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+-----BEGIN PRIVACY-ENHANCED MESSAGE-----
+Proc-Type: 2001,MIC-CLEAR
+Originator-Name: webmaster@www.sec.gov
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+<SEC-DOCUMENT>0001036848-02-000029.txt : 20020415
+<SEC-HEADER>0001036848-02-000029.hdr.sgml : 20020415
+ACCESSION NUMBER:		0001036848-02-000029
+CONFORMED SUBMISSION TYPE:	10-K
+PUBLIC DOCUMENT COUNT:		1
+CONFORMED PERIOD OF REPORT:	20011231
+FILED AS OF DATE:		20020328
+
+FILER:
+
+	COMPANY DATA:	
+		COMPANY CONFORMED NAME:			AEROCENTURY IV INC
+		CENTRAL INDEX KEY:			0001034237
+		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT ENGINES & ENGINE PARTS [3724]
+		IRS NUMBER:				943260392
+		STATE OF INCORPORATION:			CA
+		FISCAL YEAR END:			1231
+
+	FILING VALUES:
+		FORM TYPE:		10-K
+		SEC ACT:		1934 Act
+		SEC FILE NUMBER:	333-22239
+		FILM NUMBER:		02590868
+
+	BUSINESS ADDRESS:	
+		STREET 1:		1440 CHAPIN AVE SUITE 310
+		CITY:			BURLINGAME
+		STATE:			CA
+		ZIP:			94010
+		BUSINESS PHONE:		6503401880
+
+	MAIL ADDRESS:	
+		STREET 1:		1440 CHAPIN AVE SUITE 310
+		CITY:			BURLINGAME
+		STATE:			CA
+		ZIP:			94010
+
+	FORMER COMPANY:	
+		FORMER CONFORMED NAME:	AEROCENTURY FUND IV INC
+		DATE OF NAME CHANGE:	19970220
+</SEC-HEADER>
+<DOCUMENT>
+<TYPE>10-K
+<SEQUENCE>1
+<FILENAME>ac410k01.txt
+<DESCRIPTION>2001 10-K, ACIV
+<TEXT>
+                       SECURITIES AND EXCHANGE COMMISSION
+                              WASHINGTON, DC 20549
+
+                                   FORM 10-KSB
+(Mark One)
+[ X ] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
+1934 For the fiscal year ended December 31, 2001
+
+                                       OR
+
+[   ]    Transition Report Under Section 13 or 15(d) of the Securities Exchange
+Act of 1934
+For the transition period from                         to
+                               ----------------------      ---------------------
+
+                        Commission File Number: 333-22239
+                              AeroCentury IV, Inc.
+                  (Name of small business issuer in its charter)
+
+                 California                             94-3260392
+       (State or other jurisdiction        (I.R.S. Employer Identification No.)
+    of incorporation or organization)
+
+      1440 Chapin Avenue, Suite 310
+        Burlingame, California                            94010
+(Address of principal executive offices)                (Zip Code)
+
+Issuer's telephone number, including area code:                  (650) 340-1880
+
+Securities registered pursuant to Section 12(b) of the Act:            None
+
+Securities registered pursuant to Section 12(g) of the Act:            None
+
+Check whether the Issuer:  (1) filed all reports required to be filed by Section
+13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
+for such shorter  period that the registrant was required to file such reports),
+and (2) has been subject to such filing requirements for the past 90 days.
+Yes  X      No
+   ----       ----
+
+Check if there no  disclosure  of  delinquent  filers in response to Item 405 of
+Regulation S-B is not contained herein, and no disclosure will be contained,  to
+the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
+statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
+amendment to this Form 10-KSB. [X]
+
+Revenues for the issuer's most recent fiscal year:  $473,970
+
+On March 28, 2002 the aggregate market value of the voting and non-voting common
+equity held by non-affiliates (computed by reference to the price at which the
+common equity was sold) was $0.
+
+As of March 28, 2002 the Issuer had 243,420 Shares of Common Stock outstanding.
+
+Transitional Small Business Disclosure Format (check one):   Yes       No  X
+                                                                -----    ------
+
+Documents Incorporated by Reference:  None
+
+
+<PAGE>
+
+
+
+
+
+                                     PART I
+
+Forward-Looking Statements
+
+Certain statements contained in this report and, in particular, the discussion
+regarding: the Company's beliefs, plans, objectives, expectations and intentions
+regarding: collection of intercompany tax receivables under its tax sharing
+agreement, the incurring of significant operating expenses for assets on lease,
+an Event of Default during May 2002, the Trustee's actions after a May 2002
+Event of Default to take control of the Company's assets and the Trustee's
+disposition of the assets are forward looking statements. While the company
+believes that such statements are accurate, actual results may differ due to
+further defaults by existing lessees, changing general economic conditions,
+particularly those that affect the re-sale value of turboprop aircraft and
+engines, including competition for turboprop and other aircraft, and future
+trends and results that cannot be predicted with certainty. The Company's actual
+results could differ materially from those discussed in such forward looking
+statements. Factors that could cause or contribute to such differences include
+those discussed below in the section entitled "Factors that May Affect Future
+Results." The cautionary statements made in this Report should be read as being
+applicable to all related forward-looking statements wherever they appear in
+this Report.
+
+Item 1.           Description of Business.
+
+Business of the Company
+
+AeroCentury IV, Inc. (the "Company") was incorporated in the state of California
+in February 1997 ("Inception"). The Company was formed solely for the purpose of
+offering up to $10,000,000 in 10% Secured Promissory Notes, due April 30, 2005
+("Notes") (the "Offering"). The Offering commenced in May 1997 and was
+terminated in August 1997, after $4,869,000 in Notes were sold. The proceeds of
+the Offering were used to purchase income producing assets ("Income Producing
+Assets") consisting of turboprop aircraft and aircraft engines, subject to
+operating or full payout leases with third parties.
+
+All of the Company's outstanding common stock is owned by JetFleet Holding Corp.
+("JHC"), a California corporation formed in January 1994. In May 1998, JetFleet
+Management Corp., the sole shareholder of the Company was renamed JetFleet
+Holding Corp. The rights and obligations under the management agreement between
+the Company and JHC were assigned by JHC to its newly-created, wholly-owned
+subsidiary named "JetFleet Management Corp." ("JMC"). JMC also manages
+AeroCentury Corp. ("ACY"), a Delaware corporation, and JetFleet III, a
+California corporation, which are affiliates of JHC and which have objectives
+similar to the Company's. Neal D. Crispin, the President of the Company, holds
+the same position with JHC and JMC and owns a significant amount of the common
+stock of JHC.
+
+The sole director of the Company is Neal D. Crispin. The officers of the Company
+are Neal D. Crispin,  President and Secretary, and Marc J. Anderson, Senior Vice
+President and Chief Operating Officer.
+
+Aircraft and Aircraft Engines
+
+At December 31, 2001, the Company owned a Fairchild Metro III aircraft, serial
+number AC-647 ("S/N AC-647"), and a Pratt & Whitney JT8D-9A aircraft engine,
+serial number 674452B (the "Engine"). In January 2001, the Company sold its 50%
+interest in a Shorts SD3-60-100, serial number S/N 3676 ("S/N 3676"). The
+Company did not purchase any aircraft during 2001.
+
+S/N AC-647 is on lease to a U.S. carrier for a two-year term, expiring in June
+2002.
+
+The Engine is used on a McDonnell Douglas DC-9 aircraft and is subject to a
+60-month lease with the seller, expiring in November 2002. The Engine is
+subleased by the seller to a Mexican-based regional carrier.
+
+At the time of purchase, S/N 3676 (owned 50% by the Company) was subject to a
+48-month lease, expiring in July 2001, with a British regional airline. In early
+2000, the lessee filed for reorganization and subsequently returned the aircraft
+to the Company. During January 2001, it was sold.
