SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB

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

                  For the fiscal year ended December 31, 2002

                                       OR

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

                       Commission File Number:  0-24795

                         AVIATION GENERAL, INCORPORATED
             (Exact name of registrant as specified in its charter)

         Delaware                                      73-1547645
(State  of  Incorporation)                  (IRS  Employer  Identification  No.)

                              7200 NW 63rd Street
                          Hangar 8, Wiley Post Airport
                            Bethany, Oklahoma 73008
              (Address of principal executive offices) (Zip Code)

                                 (405) 440-2255
              (Registrant's telephone number, including area code)

          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)

State issuer's revenue for its most recent fiscal year:  $2,142,000.

Based  on the closing sales price of January 31, 2004 the aggregate market value
of  the  voting  stock  held  by  non-affiliates  of  the  registrant  was $650.

The  number  of  shares  outstanding  of the registrant's common stock, $.50 par
value,  was  8,270,397  at  January  31,  2004.

Total  number  of  pages  including  cover  page  51.


                                        1
<PAGE>



                                TABLE OF CONTENTS
                                -----------------

PART  I
-------

Item  1.  Description  of  Business

Item  2.  Description  of  Property

Item  3.  Legal  Proceedings

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

PART  II
--------

Item  5.  Market  for  Common  Equity  and
          Other  Stockholder  Matters

Item  6.  Selected  Financial  Data

Item  7.  Managements'  Discussion  and
          Analysis  or  Plan  of  Operations

Item  8.  Financial  Statements

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

PART  III
---------

Item  10.  Directors  and  Executive  Officers  of  Registrant.

Item  11.  Executive  Compensation

Item  12.  Security  Ownership  of  Certain  Beneficial
           Owners  and Management and  Related  Stockholder  Matters

PART  IV
--------

Item  13.  Certain  Relationships  and  Related  Transactions

Item  14.  Principal Accounting Fees and Services

Item  15.  Exhibits and Reports on Form 8-K

Item  16.  Controls and Procedures

Signatures

                                        2
<PAGE>


                                     PART 1

Item  1.  Business
------------------

Overview
--------

Aviation  General,  Incorporated  (the  "Company" or "AGI") is a publicly traded
holding  company (Pink Sheets: AVGE.PK) incorporated under the laws of the State
of  Delaware.  The Company has two wholly owned subsidiaries: Commander Aircraft
Company  ("CAC")  and  Strategic  Jet Services, Inc. ("SJS"). 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.  Strategic  Jet  Services,  Inc.  provides consulting,
brokerage,  sales,  and  refurbishment  services  for  jet  aircraft.

During  the  fourth  quarter  of  2002, SJS discontinued its operations, and CAC
suspended  indefinitely  production  of  new  aircraft.  Other  cost-cutting and
overhead  reductions  were  implemented  due  to  the  weakness in the Company's
business. Management believes this weakness is primarily the result of depressed
economic conditions and anxiety over terrorism and war in Iraq, which have had a
pronounced,  adverse effect on big-ticket, discretionary capital expenditures by
businesses  and  individuals.

On  December  27,  2002,  Commander  Aircraft Company filed a voluntary petition
under  Chapter  11  of  the  United  States  Bankruptcy Code for the District of
Delaware.  Commander  Aircraft Company filed a final reorganization plan on July
5,  2003,  following the execution of a letter agreement on that date with Tiger
Aircraft,  LLC.  ("Tiger")  to  fund  the  plan.  A stock purchase agreement was
entered  into  with Tiger on November 1, 2003, pursuant to which an amended plan
was  filed  on December 10, 2003. The U. S. bankruptcy court confirmed this plan
on  December  10, 2003, with the effective date scheduled for on or before March
31,  2004,  unless  extended  by  the  consent  of CAC, AGI, Tiger, the official
committee  of  unsecured  creditors,  the U. S. Department of Labor, and Nyltiak
Investments,  LLC.

The  agreement  with  Tiger  resulted  from months of negotiations, contact with
other  potential  investors,  and  legal  proceedings pursuant to the bankruptcy
process.  Since  the  bankruptcy  filing,  Tiger has provided CAC with Debtor in
Possession  financing,  which  has  allowed  CAC  to continue its operations and
provide  service  and  support  to  the  fleet  of  Commander  aircraft  owners,
refurbishment  services, parts, and pre-owned aircraft brokerage. CAC expects to
resume  the  production  of  new  aircraft  following  the  consummation  of the
transaction  with  Tiger.

Pursuant  to  the confirmed bankruptcy plan and agreement with Tiger, Tiger will
invest  approximately  $2.8  million in Aviation General, Incorporated in return
for  an  80% ownership interest in AGI. Approximately $2 million will be used to
settle  with  creditors  in  accordance  with  CAC's  bankruptcy  plan,  and the
remainder  will  be  used  for  working  capital. Pursuant to the agreement with
Tiger,  AGI  must  secure the approval of the agreement from its shareholders as
well  as their authorization to amend the Company's Certificate of Incorporation
to  increase  the  Company's  authorized common shares from 20,000,000 shares to
100,000,000  shares.   The  Company   currently  has  20,000,000  common  shares
authorized  and  approximately 7,000,000 common shares (excluding Treasury stock
which  will  be  retired)  issued and outstanding. The agreement with Tiger will
necessitate  the issuance of approximately 28,000,000 new shares of common stock
to  Tiger,  resulting in a total of approximately 35,000,000 shares to be issued
and  outstanding.

Forward  Looking  Statements
----------------------------

This  form  10-KSB  includes  certain  statements  that  may  be  deemed  to  be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act.  All statements, other than statements of historical fact, included in this
Form  10-KSB  that  address  activities, events or developments that the Company
expects,  projects,  believes,  or  anticipates will or may occur in the future,

                                        3
<PAGE>

including  matters  having  to  do  with  CAC's  emergence  from  bankruptcy and
continuance  as  a going concern, expected and future aircraft sales and service
revenues,  CAC's  ability  to  fund  its  operations  and  repay  debt, business
strategies,  expansion  and  growth  of  operations  and other such matters, are
forward-looking  statements.  These  statements are based on certain assumptions
and  analyses  made  by  our  management  in  light  of  its  experience and its
perception   of   historical  trends,   current  conditions,   expected   future
developments,   and   other  factors   it  believes  are   appropriate  in   the
circumstances.  These  statements  are subject to a number of assumptions, risks
and  uncertainties,  including  general  economic  and  business conditions, the
business opportunities (or lack thereof) that may be presented to and pursued by
the  Company  and  its  performance with respect to contracts and its success in
developing  new business, the ability to attract and retain qualified employees,
and  other  factors,  many  of  which  are beyond the Company's control. You are
cautioned  that  these  forward-looking  statements are not guarantees of future
performance  and  that actual results or developments may differ materially from
those  projected  in  such  statements.

History
-------

Commander  Aircraft  Company  was incorporated in 1988 upon the acquisition from
Gulfstream  Aerospace  Corporation  of the Commander single engine product line.
The  original  Commander single engine aircraft was designed and manufactured by
Rockwell  International  Corporation and received certification from the Federal
Aviation  Administration  ("FAA")  in  1972.  Between  1972  and  1979, Rockwell
produced  1,162  aircraft,  including  the  Commander 112, 112TC, 114, and other
models.  Rockwell  ceased  production  in  1979  and  sold  its General Aviation
Division  to   Gulfstream  Aerospace  Corporation  in  1981.   Gulfstream  never
manufactured  Commander  single  engine  aircraft.

After  CAC  acquired  the  Commander  single  engine  product  line  in 1988, it
designed,  engineered  and  implemented  significant  improvements to the proven
Rockwell Commander line, resulting in the new CAC Commander 114B. CAC was issued
a  new  Type Certificate for the Commander 114B by the FAA in 1992 and commenced
production.  The 114B features include an extensive range of avionics equipment,
retractable  landing  gear,  a  260  horsepower fuel-injected engine, a constant
speed  propeller,  a standard range of 725 nautical miles (833 statute miles), a
1,216  pound  useful  load,  a  maximum cruise speed of 164 knots (188 miles per
hour),  a  large  luxurious  four-place cabin, and low operating and maintenance
costs.

In 1994, CAC 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  more utilitarian  interior.

In  1995,  CAC  received  certification  from the FAA for the Commander 114TC, a
turbocharged version of the Commander 114B. The Commander 114TC is equipped with
the  same 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 the 114B, the
Commander  114TC  has received numerous favorable reviews by the aviation press.

