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, 2001

                                       OR

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        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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        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) 495-8080
      (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 31, 2002 the aggregate market
      value of the voting stock held by non-affiliates of the registrant was
      $1,400,000.

      The number of shares outstanding of the registrant's common stock, $.50
      par value, was 7,009,330 at March 31, 2002.

      Total number of pages including cover page 46.


<PAGE>






                                     PART 1

Item 1. Business

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

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


<PAGE>





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 capital investment required to build Aviation General, reflected in the
Company's tax loss carry-forward (approximately $31 million) is behind us. To
date, approximately $40 million has been invested to build Aviation General,
Incorporated. In an industry where a $40 million investment is often
insufficient to achieve the development and type certification of a prototype
aircraft, our achievements are considerable and include: the acquisition of
Rockwell's single engine high performance Commander aircraft line, modification
and enhancement of the value of the existing fleet of Commander aircraft built
from 1972 through 1979 by Rockwell International Corporation, extensively
enhancing the aerodynamics, avionics, systems, interior and powerplant of the
original Rockwell Commander design resulting in a new aircraft FAA type
certification, introduction of derivative models and the establishment of
manufacturing operations and marketing, aircraft brokerage, refurbishment and
services and support capabilities. The Company also established Stragetic Jet
Services, Incorporated, which is involved in acquisition, sales, brokerage and
refurbishment of jet aircraft.



<PAGE>





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 1,000 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 customers that have not previously
owned or operated aircraft. This flexible program can be tailored to meet each
customer's specific requirements.



<PAGE>





One new aircraft was sold in 2001 to a foreign customer accounting for $505,225
or 6% of the revenues from aircraft sales. Information regarding the Company's
export sales and major customers is disclosed in 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.



<PAGE>





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, 2001 this totaled approximately 184 aircraft, which
includes 74 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:

Certification Requirements:                 FAR 23                 CAR 3
                                     (through Amendment 7)
-------------------------------------------------------------------------
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


Employees

The Company has a total of 42 full-time employees as of March 31, 2002. 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. As of
December 16, 2001 this lease was terminated and the Company obtained a revocable
permit to lease the facility on December 17, 2001. The permit requires a monthly
lease payment in the same amount as the as the original lease and payment of
delinquent and outstanding amounts owed by December 31, 2002. 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 2001.

Item 3.  Legal Proceedings

Commander Aircraft Company is a defendant in a lawsuit resulting from a crash of
one of its manufactured aircraft. 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. The National Transportation and Safety Board accident investigation
has found the probable cause of this crash was pilot error.

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 2002.

                                       Quarterly Common Stock Price Ranges
                                    2001                         2000
                        --------------------------  --------------------------
         Quarter           High             Low       High              Low
         -------           ----             ---       ----              ---
         1st                1.75            .81       3                1 3/16
         2nd                1.00            .41       2 1/8            2 1/4
         3rd                 .70            .20       2                2 1/16
         4th                 .42            .20       3 1/32           1 1/8

During 2001, the Company issued 580,000 shares of its common stock as settlement
of certain obligations. Included were 200,000 shares issued to a related party
for a reduction of a note payable of $100,000 and $20,000 for interest, 130,000
shares issued for $78,000 for Board of Directors fees and 250,000 shares issued
for legal services of $202,500. These transactions were exempt from the
registration requirements of the federal securities laws because they did not
involve public offerings.

During a third quarter 2001 meeting of the Board of Directors a Shareholder
Rights Agreement was presented for consideration by the Board. After discussion
of the matter the Board agreed to adopt the plan. The Shareholder Rights
Agreement is expected to deter hostile tender offers and creeping takeovers and
should operate to preserve and maximize shareholder value in the event of a sale
of the Company.

There were approximately 500 holders of record of the Company's common stock as
of December 31, 2001.

During 2001 the Company received a NASDAQ Staff Determination notifying the
Company that it fails to comply with the minimum bid price requirements for
continued listing on the NASDAQ SmallCap Market, Rule 4310 (c)(4). The Company
appealed the Staff Determination and had a hearing before the NASDAQ officials.
However, due to the events of September 11, 2001, NASDAQ delayed ruling on such
proceedings until after January 1, 2002. The Company's common shares have
continued to trade on the NASDAQ Stock Market.

On February 14, 2002, the Company received a subsequent NASDAQ Staff
Determination notifying the Company that it had not met the minimum bid
requirements, for the previous 30 trading days, for continued listing on the
NASDAQ SmallCap Market, in accordance with Rule 4310 (c)(4). The Company has
been granted 180 calendar days, until August 13, 2002, to regain compliance with
the minimum bid price requirements. If, at anytime before August 13, 2002, the
bid price of the Company's common stock closes at $1.00 per share or more for a
minimum of 10 consecutive trading days, NASDAQ staff will provide written
notification that the Company complies with the Rule.


Item 6.  Selected Financial Data

The selected financial data presented below for each year in the five year
period ended December 31, 2001 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)
                               2001           2000              1999           1998           1997
                              ----------------------------------------------------------------------
<S>                         <C>        <C>              <C>              <C>               <C>
Operation Data:

Net sales                     $9,488        $16,831           $13,667        $10,712         $8,062
Net earnings (loss)          $(5,520)          $450             $(385)       $(1,849)       $(2,140)
Earnings (loss) per share
  basic & diluted              $(.84)         $0.07             $(.05)         $(.25)         $(.31)

Balance Sheet Data:

Total assets                  $7,304        $11,809            $8,632        $10,148        $10,940
Long-term debt                    -              -                 -              -           2,446
</TABLE>




<PAGE>



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


You should read the following discussion and analysis together with our
financial statements and accompanying notes appearing elsewhere in this Form
10-K. The following information contains forward-looking statements that involve
risks and uncertainties. Actual results may differ materially from those
anticipated due to many factors, including those set forth under "Items 1 and 3,
Business and Legal Proceedings."

Critical Accounting Policies

Aircraft Sales and Marketing

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

Inventories

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

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

Contractual Obligations

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

<TABLE>
<CAPTION>

                                                                                    2002 Obligations
                                                              Total             Interest         Principal
<S>                                                  <C>                    <C>                 <C>

Revolving credit facilities                                $1,995,810            $192,588         $412,593

Note payable to a stockholder, interest
  at 9%, due on demand, uncollateralized                       81,000               5,723           81,000

Note payable to an individual, payable in
  monthly installments of $8,699, including
  Interest at 8%                                               83,269               3,719           83,269

</TABLE>


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



<PAGE>






Results of Operations:

                                  2001 vs. 2000

Revenues decreased 44% in 2001 to $9,487,795 from $16,831,034 in 2000, resulting
in a net loss of $5,519,592 for 2001 compared to net earnings of $450,033 in
2000. The net loss per basic and diluted share was $0.84 in 2001 compared to net
earnings of $0.07 per basic and diluted share in 2000.

