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

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-Q


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

      For the quarterly period ended June 30, 2000

                                 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 6,373,786 Shares of Common Stock Outstanding
         as of July 31, 2000

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



<PAGE>




PART I. FINANCIAL INFORMATION
ITEM  I. FINANCIAL STATEMENTS

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

                                                                               (Unaudited)
                                                                                June 30,                December 31,
                                                                                  2000                      1999
                                                                           --------------------      --------------------
<S>                                                                        <C>                       <C>
                                    ASSETS
Current Assets
    Cash and cash equivalents                                                         $226,984                  $281,138
    Accounts receivable                                                                714,862                   111,403
    Current portion of note receivable                                                  19,777                    19,535
    Inventories                                                                      5,789,733                 5,143,720
    Prepaid expenses and other assets                                                  219,018                   172,273
                                                                           --------------------      --------------------
       Total current assets                                                          6,970,374                 5,728,069
                                                                           --------------------      --------------------

Property and equipment
    Office equipment and furniture                                                     362,912                   355,492
    Vehicles and aircraft                                                               84,021                    84,021
    Manufacturing equipment                                                            364,726                   362,205
    Tooling                                                                            576,618                   563,193
    Leasehold improvements                                                             311,764                   311,764
                                                                           --------------------      --------------------
                                                                                     1,700,041                 1,676,675
    Less accumulated depreciation                                                   (1,011,666)                 (951,791)
                                                                           --------------------      --------------------
                                                                                       688,375                   724,884
                                                                           --------------------      --------------------

Other assets
    Notes receivable, less current maturities                                          113,591                   125,331
    Available-for-sale equity securities - related party                               770,500                   317,151
    Note receivable from related party                                               1,695,649                 1,736,552
                                                                           --------------------      --------------------
                                                                           --------------------      --------------------
                                                                                     2,579,740                 2,179,034
                                                                           --------------------      --------------------

                                                                                   $10,238,489                $8,631,987
                                                                           ====================      ====================
</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,
                                                                                  2000                      1999
                                                                           --------------------      --------------------
<S>                                                                       <C>                         <C>
                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable                                                                 $790,821                   $451,645
    Accrued expenses                                                                  518,245                    344,525
    Refundable deposits                                                               142,426                    233,363
    Notes payable                                                                   1,750,332                    731,780
                                                                           --------------------      --------------------
       Total current liabilities                                                    3,201,824                  1,761,313
                                                                           --------------------      --------------------

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; 7,043,186 shares issued
        At June 30, 2000 and December 31, 1999                                      3,521,593                  3,521,593
    Additional paid-in capital                                                     36,881,466                 36,881,466
    Less: Treasury stock at cost (669,400 shares at
        June 30, 2000 and 529,400 shares at
        December 31, 1999)                                                           (983,615)                  (658,615)
    Accumulated other comprehensive income                                            339,759                          -
    Accumulated deficit                                                           (32,722,538)               (32,873,770)
                                                                           --------------------      --------------------

    Total stockholders' equity                                                      7,036,665                  6,870,674
                                                                           --------------------      --------------------

                                                                                  $10,238,489                 $8,631,987
                                                                           ====================      ====================

</TABLE>

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


<PAGE>




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


                                                                  Three Months Ended June 30,
                                                               2000                          1999
                                                      -----------------------       -----------------------
<S>                                                   <C>                          <C>
Net sales - aircraft                                             $3,746,651                    $2,660,398
Net sales - service                                                 509,436                       394,712
                                                      -----------------------       -----------------------
   Total net sales                                                4,256,087                     3,055,110
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          2,886,393                     2,119,402
Cost of sales - service                                             420,139                       275,985
                                                      -----------------------       -----------------------
   Total cost of sales                                            3,306,532                     2,395,387
                                                      -----------------------       -----------------------

Gross margin                                                        949,555                       659,723
                                                      -----------------------       -----------------------

Other operating expenses
   Product development and engineering costs                         97,179                        75,233
   Selling, general and administrative expenses                     742,225                       573,417
                                                      -----------------------       -----------------------
     Total other operating expenses                                 839,404                       648,650
                                                      -----------------------       -----------------------

