SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB
(Mark One)
[ X ] Annual Report Under Section 13 or 15(d) of the Securities  Exchange Act of
1934 For the fiscal year ended December 31, 2000

[   ]    Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from                 to
                                          ----------------   ----------------

Commission File Number:  333-22239

                              AeroCentury IV, Inc.
                 (Name of small business issuer in its charter)

            California                                  94-3260392
  (State or other jurisdiction             (I.R.S. Employer Identification No.)
of incorporation or organization)

   1440 Chapin Avenue, Suite 310
      Burlingame, California                              94010
(Address of principal executive offices)                (Zip Code)

Issuer's telephone number, including area code:         (650) 340-1880
Securities registered pursuant to Section 12(b) of the Act:           None

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

Check whether the Issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X   No
   ----   ----

Check if there no  disclosure  of  delinquent  filers in response to Item 405 of
Regulation S-B is not contained herein, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]

Revenues for the issuer's most recent fiscal year:  $533,260

On March 30, 2001 the aggregate market value of the voting and non voting Common
equity held by  non-affiliates  (computed by reference to the price at which the
common equity was sold) was $0.

As of March 30, 2001 the Issuer has 243,420 Shares of Common Stock outstanding.

Documents Incorporated by Reference:  None

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

<PAGE>

                                     PART I

Item 1.           Business.

Business of the Company

AeroCentury IV, Inc. (the "Company") was incorporated in the state of California
in February 1997 ("Inception"). The Company was formed solely for the purpose of
offering up to $10,000,000 in 10% Secured  Promissory  Notes, due April 30, 2005
("Notes")  (the  "Offering").  The  Offering  commenced  in  May  1997  and  was
terminated in August 1997,  after $4,869,000 in Notes were sold. The proceeds of
the Offering were used to purchase income  producing  assets ("Income  Producing
Assets")  consisting  of turboprop  aircraft and  aircraft  engines,  subject to
operating or full payout leases with third parties.

All of the Company's outstanding common stock is owned by JetFleet Holding Corp.
("JHC"), a California  corporation formed in January 1994. In May 1998, JetFleet
Management  Corp.,  the sole  shareholder  of the Company  was renamed  JetFleet
Holding Corp. The rights and obligations under the management  agreement between
the Company  and JHC were  assigned  by JHC to its  newly-created,  wholly-owned
subsidiary  named  "JetFleet   Management  Corp."  ("JMC").   JMC  also  manages
AeroCentury  Corp.  ("ACY"),  a  Delaware  corporation,   and  JetFleet  III,  a
California  corporation,  which are affiliates of JHC and which have  objectives
similar to the Company's.  Neal D. Crispin, the President of the Company,  holds
the same position  with JHC and JMC and owns a significant  amount of the common
stock of JHC.

The sole director of the Company is Neal D. Crispin. The officers of the Company
are Neal D. Crispin,  President and Secretary, and Marc J. Anderson, Senior Vice
President and Chief Operating Officer.

The revenue  generated  from the Income  Producing  Assets has been used to fund
interest payments on the Notes. Excess cash flow from operations, after interest
payments on the Notes,  has been held as cash because it was, in the  aggregate,
insufficient  to purchase  additional  Income  Producing  Assets.  In  addition,
although the Company has recently sold interests in three aircraft,  it does not
believe  that the total  proceeds  of such sales are  sufficient  to invest in a
desirable  Income  Producing  Asset and,  therefore,  as  required  by the Trust
Indenture,  the Company  anticipates  turning  over those sales  proceeds to the
Trustee.  After May 1, 2003,  any excess cash,  after  interest  payments on the
Notes,  is required to be deposited to a sinking  fund  account  established  to
facilitate  repayment of principal of the Notes on their maturity.  (Deposits of
cash  may also be made  prior  to May 1,  2003 if the  Company  decides  to make
prepayments  on the  principal  of the Notes.) As discussed  below,  the Company
currently  estimates that it will not have available  adequate  reserves to meet
its  short-term  immediate  cash  requirements  for normal  operating  costs and
interest  on the  secured  Notes due August 1,  2001.  If, as  anticipated,  the
Company is unable to fund the  August 1, 2001  interest  payment,  it will be in
default under the Trust Indenture.  (See Factors that May Affect Future Results,
below,  for a discussion of actions which may be taken after there has been such
default.)

Aircraft and Aircraft Engines

At December 31, 2000, the Company owned a Fairchild  Metro III aircraft,  serial
number AC-647 ("S/N AC-647"), a Pratt & Whitney JT8D-9A aircraft engine,  serial
number 674452B (the "Engine"),  and a 50% undivided interest in a Shorts SD-360,
serial  number S/N 3676 ("S/N 3676").  During 2000,  the Company sold its Shorts
SD3-60-100,  serial number S/N 3606 ("S/N 3606"), and its 67% undivided interest
in a deHavilland DHC-6, serial number S/N 668 ("S/N 668"). S/N 3676 was returned
to the Company during the fourth quarter and, in January 2001, it was also sold.
The Company did not purchase any aircraft during 2000.

When S/N AC-647 was acquired,  it was subject to a 36-month  lease,  expiring in
April  2001,  with a regional  carrier in Uruguay.  During  June 1999,  however,
management  repossessed  the aircraft due to  non-payment of rent. In connection
with the repossession, the Company recorded a write-off of approximately $4,300,
which  represented rent receivable in excess of the letter of credit held by the
Company,  which the Company  collected  during  August 1999.  In June 2000,  S/N
AC-647 was  re-leased to a U.S.  carrier for a two-year  term,  expiring in June
2002.

The Engine is used on a  McDonnell  Douglas  DC-9  aircraft  and is subject to a
60-month  lease  with the  seller,  expiring  in  November  2002.  The Engine is
subleased by the seller to a Mexican-based regional carrier.

At the time of purchase,  S/N 3606 and S/N 3676 were subject to similar 48-month
leases,  expiring in July 2001, with a British  regional  airline.  The original
lease,  entered into in 1997,  did not require  that the lessee pay  maintenance
reserves  based on  usage  because,  at the  time,  the  lessee  was  considered
creditworthy.  It had  recently  been named  Airline of the Year by the European
Regions  Airline  Association  and had its own facility,  which was certified to
perform any required  maintenance.  Subsequent to the Company's  purchase of the
aircraft,  the airline's  management pursued a policy of rapid expansion,  which
led to a  financial  crisis  and, on February  24,  2000,  the lessee  filed for
reorganization.

The lessee has continued to operate,  and,  under the  reorganization  plan, the
lessee continued to lease S/N 3676, in which the Company owns a 50% interest, on
a month-to-month  basis at the same rent as under the original lease. The lessee
also began paying monthly  maintenance  reserves based on the hours flown. Under
British law, the owners were precluded from repossessing the aircraft so long as
the lessee was  operating  it and  agreed to pay rent and  maintenance  reserves
under its reorganization  plan. The lessee notified the owners that the aircraft
would be returned to them during the fourth quarter. The owners agreed that they
would  realize a greater  benefit if they sold the  aircraft "as is" rather than
fund the maintenance  work necessary to return the aircraft to a condition which
would allow it to possibly be re-leased to a new lessee.  Therefore, the Company
reduced  the  carrying  value of the  aircraft  to  $170,000  and  recognized  a
provision for  impairment of $245,350  during 2000. The aircraft was returned to
the Company  during the fourth  quarter  and, in January  2001 it was sold.  The
Company received net proceeds of $167,450 and recognized a gain of $35,980.