Revenues from aircraft sales decreased 47% in 2001 to $8,027,663 from
$15,051,496 in 2000. New aircraft deliveries were 8 units in 2001 compared to 20
units in 2000. Pre-owned and consigned aircraft sales decreased to 24 aircraft
in 2001 from 31 in 2000. Revenues generated by the service, parts and
refurbishment business was $1,460,132 in 2001 compared to $1,779,538 in 2000.

Aircraft cost of sales was $7,665,233 in 2001 as compared to $11,489,886 for
2000. The gross margin on aircraft sales decreased to 5% in 2001 from 24% in
2000 as a result of lower production volume, which resulted in excess capacity
costs of approximately $991,000 and in some cases, increased the cost of some
purchased components due to lower purchase quantities.

Service and parts cost of sales was $1,291,618 in 2001 compared to $1,387,653 in
2000. The decrease was due to a lower volume of service activity and spare parts
shipments.

Engineering and product development costs decreased to $278,379 in 2001 from
$406,898 in 2000. The decrease in these expenses is due to the downsizing in
this area.

Sales and marketing expenses were $1,161,811 in 2001 compared to $1,655,330 in
2000. General and administrative expenses increased to $2,455,122 in 2001
compared to $1,399,721 in 2000. This increase was due to higher legal expenses
of $831,582 and a reserve for unpaid health insurance claims of $150,283.
Included in general and administrative expenses for 2001 is $321,571 for costs
associated with the operations of Strategic Jet Services, Inc. compared to
$159,891 in 2000. Also included in operating expenses for 2001 is a reserve of
$1,529,889 for a note receivable from a related party that was deemed
uncollectable during 2001.

Interest income totaled $15,350 in 2001, down from $207,152 in 2000. The
decrease in interest income is due to the write-off of interest of $115,977 due
to the uncollectability of a note receivable from the related party during 2001.
Interest expense increased to $498,715 in 2001 from $264,297 in 2000 due to
higher rates and increased short-term borrowings from the Company's lines of
credit. Other expense for 2001 increased due to a $150,000 litigation
settlement.



<PAGE>







                                  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>



Liquidity and Capital Resources

Cash provided by operations totaled $868,244 for 2001 compared to cash used in
operations of $1,872,480 in 2000. Notes and accounts receivable decreased by
$551,425 due primarily to the sale of one new aircraft at the end of 2000 paid
in full shortly after the beginning of 2001.

Inventories decreased by $1,852,939 primarily due to a decrease in new and
pre-owned aircraft of $930,115 and a decrease in work-in process and raw
materials of $847,062.

Accounts payable increased by $1,083,036 at December 31, 2001 compared to the
prior year due to increased purchases on account to support the anticipated
increased production levels. The Company had no long-term debt as of December
31, 2001 and 2000.

Capital expenditures totaled $37,243 in 2001, which included replacement of
fabrication tooling and an upgrade to the Company's business software.

The Company established a line of credit with a bank in the amount of $2,500,000
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 $1,995,810 at December 31, 2001.

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 772,189 shares of its
common stock through December 31, 2001.

The Company anticipates that its primary cash requirement will relate to working
capital associated with ongoing operations and an increase in sales activity for
2002. The Company anticipates funding these requirements by cash generated from
operations, from borrowings under the Company's existing lines of credit or new
funding sources.

Management Plans

For 2001, the Company reported $9,487,795 in revenues and a net loss of
$5,519,592, with eight new aircraft deliveries. For the year 2000, the Company
reported $16.8 million in revenues and a profit of $450,000, with deliveries of
20 new aircraft versus 13 new aircraft deliveries in 1999. With demand for new
aircraft increasing significantly throughout 2000, we increased our production
schedule for 2001 to 32 aircraft. Unfortunately, we did not anticipate events
during 2001, beyond our control, which had an adverse impact on the Company,
including:

1)   The dissipation of a significant portion of asset values and personal
     wealth resulting from the decline of United States securities markets.

2)   A severe recession in the manufacturing and capital expenditures segments
     of the U. S. economy, as well as depressed economic conditions in virtually
     every other part of the world.

3)   The September 11th terrorist attacks on the U. S. resulting in cancellation
     or postponement of aircraft purchases and disruption of business activities
     compounded by government restrictions on general aviation activities.



<PAGE>





Management believes that there were a number of significant non-recurring
charges incurred in 2001, comprising the majority of the $5,519,592 loss
reported for the year. Specifically:

<TABLE>
<CAPTION>

<S>    <C>                                                                                   <C>
1)      Excess capacity costs resulting from the slow down in manufacturing
        activities in the fourth quarter following the September 11th terrorist
        attacks and government restrictions on general
        aviation....................................................................................$991,063

2)      Abnormally high legal expenses, including a settlement
        of a lawsuit................................................................................$961,283

3)      The write-off of the uncollectable balance of an international
        dealer's credit facility..................................................................$1,529,889

4)      The write-off of accrued, unpaid interest income recorded on
        the international dealer's note receivable due to uncollectability..........................$115,977

5)      A reserve for insurance claims arising from the Company discontinuing
        its partially self-insured plan in an effort to reduce future costs.........................$150,283
                                                                                                    --------

                                                                       Total                      $3,748,495
</TABLE>


As we go forward in 2002, management believes that economic conditions and
financial markets appear to have stabilized and that the Company could benefit
from increased interest in general aviation, due to inconvenience and safety
factors now attendant with commercial airline travel. The Company could also
benefit from historically low interest rates, which lower significantly the
financing cost of aircraft purchases. Management also believes it is eligible
and will apply for federal grants and loans, pursuant to a general aviation
relief bill currently pending in Congress.

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

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

So far in the year 2002, the Company has experienced a significant increase in
its business. As of April 9, 2002, the Company has booked orders for 6 new
aircraft (versus a total of 8 for all of 2001) and 9 pre-owned aircraft (versus
a total of 22 for all of 2001). The Company's parts, service, refurbishment and
brokerage business has also increased. The Company expects to report a small
loss for the quarter ending March 31, 2002 and a return to profitability during
the second quarter of 2002.

The Company is structured to achieve break-even financial results at between 10
to 15 new aircraft deliveries annually, with the precise number dependent upon
the contribution from the Company's parts, service, refurbishment and brokerage
business activities.



<PAGE>







During 2001 the Board discussed the advisability of having an Employment
Agreement between the Company and Wirt D. Walker III, Chairman of the Board of
Directors. The Board reviewed and approved such agreement. The Board also
reviewed and approved a Consulting Agreement between the Company and Gene Criss,
a member of the Board.
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.

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.



<PAGE>





Item 8.  Financial Statements and Supplementary Data

         Index to Financial Statements and Supplementary Data:

                                                                         Page
         Report of Independent Certified Public Accountants               16

         Financial Statements:

         Consolidated Balance Sheets December 31, 2001 and 2000           17

         Consolidated Statements of Operations for the years ended        19
                     December 31, 2001, 2000, and 1999

         Consolidated Statement of  Stockholders' Equity for the          20
                     years ended December 31, 2001, 2000, and 1999

         Consolidated Statements of Cash Flows for the years ended        21
                     December 31, 2001, 2000, and 1999

         Notes to Consolidated Financial Statements                       23





<PAGE>








Report of Independent Certified Public Accountants


Board of Directors and Stockholders
Aviation General, Inc.