+
+The Company had filed claims for approximately $1,069,000 of unfunded,
+pre-reorganization maintenance expense related to S/N 3676 and another aircraft
+which had been on lease to the same lessee. On February 13, 2001, a majority of
+the creditors of the lessee approved a reorganization plan, which provided that
+unsecured creditors, like the Company, would not receive any recovery of
+pre-reorganization claims.
+
+Item 2.           Description of Property.
+
+The Company does not own or lease any real property, plant or materially
+important physical properties other than equipment under operating lease as set
+forth in Item 1.
+
+The Company maintains its principal office at 1440 Chapin Avenue, Suite 310,
+Burlingame, California, 94010. All office facilities are provided by JMC without
+reimbursement by the Company.
+
+Item 3.           Legal Proceedings.
+
+The Company is not involved in any legal proceedings.
+
+Item 4.           Submission of Matters to a Vote of Security Holders.
+
+None.
+
+                                     PART II
+
+Item 5.           Market for the Common Equity and Related Stockholder Matters.
+
+General
+
+There is no established trading market for the Notes and the Notes are not
+listed on any securities exchange.
+
+Number of Security Holders
+
+Approximate number of holders of Notes ("Noteholders") as of March 28, 2002: 350
+
+Dividends
+
+The Company has not declared a dividend on Common Stock since its formation.
+
+Item 6.           Management's Discussion and Analysis or Plan of Operation.
+
+Results of Operations
+
+The Company recorded a net loss of ($385,850) or ($1.59) per share and
+($1,751,770) or ($7.20) per share for the year ended December 31, 2001 and 2000,
+respectively.
+
+Rental income decreased by approximately $194,000 in 2001 versus 2000 due to the
+sale of aircraft during the fourth quarter of 2000 and January 2001. Gain on
+sale of aircraft was approximately $105,000 higher in 2001 because S/N 3676 was
+sold at a gain, including the associated reserves retained, while one of the
+aircraft sold during 2000 was sold at a loss. Interest income was higher in 2001
+by approximately $30,000 due to higher cash balances as a result of asset sales.
+Depreciation decreased approximately $121,000 in 2001 due to the asset sales
+noted above. Maintenance expense was approximately $63,000 lower in 2001 because
+there was substantial maintenance work performed on an aircraft upon its return
+in 2000. Professional fees and general and administrative expenses were
+approximately the same in both years.
+
+Under the terms of a tax sharing arrangement between the members of the
+consolidated group with which the Company files a consolidated tax return, in
+the event that the Company has taxable income, the Company will be credited for
+the tax benefits provided by the use of the Company's prior year net operating
+losses. However, under this agreement, the Company does not expect its
+inter-company receivable to be collected because it does not expect to generate
+adequate future taxable income.
+
+
+
+<PAGE>
+
+
+
+Capital Resources and Liquidity
+
+The Company's current financial condition is a result of several factors,
+primarily the default on lease obligations by the original lessees of four of
+the Company's five aircraft. As a result of such defaults, the aircraft were
+repossessed by the Company or returned early by the lessees, which meant that
+the Company had to sell the aircraft earlier than anticipated or negotiate lease
+terms with new lessees. See "Factors that May Affect Future Results," below, for
+a complete discussion of factors affecting the Company's cash flow.
+
+
+Since its formation, the Company's capital has come in the form of equity
+contributions from JHC, proceeds from the Offering, rental revenue from the
+Income Producing Assets purchased using those proceeds, and, most recently,
+proceeds from the sale of assets. The Company's liquidity has varied, increasing
+to the extent cash flows from operations exceeded expenses, and decreasing as
+interest payments were made to the Noteholders and to the extent expenses
+exceeded cash flows from leases.
+
+At December 31, 2001, the Company had cash balances of $1,114,420 and deposits
+of $95,780. At December 31, 2001, the Company had Notes outstanding with an
+aggregate principal face value of $4,869,000. The fair value of the Notes, based
+upon the net book values of the aircraft and the net working capital of the
+Company as of that date, is estimated to be approximately $2,221,000, which is
+approximately 46% of the face value of the Notes
+
+Since the Company has acquired Income Producing Assets, which are subject to
+triple net leases (the lessee pays operating and maintenance expenses, insurance
+and taxes), the Company typically does not incur significant operating expenses
+in connection with ownership of its Income Producing Assets as long as they
+remain on lease. The Company has, however, incurred significant maintenance
+expense for aircraft which have been off lease prior to being sold. The Company
+could incur additional expenses for its two remaining aircraft if they are
+returned by the lessees when the leases expire in June and November 2002 and
+remain off lease.
+
+The Company sold several of its aircraft during 2000 and 2001; such sales were
+earlier than anticipated, as the aircraft were returned upon defaults by their
+respective lessees. As a result, the proceeds received from the sales were less
+than was expected and insufficient to purchase additional Income Producing
+Assets. Since the Trust Indenture precludes the Company from using sales
+proceeds to fund interest payments, after consultation with, and with the
+consent of, the Trustee, on December 15, 2001, the Company's Board of Directors
+approved a resolution authorizing a prepayment of $1,000,000 of principal to the
+Noteholders during the first quarter of 2002. The Company made such prepayment
+during February 2002. After the principal prepayment made during February 2002,
+the Company has Notes outstanding with an aggregate principal face value of
+$3,869,000. Including the February 2002 principal prepayment and all interest
+paid to date, the Company has paid to Noteholders an aggregate of approximately
+63% of the face value of the Notes.
+
+The Company did not have sufficient cash balances to fund the required interest
+payment of approximately $122,000 on February 1, 2002 and is therefore in
+default under the Trust Indenture. While the Company has 90 days to cure such
+default, it does not anticipate having sufficient cash to do so. Therefore, in
+May 2002, there will be an "Event of Default" under the Trust Indenture.
+
+
+The Company's decrease in cash flow from operations was due primarily to the
+effect of the change in receivable from affiliates, prepaid expenses, payable to
+affiliate and maintenance deposits, which effects were only partially offset by
+a smaller net loss and the effect of the change in accounts receivable and
+accounts payable.
+
+The decrease in cash flow provided by investing activities was the result of the
+Company's sale of S/N 3676 during 2001 versus having sold S/N 3606 and its 67%
+interest in a deHavilland DHC-6 during 2000. There was no cash flow from
+financing activities in 2001 or 2000 because the Offering terminated in August
+1997.
+
+
+During 2001, the Company paid $100,000 to the Trustee, which amount is estimated
+to be the expenses incurred by the Trustee and its counsel in connection with
+the February 2002 prepayment and the default on the February 1 interest payment.
+Based on reports from the Trustee, during December 2001, the Company expensed
+$40,000 of the $100,000; the balance is included in prepaid expenses and will be
+expensed as incurred during 2002.
+
+
+Outlook
+
+
+As discussed above, it is anticipated that during May 2002, there will be an
+Event of Default under the Trust Indenture. The Trustee would then have control
+over the Company's assets, all of which are collateral for the notes obligation.
+The Trustee could take title to, and possession of, the Company's assets; or the
+Company and the Trustee could enter into a "going-forward" agreement, whereunder
+the Company would retain legal title to the assets that are collateral for the
+Noteholder obligations, but would give the Trustee the sole power to manage the
+assets. In either case, the Trustee would have the ultimate discretion as to the
+timing of the disposition of each asset. The Trustee could choose to sell an
+asset to a third party and immediately distribute the proceeds of such sale to
+the Noteholders. In order to achieve an immediate liquidation of the asset,
+however, the Company may have to accept a price that is substantially less than
+the net book value of the asset or lower than it would receive in a normal
+market sale. Alternatively, the Trustee could decide to continue to hold an
+asset for the benefit of Noteholders and collect rent for such asset until the
+underlying user lease expires, or until the Trustee determines that the asset
+can be sold at an acceptable price.