The same British regional airline was lessee of S/N 3606 and operated it through
April 24, 2000 at the same rent. The aircraft was  subsequently  returned to the
Company. In order to bring the aircraft to a condition required to lease it to a
new lessee,  the  Company  would have had to spend more on  maintenance  than it
could afford. The Company decided to attempt to sell the aircraft "as is", which
sale was completed in October 2000. Therefore,  the Company reduced the carrying
value of the aircraft from $873,200 to $400,000, the sales price, and recognized
a provision  for  impairment  of $473,200 at  September  30,  2000.  The Company
recognized a gain of $45,940 related to the reserves  collected from the lessee,
which were not included in the sale of the aircraft.

The  Company  had  filed  claims  for  approximately   $1,069,000  of  unfunded,
pre-reorganization  maintenance  expense  related  to S/N 3606 and S/N 3676.  On
February  13,  2001,  a  majority  of the  creditors  of the  lessee  approved a
reorganization plan, which provided that unsecured creditors,  like the Company,
would not receive any recovery of pre-reorganization claims.

S/N 668, in which the Company  owned a 67%  interest,  was subject to a 60-month
lease,  expiring in July 2004, with a regional  carrier in Colombia.  During the
third quarter of 2000,  due to  non-payment  of rent and reserves by the lessee,
the Company notified the lessee of its intent to repossess the aircraft.  At the
same time, the Company  recorded a write-off of $93,120 of rent receivable which
amount was net of the  security  deposit  held by the  Company,  and reduced its
reserves receivable and related liability by $122,600.  The Company also accrued
$134,000 of estimated maintenance to be performed on S/N 668 related to usage by
the lessee.  During November,  the owners repossessed S/N 668. In December,  the
owners sold the aircraft "as is". The Company  received net proceeds of $610,450
and  recognized  a loss of $37,820.  Because the  aircraft  was sold "as is", no
incremental maintenance work was performed and the Company reversed the $134,000
accrual for such work.

Item 2.           Properties.

The  Company  does  not own or  lease  any real  property,  plant or  materially
important physical  properties other than equipment under operating lease as set
forth in Item 1.

The Company  maintains its principal  office at 1440 Chapin  Avenue,  Suite 310,
Burlingame, California, 94010. All office facilities are provided by JMC without
reimbursement by the Company.

Item 3.           Legal Proceedings.

The Company is not involved in any legal proceedings.

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

None.


<PAGE>

                                     PART II

Item 5.           Market for the Common Equity and Related Stockholder Matters.

General

There is no  established  trading  market  for the  Notes  and the Notes are not
listed on any securities exchange.

Number of Security Holders

Approximate number of holders of Notes ("Noteholders") as of March 30, 2001: 350

Dividends

The Company has not declared a dividend on Common Stock since its formation.

Item 6.           Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

Certain statements  contained in this report and, in particular,  the discussion
regarding the Company's beliefs, plans, objectives,  expectations and intentions
regarding  the use of  sales  proceeds  to  invest  in  additional  assets,  the
Company's  ability  to meet its  short-term  immediate  cash  requirements,  the
incurring  of  significant   operating   expenses  for  assets  on  lease,   the
insufficiency of sales proceeds from asset sales to invest in additional assets,
the  collection  of its  inter-company  receivable  related  to its tax  sharing
agreement,  the Company's  inability to meet its interest  obligations after its
May 2001 interest  payment,  its potential default upon its August 2001 interest
payment and the  Trustee's  actions  thereafter to take control of the Company's
assets,  and the  inadequacy  of cash  reserves  to  meet  short-term  immediate
requirements  are forward looking  statements.  While the company  believes that
such statements are accurate,  actual results may differ due to further defaults
by existing  lessees,  recovery of  maintenance  claims from certain  defaulting
lessees,  time  required to re-lease any  returned  aircraft,  general  economic
conditions, particularly those that affect the demand for turboprop aircraft and
engines,  including  competition  for turboprop and other  aircraft,  and future
trends and results that cannot be predicted with certainty. The Company's actual
results could differ  materially  from those  discussed in such forward  looking
statements.  Factors that could cause or contribute to such differences  include
those  discussed below in the section  entitled  "Factors that May Affect Future
Results." The cautionary  statements made in this Report should be read as being
applicable  to all related  forward-looking  statements  wherever they appear in
this Report.

Results of Operations

The  Company  recorded  a net loss of  ($1,751,770)  or  ($7.20)  per  share and
($126,920)  or ($0.76) per share for the year ended  December 31, 2000 and 1999,
respectively.

Rental  income  decreased  by   approximately   $197,000  in  2000  due  to  the
repossession of S/N 668 and the associated  write-off of rent receivable  during
the third quarter of 2000 and its  subsequent  sale during fourth  quarter 2000,
the off-lease status and subsequent sale of S/N 3606, and the return of S/N 3676
during fourth quarter 2000.  Depreciation decreased approximately $13,000 due to
the asset sales noted above.  During 2000,  the Company also recorded as expense
approximately  $1.0 million to reflect a reduction in the carrying value of four
assets,  based on the current  appraisal of and management's  analysis of market
conditions for the aircraft.

Under  the  terms  of a  tax  sharing  agreement  between  the  members  of  the
consolidated  group with which the Company files a consolidated  tax return,  in
the event that the Company has taxable income,  the Company will be credited for
the tax benefits  provided by the use of the Company's  prior year net operating
losses. However, under the terms of the tax sharing agreement with other members
of the  consolidated  group,  the  Company  does not  expect  its  inter-company
receivable  to be  collected  because  it does not expect to  generate  adequate
future taxable income.


<PAGE>


Capital Resources and Liquidity

At the end of 2000,  the Company had cash balances of $1,193,140 and deposits of
$91,440.  Approximately $147,000 of the Company's cash balances was held for the
interest  payment  made to the  Noteholders  in February  2001 and for  normally
recurring  expenses.  The remaining  cash,  which was the result of two aircraft
sales during the fourth quarter 2000, is being held for return to the Trustee as
required under the terms of the Trust Indenture.

Since  its  formation,  the  Company's  capital  has come in the form of  equity
contributions  from JHC,  proceeds  from the Offering,  rental  revenue from the
Income  Producing  Assets  purchased using those  proceeds,  and, most recently,
proceeds from the sale of assets. The Company's liquidity varies,  increasing to
the  extent  cash flows from  operations  exceed  expenses,  and  decreasing  as
interest  payments are made to the Noteholders and to the extent expenses exceed
cash flows from leases.

Since the Company has acquired  Income  Producing  Assets,  which are subject to
triple net leases (the lessee pays operating and maintenance expenses, insurance
and  taxes),  the Company  does not  anticipate  that it will incur  significant
operating  expenses in connection with ownership of its Income  Producing Assets
as long as they remain on lease.

Excess cash flow from operations, after interest payments on the Notes, has been
held  as cash  because  it  was,  in the  aggregate,  insufficient  to  purchase
additional  Income  Producing  Assets.  In  addition,  although  the Company has
recently sold several  aircraft,  it does not believe that the total proceeds of
such sales are sufficient to invest in a desirable  Income  Producing Asset and,
therefore,  as required by the Trust Indenture,  the Company anticipates turning
over those sales  proceeds to the Trustee.  After May 1, 2003,  any excess cash,
after interest  payments on the Notes,  is required to be deposited to a sinking
fund account  established  to facilitate  repayment of principal of the Notes on
their  maturity.  (Deposits of cash may also be made prior to May 1, 2003 if the
Company decides to make prepayments on the principal of the Notes.)

