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

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

      Yes__X__                   No_____
           -

         There were 6,859,330 Shares of Common Stock Outstanding
         as of September 30, 2002

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



<PAGE>



PART I. FINANCIAL INFORMATION
ITEM  I. FINANCIAL STATEMENTS

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

                                                                               (Unaudited)
                                                                              September 30,             December 31,
                                                                                  2002                      2001
                                                                           --------------------      --------------------
<S>                                                                        <C>                       <C>
                                    ASSETS
Current Assets
    Cash and cash equivalents                                                         $258,489                  $211,356
    Accounts
    receivable                                                                               -                         -
    Current portion of note receivable                                                       -                    36,673
    Inventories                                                                      4,977,939                 6,139,232
    Prepaid expenses and other assets                                                   64,334                    70,155
                                                                           --------------------      --------------------
       Total current assets                                                          5,300,762                 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                                                   (1,305,459)               (1,205,135)
                                                                           --------------------      --------------------
                                                                                       538,794                   639,118
                                                                           --------------------      --------------------

Other assets
    Notes receivable, less current maturities                                                -                    65,223
    Available-for-sale equity securities - related party                                     -                   142,100
                                                                           --------------------      --------------------
                                                                                             -                   207,323
                                                                           --------------------      --------------------

                                                                                    $5,839,556                $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)
                                                                              September 30,             December 31,
                                                                                  2002                      2001
                                                                           --------------------      --------------------
<S>                                                                      <C>                        <C>
               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
   Accounts payable                                                               $2,714,372                $2,309,450
   Accrued expenses                                                                  450,093                   614,116
   Refundable deposits                                                               205,000                   745,549
   Notes payable                                                                   1,732,499                 2,160,079
                                                                          --------------------     --------------------
      Total current liabilities                                                    5,101,964                 5,829,194
                                                                          --------------------     --------------------
   Long term liabilities                                                           1,000,000                         -
     Note payable, convertible to common stock
                                                                          --------------------     --------------------
                                                                                     150,000                   150,000


   REDEEMABLE COMMON STOCK - $.01 par value; Issued 150,000 shares in 2001;
   stated at redemption value
                                                                          --------------------     --------------------


Stockholders' Equity (Deficit)
   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 September 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
       September 30, 2002 and December 31, 2001                                   (1,294,193)               (1,294,193)
   Accumulated other comprehensive income (loss)                                           -                  (253,873)
   Accumulated deficit                                                           (39,934,273)              (37,943,329)
                                                                          --------------------     --------------------
                                                                                                             1,324,663

   Total stockholders' equity (deficit)                                             (412,408)
                                                                          --------------------     --------------------
                                                                                  $5,839,556                $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 September 30,
                                                               2002                          2001
                                                      -----------------------       -----------------------
<S>                                                  <C>                           <C>
Net sales - aircraft                                             $1,377,523                    $1,277,118
Net sales - service                                                 296,815                       275,278
                                                      -----------------------       -----------------------
   Total net sales                                                1,674,338                     1,552,396
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          1,352,609                     1,024,284
Cost of sales - service                                             274,509                       237,559
                                                      -----------------------       -----------------------
   Total cost of sales                                            1,627,118                     1,261,843
                                                      -----------------------       -----------------------

Gross margin                                                         47,220                       290,553
                                                      -----------------------       -----------------------

Other operating expenses
   Product development and engineering costs                         45,193                        61,995
   Selling, general and administrative expenses                     853,246                       690,641
                                                      -----------------------       -----------------------
     Total other operating expenses                                 898,439                       752,636
                                                      -----------------------       -----------------------

Operating loss                                                     (851,219)                     (492,083)
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                          24                        36,056
   Interest expense                                                 (39,986)                     (124,900)
   Other expense                                                     (1,650)                       (8,837)
   Realized loss on available for sale equity
   securities                                                      (395,973)                            -
                                                      -----------------------       -----------------------
    Total other expenses                                           (437,585)                      (75,160)
                                                      -----------------------       -----------------------

Net loss                                                        ($1,288,804)                    ($559,764)
                                                      =======================       =======================

Net loss per share

   Weighted average common shares
      outstanding, basic and diluted                               7,009,330                     6,730,091
                                                      -----------------------       -----------------------

   Net loss per share, basic and diluted                             ($0.18)                       ($0.08)
                                                      =======================       =======================
</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>