+
+The Company's two assets are each currently on lease until June 2002 and
+November 2002, at a monthly lease rate of $10,000 and $15,000, respectively. If
+the Trustee were to direct the Company to retain both assets until lease end,
+from January 2002 until the assets' lease expirations, a total of approximately
+$200,000 could be collected under the leases; however, the amount of rental
+income received would nonetheless be insufficient to permit the Trustee to make
+net cash distributions to Noteholders at a rate of 10% per annum (the stated
+interest rate under the Notes) on unpaid Note principal.
+
+
+Any distributions to Noteholders of sales and/or rent proceeds would be net of
+legal and administrative expenses incurred by the Trustee. Such expenses are
+currently estimated at $100,000. Under the terms of the Trust Indenture, any
+final distribution to Noteholders upon sale of the last asset would consist
+first of accrued, but unpaid, interest on the Notes, and then principal.
+
+Factors that May Affect Future Results
+
+
+Anticipated Event of Default; Ability to Maximize Returns. As discussed above,
+due to cash flow problems created by lessee rental defaults, early termination
+of leases, and lower than expected remarketing proceeds described above, it is
+anticipated that there will be an Event of Default under the Trust Indenture on
+May 1, 2002. At that time, it is believed that the Trustee, Wells Fargo Bank
+Northwest (formerly known as First Security Bank, N.A.), will take control of
+the Company's assets securing the Indenture, namely the aircraft portfolio and
+leases and any remaining cash held by the Company. At that point, the Trustee
+will have the power to direct disposition of the collateral with the goal of
+maximizing value to the Noteholders. This could entail an immediate or staged
+disposition of all the assets or retention of the assets on lease for the
+benefit of the Noteholders, or a combination thereof. While the Trustee is
+unlikely to realize sufficient proceeds to enable repayment of the entire Note
+Indebtedness, its ability to maximize repayment to Noteholders will depend on
+the risk factors described below, particularly those that affect asset values of
+the Company's portfolio.
+
+
+Re-lease of Assets or Sale. The ability to maximize return to the Noteholders on
+the remaining assets of the Company will depend upon general economic conditions
+and the speed of recovery of the air transport industry. The industry is
+currently experiencing a cyclical downturn which has been exacerbated greatly by
+the terrorist attacks of September 11, 2001 and their aftermath. As a result,
+there has been a severe reduction in air travel and less revenue and less demand
+for aircraft capacity by the major air carriers, particularly those that serve
+U.S. markets.
+
+One of the Company's assets is a regional aircraft leased to a U.S. regional
+freight carrier. The second is a jet engine leased to a Mexican regional air
+carrier. It is not clear whether and to what extent the current downturn will
+have on these lessees. If the Company's lessees experience a corresponding
+downturn in their own businesses, they may be at risk of failure, and default
+under their respective leases. See "Risks Related to Regional Air Carriers",
+below.
+
+Even if the Company's lessees remain in compliance with their lease through
+expiration, the industry downturn may result in the lessees deciding not to
+renew the leases for an additional term. In that case the assets would likely be
+re-leased to another lessee; however, if the financial condition of the air
+travel industry does not improve within the next year, it may be very difficult
+to find a new lessee for the Company's assets. An unimproved or worse industry
+financial condition would also tend to result in lower amounts realizable on the
+assets if they are sold upon return from the lessee (See "Leasing Risks" and
+"Ownership Risks", below).
+
+
+Leasing Risks. The Company's successful negotiation of lease extensions,
+re-leases and sales for its two assets as directed by the Trustee under the
+going-forward agreement may be critical to its ability to achieve a maximum
+return of principal to its Noteholders, and will involve a number of risks.
+Demand for lease or purchase of the assets depends on the economic condition of
+the airline industry, which is in turn sensitive to general economic conditions.
+Ability to remarket equipment at acceptable rates may depend on the demand and
+market values at the time of remarketing. The market for used aircraft is
+cyclical, and generally, but not always, reflects economic conditions and the
+strength of the travel and transportation industry. As discussed above, The
+demand for and value of many types of older aircraft has been depressed by
+current airline financial difficulties, increased fuel costs, the number of new
+aircraft on order and the number of older aircraft coming off lease. The
+Company's limited portfolio of two assets subjects the Company to economic risks
+if those particular airframe or engine types should decline in value.
+
+
+Risks Related to Regional Air Carriers. Because the Company's leases are with
+regional air carriers, it will be subject to certain risks. First, lessees in
+the regional air carrier market include a number of companies that are start-up,
+low capital, and low margin operations. Often, the success of such carriers is
+dependent upon arrangements with major trunk carriers, which may be subject to
+termination or cancellation by such major carrier. This market segment is also
+characterized by low entry costs, and thus, there is strong competition in this
+industry segment from start-ups as well as major airlines. Thus, leasing
+transactions with these types of lessees results in a generally higher lease
+rate on aircraft, but may entail higher risk of default or lessee bankruptcy.
+
+Ownership Risks. The Company's portfolio is leased under operating leases, where
+the terms of the leases do not take up the entire useful life of an asset. The
+Company's ability to recover its purchase investment in an asset subject to an
+operating lease is dependent upon the Company's ability to profitably re-lease
+or sell the asset after the expiration of the initial lease term. Some of the
+factors that have an impact on the Company's ability to re-lease or sell include
+worldwide economic conditions, general aircraft market conditions, regulatory
+changes that may make an asset's use more expensive or preclude use unless the
+asset is modified, changes in the supply or cost of aircraft equipment and
+technological developments which cause the asset to become obsolete. In
+addition, a successful investment in an asset subject to an operating lease
+depends in part upon having the asset returned by the lessee in serviceable
+condition as required under the lease. If the Company is unable to remarket its
+aircraft equipment on favorable terms when the operating lease for such
+equipment expires, the Company's business, financial condition, cash flow,
+ability to service debt and results of operation could be adversely affected.
+
+Lessee Credit Risk. If a lessee defaults upon its obligations under a lease, the
+Company may be limited in its ability to enforce remedies. The Company's lessees
+are small domestic and foreign regional passenger airlines, which may be even
+more sensitive to airline industry market conditions than the major airlines. As
+a result, the Company's inability to collect rent under a significant lease or
+to repossess equipment in the event of a default by a lessee could have a
+material adverse effect on the Company's revenue. If a lessee that is a
+certified U.S. airline is in default under the lease and seeks protection under
+Chapter 11 of the United States Bankruptcy Code, under Section 1110 of the
+Bankruptcy Code, the Company would be automatically prevented from exercising
+any remedies for a period of 60 days. By the end of the 60 day period, the
+lessee must agree to perform the obligations and cure any defaults, or the
+Company would have the right to repossess the equipment. This procedure under
+the Bankruptcy Code has been subject to significant recent litigation, however,
+and it is possible that the Company's enforcement rights may still be further
+adversely affected by a declaration of bankruptcy by a defaulting lessee.
+
+International Risks. The Company's portfolio currently includes a lease with a
+foreign air carrier. Leases with foreign lessees may present somewhat different
+credit risks than those with domestic lessees.
+
+Foreign laws, regulations and judicial procedures may be more or less protective
+of lessor rights as those which apply in the United States. The Company could
+experience collection problems related to the enforcement of its lease
+agreements under foreign local laws and the remedies in foreign jurisdictions.
+The protections potentially offered by Section 1110 of the Bankruptcy Code would
+not apply to non-U.S. carriers, and applicable local law may not offer similar
+protections. Certain countries do not have a central registration or recording
+system with which to locally establish the Company's interest in equipment and
+related leases. This could add difficulty in recovering an aircraft in the event
+that a foreign lessee defaults.