Operating income                                                    110,151                        11,073
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                      58,144                        54,534
   Interest expense                                                 (55,039)                      (17,144)
   Other expense                                                       (207)                         (219)
                                                      -----------------------       -----------------------
   Total other income                                                 2,898                        37,171
                                                      -----------------------       -----------------------

Net income                                                         $113,049                       $48,244
                                                      =======================       =======================

Net Income per share

   Weighted average common shares
      Outstanding, basic                                           6,377,412                     7,171,108
                                                      -----------------------       -----------------------

   Net Income per share, basic                                         $0.02                         $0.01
                                                      =======================       =======================

   Weighted average common shares
      Outstanding, diluted                                         6,901,422                     7,171,108
                                                      -----------------------       -----------------------
                                                      -----------------------       -----------------------

   Net Income per share, diluted                                       $0.02                         $0.01
                                                      =======================       =======================
</TABLE>



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



<PAGE>




                      AVIATION GENERAL,  INCORPORATED
               CONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS
                                (Unaudited)

<TABLE>
<CAPTION>

                                                                   Six Months Ended June 30,
                                                               2000                          1999
                                                      -----------------------       -----------------------
<S>                                                   <C>                          <C>
Net sales - aircraft                                             $7,222,401                    $4,305,051
Net sales - service                                                 976,261                     1,008,351
                                                      -----------------------       -----------------------
   Total net sales                                                8,198,662                     5,313,402
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          5,666,356                     3,860,643
Cost of sales - service                                             738,135                       646,737
                                                      -----------------------       -----------------------
   Total cost of sales                                            6,404,491                     4,507,380
                                                      -----------------------       -----------------------

Gross margin                                                      1,794,171                       806,022
                                                      -----------------------       -----------------------

Other operating expenses
   Product development and engineering costs                        193,486                       154,271
   Selling, general and administrative expenses                   1,476,090                     1,063,389
                                                      -----------------------       -----------------------
     Total other operating expenses                               1,669,576                     1,217,660
                                                      -----------------------       -----------------------

Operating income (loss)                                             124,595                      (411,638)
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                     112,603                       111,401
   Interest expense                                                 (85,571)                      (30,168)
   Other expense                                                       (395)                         (916)
                                                      -----------------------       -----------------------
   Total other income (expenses)                                     26,637                        80,317
                                                      -----------------------       -----------------------

Net income (loss)                                                  $151,232                     ($331,321)
                                                      =======================       =======================

Net Income (loss) per share

   Weighted average common shares
      Outstanding, basic                                           6,413,566                     7,220,001
                                                      -----------------------       -----------------------

   Net Income (loss) per share, basic                                  $0.02                       ($0.05)
                                                      =======================       =======================

   Weighted average common shares
      Outstanding, diluted                                         6,769,467                     7,220,001
                                                      -----------------------       -----------------------

   Net Income (loss) per share, diluted                                $0.02                       ($0.05)
                                                      =======================       =======================
</TABLE>



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



<PAGE>



                          AVIATION GENERAL, INCORPORATED
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                              Six Months Ended June 30,
                                                                            2000                     1999
                                                                     --------------------     --------------------
<S>                                                                   <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income (Loss)                                                         $151,232                ($331,321)
     Adjustments to reconcile net income (loss) to
         net cash used by operating activities
         Depreciation and amortization                                           64,293                   54,989
         Non-cash interest earnings                                             (70,442)                 (40,435)
         Receipts on notes receivable - related party                            41,045                        -
         Changes in assets and liabilities
               (Increase) decrease  in
                   Accounts receivable                                         (603,459)                (206,211)
                   Notes receivable                                              11,498                   13,046
                   Notes receivable - related party                                (142)                    (477)
                   Inventories                                                 (646,013)                 (34,836)
                   Prepaid expense and other assets                              23,697                  (24,261)
               Increase (decrease) in
                   Accounts payable                                             339,176                 (234,127)
                   Accrued expenses                                             173,720                   13,968
                   Refundable deposits                                          (90,937)                (105,643)
                                                                     --------------------     --------------------
     Net cash used by operating activities                                     (606,332)                (895,308)
                                                                     --------------------     --------------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of securities of related party                                   (113,590)                       -
     Capital expenditures                                                       (27,784)                  (5,338)
     Payment on related party note receivable                                         -                  800,000
                                                                     --------------------     --------------------
     Net cash (used) provided by investing activities                          (141,374)                 794,662
                                                                     --------------------     --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings                                                 3,088,670                  960,350
     Payments on borrowings                                                  (2,070,118)                (779,200)
     Purchase of treasury stock                                                (325,000)                (361,694)
                                                                     --------------------     --------------------
     Net cash provided (used) by financing activities                           693,552                 (180,544)
                                                                     --------------------     --------------------

