Mega Matrix (MPU) 8-K Aerocentury Corp. Reports Third Quarter Results

Toni Perazzo

Chief Financial Officer

(650) 340-1888                                                                                                                     FOR IMMEDIATE RELEASE

AEROCENTURY CORP. REPORTS THIRD QUARTER RESULTS

(BURLINGAME, CA), November 8, 2007 — AeroCentury Corp. (AMEX:ACY), an independent aircraft leasing company, today reported its operating results for the third quarter ended September 30, 2007. As discussed and shown in the tables below, comparative information for the third quarter of 2006 and first nine months of 2006 has been restated in connection with the Company’s adoption of Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”) and Financial Accounting Standard Board Staff Position AUG AIR-1, Accounting for Planned Major Maintenance Activities (“FSP AUG AIR-1”).

For the quarter ended September 30, 2007, the Company reported total revenues of $6.4 million compared with revenues of $4.6 million for the same period a year ago. For the nine months ended September 30, 2007, the Company reported total revenues of $16.4 million compared with revenues of $13.8 million for the same period a year ago.

The Company reported net income of $1,064,000 or $0.69 per basic share and $0.66 per diluted share for the third quarter of 2007 compared to net income of $308,000 or $0.20 per basic and diluted share for the third quarter of 2006. The Company reported net income of $2,501,000 or $1.62 per basic share and $1.58 per diluted share for the nine months ended September 30, 2007 compared to net income of $152,000 or $0.10 per basic and diluted share for the same period a year ago.

Operating lease revenue was approximately $1,304,000 and $2,128,000 higher in the three months and nine months ended September 30,2007, respectively, versus the same periods in 2006, primarily because of increased operating lease revenue from aircraft purchased in the fourth quarter of 2006 and first nine months of 2007 and lease modifications which involved rent increases for several of the Company’s aircraft.  In addition, in the three months ended September 30, 2007, the Company recorded revenue from several aircraft which had been off lease for part of the same period in 2006.  The aggregate effects of these increases were partially offset by a decrease in revenue related to aircraft which were off lease for part of the 2007 periods.

Total expenses were approximately $727,000 higher in the three months ended September 30, 2007, respectively, versus the same period in 2006, primarily because of increases in interest, depreciation and management fee expenses as a result of aircraft purchases, and other taxes. Those increases were partially offset by a decrease in the amount of maintenance expense.  The Company’s maintenance expense is dependent on the aggregate maintenance claims submitted by lessees and expenses incurred in connection with off-lease aircraft. As a result of lower total lessee claims and less expense incurred for off-lease aircraft in 2007, the Company incurred approximately $494,000 less in maintenance expense in the three months ended September 30, 2007, respectively, versus the same period in 2006.

Total expenses were approximately $711,000 less in the nine months ended September 30, 2007, respectively, versus the same period in 2006, primarily because of the change in maintenance expense from year to year. As a result of lower total lessee claims and less expense incurred for off-lease aircraft in 2007, the Company incurred approximately $2,305,000 less in maintenance expense in the nine months ended September 30, 2007, respectively, versus the same period in 2006.  The decrease in maintenance expense was partially offset by increases in interest, depreciation, and management fee expenses resulting from aircraft purchases, as well as increases in professional fees and general and administrative expenses and other taxes.

Due to the recent adoption of FSP AUG AIR-1, the Company was required to discontinue the accrue-in-advance method of accounting for planned major maintenance for financial reporting periods beginning on January 1, 2007. The Company has adopted the direct expensing method, under which actual costs incurred are expensed directly when maintenance is performed and the accrual of non-refundable maintenance reserves from the Company’s lessees for planned major maintenance is reflected as income. Because the net effect of recognizing income when maintenance reserves are billed and accruing maintenance expense as incurred within any given period will vary, it is likely that the new accounting method will result in uneven effects on the Company’s results of operations.

AeroCentury is an aircraft operating lessor and finance company specializing in leasing regional aircraft and engines utilizing triple net operating leases. The Company’s aircraft and engines are on lease to regional airlines and commercial users worldwide.

(See tables following.)

AeroCentury Corp.

Selected Financial Information

(Unaudited)

