UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2018

☐ 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: 001-13387

AeroCentury Corp.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		94-3263974
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1440 Chapin Avenue, Suite 310

Burlingame, California 94010

(Address of Principal Executive Offices)

(650) 340-1888

(Registrant's Telephone Number Including Area Code)

None

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☐Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of the ~~Registrant's Common Stock~~registrant's common stock outstanding as of ~~August 10,~~November 8, 2018 was ~~1,416,699~~.1,545,924.

~~PART I~~

~~FINANCIAL INFORMATION~~

~~Forward-Looking Statements~~

As used in this report, unless the context indicates otherwise, the "Company" and "AeroCentury" refer to AeroCentury Corp. together with its consolidated subsidiaries.

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements in this report other than statements of historical fact are forward-looking statements for purposes of these provisions, including any statements of the Company's plans and objectives for future operations, the Company's future financial or economic performance (including known or anticipated trends), and the assumptions underlying or related to the foregoing. Statements that include the use of terminology such as "may," "will," "expects," "plans," "anticipates," "estimates," "potential," or "continue," or the negative thereof, or other comparable terminology, are forward-looking statements.

Forward-looking statements in this report include statements about the following matters, although this list is not exhaustive:

·	The Company's business plans and strategies, including its continued focus on acquiring used regional aircraft, any potential for acquiring and managing new types and models of regional aircraft, and its expectation that most of its future growth will be outside of North America;

Matters related to the Company's ~~proposed~~ merger with JetFleet Holding Corp. ("JHC"), including: the Company's ability to obtain the approval of its stockholders to issue shares of its common stock as partial merger consideration; the ability to complete, and the timing of, the closing of the merger; andwhich was completed on October 1, 2018, including the anticipated impact of the merger ~~(if completed)~~ on the Company and its performance, including the amount and nature of merger expenses payable by the Company, certain losses and other accounting effects of the merger, any changes to the Company's risk profile ~~after~~now that the Company ~~internalizes~~has internalized the management services ~~presently~~previously performed for the Company by JetFleet Management Corp. ("JMC"), a subsidiary of JHC, and the expectation that the combination effected by the merger could be accretive to the Company and create value for the stockholders of the combined post-merger company;

Certain industry trends and their impact on the Company and its performance, including: increasing competition that results in higher acquisition prices for many of the aircraft types that the Company has targeted to buy and, at the same time, downward pressure on lease rates for these aircraft; relatively lower market demand for older aircraft types that are no longer in production, which could cause certain of the Company's aircraft to remain off lease for significant periods of time; and expectations of shakeouts of weaker carriers in economically troubled regions, which could impact the financial condition and viability of certain of the Company's customers, and as a result, their demand for the Company's aircraft and their ability to fulfill their lease commitments and other obligations to the Company under existing leases;

·	Expectations about the Company's future liquidity, cash flow and capital requirements;

·	The Company's ~~continued compliance~~ability to comply with its existing credit facility and other outstanding debt instruments, including making payments of principal and interest thereunder as and when required and complying with the financial and other covenants included in the credit facility;

The Company's ability to access additional sources of capital in the future, including through a proposed extension of its existing credit facility and potential new non-recourse term loans, all of which is under negotiation and subject to completion of definitive agreements, which may not occur in a timely manner, on terms anticipated or favorable to the Company, or at all;

·	The expected impact of existing or known threatened legal proceedings;

·	The effect on the Company and its customers of complying with applicable government and regulatory requirements in the numerous jurisdictions in which the Company and its customers operate;

·	The Company's cyber vulnerabilities and the anticipated effects on the Company if a cybersecurity threat or incident were to materialize;

·	General economic, market, political and regulatory conditions, including anticipated changes in these conditions and the impact of such changes on customer demand and other facets of the Company's business; and

·	The impact of the foregoing on the prevailing market price and trading volume of the Company's common stock.

All of the Company's forward-looking statements involve risks and uncertainties that could cause the Company's actual results to differ materially from those projected or assumed by such forward-looking statements. Among the factors that could cause such differences are: the continued availability of financing under the Company's credit facility or otherwise; the Company's ability to comply with the debt covenants under its existing credit facility; the Company's ability to locate and acquire appropriate and revenue-producing assets; deterioration of the market for or appraised values of aircraft owned by the Company; a surge in interest rates; any noncompliance by the Company's lessees with obligations under their respective leases, including payment obligations; any economic downturn or other financial crises; the timing, rate and amount of maintenance expenses for the Company's asset portfolio, as well as the distribution of these expenses among the assets in the portfolio; ~~the ability to complete~~following completion of the merger with JHC, ~~and the timing of such completion; if and after the JHC merger is completed,~~ the Company's ability to internalize the management services ~~currently~~previously performed by JMC and the costs to the Company to internally perform these services; the Company's ability to raise capital on attractive terms when needed, or at ~~all;~~all, including the Company's ability to execute the proposed extension of its existing credit facility and establishment of new term loans as described above; limited trading volume in the Company's stock; and the other factors detailed under "Management's Discussion and Analysis of Financial Condition and Results of Operations –– Factors That May Affect Future Results and Liquidity" in this report. In addition, the Company operates in a competitive and evolving industry in which new risks emerge from time to time, and it is not possible for the Company to predict all of the risks it may face, nor can it assess the impact of all factors on its business or the extent to which any factor or combination of factors could cause actual results to differ from expectations. As a result of these and other potential risks and uncertainties, the Company's forward-looking statements should not be relied on or viewed as predictions of future events.

This cautionary statement should be read as qualifying all forward-looking statements included in this report, wherever they appear. All forward-looking statements and descriptions of risks included in this report are made as of the date hereof based on information available to the Company as of the date hereof, and except as required by applicable law, the Company assumes no obligation to update any such forward-looking statement or risk for any reason. You should, however, consult the risks and other disclosures described in the reports the Company files from time to time with the Securities and Exchange Commission after the date of this report for updated information.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements.

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Item 4. Controls and Procedures.

PART II – OTHER INFORMATION

Item 6. Exhibits

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

AeroCentury Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

ASSETS	ASSETS							ASSETS
		June 30,			December 31,				September 30,			December 31,
		2018			2017				2018			2017
Assets:
Cash and cash equivalents		$	4,378,000		$	8,657,800			$	6,769,500		$	8,657,800
Accounts receivable, including deferred rent of $228,100 and $707,300 at June 30, 2018 and December 31, 2017, respectively			3,151,600			3,825,100
Accounts receivable, including deferred rent of $0 and $707,300 at September 30, 2018 and December 31, 2017, respectively										3,168,000			3,825,100
Finance leases receivable			22,066,100			23,561,000				16,055,500			23,561,000
Aircraft and aircraft engines held for lease, net of accumulated depreciation of $38,219,000 and $33,234,200 at June 30, 2018 and December 31, 2017, respectively			210,592,000			195,098,200
Aircraft and aircraft engines held for lease, net of accumulated depreciation of $33,462,100 and $33,234,200 at September 30, 2018 and December 31, 2017, respectively										187,092,900			195,098,200
Assets held for sale			4,736,100			4,966,500				14,511,600			4,966,500
Prepaid expenses and other			312,700			301,300
Prepaid expenses and other assets										353,500			301,300
Total assets		$	245,236,500		$	236,409,900			$	227,951,000		$	236,409,900
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY							LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses		$	2,277,900		$	645,200			$	2,317,600		$	645,200
Notes payable and accrued interest, net of unamortized debt issuance costs of $1,483,500 and $2,216,000 at June 30, 2018 and December 31, 2017, respectively			147,642,500			145,598,200
Notes payable and accrued interest, net of unamortized debt issuance costs of $1,078,900 and $2,216,000 at September 30, 2018 and December 31, 2017, respectively										140,247,200			145,598,200
Maintenance reserves			30,342,000			26,942,800				27,030,800			26,942,800
Accrued maintenance costs			359,800			1,275,300				260,100			1,275,300
Security deposits			3,434,800			3,147,900				3,367,800			3,147,900
Unearned revenues			4,764,200			2,447,500				4,160,400			2,447,500
Deferred income taxes			8,503,000			8,533,700				7,159,000			8,533,700
Income taxes payable			309,400			452,600				289,000			452,600
Total liabilities			197,633,600			189,043,200				184,831,900			189,043,200
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares issued and outstanding			-			-				-			-
Common stock, $0.001 par value, 10,000,000 shares authorized, 1,629,999 shares issued, 1,416,699 shares outstanding			1,600			1,600				1,600			1,600
Paid-in capital			14,780,100			14,780,100				14,780,100			14,780,100
Retained earnings			35,858,000			35,621,800				31,374,200			35,621,800
			50,639,700			50,403,500				46,155,900			50,403,500
Treasury stock at cost, 213,300 shares			(3,036,800	)		(3,036,800	)			(3,036,800	)		(3,036,800	)
Total stockholders' equity			47,602,900			47,366,700				43,119,100			47,366,700
Total liabilities and stockholders' equity		$	245,236,500		$	236,409,900			$	227,951,000		$	236,409,900

The accompanying notes are an integral part of these condensed consolidated financial statements.