We have audited the accompanying consolidated balance sheets of Aviation
General, Inc. and Subsidiaries as of December 31, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2001. 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Aviation General,
Inc. and Subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note Q to the
consolidated financial statements, the Company has suffered recurring losses
from operations that raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note Q. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




GRANT THORNTON LLP

Oklahoma City, Oklahoma
March 8, 2002


<PAGE>



                     Aviation General, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,

<TABLE>
<CAPTION>

                                    ASSETS                                                  2001               2000
                                                                                     ------------------ ------------------
<S>                                                                                 <C>                 <C>
CURRENT ASSETS
    Cash and cash equivalents                                                         $      211,356     $      135,016
    Accounts receivable                                                                          -              551,425
    Current portion of note receivable                                                        36,673             25,628
    Inventories                                                                            6,139,232          7,992,171
    Prepaid expenses and other assets                                                         70,155            153,490
                                                                                      --------------      -------------
                  Total current assets                                                     6,457,416          8,857,730

PROPERTY AND EQUIPMENT - AT COST
    Office equipment and furniture                                                           372,162            363,388
    Vehicles and aircraft                                                                     95,115             95,115
    Manufacturing equipment                                                                  385,179            382,124
    Tooling       676,747                                                                    654,619
    Leasehold improvements                                                                   315,050            311,764
                                                                                       -------------      -------------
                                                                                           1,844,253          1,807,010
       Less accumulated depreciation                                                       1,205,135          1,085,037
                                                                                        ------------       ------------
                                                                                             639,118            721,973
OTHER ASSETS
    Note receivable, less current maturities                                                  65,223             95,921
    Available-for-sale equity securities - related party                                     142,100            603,000
    Note receivable from related party, net                                                      -            1,529,889
                                                                                   -----------------       ------------
                                                                                             207,323          2,228,810
                                                                                        ------------       ------------
                                                                                       $   7,303,857       $ 11,808,513
                                                                                        ============        ===========
</TABLE>



<PAGE>

<TABLE>
<CAPTION>



           LIABILITIES AND STOCKHOLDERS' EQUITY                                             2001               2000
                                                                                     ------------------ ------------------
<S>                                                                              <C>                    <C>
CURRENT LIABILITIES
    Accounts payable                                                                   $   2,309,450      $   1,226,414
    Accrued expenses                                                                         614,116            561,398
    Refundable deposits                                                                      745,549            115,814
    Notes payable                                                                          2,160,079          3,035,000
                                                                                        ------------       ------------
                  Total current liabilities                                                5,829,194          4,938,626

DEFERRED INCOME TAX LIABILITY                                                                    -               58,568

COMMITMENTS AND CONTINGENCIES                                                                    -                  -

REDEEMABLE COMMON STOCK - $.01 par value; issued, 150,000 shares in 2001 and 0
    shares in 2000; stated at redemption
       value                                                                                 150,000                -

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, 7,631,519
       shares in 2001 and 7,051,519 shares in 2000                                         3,815,759          3,525,759
    Additional paid-in capital                                                            37,000,299         36,889,799
    Treasury stock - at cost (772,189 shares)                                             (1,294,193)        (1,294,193)
    Accumulated deficit                                                                  (37,943,329)       (32,423,737)
    Accumulated other comprehensive income (loss)                                           (253,873)           113,691
                                                                                       -------------      -------------
                                                                                           1,324,663          6,811,319
                                                                                        ------------       ------------
                                                                                       $   7,303,857       $ 11,808,513
                                                                                        ============        ===========

</TABLE>


<PAGE>



                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             Year ended December 31,

<TABLE>
<CAPTION>

                                                                            2001              2000              1999
                                                                       --------------   ----------------  ----------------
<S>                                                                    <C>              <C>               <C>
NET SALES
    Aircraft                                                             $ 8,027,663      $15,051,496       $11,926,234
    Service                                                                1,460,132        1,779,538         1,741,011
                                                                          ----------      -----------       -----------
                                                                           9,487,795       16,831,034        13,667,245

COST OF SALES
    Aircraft (including excess capacity costs of
       $991,063 in 2001)                                                   7,665,233       11,489,886        10,198,033
    Service                                                                1,291,618        1,387,653         1,178,633
                                                                          ----------      -----------       -----------
                                                                           8,956,851       12,877,539        11,376,666
                                                                          ----------       ----------        ----------
                  Gross margin                                               530,944        3,953,495         2,290,579

OTHER OPERATING EXPENSES
    Product development and engineering costs                                278,379          406,898           336,855
    Selling, general, and administrative expenses                          3,616,933        3,055,051         2,436,578
    Bad debt expense - related party                                       1,529,889              -                 -
                                                                          ----------      -----------       -----------
                                                                           5,425,201        3,461,949         2,773,433
                                                                          ----------      -----------       -----------
                  Operating income (loss)                                 (4,894,257)         491,546          (482,854)

OTHER INCOME (EXPENSES)
    Interest income                                                           15,350          207,152           200,010
    Other income  23,770                                                      16,059           14,858
    Interest expense                                                        (498,715)        (264,297)         (115,405)
    Other expense (15,740)                                                      (427)          (1,627)
    Litigation settlement                                                   (150,000)              -                -
                                                                          ----------      -----------       -----------
                                                                            (625,335)         (41,513)           97,836
                                                                         -----------    -------------      ------------
                  NET EARNINGS (LOSS)                                    $(5,519,592)   $     450,033     $    (385,018)
                                                                          ==========     ============      ============

NET EARNINGS (LOSS) PER SHARE
    Weighted average common shares outstanding; basic                      6,581,467        6,370,520         7,037,267
                                                                          ==========      ===========       ===========

    Net earnings (loss) per share; basic                                 $      (.84)    $        .07      $       (.05)
                                                                          ==========      ===========       ===========

    Weighted average common shares outstanding; diluted                    6,581,467        6,666,676         7,037,267
                                                                          ==========      ===========       ===========

    Net earnings (loss) per share; diluted                               $      (.84)    $        .07      $       (.05)
                                                                          ==========      ===========       ===========
</TABLE>



<PAGE>



                     Aviation General, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                  Years ended December 31, 2001, 2000, and 1999


<TABLE>
<CAPTION>

                                                                                                     Accumulated
                                                          Additional                                   other             Total
                                     Common stock          paid-in     Treasury     Accumulated     comprehensive     stockholders'
                                 Shares        Amount      capital      stock         deficit        income (loss)       equity
<S>                           <C>             <C>          <C>          <C>           <C>             <C>               <C>
Balance at January 1, 1999       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

Common stock options exercised       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