+
+Leases with foreign lessees are subject to risks related to the economy of the
+country or region in which such lessee is located even if the U.S. economy
+remains strong. On the other hand, a foreign economy may remain strong even
+though the domestic U.S. economy does not. A foreign economic downturn may occur
+and impact a foreign lessee's ability to make lease payments, even though the
+U.S. and other economies remain stable. Furthermore, foreign lessees are subject
+to risks related currency conversion fluctuations. Although the Company's
+current leases are all payable in U.S. dollars, in the future, the Company may
+agree to leases that permit payment in foreign currency, which would subject
+such lease revenue to monetary risk due to currency fluctuations. Even with
+dollar-denominated lease payment provisions, the Company could still be affected
+by a devaluation of the lessee's local currency which would make it more
+difficult for a lessee to meet its dollar-denominated lease payments, increasing
+the risk of default of that lessee, particularly if that carrier's revenue is
+primarily derived in the local currency.
+
+Competition. The Company has many competitors in the aircraft leasing industry,
+including leasing companies, banks and other financial institutions and aircraft
+leasing partnerships. The market is highly competitive. Most of the Company's
+competitors have substantially greater financial and other resources than the
+Company.
+
+Casualties, Insurance Coverage. The Company, as owner of transportation
+equipment, could be held liable for injuries or damage to property caused by its
+assets. Though some protection may be provided by the United States Aviation Act
+with respect to its aircraft assets, it is not clear to what extent such
+statutory protection would be available to the Company and such act may not
+apply to aircraft operated in foreign countries. Though the Company may carry
+insurance or require a lessee to insure against a risk, some risks of loss may
+not be insurable. An uninsured loss with respect to the Equipment or an insured
+loss, for which insurance proceeds are inadequate, would result in a possible
+loss of invested capital in and any profits anticipated from such equipment.
+
+Reliance on JMC. All management of the Company is performed by JMC pursuant to a
+management agreement between JMC and the Company. The Board of Directors does,
+however, have ultimate control and supervisory responsibility over all aspects
+of the Company and does owe fiduciary duties to the Company and its
+stockholders. In addition, while JMC may not owe any fiduciary duties to the
+Company by virtue of the management agreement, the officers of the Company are
+also officers or employees of JMC, and in that capacity owe fiduciary duties to
+the Company and the stockholders by virtue of holding such offices. Although the
+Company has taken steps to prevent such conflicts, such conflicts of interest
+arising from such dual roles may still occur.
+
+Item 7.  Financial Statements.
+
+(a)               Financial Statements and Schedules
+
+         (1)      Financial statements for AeroCentury IV, Inc.:
+
+                           Report of Independent Auditors, Vocker Kristofferson
+                           and Co. Balance Sheet as of December 31, 2001
+                           Statements of Operations for the Years Ended December
+                                31, 2001 and 2000 Statements of Changes in
+                           Shareholder's Deficit for the Years Ended
+                                December 31, 2001 and 2000
+                           Statements of Cash Flows for the Years Ended December
+                                31, 2001 and 2000
+                           Notes to Financial Statements
+
+         (2)      Schedules:
+
+                           All schedules have been omitted since the required
+                           information is presented in the financial statements
+                           or is not applicable.
+
+
+
+<PAGE>
+
+
+                         REPORT OF INDEPENDENT AUDITORS
+
+
+
+To the Board of Directors and Stockholders of AeroCentury IV, Inc.
+
+
+We have audited the accompanying balance sheet of AeroCentury IV, Inc.,
+California corporation, as of December 31, 2001 and the related statements of
+operations, shareholder's deficit and cash flows for the years ended December
+31, 2001 and December 31, 2000. These financial statements are the
+responsibility of the Company's management. Our responsibility is to express an
+opinion on these financial statements based on our audits.
+
+We conducted our audits in accordance with auditing standards generally accepted
+in the United States of America. Those standards require that we plan and
+perform the audits to obtain reasonable assurance about whether the financial
+statements are free of material misstatement. An audit includes examining, on a
+test basis, evidence supporting the amounts and disclosures in the financial
+statements. An audit also includes assessing the accounting principles used and
+significant estimates made by management, as well as evaluating the overall
+financial statement presentation. We believe that our audits provide a
+reasonable basis for our opinion.
+
+In our opinion, the financial statements referred to above present fairly, in
+all material respects, the financial position of AeroCentury IV, Inc., at
+December 31, 2001 and the related statements of operations, shareholder's equity
+and cash flows for the years ended December 31, 2001 and 2000, in conformity
+with accounting principles generally accepted in the United States of America.
+
+The accompanying financial statements have been prepared assuming that the
+Company will continue as a going concern. As shown in the financial statements,
+the Company incurred a net loss of $385,850 for the year ended December 31,
+2001, and, as of that date, the Company's total liabilities exceeded its total
+assets by $2,326,800. As described more fully in Note 7 to the financial
+statements, the Company defaulted on its required interest payment to the
+Noteholders on February 1, 2002 and has ninety days to cure the default. In the
+event the Company is not able to cure the default, the management of the Company
+will be transferred to the Trustee. These conditions raise substantial doubt
+about the Company's ability to continue as a going concern. These financial
+statements do not include any adjustments that might result from the outcome of
+this uncertainty.
+
+
+
+VOCKER KRISTOFFERSON AND CO.
+
+/s/ Vocker Kristofferson & Co.
+
+March 25, 2002
+San Mateo, California
+
+<PAGE>
+
+
+
+
+
+                              AEROCENTURY IV, INC.
+                                  Balance Sheet
+                                December 31, 2001
+
+<TABLE>
+
+                                     ASSETS
+<S>                                                                        <C>
+
+Current assets:
+     Cash                                                                  $   1,114,420
+     Deposits                                                                     95,780
+     Accounts receivable                                                         128,510
+     Rent receivable                                                               5,000
+                                                                           -------------
+Total current assets                                                           1,343,710
+
+Aircraft and aircraft engines under operating leases,
+     net of accumulated depreciation of $435,410                               1,203,790
+Debt issue costs, net of accumulated
+     amortization of $334,250                                                    255,270
+Prepaid expenses                                                                  66,250
+                                                                           -------------
+
+Total assets                                                               $   2,869,020
+                                                                           =============
+
+
+                      LIABILITIES AND SHAREHOLDER'S DEFICIT
+
+Current liabilities:
+     Accounts payable                                                      $      13,880
+     Interest payable                                                             81,150
+     Prepaid rent                                                                  7,500
+     Security deposits                                                            20,000
+     Maintenance deposits                                                        204,290
+                                                                           -------------
+Total current liabilities                                                        326,820
+                                                                           -------------
+
+Medium-term secured notes                                                      4,869,000
+                                                                           -------------
+
+Total liabilities                                                              5,195,820
+                                                                           -------------
+
+Preferred stock, no par value, 100,000 shares authorized,
+     no shares issued and outstanding                                                  -
+Common stock, no par value, 500,000 shares authorized,
+     243,420 shares issued and outstanding                                       243,420
+Accumulated deficit                                                          (2,570,220)
+                                                                           -------------
+Total shareholder's deficit                                                  (2,326,800)
+                                                                           -------------
+
+Total liabilities and shareholder's deficit                                $   2,869,020
+                                                                           =============
+
+</TABLE>
+
+The accompanying notes are an integral part of these statements.
+
+
+
+
+<PAGE>
+
+
+
+                              AEROCENTURY IV, INC.
+                            Statements of Operations
+
+<TABLE>
+
+<CAPTION>
+
+                                                                                          For the Years
+                                                                                        Ended December 31
+                                                                                     2001             2000
+                                                                                     ----             ----
+<S>                                                                             <C>              <C>
+Revenues:
+
+     Rent income                                                                $     308,950    $     503,310
+     Gain on sale of aircraft                                                         113,000            8,120
+     Interest income                                                                   52,020           21,830
+                                                                                -------------    -------------
+
+                                                                                      473,970          533,260
+                                                                                -------------    -------------
+
+Expenses:
+
+     Depreciation                                                                     116,210          236,890
+     Provision for impairment in value of aircraft                                          -        1,021,000
+     Amortization                                                                      76,580           76,580
+     Maintenance                                                                        9,050           72,500
+     Interest                                                                         486,900          486,900
+     Management fees                                                                   97,380           97,380
+     Professional fees and general and administrative                                  72,900           68,260
+                                                                                -------------    -------------
+
+                                                                                      859,020        2,059,510
+
+Loss before taxes                                                                    (385,050)      (1,526,250)
+
+Tax provision                                                                             800          225,520
+                                                                                -------------    -------------
+
+Net loss                                                                        $    (385,850)    $ (1,751,770)
+                                                                                =============    =============
+
+Weighted average common shares outstanding                                            243,420          243,420
+                                                                                =============    =============
+
+Basic loss per common share                                                     $       (1.59)    $      (7.20)
+                                                                                =============    =============
+</TABLE>
+
+
+The accompanying notes are an integral part of these statements.
