================================================================================
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549

                                FORM 10-QSB
----
X     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
------
      SECURITIES EXCHANGE ACT OF 1934

      For the quarterly period ended June 30, 2002

                                 OR

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


      Commission File Number:                 0-24795

                    AVIATION GENERAL, INCORPORATED
                    (Exact name of registrant as specified in its charter)


      Delaware                                             73-1547645
      (State of Incorporation)                             (IRS Employer
                                                           Identification No.)

      7200 NW 63rd Street
      Hangar 8, Wiley Post Airport
      Bethany, Oklahoma                                     73008
      (Address of principal executive offices)            (Zip Code)

                                 (405) 440-2255
      (Registrant's telephone number, including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
      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 requirement for the past 90 days.

      Yes__X__                   No_____
           -

         There were 6,859,330 Shares of Common Stock Outstanding
         as of July 31, 2002

================================================================================



<PAGE>




PART I. FINANCIAL INFORMATION
ITEM  I. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

           AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES
              CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                               (Unaudited)
                                                                                June 30,                December 31,
                                                                                  2002                      2001
                                                                           --------------------      --------------------
                                    ASSETS
<S>                                                                         <C>                      <C>
Current Assets
    Cash and cash equivalents                                                         $132,773                  $211,356
    Accounts receivable                                                                174,744                         -
    Current portion of note receivable                                                  28,878                    36,673
    Inventories                                                                      5,704,733                 6,139,232
    Prepaid expenses and other assets                                                   71,078                    70,155
                                                                           --------------------      --------------------
       Total current assets                                                          6,112,206                 6,457,416
                                                                           --------------------      --------------------

Property and equipment
    Office equipment and furniture                                                     372,162                   372,162
    Vehicles and aircraft                                                               95,115                    95,115
    Manufacturing equipment                                                            385,179                   385,179
    Tooling                                                                            676,747                   676,747
    Leasehold improvements                                                             315,050                   315,050
                                                                           --------------------      --------------------
                                                                                     1,844,253                 1,844,253
    Less accumulated depreciation                                                   (1,272,018)               (1,205,135)
                                                                           --------------------      --------------------
                                                                                       572,235                   639,118
                                                                           --------------------      --------------------

Other assets
    Notes receivable, less current maturities                                           59,413                    65,223
    Available-for-sale equity securities - related party                                56,350                   142,100
                                                                           --------------------      --------------------
                                                                                       115,763                   207,323
                                                                           --------------------      --------------------

                                                                                    $6,800,204                $7,303,857
                                                                           ====================      ====================
</TABLE>



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



<PAGE>



                  AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                               (Unaudited)
                                                                                June 30,                December 31,
                                                                                  2002                      2001
                                                                           --------------------      --------------------
<S>                                                                    <C>                         <C>
                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable                                                               $2,444,892                 $2,309,450
    Accrued expenses                                                                  891,274                    614,116
    Refundable deposits                                                               437,843                    745,549
    Notes payable                                                                   1,677,457                  2,160,079
                                                                           --------------------      --------------------
       Total current liabilities                                                    5,451,466                  5,829,194
                                                                           --------------------      --------------------
                                                                                      150,000                    150,000
    REDEEMABLE COMMON STOCK - $.01 par value; Issued 150,000 shares in 2001;
    stated at redemption value
                                                                           --------------------      --------------------
                                                                           --------------------      --------------------




Stockholders' Equity
    Preferred stock, $.01 par value, 5,000,000
        shares authorized; no shares outstanding                                            -                          -
    Common stock, $.50 par value, 20,000,000
        shares authorized; 7,631,519 shares issued
        At June 30, 2002 and December 31, 2001                                      3,815,759                  3,815,759
    Additional paid-in capital                                                     37,000,299                 37,000,299
    Less: Treasury stock at cost, 772,189 shares at
        June 30, 2002 and December 31, 2001                                        (1,294,193)                (1,294,193)
    Accumulated other comprehensive income (loss)                                    (339,623)                  (253,873)
    Accumulated deficit                                                           (37,983,504)               (37,943,329)
                                                                           --------------------      --------------------
                                                                           --------------------      --------------------
                                                                                    1,198,738                  1,324,663