AeroCentury Corp.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Six Months Ended June 30,					For the Three Months Ended June 30,						For the Nine Months Ended September 30,						For the Three Months Ended September 30,
	2018		2017			2018			2017			2018			2017			2018			2017
Revenues and other income:
Operating lease revenue	$	13,286,800	$	14,427,000		$	6,823,900		$	7,110,100		$	20,460,000		$	21,995,600		$	7,173,200		$	7,568,500
Finance lease revenue		740,400		757,700			361,300			432,300			1,002,100			1,173,400			261,700			415,700
Maintenance reserves revenue		-		686,000			-			686,000			-			1,035,800			-			349,800
Net gain on sales-type finance leases		-		297,400			-			-			-			297,400			-			-
Net gain/(loss) on disposal of assets		9,900		(133,900	)		18,100			(147,700	)
Net (loss)/gain on disposal of assets													(2,374,400	)		(130,400	)		(2,384,300	)		3,500
Other income		1,631,600		600			580,200			400			1,632,800			2,300			1,200			1,700
		15,668,700		16,034,800			7,783,500			8,081,100			20,720,500			24,374,100			5,051,800			8,339,200
Expenses:
Depreciation		6,092,300		5,879,100			3,150,400			2,943,000			9,420,500			9,037,700			3,328,200			3,158,600
Interest		4,619,400		3,353,000			2,365,100			1,742,800			7,086,600			5,496,400			2,467,200			2,143,400
Management fees		2,948,800		3,005,100			1,502,100			1,498,300			4,482,800			4,588,700			1,534,000			1,583,700
Professional fees, general and administrative and other		954,000		924,100			376,900			418,000			1,373,400			1,357,200			419,400			433,000
Maintenance		160,200		661,400			68,900			405,300			405,400			830,600			245,300			169,200
Provision for impairment in value of aircraft		298,200		454,300			298,200			454,300			2,971,500			523,100			2,673,300			68,800
Insurance		157,700		130,900			78,000			57,700			235,400			196,900			77,700			66,000
Other taxes		45,100		45,200			22,500			22,500			67,700			67,700			22,500			22,500
		15,275,700		14,453,100			7,862,100			7,541,900			26,043,300			22,098,300			10,767,600			7,645,200
Income/(loss) before income tax provision		393,000		1,581,700			(78,600	)		539,200
Income tax provision		156,800		584,500			2,500			183,500
Net income/(loss)	$	236,200	$	997,200		$	(81,100	)	$	355,700
Earnings/(loss) per share:
(Loss)/income before income tax (benefit)/provision													(5,322,800	)		2,275,800			(5,715,800	)		694,000
Income tax (benefit)/provision													(1,075,200	)		894,100			(1,232,100	)		309,500
Net (loss)/income												$	(4,247,600	)	$	1,381,700		$	(4,483,700	)	$	384,500
(Loss)/earnings per share:
Basic	$	0.17	$	0.67		$	(0.06	)	$	0.25		$	(3.00	)	$	0.95		$	(3.16	)	$	0.27
Diluted	$	0.17	$	0.67		$	(0.06	)	$	0.25		$	(3.00	)	$	0.95		$	(3.16	)	$	0.27
Weighted average shares used in earnings/(loss) per share computations:
Weighted average shares used in (loss)/earnings per share computations:
Basic		1,416,699		1,482,997			1,416,699			1,416,699			1,416,699			1,460,655			1,416,699			1,416,699
Diluted		1,416,699		1,482,997			1,416,699			1,416,699			1,416,699			1,460,655			1,416,699			1,416,699

The accompanying notes are an integral part of these condensed consolidated financial statements.

AeroCentury Corp.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months Ended June 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017
Net cash provided by operating activities	$	11,191,500		$	8,706,500		$	14,543,600		$	13,363,000
Investing activities:
Proceeds from sale of aircraft and aircraft engines held for lease, net of re-sale fees		3,186,800			1,397,300			8,382,000			2,980,000
Proceeds from sale of assets held for sale, net of re-sale fees		2,644,900			112,600			4,366,200			160,100
Investment in direct financing leases		-			(7,614,200	)		-			(7,614,200	)
Investment in aircraft parts and acquisition costs		(22,606,000	)		(21,735,900	)		(22,702,900	)		(32,063,100	)
Net cash used in investing activities		(16,774,300	)		(27,840,200	)		(9,954,700	)		(36,537,200	)
Financing activities:
Issuance of notes payable – Credit Facility		21,000,000			26,000,000			21,000,000			35,900,000
Repayment of notes payable – Credit Facility		(17,500,000	)		(2,800,000	)		(24,200,000	)		(4,800,000	)
Repayment of notes payable – special purpose financing		(2,127,000	)		(2,033,900	)		(3,207,200	)		(3,066,000	)
Debt issuance costs		(70,000	)		(65,000	)		(70,000	)		(525,000	)
Net cash provided by financing activities		1,303,000			21,101,100
Net cash (used in)/provided by financing activities								(6,477,200	)		27,509,000
Net (decrease)/increase in cash and cash equivalents		(4,279,800	)		1,967,400			(1,888,300	)		4,334,800
Cash and cash equivalents, beginning of period		8,657,800			2,194,400			8,657,800			2,194,400
Cash and cash equivalents, end of period	$	4,378,000		$	4,161,800		$	6,769,500		$	6,529,200

During the ~~six~~nine months ended ~~June~~ September 30, 2018 and 2017, the Company paid interest totaling ~~$3,942,500~~$6,059,600 and ~~$2,890,700,~~$4,697,000, respectively. The Company paid income taxes of ~~$1,600~~$463,300 and $800 during the ~~six~~nine months ended ~~June~~ September 30, 2018 and ~~2017.~~2017, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

AeroCentury Corp.

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~June~~September 30, 2018

1. Organization and Summary of Significant Accounting Policies

(a) The Company and Basis of Presentation

AeroCentury Corp., a Delaware corporation incorporated in 1997, typically acquires used regional aircraft ~~and engines~~ for lease to foreign and domestic regional carriers.

In August 2016, AeroCentury Corp. formed two wholly-owned subsidiaries, ACY SN 19002 Limited ("ACY 19002") and ACY SN 19003 Limited ("ACY 19003") for the purpose of acquiring aircraft using a combination of cash and third-party financing ("SPE Financing" or "special purpose financing") separate from the parent's credit ~~facility.~~facility (the "Credit Facility"). Financial information for AeroCentury Corp., ACY 19002 and ACY 19003 (collectively, the "Company") is presented on a consolidated basis in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three- and ~~six-month~~nine-month periods ended ~~June~~ September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2018.~~2018 or for any other period. All intercompany balances and transactions have been eliminated in consolidation.

As discussed in Note 7, the Company's acquisition of JetFleet Holding Corp. ("JHC") was consummated on October 1, 2018. As a subsidiary of the Company, JHC's results will be included in the Company's consolidated financial statements beginning in the fourth quarter of 2018.

For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2017.

(b) Use of Estimates

The Company's condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources.

The most significant estimates with regard to these condensed consolidated financial statements are the residual values and useful lives of the Company's long-lived assets, the amount and timing of future cash flows associated with each asset that are used to evaluate whether assets are impaired, accrued maintenance costs, accounting for income taxes, and the amounts recorded as allowances for doubtful accounts.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The fair value hierarchy under GAAP is based on three levels of inputs.

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The carrying amount of the Company's money market funds included in cash and cash equivalents was ~~$2,154,400~~$2,155,600 and $6,151,900 at ~~June~~September 30, 2018 and December 31, 2017, respectively. The fair value of the Company's money market funds is categorized as Level 1 under the GAAP fair value hierarchy.

