UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 333-24743 AEROCENTURY CORP. (Exact name of small business issuer as specified in its charter) CALIFORNIA (State or other jurisdiction of incorporation or organization) 94-3263974 (I.R.S. Employer Identification No.) 1440 CHAPIN AVE., SUITE 310 BURLINGAME, CALIFORNIA (Address of principal executive office) 94010 (Zip Code) Issuer's telephone number, including area code: (650) 696-3900 Indicate by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes /X/ No On November 13, 1997, 150,000 shares of common stock were outstanding. Transitional Small Business Disclosure Format (check one): Yes No /X/ PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS AEROCENTURY CORP. (A Development Stage Delaware Corporation) Balance Sheet September 30, 1997 (Unaudited) ASSETS Cash $ 127,898 Organization costs 453 ----------- Total Assets $ 128,351 =========== LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities Accounts payable $ 167,000 Payable to affiliates 50,406 ----------- 217,406 Shareholder's Equity: Common Stock, $.001 par value, 3,000,000 shares authorized, 150,000 shares issued and outstanding 150 Paid in capital in excess of par 149,850 Accumulated deficit (239,055) ----------- Total shareholder's equity ( 89,055) ----------- Total Liabilities and Shareholder's Equity $ 128,351 =========== See accompanying notes. AeroCentury Corp. (A Development Stage Delaware Corporation) Statements of Operations (Unaudited) For the Period from Inception For the Quarter Ended (February 28, 1997) September 30, 1997 to September 30, 1997 ------------------ -------------------- Revenues - Interest income $ 642 $ 1,523 Expenses - Consolidation offering costs 109,562 240,578 ----------- ------------ Net Loss $ (108,920) $ (239,055) =========== ============ Weighted average common shares 150,000 150,000 =========== ============ Loss per common share (0.73) (1.59) =========== ============ See accompanying notes. AeroCentury Corp. (A Development Stage Delaware Corporation) Notes to Financial Statements September 30, 1997 (Unaudited) 1. Basis of Presentation AeroCentury Corp. (the "Company") was incorporated in the state of Delaware on February 28, 1997. All of the Company's outstanding stock is owned by JetFleet Management Corp. ("JMC"), a California corporation formed in January 1994. JMC is an integrated aircraft management, marketing and financing business and also manages, on behalf of their general partners and shareholders, respectively, the aircraft assets of JetFleet Aircraft, L.P. and JetFleet Aircraft II, L.P. (collectively, the "Partnerships"), and JetFleet III and AeroCentury IV, Inc., California corporations which are subsidiaries of JMC. The accompanying balance sheet at September 30, 1997 and statements of operations for the quarter ended September 30, 1997 and the period from inception (February 28, 1997) to September 30, 1997 reflect all adjustments (consisting of only normal recurring accruals) which are, in the opinion of the Company, necessary for a fair presentation of the financial results. The results of operations of such period is not necessarily indicative of results of operations for a full year. 2. Organization and Capitalization The Company was formed solely for the purpose of acquiring the Partnerships in a statutory merger (the "Consolidation"). The Partnerships, formed under California law, invest in leased aircraft equipment. A Registration Statement on Form S-4 for the proposed Consolidation became effective on September 23, 1997 and the proposed Consolidation has been submitted to the limited partners of the Partnerships for their approval. Upon completion of the Consolidation, the Company will continue in the aircraft leasing business and plans to use leveraged financing to acquire additional aircraft assets on lease. The Company maintains its cash balance of $127,898 in a regional bank headquartered in San Francisco. Of this amount, $27,898 is not federally insured. Accounts payable and payable to affiliates primarily consist of offering costs incurred in connection with the proposed Consolidation. 3. Related Party Transactions At September 30, 1997 JMC had incurred $50,406 of Consolidation costs on behalf of the Company. Upon completion of the Consolidation, the Company's portfolio of leased aircraft assets will be managed and administered under the terms of a management agreement with JMC. Under this agreement, JMC will receive a monthly management fee based on the net asset value of the assets under management. In addition, JMC may receive a brokerage fee for locating assets for the Company, provided that such fee is not more than the customary and usual brokerage fee that would be paid to an unaffiliated party for such a transaction, and provided further that the aggregate purchase price including chargeable acquisition costs and any brokerage fee shall not exceed the fair market value of the asset based on appraisal. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Capital Resources and Liquidity The Company's cash and temporary investments were $127,898 at September 30, 1997. The Company estimates that costs associated with the Consolidation will approximate $325,000. Consolidation costs of $240,578 have been incurred at September 30, 1997 of which $217,406 is included in liabilties. It is anticipated that such offering costs in excess of current cash balances will be financed through short-term payables and paid at the time of the Consolidation. Should the Consolidation not occur, the Company's sole shareholder, JetFleet Management Corp., has committed to pay such costs. Results of Operations The Company has yet to generate a profit due to the fact that the Company is recently formed. For the remainder of 1997, the Company does not anticipate significant operating activity, other than incurring merger costs in connection with the proposed consolidation of JetFleet Aircraft, L. P. and JetFleet Aircraft II, L.P. with and into the Company (the "Consolidation"). Competition Upon Consolidation, the Company will compete with aircraft manufacturers, distributors, airlines and other operators, equipment managers, leasing companies, equipment leasing programs, financial institutions and other parties engaged in leasing, managing or remarketing aircraft, many of which have significantly greater financial resources and more experience than the Company. 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 November 13, 1997. AeroCentury Corp. 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 November 13, 1997. Signature Title /S/ Toni M. Perazzo Vice President - Finance - ------------------- Toni M. Perazzo /s/ Neal D. Crispin President - ------------------- Neal D. Crispin EXHIBIT INDEX Exhibit No. Description Page No. - ------------ ------------ --------- EX-27 Financial Data Schedule