Net decrease in cash                                                            (54,154)                (281,190)
Cash and cash equivalents at beginning of period                                281,138                  645,706
                                                                     --------------------     --------------------
Cash and cash equivalents at end of period                                     $226,984                 $364,516
                                                                     ====================     ====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
      Cash paid during the period for:
         Interest                                                               $69,711                  $28,796
         Income taxes                                                                 -                        -

</TABLE>



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


<PAGE>




               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 generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations;  however, the Company believes that the disclosures are adequate to
make the information  presented not  misleading.  In the opinion of the Company,
all adjustments  necessary to present fairly the financial  position of Aviation
General, Incorporated as of June 30, 2000 and December 31, 1999, and the results
of operations  and cash flows for the three and six month periods ended June 30,
2000 and 1999 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 1999 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, 2000               June 30, 1999
                                                          -------------               -------------
<S>                                                      <C>                        <C>
  Numerator
       Net income (loss)                                       $151,232                  ($331,321)

  Denominator
       Weighted average shares outstanding,
         basic                                                6,413,566                  7,220,001

       Effect of dilutive securities
         Stock options                                          355,896                          -
                                                            -----------          -----------------

  Denominator for income (loss) per share
    assuming dilution                                         6,769,462                  7,220,001
                                                             ==========                 ==========

  Income (loss) per share, basic                                 $ 0.02                   ($ 0.05)
                                                          =============             ==============

  Income (loss) per share, assuming dilution                     $ 0.02                   ($ 0.05)
                                                          =============             ==============


                                                                    Three months ending
                                                          June 30, 2000               June 30, 1999
                                                          -------------               -------------
  Numerator
       Net income                                              $113,049                    $48,244

  Denominator
       Weighted average shares outstanding,
         basic                                                6,377,412                  7,171,108

       Effect of dilutive securities
         Stock options                                          524,010                          -
                                                            -----------          -----------------

  Denominator for income per share,
    assuming dilution                                         6,901,422                  7,171,108
                                                             ==========                 ==========

  Income per share, basic                                        $ 0.02                     $ 0.01
                                                          =============               ============

  Income per share, assuming dilution                            $ 0.02                     $ 0.01
                                                          =============               ============

</TABLE>


3.  The  Company  purchased  30,000  shares  of its  common  stock  from a major
shareholder on April 12, 2000 at a price  consistent  with shares trading freely
on the NASDAQ SmallCap Market on that date.

4.  Total comprehensive income (loss) for the periods presented is as follows:


                                       For the six months ending June 30
                                          2000                       1999
                                          ----                       ----

  Net income (loss)                      $151,232                  ($331,321)
  Other comprehensive income              339,759                       -
                                       ----------                 ------------

  Comprehensive income (loss)            $490,991                  ($331,321)
                                        =========                 ============

                                       For the three months ending June 30
                                          2000                       1999
                                          ----                       ----

  Net income (loss)                      $113,049                   $ 48,244
  Other comprehensive income (loss)      (259,384)                      -
                                       ----------                 ------------

  Comprehensive income (loss)           ($138,335)                  $ 48,244
                                        =========                 ============

5. 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, 2000      December 31, 1999

  Raw materials                                 $3,370,318          $2,867,102
  Work in process                                  833,334             595,593
  New and pre-owned aircraft                     1,586,081           1,681,025
                                               -----------         ------------

  Total inventories                             $5,789,733          $5,143,720
                                                ----------          ----------


6. The  effective  tax  rate  differs  from  the  statutory  rate  primarily  to
utilization of net operating loss  carryforwards and the change in the valuation
allowance for deferred income tax assets

7. 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  eighteen  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.