The  Company  currently  estimates  that it will  not  have  available  adequate
reserves to meet its short-term immediate cash requirements for normal operating
costs and interest on the secured  notes due August 1, 2001.  See "Factors  that
May Affect Future  Results",  below,  for a discussion of factors  affecting the
Company's cash flow.

The decrease in cash flow from  operations  during 2000 was due primarily to the
approximately  $1.6 million  increase in the  Company's  net loss in 2000 versus
1999 which was only  partially  offset by a provision for impairment in value of
aircraft  of  approximately  $1.0  million.  The  decrease  in  cash  flow  from
operations from year to year was partially  offset by increases in the change in
accounts receivable and receivable from affiliates, the effect of which was only
partially  offset by  decreases  in the  change in  accounts  payable,  security
deposits and prepaid rent from year to year.

The increase in cash flow provided by investing activities was the result of the
Company's sale of its interest in two of its Income  Producing Assets during the
fourth quarter of 2000. There was no cash flow from financing activities in 2000
or 1999 because the Offering terminated in August 1997.

Factors that May Affect Future Results

Anticipated  Default;  Trustee's Ability to Maximize Returns.  It is likely that
the Company will be unable to meet its interest  obligations  after the required
May 2001 payment,  due to cash flow problems  created by lessee rental defaults,
early  termination  of leases,  and lower  than  expected  remarketing  proceeds
described above. It is anticipated that the Company will be in default under its
Indenture upon its failure to make the August 1, 2001 interest payment.  At that
time, it is believed that the Trustee,  First  Security  Bank,  N.A.,  will take
control of the  Company's  assets  securing the  Indenture,  namely the aircraft
portfolio and leases.  At that point,  the Trustee will have the power to direct
disposition  of  the  collateral  with  the  goal  of  maximizing  value  to the
Noteholders.  This could entail an immediate  or staged  disposition  of all the
assets or retention  of the assets on lease for the benefit of the  Noteholders,
or a combination  thereof.  While the Trustee is unlikely to realize  sufficient
proceeds to enable  repayment  of the entire Note  Indebtedness,  its ability to
maximize  repayment to  Noteholders  will depend on the risk  factors  described
below, particularly those that affect asset values of the Company's portfolio.

General Economic Conditions. The market for used aircraft has been cyclical, and
usually  reflects  economic  conditions  and  the  strength  of the  travel  and
transportation  industry.  At any time,  the  market  for used  aircraft  may be
adversely  affected by such factors as airline  financial  difficulties,  higher
fuel costs, and improved availability and economics of new replacement aircraft.

An adverse change in the global air travel  industry,  however,  could result in
reduced  carrier revenue and excess capacity and increase the risk of failure of
some weaker  regional  air carriers  and create  lessee  credit risks or greater
leasing risks as discussed  below..  While the Company believes that with proper
asset and lessee  selection  the impact of such  changes on the  Company  can be
reduced,  there is no  assurance  that the  Company's  business  will escape the
effects of such a global downturn,  or a regional  downturn in an area where the
Company has placed a significant amount of its assets. In particular, a downturn
that affects used aircraft  values in the near future may  substantially  impact
the value of the Company's  aircraft  portfolio at a time when that portfolio is
being liquidated to repay the Notes.

Leasing  Risks.  The  Company's  successful  negotiation  of  lease  extensions,
re-leases  and sales may be critical  to its  ability to achieve  its  financial
objectives,  and will involve a number of substantial risks. Demand for lease or
purchase  of  the  assets  depends  on the  economic  condition  of the  airline
industry,  which is in turn highly  sensitive  to general  economic  conditions.
Ability to remarket  equipment at acceptable  rates may depend on the demand and
market  values at the time of  remarketing.  The  market  for used  aircraft  is
cyclical,  and generally,  but not always,  reflects economic conditions and the
strength of the travel and transportation  industry. The demand for and value of
many types of older  aircraft  in the  recent  past has been  depressed  by such
factors as airline financial  difficulties,  increased fuel costs, the number of
new  aircraft on order and the number of older  aircraft  coming off lease.  The
Company's  concentration  in a limited  number of airframe and  aircraft  engine
types (generally, turboprop equipment) subjects the Company to economic risks if
those airframe or engine types should decline in value. The recent  introduction
of "regional jets" to serve on short routes previously  thought to be economical
only for turboprop  aircraft  operation  could decrease the demand for turboprop
aircraft,  while at the same  increasing the supply of used turboprop  aircraft.
This could  result in lower lease rates and values for the  Company's  turboprop
aircraft.

Risks Related to Regional Air Carriers. Because the Company has concentrated its
existing  leases on leases to  regional  air  carriers,  it will be  subject  to
certain  risks.  First,  lessees in the  regional air carrier  market  include a
number of companies that are start-up,  low capital,  and low margin operations.
Often,  the success of such carriers is dependent upon  arrangements  with major
trunk  carriers,  which may be subject to  termination or  cancellation  by such
major carrier. This market segment is also characterized by low entry costs, and
thus,  there is strong  competition  in this industry  segment from start-ups as
well as major airlines.  Thus, leasing  transactions with these types of lessees
results in a generally higher lease rate on aircraft, but may entail higher risk
of default or lessee bankruptcy.

Ownership Risks. The Company's portfolio is leased under operating leases, where
the terms of the leases do not take up the entire  useful life of an asset.  The
Company's  ability to recover its purchase  investment in an asset subject to an
operating lease is dependent upon the Company's  ability to profitably  re-lease
or sell the asset after the  expiration of the initial  lease term.  Some of the
factors that have an impact on the Company's ability to re-lease or sell include
worldwide economic  conditions,  general aircraft market conditions,  regulatory
changes  that may make an asset's use more  expensive or preclude use unless the
asset is  modified,  changes in the  supply or cost of  aircraft  equipment  and
technological  developments  which  cause  the  asset  to  become  obsolete.  In
addition,  a successful  investment  in an asset  subject to an operating  lease
depends in part upon  having  the asset  returned  by the lessee in  serviceable
condition as required under the lease.  If the Company is unable to remarket its
aircraft  equipment  on  favorable  terms  when  the  operating  lease  for such
equipment  expires,  the Company's  business,  financial  condition,  cash flow,
ability to service debt and results of operation could be adversely affected.

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

International  Risks. The Company's  portfolio currently includes a lease with a
foreign air carrier.  Leases with foreign lessees may present somewhat different
credit risks than those with domestic lessees.

Foreign laws, regulations and judicial procedures may be more or less protective
of lessor  rights as those which apply in the United  States.  The Company could
experience   collection  problems  related  to  the  enforcement  of  its  lease
agreements  under foreign local laws and the remedies in foreign  jurisdictions.
The protections potentially offered by Section 1110 of the Bankruptcy Code would
not apply to non-U.S.  carriers,  and applicable local law may not offer similar
protections.  Certain countries do not have a central  registration or recording
system with which to locally  establish the Company's  interest in equipment and
related leases. This could add difficulty in recovering an aircraft in the event
that a foreign lessee defaults.

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

Competition.  The Company has many competitors in the aircraft leasing industry,
including leasing companies, banks and other financial institutions and aircraft
leasing  partnerships.  The market is highly competitive.  Most of the Company's
competitors have  substantially  greater  financial and other resources than the
Company.