+
+
+
+<PAGE>
+
+
+
+                               AEROCENTURY IV, INC.
+                       Statements of Shareholder's Deficit
+                 For the Years Ended December 31, 2001 and 2000
+
+<TABLE>
+<CAPTION>
+
+                                                                                        Total
+                                                    Common          Accumulated     Shareholder's
+                                                     Stock            Deficit          Deficit
+                                                     -----            -------          -------
+<S>                                              <C>              <C>               <C>
+Balance, December 31, 1999                       $     243,420    $    (432,600)    $   (189,180)
+
+Net loss for the period                                              (1,751,770)      (1,751,770)
+                                                 -------------    --------------    -------------
+
+Balance, December 31, 2000                             243,420       (2,184,370)      (1,940,950)
+
+Net loss for the period                                                (385,850)        (385,850)
+                                                 -------------    --------------    -------------
+
+Balance, December 31, 2001                       $     243,420      $(2,570,220)     $(2,326,800)
+                                                 =============    ==============    =============
+
+</TABLE>
+
+The accompanying notes are an integral part of these statements.
+
+
+<PAGE>
+
+
+
+                               AEROCENTURY IV, INC.
+                            Statements of Cash Flows
+
+<TABLE>
+<CAPTION>
+
+                                                                    For the Years Ended December 31,
+                                                                       2001                  2000
+                                                                       ----                  ----
+<S>                                                               <C>                   <C>
+
+Operating activities:
+     Net loss                                                     $     (385,850)        $ (1,751,770)
+     Adjustments to reconcile net loss to
+       net cash provided by operating activities:
+         Depreciation                                                    116,210              236,890
+         Amortization                                                     76,580               76,580
+         Gain on sale of aircraft                                       (113,000)              (8,120)
+         Provision for impairment in value of aircraft                         -            1,021,000
+         Receivable from affiliates-deferred taxes                             -              231,980
+         Deferred taxes                                                        -               (7,270)
+         Change in operating assets and liabilities:
+           Deposits                                                       (4,340)             (28,440)
+           Rent receivable                                                43,040               19,640
+           Accounts receivable                                            66,390              (43,850)
+           Prepaid expenses                                              (59,930)               7,850
+           Accounts payable                                              (38,780)             (89,080)
+           Payable to affiliate                                                -               38,920
+           Prepaid rent                                                        -              (25,660)
+           Security deposits                                                   -              (20,200)
+           Maintenance deposits                                          (62,040)             123,290
+                                                                  --------------        -------------
+Net cash used by operating activities                                   (361,720)            (218,240)
+                                                                  --------------        -------------
+
+Investing activities:
+     Proceeds from disposal of assets                                    283,000            1,072,420
+     Purchase of interests in aircraft                                         -              (30,370)
+                                                                  --------------        -------------
+Net cash provided by investing activities                                283,000            1,042,050
+                                                                  --------------        -------------
+
+Net (decrease)/increase in cash                                          (78,720)             823,810
+
+Cash, beginning of period                                              1,193,140              369,330
+                                                                  --------------        -------------
+
+Cash, end of period                                               $    1,114,420        $   1,193,140
+                                                                  ==============        =============
+
+Supplemental disclosures of cash flow information: Cash paid during the period
+for:
+                                                                            2001                 2000
+                                                                            ----                 ----
+     Interest (net of amount capitalized)                         $      486,900        $     486,900
+     Income taxes                                                            800                  800
+
+</TABLE>
+
+The accompanying notes are an integral part of these statements.
+
+
+<PAGE>
+
+
+
+
+                               AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+1.       Summary of Significant Accounting Policies
+
+         Basis of Presentation
+
+         AeroCentury IV, Inc. (the "Company") was incorporated in the state of
+California on February 7, 1997 ("Inception"). The Company was formed solely for
+the purpose of acquiring Income Producing Assets. The Company offered up to
+$10,000,000 in $1,000 Secured Promissory Notes maturing on April 30, 2005 (the
+"Notes") pursuant to a prospectus dated May 21, 1997 (the "Prospectus").
+
+         All of the Company's outstanding common stock is owned by JetFleet
+Holding Corp. ("JHC"), a California corporation formed in January 1994. In May
+1998, JetFleet Management Corp., the sole shareholder of the Company was renamed
+JetFleet Holding Corp. The rights and obligations under the management agreement
+between the Company and JHC were assigned by JHC to a newly-created wholly-owned
+subsidiary named "JetFleet Management Corp." ("JMC"). JMC also manages
+AeroCentury Corp. ("ACY"), a Delaware corporation, and JetFleet III, a
+California corporation, which are affiliates of JHC and which have objectives
+similar to the Company's. Neal D. Crispin, the President of the Company, holds
+the same position with JHC and JMC and owns a significant amount of the common
+stock of JHC.
+
+         Cash and Cash Equivalents/Deposits
+
+         The Company considers highly liquid investments readily convertible
+into known amounts of cash, with original maturities of 90 days or less, as cash
+equivalents. Deposits represent cash balances held related to maintenance
+reserves and security deposits and are subject to withdrawal restrictions. As of
+December 31, 2001, the Company maintained $1,207,440 of its cash balances in a
+money market fund held by a regional brokerage firm, which is not federally
+insured.
+
+         Aircraft and Aircraft Engines Under Operating Leases
+
+         The Company's interests in aircraft are recorded at the lower of cost
+or market value, which include acquisition costs (see Note 2). Depreciation is
+computed using the straight-line method over each aircraft's estimated economic
+life to its estimated residual value.
+
+         Impairment of Long-lived Assets
+
+         In accordance with SFAS No. 121, "Accounting for the Impairment of
+Long-lived Assets and Long-lived Assets to Be Disposed Of," assets are reviewed
+for impairment whenever events or changes in circumstances indicate that the
+book value of the asset may not be recoverable. Periodically, the Company
+reviews its long-lived assets for impairment based on estimated future
+non-discounted cash flows attributable to the assets or appraisals. In the event
+such cash flows are not expected to be sufficient to recover the recorded value
+of the assets, the assets are written down to their estimated realizable value.
+
+         Debt Issue Costs
+
+         Pursuant to the terms of the Prospectus, the Company paid an
+Organization and Offering Expense Reimbursement to JHC in cash in an amount up
+to 2.0% of Aggregate Gross Offering Proceeds for reimbursement of certain costs
+incurred in connection with the organization of the Company and the Offering
+(the "Reimbursement").
+
+
+
+
+<PAGE>
+
+
+
+
+                                AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+1.       Summary of Significant Accounting Policies (continued)
+
+         Debt Issue Costs (continued)
+
+         To the extent that JHC incurred expenses in excess of the 2.0% cash
+limit, such excess expenses were repaid to JHC in the form of Common Stock
+issued by the Company at a price of $1.00 per share (the "Excess Stock"). The
+amount of Excess Stock that the Company can issue was limited according to the
+amount of Aggregate Gross Offering Proceeds raised by the Company. The Company
+capitalized the Reimbursement paid and amortizes such costs over the life of the
+Notes (approximately eight years).