    Total stockholders' equity
                                                                           --------------------      --------------------
                                                                           --------------------      --------------------
                                                                                   $6,800,204                 $7,303,857

                                                                           ====================      ====================
                                                                           ====================      ====================
</TABLE>




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


<PAGE>




               AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                               (Unaudited)
<TABLE>
<CAPTION>


                                                                  Three Months Ended June 30,
                                                               2002                          2001
                                                      -----------------------       -----------------------
                                                      -----------------------       -----------------------
<S>                                                   <C>                          <C>
Net sales - aircraft                                             $4,433,946                    $2,729,783
Net sales - service                                                 295,363                       489,225
                                                      -----------------------       -----------------------
   Total net sales                                                4,729,309                     3,219,008
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          3,776,757                     2,324,580
Cost of sales - service                                             181,600                       370,645
                                                      -----------------------       -----------------------
   Total cost of sales                                            3,958,357                     2,695,225
                                                      -----------------------       -----------------------

Gross margin                                                        770,952                       523,783
                                                      -----------------------       -----------------------

Other operating expenses
   Product development and engineering costs                         41,218                        86,870
   Selling, general and administrative expenses                     443,093                       817,161
                                                      -----------------------       -----------------------
     Total other operating expenses                                 484,311                       904,031
                                                      -----------------------       -----------------------

Operating income (loss)                                             286,641                      (380,248)
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                      16,314                        56,254
   Interest expense                                                 (55,332)                     (125,315)
   Other expense                                                      2,387                        (6,099)
                                                      -----------------------       -----------------------
   Total other income (expenses)                                    (36,631)                      (75,160)
                                                      -----------------------       -----------------------

Net income (loss)                                                  $250,010                     ($455,408)
                                                      =======================       =======================

Net Income per share

   Weighted average common shares
      Outstanding, basic                                           6,859,330                     6,279,330
                                                      -----------------------       -----------------------

   Net Income (loss) per share, basic                                  $0.04                       ($0.07)
                                                      =======================       =======================

   Weighted average common shares
      Outstanding, diluted                                         6,859,330                     6,279,330
                                                      -----------------------       -----------------------

   Net Income (loss) per share, diluted                                $0.04                       ($0.07)
                                                      =======================       =======================
</TABLE>


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


<PAGE>


                   AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                       (Unaudited)
<TABLE>
<CAPTION>


                                                                   Six Months Ended June 30,
                                                               2002                          2001
                                                      -----------------------       -----------------------
                                                      -----------------------       -----------------------
<S>                                                  <C>                           <C>
Net sales - aircraft                                             $5,812,196                    $4,863,995
Net sales - service                                                 421,934                       994,773
                                                      -----------------------       -----------------------
   Total net sales                                                6,234,130                     5,858,768
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          4,942,642                     4,138,079
Cost of sales - service                                             248,305                       805,231
                                                      -----------------------       -----------------------
   Total cost of sales                                            5,190,947                     4,943,310
                                                      -----------------------       -----------------------

Gross margin                                                      1,043,183                       915,458
                                                      -----------------------       -----------------------

Other operating expenses
   Product development and engineering costs                         73,173                       182,177
   Selling, general and administrative expenses                     904,420                     1,635,520
                                                      -----------------------       -----------------------
     Total other operating expenses                                 977,593                     1,817,697
                                                      -----------------------       -----------------------

Operating income (loss)                                              65,590                      (902,239)
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                      18,011                       100,303
   Interest expense                                                (123,834)                     (245,960)
   Other expense                                                         59                        (6,099)
                                                      -----------------------       -----------------------
   Total other income (expenses)                                   (105,764)                     (151,756)
                                                      -----------------------       -----------------------

Net loss                                                           ($40,174)                  ($1,053,995)
                                                      =======================       =======================

Net Income (loss) per share

   Weighted average common shares
      Outstanding, basic                                           6,859,330                     6,279,330
                                                      -----------------------       -----------------------

   Net loss per share, basic                                         ($0.01)                       ($0.17)
                                                      =======================       =======================

   Weighted average common shares
      Outstanding, diluted                                         6,859,330                     6,279,330
                                                      -----------------------       -----------------------

   Net loss per share, diluted                                       ($0.01)                       ($0.17)
                                                      =======================       =======================