Casualties,   Insurance  Coverage.  The  Company,  as  owner  of  transportation
equipment, could be held liable for injuries or damage to property caused by its
assets. Though some protection may be provided by the United States Aviation Act
with  respect  to its  aircraft  assets,  it is not  clear to what  extent  such
statutory  protection  would be  available  to the  Company and such act may not
apply to aircraft  operated in foreign  countries.  Though the Company may carry
insurance or require a lessee to insure  against a risk,  some risks of loss may
not be insurable.  An uninsured loss with respect to the Equipment or an insured
loss, for which insurance  proceeds are  inadequate,  would result in a possible
loss of invested capital in and any profits anticipated from such equipment.

Reliance on JMC. All management of the Company is performed by JMC pursuant to a
management  agreement between JMC and the Company.  The Board of Directors does,
however,  have ultimate control and supervisory  responsibility over all aspects
of  the  Company  and  does  owe  fiduciary   duties  to  the  Company  and  its
stockholders.  In addition,  while JMC may not owe any  fiduciary  duties to the
Company by virtue of the management  agreement,  the officers of the Company are
also officers or employees of JMC, and in that capacity owe fiduciary  duties to
the Company and the stockholders by virtue of holding such offices. Although the
Company has taken steps to prevent such  conflicts,  such  conflicts of interest
arising from such dual roles may still occur.

Item 7.  Financial Statements.

(a)               Financial Statements and Schedules

         (1)      Financial statements for AeroCentury IV, Inc.:

                           Report of Independent Auditors,  Vocker Kristofferson
                           and  Co.
                           Balance  Sheet  as  of  December  31, 2000
                           Statements of Operations for the Years Ended
                              December 31, 2000 and 1999
                           Statements   of   Changes  in
                           Shareholder's Deficit for the Years Ended
                              December 31, 2000 and 1999
                           Statements of Cash Flows for the Years Ended
                              December 31, 2000 and 1999
                           Notes to Financial Statements

         (2)      Schedules:

                           All schedules  have been  omitted  since the required
                            information is presented in the financial statements
                            or is not applicable.

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Stockholders of AeroCentury IV, Inc.


We have  audited  the  accompanying  balance  sheet  of  AeroCentury  IV,  Inc.,
California  corporation,  as of December 31, 2000 and the related  statements of
operations,  shareholder's  deficit and cash flows for the years ended  December
31,  2000  and  December  31,  1999.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audits 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.  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  AeroCentury  IV, Inc.,  at
December 31, 2000 and the related statements of operations, shareholder's equity
and cash flows for the years ended  December  31, 2000 and 1999,  in  conformity
with accounting principles generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will continue as a going concern. As shown in the financial  statements,
the Company  incurred a net loss of $1,751,770  for the year ended  December 31,
2000, and, as of that date, the Company's total  liabilities  exceeded its total
assets  by  $1,940,950.  As  described  more  fully  in Note 8 to the  financial
statements,  the Company may not have  sufficient cash balances to fund required
interest  payments due during the year ended December 31, 2001. These conditions
raise  substantial  doubt  about the  Company's  ability to  continue as a going
concern.  These financial  statements do not include any adjustments  that might
result from the outcome of this uncertainty.



VOCKER KRISTOFFERSON AND CO.



March 22, 2001
San Mateo, California


<PAGE>

                               AEROCENTURY IV, INC.
                                  Balance Sheet
                                December 31, 2000

<TABLE>

                                     ASSETS
<S>                                                                        <C>

Current assets:
     Cash                                                                  $   1,193,140
     Deposits                                                                     91,440
     Rent receivable                                                              48,040
     Accounts receivable                                                         194,900
                                                                           -------------
Total current assets                                                           1,527,520

Aircraft and aircraft engines under operating leases,
     net of accumulated depreciation of $460,640                               1,490,010
Debt issue costs, net of accumulated
     amortization of $257,670                                                    331,850
Other assets                                                                       6,320
                                                                           -------------

Total assets                                                               $   3,355,700
                                                                           =============


                      LIABILITIES AND SHAREHOLDER'S DEFICIT

Current liabilities:
     Accounts payable                                                      $      13,740
     Payable to affiliate                                                         38,920
     Interest payable                                                             81,150
     Prepaid rent                                                                  7,500
     Security deposits                                                            20,000
     Maintenance deposits                                                        266,340
                                                                           -------------
Total current liabilities                                                        427,650
                                                                           -------------

Medium-term secured notes                                                      4,869,000
                                                                           -------------

Total liabilities                                                              5,296,650
                                                                           -------------

Preferred stock, no par value, 100,000 shares authorized,
     no shares issued and outstanding                                                  -
Common stock, no par value, 500,000 shares authorized,
     243,420 shares issued and outstanding                                       243,420
Accumulated deficit                                                           (2,184,370)
                                                                           -------------
Total shareholder's deficit                                                   (1,940,950)
                                                                           -------------

Total liabilities and shareholder's deficit                                $   3,355,700
                                                                           =============

</TABLE>

See  accompanying   summary  of  accounting  policies  and  notes  to  financial
statements.


<PAGE>

                              AEROCENTURY IV, INC.
                            Statements of Operations

<TABLE>
<CAPTION>

                                                                     For the year ended December 31,
<S>                                                                <C>                  <C>

                                                                       2000                  1999
                                                                       ----                  ----
Revenues:

     Rent income                                                  $      503,310        $     700,620
     Gain on sale of aircraft                                              8,120                    -
     Interest income                                                      21,830               28,500
                                                                  --------------        -------------

                                                                         533,260              729,120
                                                                  --------------        -------------

Expenses:

     Depreciation                                                        236,890              249,470
     Amortization                                                         76,580               76,580
     Maintenance                                                          72,500               88,470
     Interest                                                            486,900              486,900
     Management fees                                                      97,380               97,380
     Professional fees and general and administrative                     68,260               81,170
     Provision for impairment in value of aircraft                     1,021,000                    -
                                                                  --------------        -------------

                                                                       2,059,510            1,079,970
                                                                  --------------        -------------

Loss before taxes                                                     (1,526,250)            (350,850)

Tax provision/(benefit)                                                  225,520             (223,930)
                                                                  --------------        -------------

Net loss                                                          $   (1,751,770)        $   (126,920)
                                                                  ==============        =============

Weighted average common shares outstanding                               243,420              243,420
                                                                  ==============        =============

Basic loss per common share                                       $        (7.20)        $      (0.76)
                                                                  ==============        =============

</TABLE>

See  accompanying   summary  of  accounting  policies  and  notes  to  financial
statements.


<PAGE>

                              AEROCENTURY IV, INC.
                       Statements of Shareholder's Deficit
                 For the years ended December 31, 2000 and 1999

<TABLE>
<S>                                              <C>              <C>               <C>

                                                                                        Total
                                                    Common          Accumulated     Shareholder's
                                                     Stock            Deficit          Deficit

Balance, December 31, 1998                       $     243,420    $    (305,680)    $    (62,260)

Net loss for the period                                      -         (126,920)        (126,920)
                                                 -------------    --------------    -------------

Balance, December 31, 1999                             243,420         (432,600)        (189,180)

Net loss for the period                                              (1,751,770)      (1,751,770)
                                                 -------------    --------------    -------------

Balance, December 31, 2000                       $     243,420      $(2,184,370)     $(1,940,950)
                                                 =============      ============    =============

</TABLE>

See  accompanying   summary  of  accounting  policies  and  notes  to  financial
statements.