As of ~~June~~September 30, 2018 and December 31, 2017, there were no liabilities that were required to be measured and recorded at fair value on a recurring basis.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company determines fair value of long-lived assets held and used, such as aircraft and aircraft engines held for lease and these and other assets held for sale, by reference to independent appraisals, quoted market prices (e.g., offers to purchase) and other factors. An impairment charge is recorded when the Company believes that the carrying value of an asset will not be recovered through future net cash flows and that the asset's carrying value exceeds its fair value. The Company recorded impairment charges totaling $2,673,300 on four of its aircraft held for sale in the three months ended September 30, 2018. The Company also recorded an impairment charge of $298,200 on one of its aircraft held for lease in the ~~three months~~quarter ended June 30, 2018. The Company recorded an impairment charge of ~~$454,300~~$68,800 on one of its assets held for lease in the quarter ended September 30, 2017, based on expected sales proceeds. The aircraft was sold in October 2017. The Company also recorded an impairment charge of $454,300 on one of its assets in the quarter ended June 30, ~~2017.~~ 2017, based on its appraised value.

Fair Value of Other Financial Instruments

The Company's financial instruments, other than cash and cash equivalents, consist principally of finance leases receivable, amounts borrowed under ~~its credit facility (the "Credit Facility")~~the Credit Facility and notes payable under special purpose financing. The fair value of accounts receivable, accounts payable and the Company's maintenance reserves and accrued maintenance costs approximates the carrying value of these financial instruments because of their short-term maturities. The fair value of finance lease receivables approximates the carrying value as discussed in (d) below.

Borrowings under the Company's Credit Facility bear floating rates of interest that reset periodically to a market benchmark rate plus a credit margin. The Company believes the effective interest rate under the Credit Facility approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of ~~$137,723,000~~$131,004,800 and $134,278,900 at ~~June~~ September 30,, 2018 and December 31, 2017, respectively, approximate their fair values on such dates. The fair value of the Company's outstanding balance of its Credit Facility ~~would be~~is categorized as Level 3 under the GAAP fair value hierarchy.

The amounts payable under the Company's SPE Financing are payable through the fourth quarter of 2020 and bear a fixed rate of interest, as described in Note 4(b) to the condensed consolidated financial statements. The Company believes that the effective interest rate under the special purpose financing approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of ~~$11,403,000~~$10,321,300 and $13,535,300 ~~approximates~~approximate their fair ~~value~~values at ~~June~~ September 30,, 2018 and December 31, 2017, respectively. Such fair value ~~would be~~is categorized as Level 3 under the GAAP fair value hierarchy.

(d) Finance Leases

As of ~~June~~ September 30,, 2018, the Company had ~~six~~three aircraft subject to sales-type finance leases and three aircraft subject to direct financing leases. All ~~nine~~six leases contain lessee bargain purchase options at prices substantially below the subject assets' estimated residual values at the exercise date for the options. Consequently, the Company has classified each of these ~~nine~~six leases as finance leases for financial accounting purposes. For such finance leases, the Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease. For each of the ~~six~~three sales-type finance leases, the Company recognized as a gain or loss the amount equal to (i) the net investment in the sales-type finance lease plus any initial direct costs and lease incentives less (ii) the net book value of the subject aircraft at inception of the applicable lease.

The Company recognized interest earned on finance leases in the amount of ~~$361,300~~ $261,700 and ~~$432,300~~$415,700 in the quarters ended ~~June~~September 30, 2018 and 2017, respectively and ~~$740,400~~ $1,002,100 and ~~$757,700~~$1,173,400 in the ~~six-month~~nine-month periods ended ~~June~~ September 30, 2018 and 2017, respectively.

(e) Recent Accounting Pronouncements

Topic 606

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 that created the new Topic 606 ("Topic 606") in the Accounting Standards Codification ("ASC"). Topic 606 also included numerous conforming additions and amendments to other Topics within the ASC. Topic 606 established new rules that affect the amount and timing of revenue recognition for contracts with customers, but does not affect lease accounting and reporting. As such, adoption of these provisions ~~will~~has not ~~affect~~affected the Company's lease revenues. On August 12, 2015, the FASB deferred the effective date of the provisions included in Topic 606 to years commencing after December 15, 2017, although early adoption was permitted for the year ended December 31, 2017. As such, the Company ~~has~~ adopted Topic 606 as of January 1, 2018. Adoption may be reflected using either a full retrospective method, applying the standard to all periods presented, or a simplified method that does not recast prior periods but does disclose the effect of the adoption on the current period condensed consolidated financial statements. Since most of the Company's revenues arise from its lease contracts, which are not affected by the new standard, and since the Company's revenue recognition for other sources of revenue is generally the same as it was under previous accounting standards, adoption of Topic 606 in the current year, using the modified retrospective approach, has had no effect on its condensed consolidated financial statements.

ASU 2016-02

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) ("ASU 2016-02"). ASU 2016-02 is effective for public companies for years beginning after December 15, 2018, although early adoption is permitted. ASU 2016-02 substantially modifies lessee accounting for leases, requiring that lessees recognize lease assets and liabilities for leases extending beyond one year. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

The new standard requires a lessor to classify leases as sales-type, finance, or operating. A lease will be treated as sales-type if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor does not convey risks and rewards or control, an operating lease results. A modified retrospective transition approach is required for lessors for sales-type, finance, and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is reviewing those agreements under which it is the lessor and is evaluating the impact of the adoption of ASU 2016-02 on its condensed consolidated financial statements and related disclosures. The Company does not expect to adopt ASU 2016-02 early, and expects to elect practical expedients in connection with its adoption, including not re-evaluating lease classification or capitalized initial direct costs on existing leases.

~~The~~As of September 30, 2018, the Company iswas not a lessee under any agreements that would be considered leases under ASU 2016-02, and so would be unaffected with respect to its adoption with respect to lessee accounting. As a result of the Company's acquisition of JHC on October 1, 2018, the Company became a lessee under a real estate lease and will need to evaluate reporting for that lease under ASU 2016-02.

ASU 2017-01

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) ("ASU 2017-01"). ASU 2017-01 is effective for public companies for years beginning after December 15, 2017, although early adoption is permitted. ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The Company ~~has early~~ adopted ASU 2017-01 effective beginning the ~~first~~ quarter ended March 31, 2017, and ~~has~~ determined that none of its acquired assets ~~qualifies~~qualify as a business, such that no gain, loss or adjustment to the carrying value of assets was required in connection with such adoption.

ASU 2017-04

In January 2017, the FASB issued ASU 2017-04, Intangibles -- Goodwill and Other (Topic 350) ("ASU 2017-04"), which provides for simplification of the test for goodwill impairment. Under the revised standard, "step 2" of the test under the previous standard is eliminated and (i) the fair value of the reporting unit is compared to its carrying value, with (ii) an impairment charge up to the amount of goodwill recognized for the excess of carrying value over fair value (considering the income tax effects of deductible goodwill, if applicable). The new provisions are required to be adopted for fiscal years beginning after December 15, 2019, although the Company has elected to early adopt the new provisions beginning with its quarter ended March 31, 2017. Adoption of ASU 2017-04 has had no effect on the financial results or position of the Company.

SAB 118

In December of 2017, the United States enacted the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), which had numerous effects on U.S. corporate taxation, including reducing the federal corporate tax rate to 21%, substantially modifying the U.S. taxation of international investments and transactions, and repealing the alternative minimum tax. In December of 2017, the Staff of the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides that companies should reflect in their financial statements the effects of the change in tax law in which the accounting is complete, as such completion occurs; provisional amounts for such effects for which the company can determine a reasonable estimate, as such estimates can be made; and continued accounting under the provisions of the law as it existed before enactment of the Tax Act for such effects for which no reasonable estimate under the new law can be made, until such a reasonable estimate is available and a provisional amount can be reported. Under SAB 118, in no event should the period during which a company is obtaining, preparing, and analyzing the information needed to complete the accounting for the effects of the change in tax law exceed one year from enactment (the "measurement period"), or the fourth quarter of 2018. The Company has ~~included~~reflected the effects of the Tax Act in ~~its~~these condensed consolidated financial statements and does not expect ~~that~~ further analysis will be required.

2. Finance Leases Receivable

During the third quarter of 2018, a customer that leased six of the Company's aircraft under sales-type finance leases purchased three of those aircraft in amounts equal to the outstanding balance under the applicable finance leases. The purchase price was paid in the form of (i) $1,088,700 in cash, (ii) $1,675,100 of maintenance reserves previously paid to the Company for one of the purchased aircraft and (iii) $2,618,100 of maintenance reserves previously paid to the Company for two aircraft that remain under sales-type finance leases with the customer. Such reserves are no longer available to the customer for reimbursement of maintenance claims under the applicable lease provisions pursuant to which the reserves were paid. The Company did not record a gain or loss on the sale of the aircraft.