+
+         Assets Subject to Lien
+
+         The Company's obligations under the Notes are secured by a security
+interest in all of the Company's right, title and interest in the Income
+Producing Assets acquired by the Company.
+
+         Income Taxes
+
+         The Company follows the liability method of accounting for income taxes
+as required by the provisions of Statement of Financial Accounting Standards No.
+109 - Accounting for Income Taxes.
+
+         Use of Estimates
+
+         The preparation of financial statements in conformity with generally
+accepted accounting principles requires management to make estimates and
+assumptions that affect certain reported amounts and disclosures. Accordingly,
+actual results could differ from those estimates.
+
+         Recent Accounting Pronouncements
+
+         SFAS No. 138, which amended the effective date of SFAS No. 133,
+Accounting for Derivative Instruments and Hedging Activities, was issued in June
+1999. The Company adopted SFAS No. 133 on January 1, 2001. This statement
+establishes accounting and reporting standards requiring that all derivative
+instruments are recorded on the balance sheet as either an asset or a liability,
+measured at fair value. The statement requires that changes in the derivative's
+fair value be recognized currently in earnings unless specific hedge accounting
+criteria are met and such hedge accounting treatment is elected. Because the
+Company does not hold any derivatives as defined in SFAS No. 133, its adoption
+did not have a material impact on its results of operations or financial
+position.
+
+     In August 2001, the Financial  Accounting  Standards  Board issued SFAS No.
+144,  "Accounting  for the  Impairment or Disposal of Long-lived  Assets," which
+supercedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and
+Long-lived  Assets to Be Disposed  of." SFAS No. 144 is effective  for financial
+statements  issued for fiscal years  beginning  after  December  15,  2001,  and
+interim  periods within those fiscal years.  The Company will adopt SFAS No. 144
+on January 1, 2002.  Because SFAS No. 144 retains the fundamental  provisions of
+SFAS No. 121 for (a) recognition and measurement of the impairment of long-lived
+assets  to be held and used  and (b)  measurement  of  long-lived  assets  to be
+disposed  of by sale,  the  adoption  of SFAS No. 144 is not  expected to have a
+material effect on the Company's results of operations or financial position.
+
+
+
+
+<PAGE>
+
+
+
+                               AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+2.       Aircraft and Aircraft Engines Under Operating Leases
+
+         Aircraft and Aircraft Engines
+
+         At December 31, 2001, the Company owned a Fairchild Metro III aircraft,
+serial number AC-647 ("S/N AC-647"), and a Pratt & Whitney JT8D-9A aircraft
+engine, serial number 674452B (the "Engine"). In January 2001, the Company sold
+its 50% interest in a Shorts SD3-60-100, serial number S/N 3676 ("S/N 3676").
+The Company did not purchase any aircraft during 2001.
+
+         Aircraft and Aircraft Engines Leases
+
+         When S/N AC-647 was acquired, it was subject to a 36-month lease,
+expiring in April 2001, with a regional carrier in Uruguay. During June 1999,
+however, management repossessed the aircraft due to non-payment of rent. In June
+2000, S/N AC-647 was re-leased to a U.S. carrier for a two-year term, expiring
+in June 2002.
+
+         The Engine is used on a McDonnell Douglas DC-9 aircraft and is subject
+to a 60-month lease with the seller, expiring in November 2002. The Engine is
+subleased by the seller to a Mexican-based regional carrier.
+
+         At the time of purchase, S/N 3676 (owned 50% by the Company) was
+subject to a 48-month lease, expiring in July 2001, with a British regional
+airline. During 2000, the lessee filed for reorganization and subsequently
+returned the aircraft to the Company. The owners agreed that they would realize
+a greater benefit if they sold the aircraft "as is" rather than fund the
+maintenance work necessary to return the aircraft to a condition which would
+allow it to possibly be re-leased to a new lessee. Therefore, the Company
+reduced the carrying value of the aircraft to $170,000 and recognized a
+provision for impairment of $245,350 during 2000. The aircraft was sold during
+January 2001. At that time, the Company received net proceeds of $167,450 and
+recognized a gain of $35,980. During the second quarter of 2001, the lessee paid
+all amounts owed to the Company and, since the aircraft had been sold, the
+Company recognized an additional gain of $77,020, representing maintenance
+reserves retained.
+
+         Detail of Investment
+
+         The following schedule provides an analysis of the Company's investment
+in aircraft under operating leases and the related accumulated depreciation for
+the years ended December 31, 2001 and 2000:
+
+<TABLE>
+<CAPTION>
+
+                                                           Accumulated      Allowance for
+                                              Cost        Depreciation       Impairment           Net
+                                              ----        ------------       ----------           ---
+<S>                                     <C>               <C>              <C>               <C>
+
+Balance, December 31, 1999              $   4,273,460     $    (491,630)    $          -     $   3,781,830
+
+Additions                                      30,370          (236,890)      (1,021,000)       (1,227,520)
+
+Disposals                                  (1,332,180)          267,880                -        (1,064,300)
+                                        -------------     -------------    -------------     -------------
+
+Balance, December 31, 2000              $   2,971,650     $    (460,640)    $ (1,021,000)    $   1,490,010
+
+Additions                                           -          (116,210)               -          (116,210)
+
+Disposals                                    (556,800)          141,440          245,350          (170,010)
+                                        -------------     -------------    -------------     -------------
+
+Balance, December 31, 2000              $   2,414,850     $    (435,410)    $   (775,650)    $   1,203,790
+                                        =============     =============    =============     =============
+</TABLE>
+<PAGE>
+
+
+                               AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+3.       Operating Segments
+
+         The Company operates in one business segment, aircraft leasing, and
+therefore does not present separate segment information for lines of business.
+
+         Approximately 39% and 13% of the Company's operating lease revenue was
+derived from lessees domiciled in the United States during 2001 and 2000,
+respectively. All leases relating to aircraft leased and operated
+internationally are denominated and payable in U.S. dollars.
+
+         The table below sets forth geographic information about the Company's
+operating leased aircraft equipment grouped by domicile of the lessee:
+<TABLE>
+<CAPTION>
+
+                                        Operating Lease Revenue            Net Book Value of Operating Leased Assets
+                                    For the Year Ended December 31,                      December 31,
+         Country                         2001              2000                     2001              2000
+         -------                         ----              ----                     ----              ----
+<S>      <C>                        <C>              <C>                        <C>              <C>
+
+
+         United States              $     120,000    $      65,000              $     634,040    $     700,000
+         United Kingdom                     8,950          185,270                          -          170,010
+         Mexico                           180,000          180,000                    569,750          620,000
+         Colombia                               -           73,040                          -                -
+                                    -------------    -------------              -------------    -------------
+                                    $     308,950    $     503,310              $   1,203,790    $   1,490,010
+                                    =============    =============              =============    =============
+
+</TABLE>
+
+         As of December 31, 2001, minimum future lease rent payments receivable
+under noncancelable leases were as follows:
+
+                  Year                   Amount
+                  ----                   ------
+                  2002              $     200,000
+
+4.       Medium-Term Secured Notes
+
+         As mentioned above, the Company raised funds through the Offering from
+May 1997 to August 1997. During 1997, the Company accepted subscriptions for
+4,869 Notes aggregating $4,869,000 in Gross Offering Proceeds. Pursuant to the
+Prospectus, the Company subsequently issued $4,869,000 in Notes due April 30,
+2005. The Notes bear interest at an annual rate of 10.00%, which is due and
+payable on a quarterly basis, in arrears, on the first business day of February,
+May, August and November.
+
+         As described in Note 7 to the financial statements, there is
+substantial doubt as to the Company's ability to continue as a going concern.
+Therefore, the fair value of the Notes is estimated to be approximately
+$2,221,000, which is $2,648,000 less than the carrying value. The fair value of
+the notes payable is estimated based upon the net book values of the aircraft
+and the current net working capital of the Company.