<PAGE>



         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.

8. 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 by offering a premium  updated  version of an  established
aircraft design.  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 new  aircraft  sales,  the Company has  structured  a
separate aviation  services  division within the Company to purchase,  refurbish
and sell pre-owned  piston aircraft at reasonable  profit margins.  The Aviation
Services  Division also acts as broker for pre-owned  piston aircraft and serves
as advisor to potential aircraft buyers and sellers.

         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's CFI Referral Program  actively  engages  certified flight
instructors (CFIs) in the aircraft evaluation and acquisition process with their
students.  CFIs play an important role in advising  potential  owners.  To date,
more than 1900 CFIs have enrolled in this program.

         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 generated by the Aviation Services Division grew significantly
in 1998,  1999 and the first half of 2000 and are  expected to remain  strong in
2000. In addition,  the  Company's  subsidiary,  Strategic  Jet  Services,  Inc.
generated  its first  revenues in 1999 and  continued to  contribute  additional
earnings in the second quarter of 2000.



<PAGE>



PART 1.      FINANCIAL INFORMATION
ITEM 2.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
             OPERATIONS AND FINANCIAL CONDITION

GENERAL

         Aviation  General,  Incorporated  announced  on March 22, 2000 that the
Board of Directors  authorized  the  purchase of up to  2,000,000  shares of the
Company's  outstanding common stock.  Purchases of shares will be made from time
to time,  in either open market or  negotiated  transactions,  subject to market
conditions. The previous stock repurchase of 1,000,000 shares announced on April
7, 1999 was completed  during the first quarter of 2000.  The Company  purchased
30,000  shares of its common stock  during the second  quarter of 2000 at prices
consistent  with  shares  trading  freely on the NASDAQ  SmallCap  Market on the
respective purchase dates.

RESULTS FROM OPERATIONS

         Revenues  from the sale of  aircraft  for the  second  quarter  of 2000
totaled $3,746,651 compared to $2,660,398 for the comparable period of 1999. For
the second  quarter of 2000,  thirteen new and pre-owned  aircraft were sold and
one twin turbine  aircraft was brokered,  compared with eleven new and pre-owned
aircraft sold and one jet aircraft brokered in the same period for 1999.

         For the six month period ended June 30, 2000,  revenues were $7,222,401
compared to $4,305,051  for the six month period ending June 30, 1999.  Revenues
were higher because the company sold 28 new and pre-owned  aircraft in the first
half of 2000 compared to 18 in the comparable period in 1999.

         Service  revenues  totaled $509,436 for the quarter ended June 30, 2000
compared to $394,712 for the comparable quarter in 1999. The increase was due to
higher spare parts  shipments and increased  aircraft  repair and  refurbishment
activity.

         Service revenues were $976,261 for the six month period ending June 30,
2000 compared to $1,008,351  for the six month period ending June 30, 1999.  The
slight  decrease  was due to a  single  large  rebuild  job in the  prior  year,
partially offset by higher service work and parts sales in the current year.

         Cost of aircraft  sales for the three month  period ended June 30, 2000
increased to $2,886,393  compared to $2,119,402 for the three month period ended
June 30, 1999. The additional cost was due to higher new and pre-owned  aircraft
sales during the period.

         Cost of  aircraft  sales for the six month  period  ended June 30, 2000
increased to $5,666,356  compared to  $3,860,643  for the six month period ended
June 30, 1999. The additional cost was due to higher new and pre-owned  aircraft
sales during the period.

         Cost of sales for service and parts for the quarter ended June 30, 2000
increased to $420,139  compared to $275,985 for the quarter ended June 30, 1999.
The increase was due primarily to the increase in revenues from service activity
and parts shipments as explained above.

         Cost of sales for service and parts for the six month period ended June
30, 2000 were $738,135  compared to $646,737 for the six month period ended June
30, 1999.  The increase was due  primarily to higher  margins on service work in
the prior period, partially offset by lower volume.