                                                                Nine Months Ended September 30,
                                                               2002                          2001
                                                      -----------------------       -----------------------
<S>                                                   <C>                           <C>
Net sales - aircraft                                             $7,189,719                    $6,141,113
Net sales - service                                                 718,749                     1,270,051
                                                      -----------------------       -----------------------
   Total net sales                                                7,908,468                     7,411,164
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          6,957,217                     5,162,363
Cost of sales - service                                             522,814                     1,042,790
                                                      -----------------------       -----------------------
   Total cost of sales                                            7,480,031                     6,205,153
                                                      -----------------------       -----------------------

Gross margin                                                        428,437                     1,206,011
                                                      -----------------------       -----------------------

Other operating expenses
   Product development and engineering costs                        118,366                       244,172
   Selling, general and administrative expenses                   1,757,664                     2,326,161
                                                      -----------------------       -----------------------
     Total other operating expenses                               1,876,030                     2,570,333
                                                      -----------------------       -----------------------

Operating loss                                                   (1,447,593)                   (1,364,322)
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                      16,724                       136,359
   Interest expense                                                (163,820)                     (370,860)
   Other expense                                                       (282)                      (14,936)
   Realized loss on available for sale equity
securities                                                         (395,973)
                                                      -----------------------       -----------------------
   Total other expenses                                            (543,351)                     (249,437)
                                                      -----------------------       -----------------------

Net loss                                                        ($1,990,944)                  ($1,613,759)
                                                      =======================       =======================

Net loss per share

   Weighted average common shares
      outstanding, basic and diluted                               7,009,330                     6,431,235
                                                      -----------------------       -----------------------

   Net loss per share, basic and diluted                             ($0.28)                       ($0.25)
                                                      =======================       =======================
</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>

                                                                           Nine Months Ended September 30,
                                                                            2002                     2001
                                                                     --------------------     --------------------
<S>                                                                 <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Loss                                                               ($1,990,944)             ($1,613,759)
     Adjustments to reconcile net loss to
         net cash used in operating activities
         Depreciation and amortization                                          100,324                   85,927
         Realized loss on available for sale equity
          securities                                                            395,973                        -
         Non-cash interest earnings                                                   -                  (92,230)
         Changes in assets and liabilities
               (Increase) decrease  in
                   Accounts receivable                                                -                  529,640
                   Notes receivable                                             101,896                   19,653
                   Inventories                                                1,161,293                 (280,513)
                   Prepaid expense and other assets                               5,821                  (65,476)
               Increase (decrease) in
                   Accounts payable                                             404,922                  645,957
                   Accrued expenses                                            (164,023)                (256,293)
                   Refundable deposits                                         (540,549)                  26,059
                                                                     --------------------     --------------------
     Net cash used in operating activities                                     (525,287)              (1,001,035)
                                                                     --------------------     --------------------
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                                                 5,053,483                4,116,943
     Payments on borrowings                                                  (4,481,063)              (3,202,085)
                                                                     --------------------     --------------------
     Net cash provided by financing activities                                  572,420                  914,858
                                                                     --------------------     --------------------

Net increase in cash                                                             47,133                  123,421
Cash and cash equivalents at beginning of period                                211,356                  135,016
                                                                     --------------------     --------------------
Cash and cash equivalents at end of period                                     $258,489                  $11,595
                                                                     ====================     ====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
      Cash paid during the period for:
         Interest                                                              $163,820                 $347,486

</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, management
believes that the disclosures are adequate to make the information presented not
misleading. In the opinion of management, all adjustments necessary to present
fairly the financial position of Aviation General, Incorporated as of September
30, 2002, and the results of operations and cash flows for the three and nine
month periods ended September 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 potential common shares are outstanding during the period.

