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

                      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 September 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 6,379,330 Shares of Common Stock Outstanding as of November 10,
2000.


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



<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,
                                                                                  2000                      1999
                                                                           --------------------      --------------------
<S>                                                                         <C>                      <C>
                                    ASSETS
Current Assets
    Cash and cash equivalents                                                          $75,370                  $281,138
    Accounts receivable                                                                931,725                   111,403
    Current portion of note receivable                                                  18,437                    19,535
    Inventories                                                                      6,774,596                 5,143,720
    Prepaid expenses and other assets                                                  221,512                   172,273
                                                                           --------------------      --------------------
       Total current assets                                                          8,021,640                 5,728,069
                                                                           --------------------      --------------------

Property and equipment
    Office equipment and furniture                                                     366,158                   355,492
    Vehicles and aircraft                                                               84,021                    84,021
    Manufacturing equipment                                                            381,624                   362,205
    Tooling                                                                            608,526                   563,193
    Leasehold improvements                                                             311,764                   311,764
                                                                           --------------------      --------------------
                                                                                     1,752,093                 1,676,675
    Less accumulated depreciation                                                   (1,054,675)                 (951,791)
                                                                           --------------------      --------------------
                                                                                       697,418                   724,884
                                                                           --------------------      --------------------

Other assets
    Notes receivable, less current maturities                                          109,256                   125,331
    Available-for-sale equity securities - related party                               653,250                   317,151
    Note receivable from related party                                               1,695,649                 1,736,552
                                                                           --------------------      --------------------
                                                                                     2,458,155                 2,179,034
                                                                           --------------------      --------------------
                                                                                   $11,177,213                $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)
                                                                              September 30,             December 31,
                                                                                  2000                      1999
                                                                           --------------------      --------------------
<S>                                                                       <C>                       <C>
                     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable                                                               $1,136,724                   $451,645
    Accrued expenses                                                                  384,522                    344,525
    Refundable deposits                                                               169,955                    233,363
    Notes payable                                                                   2,267,322                    731,780
                                                                           --------------------      --------------------
       Total current liabilities                                                    3,958,523                  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; 7,051,519 shares issued at September
        30, 2000 and 7,043,186 issued at December 31, 1999                          3,525,760                  3,521,593
    Additional paid-in capital                                                     36,889,800                 36,881,466
    Less: Treasury stock at cost (652,189 shares at
        September 30, 2000 and 529,400 shares at
        December 31, 1999)                                                           (949,193)                  (658,615)
    Accumulated other comprehensive income                                            222,509                          -
    Accumulated deficit                                                           (32,470,186)               (32,873,770)
                                                                           --------------------      --------------------
    Total stockholders' equity                                                      7,218,690                  6,870,674
                                                                           --------------------      --------------------
                                                                                  $11,177,213                 $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 September 30,
                                                               2000                          1999
                                                      -----------------------       -----------------------
<S>                                                   <C>                         <C>
Net sales - aircraft                                             $4,307,203                    $2,600,952
Net sales - service                                                 497,595                       379,187
                                                      -----------------------       -----------------------
   Total net sales                                                4,804,798                     2,980,139
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          3,361,773                     2,232,918
Cost of sales - service                                             359,996                       281,083
                                                      -----------------------       -----------------------
   Total cost of sales                                            3,721,769                     2,514,001
                                                      -----------------------       -----------------------

Gross margin                                                      1,083,029                       466,138
                                                      -----------------------       -----------------------
Other operating expenses
   Product development and engineering costs                        102,261                        83,871
   Selling, general and administrative expenses                     725,181                       562,136
                                                      -----------------------       -----------------------
     Total other operating expenses                                 827,442                       646,007
                                                      -----------------------       -----------------------
Operating income (loss)                                             255,587                      (179,869)
                                                      -----------------------       -----------------------
Other income (expenses)
   Other income                                                      55,872                        47,227
   Interest expense                                                 (59,073)                      (32,962)
   Other expense                                                        (33)                           --
                                                      -----------------------       -----------------------
   Total other income                                                (3,234)                       14,265
                                                      -----------------------       -----------------------