In  2000,  CAC  introduced  the  115  series  of high performance, single engine
aircraft.   The  Commander 115  and 115TC represent the culmination of a variety
of improvements to the Commander line, and feature numerous airframe, engine and
systems  refinements, as well as significantly increased range capability and an
upgraded  avionics  package which includes global navigation, communication, and

                                        4
<PAGE>

moving  map  displays.  The Commander 115 series is the latest of a thoroughbred
line  of  aircraft that offer a combination of performance, comfort, safety, and
utility.

To date, approximately $50 million has been invested to build Commander Aircraft
Company. In an industry where a $100 million investment is often insufficient to
engineer,  design,  and  FAA  type certify an aircraft, management believes that
CAC's achievements are considerable. They include: the acquisition of Rockwell's
single  engine  high  performance  Commander aircraft line, the 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 power plant of the original
Rockwell  Commander  design  resulting  in a new aircraft FAA type certification
designated  114B  and  114TC,   the  introduction   of  new  avionics  packages,
enhancements  and derivative aircraft models (the current 115 and 115TC series),
and  the  establishment  of  manufacturing  operations  and  marketing, aircraft
brokerage,  refurbishment,  and  service  and  support  capabilities.

CAC  is  one  of the few companies in the world with an FAA Type Certificate for
production  of  a  four-place single engine high performance aircraft. Commander
aircraft  are certified to the more recent stringent standards of FAR 23 through
Amendment 7  and  have  had  zero  airframe ADs (Airworthiness Directives) since
re-certification  in  1992.  Management  believes that Commander aircraft have a
strong  reputation in their class due to their superior safety, design, quality,
comfort,  reliability,  resale  value,  and  ramp  appeal.

Industry  Overview
------------------

The  general  aviation industry originated in the United States in 1903 with the
first  flight of an aircraft by the Wright brothers.  Today, general aviation is
a  multi-billion  dollar  international industry, which includes the production,
sale  and  servicing  of  non-military  and non-commercial single engine piston,
multi  engine  piston,  turboprop,  and  turbojet  aircraft.  The  U. S. general
aviation  industry  is  uniquely  American and considered the best in the world.

There  are  approximately  155,000  previously  produced  single  engine  piston
aircraft  in  the  United  States  that  are   still  flying   today,  of  which
approximately  one-third, or 50,000, aircraft are single engine high performance
aircraft.  The  average  age  of  the  single  engine  high performance fleet is
approximately  35 years, and the Company estimates that the replacement value of
these  aircraft  is  over  $15  billion.

Although  the  general  aviation  market  has been depressed in recent years, we
believe  that  the  market  for  single  engine  high performance aircraft could
improve  as  a  result of: an improving economy, attrition of the aging fleet of
aircraft,  evolution 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  advances  single  engine  trainers.

The  market  for  pre-owned general aviation aircraft, from single engine to jet
aircraft,  is  substantially  larger than the market for new aircraft as are the
attendant  markets  for  pre-owned aircraft refurbishment, avionics, and service
and  support.

According  to  the  General Aviation Manufacturers Association ("GAMA"), general
aviation  ("GA")  is  one of our nation's most important and dynamic industries,
flying over 32 million hours (nearly twice the major airlines' flight hours) and
carrying  166  million  passengers annually. GA is relied on exclusively by more
the  5,400  communities  as  their only source of air transportation, (scheduled
airlines serve approximately 600 of 5,400 airports). Approximately 70 percent of
the  hours  flown  by  GA  are  for  business  and  commercial  purposes.

     -    GA  aircraft range from two-seat training aircraft to intercontinental
          business  jets.

                                        5
<PAGE>

     -    GA  is  estimated  to  be  an  $18  billion  industry.
     -    Domestic  GA  exports  one-third  of  its  production  and  leads  the
          world in  development  of  new  technology  aircraft.
     -    Most  people first learn  to  fly  in  a  GA  aircraft.

There  are  approximately  219,464  active  GA  and air taxi aircraft in the USA
(excluding  commuters).    Of   this  total,  more   than   half  (150,886)  are
single-engine  piston aircraft.  GA enjoys the use of over 5,000 airports in the
United  States.

Business  Strategy
------------------

Commander  Aircraft  Company  has  established  a business model that management
believes  distinguishes  it  from  its  competitors.  CAC has a low volume, high
margin,  diversified  revenue  and  value-added service base model rather than a
high  volume, low margin, pure manufacturing model. Depending upon contributions
from  CAC's non-manufacturing activities, CAC believes it can achieve break-even
financial  results  with  the  manufacture  and  sale  of as few as 12 to 15 new
Commander  aircraft  per annum and could achieve significant profitability above
these  levels.

CAC's  model  is  built  on  the  following  foundation:

     -    Manufacture,  service,  and  support  of  high-end  aircraft  with  a
          reputation  for high quality.
     -    Assembly-manufacturer  operations  allow streamlined production, lower
          capital  investment in equipment, smaller production staff and size of
          manufacturing  facility.
     -    Semi-custom  built to order in accordance with customer specifications
          of  avionics,  equipment,  paint,  and interior with customer deposits
          upon  order  and  progress  payments during the manufacturing process.
     -    Factory  direct  sales  in  the U. S. (instead of using dealers, which
          receive  a  15-25%  discount).
     -    Appointment  of  leading  aviation  fixed-based  operators ("FBOs") as
          Commander  Authorized  Service  Centers  as  referral  sources for new
          aircraft  orders  and  ability  to  provide  complementary service and
          support  functions.
     -    Diversification   into    pre-owned    piston    aircraft   brokerage,
          refurbishment  services,  paint,  part, and avionics - encouraging our
          customers  to  deal  directly  with  the  factory  whenever  possible.

This  strategy  served  CAC  well with revenues doubling from approximately $8.0
million  in  1997 to $16.8 million in 2000 and the achievement of profitability.
Based  on  trends  of  the previous years and sales and marketing forecasts, CAC
significantly  increased  its  production  schedule for 2001 and had to scale it
back as the economy, particularly manufacturing, began to slide into a prolonged
recession.  The  depressed domestic and international economic climate, which is
continuing,  has  been  coupled  with  one of the largest declines in history of
asset  values  in  the  U.  S.  securities  markets,  terrorist attacks, and the
uncertainty  over  the  international  situation  and  war  with  Iraq.

During  2001  and  2002,  CAC's  marketing,  sales, and advertising expenditures
declined  significantly  due to budget constraints, and as a result CAC incurred
several  significant  financial  charges.

Notwithstanding  the  disappointing  financial results of the last two years and
subsequent  bankruptcy  filing  and  suspension  of new aircraft production, CAC
believes  its business model is sound and that, with adequate capitalization and
emergence  from  bankruptcy,  CAC  can  return  to  profitability  in the future
following  the  recommencement  of  new  aircraft  production  and  funding  for
appropriate  marketing,  sales,  and  advertising.

                                        6
<PAGE>

Marketing  Strategy
-------------------

There  are  an  estimated 55,000 general aviation single engine high performance
aircraft  in  existence  (approximately  one-third  of  the  total single engine
fleet).  The  average  age  of  these aircraft is over 35 years, and the Company
estimates that the cost of replacing the fleet of such aircraft would exceed $15
billion.  CAC  is  one  of  the  few  companies  in  the  world with an FAA Type
Certificate  for  production  of  a  four-place  single  engine high performance
aircraft.  Commander  aircraft  are  certified  to  the  more  recent  stringent
standards  of  FAR  23  through Amendment 7 and have had zero airframe ADs since
re-certification  in  1992.

CAC  believes  its  aircraft  possess  many  qualities  superior to those of its
competitors  including  safety,  design,  comfort,  performance, quality, resale
value,  utility,  and ramp appeal.  Furthermore, CAC offers value-added services
and  programs  such as a turn-key ownership program, certified flight instructor
program,  and   trade-up  program   together  with  assistance  with  financing,
insurance,  trade-ins,  training,  hangaring,  and  pilot  services.

Commander Aircraft Company believes the market for its products will improves 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,  and  increased  use  of  single  engine  aircraft  as  a
cost/convenience effective corporate tool for small and medium sized businesses.

CAC's  primary  targeted  markets  are  as  follows:

     -    The  existing  pilot  base  comprised  of  pilots  who  may or may not
          currently  own  aircraft.
     -    New  pilots  in  various  stages  of  pilot  training.
     -    Small  and  medium  sized  businesses  with  regional  travel  needs.

To  address  these  markets,  CAC  has  developed:

     -    The Commander Trade-Up Program, which targets owners of other aircraft
          types.
     -    The Commander CFI  Program,  which  targets  newer  pilots  and  their
          Certified Flight Instructors by bringing both together in the aircraft
          evaluation  and  acquisition  process.
     -    The  Commander  Aircraft  Ownership  Program,  which provides business
          owners  who  may  be  non-pilots  with  a  complete  turn-key  program
          including  aircraft  acquisition,  financing,  insurance, maintenance,
          storage,  product  support, private pilot service, and instruction, if
          desired.

