SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K

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

      For the fiscal year ended December 31, 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)

      Securities registered pursuant to Section 12(b) of the Act:
           None

      Securities registered pursuant to Section 12(g) of the Act:
           Common stock; $.50 par value

      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 requirements for the past 90 days.

                Yes   X      No
                    ----        -----

      Indicate by check mark if the disclosure of delinquent filers pursuant to
      Item 405 of Regulation S-K is not contained herein, and will not be
      contained, to the best of the registrant's knowledge, in definitive proxy
      or information statements incorporated by reference in Part III of this
      Form 10-K or any amendment to this form 10-K.                     (X)

      Based on the closing  sales price of March 15, 2001 the  aggregate  market
      value of the voting stock held by  non-affiliates  of the  registrant  was
      $4,000,000

      The number of shares  outstanding of the registrant's  common stock,  $.50
      par value, was 6,279,330 at March 15, 2001.

      Total number of pages including cover page 40.


<PAGE>

                                     PART 1

Item 1. Business

Aviation  General  Incorporated  (the  "Company")  manufactures,   markets,  and
provides  support  services  for  single  engine,  high  performance   Commander
aircraft, as well as providing sales, brokerage,  and refurbishment services for
pre-owned jet and piston-powered  aircraft.  Originally  incorporated in 1988 as
Commander  Aircraft Company,  the Company is one of the few manufacturers in the
world that produces single engine,  high performance  aircraft  certified by the
Federal Aviation Administration (FAA).

Incorporated  under the laws of the  State of  Delaware  as a  holding  Company,
Aviation General  Incorporated  succeeded  Commander  Aircraft Company effective
August  4,  1998.  The  Company  does  business  through  its two  wholly  owned
subsidiaries:  Commander Aircraft Company and Strategic Jet Services, Inc., both
located in Bethany, Oklahoma.

Commander  aircraft are derived from a line of single engine,  high  performance
aircraft  designed,  certified and produced by the General Aviation  Division of
Rockwell  International  in the 1970s.  Rockwell later sold its General Aviation
Division to Gulfstream  Aerospace  Corporation,  from which  Commander  Aircraft
Company  acquired the rights to the single engine,  high  performance  Commander
line.   Subsequently,   the  Company   designed,   engineered  and   implemented
improvements  to the Commander  line. With an airframe design decades newer than
the competition, Commander aircraft are certified to Federal Aviation Regulation
(FAR) 23 through  Amendment  7,  meeting  more  stringent  standards  for single
engine, high performance  aircraft than aircraft certified under the older Civil
Air  Regulation  (CAR) 3. The  Commander  line has the best safety record in its
class, according to an independent study of FAA and National  Transportation and
Safety  Board  (NTSB)  statistics  conducted by R.E.  Breiling  Associates,  the
leading accident analysis firm in general aviation.  The following chart depicts
the results of this study.

       TOTAL ACCIDENT RATE PER 100,000 FLIGHT HOURS (1977-1998)

Commander 112/114 Series               2.633
Beech Bonanza Series                   5.908
Mooney M20 Series                      6.342
Piper Saratoga Series                  9.298

The Company's first  production  model, the Commander 114B, was certified by the
FAA in 1992.  The  Commander  114B offers  substantially  improved  performance,
state-of-the-art  instrumentation  and avionics,  and a  luxuriously  appointed,
spacious  cabin,  while  retaining the proven airframe and other features of the
original Rockwell International design. The Commander 114B features an extensive
range of standard  equipment,  retractable  landing gear,  260  horsepower  fuel
injected  engine,  and a constant  speed  propeller.  The  aircraft has received
favorable  reviews in the aviation  press  worldwide and is  recognized  for its
beautiful  design,  safety  features,  and its  excellent  flight,  landing  and
handling characteristics.

The Commander  114B,  with a standard  range of 725 nautical  miles (833 statute
miles),  1,216 pound useful load,  maximum  cruise speed of 164 knots (188 miles
per hour),  large  luxurious four place cabin and low operating and  maintenance
costs, offers an optimum  combination of performance,  comfort,  style,  luxury,
utility  and safety.  The  Commander  114B is an ideal  airplane  for  pleasure,
business and flight training.

In 1994, the Company added the Commander 114AT  All-Purpose  Trainer to its line
of single engine, high performance aircraft. The Commander 114AT is a four-place
high performance trainer designed for military, professional and civilian flight
training.  An all-in-one  aircraft,  the Commander 114AT All-Purpose  Trainer is
ideal for primary through instrument flight training. The Commander 114AT shares
the same  design  heritage  as the  luxurious  Commander  114B,  with a modified
instrument panel and utilitarian interior.

The Company received certification from the FAA in 1995 for the Commander 114TC,
a turbocharged  version of the Commander  114B. The Commander  114TC is equipped
with the same beautiful,  expansive interior and state-of-the-art systems as the
Commander 114B, but utilizes a 270 horsepower turbocharged Lycoming engine which
provides  speeds up to 197 knots (227 miles per hour).  The  Commander  114TC is
certified  to an altitude of 25,000 feet,  which makes it an excellent  aircraft
for mountainous regions, as well as high-density altitude environments. Like its
predecessor,  the 114B,  the Commander  114TC has received  extensive  favorable
reviews by the aviation press.

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

The statements in this report that relate to future plans, events or performance
are  forward-looking  statements  that involve risks and  uncertainties.  Actual
results,  events and performance may differ materially due to overall changes in
the economy as well as other factors.  For example,  the Company may not achieve
anticipated  results  if demand for its  aircraft  subsides  or if its  Aviation
Services Division does not continue to grow.  Readers are cautioned not to place
undue reliance on these forward-looking  statements,  which speak only as of the
date hereof.

Business Strategy

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.  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
aircraft at reasonable profit margins.  The Aviation Services Division also acts
as broker for  pre-owned  aircraft and serves as advisor to  potential  aircraft
buyers and sellers.

Marketing and Sales

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,  and ongoing direct
mail programs to owners and pilots.

The Company's CFI Referral Program actively engages certified flight instructors
(CFIs) in the evaluation and acquisition process with their students.  These key
influencers play an important role in advising  potential  owners. To date, more
than 1,900 CFIs have enrolled in this program.

The  Company  has one of the most  comprehensive  worldwide  service and support
networks in its class. The Company grants domestic Commander  Authorized Service
Centers the  non-exclusive  right to sell  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.

Two  new  aircraft  were  sold  in  2000 to  foreign  customers  accounting  for
$1,096,988 or 7% of the revenues from aircraft sales.  Information regarding the
Company's  export sales and major customers is incorporated  herein by reference
to  Note H -  Sales  Concentrations,  of the  Notes  to  Consolidated  Financial
Statements. The Company anticipates that domestic sales will continue to account
for a significant portion of its market in the future, however it is anticipated
that international markets will continue to improve and account for an increased
portion of the Company's sales in the future.

The Company has been  dependent  upon its ability to sell a single  product line
for which a small  market  exists,  and sales in  sufficient  quantities  and at
prices that will allow it to recover operating costs and earn a profit. Although
the  Company  believes  that the market for its new  aircraft  will grow and its
share will increase,  there can be no assurances  that economic  conditions will
not have an adverse effect on future sales.

Parts and Materials Availability

Aviation  General,  Incorporated  purchases  parts and  materials  from over 100
different suppliers.  Though some of these vendors are key to the manufacture of
the Company's aircraft, there are no long term commitments or contracts with any
suppliers.  The Company  considers  its  relationship  with its  suppliers to be
satisfactory and does not anticipate any shortages or interruption to production
due to lack of available components on a timely basis.

Competition

Purchasers of single engine, high performance  aircraft choose among competitive
models on the basis of numerous  factors,  including  performance,  reliability,
price,  appearance,  quality of service and  reputation  of the aircraft and the
manufacturer.  Aviation  General,  Incorporated  believes  that it can favorably
compete with its competitors on the basis of the safety,  quality,  comfort, and
performance of its aircraft,  and the quality and scope of the support  services
the Company provides to its customers. The Company further believes its aircraft
are competitively priced and have a number of features,  including certification
to stricter  standards,  newer,  more  attractive  design and larger cabin size,
which  make  them  competitive  with or  superior  to the  single  engine,  high
performance  aircraft  produced  by its  four  principal  competitors.  Raytheon
Aircraft  Corporation  suspended  production of one of its single  engine,  high
performance models, the F33A Bonanza,  in 1994.  Raytheon's other single engine,
high  performance  model,  the  A36,  remains  in  production.  Mooney  Aircraft
Corporation   produces  single  engine,  high  performance   aircraft  that  are
significantly  smaller than the 115 and 115TC.  New Piper  Aircraft  Corporation
produces two single engine,  high  performance,  six place aircraft with similar
performance.  Socata's  marketing  efforts  are,  for the most part,  focused in
Europe and Asia.  Each of these  competitors  has been well  established  in the
general  aviation  industry  for years and may have access to greater  resources
than are available to the Company.

The Company's aircraft are decades newer in design than the Bonanza,  Mooney and
Piper competitive  models and are certified to the newer, more stringent Federal
Aviation  Regulation (FAR) 23 through Amendment 7 standard rather than the older
Civil Air  Regulation  (CAR) 3. The Commander line has the best safety record in
its class, according to an independent study of FAA and National  Transportation
and Safety Board (NTSB) statistics conducted by R. E. Breiling  Associates,  the
leading accident analysis firm in general aviation.