Net income (loss)                                                  $252,353                     ($165,604)
                                                      =======================       =======================
Net income per share
   Weighted average common shares
      outstanding, basic                                           6,376,334                     7,093,322
                                                      -----------------------       -----------------------
   Net income (loss) per share, basic                                  $0.04                       ($0.02)
                                                      =======================       =======================
   Weighted average common shares
      Outstanding, diluted                                         6,619,192                     7,093,322
                                                      -----------------------       -----------------------
   Net income (loss) per share, diluted                                $0.04                       ($0.02)
                                                      =======================       =======================
</TABLE>

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


<PAGE>




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

<TABLE>
<CAPTION>

                                                                Nine Months Ended September 30,
                                                               2000                          1999
                                                      -----------------------       -----------------------
<S>                                                   <C>                          <C>
Net sales - aircraft                                            $11,529,604                    $6,906,003
Net sales - service                                               1,473,856                     1,387,538
                                                      -----------------------       -----------------------
   Total net sales                                               13,003,460                     8,293,541
                                                      -----------------------       -----------------------

Cost of sales - aircraft                                          9,028,129                     6,093,561
Cost of sales - service                                           1,098,131                       927,820
                                                      -----------------------       -----------------------
   Total cost of sales                                           10,126,260                     7,021,381
                                                      -----------------------       -----------------------

Gross margin                                                      2,877,200                     1,272,160
                                                      -----------------------       -----------------------
Other operating expenses
   Product development and engineering costs                        295,747                       238,142
   Selling, general and administrative expenses                   2,201,271                     1,625,525
                                                      -----------------------       -----------------------
     Total other operating expenses                               2,497,018                     1,863,667
                                                      -----------------------       -----------------------
Operating income (loss)                                             380,182                      (591,507)
                                                      -----------------------       -----------------------

Other income (expenses)
   Other income                                                     168,475                       158,628
   Interest expense                                                (144,644)                      (63,130)
   Other expense                                                       (428)                         (916)
                                                      -----------------------       -----------------------
   Total other income                                                23,403                        94,582
                                                      -----------------------       -----------------------
Net income (loss)                                                  $403,585                     ($496,925)
                                                      =======================       =======================

Net Income (loss) per share

   Weighted average common shares
      Outstanding, basic                                           6,401,065                     7,168,012
                                                      -----------------------       -----------------------
   Net Income (loss) per share, basic                                  $0.06                       ($0.07)
                                                      =======================       =======================
   Weighted average common shares
      outstanding, diluted                                         6,721,703                     7,168,012
                                                      -----------------------       -----------------------
   Net Income (loss) per share, diluted                                $0.06                       ($0.07)
                                                      =======================       =======================
</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>

                                                                           Nine Months Ended September 30,
                                                                            2000                     1999
                                                                     --------------------     --------------------
<S>                                                                  <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net Income (Loss)                                                         $403,585                ($496,925)
     Adjustments to reconcile net income (loss) to
         net cash used by operating activities
         Depreciation and amortization                                          107,302                   82,272
         Non-cash interest earnings                                            (105,319)                 (93,977)
         Receipts on notes receivable - related party                            41,045                        -
         Changes in assets and liabilities
               (Increase) decrease  in
                   Accounts receivable                                         (820,322)                (972,860)
                   Notes receivable                                              17,173                   18,511
                   Notes receivable - related party                                (142)                      --
                   Inventories                                               (1,630,876)                (102,207)
                   Prepaid expense and other assets                              56,079                 (136,159)
               Increase (decrease) in
                   Accounts payable                                             685,079                   33,524
                   Accrued expenses                                              74,419                  288,572
                   Refundable deposits                                          (63,408)                (137,668)
                                                                     --------------------     --------------------
     Net cash used by operating activities                                   (1,235,385)              (1,516,917)
                                                                     --------------------     --------------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of securities of related party                                   (113,590)                       -
     Capital expenditures                                                       (79,836)                 (21,658)
     Payment on related party note receivable                                         -                  800,000
                                                                     --------------------     --------------------
     Net cash (used) provided by investing activities                          (193,426)                 778,342
                                                                     --------------------     --------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from borrowings                                                 5,212,430                2,584,247
     Payments on borrowings                                                  (3,676,888)              (1,630,980)
     Exercise of stock options                                                   12,501                       --
     Purchase of treasury stock                                                (325,000)                (415,645)
                                                                     --------------------     --------------------
     Net cash provided by financing activities                                1,223,043                  537,622
                                                                     --------------------     --------------------

