the subject shares after two
years from the grant date and all subject shares after three
years from the grant date.

The Companys Disinterested Director Option Plan (the
Director Option Plan) permits the granting of
non-qualified stock options to the directors of the Company who
are not employees or officers. All such directors of the Company
are eligible to be selected to participate in the Director
Option Plan, which is administered by the Compensation Committee
of the Board of Directors. In order for options to be issued to
the non-employee, non-officer directors, the Company obtained
exemptive relief from the Securities and Exchange Commission.
Under the terms of the exemptive order and the Director Option
Plan Agreement, each qualified director will be granted an
option to purchase 2,000 shares upon their initial appointment
to the Board of Directors. Throughout the term of the plan and
immediately following each annual meeting of stockholders of the
Company, each qualified director then serving on the
Companys Board of Directors will be granted options to
purchase 2,000 additional shares, subject to adjustment. Such
option grants were made retroactively by the Company to its
formation. As a result, the three original qualifying directors
who served on the Companys Board of Directors since the
Companys formation received options to purchase 6,000
shares each. The remaining qualifying directors who served on
the Companys Board of Directors since 1998 received
options to purchase 2,000 shares each.




Item 12.  Security Ownership of Certain Beneficial
Owners and Management

The following table sets forth as of March 31, 2001, the
number of shares of Common Stock of the Company beneficially
owned by each director, nominee for director, executive officer
and all directors and executive officers as a group, according
to information furnished to the Company by such persons:

|                                                             |  |                      |         |            |  |  |       |  
|------------------------------------------------------------ |  | -------------------- | ------- | ---------- |  |  | ----- | -
|                                                             |  | Amount and Nature of |         |           
|                                                             |  | Beneficial           |         | Percent of
|Name                                                         |  | Ownership(1)         |         | Class     
|                                                             |  |                      |         |           
|L. Patrick Bales                                             |  |                      | 6,800   | (2)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|Benjamin F. Bryan                                            |  |                      | 10,174  | (2)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|Paul H. Cascio                                               |  |                      | 60,111  | (3)        |  |  | 1.58  | %
|                                                            
|                                                            
|                                                            
|                                                            
|Michael J. Finn                                              |  |                      | 105,903 | (4)        |  |  | 2.78  | %
|                                                            
|                                                            
|                                                            
|                                                            
|Tab A. Keplinger                                             |  |                      | 26,250  | (5)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|Richard Moodie                                               |  |                      | 16,000  | (2)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|James P. Oliver                                              |  |                      | 2,000   | (7)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|Robert P. Pinkas                                             |  |                      | 351,725 | (6)        |  |  | 9.23  | %
|                                                            
|                                                            
|                                                            
|                                                            
|Peter Saltz                                                  |  |                      | 13,000  | (7)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|James M. Smith                                               |  |                      | 2,000   | (7)        |  |  | *     |  
|                                                            
|                                                            
|                                                            
|                                                            
|All Directors and Executive Officers as a Group (10 persons) |  |                      | 593,963 |            |  |  | 15.59 | %



---

|  |                                                 
|- | ------------------------------------------------
|* | Shares owned are less than one percent of class.



|    |                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Each of the persons named in the above table has sole voting and
	investment power with respect to the shares indicated as
	beneficially owned.
|   
|(2) | Includes 6,000 shares subject to stock option grants.                                                                                          
|   
|(3) | Includes 50,000 shares subject to stock option grants.                                                                                         
|   
|(4) | Includes 100,000 shares subject to stock option grants.                                                                                        
|   
|(5) | Includes 25,000 shares subject to stock option grants.                                                                                         

30



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##### Table of Contents





|    |                                                        
|--- | -------------------------------------------------------
|(6) | Includes 300,000 shares subject to stock option grants.
|   
|(7) | Includes 2,000 shares subject to stock option grants.  