Issuance of common stock           580,000      290,000       110,500          -                -                -         400,500
Comprehensive loss
   Net loss                            -            -             -            -         (5,519,592)             -      (5,519,592)
   Other comprehensive loss
     Change in
      unrealized
      investment
      loss, net                        -            -              -              -                -        (367,564)     (367,564)
                               -----------------------------------------------------------------------      ---------  -----------
     Comprehensive
           loss                        -            -              -              -                -             -      (5,887,156)
                               ----------------------------------------------------------------------- -------------    ----------
Balance at December 31, 2001     7,631,519   $3,815,759   $37,000,299  $(1,294,193)    $(37,943,329)       $(253,873)  $ 1,324,663
                                 =========    =========    ==========   ==========      ===========         ========    ==========

</TABLE>


<PAGE>



                     Aviation General, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,

<TABLE>
<CAPTION>

                                                                                    2001           2000          1999
                                                                              -----------    ------------    ------------
<S>                                                                          <C>              <C>              <C>
Increase (Decrease) in Cash and Cash Equivalents

Cash flows from operating activities
   Net earnings (loss)                                                        $(5,519,592)   $    450,033   $   (385,018)
   Adjustments to reconcile net earnings (loss)
      to net cash provided by (used
      in) operating activities
        Depreciation and amortization                                             120,098         140,309        111,034
        Noncash interest earnings                                                     -          (134,383)       (17,151)
        Common  stock issued for  litigation  settlement,
           services, and interest charges                                         450,500             -              -
        Sale of aircraft and parts on notes receivable                                -              (142)      (493,977)
        Receipts on aircraft notes receivable                                      19,653          64,505        290,337
        Bad debt expense - related party                                        1,529,889             -              -
        Loss (gain) on retirement of property and equipment                           -             2,794           (850)
        Realized loss on sale of available-for-sale equity securities              14,508             -              -
        Changes in assets and liabilities
           (Increase) decrease in
              Accounts receivable                                                 551,425        (440,022)      (104,462)
              Inventories                                                       1,852,939      (2,848,451)       639,678
              Prepaid expenses and other assets                                    83,335          18,783         87,587
           Increase (decrease) in
              Accounts payable                                                  1,083,036         774,770       (170,973)
              Accrued expenses                                                     52,718         216,873          1,425
              Refundable deposits                                                 629,735        (117,549)       (19,135)
                                                                              -----------     -----------    -----------

              Net cash provided by (used in) operating activities                 868,244      (1,872,480)       (61,505)

Cash flows from investing activities
   Capital expenditures                                                           (37,243)       (140,267)       (61,633)
   Proceeds on sales of property and equipment                                        -                75            850
   Proceeds from investment in debt securities                                        -               -          800,000
   Purchase of available-for-sale equity securities                                   -          (113,590)      (100,000)
   Proceeds from available-for-sale equity securities                              20,260             -              -
                                                                             ------------  -------------- --------------

              Net cash provided by (used in) investing activities                 (16,983)       (253,782)       639,217

Cash flows from financing activities
   Proceeds from borrowings                                                     4,486,810       6,635,840      3,819,714
   Payments on borrowings                                                      (5,261,731)     (4,332,620)    (3,687,934)
   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                (774,921)      1,980,140       (942,280)
                                                                              -----------      ----------    -----------

              NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                 76,340        (146,122)      (364,568)

Cash and cash equivalents at beginning of year                                    135,016         281,138        645,706
                                                                              -----------     -----------    -----------

Cash and cash equivalents at end of year                                     $    211,356    $    135,016   $    281,138
                                                                              ===========     ===========    ===========
Cash paid during the year for:

   Interest                                                                  $    493,000    $    233,000   $    115,000
   Income taxes -                                                                     -               -
</TABLE>


Noncash investing and financing activities:

2001
   Exchange of common stock for a reduction in a note payable from a related
   party of $100,000 and interest of $20,000. Exchange of common stock of
   $78,000 for Board of Directors fees. Exchange of redeemable common stock upon
   legal settlement of $150,000.
   Exchange of common stock for legal services of $202,500.

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, 2001, 2000, and 1999


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, 2001 and 2000, the Company has approximately $212,000 and $122,000,
    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, 2001 and 2000, unrealized losses and gains, net of
    income tax effects, of $(253,873) and $113,691, respectively, have been
    recorded in accumulated other comprehensive income.



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999


NOTE B - SUMMARY OF ACCOUNTING POLICIES - CONTINUED

    3.     Investments - Continued

   The components of other comprehensive income (loss) are as follows for the
years ended December 31:
<TABLE>
<CAPTION>

                                                                                              2001              2000
                                                                                         --------------    --------------
<S>                                                                                     <C>                <C>
       Unrealized holding gains (losses) arising during the period                          $(440,640)         $172,259
           Less reclassification adjustment for net realized losses
              included in net income                                                           14,508               -
       Income tax benefit (expense)                                                            58,568           (58,568)
                                                                                            ---------          --------

           Other comprehensive income (loss)                                                $(367,564)         $113,691
                                                                                             ========           =======
</TABLE>

    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 were as follows at December 31:

                                                  2001              2000
                                             --------------    --------------

       Raw materials                           $1,983,979        $2,522,930
       Work in process                          1,402,252         1,710,363
       New and pre-owned aircraft               2,733,751         3,663,866
       Other                                       19,250            95,012
                                              -----------       -----------

                                               $6,139,232        $7,992,171
                                                =========         =========

During 2001, certain indirect costs of manufacturing, primarily excess capacity
costs, were considered abnormal and treated as current period charges rather
than as a portion of inventory costs. Such costs, totaling approximately
$991,000, are included in cost of sales - aircraft.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999
NOTE B - SUMMARY OF ACCOUNTING POLICIES - CONTINUED

    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.

    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 being produced.
    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, 2001,
    2000, and 1999 was approximately $198,000, $320,000, and $270,000,
    respectively.

    10.    Earnings (Loss) Per Common Share

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

    11.    Use of Estimates

The preparation of the consolidated financial statements requires the use of
management's estimates and assumptions in determining the carrying values of
certain assets and liabilities and disclosures of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts for certain revenues and expenses during the reporting period.
Actual results could differ from those estimates.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE B - SUMMARY OF ACCOUNTING POLICIES - CONTINUED

    12.    New Accounting Pronouncements

In 2001, the Financial Accounting Standards Board issued new pronouncements:
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations; SFAS No. 142, Goodwill and Other Intangible Assets; SFAS No. 143,
Accounting for Asset Retirement Obligations; and SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.

SFAS No. 141, which requires the purchase method of accounting for all business
combinations, applies to all business combinations initiated after June 30, 2001
and to all business combinations accounted for by the purchase method that are
completed after June 30, 2001. SFAS No. 141 will not apply to the Company unless
it enters into a future business combination.

SFAS No. 142 requires that goodwill and intangible assets with indefinite useful
lives be tested annually for impairment. SFAS No. 142 also requires that
intangible assets with finite useful lives be amortized and be evaluated for
impairment in accordance with SFAS No. 144. In addition, the Statement
eliminates the current requirement to amortize goodwill or intangible assets
with indefinite useful lives, and is effective for fiscal years beginning after
December 15, 2001.