Net decrease in cash                                                           (205,768)                (200,953)
Cash and cash equivalents at beginning of period                                281,138                  645,706
                                                                     --------------------     --------------------
Cash and cash equivalents at end of period                                      $75,370                 $444,753
                                                                     ====================     ====================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
      Cash paid during the period for:
         Interest                                                              $130,834                  $53,093
         Income taxes                                                                 -                        -
</TABLE>



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



<PAGE>


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

1. The condensed financial  statements included herein have been prepared by the
Company,  without audit, pursuant to the rules and regulations of the Securities
and Exchange  Commission.  Certain information and footnote disclosures normally
included in financial  statements prepared in accordance with 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 September 30, 2000 and December 31, 1999,  and the
results of operations  and cash flows for the three and nine month periods ended
September  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>

                                                                     Nine months ending
                                                       September 30, 2000        September 30, 1999
                                                       ------------------        ------------------
<S>                                                   <C>                         <C>
  Numerator
       Net income (loss)                                       $403,585                  ($496,925)
  Denominator
       Weighted average shares outstanding,
         basic                                                6,401,065                  7,168,012
       Effect of dilutive securities
         Stock options                                          320,638                          -
                                                            -----------          -----------------
  Denominator for income (loss) per share
    assuming dilution                                         6,721,703                  7,168,012
                                                             ==========                ===========
  Income (loss) per share, basic                                 $ 0.06                   ($ 0.07)
                                                          =============             ==============
  Income (loss) per share, assuming dilution                     $ 0.06                   ($ 0.07)
                                                          =============             ==============
</TABLE>

<TABLE>
<CAPTION>

                                                                    Three months ending
                                                       September 30, 2000          September 30, 1999
                                                       ------------------          ------------------
<S>                                                   <C>                         <C>
  Numerator
       Net income                                              $252,353                  ($165,604)
  Denominator
       Weighted average shares outstanding,
         Basic                                                6,376,334                  7,093,322
       Effect of dilutive securities
         Stock options                                          242,858                          -
                                                            -----------          -----------------
  Denominator for income per share,
    assuming dilution                                         6,619,192                  7,093,322
                                                             ==========                 ==========
  Income (loss) per share, basic                                 $ 0.04                    ($ 0.02)
                                                          =============              ==============
  Income (loss) per share, assuming dilution                     $ 0.04                    ($ 0.02)
                                                          =============              ==============
</TABLE>


<PAGE>




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

                                      For the nine months ending September 30,
                                              2000                 1999
                                              ----                 ----

  Net income (loss)                          $403,585            ($496,925)
  Other comprehensive income                  222,509                 -
                                           ----------         ------------

  Comprehensive income (loss)                $626,094            ($496,925)
                                            =========           ============

                                      For the three months ending September 30,
                                              2000                  1999
                                              ----                  ----

  Net income                                 $252,353             ($165,604)
  Other comprehensive income (loss)          (117,250)                 -
                                          ------------      ---------------

  Comprehensive income (loss)                $135,103             ($165,604)
                                           ==========            ===========

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:

                                        September 30, 2000    December 31, 1999

  Raw materials                                 $3,539,482       $2,867,102
  Work in process                                  884,192          595,593
  New and pre-owned aircraft                     2,350,922        1,681,025
                                               -----------      ------------

  Total inventories                             $6,774,596       $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.

         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.

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  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  nine  months of 2000 and are  expected  to remain
strong in the fourth  quarter of 2000. In addition,  the  Company's  subsidiary,
Strategic Jet Services,  Inc. generated its first revenues in 1999 and continued
to contribute additional revenues in the first nine months of 2000.



<PAGE>



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

RESULTS FROM OPERATIONS

         Revenues  from the  sale of  aircraft  for the  third  quarter  of 2000
totaled $4,307,203 compared to $2,600,952 for the comparable period of 1999. For
the third  quarter  of 2000,  thirteen  new and  pre-owned  aircraft  were sold,
compared with ten new and pre-owned aircraft sold in the same period for 1999.

         For the nine months ended September 30, 2000, revenues were $11,529,604
compared to $6,906,003  for the nine months ended  September 30, 1999.  Revenues
were higher because the company sold 41 new and pre-owned  aircraft in the first
nine months of 2000 compared to 28 in the comparable period in 1999.