The following table sets forth information about two persons
known by the Company to be a beneficial owner of more than 5% of
the Companys outstanding shares of Common Stock:

|                                                                                       |  |                   |         |            |  |  |      |  
|-------------------------------------------------------------------------------------- |  | ----------------- | ------- | ---------- |  |  | ---- | -
|                                                                                       |  | Amount and Nature |         |           
|Name and Address                                                                       |  | of Beneficial     |         | Percent of
|Of Beneficial Owner                                                                    |  | Ownership         |         | Class     
|                                                                                       |  |                   |         |           
|Maxus Investment Group
	1301 East Ninth Street, Suite 3600
	Cleveland, Ohio 44114-1800 |  |                   | 515,500 | (1)        |  |  | 12.5 | %
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|                                                                                      
|Mr. Phillip Goldstein
	60 Heritage Drive
	New York, New York 10570                     |  |                   | 198,000 | (2)        |  |  | 5.2  | %



---



|    |                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Information regarding share ownership was obtained from
	Schedule 13D filed by Maxus Investment Group on
	January 26, 1999. All of the reporting persons and entities
	known as Maxus Investment Group reported sole voting and
	investment power as to 60,000 shares of Common Stock and shared
	voting and investment power as to 455,500 shares of Common Stock.
|   
|(2) | Information regarding share ownership was obtained from
	Schedule 13D filed by Mr. Goldstein on
	November 13, 2000. Mr. Goldstein reported sole voting
	and investment power as to the 198,000 shares of Common Stock.                                                                                                                                             




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, 2000, the Investment Adviser was owed an
investment advisory fee in the aggregate amount of $383,976.
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s Discussion and Analysis of
Financial Condition and Results of Operations in Item 7 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.

31



---



##### 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, 2000 and
	December 31, 1999
	Statements of Operations  For the years ended
	December  31, 2000, 1999 and 1998
	Statements of Cash Flows  For the years ended
	December  31, 2000, 1999 and 1998
	Statements of Stockholders Equity  For the
	years ended December 31, 2000, 1999 and 1998
	Notes to the Financial Statements
	Report of Independent Public Accountants
|   
|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 34 of this Form 10-K.                                                                                                                                                                                                                                                                                                         
|   
|(b) |  | No reports on Form 8-K were filed by the Company during the
	quarter ended December 31, 2000.                                                                                                                                                                                                                                                                                                           
|   
|(c) |  | Exhibits  Reference is made to the Exhibit Index
	which is found on page 34 of this Form 10-K.                                                                                                                                                                                                                                                                                                         
|   
|(d) |  | Financial Statement Schedules were omitted as they are not
	required or not applicable, or the required information is
	included in the Financial Statements.                                                                                                                                                                                                                                           

32



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##### 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, 2001

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, 2001
|                                      
|/s/ TAB A. KEPLINGERTab A. Keplinger   |  | Vice President and Chief Financial Officer (principal financial
        officer)                                                                      |  | March 30, 2001
|                                      
|/s/ MICHAEL J. FINNMichael J. Finn     |  | President and Director                                                                                                                                |  | March 30, 2001
|                                      
|/s/ L. PATRICK BALESL. Patrick Bales   |  | Director                                                                                                                                              |  | March 30, 2001
|                                      
|/s/ BENJAMIN F. BRYANBenjamin F. Bryan |  | Director                                                                                                                                              |  | March 30, 2001
|                                      
|/s/ RICHARD MOODIERichard Moodie       |  | Director                                                                                                                                              |  | March 30, 2001
|                                      
|/s/ PETER SALTZPeter Saltz             |  | Director                                                                                                                                              |  | March 30, 2001
|                                      
|/s/ JAMES P. OLIVERJames P. Oliver     |  | Director                                                                                                                                              |  | March 30, 2001
|                                      
|/s/ JAMES M. SMITHJames M. Smith       |  | Director                                                                                                                                              |  | March 30, 2001

33



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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  99 |  |  | Additional Exhibits                                                                                                                                                                          
| |             |  |  |                                                                                                                                                                                               | (1) |  |  | Form 8-K dated January 19, 2000 (incorporated by reference
        into Part II of this Form 10-K)                                                                                                                                                       

34