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

SFAS No. 144 is effective for the Company for the fiscal year beginning January
1, 2002 and addresses accounting and reporting for the impairment or disposal of
long-lived assets. SFAS No. 144 supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and
Accounting Principles Board Opinion No. 30, Reporting the Results of Operations
- Reporting the Effects of Disposal of a Segment of a Business. SFAS No. 144
retains the fundamental provisions of SFAS No. 121 and expands the reporting of
discontinued operations to include all components of an entity with operations
that can be distinguished from the rest of the entity and that will be
eliminated from the ongoing operations of the entity in a disposal transaction.

Management believes adoption of these new statements will not have any
significant effect on the Company's financial condition or results of
operations.

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. At
    December 31, 2001, the Company had one note receivable which matures
    February 1, 2005 and bears interest at prime plus 1.5%. A summary of the
    note receivable is as follows as of December 31:
                                                       2001             2000
                                                   ------------     ------------

       Amounts due within one year                  $  36,673        $  25,628
       Amounts due after one year                      65,223           95,921
                                                     --------         --------
                         Total note receivable       $101,896         $121,549
                                                      =======          =======


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE D - NOTES PAYABLE

    Notes payable consist of the following at December 31:
<TABLE>
<CAPTION>

                                                                                              2001               2000
                                                                                         --------------      ------------
<S>                                                                                     <C>               <C>
       Revolving credit facilities (a)                                                     $1,995,810        $3,035,000

       Note   payable   to  a   stockholder,   interest   at  9%,  due  on  demand;
       uncollateralized  81,000                                                                   -

       Note  payable to  individual,  payable in  monthly  installments  of $8,699,
       including interest at 8%, through September 30, 2002; uncollateralized                  83,269               -
                                                                                          -----------   ---------------

                                                                                           $2,160,079        $3,035,000
                                                                                          ===========   ===============
</TABLE>

    (a)    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% with specific draws and accrued unpaid
           interest thereon generally due within six months. The facilities are
           collateralized by specific new and pre-owned aircraft. The revolving
           credit facilities are subject to certain covenants and the Company
           was not in compliance with covenants on one of the facilities at
           December 31, 2001. As such, $1,341,810 is callable at December 31,
           2001. Management believes the violation to be a minor technical
           violation and, as of March 8, 2002, the debt had not been called.

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, 2001 and 2000.
    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, 2001, 2000, and 1999

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>

                                                                         2001                            2000
                                                               Carrying           Fair         Carrying          Fair
                                                                amount           value          amount           value
                                                                ---------   ---------------  ------------   ---------------
<S>                                                         <C>             <C>              <C>              <C>
    Cash and cash equivalents                                $    211,356  $    211,356      $    135,016   $    135,016
    Note receivable                                               101,896       101,896           121,549        121,549
       Available-for-sale equity securities - related party       142,100       142,100           603,000        603,000
       Note receivable from related party                             -             -           1,529,889      1,529,889
       Notes payable                                           (2,160,079)   (2,160,079)       (3,035,000)    (3,035,000)
</TABLE>



NOTE F - STOCK OPTION PLAN

    In December 1993, the Company approved a stock option plan for issuance of
    options to purchase up to 300,000 shares of common 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
    3,300,000 shares. The stock option plan also provides for automatic grants
    of options to purchase 20,000 shares of common stock to each director on an
    annual basis. At December 31, 2001, approximately 644,000 shares remain to
    be granted under the plan. The stock options generally vest ratably over a
    three-year period and the exercise price of all options equaled or exceeded
    market price of the stock at the date of grant.

    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>

                                                                           2001              2000               1999
                                                                      --------------     ------------     ----------------
<S>                                                                 <C>                 <C>               <C>
       Net earnings (loss)
           As reported                                                  $(5,519,592)         $450,033         $(385,018)
           Pro forma                                                     (5,932,547)           17,407          (708,612)

       Earnings (loss) per share, basic and diluted
           As reported                                                  $      (.84)         $    .07         $    (.05)
           Pro forma                                                    $      (.90)         $    .01         $    (.10)
</TABLE>


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 2001, 2000, and 1999, respectively: No expected
dividends; expected volatility of 75%, 75%, and 66%, risk-free interest rate of
4.3%, 5.9%, and 5.5%, and expected lives of three years.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE F - STOCK OPTION PLAN - CONTINUED

    The Black-Scholes options pricing 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, 2001, 2000, and 1999 and changes during the years ending on those dates
    is presented below.

<TABLE>
<CAPTION>

                                                           2001                  2000                     1999
                                                   --------------------  --------------------    ---------------------
                                                              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            2,394,667     $2.15    1,460,880     $2.27      980,880      $2.97
       Granted                                     1,123,383     $0.48    1,258,700     $2.17      700,000      $1.58
       Exercised                                         -        -          (8,333)    $1.50          -          -
       Expired                                      (117,500)    $2.57     (177,080)    $2.52          -          -
       Forfeited                                    (745,000)    $1.85     (139,500)    $1.81     (220,000)     $3.30
                                                  ----------             ----------             ----------

       Outstanding at end of year                  2,655,550     $1.49    2,394,667     $2.15    1,460,880      $2.27
                                                   =========              =========              =========

       Options exercisable at year end               993,076     $2.17      592,937     $2.26      398,983      $3.01

       Weighted average fair value of options
           granted during the year                               $0.23                  $1.04                   $0.74
</TABLE>



         The following table summarizes information about fixed-price stock
options outstanding at December 31, 2001:

<TABLE>
<CAPTION>

                                                             Options outstanding                  Optionsex ercisable
                                                   --------------------------------------     ---------------------------
                                                                  Weighted
                                                                   average      Weighted                      Weighted
                                                      Number      remaining      average         Number       average
                                                   outstanding   contractual     exercise      exercisable    exercise
                                                   at 12/31/01      life          price        at 12/31/01      price
                                                   -----------   ----------     ---------     ------------  -------------
<S>                                               <C>            <C>            <C>          <C>             <C>
       Range of exercise prices
           $0.50 to $1.38                             992,383        2.77         $0.48              -           -
           $1.39 to $1.75                             703,301        1.03         $1.52          387,587       $1.54
           $1.76 to $2.75                             959,866        1.53         $2.49          605,489       $2.57
                                                   ----------                                    -------

           $0.50 to $2.75                           2,655,550                                    993,076
                                                    =========                                    =======
</TABLE>


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

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 $287,000, $274,000, and $271,000 for
    the years ended December 31, 2001, 2000, and 1999, respectively.

    Effective December 16, 2001, the Company's lease for office space, hangar
    space, and its manufacturing and service facility was terminated for the
    nonpayment of rentals. Effective December 17, 2001, the Company obtained a
    revocable permit to lease the facility. The permit requires monthly rentals
    in the same amounts as the original lease. The permit further requires the
    Company to pay outstanding delinquent amounts plus penalties as defined in
    the permit (totaling $66,390 at December 31, 2001) prior to December 31,
    2002. The following table presents future annual minimum lease payments
    assuming the Company fulfills its obligations under the original lease
    agreement and the revocable permit.