</TABLE>


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



<PAGE>

             AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Unaudited)
<TABLE>
<CAPTION>

                                                                              Six Months Ended June 30,
                                                                            2002                     2001
                                                                     --------------------     --------------------
<S>                                                               <C>                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Loss                                                                  ($40,174)             ($1,053,995)
     Adjustments to reconcile net loss to
         net cash provided (used) by operating activities
         Depreciation and amortization                                           66,883                   51,108
         Non-cash interest earnings                                                   -                  (68,149)
         Changes in assets and liabilities
               (Increase) decrease  in
                   Accounts receivable                                         (174,744)                 504,714
                   Notes receivable                                              13,605                    6,259
                   Inventories                                                  434,499                 (713,809)
                   Prepaid expense and other assets                                (923)                 (56,959)
               Increase (decrease) in
                   Accounts payable                                             135,442                  463,699
                   Accrued expenses                                             328,154                  (44,673)
                   Refundable deposits                                         (307,706)                  17,059
                                                                     --------------------     --------------------
     Net cash provided (used) by operating activities                           455,036                 (894,746)
                                                                     --------------------     --------------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Capital expenditures                                                             -                  (37,244)
                                                                     --------------------     --------------------
     Net cash used by investing activities                                            -                  (37,244)
                                                                     --------------------     --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings                                                 2,054,332                3,986,943
     Payments on borrowings                                                  (2,587,951)              (2,644,541)
                                                                     --------------------     --------------------
     Net cash provided (used) by financing activities                          (533,619)               1,342,402
                                                                     --------------------     --------------------

Net increase (decrease) in cash                                                 (78,583)                 410,412
Cash and cash equivalents at beginning of period                                211,356                  135,016
                                                                     --------------------     --------------------
Cash and cash equivalents at end of period                                     $132,773                 $545,428
                                                                     ====================     ====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
      Cash paid during the period for:
         Interest                                                              $123,596                 $256,001
         Income taxes                                                                 -                        -
</TABLE>


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


<PAGE>



                         AVIATION GENERAL, INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1. The condensed financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations; however, the
management believes that the disclosures are adequate to make the information
presented not misleading. In the opinion of the management, all adjustments
necessary to present fairly the financial position of Aviation General,
Incorporated as of June 30, 2002, and the results of operations and cash flows
for the three and six month periods ended June 30, 2002 and 2001 have been
included and are of a normal, recurring nature. The results of operations for
such interim periods are not necessarily indicative of the results for the full
year. It is suggested that these condensed financial statements be read in
conjunction with the Company's 2001 Annual Report on Form 10-K.

2. Basic income (loss) per share of common stock has been computed by using the
weighted average number of shares of common stock outstanding during the period.
Diluted income loss per share has been computed based on the assumption that all
dilutive options are exercised.
<TABLE>
<CAPTION>
                                                                     Six months ending
                                                          June 30, 2002               June 30, 2001
                                                          -------------               -------------
<S>                                               <C>                             <C>
  Numerator
       Net loss                                                ($40,174)               ($1,053,995)

  Denominator
       Weighted average shares outstanding,
         basic                                                6,859,330                  6,279,330

       Effect of dilutive securities
         Stock options                                                0                          0
                                                                  -----                     ------

  Denominator for loss per share
    assuming dilution                                         6,859,330                  6,279,330
                                                             ==========                 ==========

  Loss per share, basic                                        ($ 0.01)                   ($ 0.17)
                                                        ===============             ==============

  Loss per share, assuming dilution                            ($ 0.01)                   ($ 0.17)
                                                        ===============             ==============


                                                                    Three months ending
                                                          June 30, 2002               June 30, 2001
                                                          -------------               -------------
  Numerator
       Net income (loss)                                       $250,010                  ($455,408)

  Denominator
       Weighted average shares outstanding,
         basic                                                6,859,330                  6,279,330

       Effect of dilutive securities
         Stock options                                                0                          0
                                                                  -----                      -----

  Denominator for income (loss) per share,
    assuming dilution                                         6,859,330                  6,279,330
                                                             ==========                 ==========

  Income (loss) per share, basic                                 $ 0.04                   ($ 0.07)
                                                          =============             ==============

  Income (loss) per share, assuming dilution                     $ 0.04                   ($ 0.07)
                                                          =============             ==============
</TABLE>


Outstanding options of 2,695,750 and 2,775,050 for the periods ended June 30,
2002 and 2001 have been excluded from the calculations above as they would be
antidilutive.