+
+         The Company used the proceeds from previous asset sales to fund a
+principal prepayment totaling $1,000,000 to Noteholders during the first quarter
+of 2002.
+
+
+
+
+
+
+
+<PAGE>
+
+
+
+                                AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+4.       Medium-Term Secured Notes (continued)
+
+         The Company did not have sufficient cash balances to fund the required
+interest payment of approximately $122,000 on February 1, 2002 and is therefore
+in default under the Trust Indenture. The Company has 90 days to cure such
+default, but it will not have sufficient cash to do so. Under the Trust
+Indenture, the Trustee would then have the right to manage the Company's assets,
+all of which are collateral for the notes obligation. Management of the
+Company's assets and extinguishment of its liabilities would then become the
+responsibility of the Trustee, unless the Trustee assigns such management.
+During 2001, the Company paid $100,000 to the Trustee, which amount is estimated
+to be the expenses incurred by the Trustee and its counsel in connection with
+the prepayment and the default. Based on reports from the Trustee, during
+December 2001, the Company expensed $40,000 of the $100,000; the balance is
+included in prepaid expenses and will be expensed as incurred during 2002.
+
+5.       Income Taxes
+
+         The items comprising income tax expense are as follows:
+<TABLE>
+<CAPTION>
+
+                                                                                           2001             2000
+                                                                                           ----             ----
+<S>      <C>                                                                        <C>              <C>
+         Current tax provision
+              Federal                                                               $           -    $            -
+              State                                                                           800               800
+                                                                                    -------------    --------------
+              Current tax provision                                                           800               800
+                                                                                    -------------    --------------
+
+         Deferred tax provision
+              Federal                                                                    (125,760)          (61,840)
+              State                                                                          (840)              780
+                                                                                    -------------    --------------
+              Deferred benefit                                                           (126,600)          (61,060)
+              Valuation allowance                                                         126,600           285,780
+                                                                                    -------------    --------------
+         Total provision for income taxes                                           $         800    $      225,520
+                                                                                    =============    ==============
+
+         Total income tax expense differs from the amount which would be
+provided by applying the statutory federal income tax rate to pretax earnings as
+illustrated below:
+
+                                                                                           2001             2000
+                                                                                           ----             ----
+
+         Income tax benefit at statutory federal income tax rate                    $    (130,910)   $     (475,700)
+         State taxes net of federal benefit                                                  (490)             (290)
+         Other                                                                              5,600                 -
+         Basis differences                                                                      -            21,370
+         Inter-company tax expense                                                              -           394,360
+         Valuation allowance                                                              126,600           285,780
+                                                                                    -------------    --------------
+         Total provision for income taxes                                           $         800    $      225,520
+                                                                                    =============    ==============
+
+</TABLE>
+
+
+
+<PAGE>
+
+
+
+                               AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+5.       Income Taxes (continued)
+
+         Temporary differences and carryforwards, which gave rise to a
+significant portion of deferred tax assets and liabilities as of December 31,
+2001 are as follows:
+
+<TABLE>
+<S>      <C>                                                                        <C>
+         Deferred tax assets:
+              Depreciation of aircraft                                              $      41,590
+              Maintenance deposits                                                         28,730
+              Net operating losses                                                        339,350
+              Other                                                                         2,830
+                                                                                    -------------
+                                                                                          412,500
+                  Valuation allowance                                                    (412,380)
+                                                                                    -------------
+                  Net deferred tax assets                                                     120
+         Deferred tax liability-
+              Amortization of organizational costs                                           (120)
+                                                                                    -------------
+
+                                                                                    $           -
+                                                                                    =============
+</TABLE>
+
+         The Company does not anticipate generating adequate future taxable
+income to realize the benefits of the remaining deferred tax assets on the
+balance sheet. Therefore, the Company has recognized a valuation allowance equal
+to the net deferred tax asset.
+
+         As discussed in Note 1, the Company is a subsidiary of JHC. JHC files a
+consolidated tax return that includes the Company as a member of the
+consolidated group. The current and deferred taxes of the consolidated group are
+allocated to members of the group in their separately issued financial
+statements. Current and deferred income taxes are allocated to members of the
+group by applying FAS 109 as if it were a separate taxpayer. In addition, the
+members of the group record inter-company receivables and payables to reflect
+the tax benefits of net operating losses used in the consolidated tax return.
+However, under the terms of the tax sharing arrangement with other members of
+the consolidated group, the Company does not expect its inter-company receivable
+to be collected because it does not expect to generate adequate future taxable
+income. The Company's current net operating losses of $995,640 may be carried
+forward for twenty years and begin to expire in 2020.
+
+6.       Related Party Transactions
+
+         The Company's Income Producing Asset portfolio is managed and
+administered under the terms of a management agreement with JMC. Under this
+agreement, on the last day of each calendar quarter, JMC receives a quarterly
+management fee equal to 0.5% of the Company's Aggregate Gross Proceeds received
+through the last day of such quarter. In 2001 and 2000, the Company accrued a
+total of $97,380 and $97,380, respectively, in management fees to JMC.
+
+         JMC may receive an acquisition fee for locating assets for the Company
+and a remarketing fee in connection with the sale of the Company's assets,
+provided that such fees are not more than the customary and usual fees that
+would be paid to an unaffiliated party for such a transaction. The total of the
+Aggregate Purchase Price plus the acquisition fee cannot exceed the fair market
+value of the asset based on appraisal. JMC may also receive reimbursement of
+Chargeable Acquisition Expenses incurred in connection with a transaction which
+are payable to third parties. During 2001 and 2000, no acquisition fees or
+reimbursements for Chargeable Acquisition Expenses were paid as the Company did
+not acquire additional assets. During 2001, remarketing fees of $2,550 were paid
+to JMC in connection with the sale of aircraft. During 2000, remarketing fees of
+$9,290 were accrued to JMC in connection with the sale of aircaft.
+
+
+<PAGE>
+
+
+
+                               AEROCENTURY IV, INC.
+                          Notes to Financial Statements
+
+6.       Related Party Transactions (continued)
+
+         As discussed in Note 1, the Company reimbursed JHC for certain costs
+incurred in connection with the organization of the Company and the Offering.
+The Company made no such payments during 2001 and 2000.
+
+7.       Going Concern
+
+         As indicated in the accompanying financial statements, as of December
+31, 2001, the Company's total liabilities exceeded its total assets by
+$2,326,800.
+
+         The Company sold several of its aircraft during 2000 and 2001; such
+sales were earlier than anticipated, as the aircraft were returned upon defaults
+by their respective lessees. As a result, the proceeds received from the sales
+were less than was expected and insufficient to purchase additional Income
+Producing Assets. Since the Trust Indenture precludes the Company from using
+sales proceeds to fund interest payments, after consultation with, and with the
+consent of, the Trustee, on December 15, 2001, the Company's Board of Directors
+approved a resolution authorizing a prepayment of $1,000,000 of principal to the
+Noteholders during the first quarter of 2002. The Company made such prepayment
+during February 2002.
+
+         The Company did not have sufficient cash balances to fund the required
+interest payment of approximately $122,000 on February 1, 2002 and is therefore
+in default under the Trust Indenture. The Company has 90 days to cure such
+default, but it does not anticipate having sufficient cash to do so. Therefore,
+in May 2002, the Trustee will declare an "Event of Default" under the Trust
+Indenture. Under the Trust Indenture, the Trustee will then have the right to
+manage the Company's assets, all of which are collateral for the notes
+obligation, and extinguishment of the Company's liabilities. The Trustee may
+assign such management to the Company or another party.
+
+         During 2001, the Company prepaid $100,000 to the Trustee, which amount
+is estimated to be the expenses incurred by the Trustee and its counsel in
+connection with the prepayment and the default. Based on reports from the
+Trustee, during December 2001, the Company expensed $40,000 of the $100,000; the
+balance is included in prepaid expenses and will be expensed as incurred during
+2002.