	For the Quarter Ended September 30,2007		For the Quarter Ended September 30,2006 (as restated)		For the Nine Months Ended September 30,2007		For the Nine Months Ended September 30, 2006 (as restated)
Summary of Operations:
Operating lease revenue	$	5,224,310	$	3,920,000	$	13,582,920	$	11,454,940
Maintenance reserves income		1,152,460		709,950		2,826,780		2,258,180
Gain on sale of aircraft		-		-		-		33,690
Other		11,540		9,510		20,020		4,200
Total revenues		6,388,310		4,639,460		16,429,720		13,751,010
Interest		1,724,080		1,271,750		4,369,860		3,687,380
Depreciation		1,492,960		1,172,770		3,986,030		3,487,970
Management fees		794,440		676,660		2,161,620		2,056,300
Maintenance		375,310		869,320		1,301,200		3,605,860
Other taxes		291,770		7,830		313,570		23,490
Professional fees and general and administrative		159,670		116,860		490,390		389,960
Insurance expense		57,610		53,760		133,050		183,000
Bad debt expense		-		-		15,690		48,820
Total expenses		4,895,840		4,168,950		12,771,410		13,482,780
Income before taxes		1,492,470		470,510		3,658,310		268,230
Tax provision		428,160		162,680		1,156,980		115,740
Net income	$	1,064,310	$	307,830	$	2,501,330	$	152,490
Weighted average common shares outstanding		1,543,257		1,543,257		1,543,257		1,543,257
Weighted average diluted common shares outstanding		1,618,674		1,543,257		1,588,082	$	1,543,257
Basic earnings per share	$	0.69	$	0.20	$	1.62	$	0.10
Diluted earnings per share	$	0.66	$	0.20	$	1.58	$	0.10

Summary Balance Sheet:	September 30, 2007		September 30,2006 (as restated)
Total assets	$	119,682,940	$	92,891,780
Total liabilities	$	89,224,820	$	67,153,820
Shareholders’ equity	$	30,458,120	$	25,737,960

(more)

Effect of SAB 108 on

Statement of Operations

For the three months and nine months ended September 30, 2006

(Unaudited)

	For the Three Months Ended September 30, 2006							For the Nine Months Ended September 30, 2006
	As reported previously		As adjusted under SAB 108		Increase/ (decrease) effect of change			As reported previously		As adjusted under SAB 108		Increase/ (decrease) effect of change
Operating lease revenue	$	3,920,000	$	3,920,000	$	-		$	11,454,940	$	11,454,940	$	-
Maintenance reserves income		-		-		-			-		-		-
Gain on sale of aircraft		-		-		-			408,840		408,840		-
Other		9,510		9,510		-			2,400,700		2,400,700		-
		3,929,510		3,929,510		-			14,264,480		14,264,480		-
Interest		1,271,750		1,271,750		-			3,687,380		3,687,380		-
Depreciation		1,247,560		1,241,560		(6,000	)		3,708,520		3,690,550		(17,970	)
Management fees		678,460		676,660		(1,800	)		2,061,720		2,056,300		(5,420	)
Maintenance		221,600		221,600		-			3,554,920		3,554,920		-
Professional fees and other		178,450		178,450		-			645,270		645,270		-
		3,597,820		3,590,020		(7,800	)		13,657,810		13,634,420		(23,390	)
Income before taxes		331,690		339,490		7,800			606,670		630,060		23,390
Tax provision		112,580		123,780		11,200			196,970		230,570		33,600
Net income	$	219,110	$	215,710	$	(3,400	)	$	409,700	$	399,490	$	(10,210	)
Earnings per share:
Basic	$	0.14	$	0.14	$	-		$	0.27	$	0.26	$	(0.01	)
Diluted	$	0.14	$	0.14	$	-		$	0.27	$	0.26	$	(0.01	)

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Effect of FSP AUG AIR-1 on

Statement of Operations

For the three months and nine months ended September 30, 2006

(Unaudited)

	For the Three Months Ended September 30, 2006							For the Nine Months Ended September 30, 2006
	As adjusted under SAB 108		As reported under FSP AUG AIR-1		Increase/ (decrease) effect of change			As adjusted under SAB 108		As reported under FSP AUG AIR-1		Increase/ (decrease) effect of change
Operating lease revenue	$	3,920,000	$	3,920,000	$	-		$	11,454,940	$	11,454,940	$	-
Maintenance reserves income		-		709,950		709,950			-		2,258,180		2,258,180
Gain on sale of aircraft		-		-		-			408,840		33,690		(375,150	)
Other		9,510		9,510		-			2,400,700		4,200		(2,396,500	)
		3,929,510		4,639,460		709,950			14,264,480		13,751,010		(513,470	)
Interest		1,271,750		1,271,750		-			3,687,380		3,687,380		-
Depreciation		1,241,560		1,172,770		(68,790	)		3,690,550		3,487,970		(202,580	)
Management fees		676,660		676,660		-			2,056,300		2,056,300		-
Maintenance		221,600		869,320		647,720			3,554,920		3,605,860		50,940
Professional fees and other		178,450		178,450		-			645,270		645,270		-
		3,590,020		4,168,950		578,930			13,634,420		13,482,780		(151,640	)
Income before taxes		339,490		470,510		131,020			630,060		268,230		(361,830	)
Tax provision		123,780		162,680		38,900			230,570		115,740		(114,830	)
Net income	$	215,710	$	307,830	$	92,120		$	399,490	$	152,490	$	(247,000	)
Earnings per share
Basic	$	0.14	$	0.20	$	0.06		$	0.26	$	0.10	$	(0.16	)
Diluted	$	0.14	$	0.20	$	0.06		$	0.26	$	0.10	$	(0.16	)

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