CAC  stresses  the  superior  aspects  of  its  aircraft such as safety, design,
quality,  comfort,  reliability,  resale  value,  and  ramp  appeal  as  well as
value-added service and support through direct contact and growing relationships
with  its  prospects  and  customers.

CAC  implements  its  marketing  strategy  via factory direct sales comprised of
regional  sales  personnel  who  are  directly  managed and supported from CAC's
headquarters in Oklahoma. The marketing organization is augmented by a worldwide
network  of  Commander  Authorized  Service  Centers  (ASCs),  which are leading
independent  FBOs (fixed base operators). CAC believes that factory direct sales
and  marketing  of  its  products and services provides total control of product
pricing,  quality,  and  business  integrity in addition to unsurpassed customer
relations  and  repeat  business.  Unfortunately,  CAC's  marketing,  sales, and
advertising expenditures have been sharply curtailed over the past two years due
to  budget  constraints.

                                        7
<PAGE>

Competition
-----------

Commander  Aircraft  Company  competes  in  the  single  engine high performance
category directly with normally aspirated and turbo-charged aircraft of the same
type  produced  by  Raytheon's  Beechcraft unit, the New Piper Aircraft Company,
Mooney  Aerospace  Group,  and   Aerospatiale's  Socata  subsidiary.   CAC  also
competes,  for aircraft purchasers, indirectly with aircraft in other categories
such  as:  single engine fixed gear aircraft manufactured by Cessna, Cirrus, and
Lancair,  single engine pressurized and turboprop aircraft, twin engine aircraft
and  alternatives  available  to  purchasers  in  the  pre-owned  market.

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.  Commander Aircraft Company 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
CAC  provides  to  its  customers.   CAC  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.  However, it is decades older
in  design, FAA certified to lesser standards, and has an inferior safety record
than  Commander  aircraft.  Mooney  Aerospace Group produces single engine, high
performance  aircraft  that are significantly smaller than the Commander 115 and
115TC, and Mooney aircraft are also decades older in design and FAA certified to
lesser  standards  with inferior safety records.  New Piper Aircraft Corporation
produces  a  single  engine,  high  performance, six place aircraft with similar
performance,  the normally aspirated and turbo-charged Saratoga/Cherokee series,
which  again  is decades older in design, FAA certified to lesser standards, and
possesses   a  substantially  inferior  safety  record  to  Commander  aircraft.
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  CAC.

Commander  Aircraft  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  Administration  ("FAA")  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.

Factors  inhibiting  our  market  share  include:

     -    Our  competitors' larger  outstanding fleets of
          aircraft,  which  are  eight  to ten times the size of ours, providing
          them  with  a  larger  pool  of  potential  trade-in  business.
     -    Our  competitors'  use  of  dealers.
     -    Our  competitors'  significantly greater expenditures on marketing and
          advertising.
     -    Our  competitors'  pricing  policies.

Commander  Aircraft Company believes its aircraft are superior in many respects,
including  safety, design, quality, comfort, reliability, resale value, and ramp
appeal,  and  accordingly,  Commander  aircraft  are priced approximately 10-25%
higher than those of our competitors, except for the Beech Bonanza series, which


                                        8
<PAGE>

are  priced  approximately  10-20%  higher  than  comparably  equipped Commander
aircraft.  Inherent  in  our  pricing  are  value-added programs, and individual
consultation  with  each  purchaser   and  customization  of  each  aircraft  in
accordance  with  their  specifications.

Unfortunately,  economic  conditions  during  the past several years have caused
price  deflation  in  manufactured  goods, with aircraft among the most affected
products.  Our  competitors  have  been unable to maintain pricing integrity and
have  resorted  in  many  cases  to  price reduction policies intended to foster
sales.  We  believe  that  these  competitors  will not be able to sustain these
policies  as  the  margins  they  result  in  are  not  profitable. Although our
competitors  have  reduced prices, we plan to maintain our prices while offering
additional  avionics as standard equipment on our aircraft, making it more price
competitive  with  comparably  equipped  aircraft  offered  by  our competitors.

Insurance
---------

Commander  Aircraft  Company  normally 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.  At December 31, 2002, all
insurance coverage had been suspended due to the inability of the Company to pay
for this coverage  There is no assurance that the amount of insurance carried by
CAC  would  be sufficient to protect it fully in the event of a serious accident
and  liability  claim,  but  CAC  believes  that the amounts and coverage of its
insurance  protection  are  reasonable  and  appropriate  for the CAC's business
operations.  Although highly probable, there is no assurance that such insurance
will  continue  to  be  available  on  commercially  reasonable  terms.

From  time  to  time,  Commander Aircraft is the target of litigation, including
suits  filed  regarding  accidents  of Commander aircraft. In mid 1994, Congress
enacted  the  General  Aviation  Revitalization  Act,  S.  1458  ("GARA"), which
established  an  18-year  statute  of  repose  for general aviation aircraft and
component manufacturers. GARA prohibits product liability suits against aircraft
manufacturers  for  aircraft  that  are  more than 18 years old when an accident
occurs. This action eliminated from the liability tail all Rockwell-manufactured
Commander  aircraft,  last  produced  in  1979.  The only aircraft for which the
Company  has  potential liability as a manufacturer are aircraft it has produced
since  1992. This currently represents approximately 200 aircraft, approximately
70  of  which  have  been  exported  outside  of  the  United  States.

Through  March 1, 1995, CAC 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, CAC elected
not  to  retain  product  liability insurance coverage commencing March 1, 1995.
CAC  could  be  exposed  to  significant  financial risks if losses from product
liability  were  to occur.  Since CAC dropped its product liability insurance in
1995,  it has saved an estimated $8-10 million in insurance premium costs versus
expenditures  of  approximately $1.5 million in litigation and settlement costs,
most  of which would have been expended even with liability insurance because of
insurance  policy  deductibles.

The General Aviation Revitalization Act established an 18-year statute of repose
for  general  aviation  aircraft and component manufacturers. This law 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

                                        9
<PAGE>

action  eliminated  all  Rockwell manufactured Commanders produced in the 1970's
from  CAC's  liability  tail.  The  only  aircraft  that CAC bears manufacturing
responsibility  for  are  the models 115, 115TC, 114B, 114TC, and 114AT produced
from  1992  through  the  present,  which  currently represent approximately 200
aircraft.

Parts  and  Materials  Availability
-----------------------------------

Commander Aircraft Company purchases parts and materials from over 100 different
suppliers.  Though  some  of  these  vendors are key to the manufacture of CAC's
aircraft,  there  are  no long-term commitments or contracts with any suppliers.
CAC  considers  its relationship with its suppliers, including those affected by
the  bankruptcy filing, to be satisfactory and does not anticipate any shortages
or  interruption  to  production due to lack of available components on a timely
basis.

Government  Regulations
-----------------------

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.
Commander  Aircraft Company was issued a Type Certificate for the Commander 114B
in  1992  and a Type Certificate for the Commander 114TC in 1995.  CAC owns Type
Certificates  for  all  predecessor  and current single engine Commander models.
The sale of CAC's product internationally is subject to regulation by comparable
agencies  in  foreign  countries.

CAC  received a Production Certificate from the FAA in 1993, which allows CAC to
issue  Airworthiness Certificates from 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  regulations.   CAC's  production
certificate  has  remained dormant during suspension of new aircraft production.
CAC  plans  to  reactivate  its  production  certificate  upon  recommencing new
aircraft  production.  Although  a  production  certificate  is not necessary to
produce  aircraft, having one facilitates the production process and interaction
with  the  FAA.

Employees
---------

The  Company  has a total of 14 full-time and 3 contract employees as of January
21,  2004.  The  Company  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 the Company
considers its employee relations to be good.  The Company believes resumption of
new  aircraft  production  and  achievement of profitable financial results will
require  approximately  50  to  60  full-time  employees.

Item  2.  Properties
--------------------

The  Company  has  operated in a 103,650 square foot facility, which consists of
three  buildings  constructed  in  1981,  located  at  the Wiley Post Airport in
Bethany, Oklahoma.  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.

In  2003, the Company transferred its lease with the Oklahoma City Airport Trust
Authority to The Servicenter, Inc., a company with plans to operate a Fixed Base
Operation  in  the facility and to provide significant aesthetic upgrades to the
facility.  The Company negotiated a 3.5 year sub-lease for 50,011 square feet of
manufacturing,  service  and  office  space,  guaranteed  renewable at six-month
intervals.