<TABLE>
<CAPTION>

                                                                     Nine months ending
                                                       September 30, 2002          September 30, 2001
                                                       ------------------          ------------------
<S>                                                   <C>                          <C>
  Numerator
       Net loss                                             ($1,990,944)               ($1,613,759)
         Interest reduction on assumed note
         conversion                                                   0                          0
                                                           ------------              ---------------
         Numerator for loss per share
          assuming dilution                                 ($1,990,944)                 ($1,613,759)
                                                            ============                 ============
  Denominator
       Weighted average shares outstanding,
         basic                                                7,009,330                  6,431,235

       Effect of dilutive securities
         Stock options                                                0                          0
          Redeemable common stock                                     0                          0
         Note conversion                                              0                          0
                                                           ------------                  ---------

  Denominator for loss per share
    assuming dilution                                         7,009,330                  6,431,235
                                                             ==========                 ==========

  Loss per share, basic                                        ($ 0.28)                   ($ 0.25)
                                                        ===============             ==============

  Loss per share, assuming dilution                            ($ 0.28)                   ($ 0.25)
                                                        ===============             ==============


                                                                    Three months ending
                                                       September 30, 2002          September 30, 2001
                                                       ------------------          ------------------
  Numerator
       Net loss                                             ($1,288,804)                 ($559,764)
       Interest reduction on assumed note
       conversion                                                     0                          0
                                                           ------------                 ----------
       Numerator for loss per share
        assuming dilution                                   ($1,288,804)                 ($559,764)
                                                           ============                 ==========


  Denominator
       Weighted average shares outstanding,
         basic                                                7,009,330                  6,730,091

       Effect of dilutive securities
         Stock options                                                0                          0
          Redeemable common stock                                     0                          0
         Note conversion                                              0                          0
                                                           ------------                  ---------

  Denominator for loss per share,
    assuming dilution                                         7,009,330                  6,730,091
                                                             ==========                 ==========

  Loss per share, basic                                          ($0.18)                   ($ 0.08)
                                                           ==============           ==============

  Loss per share, assuming dilution                             ($0.18)                   ($ 0.08)
                                                         ==============             ==============
</TABLE>

Incremental shares relating to outstanding options, convertible debt, and
redeemable common stock for the periods ended September 30, 2002 and 2001 have
been excluded from the calculations above as they would be antidilutive.

3. The Company has an investment consisting of 245,000 shares of Stratesec Inc.
common stock which has historically been classified as an available-for-sale
security and reported at fair value with unrealized gains and losses excluded
from earnings and reported in other comprehensive income.

However, during the third quarter of 2002, certain information has come to the
Company's attention concerning the ability of Stratesec's stock to recover its
fair value. Among these are deteriorating financial condition, the lack of
development of merger or acquisition opportunities and notification from the
American Stock Exchange on July 18, 2002 that Stratesec does not meet minimum
equity requirements and is subject to being de-listed. Based on the above facts
and in consultation with the appropriate authoritative literature, management
believes that an impairment loss of approximately $396,000 has occurred and has
been recorded in the third quarter of 2002 as a charge to earnings.

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:


                                       September 30, 2002     December 31, 2001

  Raw materials                            $1,842,548              $1,983,979
  Work in process                           1,045,653               1,402,252
  New and pre-owned aircraft                2,070,488               2,733,751
  Other                                        19,250                  19,250
                                               ------                  ------

  Total inventories                        $4,977,939              $6,139,232
                                           ----------              ----------

         During the preparation of the third quarter 2002 financial statements,
management identified certain excess capacity costs of approximately $662,000
which were capitalized as work in process inventories as of June 30, 2002.
Management believes these costs were incurred primarily as a result of the
reduced manufacturing environment and should have been expensed during the
second quarter of 2002. The effect of this adjustment was as follows:

<TABLE>
<CAPTION>

                                                              3 months ended            6 months ended
                                                               June 30, 2002             June 30, 2002
                                                               -------------             -------------
<S>                                                          <C>                     <C>
Net Income (Loss), as previously reported                     $250,010                  ($40,174)

Effective restatement                                         (661,966)                 (661,966)
                                                              ---------                 ---------

Net loss, as restated                                        ($411,956)                ($702,140)
                                                              ==========                ==========


Net income (loss) per share, basic and diluted,
as previously reported                                           $0.04                    ($0.01)

Effect of restatement                                           ($0.10)                   ($0.10)
                                                              -------                   -------

Net loss per share, basic and diluted,
as restated                                                     ($0.06)                   ($0.11)
                                                              =======                   =======

</TABLE>

5. 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.

6. 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.

7. 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.

8. 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,  and such losses have
continued through the current year.

         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.


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


BUSINESS OVERVIEW

         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 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. However, due to the current economic conditions, expenditures
for these activities have been reduced substantially.

         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.