<PAGE>

                              AEROCENTURY IV, INC.
                            Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                     For the year ended December 31,
<S>                                                               <C>                   <C>
                                                                       2000                  1999
                                                                       ----                  ----
Operating activities:
     Net loss                                                     $   (1,751,770)       $    (126,920)
     Adjustments to reconcile net loss to
       net cash provided by operating activities:
         Depreciation                                                    236,890              249,470
         Amortization                                                     76,580               76,580
         Provision for impairment in value of aircraft                 1,021,000                    -
         Receivable from affiliates-deferred taxes                       231,980            (231,980)
         Deferred taxes                                                   (7,270)               7,270
         Change in operating assets and liabilities:
           Deposits                                                      (28,440)             (48,390)
           Rent receivable                                                19,640              (13,420)
           Accounts receivable                                           (43,850)            (144,640)
           Other assets                                                    7,850              (14,170)
           Accounts payable                                              (89,080)              91,820
           Payable to affiliate                                           38,920                    -
           Prepaid rent                                                  (25,660)              33,160
           Security deposits                                             (20,200)              40,200
           Maintenance deposits                                          123,290              122,030
                                                                  --------------        -------------
Net cash (used)/provided by operating activities                        (218,240)              41,010
                                                                  --------------        -------------

Investing activities:
     Proceeds from disposal of assets                                  1,072,420                    -
     Purchase of interests in aircraft                                   (30,370)            (659,940)
                                                                  --------------        -------------
Net cash provided/(used) in investing activities                       1,042,050             (659,940)
                                                                  --------------        ------------

Net increase/(decrease) in cash                                          823,810             (618,930)

Cash, beginning of period                                                369,330              988,260
                                                                  --------------        -------------

Cash, end of period                                               $    1,193,140        $     369,330
                                                                  ==============        =============

Supplemental  disclosures of cash flow information:  Cash paid during the period
for:
                                                                            2000                 1999
                                                                            ----                 ----
     Interest (net of amount capitalized)                         $      486,900        $     486,900
     Income taxes                                                            800                  800

</TABLE>


See  accompanying   summary  of  accounting  policies  and  notes  to  financial
statements.


<PAGE>

                               AEROCENTURY IV, INC.
                          Notes to Financial Statements

1.       Summary of Significant Accounting Policies

         Basis of Presentation

         AeroCentury IV, Inc. (the  "Company") was  incorporated in the state of
California on February 7, 1997 ("Inception").  The Company was formed solely for
the purpose of acquiring  Income  Producing  Assets.  The Company  offered up to
$10,000,000 in $1,000 Secured  Promissory  Notes maturing on April 30, 2005 (the
"Notes") pursuant to a prospectus dated May 21, 1997 (the "Prospectus").

         All of the  Company's  outstanding  common  stock is owned by  JetFleet
Holding Corp.  ("JHC"), a California  corporation formed in January 1994. In May
1998, JetFleet Management Corp., the sole shareholder of the Company was renamed
JetFleet Holding Corp. The rights and obligations under the management agreement
between the Company and JHC were assigned by JHC to a newly-created wholly-owned
subsidiary  named  "JetFleet   Management  Corp."  ("JMC").   JMC  also  manages
AeroCentury  Corp.  ("ACY"),  a  Delaware  corporation,   and  JetFleet  III,  a
California  corporation,  which are affiliates of JHC and which have  objectives
similar to the Company's.  Neal D. Crispin, the President of the Company,  holds
the same position  with JHC and JMC and owns a significant  amount of the common
stock of JHC.

         Cash and Cash Equivalents/Deposits

         The Company  considers highly liquid  investments  readily  convertible
into known amounts of cash, with original maturities of 90 days or less, as cash
equivalents.  Deposits  represent  cash  balances  held  related to  maintenance
reserves and security deposits and are subject to withdrawal restrictions. As of
December 31, 2000, the Company  maintained  $1,268,420 of its cash balances in a
money  market fund held by a regional  brokerage  firm,  which is not  federally
insured.

         Aircraft and Aircraft Engines Under Operating Leases

         The  Company's  interests in aircraft are recorded at the lower of cost
or market value, which include  acquisition costs (see Note 2).  Depreciation is
computed using the straight-line  method over each aircraft's estimated economic
life to its estimated residual value.

         Impairment of Long-lived Assets

         In  accordance  with SFAS No. 121,  "Accounting  for the  Impairment of
Long-lived  Assets and Long-lived Assets to Be Disposed Of," assets are reviewed
for impairment  whenever  events or changes in  circumstances  indicate that the
book value of the asset may not be  recoverable.  At each year-end,  the Company
reviews  its  long-lived   assets  for  impairment  based  on  estimated  future
non-discounted cash flows attributable to the assets or appraisals. In the event
such cash flows are not expected to be sufficient to recover the recorded  value
of the assets, the assets are written down to their estimated realizable value.

         Debt Issue Costs

         Pursuant  to  the  terms  of  the  Prospectus,   the  Company  paid  an
Organization and Offering  Expense  Reimbursement to JHC in cash in an amount up
to 2.0% of Aggregate Gross Offering  Proceeds for reimbursement of certain costs
incurred in  connection  with the  organization  of the Company and the Offering
(the "Reimbursement").


<PAGE>

                                AEROCENTURY IV, INC.
                          Notes to Financial Statements

1.       Summary of Significant Accounting Policies (continued)

         Debt Issue Costs (continued)

         To the extent  that JHC  incurred  expenses  in excess of the 2.0% cash
limit,  such  excess  expenses  were  repaid to JHC in the form of Common  Stock
issued by the Company at a price of $1.00 per share (the  "Excess  Stock").  The
amount of Excess  Stock that the Company can issue was limited  according to the
amount of Aggregate Gross Offering  Proceeds raised by the Company.  The Company
capitalized the Reimbursement paid and amortizes such costs over the life of the
Notes (approximately eight years).

         Assets Subject to Lien

         The  Company's  obligations  under the Notes are  secured by a security
interest  in all of the  Company's  right,  title  and  interest  in the  Income
Producing Assets acquired by the Company.

         Income Taxes

         The Company follows the liability method of accounting for income taxes
as required by the provisions of Statement of Financial Accounting Standards No.
109 - Accounting for Income Taxes.

         Use of Estimates

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect certain  reported amounts and disclosures.  Accordingly,
actual results could differ from those estimates.

         Recent Accounting Pronouncements

         SFAS No.  137,  which  amended  the  effective  date of SFAS  No.  133,
Accounting for Derivative Instruments and Hedging Activities, was issued in June
1999.  The  Company  adopted  SFAS No. 133 on January  1, 2001.  This  statement
establishes  accounting  and reporting  standards  requiring that all derivative
instruments are recorded on the balance sheet as either an asset or a liability,
measured at fair value. The statement  requires that changes in the derivative's
fair value be recognized  currently in earnings unless specific hedge accounting
criteria are met and such hedge  accounting  treatment  is elected.  Because the
Company does not hold any  derivatives  as defined in SFAS No. 133, the adoption
of SFAS No. 133 did not have a material  impact on its results of  operations or
financial position.

          In December  1999,  the  Securities  and Exchange  Commission  ("SEC")
issued Staff  Accounting  Bulletin  No. 101,  Revenue  Recognition  in Financial
Statements  ("SAB 101").  SAB 101, as amended,  summarizes  certain of the SEC's
views  in  applying   generally  accepted   accounting   principles  to  revenue
recognition in financial statements. SAB 101 was adopted by the Company in 2000.
The adoption of the provisions of SAB 101 did not have a material  effect on the
Company's  consolidated  operating  results,  statement of financial position or
cash flow.