3.       Total comprehensive loss for the periods presented is as follows:

                                   For the six months ending June 30
                                      2002                       2001
                                      ----                       ----

  Net loss                           ($40,174)               ($1,053,995)
  Other comprehensive loss            (85,750)               (135,941)
                                   -----------           ---------------

  Comprehensive loss                ($125,924)               ($1,189,936)
                                   ===========              ==============

                                   For the three months ending June 30
                                      2002                       2001
                                      ----                       ----

  Net income (loss)                  $250,010                 ($455,408)
  Other comprehensive loss            (53,900)                 (107,200)
                                   -----------               -----------

  Comprehensive income (loss)        $196,110                  ($562,608)
                                    =========                 ===========


4. Inventories consist primarily of finished goods and parts for manufacturing
and servicing aircraft. Inventory costs include all direct manufacturing costs
and applied overhead. These inventories, other than used aircraft, are stated at
the lower of cost or market, and cost is determined by the average-cost method.
Used aircraft are valued on a specific-identification basis at the lower of cost
or current estimated realizable wholesale price. Inventory components at the
balance sheet dates were as follows:

                                    June 30, 2002             December 31, 2001

  Raw materials                           $1,709,431                 $1,983,979
  Work in process                          2,033,212                  1,402,252
  New and pre-owned aircraft               1,942,840                  2,733,751
  Other                                       19,250                     19,250
                                              ------                     ------

  Total inventories                       $5,704,733                 $6,139,232
                                          ----------                 ----------



5. The Company is subject to regulation by the FAA. The Company is subject to
inspections by the FAA and may be subjected to fines and other penalties
(including orders to cease production) for noncompliance with FAA regulations.
The Company has a Production Certificate from the FAA, which delegates to the
Company the inspection of each aircraft. The sale of the Company's product
internationally is subject to regulation by comparable agencies in foreign
countries.

         The Company faces the inherent business risk of exposure to product
liability claims. In 1988, the Company agreed to indemnify a former manufacturer
of the Commander single engine aircraft against claims asserted against the
manufacturer with respect to aircraft built from 1972 to 1979. In 1994, Congress
enacted the General Aviation Revitalization Act, which established an
eighteen-year statute of repose for general aviation manufacturers. This
legislation prohibits product liability suits against manufacturers when the
aircraft involved in an accident is more than 18 years old. This action
effectively eliminated all potential liability for the Company with respect to
aircraft produced in the 1970s as of December 31, 1997. The Company's product
liability insurance policy with coverage of $10 million per occurrence and $10
million annually in the aggregate with a deductible of $200,000 per occurrence
and annually in the aggregate expired March 1, 1995. Subsequent to March 1,
1995, the Company is not insured for product liability claims. Management
believes that the interest of shareholders is better served by vigorously
defending claims through the services of highly qualified specialists and
attorneys rather than retaining product liability insurance to settle exorbitant
claims.

         The Company is routinely involved in various legal matters arising in
the normal course of business, including product liability claims. Management
intends to vigorously defend against these claims and currently believes that
legal matters will not result in any material adverse effect on the Company's
financial position or results of operations. Accordingly, no provision for any
liabilities that may result have been recorded in the financial statements. Due
to the uncertainty of these matters, it is at least reasonably possible that
management's view of the outcome will change in the near term.

6. SFAS No. 143 requires entities to record the fair value of a liability for an
asset retirement obligation in the period in which it is incurred and a
corresponding increase in the carrying amount of the related long-lived asset.
SFAS No. 143 is effective for fiscal years beginning after June 15, 2002.

         SFAS No. 144 is effective for the Company for the fiscal year beginning
January 1, 2002 and addresses accounting and reporting for the impairment or
disposal of long-lived assets.

         Adoption of SFAS No. 144 has not had and management believes that
adoption of SFAS No. 143 will not have any significant effect on the Company's
financial condition or results of operations.