Insurance

The Company  carries most types of insurance  customary  for a  manufacturer  of
general aviation aircraft,  including  coverage for general liability,  property
damage,  aircraft loss or damage and worker's  compensation,  but does not carry
product liability insurance.  There is no assurance that the amount of insurance
carried by the Company would be sufficient to protect it fully in the event of a
serious  accident or liability  claim, but the Company believes that the amounts
and coverage of its insurance  protection are reasonable and appropriate for the
Company's business operations.  Although highly probable,  there is no assurance
that such  insurance  will continue to be available on  commercially  reasonable
terms.

In mid-1994,  Congress enacted the General Aviation Revitalization Act, S. 1458,
which established an 18-year statute of repose for general aviation aircraft and
component  manufacturers.  This legislation  prohibits  product  liability suits
against aircraft manufacturers when the aircraft involved in an accident is more
than 18 years old when the accident occurs.  This action eliminated all Rockwell
manufactured  Commanders  produced  in the 1970's from the  Company's  liability
tail. The only aircraft that the Company bears manufacturing  responsibility for
are the models 115, 115TC,  114B, 114AT and 114TC produced from 1992 through the
present.  At December 31, 2000 this totaled  approximately  176 aircraft,  which
includes 73 aircraft exported from the United States.

Through March 1, 1995, the Company maintained  product liability  insurance with
coverage of $10 million per occurrence  and $10 million in the  aggregate,  with
deductible  of $200,000 for aircraft  built  through  March 1, 1995.  Management
believes  that the  premiums  for this  type of  insurance  are  rapacious,  the
policies are full of holes,  the  insurance  companies  end up  controlling  any
litigation and are loathe to vigorously defend unwarranted claims, and prefer to
settle  and  raise  premiums  rather  than  defend  unwarranted  claims.   Thus,
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. As such, the Company elected not to retain product liability
insurance  coverage  commencing  March 1, 1995.  The Company could be exposed to
significant financial risks if losses from product liability were to occur.

The Company does not carry business interruption or key man insurance.

Governmental Regulation

In order for an aircraft model to be manufactured for sale, the FAA must issue a
Type Certificate for the aircraft model and, in order for a particular  aircraft
to be operated,  an Airworthiness  Certificate for that aircraft must be issued.
The Company was issued a Type  Certificate  for the Commander 114B in 1992 and a
Type  Certificate  for the  Commander  114TC  in 1995.  The  Company  owns  Type
Certificates  for all predecessor  single engine Commander  models.  The Company
received a Production Certificate from the FAA in 1993, which allows the Company
to issue  Airworthiness  Certificates  under authority  delegated by the FAA. An
Airworthiness  Certificate  is  issued  for a  particular  aircraft  when  it is
certified to have been built in accordance  with  specifications  approved under
the Type Certificate for that particular model aircraft.  Commander aircraft are
certified to FAR 23,  Amendment 7 meeting more  stringent  standards  for single
engine aircraft than aircraft certified under the older CAR 3 regulation.


<PAGE>



The following table compares these standards:
<TABLE>
<CAPTION>

         Certification Requirements:                 FAR 23                             CAR 3
                                              (through Amendment 7)
         ----------------------------------------------------------------------------------------
<S>                                               <C>                                <C>
         Increased gust loading                      50 ft/sec                          30 ft/sec
         Fatigue evaluation -                        Fail-safe                          Static load
            Wing and associated structures           Safe life                             margin
         Fail-safe elevator control system               Yes                                    No
         Gear and door substantiation under
            all conditions                               Yes                                    No
         Flap actuated aural warning                     Yes                                    No
         More stringent usable fuel testing              Yes                                    No
         Non-siphoning fuel caps                         Yes                                    No
         Improved accessibility of fuel
            selector switch                              Yes                                    No
         More stringent lightning strike
            analysis                                     Yes                                    No
</TABLE>


Employees

The  Company  has  a  total  of  116  full-time  employees.   Aviation  General,
Incorporated  believes that its future  success will depend,  in part,  upon its
continued  ability to recruit  and retain  highly  skilled  employees.  Although
competition for qualified  personnel is strong,  the Company has been successful
in attracting and retaining skilled employees.  None of the Company's  employees
are  covered  by  a  collective  bargaining  agreement,  and  Aviation  General,
Incorporated considers its employee relations to be good.


Item 2.  Properties

The Company's  103,650 square foot facility,  which consists of three  buildings
constructed in 1981, is located at the Wiley Post Airport in Bethany,  Oklahoma.
The facility is leased from the Oklahoma  City Airport Trust  Authority  under a
lease that expires in October 2003, with a five-year renewal option. The Company
performs all of its operations and services from this facility.  During the past
ten years, the Company has improved its facility to assure safety and compliance
with environmental laws and regulations.

A summary of lease  payments is  presented  in Note G - Leases,  of the Notes to
Consolidated  Financial  Statements for 2000,  which is hereby  incorporated  by
reference.


Item 3.  Legal Proceedings

On February 18, 2000, a lawsuit was filed in the Third  Judicial  District Court
in Salt  Lake  City,  Utah  on  behalf  of the  estate  of  Frank  Earl  against
Aeroquip-Vickers,  Inc., Commander Aircraft Company, and Textron Lycoming,  Inc.
The plaintiff alleges that Mr. Earl was killed in the crash of a Commander 114TC
July 18, 1998 due to the failure of a clamp  manufactured  by  Aeroquip-Vickers,
Inc. that secured the turbocharger to the exhaust pipe, which ultimately  caused
the aircraft to crash.  Amounts of damages are not  specified in the  complaint.
Although  it is  too  early  for  the  ultimate  outcome  of  this  claim  to be
determined, management does not believe the Company bears any responsibility and
will  vigorously  defend  against this claim and  currently  believes  that this
action will not have a material impact on the Company's operations.

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


Item 4.  Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year covered by this report.


<PAGE>




                                     PART II


Item 5.  Market for the Registrant's Common Stock and Related Shareholder
         Matters

The common stock of Aviation General,  Incorporated,  $.50 par value,  trades on
the NASDAQ Small-Cap Market (symbol AVGE).  This table presents its high and low
market prices during the past two years. The Company has never paid dividends in
the past, and does not intend to pay dividends in 2001.
<TABLE>
<CAPTION>

                                          Quarterly Common Stock Price Ranges
                                       2000                                1999
                           --------------------------         --------------------------
         Quarter           High             Low                High              Low
         -------           ----             ---                ----              ---
<S>                     <C>               <C>              <C>              <C>
         1st                4                1 3/16            3                1 1/2
         2nd                4                2 1/4             2 1/8            1 1/4
         3rd                3                2 1/16            2                1 1/8
         4th                2 3/4            1 1/8             3 1/32           7/16
</TABLE>

There were  approximately 400 holders of record of the Company's common stock as
of December 31, 2000.

Item 6.  Selected Financial Data

The  selected  financial  data  presented  below  for each year in the five year
period ended  December 31, 2000 have been  derived  from the  Company's  audited
financial statements. This data should be read in conjunction with the Financial
Statements and related notes thereto and other financial  information  appearing
elsewhere in this Form 10-K.

<TABLE>
<CAPTION>

                                                              Year Ended December 31
                                         ----------------------------------------------------------------------
                                                     (Amounts in thousands, except per share data)
                                           2000           1999              1998           1997           1996
                                           -------------------------------------------------------------------
<S>                                   <C>            <C>               <C>           <C>            <C>
   Operation Data:

   Net sales                            $16,831        $13,667           $10,712         $8,062         $7,958
   Net earnings (loss)                     $450          $(385)          $(1,849)       $(2,140)       $(3,408)
   Earnings (loss) per share
     basic & diluted                      $0.07          $(.05)            $(.25)         $(.31)         $(.51)

   Balance Sheet Data:

   Total assets                         $11,809         $8,632           $10,148        $10,940        $11,060
   Long-term debt                             -              -                 -       $  2,446              -
</TABLE>


<PAGE>



Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations


Results of Operations:

                                  2000 vs. 1999

Revenues  increased 23% in 2000 to $16,831,034 from $13,667,245 in 1999, and the
net loss in 1999 of $385,018 improved by $835,051 to net earnings of $450,033 in
2000.  The net loss of $0.05 per basic and diluted share in 1999 improved to net
earnings of $0.07 per basic and diluted share in 2000.

Revenues  from  aircraft  sales  increased  26%  in  2000  to  $15,051,496  from
$11,926,234  in  1999.  New  aircraft  deliveries  improved  to 20 units in 2000
compared to 13 units in 1999,  while  pre-owned  and  consigned  aircraft  sales
decreased  to 31 aircraft  in 2000 from 35 in 1999.  Revenues  generated  by the
service,   parts  and  refurbishment  business  increased  $38,527  in  2000  to
$1,779,538 from $1,741,011 in 1999.

Aircraft cost of sales increased by 13% to $11,489,886 in 2000 from  $10,198,033
in 1999.  The  increase was  significantly  smaller than the increase in revenue
from aircraft sales,  thereby resulting in substantially higher margins in 2000.
The  increased  costs  were due to higher  volume of new units  sold,  partially
offset by lower pre-owned volume and lower new per-unit costs.

Service and parts cost of sales  increased to $1,387,653 in 2000 from $1,178,633
in 1999 due to higher  parts cost and a change in mix with more  volume  derived
from service repair and refurbishment  work and less volume in spare parts sales
that generally carry higher margins.