         Product  development and engineering costs increased to $97,179 for the
second quarter of 2000, from $75,233 for the comparable  period in 1999. For the
six month period ended June 30, 2000 product  development and engineering  costs
were $193,486 compared to $154,271 for the six month period ended June 30, 1999.
The increase was primarily for higher  technical  consulting to support  various
product improvement initiatives currently underway.

         Sales, general and administrative expense increased for the three-month
period ended June 30, 2000, to $742,225 from $573,417 for the comparable  period
ended June 30, 1999. Sales, general and administrative expense for the six-month
period ended June 30, 2000 were  $1,476,090  compared to $1,063,389  for the six
month period ended June 30, 1999.  Consistent with the increase in sales volume,
higher commissions were incurred. Higher salaries, payroll burden,  advertising,
legal and travel  costs were also  noted,  partially  offset by lower  costs for
administration of Strategic Jet Services.

         Interest  expense  increased to $55,039 for the second  quarter of 2000
from $17,144 for the comparable period in 1999 due to higher borrowings at banks
to finance aircraft held for resale.

LIQUIDITY AND CAPITAL RESOURCES

         Cash  balances  decreased to $226,984 at June 30, 2000 from $281,138 at
December 31, 1999.  Accounts  receivable  increased by $603,459 at June 30, 2000
due to a trade balance from the sale of three  pre-owned  piston  aircraft and a
$54,850  international parts order. The parts order is secured by an irrevocable
letter of credit.  The trade  receivable  balance  from the sale of  aircraft is
secured by the aircraft.

         Notes  receivable  decreased to $133,368 at June 30, 2000 from $144,866
at December 31, 1999 due to regular  quarterly  payments from the debtor.  Notes
receivable  from related  parties  decreased  from December 31, 1999 to June 30,
2000 based on a principal  payment.  Accrued interest due on the note receivable
from the  related  party at June 30,  2000 was  $70,442.  The note is secured by
Aviation General,  Incorporated  stock pledged,  as well as a personal guarantee
from  the  principal  shareholder  of the  debtor.  The  note is  classified  as
non-current  due to the  probability  that payment in full will not occur within
the next year.

         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 increased to $5,789,733 at June 30, 2000 from $5,143,720 at
December  31,  1999.  Raw  materials,   parts  and  work  in  process  increased
approximately  $740,957 as the Company  increased  production of new aircraft to
meet higher market demand. New and pre-owned  aircraft inventory  decreased from
$1,681,025 at December 31, 1999 to $1,586,081 at June 30, 2000.

         During  the first six  months of 2000,  expenditures  for fixed  assets
totaled  $27,784,  which  included  replacement  of  fabrication  tooling and an
upgrade to the Company's business software.

         Accounts  payable  increased to $790,821 at June 30, 2000 from $451,645
at December 31, 1999,  as increased  production of new aircraft in 2000 resulted
in higher  material  and parts  inventory  purchased  on open  account.  Accrued
expenses  increased  to $518,245 at June 30, 2000 from  $344,525 at December 31,
1999. The increase in accrued  expenses is  attributable  to amounts accrued for
payroll taxes, warranty, employee benefits, and miscellaneous expenses.

         Refundable  deposits  decreased  to  $142,426  at June  30,  2000  from
$233,363  at  December  31,  1999.  Borrowings  from  bank  lines  increased  to
$1,750,332 at June 30, 2000 from $731,780 at December 31, 1999.

         Since   commencement  of  production  in  1992,  annual  revenues  have
increased significantly and annual losses have substantially declined concurrent
with ongoing  investment in the Company's future.  Cash needs have been financed
with debt,  private investor capital,  proceeds from an initial public offering,
and proceeds from subsequent stock issuances.  The Company  continues to broaden
its general  aviation  capabilities  by increasing its business in the pre-owned
piston and jet  markets.  These  markets are much larger than the market for new
high  performance,  single engine  aircraft.  Furthermore,  this diversifies the
Company's  business and revenue base and is synergistic with the  manufacturing,
marketing and support services of our high performance,  single engine Commander
aircraft.