7. The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the company as a going concern. However, the Company
sustained substantial losses from operations in 2001. While losses have
continued for the unaudited period ended June 30, 2002, the second quarter was
profitable.

         In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operations of the
company, which in turn is dependent upon the Company's ability to meet its
financing requirements on a continuing basis, to maintain present financing, and
to succeed in its future operations. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should the company be unable to continue in existence.

         Management believes that economic conditions and financial markets
appear to have stabilized and that the Company could benefit from increased
interest in general aviation, due to the inconvenience and safety factors
attendant with commercial airline travel. The Company could also benefit from
low interest rates, which significantly lower the financing cost of aircraft
purchases. Management also believes it is eligible and will apply for federal
grants and loans, pursuant to a general aviation relief bill pending in
Congress.

         Furthermore, management has effected a number of initiatives, which, it
believes, will increase revenue and profitability. They include:

1.       Reduction of the Company's cost structure
2.       Adjustment of the Company's production schedule
3.       Increased prices of new aircraft, parts, and services
4.       Seeking additional financing for general working capital purposes
5.       Increase in marketing and advertising activities
6.       Enhancement of the Company's service and refurbishment capabilities and
         business
7.       Increase of Strategic Jet Services, Inc. capabilities and business
8.       Exploring merger and acquisitions possibilities with other general
         aviation concerns

         So far in the year 2002, the Company has experienced a significant
increase in its business. Through June of this year, the company has recorded
sales of 6 new aircraft (versus a total of 8 for all of 2001) and 11 pre-owned
aircraft (versus a total of 22 for all of 2001). The company is currently
structured to achieve break-even financial results at between 10 to 15 new
aircraft deliveries annually, with the precise number dependent upon the
contribution from the Company's parts, service, refurbishment and brokerage
business activities.

8. On July 22, 2002, the Company issued a $1million six percent secured
convertible note due December 31, 2004 in a private placement. The note is
collateralized by the assets of the Company and is convertible into common stock
at $.85 a share at any time during the term of the note. Interest on the note is
payable semi-annually at the end of June and December until maturity.

PART I.      FINANCIAL INFORMATION
ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
             OPERATIONS AND FINANCIAL CONDITION


RESULTS FROM OPERATIONS

         Aviation General, Incorporated is a publicly traded holding company
with two wholly owned subsidiaries, Commander Aircraft Company and Strategic Jet
Services, Inc. Commander Aircraft Company (www.commanderair.com) manufactures,
markets and provides support services for its line of single engine, high
performance Commander aircraft, and consulting, brokerage and refurbishment
services for all types of piston aircraft. Strategic Jet Services, Inc.
(www.strategicjet.com) provides consulting, sales, brokerage, acquisition and
refurbishment services for jet aircraft.

         In 1999, the Company formed Strategic Jet Services, Inc. (SJS), a
wholly owned subsidiary, to provide brokerage, sales, consulting and
refurbishment work for jet aircraft.

         The Company continues to certify new state-of-the-art avionics systems
that offer the customer the latest technology in navigational and communication
equipment. The Company introduced a new de-icing option and received
certification from the Federal Aviation Administration, allowing equipped
aircraft to operate in known icing conditions similar to larger, more expensive
aircraft. Sales of this equipment not only provide additional revenues and
earnings, but also increase the value of the aircraft relative to its
competition.

         During 2000, the Company introduced the 115 series of high performance,
single engine aircraft. The Commander 115 represents the culmination of a
multitude of improvements to the Commander line, and features numerous airframe,
engine and systems refinements, as well as significantly increased range
capability and an upgraded standard avionics package which includes dual Garmin
430 global navigation, communication and moving map displays. The Commander 115
series is the latest of a thoroughbred line of aircraft that offer the ultimate
combination of performance, comfort, safety, and utility, and has become
recognized as the Mercedes of the single engine fleet.

         The Company's business strategy is to capture a significant share of
the existing domestic and international market for the single engine, high
performance aircraft. Commander aircraft have an airframe design decades newer
than the competition and are certified to more stringent standards. In addition,
Commander aircraft have a significantly better safety record and higher resale
value than all other aircraft in their class. The Company believes the domestic
and international market for its aircraft includes individuals and corporations
that will purchase the Company's aircraft for business and personal travel, and
governments, commercial and military organizations that will use the aircraft
for training and other purposes.