Engineering and product development costs increased 21% in 2000 to $406,898 from
$336,855  in  1999.  The  increase  was  due  primarily  to   compensation   and
professional  service  fees  to  support   certification  of  new  avionics  and
electrical  equipment  introduced  as  standard or  optional  equipment  for new
aircraft.

Sales and marketing expenses increased 16% to $1,655,330 in 2000 from $1,430,266
in 1999.  Costs increased due to higher  compensation  and sales  commissions of
$151,000 and higher advertising of $50,000.  General and administrative expenses
increased to $1,399,721 in 2000 from  $1,006,306 in 1999.  This increase was due
to higher  compensation  costs of $175,000,  higher legal  expenses of $145,000,
higher  director and  professional  fees of $71,000,  partially  offset by lower
costs for SJS of $19,000.  Included in general and  administrative  expenses for
2000 is $160,000 for costs  associated  with the  operations  of  Strategic  Jet
Services, Inc. compared to $179,000 in 1999.

Interest  income  totaled  $207,152 in 2000, up from $200,010 in 1999.  Interest
expense  increased to $264,297 in 2000 from $115,405 in 1999 due to higher rates
and increased short-term borrowings from the Company's lines of credit.



<PAGE>



                                  1999 vs. 1998

Revenues  increased 28% in 1999 to $13,667,245 from $10,711,827 in 1998, and the
net loss was reduced 79% to $385,018 from $1,849,400 in 1998. Net loss per basic
and diluted  share  decreased  to $.05 per basic and diluted  share in 1999 from
$.25 per share in 1998.

Revenues  from  aircraft  sales  increased  27%  in  1999  to  $11,926,234  from
$9,375,478 in 1998. New aircraft  deliveries  remained constant in 1999 and 1998
at 13 units,  while  pre-owned  and  consigned  aircraft  sales  increased to 35
aircraft in 1999 from 29 in 1998.  A portion of the increase in revenues was due
to an increase in selling  prices of new aircraft,  but most of the increase was
due to the additional number of pre-owned aircraft sold, particularly late model
114Bs and 114TCs.

The  revenues  generated  by  the  service,  parts  and  refurbishment  business
increased 30% in 1999 to  $1,741,011  from  $1,336,349 in 1998.  The increase in
revenue was due to a major rebuild of a customer's  aircraft,  along with higher
volume of parts shipments.

Aircraft cost of sales  increased by 17% to $10,198,033 in 1999 from  $8,751,936
in 1998.  The  increase was  significantly  smaller than the increase in revenue
from aircraft sales which resulted in substantially  higher margins in 1999. The
increase in aircraft cost of sales was due to the increased  number of pre-owned
aircraft sold and higher costs for material and labor for new aircraft produced.

Service and parts cost of sales  increased to $1,178,633 in 1999 from $1,094,075
in  1998.  The  increase  of only 8% in  costs  on a sales  increase  of 30% was
accomplished  by higher  prices for parts and  refurbishment  work and continued
control of labor and overhead costs in the Completion Center.

Engineering and product  development costs increased 9% in 1999 to $336,855 from
$308,772 in 1998.  The increase was due primarily to expenses  involved with the
certification of new avionics and electrical equipment introduced as standard or
optional  equipment  for new  aircraft.  The balance of costs was  incurred  for
routine sustaining engineering projects.

Sales and marketing expenses decreased 18% to $1,430,266 in 1999 from $1,745,732
in 1998.  Advertising  expenses  accounted for the decrease as they were reduced
from $590,000 in 1998 to $270,000 in 1999. General and  administrative  expenses
were reduced 4% in 1999 to $1,006,306  from $1,044,266 in 1998. The decrease was
due to a reduction in  insurance  expense and lower  expenses in  virtually  all
areas. Included in general and administrative  expenses for 1999 is $178,500 for
costs associated with the operations of Strategic Jet Services, Inc. compared to
$128,000 in 1998.

Interest  income totaled  $200,010 in 1999,  down from $324,043 in 1998. Most of
the reduction in interest  income in 1999 was due to the  redemption of $800,000
notes  receivable  from a related party in February,  which bore interest at 10%
per annum.  The balance of the change was due to interest earned on certificates
of deposit that were redeemed during 1998.

Interest  expense  increased  to  $115,405  in 1999 from  $12,619 in 1998.  This
increase was due to the Company's line of credit with several  financial sources
that provided floor planning for aircraft held for sale.



<PAGE>



Liquidity and Capital Resources

Cash used in  operations  totaled  $1,872,480  for 2000 compared to cash used in
operations  of $61,505  in 1999.  Notes and  accounts  receivable  increased  by
$440,022  due  primarily to the sale of one new  aircraft,  paid in full shortly
after year-end.

Inventories  increased  $2,848,451.  New and  pre-owned  aircraft  increased  by
$1,983,000 due to an increase of one new aircraft and an overall increase in the
number and average  unit cost of the  pre-owned  aircraft  on hand at  year-end.
Work-in  process and raw  materials  also  increased  by $771,003 as the Company
increased production to meet higher sales demand.

Accounts  payable  increased  by $774,770 at December  31, 2000  compared to the
prior year due to  increased  purchases  on account  to  support  the  increased
production levels. The Company had no long-term debt as of December 31, 2000 and
1999.

Capital  expenditures totaled $140,267 in 2000, primarily to replace and upgrade
manufacturing  tooling.  These investments improve the quality of the components
and reduce the cost of manufacturing.

The Company established a line of credit with a bank in the amount of $1,500,000
for the purpose of funding  pre-owned  aircraft  for  inventory.  The notes bear
interest at prime plus 1% and are  secured by  individual  aircraft  and certain
guarantees.  In  addition,  the  Company  established  a line of  credit  with a
financial  institution  in the amount of $3,000,000  to provide  funding for new
aircraft as well as pre-owned  piston and turbine  aircraft.  The notes  contain
variable  interest  rates up to 12.5%,  mature in  six-month  intervals  and are
renewable at the option of the Company for an additional six months.  Borrowings
under these lines of credit totaled $3,035,000 at December 31, 2000.

On March 22, 2000, the Company announced a plan to repurchase up to 2,000,000 of
its common  stock.  Prior to this  announcement,  the Company had  completed the
previously  announced  repurchase  of  1,000,000  shares  of its  common  stock.
Pursuant to these plans,  the Company has  repurchased  1,170,284  shares of its
common stock through December 31, 2000.

The Company anticipates that its primary cash requirement will relate to working
capital associated with continued growth. The Company  anticipates funding these
requirements  by cash generated  from  operations or from  borrowings  under the
Company's existing lines of credit.

Market Risk

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



<PAGE>



Inflation

Management believes that the overall effects of inflation on the Company's costs
of materials and supplies  have been  minimal.  For each of the past five years,
cost of sales was  virtually  the same as it would  have been on a current  cost
basis.  The Company uses a moving average cost for inventory  valuation and cost
changes are not readily recognized in the short-term.

Item 8.  Financial Statements and Supplementary Data

         Index to Financial Statements and Supplementary Data:
<TABLE>
<CAPTION>

                                                                                       Page
<S>                                                                                  <C>
                  Report of Independent Public Accountants                              14

                  Financial Statements:

                  Consolidated Balance Sheets December 31, 2000 and 1999                15

                  Consolidated Statements of Operations for the years ended             17
                              December 31, 2000, 1999, and 1998

                  Consolidated Statement of  Stockholders' Equity for the               18
                              years ended December 31, 2000, 1999, and 1998

                  Consolidated Statements of Cash Flows for the years ended             19
                              December 31, 2000, 1999, and 1998

                  Notes to Consolidated Financial Statements                            21


                  Supplementary Financial Data:

                           Selected Quarterly Financial Data for the years ended
                                December 31, 2000 and 1999 (unaudited)                  34
</TABLE>


<PAGE>






Report of Independent Certified Public Accountants


Stockholders
Aviation General, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of  Aviation
General, Inc. (a Delaware corporation) and Subsidiaries, as of December 31, 2000
and 1999, and the related consolidated  statements of operations,  stockholders'
equity,  and cash flows for each of the three years in the period ended December
31, 2000.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated financial position of Aviation General,
Inc. and  Subsidiaries,  as of December 31, 2000 and 1999, and the  consolidated
results of their  operations and their  consolidated  cash flows for each of the
three years in the period ended December 31, 2000 in conformity  with accounting
principles generally accepted in the United States of America.