                                       10
<PAGE>

A  summary  of  lease  payments is presented in Note G - Leases, of the Notes to
Consolidated  Financial  Statements  for  2002.

Item  3.  Legal  Proceedings
----------------------------

The  Company  is  a  defendant  in  a  lawsuit resulting from a crash of one its
manufactured  aircraft.  Management  does  not  believe  the  Company  bears any
responsibility  and  has  vigorously  defended against this claim.  The National
Transportation  and  Safety  Board accident investigation has found the probable
cause of this crash was pilot error.  This matter will be discharged pursuant to
the  bankruptcy  plan  upon  its  completion.  The  Company  is also a defendant
resulting  from  a  crash  of  a  1977  Rockwell Commander aircraft that was not
manufactured  by  the  Company  and  for  which the Company believes it bears no
responsibility,  and in any event, will be discharged pursuant to the bankruptcy
plan  upon  its  completion.

On  December  27,  2002,  CAC filed a voluntary petition under Chapter 11 of the
United  States  Bankruptcy  Code  in  the United States bankruptcy court for the
District  of  Delaware.  CAC  filed a final reorganization plan on July 5, 2002,
following  the  execution  of  a  letter  of  agreement  on that date with Tiger
Aircraft, LLC ("Tiger") to fund the plan. A stock purchase agreement was entered
into with Tiger on November 1, 2003, pursuant to which an amended plan was filed
on  December  10, 2003, with the effective date scheduled for on or before March
31,  2004,  unless  extended  by  the  consent  of CAC, AGI, Tiger, the official
committee  of  unsecured  creditors,  the  U.S. Department of Labor, and Nyltiak
Investments,  LLC.  For  additional  information,  see  Note  R  of  Notes  to
Consolidated  Financial  Statements.

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.


                                    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 (symbol
AVGE.PK),  trades on the NASDAQ Small-Cap Market until it was delisted and began
trading  on  the  over-the-counter  bulletin board on September 24, 2002 and has
recently  been  traded  on the pink sheets. 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  2004.

<TABLE>
<CAPTION>
                              Quarterly  Common  Stock  Price  Ranges
                             -----------------------------------------
                                  2002                      2001
                             ---------------           ---------------
     Quarter                 High        Low           High        Low
     -------                 ----        ---           ----        ---
<S>                           <C>        <C>           <C>         <C>
     1st                      .38        .23           1.75        .81
     2nd                      .67        .33           1.00        .41
     3rd                      .95        .28            .70        .20
     4th                      .30        .05            .42        .20
</TABLE>

In  2002, The Company issued 251,516 shares of its common stock as settlement of
certain  obligations.  Included were 136,364 shares issued for $45,000 for Board
of  Directors  fees and 115,152 shares issued for $38,000 for sales commissions.

There  were approximately 300 holders of record of the Company's common stock as
of  December  31,  2002.

Item  6.  Selected  Financial  Data
-----------------------------------

The  selected  financial  data  presented  below  for each year in the five year
period  ended  December  31,  2002  have been derived from the Company's audited

                                       11
<PAGE>

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)
                                2002       2001       2000     1999      1998
                               -------   -------    -------   -------   -------
   Operation  Data:
   ----------------
<S>                            <C>       <C>        <C>       <C>       <C>
   Net  sales                  $ 8,443   $ 9,488    $16,831   $13,667   $10,712
   Net  earnings  (loss)       $(4,285)  $(5,520)   $   450   $  (385)  $(1,849)
   Earnings (loss) per share
     basic  &  diluted         $  (.60)  $  (.84)   $  0.07   $  (.05)  $  (.25)

   Balance  Sheet  Data:
   ---------------------
   Total  assets               $ 3,715   $ 7,304    $11,809   $ 8,632   $10,148
   Long-term  debt             $ 1,235   $     -    $     -   $     -   $     -
</TABLE>


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
10KSB.  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  Estimates  and  Accounting  Policies

We must make estimates of the collectability of accounts receivable.  We analyze
historical  write-offs,  changes  in  our  internal credit policies and customer
concentrations  when  evaluating  the  adequacy  of  our  allowance for doubtful
accounts.  Differences  may  result in the amount and timing of expenses for any
period  if  we  make  different  judgments  or  use  difference  estimates.

Inventories  are  valued  at  the lower of cost or market.  We must periodically
evaluate  the  carrying  value  of  our  inventories to determine whether market
conditions  have  impaired  the  carrying  value  of  our  inventories.

Property  and  equipment  are  evaluated  for  impairment whenever indicators of
impairment  exist.  Accounting standards require that if an impairment indicator
is  present, the Company must assess whether the carrying amount of the asset is
unrecoverable  by estimating the sum of the future cash flows expected to result
form  the  asset,  undiscounted  and  without interest charges.  If the carrying
amount  is  less  than  the  recoverable  amount,  an  impairment charge must be
recognized,  based  on  the  fair  value  of  the asset.  Management assumed the
Company  was  a going concern for purposes of evaluating the possible impairment
of  its property and equipment.  Should the Company not be able to continue as a
going concern, there may be significant impairment in the value of the Company's
property  and  equipment.

                                       12
<PAGE>

We  must  estimate the future liability related to warranty work on new aircraft
sold.

As  part  of  the process of preparing our consolidated financial statements, we
are required to estimate our income taxes.  This process involves estimating our
current  tax  exposure  together  with assessing temporary differences resulting
from  differing  treatment  of  items  for  tax  and accounting purposes.  These
differences  result in deferred tax assets and liabilities.  We must then assess
the  likelihood  that  our  deferred  tax  assets  will be recovered from future
taxable  income,  and,  to the extent we believe that recovery is not likely, we
must  establish  a  valuation  allowance.  To  the  extent  that  we establish a
valuation  allowance  or  increase this allowance in a period, we must include a
tax provision or reduce our tax benefit in the statements of operations.  We use
our  judgment  to  determine our provision or benefit for income taxes, deferred
tax  assets and liabilities and any valuation allowance recorded against our net
deferred  tax  assets.  We  believe,  based  on  a  number  of factors including
historical  operating  losses, that we will not realize the future benefits of a
significant  portion  of  our  net  deferred  tax assets and we have accordingly
provided  a  full valuation allowance against our deferred tax assets.  However,
various  factors  may  cause  those  assumptions  to  change  in  the near term.

     We  cannot  predict  what  future laws and regulations might be passed that
could have a material effect on our results of operations.  We assess the impact
of significant changes in laws and regulations on a regular basis and update the
assumptions  and estimates used to prepare our financial statements when we deem
it  necessary.

     We  have  determined  the  significant principles by considering accounting
policies  that  involve the most complex or subjective decisions or assessments.
Our  most   significant  accounting   policies  are  those  related  to  revenue
recognition  and  accounting  for  stock-based  compensation.


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.

Our  aircraft  production is dependent upon the perception of our customers that
the  purchase  of  our aircraft is desirable over others that they could choose.
Often the purchase of an aircraft is dependent upon investment decisions made by
the  buyer  that  could be affected by many factors. Among these factors are the
general economic conditions at the time the decision is made, the performance of
the  buyer's  investments  and  the tax treatment or possible changes in the tax
treatment  of the aircraft purchase for the buyer. Additionally, as we have seen
in the last year, the perception of safety, both personal and national, can have
an  impact  on  the  business  of  the  Company.

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.

                                       13
<PAGE>

Results  of  Operations:

                                  2002 vs. 2001
                                  -------------

The Company's business began to rebound and improve in the first half of 2002 as
compared  to  2001.  However, the economy entered into a renewed slowdown, which
management believes was probably the result of continued weakness in the overall
economy,  which may have resulted from renewed anxiety over possible events such
as anthrax, air travel, potential terrorist activities, and the march toward war
with  Iraq,  and it caused a decline in the purchase of big-ticket durable goods
such  as  automobiles  and  aircraft.

During  the  second  half  of  2002,  the  Company  experienced  cancellation or
postponement  of  several  new  and  pre-owned aircraft orders and transactions,
causing  a  cash  flow  crisis resulting in the necessity of filing a Chapter 11
bankruptcy  petition  on  December  27,  2002.

The  Company, along with many other companies in the aviation industry, has been
affected  by  macro  political  and  economic   events  beyond  its  control and
endeavored  to  adjust its new aircraft production schedule and overall business
accordingly.  However,  there  are  lead and lag financial consequences to doing
so.  For example, the terrorist attacks on the United States in 2001, concurrent
with  the  largest decline in asset values in the securities markets in history,
and  a  weakening  economy,  presented  enormous  adjustment  challenges  to the
Company.