2.       Aircraft and Aircraft Engines Under Operating Leases

         Aircraft and Aircraft Engines

         At December 31, 2000, the Company owned a Fairchild Metro III aircraft,
serial number AC-647 ("S/N AC-647"),  a Pratt & Whitney JT8D-9A aircraft engine,
serial number 674452B (the "Engine"),  and a 50% undivided  interest in a Shorts
SD-360,  serial number S/N 3676 ("S/N 3676").  During 2000, the Company sold its
Shorts


<PAGE>

                               AEROCENTURY IV, INC.
                          Notes to Financial Statements

2.       Aircraft and Aircraft Engines Under Operating Leases (continued)

         Aircraft and Aircraft Engines (continued)

SD3-60-100,  serial number S/N 3606 ("S/N 3606"), and its 67% undivided interest
in a deHavilland DHC-6, serial number S/N 668 ("S/N 668"). S/N 3676 was returned
to the Company during the fourth quarter and, in January 2001, it was also sold.
The Company did not  purchase  any  aircraft  during  2000,  but did  capitalize
$30,370  of  equipment  added to S/N 668.  During  December  2000,  the  Company
recorded as expense $302,410 to reflect a reduction in the carrying value of S/N
AC-647 and the Engine, based on an appraisal of the assets.

         Aircraft and Aircraft Engines Leases

         When S/N  AC-647 was  acquired,  it was  subject  to a 36-month  lease,
expiring in April 2001,  with a regional  carrier in Uruguay.  During June 1999,
however,  management  repossessed  the aircraft due to  non-payment  of rent. In
connection  with  the   repossession,   the  Company  recorded  a  write-off  of
approximately  $4,300, which represented rent receivable in excess of the letter
of credit held by the Company,  which the Company  collected during August 1999.
In June 2000,  S/N AC-647 was re-leased to a U.S.  carrier for a two-year  term,
expiring in June 2002.

         The Engine is used on a McDonnell  Douglas DC-9 aircraft and is subject
to a 60-month  lease with the seller,  expiring in November  2002. The Engine is
subleased by the seller to a Mexican-based regional carrier.

         At the time of purchase,  S/N 3606 and S/N 3676 were subject to similar
48-month  leases,  expiring in July 2001, with a British regional  airline.  The
original  lease,  entered  into in 1997,  did not  require  that the  lessee pay
maintenance  reserves  based on usage  because,  at the  time,  the  lessee  was
considered  creditworthy.   Subsequently,   the  airline  experienced  financial
difficulties and, on February 24, 2000, filed for reorganization.

         The lessee has  continued  to operate,  and,  under the  reorganization
plan,  the lessee  continued to lease S/N 3676,  in which the Company owns a 50%
interest,  on a  month-to-month  basis at the same  rent as under  the  original
lease.  The lessee also began paying monthly  maintenance  reserves based on the
hours flown.  Under British law, the owners were precluded from repossessing the
aircraft  so long as the  lessee  was  operating  it and  agreed to pay rent and
maintenance  reserves under its  reorganization  plan.  The lessee  notified the
owners that the  aircraft  would be returned to them during the fourth  quarter.
The owners  agreed  that they would  realize a greater  benefit if they sold the
aircraft "as is" rather than fund the  maintenance  work necessary to return the
aircraft to a condition  which would allow it to possibly be  re-leased to a new
lessee.  Therefore,  the Company  reduced the carrying  value of the aircraft to
$170,000 and recognized a provision for  impairment  estimated to be $245,350 at
during 2000.  The aircraft was returned to the Company during the fourth quarter
and, in January 2001 it was sold. The Company  received net proceeds of $167,450
and recognized a gain of $35,980 (See also Note 7, Subsequent Events.)

         The same British  regional  airline was lessee of S/N 3606 and operated
it  through  April 24,  2000 at the same rent.  The  aircraft  was  subsequently
returned to the Company.  In order to bring the aircraft to a condition required
to  lease it to a new  lessee,  the  Company  would  have  had to spend  more on
maintenance  than it could afford.  The Company decided to sell the aircraft "as
is", which sale was completed in October 2000.  Therefore,  the Company  reduced
the carrying  value of the aircraft from $873,200 to $400,000,  the sales price,
and recognized a provision for impairment of $473,200 at September 30, 2000. The
Company  recognized a gain of $45,940 related to the reserves collected from the
lessee which were not included in the sale of the aircraft.

         S/N 668, in which the  Company  owns a 67%  interest,  was subject to a
60-month  lease,  expiring in July 2004,  with a regional  carrier in  Colombia.
During the third quarter of 2000, due to non-payment of rent and reserves by the
lessee, the Company notified the lessee of its intent to repossess the aircraft.
At the same time, the Company recorded a write-off of $93,120 of rent receivable
which  amount was net of the security  deposit held by the Company,  and reduced
its reserves  receivable  and related  liability  by $122,600.  The Company also
accrued $134,000


<PAGE>

                               AEROCENTURY IV, INC.
                          Notes to Financial Statements

2.       Aircraft and Aircraft Engines Under Operating Leases (continued)

         Aircraft and Aircraft Engines Leases (continued)

of  estimated  maintenance  to be  performed  on S/N 668 related to usage by the
lessee. During November, the owners repossessed S/N 668. In December, the owners
sold the  aircraft  "as is".  The Company  received net proceeds of $610,450 and
recognized  a loss of  $37,820.  Because  the  aircraft  was sold  "as  is",  no
incremental maintenance work was performed and the Company reversed the $134,000
accrual for such work.

         Detail of Investment

         The following schedule provides an analysis of the Company's investment
in aircraft under operating leases and the related accumulated  depreciation for
the years ended December 31, 2000 and 1999:

<TABLE>
<S>                                     <C>              <C>               <C>               <C>

                                                           Accumulated      Allowance for
                                              Cost        Depreciation       Impairment           Net

Balance, December 31, 1998              $   3,613,520     $   (242,160)    $           -     $   3,371,360

Additions                                     659,940         (249,470)                -           410,470
                                        -------------     -------------    -------------     -------------

Balance, December 31, 1999                  4,273,460         (491,630)                -         3,781,830

Additions                                      30,370         (236,890)       (1,021,000)       (1,227,520)

Disposals                                  (1,332,180)         267,880                 -        (1,064,300)
                                        -------------     -------------    -------------     -------------

Balance, December 31, 2000              $   2,971,650     $   (460,640)    $  (1,021,000)     $  1,490,010
                                        =============     =============    =============     =============
</TABLE>

3.       Operating Segments

         The Company operates in one business  segment,  aircraft  leasing,  and
therefore does not present separate segment information for lines of business.

         Approximately 13% and 40% of the Company's  operating lease revenue was
derived  from  lessees  domiciled  in the United  States  during  2000 and 1999,
respectively.   All  leases   relating   to   aircraft   leased   and   operated
internationally are denominated and payable in U.S. dollars.