GRANT THORNTON LLP

Oklahoma City, Oklahoma
February 9, 2001


<PAGE>



                     Aviation General, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,

<TABLE>
<CAPTION>

                                    ASSETS                                      2000                1999
                                                                         ------------------  ------------------
<S>                                                                     <C>                 <C>
CURRENT ASSETS
    Cash and cash equivalents                                            $      135,016       $      281,138
    Accounts receivable                                                         551,425              111,403
    Current portion of note receivable                                           25,628               19,535
    Inventories                                                               7,992,171            5,143,720
    Prepaid expenses and other assets                                           153,490              172,273
                                                                          -------------        -------------

                  Total current assets                                        8,857,730            5,728,069

PROPERTY AND EQUIPMENT - AT COST
    Office equipment and furniture                                              363,388              355,492
    Vehicles and aircraft                                                        95,115               84,021
    Manufacturing equipment                                                     382,124              362,205
    Tooling       654,619                                                       563,193
    Leasehold improvements                                                      311,764              311,764
                                                                          -------------        -------------
                                                                              1,807,010            1,676,675
       Less accumulated depreciation                                          1,085,037              951,791
                                                                           ------------        -------------
                                                                                721,973              724,884

OTHER ASSETS
    Note receivable, less current maturities                                     95,921              125,331
    Available-for-sale equity securities - related party                        603,000              317,151
    Note receivable from related party                                        1,529,889            1,736,552
                                                                           ------------         ------------
                                                                              2,228,810            2,179,034
                                                                           ------------         ------------

                                                                           $ 11,808,513        $   8,631,987
                                                                            ===========         ============
</TABLE>



<PAGE>

                     Aviation General, Inc. and Subsidiaries

                     CONSOLIDATED BALANCE SHEETS - CONTINUED

                                  December 31,

<TABLE>
<CAPTION>

           LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                                2000                1999
                                                                         ------------------  ------------------
<S>                                                                     <C>                  <C>
CURRENT LIABILITIES
    Accounts payable                                                      $   1,226,414       $      451,645
    Accrued expenses                                                            561,398              344,525
    Refundable deposits                                                         115,814              233,363
    Notes payable                                                             3,035,000              731,780
                                                                           ------------         ------------

                  Total current liabilities                                   4,938,626            1,761,313

DEFERRED INCOME TAX LIABILITY                                                    58,568                  -

COMMITMENTS AND CONTINGENCIES                                                       -                    -

STOCKHOLDERS' EQUITY
    Preferred stock - $.01 par value; authorized,
       5,000,000 shares; none issued                                                -                    -
    Common stock - $.50 par value;  authorized,
       20,000,000 shares;  issued, 7,051,519
       shares in 2000 and 7,043,186 shares in 1999                            3,525,759            3,521,593
    Additional paid-in capital                                               36,889,799           36,881,466
    Treasury stock - at cost (772,189 shares in 2000
       and 529,400 shares in 1999)                                           (1,294,193)            (658,615)
    Accumulated deficit                                                     (32,423,737)         (32,873,770)
    Accumulated other comprehensive income                                      113,691                  -
                                                                          -------------         ------------
                                                                              6,811,319            6,870,674
                                                                           ------------         ------------

                                                                           $ 11,808,513        $   8,631,987
                                                                            ===========         ============
</TABLE>



<PAGE>



                     Aviation General, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             Year ended December 31,

<TABLE>
<CAPTION>

                                                                            2000              1999              1998
                                                                      ----------------  ----------------  ----------------
<S>                                                                     <C>              <C>               <C>
NET SALES
    Aircraft                                                             $15,051,496      $11,926,234      $  9,375,478
    Service                                                                1,779,538        1,741,011         1,336,349
                                                                         -----------      -----------       -----------
                                                                          16,831,034       13,667,245        10,711,827

COST OF SALES
    Aircraft                                                              11,489,886       10,198,033         8,751,936
    Service                                                                1,387,653        1,178,633         1,094,075
                                                                         -----------      -----------       -----------
                                                                          12,877,539       11,376,666         9,846,011
                                                                          ----------       ----------       -----------

                  Gross margin                                             3,953,495        2,290,579           865,816

OTHER OPERATING EXPENSES
    Product development and engineering costs                                406,898          336,855           308,772
    Selling, general, and administrative expenses                          3,055,051        2,436,578         2,792,826
                                                                         -----------      -----------       -----------
                                                                           3,461,949        2,773,433         3,101,598
                                                                         -----------      -----------       -----------

                  Operating income (loss)                                    491,546         (482,854)       (2,235,782)

OTHER INCOME (EXPENSES)
    Interest income                                                          207,152          200,010           324,043
    Other income                                                              16,059           14,858            83,346
    Interest expense                                                        (264,297)        (115,405)          (12,619)
    Other expense                                                               (427)          (1,627)           (8,388)
                                                                         -----------      -----------       -----------
                                                                             (41,513)          97,836           386,382
                                                                       -------------     ------------      ------------

                  NET EARNINGS (LOSS)                                  $     450,033    $    (385,018)     $ (1,849,400)
                                                                        ============     ============       ===========

NET EARNINGS (LOSS) PER SHARE
    Weighted average common shares outstanding; basic                      6,370,520        7,037,267         7,280,548
                                                                         ===========      ===========       ===========

    Net earnings (loss) per share; basic                               $         .07    $        (.05)     $       (.25)
                                                                         ===========      ===========       ===========

    Weighted average common shares outstanding; diluted                    6,666,676        7,037,267         7,280,548
                                                                         ===========      ===========       ===========

    Net earnings (loss) per share; diluted                             $         .07    $        (.05)     $       (.25)
                                                                         ===========      ===========       ===========
</TABLE>


<PAGE>



                     Aviation General, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                  Years ended December 31, 2000, 1999, and 1998


<TABLE>
<CAPTION>
                                                                                                           Accumulated
                                                              Additional                                     other          Total
                                        Common stock           paid-in       Treasury      Accumulated     comprehensive
                                  stockholders'
                                    Shares        Amount       capital         stock        deficit          income         equity

<S>                            <C>             <C>          <C>          <C>               <C>              <C>        <C>
Balance at January 1, 1998         7,280,548     $3,640,274  $37,178,230  $           -     $(30,639,352)     $    -    $10,179,152

Net loss                                 -              -             -               -       (1,849,400)          -     (1,849,400)
                                  -------------------------------------------------------     ----------    ----------  -----------

Balance at December 31, 1998       7,280,548      3,640,274   37,178,230             -       (32,488,752)          -      8,329,752

Purchase of treasury stock               -              -            -        (1,108,904)            -             -     (1,108,904)

Retirement of treasury stock        (237,362)      (118,681)    (296,764)        415,445             -             -            -

Sale of treasury stock                   -              -            -            34,844             -             -         34,844

Net loss                                 -              -             -                -        (385,018)          -       (385,018)
                                  -------------------------------------------------------- -------------    ----------  -----------

Balance at December 31, 1999       7,043,186      3,521,593   36,881,466        (658,615)    (32,873,770)          -      6,870,674

Sale of common stock                   8,333          4,166        8,333             -               -             -         12,499

Purchase of treasury stock               -              -            -          (670,000)            -             -       (670,000)

Sale of treasury stock                   -              -            -            34,422             -             -         34,422

Comprehensive income
   Net earnings                          -              -            -               -           450,033           -        450,033
   Other comprehensive income
     Change in unrealized
       investment gain, net              -              -             -                -                -      113,691      113,691
                                  -------------------------------------------------------------------------    -------  -----------

     Comprehensive income                -              -             -                -                -          -        563,724
                                  ------------------------------------------------------------------------- ----------  -----------

Balance at December 31, 2000       7,051,519     $3,525,759  $36,889,799     $(1,294,193)   $(32,423,737)     $113,691  $ 6,811,319
                                   =========      =========   ==========      ==========     ===========       =======  ===========
</TABLE>


<PAGE>



                     Aviation General, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,
<TABLE>
<CAPTION>

                                                                                2000             1999           1998
<S>                                                                      <C>               <C>              <C>
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities
   Net earnings (loss)                                                       $    450,033    $   (385,018)   $(1,849,400)
   Adjustments to reconcile net earnings (loss)
      to net cash used in operating activities
        Depreciation and amortization                                             140,309         111,034        106,130
        Noncash interest earnings                                                (134,383)        (17,151)           -
        Sale of aircraft and parts on notes receivable                               (142)       (493,977)       (17,044)
        Receipts on aircraft notes receivable                                      64,505         290,337        161,611
        Loss (gain) on retirement of property and equipment                         2,794            (850)           (91)
        Changes in assets and liabilities
           (Increase) decrease in
              Accounts receivable                                                (440,022)       (104,462)       335,976
              Inventories                                                      (2,848,451)        639,678       (173,269)
              Prepaid expenses and other assets                                    18,783          87,587        (56,045)
           Increase (decrease) in
              Accounts payable                                                    774,770        (170,973)       352,364
              Accrued expenses                                                    216,873           1,425         30,155
              Refundable deposits                                                (117,549)        (19,135)       177,318
                                                                              -----------     -----------    -----------

              Net cash used in operating activities                            (1,872,480)        (61,505)      (932,295)

Cash flows from investing activities
   Change in short-term investments                                                   -               -        1,224,845
   Capital expenditures                                                          (140,267)        (61,633)      (167,936)
   Proceeds on sales of property and equipment                                         75             850          1,068
   Purchase of debt securities                                                        -               -       (1,000,000)
   Proceeds from investment in debt securities                                        -           800,000            -
   Purchase of available-for-sale equity securities                              (113,590)       (100,000)             -
                                                                              -----------      ----------    -----------

              Net cash provided by (used in) investing activities                (253,782)        639,217         57,977

Cash flows from financing activities
   Proceeds from borrowings                                                     6,635,840       3,819,714        873,000
   Payments on borrowings                                                      (4,332,620)     (3,687,934)      (375,000)
   Proceeds from sale of stock                                                     12,498             -              -
   Purchase of treasury stock                                                    (370,000)     (1,108,904)           -
   Sale of treasury stock                                                          34,422          34,844             -
                                                                             ------------    -------------   -----------

              Net cash provided by (used in) financing activities               1,980,140        (942,280)       498,000
                                                                               ----------     -----------    -----------

              NET DECREASE IN CASH
                AND CASH EQUIVALENTS                                             (146,122)       (364,568)      (376,318)

Cash and cash equivalents at beginning of year                                    281,138         645,706      1,022,024
                                                                              -----------     -----------     ----------

Cash and cash equivalents at end of year                                     $    135,016    $    281,138   $    645,706
                                                                              ===========     ===========    ===========
</TABLE>


<PAGE>


                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                             Year ended December 31,

<TABLE>
<CAPTION>

                                                                                 2000           1999              1998
<S>                                                                     <C>                 <C>            <C>


Cash paid during the year for:

   Interest                                                                  $    233,000    $    115,000   $       8,000
   Income taxes                                                                       -               -               -
</TABLE>

Noncash investing and financing activities:

2000
   Exchange of note  receivable  from related  party of $165,617 and $134,383 of
   accrued interest thereon for acquisition of treasury stock.