At ~~June~~ September 30, 2018 and December 31, 2017, the net investment included in finance leases and direct financing leases receivable were as follows:

	June 30, 2018			December 31, 2017			September 30, 2018			December 31, 2017
Gross minimum lease payments receivable	$	24,839,100		$	27,074,400		$	18,160,700		$	27,074,400
Less unearned interest		(2,773,000	)		(3,513,400	)		(2,105,200	)		(3,513,400	)
Finance leases receivable	$	22,066,100		$	23,561,000		$	16,055,500		$	23,561,000

As of ~~June~~ September 30, 2018, minimum future payments receivable under finance leases were as follows:

Years ending

Remainder of 2018	$	4,026,900	$	1,891,500
2019		7,087,600		4,047,600
2020		5,036,600		4,208,600
2021		5,381,000		4,805,000
2022		3,307,000		3,208,000
	$	24,839,100	$	18,160,700

3. Aircraft and Aircraft Engines Held for Lease or Sale

(a) Assets Held for Lease

At ~~June~~ September 30, 2018 and December 31, 2017, the Company's aircraft and aircraft engines held for lease consisted of the following:

	June 30, 2018					December 31, 2017					September 30, 2018					December 31, 2017
Type	Number Owned		% of net book value			Number owned		% of net book value			Number Owned		% of net book value			Number owned		% of net book value
Regional jet aircraft		13		73	%		13		82	%		13		81	%		13		82	%
Turboprop aircraft		10		26	%		10		17	%		4		18	%		10		17	%
Engines		1		1	%		1		1	%		1		1	%		1		1	%

During the ~~three months and six months ended June 30,~~first half of 2018, the Company recorded ~~$579,000 and~~ $1,629,000 ~~respectively,~~ in other income resulting from cash received from the previous lessee of three aircraft that were returned to the Company during 2017. Such payments were for unpaid maintenance reserves, as well as amounts due pursuant to the return conditions of the applicable leases. The Company did not accrue unpaid reserves or return condition amounts at the time of lease termination based on management's evaluation of the creditworthiness of the lessee. Therefore, the Company is accounting for payments as they are received and ~~recorded~~recording the ~~amount~~amounts received in other ~~income.~~income in the period in which a payment is received. The Company received no such payments during the third quarter of 2018.

The Company acquired no aircraft during the third quarter of 2018. During the ~~second quarter of 2018, the Company used cash of $22,606,000 for the acquisition of two Dash 8-400 aircraft on lease to a customer in Croatia, as well as equipment added to an aircraft.~~

~~During the second~~third quarter of 2017, the Company used ~~$21,172,700~~$10,557,400 for the acquisition of ~~two~~an Embraer 175 aircraft on lease to a customer in the United ~~States. The Company also paid a $500,000 deposit for a third Embraer 175~~States and acquisition costs related to aircraft ~~which was~~ acquired earlier in the year.

During the third quarter of ~~2017 and is on lease to~~2018, the ~~same customer.~~

~~The~~ Company sold notwo turboprop aircraft ~~during the second quarter~~and recorded a loss of ~~2018.~~$2,384,300. During the ~~second~~third quarter of 2017, the Company sold two spare turboprop engines and recorded a loss of $173,700.

~~Six turboprop aircraft, representing 10% of the net book value~~None of the Company's aircraft and engines held for lease were off lease at ~~June~~ September 30, 2018. As discussed below, the Company has four off-lease aircraft that were reclassified as held for sale during the third quarter.

As of ~~June~~ September 30, 2018, minimum future lease revenue payments receivable under noncancelable operating leases were as follows:

Years ending

Remainder of 2018	$	13,858,100	$	7,185,500
2019		27,460,200		28,381,100
2020		25,821,900		25,797,800
2021		18,720,500		18,696,400
2022		16,762,900		16,738,800
Thereafter		34,732,900		34,687,700
	$	137,356,500	$	131,487,300

(b) Assets Held for Sale

Assets held for sale at ~~June~~ September 30, 2018 consist of four off-lease turboprop aircraft and airframe parts from two turboprop aircraft. During the third quarter, the Company recorded impairment provisions totaling $2,673,300 for the four aircraft and reclassified them from assets held for lease to assets held for sale.

During the ~~second~~third quarter of 2018, the Company received ~~$73,400~~$89,200 in cash and accrued ~~$41,000~~$92,400 in receivables for parts sales. These amounts were accounted for as follows: ~~$10,600~~$41,100 reduced accounts receivable for parts sales accrued in the ~~first~~second quarter of 2018, ~~$85,700~~$124,500 reduced the carrying value of the parts, and ~~$18,100~~$16,000 was recorded as gains in excess of the carrying value of the parts. During the ~~second quarter of~~three months ended September 30, 2017, the Company received ~~$96,300~~$47,500 from the sale of ~~parts, of which $70,400~~parts. Of such amount, $44,000 reduced the carrying value of the parts and ~~$25,900~~$3,500 was recorded as ~~a gain.~~gains in excess of the carrying value of the parts.

4. Notes Payable and Accrued Interest

At ~~June~~September 30, 2018 and December 31, 2017, the Company's notes payable and accrued interest consisted of the following:

	June 30, 2018			December 31, 2017			September 30, 2018			December 31, 2017
Credit Facility:
Principal	$	137,500,000		$	134,000,000		$	130,800,000		$	134,000,000
Unamortized debt issuance costs		(1,483,500	)		(2,216,000	)		(1,078,900	)		(2,216,000	)
Accrued interest		223,000			278,900			204,800			278,900
Special purpose financing:
Principal		11,384,800			13,511,900			10,304,700			13,511,900
Accrued interest		18,200			23,400			16,600			23,400
	$	147,642,500		$	145,598,200		$	140,247,200		$	145,598,200

(a) Credit ~~facility~~Facility

The Company's $170 million Credit Facility is provided by a syndicate of banks and is secured by all of the assets of the Company, including its aircraft and engine ~~portfolio.~~portfolio, except for the aircraft that serve as collateral for the Company's SPE Financing. The Credit Facility, which expires on May 31, 2019, can be expanded to a maximum of $180 million. The Company is negotiating with lenders for an extension of the Credit Facility and a new non-recourse term loan that would be secured by certain of the regional jet aircraft in its portfolio, and expects these transactions, if completed, to close prior to the expiration of the current credit facility.

The Company was not in compliance with the interest coverage, debt service coverage and revenue concentration covenants under the Credit Facility at September 30, 2018. The Company obtained a waiver from the Credit Facility lenders in November 2018 for the September 30, 2018 non-compliance. There were no fees or penalties related to the waiver. In addition, based on appraisals obtained in October 2018 for four assets held for sale, the Company had a borrowing base deficiency of approximately $1,400,000 at September 30, 2018. The Company cured the deficiency in October by making a principal payment of $2,000,000 on the Credit Facility.

The Company was in compliance with all covenants under the Credit Facility at ~~June 30, 2018 and~~ December 31, 2017.

The unused amount of the Credit Facility was ~~$32,500,000~~$39,200,000 and $36,000,000 as of ~~June~~ September 30, 2018 and December 31, 2017, respectively.

The weighted average interest rate on the Credit Facility was ~~5.51%~~5.61% and 5.21% at ~~June~~September 30, 2018 and December 31, 2017, respectively.

(b) SPE Financing

In August 2016, the Company acquired two regional jet aircraft using cash and financing separate from its Credit Facility. The separate SPE Financing resulted in note obligations of $9,805,600 and $9,804,300, which are being paid from a portion of the rent payments on the related aircraft leases through October 3, 2020 and November 7, 2020, respectively, and which bear interest at the rate of 4.455% per annum. The borrower under each note obligation is the special purpose entity that owns each aircraft. The notes are collateralized by the aircraft and are recourse only to the special purpose entity borrower and its aircraft asset, subject to standard exceptions for this type of financing. Payments due under the notes consist of quarterly principal and interest. The combined balance of the ~~notes payable~~principal amount and accrued interest owed on these notes at ~~June~~September 30, 2018 and December 31, 2017 was ~~$11,403,000~~ $10,321,300 and $13,535,300, respectively.

5. Contingencies

In the ordinary conduct of the Company's business, the Company ismay be subject to lawsuits, arbitrations and administrative proceedings from time to time. The Company believes that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on the Company's business, financial condition, liquidity or results of operations.