The  following is a more detailed explanation of the components of the financial
results  that  were  affected:

Revenues  decreased 11% in 2002 to $8,443,416 from $9,487,795 in 2001, resulting
in a net loss of $(4,285,111) for 2002 compared to a net loss of $(5,519,592) in
2001.  The  net loss per basic and diluted share was $(0.60) in 2002 compared to
a  net  loss  of  $(0.84)  per  basic  and  diluted  share  in  2001.

Revenues  from aircraft sales decreased 8% in 2002 to $7,412,519 from $8,027,663
in  2001.  New  aircraft  deliveries were 6 units in 2002 compared to 8 units in
2001.  Pre-owned  and  consigned aircraft sales decreased to 16 aircraft in 2002
from  24  in  2001.  Revenues  generated by the service, parts and refurbishment
business  was  $1,030,897  in  2002  compared  to  $1,460,132  in  2001.

Aircraft  cost  of  sales  was  $6,679,481 in 2002 as compared to $7,665,233 for
2001.  The  gross  margin  on aircraft sales increased to 10% in 2002 from 5% in
2001.

Service  and  parts cost of sales was $829,954 in 2002 compared to $1,291,618 in
2001.  The  decrease was partially due to a lower volume of service activity and
spare  parts  shipments,  however,  the  gross margin on service and parts sales
increased  to  19%  in  2002  from  12%  in  2001.

Engineering  and  product  development  costs decreased to $126,232 in 2002 from
$278,379  in  2001.  The  decrease in these expenses is due to the downsizing in
this  area.

Selling, general and administrative expenses decreased by 33% from $3,616,933 in
2001  to  $2,440,414 in 2002.  This decrease is due primarily to reductions both
in  the  sales  and  administrative  staffs  and  operations.

Also included in operating expenses for 2002 is an impairment of Work in Process
(WIP),  parts  and aircraft inventory of $1,758,620. Of this, pre-owned aircraft

                                       14
<PAGE>

inventory was impaired by $296,699 to reflect the depressed market values during
the  current  recession, reducing the values to the lower of cost or market; WIP
was  impaired  by  $510,506  in anticipation of the additional time and expenses
necessary  to  restart  manufacturing and; inventory was impaired by $951,415 to
reduce  value  of slow-moving inventories, thereby reducing the inventory values
to  the  lower  of  cost  or  market. No such impairment was recognized in 2001.

During 2001, the Company recognized bad debts form a related party in the amount
of  $1,529,889.  There  was  no  corresponding  bad  debts  for  2002.

Interest  income  totaled  $1,929  in  2002,  down  from  $15,350 in 2001.  This
decrease  was  due  to  a  reduction  in  interest  bearing  funds  during 2002.

Interest expense decreased by 51%  to $243,414 in 2002 from $498,715 in 2001 due
to reduced activity in short-term borrowings from the Company's lines of credit.

Litigation  settlements  increased  by  33% from $150,000 in 2001 to $200,000 in
2002.  This  increase was due to the settlement during 2002 of a claim resulting
from  a  crash  of  a  aircraft  manufactured  by  the  Company.

During  2002,  the  Company  realized  a  loss on the sale of available for sale
equity  securities  in  the  amount  of  $(395,973)

Liquidity  and  Capital  Resources
----------------------------------

Cash used in operations totaled $(648,036) for 2002 compared to cash provided by
operations  of  $868,244  in  2001.

Inventories  decreased by $2,927,701 primarily due in part to the recognition of
$1,758,620  in  impairments on inventory and in part due to the reduction in the
number  of  new  and  used  aircraft  held  in  inventory.

                                       16
<PAGE>

Accounts  payable  decreased  by  $163,229 at December 31, 2002.  Long-term debt
increased  to  $1,234,795.  The Company had no long-term debt as of December 31,
2001  and  2000.

The  Company  had  no  capital  expenditures  in  2002.

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  $1,359,819  at  December  31,  2002.

     For  2002,  the  Company  reported  $8,443,416  in  revenues  and  a  loss,
$(4,285,111),  with  six new aircraft deliveries. For the year 2001, the Company
reported  $9,487,795  in revenues and a loss of $(5,519,592), with deliveries of
eight  new  aircraft.

Contractual  Obligations  and  Commercial Commitments.  The following table is a
summary of the  Company's  contractual  obligations  as  of  December  31, 2002.

<TABLE>
<CAPTION>
                                      Payment Due  by  Period
                                      -----------------------
                              Total     Less than One   1-3  Years   Thereafter
                              -----     -------------   ----------   ----------
                                        Year
                                        ----
<S>                        <C>          <C>             <C>          <C>
Long-Term  Debt            $1,234,795   $        -      $1,234,795   $      -
Current  Note  Payable      1,359,819    1,359,819               -          -
Operating  Leases             396,900       75,600         226,800     94,500
                           ----------   ----------      ----------   --------

Total                      $2,991,514   $1,435,419      $1,461,595   $ 94,500
                           ==========   ==========      ==========   ========
</TABLE>

As  we  go  forward  in  2004,  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.


                                       17
<PAGE>

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.

Item  8.  Financial  Statements  and  Supplementary  Data
---------------------------------------------------------

     Index  to  Financial  Statements  and  Supplementary  Data:

                                                                            Page
                                                                            ----

          Report  of  Independent  Public  Accountants                        19

          Financial  Statements:

          Consolidated  Balance  Sheet   December  31, 2002                   21

          Consolidated  Statements of Operations for the years ended          23
                  December  31,  2002 and 2001

          Consolidated  Statement  of  Stockholders'  Equity for the          24
                  years  ended  December  31,  2002 and 2001

          Consolidated  Statements of Cash Flows for the years ended          25
                  December  31,  2002 and 2001

          Notes  to  Consolidated  Financial  Statements                      27



                                       18
<PAGE>

               Report of Independent Certified Public Accountants


Board  of  Directors  and  Stockholders
Aviation  General,  Incorporated

We have audited the accompanying consolidated balance sheet of Aviation General,
Incorporated  and  Subsidiaries  as  of  December  31,  2002,  and  the  related
consolidated  statements of operations, stockholders' equity, and cash flows for
the  years  ended December 31, 2002 and 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 audit 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  audit  provides  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,
Incorporated  and Subsidiaries as of December 31, 2002, and the results of their
operations  and  their cash flows for the years ended December 31, 2002 and 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 Notes A and 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.



\s\Murrell,  Hall,  McIntosh  &  Co.,  PLLP
Murrell,  Hall,  McIntosh  &  Co.,  PLLP

Oklahoma  City,  Oklahoma
January  30,  2004


                                       19
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                DECEMBER 31, 2002

<TABLE>
<CAPTION>
                                     ASSETS
CURRENT  ASSETS:
<S>                                                                <C>
  Accounts  receivable                                             $      9,431
  Inventories                                                         3,211,531
  Prepaid  expenses  and  other  assets                                   3,591
                                                                   ------------
        Total  current  assets                                        3,224,553
                                                                   ------------

PROPERTY  AND  EQUIPMENT  -  AT  COST:
  Office  equipment  and  furniture                                     365,373
  Vehicles  and  aircraft                                                95,115
  Manufacturing  equipment                                              385,179
  Tooling                                                               676,747
  Leasehold  improvements                                               112,748
                                                                   ------------
                                                                      1,635,162
    Less  accumulated  depreciation                                  (1,144,693)
                                                                   ------------
                                                                        490,469
                                                                   ------------

                                                                   $  3,715,022
                                                                   ============
</TABLE>

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

                                       21
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                DECEMBER 31, 2002

<TABLE>
<CAPTION>
                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT  LIABILITIES:
  LIABILITIES  NOT  SUBJECT  TO  COMPROMISE -
<S>                                                                 <C>
    Cash  overdraft                                                 $     2,145
    Notes  payable                                                    1,359,819
                                                                    -----------
        Total  current  liabilities                                   1,361,964

  LIABILITIES  SUBJECT  TO  COMPROMISE -
    Accounts  payable                                                 2,146,221
    Accrued  expenses                                                 1,299,117
    Refundable  deposits                                                146,500
                                                                    -----------
        Total liabilities subject to compromise                       3,591,838
                                                                    -----------

        Total  current  liabilities                                   4,953,802
                                                                    -----------

NONCURRENT  LIABILITIES:
  Notes  payable                                                      1,234,795
                                                                    -----------