1999
   Exchange  of  debt  securities  -  related party with  a  carrying  value  of
   $200,000  and  accrued   interest  of  $17,151  for available-for-sale equity
   securities - related party.



<PAGE>



                     Aviation General, Inc. and Subsidiaries

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2000, 1999, and 1998


NOTE A - ORGANIZATION AND OPERATIONS

    Aviation  General,  Inc. ("AGI") was  incorporated  August 4, 1998 under the
    laws of the State of Delaware,  and is the  successor to the  operations  of
    Commander Aircraft Company ("CAC").  AGI is a holding company which, through
    its wholly owned subsidiaries,  CAC and Strategic Jet Services, Inc. ("SJS")
    (collectively  referred to as the  "Company"),  manufactures,  markets,  and
    provides  support  services for single engine,  high  performance  Commander
    aircraft  and to a  lesser  extent  provides  sales  and  service  of  other
    pre-owned aircraft. The Company also provides consulting,  sales, brokerage,
    and refurbishment services for jet aircraft through SJS.

    The Board of Directors of AGI is authorized to issue  preferred stock in one
    or more  series.  The Board of Directors  is further  authorized  to fix the
    number of shares constituting such series and to fix the relative rights and
    preferences of the shares of the series.

NOTE B - SUMMARY OF ACCOUNTING POLICIES

    A summary of the significant accounting policies consistently applied in the
    preparation of the accompanying consolidated financial statements follows.

    1.     Principles of Consolidation

    The Company consolidates the accounts of its subsidiaries,  CAC and SJS. All
    intercompany balances and transactions are eliminated in consolidation.

    2.     Cash and Cash Equivalents

    The Company  considers all highly liquid debt  instruments  purchased with a
    maturity  of  three  months  or  less  and  money  market  funds  to be cash
    equivalents.  The Company maintains its cash in bank deposit accounts which,
    at  times,  may  exceed  federally  insured  limits.  The  Company  has  not
    experienced  any losses in such  accounts  and believes it is not exposed to
    any significant  credit risks on cash and cash  equivalents.  As of December
    31, 2000 and 1999,  the Company has  approximately  $122,000  and  $279,000,
    respectively, on deposit at one financial institution.

    3.     Investments

   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  included in
   earnings.  At December 31, 2000, unrealized gains, net of income tax effects,
   of $113,691 have been recorded in accumulated other comprehensive  income. At
   December  31,  1999,   the  fair  value  of   available-for-sale   securities
   approximates cost.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE B - SUMMARY OF ACCOUNTING POLICIES - CONTINUED

    4.     Revenue Recognition

   Sales of aircraft are  recognized  upon execution and funding of the purchase
   agreement  and  transfer of title to the buyer which occurs after the Company
   receives   the   airworthiness   certificate   from  the   Federal   Aviation
   Administration ("FAA"). Additionally, for aircraft financed by the Company it
   must also be determined that the buyer's  initial and continuing  investments
   in the aircraft are adequate to  demonstrate  a commitment  to pay.  Sales of
   pre-owned  aircraft are recognized upon execution and funding of the purchase
   agreement.  Service revenue is recognized when the services are performed and
   billable.

    5.     Inventories

    Inventories  consist primarily of finished goods and parts for manufacturing
    and servicing of aircraft.  Inventory costs include all direct manufacturing
    costs  and  applied  overhead.  These  inventories,   other  than  pre-owned
    aircraft,  are stated at the lower of cost or market, and cost is determined
    by  the   average-cost   method.   Pre-owned   aircraft   are  valued  on  a
    specific-identification  basis  at the  lower of cost or  current  estimated
    realizable  wholesale  price.  Inventory  components  at December 31 were as
    follows:

                                                 2000            1999
                                            --------------    ------------

       Raw materials                          $2,522,930        $2,866,697
       Work in process                         1,710,363           595,593
       New and pre-owned aircraft              3,663,866         1,681,025
       Other                                      95,012               405
                                             -----------     -------------

                                              $7,992,171        $5,143,720
                                             ===========     =============

    6.     Property and Equipment

    Depreciation  is  computed  using the  straight-line  method  for  financial
    reporting  purposes and accelerated  methods for tax purposes over estimated
    useful lives ranging from three to 15 years.

    7.     Income Taxes

    Deferred  income  taxes  are  provided  on  carryforwards  and on  temporary
    differences  between the tax basis of an asset or liability and its reported
    amount in the financial statements that will result in taxable or deductible
    amounts in future  years.  Deferred  income tax assets and  liabilities  are
    determined by applying the presently enacted tax rates and laws.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE B - SUMMARY OF ACCOUNTING POLICIES - CONTINUED

7.       Income Taxes (Continued)

    The Company  provides  for a valuation  allowance on deferred tax assets if,
    based on the weight of available  evidence,  it is more likely than not that
    some portion or all of the deferred tax assets will not be realized.

    AGI  files  a   consolidated   income  tax  return  with  its  wholly  owned
    subsidiaries.

    8.     Refundable Deposits

    Refundable  deposits  consist of payments made by customers  prior to having
    repairs  performed on their  aircraft and deposits on aircraft  sold.  These
    deposits are  recognized as revenue in the period the services are completed
    or the aircraft sale is recognized.

    9.     Prepaid Advertising and Advertising Costs

    The Company expenses the cost of advertising as incurred, except for prepaid
    advertising.  Prepaid  advertising  largely  consists  of costs  for  future
    magazine  advertisements.  These costs are expensed when the  advertisements
    are  published.  Advertising  expense for the years ended December 31, 2000,
    1999,  and  1998  was  approximately   $320,000,   $270,000,  and  $590,000,
    respectively.

    10.    Earnings (Loss) Per Common Share

    Basic earnings  (loss) per common share is calculated  based on the weighted
    average  number of shares  outstanding  during  the year.  Diluted  earnings
    (loss) per common share has been computed based on the  assumption  that all
    dilutive options and warrants are exercised.

    11.    Use of Estimates

    In preparing the Company's  consolidated  financial  statements,  management
    makes estimates and  assumptions  that affect certain  reported  amounts and
    disclosures; accordingly, actual results could differ from those estimates.



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE C - NOTE RECEIVABLE

    From time to time, the Company  finances the sale of new aircraft with notes
    receivable from customers which are collateralized by the aircraft. The note
    receivable matures February 1, 2005 and bears interest at prime plus 1.5%.

    A summary of the note receivable as of December 31 is as follows:

                                                   2000                1999
                                                 -----------      -------------

       Amounts due within one year                  $  25,628        $  19,535
       Amounts due after one year                      95,921          125,331
                                                     --------          -------

                         Total note receivable       $121,549         $144,866
                                                      =======          =======

NOTE D - NOTES PAYABLE

    Notes  payable  consist  of  outstanding   draws  under   revolving   credit
    facilities. The revolving credit facilities may be drawn down to manufacture
    new and purchase  pre-owned  aircraft.  Interest is payable monthly at fixed
    rates of 10.5% to 12.5%.

NOTE E - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

    The following  methods and assumptions  were used to estimate the fair value
    of each class of  financial  instruments  as of December  31, 2000 and 1999.
    Such  information does not purport to represent the aggregate net fair value
    of the Company:

       Cash and Cash Equivalents. The balance sheet carrying amounts of cash and
       cash equivalents approximate fair values of such assets.

       Note Receivable.  The carrying amount  approximates  fair  value  because
       of the fluctuating  interest rate associated with the note receivable.

       Note  Receivable  From Related  Party (see Note I). The  carrying  amount
       approximates  fair  value  because  of  the  fluctuating   interest  rate
       associated with the line of credit.

       Available-For-Sale  Equity Securities - Related Party. The estimated fair
       value is based on quotes from independent pricing sources.

       Notes  Payable.  The carrying  value of notes  payable approximates  fair
       value because of variable  interest  rates and the short-term  nature  of
       the instruments.