+
+         These factors create a substantial uncertainty about the Company's
+ability to continue as a going concern. The financial statements do not include
+any adjustments that might be necessary if the Company is unable to continue as
+a going concern. Since the Company has not yet elected liquidation, and there
+has not yet been a change in management, liquidation accounting has not been
+applied to these financial statements.
+
+8.       Subsequent Events
+
+         After consultation, and with the consent of the Trustee, on February
+19, 2002, the Company made a prepayment of $1,000,000 of principal to the
+Noteholders. After such prepayment, the Company has an aggregate of $3,869,000
+of principal outstanding on the Notes.
+
+         As discussed in Note 7, it is anticipated that during May 2002, there
+will be an Event of Default under the Trust Indenture. The Trustee would then
+have control over the Company's assets, all of which are collateral for the
+notes obligation. The Trustee could take title to, and possession of, the
+Company's assets on behalf of the Noteholders; or the Company and the Trustee
+could enter into a "going-forward" agreement, whereunder the Company would
+retain legal title to the assets that are collateral for the Noteholder
+obligations, but would give the Trustee the sole power to manage the assets. In
+either case, the Trustee would have the ultimate discretion as to the timing of
+the disposition of each asset. The Trustee could choose to sell an asset to a
+third party and immediately distribute the proceeds of such sale to the
+Noteholders. In order to achieve an immediate liquidation of the asset, however,
+the Company may have to accept a price that is substantially less than the net
+book value of the asset or lower than it would receive in a normal market sale.
+Alternatively, the Trustee could decide to continue to hold an asset for the
+benefit of Noteholders and collect rent for such asset until the underlying user
+lease expires, or until the Trustee determines that the asset can be sold at an
+acceptable price.
+
+
+
+
+
+
+Item 8.           Changes in and Disagreements With Accountants
+                  on Accounting and Financial Disclosure.
+
+None.
+
+
+                                    PART III
+
+Item 9.           Directors, Executive Officers, Promoters and Control Persons;
+                  Compliance With Section 16(a) of the Exchange Act.
+
+General
+
+Pursuant to a Management Agreement between the Company and JMC, JMC is
+responsible for most management decisions, has responsibility for supervising
+the Company's day-to-day operations, including compliance with legal and
+regulatory requirements, and is responsible for cash management and
+communications between the Company and the holders of Notes. The Management
+Agreement authorizes JMC, in its sole discretion, to acquire, hold title to,
+sell, lease, re-lease or otherwise dispose of Income Producing Assets or any
+interest therein, on behalf of the Company when and upon such terms as JMC
+determines to be in the best interests of the Company, subject to certain
+limitations set forth in the Prospectus.
+
+Directors and Officers
+
+The directors, executive officers and key employees of the Company and JMC, each
+of whom serves until his successor is elected and qualified, are as follows:
+
+     Name                                 Position Held
+
+Neal D. Crispin         President, Chairman of the Board of Directors and Chief
+                        Financial Officer of the Company
+
+Marc J. Anderson        Senior Vice President of the Company
+
+Neal D. Crispin,  age 56. Mr.  Crispin is Chairman of the Board of Directors and
+President of the Company.  He is also  President and a Director of ACY, JHC, JMC
+and CMA Consolidated,  Inc.  ("CMA").  Prior to forming CMA in 1983, Mr. Crispin
+was vice  president-finance of an oil and gas company.  Previously,  Mr. Crispin
+was a manager with Arthur Young & Co., Certified Public Accountants. Mr. Crispin
+is the husband of Toni M. Perazzo,  a Director and Officer of JHC, JMC, and ACY.
+He received a Bachelors degree in Economics from the University of California at
+Santa Barbara and a Masters degree in Business  Administration  (specializing in
+Finance) from the University of California at Berkeley. Mr. Crispin, a certified
+public  accountant,  is a member of the American  Institute of Certified  Public
+Accountants and the California Society of Certified Public Accountants.
+
+Marc J. Anderson, age 65. Mr. Anderson is the Company's Senior Vice President
+and is also Senior Vice President of JHC, JMC and ACY and a Director of ACY.
+Prior to joining JMC in 1994, Mr. Anderson was an aviation consultant (1992 to
+1994) and prior to that spent seven years (1985 to 1992) as Senior Vice
+President-Marketing for PLM International, a transportation equipment leasing
+company. He was responsible for the acquisition, modification, leasing and
+remarketing of all aircraft. Prior to PLM, Mr. Anderson served as
+Director-Contracts for Fairchild Aircraft Corp., Director of Aircraft Sales for
+Fairchild SAAB Joint Venture, and Vice President, Contracts for SHORTS Aircraft
+USA, Inc. Prior to that, Mr. Anderson was employed by several airlines in
+various roles of increasing responsibility beginning in 1959.
+
+Item 10.          Executive Compensation.
+
+The Company's Income Producing Asset portfolio is managed and administered under
+the terms of a management agreement with JMC. Under this agreement, on the last
+day of each calendar quarter, JMC receives a quarterly management fee equal to
+0.5% of the Company's Aggregate Gross Proceeds received through the last day of
+such quarter. In 2001 and 2000, the Company accrued a total of $97,380 and
+$97,380, respectively, in management fees to JMC.
+
+JMC may receive an acquisition fee for locating assets for the Company and a
+remarketing fee in connection with the sale of the Company's assets, provided
+that such fees are not more than the customary and usual fees that would be paid
+to an unaffiliated party for such a transaction. The total of the Aggregate
+Purchase Price plus the acquisition fee cannot exceed the fair market value of
+the asset based on appraisal. JMC may also receive reimbursement of Chargeable
+Acquisition Expenses incurred in connection with a transaction which are payable
+to third parties. During 2001 and 2000, no acquisition fees or reimbursements
+for Chargeable Acquisition Expenses were paid as the Company did not acquire
+additional assets. During 2001, remarketing fees of $2,550 were paid to JMC in
+connection with the sale of aircraft. During 2000, remarketing fees of $9,290
+were accrued to JMC in connection with the sale of aircaft.
+
+As discussed in Note 1, the Company reimbursed JHC for certain costs incurred in
+connection with the organization of the Company and the Offering. The Company
+made no such payments during 2001 and 2000.
+
+Item 11.          Security Ownership of Certain Beneficial Owners and Management
+                  and Related Stockholder Matters.
+
+No person is known to the Company to be the beneficial owner of more than 5% of
+the Units. No officer or director of JHC or JMC or any of its related parties
+beneficially owns any Units.
+
+JHC owns 100% of the issued and outstanding common stock of the Company. Mr.
+Crispin, President of JHC, and Toni M. Perazzo, Vice President-Finance of JHC,
+collectively own the majority of the issued and outstanding common stock of JHC,
+including shares owned by CMA Consolidated, an affiliated company controlled by
+Mr. Crispin. Marc J. Anderson, Senior Vice President of JMC owns approximately
+1% of JHC's common stock.
+
+Item 12.          Certain Relationships and Related Transactions.
+
+See Item 10, above.
+
+Item 13.          Exhibits and Reports on Form 8-K.
+
+         (a)      Exhibits
+
+                  None.
+
+         (b)      Reports on Form 8-K Filed in Last Quarter
+
+                  Report on Form 8-K filed with the Securities and Exchange
+                  Commission on October 1, 2001.
+
+
+<PAGE>
+
+
+
+                                   SIGNATURES
+
+In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has
+caused this Report on Form 10-KSB to be signed on its behalf by the undersigned,
+thereunto duly authorized on March 28, 2002.
+
+                                            AEROCENTURY IV, INC.
+
+
+                                     By:    /s/ Neal D. Crispin
+                                            -------------------------------
+                                            Neal D. Crispin
+
+                                     Title: President
+
+
+
+
+
+
+</TEXT>
+</DOCUMENT>
+</SEC-DOCUMENT>
+-----END PRIVACY-ENHANCED MESSAGE-----