         The table below sets forth geographic  information  about the Company's
operating leased aircraft equipment grouped by domicile of the lessee:

<TABLE>
<CAPTION>

                                        Operating Lease Revenue            Net Book Value of Operating Leased Assets
                                    For the Year Ended December 31,                      December 31,
<S>      <C>                        <C>              <C>                        <C>              <C>

         Country                         2000              1999                     2000              1999
         -------                         ----              ----                     ----              ----

         United Kingdom             $     185,270    $     386,640              $     170,010    $   1,392,190
         Mexico                           180,000          180,000                    620,000          793,220
         Colombia                          73,040           86,680                          -          651,020
         Other                             65,000           47,300                    700,000          945,400
                                    -------------    -------------              -------------    -------------
                                    $     503,310    $     700,620              $   1,490,010    $   3,781,830
                                    =============    =============              =============    =============
</TABLE>

<PAGE>

                               AEROCENTURY IV, INC.
                          Notes to Financial Statements

3.       Operating Segments (continued)

         During the year ended December 31, 2000, the Company had four customers
which accounted for 37%, 36%, 14% and 13%, respectively of lease revenue. During
the year ended December 31, 1999, the Company had three  significant  customers,
which accounted for 55%, 26% and 12%, respectively of lease revenue.

         As of December 31, 2000, minimum future lease rent payments  receivable
under noncancelable leases were as follows:
                  Year                   Amount

                  2001              $     300,000
                  2002                    192,500
                                    -------------

                                    $     492,500
                                    =============

4.       Medium-Term Secured Notes

         As mentioned  above, the Company raised funds through the Offering from
May 1997 to August 1997.  During 1997, the Company  accepted  subscriptions  for
4,869 Notes aggregating  $4,869,000 in Gross Offering Proceeds.  Pursuant to the
Prospectus,  the Company  subsequently  issued $4,869,000 in Notes due April 30,
2005.  The Notes bear  interest  at an annual  rate of 10.00%,  which is due and
payable on a quarterly basis, in arrears, on the first business day of February,
May,  August and November.  As described in Note 8 to the financial  statements,
there is  substantial  doubt as to the Company's  ability to continue as a going
concern. Therefore, the fair value of the Notes is estimated to be approximately
$2,590,000,  which is $2,279,000 less than the carrying value. The fair value of
the notes payable is estimated  based upon the appraised  values of the aircraft
and the current working capital of the Company.

5.       Income Taxes

         The items comprising income tax expense are as follows:

<TABLE>
<S>                                                                                 <C>              <C>
                                                                                             2000              1999
                                                                                             ----              ----
         Current tax provision
              Federal                                                               $           -    $            -
              State                                                                           800               800
                                                                                    -------------    --------------
              Current tax provision                                                           800               800
                                                                                    -------------    --------------

         Deferred tax provision
              Federal                                                                     (61,840)         (119,830)
              State                                                                           780            16,870
                                                                                    -------------    --------------
              Deferred tax provision                                                      (61,060)         (102,960)
              Valuation allowance                                                         285,780          (121,770)
                                                                                    -------------    --------------
         Total provision for income taxes                                           $    (225,520)    $    (223,930)
                                                                                    =============    ==============
</TABLE>


<PAGE>

                               AEROCENTURY IV, INC.
                          Notes to Financial Statements

5.       Income Taxes (continued)

         Total  income  tax  expense  differs  from the  amount  which  would be
provided by applying the statutory federal income tax rate to pretax earnings as
illustrated below:

<TABLE>
<S>                                                                                 <C>              <C>
                                                                                             2000              1999
                                                                                             ----              ----

         Income tax expense at statutory federal income tax rate                    $    (475,700)    $    (119,290)
         State taxes net of federal benefit                                                  (290)             (510)
         Basis differences                                                                 21,370                 -
         Tax rate differences                                                                   -            17,370
         State franchise taxes                                                                  -               270
         Inter-company tax expense                                                        394,360                 -
         Change in valuation allowance                                                    285,780          (121,770)
                                                                                    -------------    --------------
         Total provision for income taxes                                           $     225,520    $     (223,930)
                                                                                    =============    ==============

</TABLE>

         Temporary   differences  and  carryforwards,   which  gave  rise  to  a
significant  portion of deferred tax assets and  liabilities  as of December 31,
2000 are as follows:

<TABLE>
<S>                                                                                 <C>

         Deferred tax assets:
              Depreciation of aircraft                                              $     135,410
              Maintenance deposits                                                         49,790
              Net operating losses                                                         97,920
              Other                                                                         2,820
                                                                                    -------------
                                                                                          258,940
                  Valuation allowance                                                    (285,780)
                                                                                    -------------
                  Net deferred tax assets                                                     160
         Deferred tax liability-
              Amortization of organizational costs                                           (160)
                                                                                    -------------

                                                                                    $           -
                                                                                    =============
</TABLE>


         The Company does not  anticipate  generating  adequate  future  taxable
income to realize  the  benefits  of the  remaining  deferred  tax assets on the
balance sheet. Therefore, the Company has recognized a valuation allowance equal
to the net deferred tax asset.

         As discussed in Note 1, the Company is a subsidiary of JHC. JHC files a
consolidated   tax  return  that  includes  the  Company  as  a  member  of  the
consolidated group. The current and deferred taxes of the consolidated group are
allocated  to  members  of  the  group  in  their  separately  issued  financial
statements.  Current and deferred  income taxes are  allocated to members of the
group by applying FAS 109 as if it were a separate  taxpayer.  In addition,  the
members of the group record  inter-company  receivables  and payables to reflect
the tax benefits of net operating  losses used in the  consolidated  tax return.
However,  under the terms of the tax sharing  arrangement  with other members of
the consolidated group, the Company does not expect its inter-company receivable
to be collected  because it does not expect to generate  adequate future taxable
income.  The Company's  current net operating  losses of $287,820 may be carried
forward for twenty years and begin to expire in 2020.


<PAGE>

                               AEROCENTURY IV, INC.
                          Notes to Financial Statements

6.       Related Party Transactions

         The  Company's   Income   Producing  Asset  portfolio  is  managed  and
administered  under the terms of a  management  agreement  with JMC.  Under this
agreement,  on the last day of each calendar  quarter,  JMC receives a quarterly
management fee equal to 0.5% of the Company's  Aggregate Gross Proceeds received
through the last day of such quarter.  In 2000 and 1999,  the Company  accrued a
total of $97,380 and $97,380, respectively, in management fees due JMC.

         JMC may receive an acquisition  fee for locating assets for the Company
and a  remarketing  fee in  connection  with the sale of the  Company's  assets,
provided  that  such fees are not more than the  customary  and usual  fees that
would be paid to an unaffiliated party for such a transaction.  The total of the
Aggregate  Purchase Price plus the acquisition fee cannot exceed the fair market
value of the asset based on  appraisal.  JMC may also receive  reimbursement  of
Chargeable  Acquisition Expenses incurred in connection with a transaction which
are payable to third parties. During 2000, no acquisition fees or reimbursements
for  Chargeable  Acquisition  Expenses  were paid as the Company did not acquire
additional  assets.  During  1999,  the  Company  paid JMC a total of $36,280 in
acquisition  fees and  reimbursed  JMC for  $6,620  for  Chargeable  Acquisition
Expenses.  During  2000,  remarketing  fees of  $9,290  were  accrued  to JMC in
connection with the sale of aircraft. No remarketing fees were paid during 1999.

         As discussed in Note 1, the Company  reimbursed  JHC for certain  costs
incurred in connection  with the  organization  of the Company and the Offering.
The Company made no such payments during 2000 and 1999.

7.       Subsequent Events

         S/N 3676 was returned to the Company  during the fourth quarter and, in
January  2001 it was sold.  The Company  received  net  proceeds of $167,450 and
recognized  a gain of $35,980.  The Company had filed  claims for  approximately
$1,069,000of  unfunded,  pre-reorganization  maintenance  expense related to S/N
3606 and S/N 3676.  On February  13,  2001,  a majority of the  creditors of the
lessee approved a reorganization  plan, which provided that unsecured creditors,
like the Company, would not receive any recovery of pre-reorganization claims.