6. Computation of Earnings Per Share

Basic and diluted earnings per share are calculated as follows:

For the Six Months
Ended June 30,

For the Three Months
Ended June 30,

2018 2017 2018 2017
Net income/(loss) $ 236,200 $ 997,200 $ (81,100 ) $ 355,700
Weighted average shares outstanding for the period 1,416,699 1,482,997 1,416,699 1,416,699
Basic earnings/(loss) per share $ 0.17 $ 0.67 $ (0.06 ) $ 0.25
Diluted earnings/(loss) per share $ 0.17 $ 0.67 $ (0.06 ) $ 0.25

	For the Nine Months Ended September 30,					For the Three Months Ended September 30,
	2018			2017		2018			2017
Net (loss)/income	$	(4,247,600	)	$	1,381,700	$	(4,483,700	)	$	384,500
Weighted average shares outstanding for the period		1,416,699			1,460,655		1,416,699			1,416,699
Basic (loss)/earnings per share	$	(3.00	)	$	0.95	$	(3.16	)	$	0.27
Diluted (loss)/earnings per share	$	(3.00	)	$	0.95	$	(3.16	)	$	0.27

Basic earnings per common share is computed using net income and the weighted average number of common shares outstanding during the period. Diluted earnings per common share are computed using net income and the weighted average number of common shares outstanding, assuming dilution. Weighted average common shares outstanding, assuming dilution, include potentially dilutive common shares outstanding during the period.

7. Acquisition of Management Company

In October 2017, the Company and JetFleet Holding Corp. ("JHC") entered into an Agreement and Plan of Merger (the "Merger Agreement") for the acquisition of JHC by the Company in a reverse triangular merger ("Merger") for consideration of ~~$3.5~~approximately $2.8 million in cash and 129,286 shares of common stock of the Company, ~~subject~~as determined pursuant to ~~adjustment~~the Merger Agreement. JHC is the sole shareholder of JetFleet Management Corp, ("JMC"), which is the manager of the Company's assets as ~~provided~~described in Note 8 below. The Merger was consummated on October 1, 2018. The Company's common stock issued as consideration in the Merger ~~Agreement. The Company submitted~~was offered and sold pursuant to an ~~application to~~exemption from registration under Section 3(a)(10) of the ~~State~~Securities Act of 1933, as the California Department of Business Oversight (the "DBO") ~~for~~had issued a permit ~~("Permit") to issue~~for the issuance of such securities to JHC's shareholders ~~in the Merger, which Permit was issued~~ on February 22, 2018 after a fairness hearing ~~with~~before the DBO. ~~JHC has received~~

As a subsidiary of the ~~requisite consent~~Company, JHC's results will be included in the Company's consolidated financial statements beginning in the fourth quarter of ~~its shareholders to the Merger.~~2018. The Company ~~intends to hold~~will be responsible for all expenses incurred by JMC in managing the Company, including employee salaries, office rent and all other general and administrative expenses. As a special meeting of the Company's shareholders in order to approve the Merger and the issuance of AeroCentury Common Stock in connection with the Merger as required under the applicable listing rules of the NYSE American exchange on which AeroCentury's common stock is traded. Approvalresult of the Merger, ~~is not required under Delaware or California corporate law, or under~~ the ~~Merger Agreement. If the AeroCentury shareholders approve the issuance~~Company assumed all of ~~AeroCentury Common Stock, the Merger is anticipated to be consummated in the third quarter~~JHC's assets, comprised primarily of ~~2018 or shortly thereafter, but there can be no assurance that such closing will occur, or that it will occur in the anticipated time frame.~~marketable securities, prepaid expenses and an office lease, as well as liabilities of approximately $0.9 million.

During the quarter and ~~six~~nine months ended ~~June~~ September 30, 2018, the Company accrued ~~$64,300~~$77,200 and ~~$264,200~~$341,400, respectively, of expenses related to the proposed Merger transaction. During the quarter and ~~six~~nine months ended ~~June~~ September 30, 2017, the Company accrued ~~$24,100~~$161,800 and ~~$125,900~~$287,700, respectively, of expenses related to the ~~proposed~~ Merger transaction. Such expenses are included in professional fees, general and administrative and other in the Company's condensed consolidated statements of operations.

8. Related Party Transactions

~~The~~See the description of the Merger Agreement between the Company and JHC in Note 7 above, pursuant to which the Company acquired JHC in the Merger and JHC became a wholly owned subsidiary of the Company on October 1, 2018.

Before completion of the Merger, the Company's portfolio of leased aircraft assets iswere managed and administered under the terms of a management agreement (the "Management Agreement") with ~~JetFleet Management Corp. ("JMC"),~~JMC, which is an integrated aircraft management, marketing and financing ~~business and a subsidiary of JHC.~~business. Certain officers of the Company ~~are~~were also officers of JHC and JMC and ~~hold~~held significant ownership positions in both JHC and the Company.

Under the Management Agreement, JMC ~~receives~~received a monthly management fee based on the net asset value of the assets under management. JMC also ~~receives~~received an acquisition fee for locating assets for the Company. Acquisition fees ~~are~~were included in the cost basis of the asset purchased. JMC ~~may receive~~also received a remarketing fee in connection with the re-lease or sale of the Company's assets. Remarketing fees ~~are~~were amortized over the applicable lease term or included in the gain or loss on sale.

~~See the description of the Merger Agreement between the Company and JHC in Note 7 above.~~

In April 2018, subsequent to the execution of the Merger Agreement, ~~for~~ the ~~acquisition of~~Company, JHC and JMC entered into a waiver and reimbursement agreement (the "Waiver/Reimbursement Agreement"), pursuant to which JHC and JMC agreed to waive ~~its~~their right to receive management and acquisition fees ("Contract Fees") otherwise owed by the Company to ~~JHC~~JMC pursuant to the Management Agreement for all periods after March 31, 2018 and until the ~~earlier of the~~ consummation of the Merger, ~~or August 15, 2018. In~~and in return, the Company agreed to reimburse JMC for expenses ("Management Expense") incurred in providing management services set forth under the Management Agreement. In July 2018, JHC agreed to extend the expiration of this agreement (the "Waiver and Reimbursement Agreement") through October 15, 2018. Thus, if the Merger Agreement is terminated on or before October 15, 2018 or the Merger otherwise does not close by October 15, 2018,As a result, the Company ~~would become obligated to~~has been responsible for all expenses incurred by JMC ~~pay~~ ~~any excess (the "JMC Margin") of (i)~~in managing the ~~Contract Fees that would have been paid to JMC since~~Company's assets beginning April 1, 2018 and will continue to be responsible for all such expenses in all periods after the ~~absence of the Waiver~~Merger, and ~~Reimbursement Agreement over (ii) the Management Expenses actually paid~~no Contract Fees have been or will be payable by the Company to JMC ~~since April 1, 2018.~~ ~~For the quarter and six months ended June 30, 2018, contractual fees exceeded the reimbursed management fees by $497,200 of management fees and $494,400 of acquisition fees.~~ for those periods.

Notwithstanding the ~~Waiver and~~ Waiver/Reimbursement ~~Agreement, until the closing or termination of the Merger~~ Agreement, the Company ~~will accrue~~accrued as an expense the ~~total~~ Contract Fees that would have been due under the Management ~~Agreement. If~~Agreement through September 30, 2018. For the ~~Merger closes on or before October 15,~~quarter ended September 30, 2018, Contract Fees exceeded the ~~Waiver~~Management Expense by $525,900 of management fees. For the nine months ended September 30, 2018, Contract Fees exceeded the Management Expense by $1,023,100 of management fees and ~~Reimbursement Agreement for~~$494,400 of acquisition fees (collectively, the ~~period beginning on April 1, 2018, and ending on the consummation~~"JMC Margin"). The amount of the ~~Merger~~JMC Margin will be considered in the acquisition accounting for the calculation of the settlement loss that will be recognized by the Company ~~when~~in the ~~Merger is consummated.~~fourth quarter of 2018, upon closing of the Merger.

Contract Fees incurred during the three months and ~~six~~nine months ended ~~June~~ September 30, 2018 and 2017 were as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,				For the Nine Months Ended September 30,				For the Three Months Ended September 30,
	2018		2017		2018		2017		2018		2017		2018		2017
Management fees	$	2,948,800	$	3,005,100	$	1,502,100	$	1,498,300	$	4,482,800		4,588,700	$	1,534,000	$	1,583,700
Acquisition fees		494,400		641,900		494,400		421,400		494,400		850,500		-		208,600
Remarketing fees		-		51,100		-		-		-		51,100		-		-

In March 2017, the Company exchanged one of its engines for 150,000 shares of common stock of the Company held by a holder of more than 5% of the Company's then-outstanding common stock. The Company recorded no gain or loss related to the exchange.