RESULTS FROM OPERATIONS

         Revenues from the sale of aircraft for the third quarter of 2002
totaled $1,377,523 compared to $1,277,118 for the comparable period of 2001. In
the third quarter of 2002, one new and two pre-owned aircraft were sold compared
with two new and one pre-owned aircraft sold and two aircraft brokered in the
same period for 2001.

         For the nine-month period ended September 30, 2002, aircraft revenues
were $7,189,719 compared to $6,141,113 for the nine-month period ending
September 30, 2001. This increase is due in part to equipment, accessories and
price increases for the planes sold during the first nine months of 2002
compared to 2001.

         Service revenues totaled $296,815 for the quarter ended September 30,
2002 compared to $275,278 for the comparable quarter in 2001. This increase is
due to an increase in aircraft repair and refurbishment activity. Service
revenues were $718,749 for the nine-month period ending September 30, 2002
compared to $1,270,051 for the nine month period ending September 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 September 30, 2002
increased to $1,352,609 compared to $1,024,284 for the three month period ended
September 30, 2001. The increase in cost is due in part to increases the company
has experienced in component costs. Cost of aircraft sales for the nine month
period ended September 30, 2002 increased to $6,957,217 compared to $5,162,363
for the nine month period ended September 30, 2001. The increase in cost was due
to the increase in component costs of new aircraft sold as well as excess
capacity costs of approximately $682,000 that were incurred during the first
nine months of 2002.

         During the preparation of the third quarter 2002 financial statements,
management identified certain excess capacity costs of approximately $662,000
which were capitalized as work in process inventories as of June 30, 2002.
Management believes these costs were incurred primarily as a result of the
reduced manufacturing environment and should have been expensed during the
second quarter of 2002. Management is currently amending the Form 10-QSB for the
periods ended June 30, 2002 to properly reflect the effect of this adjustment as
a charge to earnings in the second quarter of 2002.

         Cost of sales for service and parts for the quarter ended September 30,
2002 increased to $274,509 compared to $237,559 for the quarter ended September
30, 2001. The increase was due primarily to the increase in part sales and
repair and refurbishment activity and price increases. Cost of sales for service
and parts for the nine month period ended September 30, 2002 were $522,814
compared to $1,042,790 for the nine month period ended September 30, 2001. The
decrease was due to the decrease in part sales and repair and refurbishment
activity.

         Product development and engineering costs decreased to $45,193 for the
third quarter of 2002, from $61,995 for the comparable period in 2001 due to the
reduction in support staff and employee benefits. For the nine month period
ended September 30, 2002 product development and engineering costs were $118,366
compared to $244,172 for the nine month period ended September 30, 2001 due to a
reduction in support staff and employee benefits.

         Sales, general and administrative expense increased for the three-month
period ended September 30, 2002, to $853,246 from $690,641 for the comparable
period ended September 30, 2001 due to legal expenses incurred during the
period. Sales, general and administrative expense for the nine-month period
ended September 30, 2002 were $1,876,030 compared to $2,326,161 for the
nine-month period ended September 30, 2001 due to reduction in staff and
employee benefits.

         Interest expense decreased to $39,986 for the third quarter of 2002
from $124,900 for the comparable period in 2001 due to a reduction of bank lines
of credit and lower daily average debt during the period and is partially offset
by the issuance of convertible debt.


LIQUIDITY AND CAPITAL RESOURCES

         Cash balances increased to $258,489 at September 30, 2002 from $211,356
at December 31, 2001.

         A note receivable held by the Company for an aircraft sold to a
customer was paid in the third quarter of 2002.

         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 that are included in
earnings. During the third quarter of 2002, this investment in the common stock
of a related party was determined to be other than temporarily impaired,
resulting in a charge to the period's operations of $395,973.

         Inventories decreased to $4,977,939 at September 30, 2002 from
$6,139,232 at December 31, 2001. Raw materials, parts and work in process
decreased $498,030 as the company has recognized excess capacity charges during
2002 of approximately $682,000. New and pre-owned aircraft inventory decreased
by $663,263 due to sales of aircraft and reduction of inventory.

         Accounts payable increased to $2,714,372 at September 30, 2002 from
$2,309,450 at December 31, 2002 . Accrued expenses decreased to $450,093 at
September 30, 2002 from $614,116 at December 31, 2001. This is due to the
receipt of related invoices which are now in accounts payable.