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

STOCKHOLDERS'  EQUITY  (DEFICIT):
  Preferred  stock  -  $.01 par value; 5,000,000
    authorized shares; no shares outstanding                                  -
  Common  stock,  $.50  par  value;  20,000,000
    shares  authorized; 8,120,397 at December 31, 2002                4,060,198
  Additional  paid-in  capital                                       37,254,305
  Less:  Treasury stock at cost, 1,009,551 shares
  at December 31, 2002                                               (1,709,638)
  Accumulated  (deficit)                                            (42,228,440)
  Accumulated other comprehensive income (loss)                               -
                                                                    -----------
        Total stockholders' equity (deficit)                         (2,623,575)
                                                                    -----------

                                                                    $ 3,715,022
                                                                    ===========
</TABLE>

     The accompany notes are an integral part of these financial statements

                                       22
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                          2002         2001
                                                      ------------   ----------

NET  SALES:
<S>                                                  <C>            <C>
  Aircraft                                           $  7,412,519   $ 8,027,663
  Service                                               1,030,897     1,460,132
                                                     ------------   -----------
                                                        8,443,416     9,487,795
                                                     ------------   -----------

COST  OF  SALES:
  Aircraft                                              6,679,481     7,665,233
  Service                                                 829,954     1,291,618
                                                     ------------   -----------
                                                        7,509,435     8,956,851
                                                     ------------   -----------

        Gross  margin                                     933,981       530,944
                                                     ------------   -----------

OTHER  OPERATING  EXPENSES:
  Product  development  and
    engineering  costs                                    126,232       278,379
  Selling, general, and
    administrative expenses                             2,440,414     3,616,933
  Impairments  and  allowances                          1,758,620             -
  Bad debt expense - related party                              -     1,529,889
                                                     ------------   -----------
        Total operating expenses                        4,325,266     5,425,201
                                                     ------------   -----------

        Operating  income  (loss)                      (3,391,285)   (4,894,257)
                                                     ------------   -----------

OTHER  INCOME  (EXPENSES):
  Interest  income                                          1,929        15,350
  Other  income                                            27,564        23,770
  Interest  expense                                      (243,414)     (498,715)
  Other  expense                                          (65,966)      (15,740)
  Litigation  settlement                                 (200,000)     (150,000)
  Loss  abandonment  of  lease                            (17,966)            -
  Realized  loss  on  available
    for  sale  equity securities                         (395,973)            -
                                                     ------------   -----------
        Total  other  expenses                           (893,826)     (625,335)
                                                     ------------   -----------

NET  (LOSS)                                          $ (4,285,111)  $(5,519,592)
                                                     ============   ===========

NET  (LOSS)  PER  SHARE
  Weighted  average  common  shares
    outstanding;  basic                                 7,143,250     6,581,467
                                                     ============   ===========

  Net (loss) per share; basic                        $       (.60)  $      (.84)
                                                     ============   ===========

  Weighted  average  common  shares
    outstanding;  diluted                               7,143,250     6,581,467
                                                     ============   ===========

  Net  (loss)  per  share; diluted                   $       (.60)  $      (.84)
                                                     ============   ===========
</TABLE>


     The accompany notes are an integral part of these financial statements

                                       23
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 2002 AND 2001


<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                              Additional                                                  Other          Total
                           Common Stock         Paid-in          Treasury Stock       Accumulated     Comprehensive   Stockholders'
                       Shares       Amount      Capital       Shares        Amount      Deficit       Income (Loss)     Equity
                     ---------   ----------   -----------   ---------   ------------  ------------   --------------   -------------

Balance  at
<S>                   <C>         <C>          <C>           <C>         <C>           <C>             <C>             <C>
January 1, 2001       7,051,519   $ 3,525,759  $ 36,889,799    772,189   $(1,294,193)  $(32,423,737)   $  113,691      $ 6,811,319

Issuance of
 common stock           580,000       290,000       110,500          -             -              -             -          400,500

Comprehensive income:
  Net loss                    -             -             -          -             -     (5,519,592)            -       (5,519,592)
  Other comprehensive
  loss -
    Change in
    unrealized
    investment
    gain, net                 -             -             -          -              -             -      (367,564)        (367,564)
                      ---------   -----------  ------------  ---------   ------------  ------------    ----------      -----------
      Comprehensive
      income                  -             -             -          -              -    (5,519,592)     (367,564)      (5,887,156)
                      ---------   -----------  ------------  ---------   ------------  ------------    ----------      -----------

Balance at
  December 31, 2001   7,631,519     3,815,759    37,000,299    772,189     (1,294,193)  (37,943,329)     (253,873)       1,324,663

Treasury Stock not
  retired as planned    237,362       118,681       296,764    237,362       (415,445)            -             -                -

Issuance of
  common stock          251,516       125,758       (42,758)         -              -             -             -           83,000

Comprehensive loss:
  Net loss                    -             -             -          -              -    (4,285,111)            -       (4,285,111)
  Other comprehensive
  income -
    Change in
    unrealized
    investment
    loss, net                 -             -             -          -              -             -       253,873          253,873
                      ---------   -----------  ------------  ---------   ------------  ------------    ----------      -----------
      Comprehensive
        loss                  -             -             -          -              -    (4,285,111)      253,873       (4,031,238)
                      ---------   -----------  ------------  ---------   ------------  ------------    ----------      -----------

Balance at
  December 31, 2002   8,120,397    $4,060,19    $37,254,305  $1,009,551  $ (1,709,638) $(42,228,440)   $        -      $(2,623,575)
                      =========   ==========    ===========  ==========  ============  ============    ==========      ===========
</TABLE>

     The accompany notes are an integral part of these financial statements


                                       24
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                          2002          2001
                                                      ------------  ------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                   <C>           <C>
  Net  (loss)                                         $(4,285,111)  $(5,519,592)
  Adjustments  to reconcile net
  earnings (loss) to net cash provided
  by (used in) operating  activities
    Depreciation and amortization                         130,684       120,098
    Common stock issued for litigation
      settlement, services, and interest
      charges                                              83,000       450,500
    Receipts on aircraft notes receivable                 101,896        19,653
    Bad debt expense - related party                            -     1,529,889
    Loss on retirement of
      property and equipment                               17,965             -
    Realized  loss on sale of
      available-for-sale equity
      securities                                          395,973        14,508
    Changes  in  assets  and
      liabilities:
      (Increase)  decrease  in -
        Accounts  receivable                               (9,431)      551,425
        Inventories                                     2,927,701     1,852,939
        Prepaid expenses and other -
          assets                                           66,564        83,335
        Increase  (decrease)  in
          Accounts  payable                              (163,229)    1,083,036
          Accrued  expenses                               685,001        52,718
          Refundable  deposits                           (599,049)      629,735
                                                      -----------   -----------
          Net cash provided  by (used
          in) operating activities                       (648,036)      868,244
                                                      -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital  expenditures                                         -       (37,243)
  Proceeds  from  available-for-sale
    equity  securities                                          -        20,260
                                                      -----------   -----------
          Net  cash  provided  by
          (used in) investing activities                        -       (16,983)
                                                      -----------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds  from  borrowings                            3,693,325     4,486,810
  Payments  on  borrowings                             (3,258,790)   (5,261,731)
                                                      -----------   -----------
          Net cash provided by (used in)
            financing activities                          434,535      (774,921)
                                                      -----------   -----------

NET INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                              (213,501)       76,340

CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR                                                   211,356       135,016
                                                      -----------   -----------

CASH AND CASH EQUIVALENTS
  (OVERDRAFT) AT END OF YEAR                          $    (2,145)  $   211,356
                                                      ===========   ===========
</TABLE>

     The accompany notes are an integral part of these financial statements

                                       25
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

                     YEARS ENDED DECEMBER 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                         2002          2001
                                                     ------------  ------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Cash  paid  during  the  year  for -
  ------------------------------------
<S>                                                   <C>           <C>
  Interest                                            $   260,928   $   493,000
  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  for Board  of  Directors  fees  of  $78,000
  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.


     The accompany notes are an integral part of these financial statements












                                       26
<PAGE>

                AVIATION GENERAL, INCORPORATED AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2002 AND 2001


NOTE  A  -  ORGANIZATION  AND  OPERATIONS

     Aviation  General, Incorporated (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, the  Company  had
approximately $212,000 on deposit at one financial institution.  The Company had
a  bank  overdraft  of  $(2,145)  at  December  31,  2002.

     3.     Investments
            -----------

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

However,  during  2002,  certain information has come to the Company's attention
concerning  the  ability  of Stratesec's stock to recover its fair value.  Among
these  are  deteriorating financial condition, the lack of development of merger
or  acquisition  opportunities and notification from the American Stock Exchange
on July 18, 2002 that Stratesec does not meet minimum equity requirements and is
subject  to  being  de-listed.  Based  on  the above facts an impairment loss of
approximately  $396,000  has  occurred  and  has  been  recorded  as a charge to
earnings.  At  December 31,  2001, unrealized losses, net of income tax effects,
of  $(253,873)  had  been  recorded  in  accumulated other comprehensive income.