8.       Going Concern

         As shown in the accompanying financial statements, the Company incurred
a net loss of ($1,751,770)  for the year ended December 31, 2000, and as of that
date, the Company's total  liabilities  exceeded its total assets by $1,940,950.
In addition,  although the Company has recently sold several  aircraft,  it does
not believe that it has  sufficient  total  proceeds to invest in another income
producing  asset and,  therefore,  as  provided  under the Trust  Indenture,  it
anticipates turning over those proceeds to the Trustee.  Further,  the Company's
cash flow  projections  show that it will not have  sufficient  cash balances to
fund the required interest payment of approximately  $122,000 on August 1, 2001.
The Company has informed the Trustee that it will be unable to make such payment
and that it will,  therefore,  be in default  under the Trust  Indenture at that
time. Under the Trust Indenture, the Trustee would then have the right to manage
the Company's  assets,  all of which are  collateral  for the notes  obligation.
Management of the Company's assets and  extinguishment  of its liabilities would
then become the responsibility of the Trustee.

         These  factors  create a  substantial  uncertainty  about the Company's
ability to continue as a going concern.  The financial statements do not include
any adjustments  that might be necessary if the Company is unable to continue as
a going concern.

<PAGE>


Item 8.           Changes in and Disagreements With Accountants
                  on Accounting and Financial Disclosure.

None.


                                    PART III

Item 9.           Directors, Executive Officers, Promoters and Control Persons;
                  Compliance With Section 16(a) of the Exchange Act.

General

Pursuant  to a  Management  Agreement  between  the  Company  and  JMC,  JMC  is
responsible for most management  decisions,  has  responsibility for supervising
the  Company's  day-to-day  operations,  including  compliance  with  legal  and
regulatory   requirements,   and  is   responsible   for  cash   management  and
communications  between the Company  and the  holders of Notes.  The  Management
Agreement  authorizes JMC, in its sole  discretion,  to acquire,  hold title to,
sell,  lease,  re-lease or otherwise  dispose of Income  Producing Assets or any
interest  therein,  on behalf  of the  Company  when and upon such  terms as JMC
determines  to be in the best  interests  of the  Company,  subject  to  certain
limitations set forth in the Prospectus.

Directors and Officers

The directors, executive officers and key employees of the Company and JMC, each
of whom serves until his successor is elected and qualified, are as follows:

     Name                                   Position Held

Neal D. Crispin          President, Chairman of the Board of Directors and Chief
                         Financial Officer of the Company

Marc J. Anderson         Senior Vice President of the Company

Neal D. Crispin,  age 55. Mr.  Crispin is Chairman of the Board of Directors and
President of the Company.  He is also  President and a Director of ACY, JHC, JMC
and CMA Consolidated,  Inc.  ("CMA").  Prior to forming CMA in 1983, Mr. Crispin
was vice  president-finance of an oil and gas company.  Previously,  Mr. Crispin
was a manager with Arthur Young & Co., Certified Public Accountants. Mr. Crispin
is the husband of Toni M. Perazzo,  a Director and Officer of JHC, JMC, and ACY.
He received a Bachelors degree in Economics from the University of California at
Santa Barbara and a Masters degree in Business  Administration  (specializing in
Finance) from the University of California at Berkeley. Mr. Crispin, a certified
public  accountant,  is a member of the American  Institute of Certified  Public
Accountants and the California Society of Certified Public Accountants.

Marc J. Anderson,  age 64. Mr.  Anderson is the Company's  Senior Vice President
and is also Senior  Vice  President  of JHC,  JMC and ACY and a Director of ACY.
Prior to joining JMC in 1994, Mr. Anderson was an aviation  consultant  (1992 to
1994)  and  prior to that  spent  seven  years  (1985 to  1992) as  Senior  Vice
President-Marketing  for PLM International,  a transportation  equipment leasing
company.  He was  responsible  for the  acquisition,  modification,  leasing and
remarketing   of  all   aircraft.   Prior  to  PLM,  Mr.   Anderson   served  as
Director-Contracts  for Fairchild Aircraft Corp., Director of Aircraft Sales for
Fairchild SAAB Joint Venture, and Vice President,  Contracts for SHORTS Aircraft
USA,  Inc.  Prior to that,  Mr.  Anderson  was  employed by several  airlines in
various roles of increasing responsibility beginning in 1959.

Item 10.          Executive Compensation.

The Company has no employees. The following is a summary of the compensation and
reimbursements  paid to the parent of the  Company  and  related  parties by the
Company for the years ended December 31, 2000 and 1999. Compensation

The Company's Income Producing Asset portfolio is managed and administered under
the terms of a management agreement with JMC. Under this agreement,  on the last
day of each calendar quarter,  JMC receives a quarterly  management fee equal to
0.50% of the Company's Aggregate Gross Proceeds received through the last day of
such quarter.  During 2000 and 1999, the Company  accrued a total of $97,380 and
$97,380, respectively, in management fees due JMC.

JMC may receive an  acquisition  fee for  locating  assets for the Company and a
remarketing  fee in connection with the sale of the Company's  assets,  provided
that such fees are not more than the customary and usual fees that would be paid
to an  unaffiliated  party for such a  transaction.  The total of the  Aggregate
Purchase Price plus the  acquisition  fee cannot exceed the fair market value of
the asset based on appraisal.  JMC may also receive  reimbursement of Chargeable
Acquisition Expenses incurred in connection with a transaction which are payable
to third  parties.  During 2000 and 1999, the Company paid JMC a total of $0 and
$36,280, respectively, in acquisition fees and reimbursed JMC for $0 and $6,620,
respectively,  for Chargeable  Acquisition  Expenses.  During 2000 and 1999, the
Company accrued JMC a total of $9,290 and $0 for remarketing fees.

The Company  reimburses  JHC for certain costs  incurred in connection  with the
organization of the Company and the Offering.  The Company made no such payments
during 2000 or 1999.

Item 11.         Security Ownership of Certain Beneficial Owners and Management.

No person is known to the Company to be the beneficial  owner of more than 5% of
the Units.  No officer or director  of JHC or JMC or any of its related  parties
beneficially owns any Units.

JHC owns 100% of the issued and  outstanding  common stock of the  Company.  Mr.
Crispin,  President of JHC, and Toni M. Perazzo, Vice  President-Finance of JHC,
collectively own the majority of the issued and outstanding common stock of JHC,
including shares owned by CMA Consolidated,  an affiliated company controlled by
Mr. Crispin.  Marc J. Anderson,  Senior Vice President of JMC owns approximately
1% of JHC's common stock.

Item 12.          Certain Relationships and Related Transactions.

See Item 10, above.

Item 13.          Exhibits and Reports on Form 8-K.

         (a)      Exhibits

                  None.

         (b)      Reports on Form 8-K Filed in Last Quarter

                  None.

<PAGE>

                                   SIGNATURES


Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities  Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on March 30, 2001.

                                            AEROCENTURY IV, INC.


                                        By: /s/ Neal D. Crispin
                                            -------------------------------
                                            Neal D. Crispin
                                            Title:  President

Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following  persons in the capacities  indicated on March 30,
2001.

Signature                                             Title

/s/ Neal D. Crispin                         President and Chairman of the
-------------------
Neal D. Crispin                             Board of Directors of the Registrant
                                            Chief Financial Officer