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998

NOTE E - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED

    All of the  Company's  financial  instruments  are for  purposes  other than
trading.
<TABLE>
<CAPTION>

                                                             2000                              1999
                                                ------------------------------    -----------------------------
                                                   Carrying            Fair          Carrying           Fair
                                                    amount             value          amount            value
<S>                                            <C>               <C>             <C>             <C>

       Cash and cash equivalents                $    135,016      $   135,016     $    281,138     $   281,138
       Note receivable                               121,548          121,548          144,866         144,866
       Available-for-sale equity securities -
         related party                               603,000          603,000          317,151         317,151
       Note receivable from related party          1,529,889        1,529,889        1,736,552       1,736,552
       Notes payable                              (3,035,000)      (3,035,000)        (731,780)       (731,780)
</TABLE>

NOTE F - STOCK OPTION PLANS

   In December 1993, the Company approved a stock option plan for issuance of up
   to 300,000  shares of stock to employees at the  discretion  of the committee
   appointed  by the Board of  Directors.  The number of shares  authorized  for
   issuance has  subsequently  been  increased to  2,550,000  shares.  The stock
   option plan also provides for automatic  grants to purchase  20,000 shares of
   common  stock to each  director on an annual  basis.  At December  31,  2000,
   approximately  155,000  shares remain to be granted under the plan. The stock
   options generally vest ratably over a three-year period.

    The Company uses the intrinsic  value method to account for its stock option
    plan in which  compensation  is recognized  only when the fair value of each
    option  exceeds its  exercise  price at the date of grant.  Accordingly,  no
    compensation   cost  has  been  recognized  for  the  options  issued.   Had
    compensation  cost been determined based on the fair value of the options at
    the grant dates,  the Company's net earnings  (loss) and earnings (loss) per
    share would have been  decreased/increased  to the pro forma amounts for the
    years ended as indicated below.

<TABLE>
<CAPTION>

                                                          2000               1999             1998
                                                     --------------    ---------------- ----------------
<S>                                                  <C>                <C>             <C>
       Net earnings (loss)
           As reported                                   $450,033        $(385,018)       $(1,849,400)
           Pro forma                                       17,407         (708,612)       $(2,069,761)

       Earnings (loss) per share, basic and diluted
           As reported                                   $    .07        $    (.05)       $      (.25)
           Pro forma                                     $    .01        $    (.10)       $      (.28)
</TABLE>


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE F - STOCK OPTION PLANS - CONTINUED

   The fair  value of each  grant is  estimated  on the date of grant  using the
   Black-Scholes  options-pricing  model  with  the  following  weighted-average
   assumptions  used for  grants  in 2000,  1999,  and  1998,  respectively:  No
   expected  dividends;  expected  volatility  of 75%,  66%, and 66%,  risk-free
   interest rate of 5.9%, 5.5%, and 5.5%, and expected lives of three years. The
   exercise price of all options  equaled or exceeded  market price of the stock
   at the date of grant.

    The Black-Scholes option valuation model was developed for use in estimating
    the fair value of traded options which have no vesting  restrictions and are
    fully transferable.  In addition,  option valuation models require the input
    of  highly  subjective   assumptions  including  the  expected  stock  price
    volatility.    Because   the   Company's   employee   stock   options   have
    characteristics  significantly  different from those of traded options,  and
    because changes in the subjective  input  assumptions can materially  affect
    the fair value estimate, in management's opinion, the existing models do not
    necessarily  provide a  reliable  single  measure  of the fair  value of its
    employee stock options.

   A summary of the status of the Company's stock option plan as of December 31,
   2000,  1999,  and 1998 and changes  during the years ending on those dates is
   presented below.

<TABLE>
<CAPTION>

                                                2000                  1999                       1998
                                        --------------------  ----------------------     --------------------
                                                     Weighted               Weighted                Weighted
                                                     average                average                 average
                                                     exercise               exercise                exercise
                                           Shares     price     Shares        price     Shares        price
                                        --------------------- ----------------------  ----------------------
<S>                                    <C>         <C>        <C>          <C>         <C>         <C>
    Outstanding at beginning of year    1,460,880    $2.27      980,880       $2.97      691,349       $3.65
    Granted                             1,258,700    $2.17      700,000       $1.58      672,400       $2.67
    Exercised                              (8,333)   $1.50          -           -           -            -
    Expired                              (177,080)   $2.52          -           -           -            -
    Forfeited                            (139,500)   $1.81     (220,000)      $3.30     (382,869)      $3.68
                                       ----------            ----------                 --------

    Outstanding at end of year          2,394,667    $2.15    1,460,880       $2.27      980,880       $2.97
                                        =========             =========                 ========

    Options exercisable at year end       592,937    $2.26      398,983       $3.01      234,360       $3.89

    Weighted average fair value of options
           granted during the year                   $1.04                    $0.74                    $1.33
</TABLE>



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE F - STOCK OPTION PLANS - CONTINUED

   The following table summarizes  information  about  fixed-price stock options
outstanding at December 31, 2000:
<TABLE>
<CAPTION>

                                                        Options outstanding                   Options exercisable
                                            ---------------------------------------      ----------------------------
                                                           Weighted-
                                                              average      Weighted-                    Weighted-
                                                Number      remaining        average        Number       average
                                             outstanding   contractual       exercise     exercisable    exercise
                                             at 12/31/00      life            price        at 12/31/00    price
<S>                                        <C>            <C>             <C>           <C>            <C>
       Range of exercise prices
           $1.38 to $1.75                      826,801       2.07 years       $1.52         179,223      $1.57
           $1.76 to $2.75                    1,567,866       2.42 years       $2.48         413,714      $2.56
                                             ---------                                      -------

           $1.38 to $2.75                    2,394,667                                      592,937
                                             =========                                      =======
</TABLE>


NOTE G - LEASES

    The Company leases office space, hangar space, its manufacturing and service
    facility,  and certain  office  equipment  under  agreements  classified  as
    operating  leases that expire at various dates through 2004.  Rental expense
    under these leases was approximately  $274,000,  $271,000,  and $264,000 for
    the years ended December 31, 2000, 1999, and 1998, respectively.  The future
    annual minimum lease payments under these leases at December 31, 2000 are as
    follows:

    Year ending December 31
                     2001                                       $281,861
                     2002                                        289,672
                     2003                                        250,536
                     2004                                         21,504
                                                                --------

                     Total future minimum lease payments        $843,573
                                                                 =======



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE H - SALES CONCENTRATIONS

    The geographic sales of the Company's new aircraft are as follows:
<TABLE>
<CAPTION>

                                        2000                     1999                       1998
                               -----------------------   ------------------------   ----------------------
                               Number        Amount       Number        Amount      Number        Amount
                               ------     ------------    ------     ------------   ------     ------------
<S>                           <C>          <C>          <C>          <C>            <C>        <C>
    United States                 18        $9,632,353     12         $5,757,791       10        $4,182,703
    Europe                         2         1,096,988      -                -          2           828,750
    South America                 -                -        1            424,770        1           511,700
</TABLE>


    Pre-owned  aircraft sold during 2000 in the United States and Europe were 28
    and 0, respectively,  totaling  $4,192,481 and $0,  respectively.  Brokerage
    commissions  of  $129,674  were  received  in 2000 as a  selling  agent  for
    pre-owned aircraft.

    Pre-owned  aircraft sold during 1999 in the United States and Europe were 29
    and  2,  respectively,   totaling  $4,853,789  and  $733,400,  respectively.
    Brokerage  commissions  of $156,484 were received in 1999 as a selling agent
    for pre-owned aircraft.

    Pre-owned  aircraft sold during 1998 in the United States and Europe were 21
    and 2, respectively, totaling $3,205,325 and $647,000, respectively.


NOTE I - RELATED PARTY TRANSACTIONS

    The  Company  extends  financing  for  aircraft  and spare parts sold either
    directly to a director of the  corporate  general  partner of the  Company's
    majority  stockholder or to an Authorized  Sales and Service  Representative
    owned by the director under a line of credit of $5,000,000.  All outstanding
    advances under this line of credit and accrued  interest  thereon are due on
    June 30,  2001.  The line of credit  bears  interest  at 1% over the  Morgan
    Guaranty  of New York prime  rate  (10.5% at  December  31,  2000),  payable
    quarterly,  in arrears.  Following is a summary of  transactions  under this
    line of credit for 2000, 1999, and 1998:
<TABLE>
<CAPTION>

                                                                      2000            1999           1998
                                                                 --------------  -------------- --------------
<S>                                                              <C>             <C>            <C>
       Balance at beginning of year                                $1,736,000      $1,508,000     $1,497,000

       Sale of pre-owned aircraft                                         -           493,000            -
       Sale of spare parts                                              1,000             -           11,000
       Cash payments received                                         (41,000)       (265,000)           -
       Exchange of common stock                                      (166,000)            -              -
                                                                   ----------  -------------- --------------

       Balance at end of year                                      $1,530,000      $1,736,000     $1,508,000
                                                                    =========       =========      =========
</TABLE>



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998

NOTE I - RELATED PARTY TRANSACTIONS - CONTINUED

    Accrued interest  receivable under this line of credit agreement  totaled $0
    as of each  December 31, 2000 and 1999.  Interest  income under this line of
    credit was approximately  $169,000,  $144,000,  and $142,000 for 2000, 1999,
    and 1998, respectively.

    The  line  of  credit  is   collateralized   by  one   pre-owned   aircraft,
    approximately  800,000  shares of the Company's  stock owned directly by the
    majority   stockholder,   and  the   personal   guarantee  of  the  majority
    stockholder.

    During 1998, the Company  purchased debt securities  with  detachable  stock
    purchase warrants for $1,000,000 from an entity under common control. During
    1999,  $800,000 of the debt  securities were paid off and the balance of the
    securities plus accrued interest was converted into 133,333 shares of common
    stock of the affiliate in exchange for shortening the expiration date of the
    accompanying  warrants. The Company purchased an additional 66,667 shares of
    the entity for  $100,000  during 1999 and an  additional  68,000  shares for
    $113,590 during 2000.