                                       27
<PAGE>

     3.     Investments  -  Continued
            -------------------------

     The  components of other comprehensive income (loss) are as follows for the
years  ended  December  31:
<TABLE>
<CAPTION>
                                                          2002         2001
                                                       ---------    ----------
      Unrealized  holding  gains  (losses)  arising
<S>                                                    <C>          <C>
        during  the  period                            $       -    $(440,640)
      Less  reclassification  adjustment  for  net
        realized  losses  included  in  net  income      253,873       14,508
      Income  tax  benefit  (expense)                          -       58,568
                                                       ---------    ---------

          Other  comprehensive  income  (loss)         $ 253,873    $(367,564)
                                                       =========    =========
</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,  2002:

<TABLE>
<CAPTION>
                                                               2002
                                                          ------------
<S>                                                       <C>
     Raw  materials                                       $  1,321,993
     Work  in  process                                         510,506
     New  and  pre-owned  aircraft                           1,359,782
     Other                                                      19,250
                                                          ------------

                                                          $  3,211,531
                                                          ============
</TABLE>

During  2002 and 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
$662,000 and  $991,000  for 2002 and 2001, respectively, are included in cost of
sales  -  aircraft.


                                       28
<PAGE>

During  2002 the Company recognized an  impairment loss of $1,758,620 associated
with  writing  the  inventory  to  the  lower  of  cost  or  market.

     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  of  five  to seven years for vehicles and aircraft, three to five
years  for  office  equipment  and  furniture,  seven to ten years for leasehold
improvements,  and ten to fifteen years for manufacturing equipment and tooling.

     Depreciation  expense  was  $130,684  and  $120,098  for  2002  and  2001,
respectively.

     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, 2002 and 2001
was  approximately  $5,363  and  $198,000,  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.


                                       29
<PAGE>

     12.     New  Accounting  Pronouncements
             -------------------------------

     In   2001,   the   Financial  Accounting   Standards  Board    issued   new
pronouncements:  SFAS  No.  144,  Accounting  for  the Impairment or Disposal of
Long-Lived  Assets.

     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.

     13.     Going  Concern
             --------------

     During the years ended December 31, 2001 and 2002, the Company incurred net
(losses)  of  ($5,519,592)  and  ($4,285,111),  respectively. As of December 31,
2002,  the  Company had a negative working capital of ($1,729,244) and a deficit
net  worth  of  ($2,623,575).  On  December  27, 2002 the Company's wholly owned
subsidiary, Commander Aircraft Company, filed petitions for relief under Chapter
11  of  the federal bankruptcy code. These factors raise substantial doubt about
the  Company's  ability  to  continue  as  a  going  concern.

     The ability of the Company to continue as a going concern is dependent upon
the  Company's ability to successfully reorganize Commander Aircraft Company, to
attain  a  satisfactory  level  of  profitability,  and  to  obtain suitable and
adequate  financing.  There  can  be  no  assurance that these objectives can be
achieved.  The  financial  statements  do not include any adjustments that might
result  from  the  outcome  of this uncertainty nor do they take into effect any
adjustments  that  might  occur  as  a result of a successful plan to reorganize
Commander  Aircraft  Company.  See  Note  C  for  further  details.

     14.     Product  Warranties  and  Liability
             -----------------------------------

     The  Company  follows  the  policy  of accruing $5,000 in projected product
warranty  cost  associated  with  each  new  aircraft  sold. Any portion of this
accrual  that  is not used within the five year warranty period is recognized as
income at the end of the warranty period. Costs exceeding the $5,000 accrual per
plane  are  charged to current operations as they are incurred and an additional
accrual  is  recorded  to  cover  the  remaining  warranty period on that plane.
Warranty  costs  for the years ended December 31, 2002 and 2001 were $61,052 and
$41,500,  respectively.

     The  Company  does not carry any product liability insurance and recognizes
product  liability  costs  at such time as a claim arises and an estimate of the
ultimate  liability  associated  with  the  claim  can  be  determined.  Product
liability costs for the years ended December 31, 2002 and 2001 were $200,000 and
$150,000,  respectively.

     15.     Impairment  of  Long-Lived  Assets
             ----------------------------------

     The  Company  evaluates  long-lived  assets  for  potential  impairment  in
compliance  with  SFAS  No.  144,  Accounting  for the Impairment or Disposal of
Long-Lived  Assets.  The  Company records impairment losses on long-lived assets
used  in  operations  when events and circumstances indicate the assets might be
impaired  and  the  undiscounted  cash  flows estimated to be generated by those
assets  are less than their carrying amounts. The Company has not recognized any
impairments  of  its  long-term  assets  that  might  occur  as  a result of its
inability  to  continue  as  a  going  concern.

                                       30
<PAGE>

NOTE  C  -  PETITION  FOR  RELIEF  UNDER  CHAPTER  11

     On  December  27,  2002  the  Company's  wholly owned subsidiary, Commander
Aircraft  Company  (the "Debtor") filed petitions for relief under Chapter 11 of
the  federal  bankruptcy  laws  in  the  United  States Bankruptcy Court for the
District  of  Delaware.  Under  Chapter 11, certain claims against the Debtor in
existence  prior  to  the  filing  of the petitions for relief under the federal
bankruptcy  laws  are  stayed  while the Debtor continues business operations as
Debtor-in-possession.  These  claims  are  reflected  in  the  December 31, 2002
balance sheet as "liabilities subject  to compromise."    Claims secured against
the  Debtor's assets ("secured claims") also are stayed, although the holders of
such  claims have the right to move the court for relief from the stay.  Secured
claims  are  secured  primarily  by  liens  on  the Debtor's property, plant and
equipment.

     The  Debtor received approval from the Bankruptcy Court to pay or otherwise
honor  certain  of  its  prepetition  obligations,  including employee wages and
product  warranties  totaling  $75,000.

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%.  This note was paid in full during the year
ended  December  31,  2002.

NOTE  D  -  NOTES  PAYABLE
<TABLE>
<CAPTION>
     Notes payable consist of the following at December 31,  2002:
                                                                     2002
                                                                  ----------
<S>                                                               <C>
       Revolving  credit  facilities  (a)                         $1,359,819

       Note  payable  to individual, 0% interest,
         payable at confirmation of bankruptcy
         plan  confirmation.                                         200,000

       Note  payable  to  an individual, payable
         December 31, 2004.  Convertible to common
         stock  at  $.85 a share.  Interest due
         semi annually at the end of  June and
         December  until  maturity.  Collateralized
         by Commander Aircraft Company's inventory
         and  fixed  assets.                                       1,000,000

       Note payable to individual, payable in
         monthly installments of $8,699, including
         interest at 8%, through  September 30, 2002;
         uncollateralized                                             34,795
                                                                  ----------

                                                                  $2,594,614
                                                                  ==========
</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
     8%  to  8.5%  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, 2002. In the bankruptcy
     plan  of reorganization, the credit facilities are secured debt and are not
     impaired.

                                       31
<PAGE>

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, 2002 and 2001.  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.

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

     All  of  the  Company's  financial  instruments are for purposes other than
trading.

<TABLE>
<CAPTION>
                                                                  2002
                                                      -------------------------
                                                         Carrying       Fair
                                                          amount        value
                                                      ------------  -----------
<S>                                                   <C>           <C>
     Cash and cash equivalents (overdraft)            $    (2,145)  $   (2,145)
     Notes  payable                                   $(2,594,614)   (2,594,614)
</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,  2002, approximately 952,000 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.

                                       32
<PAGE>
<TABLE>
<CAPTION>
                                               2002          2001        2000
                                           ------------  ------------  --------
     Net  (loss):
<S>                                        <C>           <C>           <C>
       As  reported                        $(4,284,744)  $(5,519,592)  $450,033
       Pro  forma                           (4,397,114)   (5,932,547)    17,407

     (Loss)  per  share,
     basic  and  diluted
       As  reported                        $      (.60)   $     (.84)  $    .07
      Pro  forma                           $      (.62)   $     (.90)  $    .01
</TABLE>

NOTE  F  -  STOCK  OPTION  PLAN  -  CONTINUED

     The  fair  value  of each grant is estimated on the date of grant using the
Black-Scholes   options-pricing  model  with   the  following   weighted-average
assumptions  used  for  grants  in  2002  and  2001,  respectively:  No expected
dividends;  expected  volatility  of  75% and 75%, risk-free interest rate of 4%
and  4.3%,  and  expected  lives  of  three  years.