9. Subsequent Events

~~In July~~As discussed in Notes 7 and 8, the Company's acquisition of JHC was consummated on October 1, 2018, for consideration of approximately $2.8 million in cash and 129,286 shares of common stock of the Company. As a subsidiary of the Company, ~~and one if its customers that leases six~~JHC's results will be included in the Company's consolidated financial statements beginning in the fourth quarter of 2018. As a result of the ~~Company's aircraft under sales-type finance leases agreed to apply approximately $4,300,000 of maintenance reserves previously paid by~~Merger, the Company ~~to the purchase by the customer~~assumed JHC liabilities of ~~three of the aircraft. A cash payment by the customer is also required.~~approximately $0.9 million. The Company ~~expects~~also became a lessee under a real estate lease and will need to evaluate reporting for that ~~the transaction will close during the third quarter of 2018 and does not expect to record a gain or loss.~~lease under ASU 2016-2.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Company's Form 10-K for the year ended December 31, 2017 and the unaudited condensed consolidated financial statements and related notes that appear elsewhere in this report. Pursuant to Instruction 2 to Item 303(b) of Regulation S-K promulgated by the Securities and Exchange Commission, in preparing this discussion, the Company has presumed that readers have access to and have read the discussion under the same heading that appears in the Company's Form 10-K for the year ended December 31, 2017. The following discussion contains forward-looking statements. Please see the cautionary note regarding these statements at the beginning of this report.

Overview

AeroCentury provides leasing and finance services to regional airlines worldwide. The Company is principally engaged in ~~providing~~ leasing ~~services~~its aircraft portfolio, primarily consisting of mid-life regional aircraft, ~~to carriers, including~~through operating leases and finance ~~leases.~~leases to is globally diverse customer base of eleven lessees in nine countries. In addition to leasing activities, the Company sells aircraft from its operating lease portfolio to third parties, including other leasing companies, financial services companies, and airlines. Its operating performance is driven by the growth of its aircraft portfolio, the terms of its leases, the interest rate of its debt, as well as asset sales.

~~During~~The Company did not purchase any aircraft during the ~~second~~third quarter of 2018, ~~the Company purchased~~but sold two ~~aircraft.~~aircraft during this quarter. The Company ended the period with a total of ~~twenty-three~~seventeen aircraft and one engine held for lease, with a net book value of approximately ~~$210~~$187 million. This ~~represents an 8% increase~~4% decrease compared to the net book value at December 31, 2017 asis a result of ~~the~~ aircraft purchases ~~as well as two~~in the second quarter of 2018, four asset sales during the first ~~quarter~~nine months of 2018, ~~and~~ depreciation on ~~its~~the Company's remaining assets held for ~~lease.~~lease, and the reclassification in the third quarter of four assets from held for lease to held for sale. The Company also owns ~~nine~~six aircraft subject to finance leases, three of which were acquired in 2017.

~~The Company has a globally diversified customer base of eleven airlines in nine countries.~~ Average portfolio utilization was approximately ~~91%~~93% during the ~~second~~third quarter of 2018 compared ~~with~~to approximately ~~94%~~93% during the same period in 2017, and approximately ~~90%~~91% during the first ~~six~~nine months of 2018 compared ~~with~~to approximately ~~95%~~94% during the first ~~six~~nine months of 2017. The decrease between the nine-month periods was due to asset sales of previously-leased assets during 2017 and 2018, as well as the return of several aircraft at lease ~~end~~-end in 2017.

In July 2017, the Company expanded its revolving credit facility (referred to as the "Credit Facility" or the "credit facility") from $150 million to $170 million. The unused amount of the Credit Facility was ~~$32,500,000~~$39.2 million as of ~~June~~ September 30, 2018. The weighted average interest rate on the Credit Facility was ~~5.51%~~5.61% at ~~June~~ September 30, 2018.

[The Company ~~has agreed~~is negotiating with lenders for an extension of the Credit Facility and a new non-recourse term loan that would be secured by certain of the regional jet aircraft in its portfolio, and expects these transactions, if completed, to ~~acquire, by way~~close prior to expiration of ~~merger (the "Merger"), JetFleet Holding Corp. ("JHC"). JHC is~~ the owner of JetFleet Management Corp. ("JMC"), an integrated aircraft management, marketing and financing business that manages and administers the Company's portfolio of leased aircraft assets under the terms of a management agreement (the "Management Agreement"). If the Merger is completed, these management and administration services will be internalized and performed by the Company following completion.

Total revenues and other income for the quarter ended June 30, 2018 decreased by $0.3 million compared to the second quarter of 2017, and total revenues and other income for the six months ended June 30, 2018 decreased by $0.4 million compared to the first six months of 2017, primarily as a result of decreased operating lease revenues and maintenance reserves revenues, the effects of which were significantly offset by increased other income and gains on sales of aircraft parts in the 2018 period versus net losses on sales of assets in the 2017 period.current credit facility.

Net loss for the quarter ended ~~June~~ September 30, 2018 was ~~$0.1~~$4.5 million, compared to net income of $0.4 million in the same period of 2017, resulting in basic and diluted (loss)/earnings per share of ~~$(0.06)~~$(3.16) and ~~$0.25~~$0.27 respectively. Net ~~income~~loss for the ~~six~~nine months ended ~~June~~ September 30, 2018 was ~~$0.2~~$4.2 million, compared to net income of ~~$1.0~~$1.4 million in the same period of 2017, resulting in basic and diluted (loss)/earnings per share of ~~$0.17~~$(3.00) and ~~$0.67,~~$0.95, respectively. Pre-tax profit margin (which the Company calculates as its income before income tax provision as a percentage of its revenues and other income) for the quarter ended ~~June~~ September 30, 2018 was ~~(1%~~(113%) compared to 7%8% for the ~~second~~third quarter of 2017, and pre-tax profit margin for the ~~six~~nine months ended ~~June~~ September 30, 2018 was 3%(26%) compared to ~~10%~~9% for the same period of 2017 . The second quarters and first six months of 2018 and 2017 included $64,300 and $24,100 and $264,200 and $125,900, respectively, of expenses incurred in connection with the proposed acquisition of JHC by the Company.2017.

On October 1, 2018, the Company acquired, by way of a reverse triangular merger (the "Merger"), JetFleet Holding Corp. ("JHC"). JHC is the owner of JetFleet Management Corp. ("JMC"), the integrated aircraft management, marketing and financing business that manages and administers the Company's portfolio of leased aircraft assets. Before the Merger, such management and administration was performed pursuant to the terms of a management agreement (the "Management Agreement") between the Company and JMC. Post-Merger, management and administration services provided under the Management Agreement have become internalized and under the control and management of the Company itself. Expenses incurred by JMC in providing services under the Management Agreement are, as of October 1, 2018, expenses of the Company reflected in the Company's financial statements. In addition, after October 1, 2018, the management, acquisition and remarketing fees previously paid by the Company to JMC as an unconsolidated third party will no longer be reflected in the Company's financial statements; rather, the expenses incurred by JMC in managing and administering the Company's assets will be borne by the Company directly and reflected in its financial statements accordingly.

Fleet Summary – Assets Held for Lease

~~Portfolio~~Key portfolio metrics of the Company's aircraft held for lease as of ~~June~~ September 30, 2018 and December 31, 2017 were as ~~follows~~.follows:

	June 30, 2018		December 31, 2017		September 30, 2018		December 31, 2017
Number of aircraft and engines held for lease		24		24		18		24

Weighted average fleet age	11.5 years		11.4 years		10.8 years		11.4 years
Weighted average remaining lease term	57 months		58 months		61 months		58 months
Aggregate fleet net book value	$	210,592,000	$	195,098,200	$	187,093,000	$	195,098,200

For the Six Months
Ended June 30,

For the Three Months
Ended June 30,

2018 2017 2018 2017

Average portfolio utilization
90 % 95 % 91 % 94 %

	For the Nine Months Ended September 30,						For the Three Months Ended September 30,
	2018			2017			2018			2017
Average portfolio utilization		91	%		94	%		93	%		93	%

Average portfolio utilization remained flat between the third quarters of 2018 and 2017. The decrease in average portfolio utilization between the first nine months of 2017 and the first nine months of 2018 was due to asset sales during late 2017 and 2018, as well as the return of several aircraft at lease end in 2017.