    The Chairman of the Board of Directors of the Company is also a stockholder,
    director,  and the Managing Director of the corporate general partner of the
    Company's majority stockholder.


NOTE J - INCOME TAXES

    No  current  tax  provisions  have  been  recognized  in  the   accompanying
    statements of operations given the historical operating losses incurred.

    Components of the net deferred tax assets  (liabilities)  at December 31 are
    as follows:

                                                   2000               1999
                                             -----------------   ---------------

    deferred tax assets (liabilities)
       Inventories                           $      371,000         $   270,000
       Depreciation and amortization               (159,000)           (163,000)
       Unrealized gains on investments              (59,000)                -
       Accrued liabilities                           88,000             142,000
       Net operating loss carryforwards          10,945,000          11,225,000
                                                -----------          ----------
                                                 11,186,000          11,474,000
    Valuation allowance                         (11,245,000)        (11,474,000)
                                                -----------         -----------

           Total deferred tax liabilities       $   (59,000)   $            -
                                              ==============     ===============

    The  valuation  allowance  on tax  assets  decreased  $229,000  in 2000  and
    increased  $146,000  in  1999,  primarily  due  to  the  utilization  of net
    operating  loss  carryforwards  in 2000 and the  generation of net operating
    loss carryforwards in 1999.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998

NOTE J - INCOME TAXES - CONTINUED

    The Company's net operating loss carryforwards will expire as follows:

    Year Ending December 31
                     2005                                     $  2,803,818
                     2006                                           17,434
                     2007                                        6,466,819
                     2008                                        3,982,473
                     2009                                        4,523,401
                     2010                                        2,279,486
                     2011                                        3,445,366
                     2012                                        1,869,674
                     2018                                        1,681,538
                     2019                                          438,829
                                                              ------------

    Total net operating loss carryforwards                     $27,508,838
                                                                ==========


NOTE K - COMMITMENTS AND CONTINGENCIES

    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 18 year  statute of repose  for  general  aviation  aircraft
    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.  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.

    The Company has been named in a lawsuit  concerning the crash of a Commander
    114TC  resulting  in the death of the pilot.  Further,  the Company has been
    notified of a claim by the insurer of the aircraft hull and a cross-claim by
    a co-defendant  for  indemnification  and contribution for which the Company
    has made a similar counter claim. In addition, the Company has been named in
    a lawsuit  filed by the estates and survivors of four  decedents  concerning
    the crash of a  Commander  114B.  Although  it is too early for any  factual
    development to take place concerning  these claims,  the ultimate outcome of
    these matters cannot


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998

NOTE K - COMMITMENTS AND CONTINGENCIES - CONTINUED

    be  determined;  however,  management  intends to vigorously  defend against
    these  claims  and  currently  believes  that  these  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 uncertainties of
    these matters,  it is at least reasonably possible that management's view of
    the outcome will change in the near term.

    The Company is routinely  involved in various legal  matters  arising in the
    normal course of business.  Management believes that losses, if any, arising
    from such actions will not have a material  adverse  effect on the financial
    position or operations of the Company.

NOTE L - EMPLOYEE BENEFIT PLANS

    The Company has a profit  sharing  401(k) plan  covering  substantially  all
    employees.   Eligible   employees   may   contribute  up  to  15%  of  their
    compensation.  The Company  contributes  an amount  equal to at least 25% of
    each employee's contributions not in excess of 10% of compensation. However,
    additional  contributions may be made at the Company's  discretion.  Expense
    under the plan was  approximately  $48,000,  $45,000,  and $53,000 for 2000,
    1999, and 1998, respectively.

    The  Company  has  a   contributory   health  care  benefit  plan   covering
    substantially all employees and eligible  dependents.  The plan provides for
    covered  major  medical  expense  benefits  subject to certain  deductibles,
    coinsurance  provisions,   and  lifetime  maximums.   Employee  and  Company
    contributions  are  determined by the Company from time to time based on the
    amounts  of  claims  and  other  expenses  incurred.  The plan  has  certain
    stop-loss  coverage under an insurance  policy that provides for payments of
    covered benefits in excess of $25,000 per year per covered person.

The policy also  provides an aggregate  monthly  stop-loss for the plan based on
    number  of  covered  persons.  Expense  under  the  plan  was  approximately
    $240,000, $110,000, and $160,000 for 2000, 1999, and 1998, respectively.



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998

NOTE M - SEGMENT INFORMATION

   The Company operates in the segments of piston engine aircraft  manufacturing
   sales and service and jet aircraft brokerage and  refurbishment.  Information
   concerning the Company's  reportable segments for the years ended December 31
   are as follows:
<TABLE>
<CAPTION>

                                                                   2000             1999              1998
                                                             ---------------- ----------------  ----------------
<S>                                                        <C>                 <C>              <C>
    Revenues
       Jet aircraft brokerage and refurbishment             $       83,105     $     107,750      $         -
       Aircraft sales and service                               16,747,929        13,559,495       10,711,827
                                                                ----------        ----------       ----------

           Total                                               $16,831,034       $13,667,245      $10,711,827
                                                                ==========        ==========       ==========

    Operating income (loss)
       Jet aircraft brokerage and refurbishment             $      (76,786)   $      (70,758)   $    (127,795)
       Aircraft sales and service                                  568,332          (412,096)      (2,107,987)
                                                              ------------      ------------       ----------

           Total                                             $     491,546     $    (482,854)    $ (2,235,782)
                                                              ============      ============      ===========

    Assets
       Jet aircraft brokerage and refurbishment             $       43,749   $         9,978   $       25,921
       Aircraft sales and service                               11,764,764         8,622,009       10,122,047
                                                                ----------       -----------       ----------

           Total                                               $11,808,513      $  8,631,987      $10,147,968
                                                                ==========       ===========       ==========
</TABLE>


<TABLE>
<CAPTION>

                                                          Jet aircraft
                                                       brokerage and           Aircraft sales   Consolidated
                                                        refurbishment           and service            total
                                                       ---------------        ---------------   -------------------
<S>                                                    <C>                    <C>               <C>
Other significant items - 2000
    Interest income                                          $         -            $207,152         $207,152
    Interest expense                                                   -             264,297          264,297
    Depreciation and amortization                                    1,291           138,339          139,630
    Expenditures for long-lived assets                                 -             140,267          140,267

Other significant items - 1999
    Interest income                                          $         -            $200,010         $200,010
    Interest expense                                                   -             115,405          115,405
    Depreciation and amortization                                    5,295           105,739          111,034
    Expenditures for long-lived assets                                 782            60,851           61,633

Other significant items - 1998
    Interest income                                          $         -            $324,043         $324,043
    Interest expense                                                   -              12,619           12,619
    Depreciation and amortization                                    1,229           104,901          106,130
    Expenditures for long-lived assets                              10,461           157,475          167,936

</TABLE>

<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2000, 1999, and 1998


NOTE N - EARNINGS (LOSS) PER SHARE

    The following  table sets forth the computation of earnings (loss) per share
    and earnings (loss) per share assuming dilution at December 31:
<TABLE>
<CAPTION>

                                                                   2000             1999              1998
                                                             ---------------- ----------------  ----------------
<S>                                                         <C>                <C>              <C>
    Numerator
    Net earnings (loss)                                        $   450,033       $  (385,018)     $(1,849,400)

    Denominator for earnings (loss) per share
    Weighted average shares outstanding, basic                   6,370,520         7,037,267        7,280,548
    Effect of dilutive securities - stock options                  296,156               -                -
                                                                ----------   ---------------  ---------------

    Denominator for earnings (loss) per share
         assuming dilution                                       6,666,676         7,037,267        7,280,548
                                                                 =========         =========        =========

    Earnings (loss) per share, basic                        $          .07   $         (.05)  $         (.25)
                                                             =============    =============    =============

    Earnings (loss) per share, assuming dilution            $          .07   $         (.05)  $         (.25)
                                                             =============    =============    =============
</TABLE>



<PAGE>




                                       49

                        SELECTED QUARTERLY FINANCIAL DATA
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                        March 31,          June 30,       September 30,       December 31,
                                          2000               2000              2000               2000
<S>                               <C>                  <C>               <C>               <C>
Net Sales                               $3,942,575         $4,256,087       $4,804,798          $3,827,576

Net Earnings                               $38,183           $113,049         $252,353             $46,448

Earnings per Share, basic                    $0.01              $0.02            $0.04               $0.01

Weighted Average Shares
Outstanding, basic                       6,449,720          6,377,412        6,376,334           6,279,547

Earnings per Share, diluted                  $0.01              $0.02            $0.04               $0.01

Weighted Average Shares
Outstanding, diluted                     6,713,720          6,901,422        6,619,192           6,370,121



                                                                   Three Months Ended
                                        March 31,          June 30,       September 30,       December 31,
                                          1999               1999              1999               1999

Net Sales                               $2,258,292         $3,055,110       $2,980,139          $5,373,704

Net Earnings (Loss)                      ($379,565)           $48,244        ($165,604)           $111,907

Net Earnings (Loss) per
  share, basic                             ($0.05)              $0.01          ($0.02)               $0.02

Weighted Average Shares
Outstanding, basic                       7,269,437          7,171,108        7,093,322           6,643,156

Net Earnings (Loss) per
  share, basic                             ($0.05)              $0.01          ($0.02)               $0.02

Weighted Average Shares
Outstanding, diluted                     7,269,437          7,171,108        7,093,322           6,643,156

</TABLE>


Quarterly  and   year-to-date   computations  of  per  share  amounts  are  made
independently.  Therefore,  the sum of quarterly per share amounts may not agree
with per share amounts for the year.