         The Company believes the market for its products will improve as a
result of attrition of the existing fleet of aging single engine high
performance aircraft, development of new international markets for general
aviation aircraft, increased use of single engine aircraft as a corporate tool
for small and medium-sized businesses, and demand for advanced single engine
trainers. Recognizing that the size of the pre-owned aircraft market is
significantly larger than the market for new aircraft sales, the Company has
also established capabilities to provide consulting, sales, brokerage,
acquisition and refurbishment services for pre-owned piston and jet aircraft.

         The Company markets its aircraft through a factory direct sales and
marketing organization comprised of regional sales personnel who are managed and
supported from the Company's headquarters in Oklahoma. The marketing
organization is augmented by a worldwide network of Commander Authorized Service
Centers (ASCs). The Company's marketing program utilizes a highly focused
domestic and international advertising and public relations program that
includes product advertising in leading business and aviation publications,
ongoing direct mail programs to owners and pilots, and internet marketing
communications.

         The Company has one of the most comprehensive worldwide service and
support networks in its class. The Company grants domestic Commander ASCs the
non-exclusive right to refer prospects for new Commander aircraft. Commander
ASCs receive a referral fee for identifying purchasers, and provide a full
complement of service and support services, including financing, insurance,
service and support, hangar/storage, flight instruction, and professional pilot
service. The Company selects ASCs from among experienced independent aviation
sales and service organizations that it believes to have excellent facilities,
service capabilities, reputation and financial strength. Through its ASCs,
Commander Aircraft Company offers a turn-key aircraft ownership program designed
to stimulate ownership of Commander aircraft by companies that have not
previously owned or operated aircraft. This flexible program can be tailored to
meet each customer's specific requirements.

         Revenues from the sale of aircraft for the second quarter of 2002
totaled $4,433,946 compared to $2,729,783 for the comparable period of 2001. For
the second quarter of 2002, twelve new and pre-owned aircraft were sold compared
with eight new and pre-owned aircraft sold and one jet aircraft brokered in the
same period for 2001.

         For the six month period ended June 30, 2002, aircraft revenues were
$5,812,196 compared to $4,863,995 for the six month period ending June 30, 2001.
The increase was due to an increase in the number of new aircraft sold during
the first six months of 2002.

         Service revenues totaled $295,363 for the quarter ended June 30, 2002
compared to $489,225 for the comparable quarter in 2001. The decrease was due to
a decrease in parts shipments and aircraft repair and refurbishment activity.
Service revenues were $421,934 for the six month period ending June 30, 2002
compared to $994,773 for the six month period ending June 30, 2001. The decrease
was due to a decrease in parts shipments and aircraft repair and refurbishment
activity.

         Cost of aircraft sales for the three month period ended June 30, 2002
increased to $3,776,757 compared to $2,324,580 for the three month period ended
June 30, 2001. The increase in cost was due to the increase in the number of
aircraft sold. Cost of aircraft sales for the six month period ended June 30,
2002 increased to $4,942,642 compared to $4,138,079 for the six month period
ended June 30, 2001. The increase in cost was due to the increase in the number
of new aircraft sold during the first six months of 2002.

         Cost of sales for service and parts for the quarter ended June 30, 2002
decreased to $181,600 compared to $370,645 for the quarter ended June 30, 2001.
The decrease was due primarily to the decrease in part sales and repair and
refurbishment activity. Cost of sales for service and parts for the six month
period ended June 30, 2002 were $248,305 compared to $805,231 for the six month
period ended June 30, 2001. The decrease was due to the decrease in part sales
and repair and refurbishment activity.

         Product development and engineering costs decreased to $41,218 for the
second quarter of 2002, from $86,870 for the comparable period in 2001 due to
the reduction in support staff and employee benefits. For the six month period
ended June 30, 2002 product development and engineering costs were $73,173
compared to $182,177 for the six month period ended June 30, 2001 due to a
reduction in support staff and employee benefits.

         Sales, general and administrative expense decreased for the three-month
period ended June 30, 2002, to $443,093 from $817,161 for the comparable period
ended June 30, 2001 due to the reduction in staff and employee benefits. Sales,
general and administrative expense for the six-month period ended June 30, 2002
were $904,420 compared to $1,635,520 for the six month period ended June 30,
2001 due to reduction in staff and employee benefits.