The following table sets forth the net book value and percentage of the net book value, by type, of the Company's assets that were held for lease at ~~June~~ September 30, 2018 and December 31, ~~2017.~~2017:

	June 30, 2018					December 31, 2017					September 30, 2018					December 31, 2017
Type	Number owned		% of net book value			Number owned		% of net book value			Number owned		% of net book value			Number owned		% of net book value
Turboprop aircraft:
Bombardier Dash-8-400		4		18	%		2		7	%		2		13	%		2		7	%
Bombardier Dash-8-300		3		5	%		3		6	%		2		5	%		3		6	%
Saab 340B Plus		2		2	%		4		3	%		-		-	%		4		3	%
Saab 340B		1		1	%		1		1	%		-		-	%		1		1	%

Regional jet aircraft:
Canadair 900 (*)		5		35	%		5		38	%		5		39	%		5		38	%
Embraer 175		3		14	%		3		16	%		3		16	%		3		16	%
Canadair 1000		2		13	%		2		15	%		2		14	%		2		15	%
Canadair 700		3		11	%		3		13	%		3		12	%		3		13	%

Engines:
Pratt & Whitney 150A		1		1	%		1		1	%		1		1	%		1		1	%

(*) Amounts for December 31, 2017 ~~includes~~include a Canadair 705 that was converted to a Canadair 900 in 2018.

~~At June 30,~~During the third quarter of 2018, the Company purchased no aircraft and ~~December 31,~~sold two aircraft. During the first nine months of 2018, the Company purchased two aircraft subject to operating leases and sold four aircraft and certain aircraft parts. During the third quarter of 2017, the Company ~~also had nine~~purchased one aircraft subject to an operating lease and sold no aircraft. During the first nine months of 2017, the Company purchased three aircraft subject to operating leases and three aircraft that the Company leased pursuant to direct financing leases in a sale and leaseback transaction, and sold one aircraft pursuant to a sales-type finance ~~leases.~~

lease, three spare engines and parts from two assets that are held for sale.

The following table sets forth the net book value and percentage of the net book value of the Company's assets that were held for lease at ~~June~~ September 30, 2018 and December 31, 2017 in the indicated regions (based on the domicile of the lessee):

	June 30, 2018					December 31, 2017					September 30, 2018					December 31, 2017
Region	Net book value		% of net book value			Net book value		% of net book value			Net book value		% of net book value			Net book value		% of net book value
Europe	$	113,905,000		54	%	$	92,108,500		47	%	$	111,920,600		60	%	$	92,108,500		47	%
North America		70,378,100		33	%		72,270,700		37	%		69,431,700		37	%		72,270,700		37	%
Asia		5,854,400		3	%		6,082,100		3	%		5,740,600		3	%		6,082,100		3	%
Off lease		20,454,500		10	%		24,636,900		13	%		-		-	%		24,636,900		13	%
	$	210,592,000		100	%	$	195,098,200		100	%	$	187,092,900		100	%	$	195,098,200		100	%

For the quarter ended ~~June~~ September 30, 2018, approximately ~~30%~~29%, ~~28%,~~27% and ~~21%~~20% of the Company's operating lease revenue was derived from customers in Slovenia, the United States and Spain, respectively. Operating lease revenue does not include interest income from the Company's finance leases. The following table sets forth geographic information about the Company's operating lease revenue for leased aircraft and aircraft equipment, grouped by domicile of the lessee:

	For the Three Months Ended June 30,										For the Three Months Ended September 30,
	2018					2017					2018					2017
Region	Number of lessees		% of operating lease revenue			Number of lessees		% of operating lease revenue			Number of lessees		% of operating lease revenue			Number of lessees		% of operating lease revenue
Europe		4		58	%		4		53	%		4		60	%		4		48	%
North America		4		37	%		4		24	%		4		35	%		4		33	%
Africa		-		-			1		15	%		-		-			1		11	%
Asia		1		5	%		1		4	%		1		5	%		1		4	%
Australia		-		-			1		4	%		-		-			1		4	%

At September 30, 2018 and December 31, 2017, the Company also had six aircraft and nine aircraft, respectively, subject to finance leases. For the quarter ended ~~June~~ September 30, 2018, approximately ~~70%~~61% and ~~30%~~39% of the Company's finance lease revenue was derived from customers in Africa and Europe, respectively.

Assets Held for Sale

At September 30, 2018, the Company also had four aircraft held for sale, comprised of two Saab 340B Plus, one Bombardier Dash-8-300 and one Bombardier Dash-8-400 aircraft.

Results of Operations

(a) Quarter ended ~~June~~September 30, 2018 compared to the quarter ended ~~June~~September 30, 2017

~~The Company recorded a net loss of $0.1 million~~(i) Revenues and Other Income

Revenues and other income for the quarter ended ~~June~~ September 30, 2018 decreased by $3.3 million compared to ~~net income~~the third quarter of ~~$0.4 million in~~2017. The decrease was primarily a result of losses incurred on the ~~same period~~sale of ~~2017.~~two assets, decreased operating lease revenues and decreased maintenance reserves revenues.

Operating lease revenue decreased 4%by 5% to ~~$6.8~~$7.2 million in the ~~second~~third quarter of 2018, from ~~$7.1~~$7.6 million in the ~~second~~third quarter of 2017, primarily due to (i) the loss of revenue from assets that were on lease during the 2017 quarter, but off lease in 2018 and (ii) the loss of revenue from aircraft that were sold during 2017. Such decreases were partially offset by revenue from assets purchased in mid-2017 and in the ~~2018 quarter.~~first six months of 2018.

~~Average portfolio utilization~~Finance lease revenue decreased by 37% to ~~approximately 91% during~~$0.3 million in the ~~second~~third quarter of 2018, from ~~approximately 94% during~~$0.4 million in the ~~second~~third quarter of ~~2017. The decrease was~~2017, primarily due to ~~asset sales during late 2017 and~~a lower finance lease receivables balance in the 2018 ~~as well as the return of several aircraft at lease end in 2017.~~period.

Maintenance reserves that are retained by the Company at lease end are recorded as revenue at that time. The Company recorded no such revenue during the ~~second~~third quarter of 2018. During the ~~second~~third quarter of 2017, the Company recorded maintenance reserves revenue of ~~$0.4~~$0.3 million related to ~~an economic adjustment when an aircraft was returned at lease expiration and $0.3 million of~~ retained ~~reserves when two aircraft were returned prior to lease expiration.~~

~~The Company sold no aircraft during the second quarter of 2018. During the second quarter of 2017, the Company sold two of its spare engines and recorded a loss of $0.2 million.~~

During the second quarter of 2018, the Company recorded $0.6 million in other income resulting from cash received from the previous lessee of three aircraft that were returned to the Company during 2017. Such payments were for unpaid maintenance reserves ~~as well as amounts due pursuant to the return conditions of the applicable leases. The Company did not accrue unpaid reserves or return condition amounts~~ at the time of lease termination ~~based on management's evaluation~~for two aircraft.

During the third quarter of ~~the creditworthiness of the lessee. Therefore,~~2018, the Company ~~is accounting for payments as they are received~~sold two aircraft and recorded losses totaling $2.4 million.

(ii) Expenses

Expenses for the ~~amount~~quarter ended September 30, 2018 increased by $3.1 million compared to the third quarter of 2017. The increase was primarily a result of increases in asset impairment provisions, interest expenses and maintenance expenses between periods, partially offset by decreases in management fees and professional fees, general and administrative and other ~~income.~~expenses.

The ~~Company purchased two aircraft subject~~Company's interest expense increased by 15% to ~~operating leases during each of~~$2.5 million in the ~~second quarters~~third quarter of 2018, from $2.1 million in the same period of 2017, primarily as a result of both a higher average interest rate and ~~2017.~~ higher fee amortization in the 2018 period, the effects of which were partially offset by a lower average debt balance in the 2018 period.

The average net book value of assets held for lease during the ~~second~~third quarters of 2018 and 2017 was approximately ~~$203.3~~$201.6 million and ~~$190.9~~$207.9 million, respectively. Management fees, which are based on the net book value of the Company's aircraft and engines as well as finance lease receivable balances, were ~~approximately the same~~3% lower in the ~~second quarters of 2018 and 2017.~~

~~The Company's interest expense increased by 36% to $2.4 million in the second~~third quarter of 2018 ~~from $1.7 million in~~as compared to the same period of ~~2017, primarily as a result of both a higher average debt balance and a higher average interest rate in the 2018 period, as well as higher fee amortization.~~

The Company's maintenance expense decreased by 83% to $0.1 million in the second quarter of 2018 from $0.4 million in the same period of 2017 primarily as a result of a decrease in maintenance performed by the Company on off-lease aircraft to prepare them for sale or re-lease.

During each of the quarters ended June 30, 2018 and 2017, the Company recorded an impairment provision of $0.3 million and $0.5 million, respectively, for an asset held for lease, based on appraised values.2017.

Professional fees, general and administrative and other expenses for the quarters ended ~~June~~ September 30, 2018 and 2017 included ~~$64,300~~$77,200 and ~~$24,100,~~$161,800, respectively, incurred in connection with the ~~proposed~~ acquisition of JHC.