    The future annual minimum lease payments under these leases at December 31,
2001 are as follows:

    Year ending December 31
                     2002                                        $356,091
                     2003                                         250,536
                     2004                                          21,504
                                                                 --------

                     Total future minimum lease payments         $628,131
                                                                  =======

NOTE H - SALES CONCENTRATIONS

    The geographic sales of the Company's new aircraft are as follows:

<TABLE>
<CAPTION>

                                                 2001                      2000                        1999
                                          -----------------------    -----------------------   ------------------------
                                          Number        Amount       Number        Amount      Number         Amount
                                          ------     ------------    ------     ------------   ------      ------------
<S>                                      <C>         <C>           <C>          <C>             <C>        <C>
    United States                              7       $3,883,801       18        $9,632,353       12        $5,757,791
    Europe                                     1          505,225        2         1,096,988      -                 -
    South America                            -                -         -                -          1           424,770
</TABLE>


    Pre-owned aircraft sold during 2001 in the United States was 15, totaling
    $3,413,533. Brokerage commissions of $225,104 were received in 2001 as a
    selling agent for pre-owned aircraft.

    Pre-owned aircraft sold during 2000 in the United States was 28, totaling
    $4,192,481. 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 was 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.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE I - RELATED PARTY TRANSACTIONS

    On May 9, 2001, the Company entered into a $200,000 unsecured note payable
    bearing interest at 9% and due on demand with a Company controlled by the
    Chairman of the Board of Directors. On August 3, 2001, the Company issued
    200,000 shares of common stock having a fair value at the date of issue of
    $120,000 in exchange for a $100,000 reduction in the note payable and
    interest expense of $20,000. On October 18, 2001, the affiliate assigned the
    note payable with an outstanding balance of $85,000 to a stockholder.

    During 2001, 130,000 shares of common stock having a fair value at the date
    of issue of $78,000 were issued to members of the Board of Directors in
    exchange for services provided.

    At December 31, 2001, amounts payable for brochures and publications to a
    company controlled by the Chairman of the Board of Directors were
    approximately $33,000. Purchases from this entity were approximately
    $38,000, $15,000 and $200,000 for the years ended December 31, 2001, 2000
    and 1999, respectively.

    In prior years, the Company extended 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 (ASSR) owned by the director under a line of credit of
    $5,000,000. The Company has made efforts to collect amounts owed under this
    line, including repeated requests for payment, attempts to obtain or cancel
    approximately 800,000 shares of common stock of the Company collateralizing
    the line and attempts to block ownership transfers of said shares. However,
    during 2001, the ASSR went out of business and the individual suffered other
    business reversals. In addition, the individual resigned from the Company's
    Board of Directors in 2001 and all of his stock options were cancelled. Due
    to the uncertainties relating to ultimate collectibility, during the fourth
    quarter of 2001, the Company recorded bad debt expense relating to this line
    of credit for the outstanding balance of $1,529,889. In addition, the
    Company wrote off accrued, unpaid interest of $115,977. Bad debt expense of
    $1,529,889 is recorded in other operating expenses and the write-off of
    interest of $115,977 is recorded as an offset to interest income in the 2001
    statement of operations. Management intends to continue to attempt to
    collect on amounts owed and continue to attempt to take possession of the
    common stock collateralizing the line.

    Following is a summary of transactions under this line of credit for 2001,
    2000, and 1999 (rounded to the nearest thousand):
<TABLE>
<CAPTION>

                                                                            2001              2000              1999
                                                                       --------------    --------------    --------------
<S>                                                                   <C>              <C>                <C>
       Balance at beginning of year                                      $ 1,530,000       $1,736,000        $1,508,000

       Sale of pre-owned aircraft                                                -                -             493,000
       Sale of spare parts                                                       -              1,000               -
       Cash payments received                                                    -            (41,000)         (265,000)
       Exchange of common stock                                                  -           (166,000)              -
       Bad debt expense                                                   (1,530,000)             -                 -
                                                                          ----------   --------------    --------------

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


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE I - RELATED PARTY TRANSACTIONS - CONTINUED

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

    The line of credit is collateralized by 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 Company sold 23,000 shares of the entity during
    2001, resulting in proceeds of $20,260 and gross realized losses of $14,508.

    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 or deferred tax provision (benefit) has been recognized in the
    accompanying statements of operations given the historical operating losses
    incurred.

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

                                                        2001          2000
                                                   ----------------------------

    deferred tax assets (liabilities)
       Note receivable from related party          $      613,000 $         -
       Inventories                                        369,000      371,000
       Depreciation and amortization                     (145,000)    (159,000)
         Unrealized losses (gains) on investments          86,000      (59,000)
       Accrued liabilities                                339,000       88,000
       Net operating loss carryforwards                12,401,000   10,945,000
                                                      -----------  -----------
                                                       13,663,000   11,186,000
    Valuation allowance                               (13,663,000) (11,245,000)
                                                      -----------  -----------

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




<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE J - INCOME TAXES - CONTINUED

    The valuation allowance on tax assets increased $2,418,000 in 2001,
    decreased $229,000 in 2000, and increased $146,000 in 1999, primarily due to
    the generation of net operating loss carryforwards in 2001 and 1999 and the
    utilization of net operating loss carryforwards in 2000.

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

    Year ending December 31
                     2005                               $  2,998,231
                     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
                     2021                                  3,298,986
                                                         -----------

    Total net operating loss carryforwards               $31,002,237
                                                          ==========

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.

    During 2001, the Company executed an employment contract with its President
    and Chief Executive Officer through August 2006 which provides for a
    specified annual salary, subject to periodic adjustments and incentives.
    Should the Company terminate this executive without cause (as defined), the
    Company will be obligated to pay the executive an amount equal to his salary
    in effect at termination


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE K - COMMITMENTS AND CONTINGENCIES - CONTINUED

    through the expiration of the term of the agreement. Further, should a
    termination without cause occur within two years following a change in
    control (as defined), the Company will pay the executive an additional
    amount equal to 2.99 times the executives salary in effect at the time of
    such change in control. The contract also includes a noncompete clause
    effective throughout the term of the employment contract and for a period of
    one year thereafter.

    During 2001, the Company executed a consulting agreement with a member of
    the Board of Directors. The agreement provides for a consulting fee of
    $60,000 over an initial one-year term. The agreement renews automatically
    for successive one-year periods unless terminated by either party upon 90
    days prior written notice. Upon termination of the agreement without cause
    (as defined), the Company would be obligated through the remainder of the
    then-current term of the agreement. The agreement also includes a noncompete
    clause effective throughout the term of the agreement and for a period of
    six months thereafter.

    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 this claim,
    the ultimate outcome of this matter cannot be determined; however,
    management intends to vigorously defend against this claim and currently
    believes that this 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
    consolidated financial statements. Due to the uncertainties of this matter,
    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.