         Service  revenues  totaled $497,505 for the quarter ended September 30,
2000 compared to $379,187 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  $1,473,856 for the nine months ended  September
30, 2000  compared to $1,387,538  for the nine months ended  September 30, 1999.
The increase was due to higher service work and parts sales in the current year.

         Cost of aircraft  sales for the three months ended  September  30, 2000
increased  to  $3,361,773  compared to  $2,232,918  for the three  months  ended
September  30, 1999.  The  additional  cost was due to higher new and  pre-owned
aircraft sales during the period.

         Cost of aircraft  sales for the nine months  ended  September  30, 2000
increased  to  $9,028,129  compared  to  $6,093,561  for the nine  months  ended
September  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 September 30,
2000 increased to $359,996  compared to $281,083 for the quarter ended September
30, 1999.  The  increase  was due to the increase in service  activity and parts
shipments.

         Cost of sales for service and parts for the nine months ended September
30,  2000  were  $1,098,131  compared  to  $927,820  for the nine  months  ended
September 30, 1999. The increase was due to the increase in service activity and
parts shipments.

         Aircraft  sales margins were higher for the three and nine months ended
September  30,  2000  compared to the prior  periods due to higher new  aircraft
pricing and lower new aircraft unit costs.  Service  margins were for up for the
three months ended  September 30, 2000 compared to the prior period due to sales
price  increases and higher volume,  partially  offset by higher costs.  For the
nine months ended  September 30, 2000 service  margins were lower than the prior
period  because of higher  costs,  partially  offset by higher prices and higher
service and parts volume.

         Product development and engineering costs increased to $102,261 for the
third quarter of 2000,  from $83,871 for the comparable  period in 1999. For the
nine months ended September 30, 2000 product  development and engineering  costs
were $295,747 compared to $238,142 for the nine months ended September 30, 1999.
The increase was for higher  technical  consulting  to support  various  product
improvement initiatives currently underway.

         Sales, general and administrative expense increased for the three-month
period ended  September 30, 2000,  to $725,181 from $562,136 for the  comparable
period ended September 30, 1999. Sales,  general and administrative  expense for
the nine months ended September 30, 2000 were $2,201,271  compared to $1,625,525
for the nine months ended  September 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.

         Interest  expense  increased  to $59,073 for the third  quarter of 2000
from  $32,962  for the  comparable  period in 1999 due to higher  borrowings  to
finance aircraft held for resale.  For the nine months ended September 30, 2000,
interest  expense was $144,644  compared to $63,130 due to higher  borrowings to
finance aircraft held for sale.

LIQUIDITY AND CAPITAL RESOURCES

         Cash balances  decreased to $75,370 at September 30, 2000 from $281,138
at December 31, 1999. Accounts receivable increased by $820,232 at September 30,
2000 due to a trade  balance  from the sale of three  aircraft,  secured  by the
aircraft.

         Notes  receivable  decreased  to  $127,693 at  September  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
September  30, 2000 based on a principal  payment.  Accrued  interest due on the
note receivable  from the related party at September 30, 2000 was $125,440.  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  $6,774,596  at  September  30,  2000  from
$5,143,720  at  December  31,  1999.  Raw  materials,  parts and work in process
increased  approximately  $960,979 as the Company  increased  production  of new
aircraft to meet higher market  demand.  Consistent  with the increase in sales,
new and pre-owned  aircraft inventory  increased by $669,897.  The Company added
one new aircraft to satisfy the demand for use in new sales  demonstrations  and
acquired additional pre-owned aircraft for resale.

         During the first nine  months of 2000,  expenditures  for fixed  assets
totaled $79,836,  which included  replacement of machinery,  fabrication tooling
and an upgrade to the Company's business software.

         Accounts  payable  increased to  $1,136,724  at September 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 $384,522 at September  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 $169,955 at September  30, 2000 from
$233,363  at  December  31,  1999.  Borrowings  from  bank  lines  increased  to
$2,267,322 at September 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,  yielding
to quarterly  profits for the last four  consecutive  quarters.  Cash needs have
been  financed with debt,  private  investor  capital,  proceeds from an initial
public offering,  profits,  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 that the four consecutive quarters of profitability
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  nine  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  revenues  in the first  nine  months of 2000,  and is  expected  to
contribute additional revenue in the fourth quarter 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 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.  Demand for the new 115
model has contributed to increased revenues and profitability in 2000.

         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 15 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 three 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 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibit 27 - Financial Summary

(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:  November 14, 2000