~~(b) Six months ended June 30, 2018 compared~~The Company's maintenance expense increased by 45% to ~~the six months ended June 30, 2017~~

~~The Company recorded net income of~~ $0.2 million ~~for~~in the ~~six months ended June 30,~~third quarter of 2018 ~~compared to net income of $1.0~~from $0.2 million in the same period of 2017, primarily as a result of maintenance performed by the Company in the 2018 period on an off-lease aircraft to prepare it for sale or re-lease.

During the third quarter of 2018, the Company recorded impairment provisions totaling $2.7 million on four of its aircraft held for sale, based on appraised values. During the third quarter of 2017, the Company recorded an impairment provision of $0.1 million for one of its turboprop aircraft held for lease, based on its expected sales value.

(iii) Income tax (benefit)/provision

The Company's (benefit)/provision for income taxes changed from a provision of $0.3 million in the third quarter of 2017 to a benefit of $1.2 million in the same period of 2018. This change was primarily attributable to the losses on sale and provisions for impairment discussed above, as well as a decrease in the Company's effective tax rate from year to year.

(b)Nine months ended September 30, 2018 compared to the nine months ended September 30, 2017

(i) Revenues and Other Income

Revenues and other income for the nine months ended September 30, 2018 decreased by $3.7 million compared to the first nine months of 2017. The decrease was primarily a result of losses incurred on the sale of assets, decreased operating lease revenues and decreased maintenance reserves revenues, partially offset by increased other income.

Operating lease revenue decreased 8%7% to ~~$13.3~~$20.5 million in the first ~~six~~nine months of 2018, from ~~$14.4~~$22.0 million in the ~~second quarter~~same period of 2017, primarily due to (i) the loss of revenue from assets that were on lease during the 2017 ~~quarter,~~period, but off lease in 2018 and (ii) the loss of revenue from aircraft that were sold during 2017. Such decreases were partially offset by revenue from assets purchased in mid-2017 and in the second quarter of 2018.

~~Average portfolio utilization~~Finance lease revenue decreased by 15% to ~~approximately 90% during~~$1.0 million in the ~~first six~~nine months ofended September 30, 2018, from ~~approximately 95% during~~$1.2 million in the ~~first six~~nine months ~~of 2017. The decrease was~~ended September 30, 2017, primarily due to ~~asset sales during late 2017 and~~a lower finance lease receivables balance in the 2018 ~~as well as~~period.

Maintenance reserves that are retained by the ~~return of several aircraft~~Company at lease end ~~in 2017.~~are recorded as revenue at that time. The Company recorded no such revenue during the nine months ended September 30, 2018. During the nine months ended September 30, 2017, the Company recorded maintenance reserves revenue of $0.4 million related to an economic adjustment due from the lessee when an aircraft was returned at lease expiration and $0.6 million of retained maintenance reserves when four aircraft were returned at or prior to lease expiration.

During the ~~six~~nine months ended ~~June~~ September 30, 2018, the Company recorded ~~net~~ gains totaling of ~~$9,900~~approximately $90,000 on the sale of ~~two~~an aircraft and aircraft ~~parts.~~ parts and losses totaling approximately $2.5 million on the sale of three aircraft.

During the ~~six~~nine months ended ~~June~~ September 30, 2017, the Company recorded a gain of $297,400 on the sale of an aircraft pursuant to a sales-type finance ~~lease. In the 2017 period, the Company also sold two of its spare engines and recorded a loss of $0.2 million, and recorded~~lease, gains totaling ~~$39,800~~$43,200 related to the sale of parts from two assets that are held for ~~sale. Additionally,~~sale, and a loss of $0.2 million on the sale of two spare engines. Also in the 2017 period, the Company exchanged one of its spare engines for 150,000 shares of the Company's common stock held by a ~~stockholder. The Company~~stockholder, and recorded no gain or loss related to the exchange.

During the ~~six~~nine months ended ~~June~~ September 30, 2018, the Company recorded $1.6 million in other income resulting from cash received from the previous lessee of three aircraft that were returned to the Company during 2017. Such payments were for unpaid maintenance reserves, as well as amounts due pursuant to the return conditions of the applicable leases. The Company did not accrue unpaid reserves or return condition amounts at the time of lease termination based on management's evaluation of the creditworthiness of the lessee. Therefore, the Company is accounting for payments as they are received and ~~recorded~~is recording the amount in other ~~income.~~income in the period in which a payment is received.

The Company purchased two aircraft subject to operating leases during the first six months of 2018. During the first six months of 2017, the Company acquired two aircraft that are subject to operating leases, as well as three aircraft that the Company leased pursuant to direct financing leases to the seller of such aircraft. (ii) Expenses

~~The average net book value of assets held~~Expenses for ~~lease during~~ the ~~six~~nine months ended ~~June~~ September 30, 2018 ~~and 2017 was approximately $196.8~~increased by $3.9 million and $189.8 million, respectively. Management fees, which are based on the net book value of the Company's aircraft and engines as well as finance lease receivable balances, were 2% lower in the first six months of 2018 as compared to the ~~same period~~nine months ended September 30, 2017. The increase was primarily a result of ~~2017.~~increases in asset impairment provisions and interest expenses between periods, partially offset by decreases in management fees and maintenance fees.

The Company's interest expense increased by ~~38%~~29% to ~~$4.6~~$7.1 million in the ~~six~~nine months ended ~~June~~ September 30, 2018 from ~~$3.4~~$5.5 million in the same period of 2017, primarily as a result of both a higher average debt balance and a higher average interest rate in the 2018 period, as well as higher fee amortization.

The average net book value of assets held for lease during the nine months ended September 30, 2018 and 2017 was approximately $198.4 million and $195.8 million, respectively. Management fees, which are based on the net book value of the Company's aircraft and engines as well as finance lease receivable balances, were 2% lower in the first nine months of 2018 as compared to the same period of 2017.

Professional fees, general and administrative and other expenses for the nine months ended September 30, 2018 and 2017 included $341,400 and $287,700, respectively, incurred in connection with the acquisition of JHC.

The Company's maintenance expense decreased by ~~76%~~51% to ~~$0.2~~$0.4 million in the first ~~half~~nine months of 2018, from ~~$0.7~~$0.8 million in the same period of 2017, as a result of a decrease in maintenance work performed by the Company on off-lease aircraft to prepare them for sale or re-lease.

During ~~each of~~ the ~~six~~nine months ended ~~June~~ September 30, 2018, ~~and~~the Company recorded impairments totaling $3.0 million on four aircraft held for sale, based on appraised values. During the nine months ended September 30, 2017, the Company recorded an impairment ~~provision~~provisions of ~~$0.3~~$0.4 million ~~and $0.5 million, respectively,~~ for ~~an asset~~one of its aircraft held for lease, based on its appraised ~~value.~~value, and $0.1 million on another aircraft, which was sold in October 2017, based on the net sales value agreed with the buyer during the third quarter of 2017.

Professional fees, general and administrative and other expenses for the six months ended June 30, 2018 and 2017 included $264,200 and $125,900, respectively, incurred in connection with the proposed acquisition of JHC.(iii) Income tax (benefit)/provision

The Company's (benefit) provision for income taxes ~~decreased by 73% to $0.2~~changed from a provision of $0.9 million in the ~~first six~~nine months ended September 30, 2017 to a benefit of ~~2018 from $0.6~~$1.1 million in the same period of ~~2017 as a result of lower pre-tax income in 2018,~~2018. This change was primarily attributable to the losses on sale and provisions for impairment discussed above, as well as ~~lower tax rates provided~~a decrease in the ~~Tax Act of 2017.~~Company's effective tax rate from year to year.

Exhibit Number	Description
10.1	Employment Agreement dated September 1, 2016 between Michael G. Magnusson and JetFleet Management Corp.
31.1	Certification of Michael G. Magnusson, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Toni M. Perazzo, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Michael G. Magnusson, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Toni M. Perazzo, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

	AEROCENTURY CORP.
Date: ~~August 10,~~November 8, 2018	By:	/s/ Toni M. Perazzo
		Name: Toni M. Perazzo
		Title: Senior Vice President-Finance and
		Chief Financial Officer

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2018		2017		2018			2017
Net income/(loss)	$	236,200	$	997,200	$	(81,100	)	$	355,700
Weighted average shares outstanding for the period		1,416,699		1,482,997		1,416,699			1,416,699
Basic earnings/(loss) per share	$	0.17	$	0.67	$	(0.06	)	$	0.25
Diluted earnings/(loss) per share	$	0.17	$	0.67	$	(0.06	)	$	0.25