   Additionally, during 2001, the Company received a NASDAQ Staff Determination
   notifying the Company that it fails to comply with the minimum bid price
   requirements for continued listing on the NASDAQ SmallCap Market in
   accordance with Rule 4310 (c)(4). The Company appealed the Staff
   Determination and had a hearing before NASDAQ officials. However, due to the
   events of September 11, 2001, NASDAQ delayed ruling on such proceedings until
   after January 1, 2002. The Company's common shares have continued to trade on
   the NASDAQ Stock Market.

   On February 14, 2002, the Company received a subsequent NASDAQ Staff
   Determination notifying the Company that it had not met the minimum bid
   requirements, for the previous 30 trading days, for continued listing on the
   NASDAQ SmallCap Market. The Company has been granted 180 calendar days, until
   August 13, 2002, to regain compliance with the minimum bid price
   requirements. If, at anytime before August 13, 2002, the bid price of the
   Company's common stock closes at $1 per share or more for a minimum of ten
   consecutive trading days, NASDAQ staff will provide written notification that
   the Company complies with the Rule.



<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE L - REDEEMABLE COMMON STOCK

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

NOTE M - STOCKHOLDERS' EQUITY

    In connection with the following Shareholder Rights Agreement, the Company
    created a series of 100,000 shares of preferred stock, par value $.01 per
    share, designated as Series A Junior Participating Preferred Stock (Series A
    Preferred Stock).

    During 2001, the Company adopted a Shareholder Rights Agreement providing
    each outstanding share of common stock with a Series A preferred share
    purchase right (right) that expires in July of 2011. Each right entitles the
    holder to purchase one one-thousandth of a share of Series A preferred stock
    at a price of $10 per one one-thousandth of a share of Series A preferred
    stock. The rights will generally become exercisable only if a person or
    group (acquiring group), excluding the Company's largest stockholder,
    acquires, without approval of the Company's Board of Directors, 15% or more
    of the Company's common stock or announces a tender offer with the intention
    to do the same. Upon exercise, each holder, excluding the acquiring group,
    will receive the number of shares of common stock having a value equal to
    two times the exercise price of the right or one one-thousandth of a share
    of Series A preferred stock. The number of shares issuable upon exercise of
    rights is subject to certain antidilution adjustments. Generally, the rights
    may be redeemed by the Company at $.01 per right. The rights are
    non-participating and non-voting until exercised.

    Series A preferred stock issued, if any, upon exercise of the rights will be
    entitled to the greater of a cumulative quarterly dividend payment of $10
    per share when, and if, declared or 1,000 times the dividend declared per
    common share. In the event of liquidation, the Series A preferred share
    holders will be entitled to the greater of $1,000 per share or an aggregate
    payment of 1,000 times the aggregate payment per common share. Each share of
    Series A preferred stock will be entitled to 1,000 votes on all matters
    submitted to the stockholders. The Series A preferred stock will not be
    redeemable or convertible into common stock or any other security of the
    Company.

NOTE N - 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,
    addi-tional contributions may be made at the Company's discretion. Expense
    under the plan was approxi-mately $20,000, $48,000, and $45,000 for 2001,
    2000, and 1999, respectively.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                          December 31, 2001, 2000 and 1999

NOTE N - EMPLOYEE BENEFIT PLANS - CONTINUED

    Through December 31, 2001, the Company had a contributory health care
    benefit plan covering substantially all employees and eligible dependents.
    The plan provided for covered major medical expense benefits subject to
    certain deductibles, coinsurance provisions, and lifetime maximums. Through
    October 31, 2001, the plan had certain stop-loss coverage under an insurance
    policy that provided for payments of covered benefits in excess of $25,000
    per year per covered person. The policy also provided an aggregate monthly
    stop-loss for the plan based on number of covered persons. Effective October
    31, 2001, due to a lapse in insurance coverage, the Company became uninsured
    on this plan for benefit claims occurring through December 31, 2001. As of
    January 1, 2002, the Company terminated its employee health care benefits.
    Management has accrued amounts which it believes are sufficient to cover
    claims for incidents occurring from October 31, 2001 through December 31,
    2001. Expense under the plan was approximately $338,000, $240,000, and
    $110,000 for 2001, 2000, and 1999, respectively.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE O - 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 are as follows for the years
    ended December 31:
<TABLE>
<CAPTION>


                                                                            2001             2000              1999
                                                                      ---------------- ----------------  ----------------
<S>                                                                  <C>               <C>               <C>
    Revenues
       Jet aircraft brokerage and refurbishment                        $      95,000   $       83,105     $     107,750
       Aircraft sales and service                                          9,392,795       16,747,929        13,559,495
                                                                          ----------       ----------        ----------

           Total                                                         $ 9,487,795      $16,831,034       $13,667,245
                                                                          ==========       ==========        ==========

    Operating income (loss)
       Jet aircraft brokerage and refurbishment                         $   (223,486)  $      (76,786)   $      (70,758)
       Aircraft sales and service                                         (4,670,771)         568,332          (412,096)
                                                                          ----------     ------------      ------------

           Total                                                         $(4,894,257)   $     491,546     $    (482,854)
                                                                          ==========     ============      ============

    Assets
       Jet aircraft brokerage and refurbishment                       $        3,871   $       43,749   $         9,978
       Aircraft sales and service                                          7,299,986       11,764,764         8,622,009
                                                                          ----------       ----------       -----------

           Total                                                         $ 7,303,857      $11,808,513      $  8,631,987
                                                                          ==========       ==========       ===========
</TABLE>


<TABLE>
<CAPTION>

                                                                    Jet aircraft
                                                                    brokerage and        Aircraft sales      Consolidated
                                                                  refurbishment          and service             total
                                                                  --------------       ---------------    -------------------
<S>                                                               <C>                <C>                  <C>
Other significant items - 2001
    Interest income                                                   $       566          $  14,784          $  15,350
    Interest expense                                                          -              498,715            498,715
    Depreciation and amortization                                           1,487            118,611            120,098
    Expenditures for long-lived assets                                        -               37,243             37,243

Other significant items - 2000
    Interest income                                                 $         -             $207,152           $207,152
    Interest expense                                                          -              264,297            264,297
    Depreciation and amortization                                           1,291            139,018            140,309
    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
</TABLE>


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE P - 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>

                                                                            2001              2000             1999
                                                                       --------------    --------------   --------------
<S>                                                                   <C>                <C>              <C>
    Numerator
         Net earnings (loss)                                             $(5,519,592)     $   450,033       $  (385,018)

    Denominator for earnings (loss) per share
    Weighted average shares outstanding, basic                             6,581,467        6,370,520         7,037,267
    Effect of dilutive securities - stock options                                -            296,156               -
                                                                        ------------      -----------      ------------

    Denominator for earnings (loss) per share assuming dilution            6,581,467        6,666,676         7,037,267
                                                                        ============      ===========      ============

    Earnings (loss) per share, basic                                    $       (.84)     $       .07      $       (.05)
                                                                        ============      ===========      ============

    Earnings (loss) per share, assuming dilution                        $       (.84)     $       .07      $       (.05)
                                                                        ============      ===========      ============
</TABLE>


    Outstanding options of 2,655,550, 1,278,366, and 1,460,880 for the years
    ended December 31, 2001, 2000, and 1999, respectively, have been excluded
    from the above calculations as they would be antidilutive.