         Refundable deposits decreased to $205,000 at September 30, 2002 from
$745,549 at December 31, 2001. Short term notes payable decreased to $1,732,499
at September 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 $1 million of financing
through the issuance of a convertible note, which is described below under
"Contractual Obligations."

         After seeming to rebound in the first half of 2002, orders for new and
pre-owned aircraft softened significantly, management believes, as a result of
the continued weakness in the economy, renewed anxiety over possible terrorists
activities and an impending war with Iraq. The Company plans to limit production
activities through the holidays until year end and further reduce its operating
costs while continuing revenue-generating activities in aircraft maintenance and
service, refurbishing services, parts sales and brokerage services.

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

         Inventory of new and pre-owned aircraft is financed 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
September 30, 2002.

                                                   2002 Obligation
                                               Total               Interest

Revolving credit facilities                 $1,707,153             $33,360

Note payable to an individual, payable          25,346               2,027
 in monthly installments of $8,699,
 including interest at 8%

Note payable to an individual, payable      $1,000,000             $20,000
 December 31, 2004. Convertible to
 common stock at $.85 a share. Interest due
 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 September 30, 2002 are
as follows:

2002     159,318
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 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 and 2002 the Company made
significant reductions in its cost and overhead structure, and will continue to
evaluate such changes if and when they are needed. However, the Company does not
currently have sufficient resources to continue operations for the next 12
months without additional capital.


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 and
certain equity security prices. 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. However, during the third
quarter of 2002 certain reductions in the fair value of available for sale
equity securities were determined to be other than temporary resulting in a
charge to earnings. The Company has no significant risk associated with
commodity prices.


PART I.    FINANCIAL INFORMATION
ITEM 4.    CONTROLS AND PROCEDURES

           The Company's Chief Executive Officer acting also in capacity as
principal financial officer, evaluated the Company's disclosure controls and
procedures within 90 days of the filing of this report. As previously discussed,
during the preparation of the third quarter 2002 financial statements,
management identified certain excess capacity costs which were capitalized as
work in process inventory as of June 30, 2002; however, such costs should have
been expensed. This internal evaluation of the current processes has included
the potential issues with regard to identifying excess capacity costs and
excluding such costs from work in process inventory. As a result of this
evaluation, management has implemented additional controls to provide reasonable
assurance that excess capacity costs are expensed and not capitalized as work in
process inventory. Aside from this, management concluded that the Company's
disclosure controls and procedures were effective. Except for the
aforementioned, there were no significant changes in the Company's internal
controls or in other factors that could significantly affect these controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses subsequent to their evaluation.


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 September 24, 2002 the Company's common stock was delisted from
theNasdaq SmallCap Market and began trading on the Over-the-Counter Bulletin
Board, or OTCBB, under the symbol AVGE.OB due to the Company's noncompliance
with the applicable minimum asset and equity requirements and the minimum bid
price requirement

         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*
99.1     Certification

*Incorporated by reference to the registrant's report on Form 10-QSB for the
 period ended June 30, 2002

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


The following exhibits are filed as a part of this quarterly report on form
10-QSB


99.1     Certification of Filing by Officers Pursuant to U.S.C. Section 1350 as
         Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002









                                    SIGNATURE


         In accordance with the requirements of the Exchange Act, the registrant
has 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
            (Certifying on behalf of Registrant and in capacity as Principal
                     Executive Officer and Principal Financial Officer)


<PAGE>


                                  CERTIFICATION

I, Wirt D. Walker, III certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of Aviation General,
     Incorporated;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   I am responsible for establishing and maintaining disclosure controls and
     procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
     registrant and have:

     a)  designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to me by others within those
         entities, particularly during the period in which this quarterly report
         is being prepared;

     b)  evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5.   I have disclosed, based on my most recent evaluation, to the registrant's
     auditors and the audit committee of registrant's board of directors (or
     persons performing the equivalent function):

     a)  all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     b)  any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

6.   I have indicated in this quarterly report whether or not there were
     significant changes in internal controls or in other factors that could
     significantly affect internal controls subsequent to the date of our most
     recent evaluation, including any corrective actions with regard to
     significant deficiencies and material weaknesses.

Date:  November 25, 2002


                             /s/ WIRT D. WALKER III
                               Wirt D. Walker III
                             Chief Executive Officer
                       Chairman of the Board of Directors
          (certifying in capacity as Principal Executive Officer
                           and Principal Financial Officer)