<PAGE>



Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure


There were no Form 8-K filings in fiscal year ended  December 31, 2000 and there
were no changes in or disagreements with accountants on accounting and financial
disclosure in 2000.


                                    PART III

Certain  information  required  by Part III is omitted  from this report in that
registrant will file a definitive proxy statement pursuant to Regulation 14A for
its 2001 Annual Meeting of Shareholders, and the information included therein is
incorporated by reference.

Item 10.  Directors and Executive Officers of the Registrant


Information  regarding  directors  of the  Registrant  required  by this item is
incorporated herein by reference to the Company's 2001 Proxy Statement under the
caption "Election of Directors - Nominees".

The information  regarding  executive  officers of the Company  required by this
item appearing in the Company's 2001 Proxy Statement under the caption "Election
of Directors - Other Officers" is hereby incorporated by reference.

Item 11.  Executive Compensation

The  information  required by this item  appearing in the  Company's  2001 Proxy
Statement under the captions "Election of Directors - Director Compensation" and
"Executive Compensation" is hereby incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The  information  required by this item  appearing in the  Company's  2001 Proxy
Statement under the caption  "Information  Concerning  Solicitation and Voting -
Security  Ownership  of  Certain  Beneficial  Owners and  Management"  is hereby
incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

Note E -  Disclosures  About Fair Value of  Financial  Instruments  and Note I -
Related Party Transactions,  of the Notes to Consolidated  Financial  Statements
for 2000 are hereby incorporated by reference.



<PAGE>



                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports of Form 8-K:
---------------------------------------------------------------------------
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<CAPTION>

                                                                                                Page
<S>     <C>                                                                               <C>
(a)      (1)  The following financial statements are included in Part II Item 8:

                  Report of Independent Public Accountants                                       14

                  Financial Statements:
                  Consolidated Balance Sheets December 31, 2000 and 1999                         15

                  Consolidated Statements of Operations for the years ended
                         December 31, 2000, 1999, and 1998                                       17

                  Consolidated  Statement of Stockholders' Equity for the
                         years ended 2000, 1999, and 1998                                        18

                  Consolidated Statements of Cash Flows for the years ended
                         December 31, 2000, 1999, and 1998                                       19

                  Notes to Consolidated Financial Statements                                     21


         (2)   The following financial schedule for the years 2000, 1999 and
               1998 is submitted herewith:

                 Selected Quarterly Financial Data for the years ended
                  December 31, 2000 and 1999 (unaudited)                                         34

                 All other schedules are omitted because they are not applicable
                 or the required information has been presented in the financial
                 statements or notes thereto.

         (3)      Exhibits included are hereby  incorporated by reference to the
                  Exhibit Index, page 37 of this report.

</TABLE>



<PAGE>



                                INDEX OF EXHIBITS

Exhibit No                                   Description

3.1  Certificate  of  Incorporation  of  Aviation  General,  Incorporated.  This
     exhibit is  incorporated  by reference  to Exhibit 3.1 of the  Registrant's
     Form S-4 filed June 12, 1998 (Reg. No. 333-56731).

3.2  Bylaws of Aviation General,  Incorporated.  This exhibit is incorporated by
     reference to Exhibit 3.2 of the  Registrant's  Form S-4 filed June 12, 1998
     (Reg. No. 333-56731).

4.1(a) Certificate of  Incorporation,  describing the Common Stock  (included in
     Exhibit 3.1).  This exhibit is  incorporated by reference to Exhibit 4.1(a)
     of the Registrant's Form S-4 filed June 12, 1998 (Reg. No. 333-56731).

10.1 Federal  Aviation   Administration  ("FAA")  Type  Certificates  issued  to
     Commander  Aircraft  Company (the  "Company")  for models 112, 114,  112TC,
     112B, 112TCA,  114A, and 114B. This exhibit is incorporated by reference to
     Exhibit  10.1 of the  Registrant's  Form S-1 filed March 4, 1993 (Reg.  No.
     33-59128).

10.2 FAA Repair  Station  Air Agency  Certificate  issued to the  Company.  This
     exhibit is  incorporated  by reference to Exhibit 10.2 of the  Registrant's
     Form S-1 filed March 4, 1993 (Reg. No. 33-59128).

10.3 Lease and operations  Agreement between the Company and the Trustees of the
     Oklahoma  City  Airport  Trust  dated  August 9,  1988,  as  amended by the
     Supplemental  Agreement No. 1 dated December 18, 1991, and the Supplemental
     Agreement  No. 2 dated  April 2,  1992.  This  exhibit is  incorporated  by
     reference to Exhibit 10.19 of the Registrant's Form S-1 filed March 4, 1993
     (Reg. No. 33-59128).

10.4 Textron Lycoming Finance Plan No. 1 between Textron  Financial  Corporation
     and the Company  dated June 26, 1991,  as amended to the Finance Plan No. 1
     dated as of May 28, 1992,  the Second  Amendment  dated as of September 29,
     1992, and the Third  Amendment  dated as of December 10, 1992. This exhibit
     is incorporated by reference to Exhibit 10.29 of the Registrant's  Form S-1
     filed March 4, 1993 (Reg.No. 33-59128).

10.5 International  Distributorship  Agreement  between  the Company and Com-Air
     Flugzeughandel  Gmbh.  This exhibit is incorporated by reference to Exhibit
     10.31 of the Registrant's Form S-1 filed March 4, 1993 (Reg. No. 33-59128).

10.6 International  Distributorship  Agreement  between  the  Company  and  Aero
     Service b.v. This exhibit is  incorporated by reference to Exhibit 10.32 of
     the Registrant's Form S-1 filed March 4, 1993 (Reg. No. 33-59128).

10.7 International  Dealership  Agreement  between  the  Company  and  Commander
     Khaleej Trading Establishment. This exhibit is incorporated by reference to
     Exhibit10.28 of the Registrant's Form 10-K filed March 30, 1994.


<PAGE>




                                INDEX OF EXHIBITS

Exhibit No                                   Description

10.8 Form of the Company's  Authorized Sales and Service  Representative  Policy
     and Procedures Manual. This exhibit is incorporated by reference to Exhibit
     10.37 of the Registrant's Form S-1 filed March 4, 1993 (Reg. No. 33-59128).

10.9 Form  of  the  Company's   Authorized  Sales  and  Service   Representative
     Agreement.  This exhibit is  incorporated  by reference to Exhibit 10.38 of
     the Registrant's Form S-1 filed March 4, 1993 (Reg. No. 33-59128).

10.10Form  of  the  Company's   Service  Center   Agreement.   This  exhibit  is
     incorporated  by reference to Exhibit  10.39 of the  Registrant's  Form S-1
     filed March 4, 1993 (Reg. No. 33-59128).

10.11The  Commander  Aircraft  Company  Profit  Sharing  Plan.  This  exhibit is
     incorporated  by reference to Exhibit  10.40 of the  Registrant's  Form S-1
     filed March 4, 1993 (Reg. No. 33-59128).

10.12Nonstatutory  Stock  Option  Agreement  between  the  Company  and  Wirt D.
     Walker,  III dated  January  31,  1994.  This  exhibit is  incorporated  by
     reference to Exhibit  10.48 of the  Registrant's  Form 10-K filed March 30,
     1994.

10.13Nonstatutory  Stock Option Agreement between the Company and Mishal Y.S. Al
     Sabah dated January 31, 1994.  This exhibit is incorporated by reference to
     Exhibit 10.49 of the Registrant's Form 10-K filed March 30, 1994.

10.14Form of Company's Aircraft Delivery and Acceptance Agreement.  This exhibit
     is incorporated by reference to Exhibit 10.63 of the Registrant's  Form S-1
     filed March 4, 1993 (Reg. No. 33-59128).

10.15Form  of  the  Company's   Aircraft  Retail   Warranty.   This  exhibit  is
     incorporated  by reference to Exhibit  10.64 of the  Registrant's  Form S-1
     filed March 4, 1993 (Reg. No. 33-59128).

10.16Commander  Aircraft  Company  1993  Stock  Option  Plan.  This  exhibit  is
     incorporated  by reference to Exhibit 10.53 of the  Registrant's  Form 10-K
     filed March 28, 1996.

21   List of subsidiaries




<PAGE>



                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto authorized on the 28th day of March, 2001.

                          AVIATION GENERAL INCORPORATED




                            By: Wirt D. Walker, III
                             Chairman of the Board


Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

<S>                                     <C>                                      <C>
Principal Executive Officers:

Wirt D. Walker, III                         Chairman                                 March 28, 2001
-------------------
                                            Chief Executive Officer
                                            President

Principal Financial Officer and
    Accounting Officer:

Ronald F. Thomason                          Chief Financial Officer                  March 28, 2001
------------------


Directors:

Wirt D. Walker, III                         Director                                 March 28, 2001
-------------------

Mishal Y.S. Al Sabah                        Director                                 March 28, 2001
--------------------

N. Gene Criss                               Director                                 March 28, 2001
-------------

Stephen R. Buren                            Director                                 March 28, 2001
----------------

John H. DeHavilland                         Director                                 March 28, 2001
-------------------
</TABLE>