         Management  believes  the  reduction  in net loss  from  operations  is
attributable to plans  implemented in late 1996 and 1997 to provide new revenues
for the  Company.  During  1999,  the Company  continued  to expand the Aviation
Services   Division  ("ASD"),   which  sells  pre-owned   aircraft  and  markets
refurbishment services. In the first six months of 2000, this division continued
efforts to purchase and accept trade-in of pre-owned  aircraft,  refurbish these
aircraft and sell them at a  reasonable  profit.  The Company  continues to take
advantage  of its factory  facilities  to market  upgrades to existing  aircraft
owners for new paint,  interior  and  equipment.  Management  expects  growth to
continue in 2000 for refurbishment and pre-owned aircraft sales.

         The Company formed  Strategic Jet Services,  Inc. (SJS), a wholly owned
subsidiary,  to provide brokerage,  sale,  consulting and refurbishment work for
jet  aircraft.  This line of business  generated  first  activity  in 1999,  has
contributed  earnings in the first half of 2000,  and is expected to  contribute
additional earnings in the second half of 2000.

         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 the first half of 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.

         In  addition to the above  actions by the Company to increase  revenue,
management has made efforts to reduce costs and cash  requirements by optimizing
its production  schedule using just-in-time  scheduling.  Management has reduced
the costs incurred to advertise new aircraft by focusing  marketing efforts at a
specific customer profile.

         The Company  continues to advertise in industry and trade  publications
at a significantly  reduced level, while directly contacting potential customers
whose demographic characteristics closely match the typical customer, especially
in the  areas  of  income,  pilot  experience,  and  types  of  businesses  with
demonstrated  regional travel  requirements.  Further reducing selling expenses,
the Company has organized its service center, paint, interior and avionics shops
into a  completion  center to focus on the  growing  after-market  refurbishment
business.

         The  Company  has  expanded  its  operations  to  include  ASD and SJS,
enhanced the Commander  brand with the  introduction  of the Commander  115, and
more  effectively  targeted  sales and marketing  expenditures.  With  continued
activity in the parts,  service and pre-owned  aircraft  sales,  the Company has
lowered its break even sales to only 14 new  aircraft  per year.  With the large
investment  complete,  management  believes  it has  made  significant  progress
towards  the  building  of a world  class  aviation  company  and  has  achieved
sustained profitability. Based on performance in the first two quarters of 2000,
the Company  believes that annual results for the year ending  December 31, 2000
should exceed the prior year. Due to numerous  factors beyond the control of the
Company, there can be no assurances that these results will be achieved.

Forward Looking Statements

         This Form 10-Q  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-Q 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
services 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.



<PAGE>



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

         The registrant  has no material  market risk  associated  with interest
rates, foreign currency exchange rates or commodity prices.


PART II.  OTHER INFORMATION
ITEM 1.   LEGAL PROCEEDINGS

Between May 10th and May 12th,  2000,  lawsuits  were filed in the United States
District Court for the Western  District of Oklahoma on behalf of the estates of
Steven Daleo,  Gary Daleo,  Kathleen Daleo Bay and Michael  Thompson Bay against
Commander  Aircraft  Company.   The  plaintiffs  allege  that  the  above  named
individuals  were killed in the crash of a Commander 114B on May 15, 1998 due to
defective manufacture of the aircraft. Although it is too early for the ultimate
outcome of this claim to be determined,  management does not believe the Company
bears any  responsibility  and will  vigorously  defend  against  this claim and
currently  believes  that this  action  will not have a  material  impact on the
Company's operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its annual meeting of shareholders on June 16, 2000.

At the meeting, shareholders elected the following individuals as members of the
Board of Directors:

                                 Wirt D. Walker, III
                             Mishal Yousef Saud Al Sabah
                                    N. Gene Criss
                                  Stephen R. Buren

There were  5,877,559  votes for each of the  directors  and  22,925  votes were
withheld.

The shareholders approved an Amendment of the 1993 Stock Option Plan. There were
5,177,331 votes for and 44,682 against and 678,471 votes withheld.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits - None.

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













<PAGE>











                                    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/ Ronald F. Thomason
                                                Ronald F. Thomason
                                              Vice President Finance
                                           (Chief Financial Officer and
                                               Authorized Signatory)




Date:  August 14, 2000