         Interest expense decreased to $55,332 for the second quarter of 2002
from $125,315 for the comparable period in 2001 due to a reduction of bank lines
of credit.

LIQUIDITY AND CAPITAL RESOURCES

         Cash balances decreased to $132,773 at June 30, 2002 from $211,356 at
December 31, 2001. Accounts receivable increased by $174,744 at June 30, 2002
due to the increase in aircraft sales.

         Notes receivable decreased to $88,291 at June 30, 2002 from $101,896 at
December 31, 2001 due to regular quarterly payments from the debtor.

         The Company's investment in equity securities is classified as
available for sale with unrealized gains or losses excluded from income and
reported as other comprehensive income. Declines in the fair value of securities
that are other than temporary result in write-downs are included in earnings.
This investment is in the common stock of a related party.

         Inventories decreased to $5,704,733 at June 30, 2002 from $6,139,232 at
December 31, 2001. Raw materials, parts and work in process increased
approximately $356,000, as the company continues production of new aircraft. New
and pre-owned aircraft inventory decreased by $791,000 due to sales of aircraft.

         Accounts payable increased to $2,444,892 at June 30, 2002 from
$2,309,450 at December 31, 2002 . Accrued expenses increased to $942,270 at June
30, 2002 from $614,116 at December 31, 2002. The increase reflects the
acquisition of a pre-owned aircraft paid for in the first week of July.

         Refundable deposits decreased to $437,843 at June 30, 2002 from
$745,549 at December 31, 2001. Short term notes payable decreased to $1,677,457
at June 30, 2002 from $2,160,079 at December 31, 2001.

         The Company anticipates that its primary cash requirement will relate
to working capital associated with ongoing operations and an increase in sales
activity. The Company anticipates funding these requirements by cash generated
from operations, borrowings under the Company's existing lines of credit and new
funding sources. In July 2002 the Company obtained $1million of Financing
through the issuance of a convertible note, which is described below under
"Contractual Obligations."

CRITICAL ACCOUNTING POLICIES

Aircraft Sale and Marketing

         The Company recognizes the sale of new aircraft when a purchase
agreement is funded and title is transferred to the buyer, which occurs after
the Company receives an airworthiness certificate from the Federal Aviation
Administration. Sales of pre-owned aircraft are recognized upon execution and
the funding of a purchase agreement. Service revenues are recognized when
services are performed.


Inventories

         Inventories, other than pre-owned aircraft, are stated at lower of cost
or market, and cost is determined by the average-cost method. The inventory
costs include all direct manufacturing costs and overhead. The inventories
consist of parts for manufacturing and servicing of aircraft, parts for resale
and work in process, as well as new and pre-owned aircraft. Pre-owned aircraft
are valued on a specific-identification basis at the lower of cost or current
estimated realizable wholesale price.

         Overhead and indirect costs are capitalized as incurred and allocated
to aircraft produced based on the number of direct labor hours required to
complete the aircraft.


CONTRACTUAL OBLIGATIONS

         We finance our inventory of new and pre-owned aircraft to provide
working capital for the Company. These loans require monthly interest payments
during the term of the loan and partial principal repayments or renewal fees if
the notes are renewed. The table below summarizes the Company's obligations at
June 30,2002.

                                                                2002 Obligation
                                          Total Interest

Revolving credit facilities                 $1,626,461               $68,706

Note payable to an individual, payable          50,996                 1,590
 in monthly installments of $8,699,
 including interest at 8%

         On July 22, 2002, the Company issued a $1million six percent secured
convertible note due December 31, 2004 in a private placement. The note is
collateralized by the assets of the Company and is convertible into common stock
at $.85 a share at any time during the term of the note. Interest on the note is
payable semi-annually at the end of June and December until maturity.

         The Company leases its facilities with a revocable permit to lease
obtained on December 17, 2001. The permit requires a monthly lease payment in
the same amount as the original five year lease scheduled to expire in October,
2003 and was terminated December 16, 2001. The permit requires payment of any
delinquent and outstanding amounts owed by December 31, 2002. The following
table presents future annual minimum lease payments assuming the Company
fulfills its obligations under the original lease agreement and the revocable
permit.