NOTE Q - MANAGEMENT PLANS

   For the year 2001, the Company reported $9,487,795 in revenues and a net loss
   of $5,519,592, with eight new aircraft deliveries. For the year 2000, the
   Company reported revenues of $16,831,034 and net earnings of $450,033, with
   20 new aircraft deliveries. With demand for new aircraft increasing
   significantly throughout 2000, the Company increased the production schedule
   for 2001 to 32 aircraft. Unfortunately, management did not anticipate events
   during 2001, beyond the Company's control, which had an adverse impact on the
   Company, including:

o            The dissipation of a significant portion of asset values and
             personal wealth, resulting from the decline of United States
             securities markets.

o            A severe recession in the manufacturing and capital expenditures
             segments of the United States economy, as well as depressed
             economic conditions in virtually every other part of the world.

The September 11th terrorist attacks on the United States resulting in
cancellation or postponement of aircraft purchases and disruption of business
activities compounded by government restrictions on general aviation activities.


<PAGE>



             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                        December 31, 2001, 2000, and 1999

NOTE Q - MANAGEMENT PLANS - CONTINUED


   Management believes that there were a number of significant non-recurring
   charges incurred in 2001, comprising the majority of the $5,519,592 loss
   reported for the year. Specifically:

<TABLE>
<CAPTION>

<S>                                                                                                  <C>
       Excess capacity costs resulting from the slowdown in manufacturing
       activities in the fourth quarter following the September 11th terrorist
       attacks and government
       restrictions on general aviation                                                                     $   991,063

       Abnormally high legal expenses, including a settlement of a lawsuit                                      961,283

       The  write-off of the  uncollectable  balance of an  international  dealer's  credit
       facility, also a related party                                                                         1,529,889

       The  write-off of accrued,  unpaid  interest  income on the  international  dealer's
       note receivable due to uncollectability                                                                  115,977

       A reserve for  insurance  claims  arising  from the  Company's  partially  uninsured
       employee health plan                                                                                     150,283
                                                                                                             ----------
                         Total                                                                               $3,748,495
                                                                                                              =========
</TABLE>

As the Company goes forward in 2002, management believes that economic
conditions and financial markets appear to have stabilized and that the Company
could benefit from increased interest in general aviation, due to inconvenience
and safety factors now attendant with commercial airline travel. The Company
could also benefit from historically low interest rates, which lower
significantly the financing cost of aircraft purchases. Management also believes
it is eligible and will apply for federal grants and loans, pursuant to a
general aviation relief bill currently pending in Congress.

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

o    Reduction of the Company's cost structure

o    Adjustment of the Company's production schedule

o    Increased prices of new aircraft, parts, and services

o    Seeking additional financing for general working capital purposes

o    Increase in marketing and advertising activities

o    Enhancement of the Company's service and refurbishment capabilities and
     business

o    Increase of SJS's capabilities and business

o    Exploring merger and acquisition possibilities with other general aviation
     concerns

NOTE R - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

    The following is a summary of the quarterly results of operations for the
years ended December 31:

<TABLE>
<CAPTION>

                                                                                         2001
                                                                                  Three months ended
                                                     -----------------------------------------------------------------
                                                      March 31          June 30     September 30        December 31
                                                     ----------      ------------   ----------          -----------
<S>                                                  <C>             <C>            <C>                <C>
       Total net sales                                 $2,639,760      $3,219,008        $1,552,396        $2,076,631
       Gross margin                                       381,674         523,783           290,553          (665,066)
       Net loss                                          (598,587)       (455,408)         (559,764)       (3,905,833)
       Net loss per share, basic and diluted                (0.10)          (0.07)            (0.08)            (0.59)

</TABLE>



<TABLE>
<CAPTION>

                                                                                        2000
                                                                                  Three months ended
                                                     ---------------------------------------------------------------
                                                      March 31          June 30     September 30        December 31
                                                     ----------      ------------   ------------        -----------
<S>                                                 <C>             <C>            <C>                 <C>
       Total net sales                                 $3,942,575      $4,256,087        $4,804,798        $3,827,574
       Gross margin                                       844,616         949,555         1,083,029         1,076,295
       Net loss                                            38,183         113,049           252,353            46,448
       Net income per share, basic and diluted               0.01            0.02              0.04              0.01
</TABLE>



    During the fourth quarter of 2001, the Company recorded bad debt expense
    relating to a note receivable from related party of $1,529,889, or $.23 per
    share, and wrote off related accrued interest receivable of $115,977, or
    $.02 per share. In addition, during the fourth quarter of 2001, the Company
    recorded certain indirect manufacturing costs of $991,063, or $0.15 per
    share, as current period charges rather than as a portion of inventory
    costs.

    The sum of per-share amounts for the four quarters may differ from the
    annual per share amounts due to rounding and the required method of
    computing weighted average number of shares in the respective periods.




<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, 2001 and there
were no changes in or disagreements with accountants on accounting and financial
disclosure in 2001.


                                    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 2002 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 2002 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 2002 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 2002 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

Related-party transactions are disclosed in Note I - Related Party Transactions,
of the Notes to Consolidated Financial Statements. In addition, the information
required by this item appearing in the Company's 2002 Proxy Statement under the
caption "Compensation Committee Interlocks and Certain Transactions" is hereby
incorporated by reference.


<PAGE>



                                     PART IV

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

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

       Report of Independent Certified Public Accountants                    16

       Financial Statements:
       Consolidated Balance Sheets December 31, 2001 and 2000                17

       Consolidated Statements of Operations for the years ended
              December 31, 2001, 2000 and 1999                               19

       Consolidated  Statement of Stockholders' Equity for the
              years ended 2001, 2000 and 1999                                20

       Consolidated Statements of Cash Flows for the years ended
              December 31, 2001, 2000 and 1999                               21

       Notes to Consolidated Financial Statements                            23


         (2)


All 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 44 of this report.




<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).

10.10 Form 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).

10.11 The 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).

10.12 Nonstatutory 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.

10.13 Nonstatutory 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.

10.14 Form 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).

10.15 Form 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).

10.16 Commander 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


                               /s/ WIRT D. WALKER, III

                             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>

Principal Executive Officers:
<S>                                         <C>                                     <C>
Wirt D. Walker, III                         Chairman                                 April 15, 2002
-------------------
                                            Chief Executive Officer
                                            President

Principal Financial Officer and Accounting Officer:

Jeff Henderson                              Chief Financial Officer                  April 15, 2002


Directors:

Wirt D. Walker, III                         Director                                 April 15, 2002
-------------------

N. Gene Criss                               Director                                 April 15, 2002
-------------

Stephen R. Buren                            Director                                 April 15, 2002
----------------

John H. DeHavilland                         Director                                 April 15, 2002
-------------------
</TABLE>