The future minimum lease payments under these leases at June 30, 2002 are as
follows:

2002     216,699
2003     250,536
2004      21,504

         On October 3, 2001, the Company, pursuant to an agreement, issued
150,000 shares of common stock. Under the agreement, the Company will be
obligated for the difference between the net proceeds to the holder and $150,000
should the holder elect to sell the shares within 12 months of such shares
becoming fully tradable or if such shares cannot be sold or are not fully
tradable within 13 months of issuance the Company is obligated to buy back the
shares for $150,000.

         The Company plans to seek additional capital through additional private
placements of an ownership interest and/or mergers with a strategic partner, as
well as explore merger and acquisition opportunities that could broaden the
Company's business base and create synergies. During 2001 the Company made
significant reductions in its cost and overhead structure, and will continue to
evaluate such changes if and when they are needed.


Forward Looking Statements

         This Form 10-QSB includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act. All statements, other than statements of historical fact, included in this
Form 10-QSB that addresses activities, events or developments that the Company
expects, projects, believes, or anticipates will or may occur in the future,
including matters having to do with expected and future aircraft sales and
service revenues, the Company's ability to fund its operations and repay debt,
business strategies, expansion and growth of operations and other such matters,
are forward-looking statements. These statements are based on certain
assumptions and analyses made by our management in light of its experience and
its perception of historical trends, current conditions, expected future
developments, and other factors it believes are appropriate in the
circumstances. These statements are subject to a number of assumptions, risks
and uncertainties, including general economic and business conditions, the
business opportunities (or lack thereof) that may be presented to and pursued by
the Company, the Company's performance on its current contracts and its success
in obtaining new contracts, the Company's ability to attract and retain
qualified employees, and other factors, many of which are beyond the Company's
control. You are cautioned that these forward-looking statements are not
guarantees of future performance and that actual results or developments may
differ materially from those projected in such statements.

PART I.    FINANCIAL INFORMATION
ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

         The Company's market risk is impacted by changes in interest rates,
foreign currency exchange rates and certain equity security prices. The note
receivable held by the Company includes a quarterly adjustment clause, which
permits the Company to increase or decrease, the amount of interest charged
based on bank prime rates. All transactions with international customers are
made in U.S. dollars, thereby minimizing the risk associated with foreign
currency exchange rates. The Company's investment in equity securities is
classified as available-for-sale with unrealized gains or losses excluded from
income and reported as other comprehensive income. The Company has no
significant risk associated with commodity prices.


PART II.  OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         In July 2002, the Company issued a $1 million secured convertible note
to a private investor, the proceeds of which are being used for working capital
purposes. The transaction was exempt from registration under the Securities Act
of 1933 under section 4(2) of the Act because it did not involve a public
offering.


ITEM 5. OTHER

         On July 22,2002 the Company appealed a determination by the Nasdaq
Staff that the Company was not in compliance with Rule 4310(c)(2) regarding
minimum asset and equity requirements and Rule 4310(c)(4) regarding minimum bid
price requirements for continued listing on the Nasdaq SmallCap Market. The
Company's common stock will continue to trade on the Nasdaq Stock Market pending
the outcome of the appeal.

         The Company believes it is eligible to trade on the BBX, OTC Bulletin
Board (OTCBB). The company believes that the exchange on which the Company's
shares are traded does not affect the market value or intrinsic value of the
Company's business nor the trading liquidity of its shares.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

10.1     Securities Purchase Agreement
10.2     Secured Convertible Note
10.3     Investor Rights Agreement
10.4     Security Agreement
10.5     Guarantee
99       Certification of Officers


(b)      Reports on Form 8-K - None.



                                    SIGNATURE


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                          AVIATION GENERAL INCORPORATED
                                  (Registrant)




                             By: /s/ Wirt D. Walker
                                 Wirt D. Walker
                                    Chairman of the Board of Directors
                                     (Chief Executive Officer and
                                        Authorized Signatory)





                             By:  /s/ JEFFREY HENDERSON
                                 Jeffrey Henderson
                                    Chief Financial Officer
                                    (Principal Financial and Accounting
                                    Officer)

Date:  August 14, 2002