     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,  2002  and  2001  and  changes  during  the  years  ending on those dates is
presented  below.

<TABLE>
<CAPTION>
                                                  2002                  2001
                                            -------------------  -------------------
                                                       Weighted             Weighted
                                                       average              average
                                                       exercise             exercise
                                             Shares    price      Shares    price
                                            ---------  --------  ---------  --------
<S>                                         <C>        <C>       <C>        <C>
     Outstanding at beginning of year       2,655,550  $1.49     2,394,667  $2.15
     Granted                                  661,000  $ .33     1,123,383  $0.48
     Exercised                                      -  $   -             -      -
     Expired                                 (422,167) $1.60      (117,500) $2.57
     Forfeited                               (561,300) $1.39      (745,000) $1.85

     Outstanding  at end of year            2,333,083  $1.14     2,655,550  $1.49

     Options  exercisable  at  year  end    1,672,083  $1.44       993,076  $2.17

     Weighted  average  fair  value  of
       options granted  during  the  year              $ .17                $0.23
</TABLE>


                                       33
<PAGE>

     The  following table summarizes information about fixed-price stock options
outstanding  at  December  31,  2002:

<TABLE>
<CAPTION>
                                                   Options  outstanding          Options exercisable
                                          ------------------------------------   ---------------------
                                                         Weighted
                                                          average     Weighted                Weighted
                                             Number      remaining     average     Number      average
                                          outstanding   contractual   exercise   exercisable   exercise
                                          at 12/31/02      life         price    at 12/31/02     price
                                          -----------   -----------   --------   -----------   --------
     Range  of  exercise  prices
<S>                                        <C>              <C>         <C>        <C>           <C>
       $0.33  to  $1.38                    1,529,017        1.97        $0.46            -           -
       $1.39  to  $1.75                       77,500         .88        $1.56       77,500       $1.56
       $1.76  to $2.75                       726,566         .67        $2.53      726,566       $2.53
                                           ---------                               -------

       $0.50  to  $2.75                    2,333,083                               804,066
                                           =========                               =======
</TABLE>

NOTE  G  -  LEASES

     The  Company  leases  office  space,  hangar  space,  its manufacturing and
service  facility,  and  certain office equipment under agreements classified as
operating leases that expire at various dates through 2004. Rental expense under
these  leases  was  approximately  $287,000  and  $287,000  for  the years ended
December  31,  2002  and  2001,  respectively.

     The  Company's  lease for office space, hangar space, and its manufacturing
and  service  facility was a revocable permit to lease the facility.  The permit
required  monthly rentals in the same amounts as the original lease.  The permit
further  required  the  Company  to  pay  outstanding  delinquent  amounts  plus
penalties as defined in the permit.   On April 23, 2003, the Company transferred
its  lease  to  a  third party. The Company negotiated a 3.5 year sub-lease with
this  third  party  for  50,011 square feet of manufacturing, service and office
space,  guaranteed renewable at six month intervals.  The Company also agreed to
pay  $94,359  in  past  due  rent  to  this  third  party.

          The  future  annual  minimum  lease  payments under the April 23, 2003
operating  lease  are  as  follows:
<TABLE>
<CAPTION>
     Year  ending  December  31,
<S>                                                        <C>
                   2003                                    $ 75,600
                   2004                                     113,400
                   2005                                     113,400
                   2006                                      94,500
                                                           --------

                   Total future minimum lease payments     $396,900
                                                           ========
</TABLE>


                                       34
<PAGE>

NOTE  H  -  SALES  CONCENTRATIONS

     The  geographic  sales  of  the  Company's  new  aircraft  are  as follows:
<TABLE>
<CAPTION>
                                     2002                  2001
                               -----------------     -----------------
                               Number     Amount     Number     Amount
                               ------   ----------   ------   ----------
<S>                              <C>    <C>             <C>   <C>
     United  States              6      $3,758,426      7     $3,883,801
     Europe                      -                      1        505,225
</TABLE>

     Pre-owned  aircraft  sold during 2002 in the United States was 16, totaling
$3,654,093. Brokerage commissions of $138,482 were received in 2002 as a selling
agent  for  pre-owned  aircraft.

     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.

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. During 2002, 115,152 shares of common stock having a fair
value  at  the  date  of issue of $45,000 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 and $15,000 for
the  years  ended December 31, 2001 and 2000.  There were no purchases from this
entity  in  2002.

     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.


                                       35
<PAGE>

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,  2002:
<TABLE>
<CAPTION>
                                                                       2002
                                                                   ------------
     Deferred  tax  assets  (liabilities)
<S>                                                                 <C>
       Note  receivable  from  related  party                      $    613,000
       Inventories                                                    1,152,000
       Depreciation  and  amortization                                 (106,000)
       Unrealized  losses  (gains)  on  investments                           -
       Accrued  liabilities                                              98,000
       Net  operating  loss  carryforwards                           13,600,000
                                                                   ------------
                                                                     15,357,000
     Valuation  allowance                                           (15,357,000)
                                                                   ------------

       Total  deferred  tax  liabilities                           $          -
                                                                   ============
</TABLE>

     The  valuation  allowance on tax assets increased $1,655,000 and $2,418,000
in 2002 and 2001, respectively, primarily due to the generation of net operating
loss  carryforwards  in  both  years.

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

<TABLE>
<CAPTION>
     Year  ending  December  31,
<S>                                            <C>
          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
          2022                                    2,888,549
                                               ------------

     Total net operating loss carryforwards    $ 33,890,786
                                               ============
</TABLE>

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.

                                       36
<PAGE>

     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  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  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.

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

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).

                                       37
<PAGE>

     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,  additional
contributions  may  be  made at the Company's discretion. Expense under the plan
was  approximately  $19,000  and  $20,000  for  2002  and  2001,  respectively.

     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 $26,117 and $338,000 for 2002 and 2001, respectively.

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:



                                       38
<PAGE>
<TABLE>
<CAPTION>
                                                        2002          2001
                                                    -----------   -----------
     Revenues:
<S>                                                 <C>           <C>
       Jet aircraft brokerage and refurbishment     $   122,732   $    95,000
         Aircraft sales and service                   8,320,684     9,392,795
                                                    -----------   -----------

          Total                                     $ 8,443,416   $ 9,487,795
                                                    ===========   ===========

     Operating  income  (loss):
       Jet aircraft brokerage and refurbishment     $    19,732   $  (223,486)
         Aircraft  sales  and  service               (3,410,650)   (4,670,771)
                                                    -----------   -----------

          Total                                     $(3,390,918)  $(4,894,257)
                                                    ===========   ===========

     Assets:
       Jet aircraft brokerage and refurbishment     $         -   $     3,871
         Aircraft  sales  and  service                3,715,022     7,299,986
                                                    -----------   -----------

          Total                                     $ 3,715,022   $ 7,303,857
                                                    ===========   ===========
</TABLE>

<TABLE>
<CAPTION>
                                                   Jet aircraft
                                                   brokerage and  Aircraft sales  Consolidated
                                                   refurbishment   and  service      total
                                                   -------------  --------------  ------------
Other  significant  items  -  2002:
<S>                                                 <C>           <C>           <C>
  Interest  income                                  $         -   $     1,929   $      1,929
  Interest  expense                                           -       243,414        243,414
  Depreciation  and  amortization                             -       130,684        130,684
  Expenditures  for  long-lived  assets                       -             -              -

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
</TABLE>


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>
                                                        2002          2001
                                                    -----------   -----------
     Numerator
<S>                                                 <C>           <C>
       Net  (loss)                                  $(4,284,744)  $(5,519,592)

       Denominator for earnings (loss) per share
         Weighted average shares outstanding, basic   7,143,250     6,581,467
         Effect of dilutive securities -
           stock  options                                     -             -

       Denominator  for earnings (loss) per share
         assuming dilution                            7,143,250     6,581,467

       (Loss)  per share, basic                     $      (.60)  $      (.84)

       (Loss) per share, assuming dilution          $      (.60)  $      (.84)
</TABLE>


                                       39
<PAGE>

     Outstanding  options  of  2,655,550,  and  1,278,366,  for  the years ended
December  31,  2002,  and  2001, respectively, have been excluded from the above
calculations  as  they  would  be  antidilutive.

NOTE  Q  -  MANAGEMENT  PLANS

     During  the second half of 2002, the Company experienced an abrupt lull and
slowdown  of  its business, evidenced by cancellation or postponement of several
new  and  pre-owned aircraft orders and the absence of prospective new business.
Management continued to reduce its overhead expenses including employee layoffs,
terminating  the  business  operations  of  Strategic  Jet  Services,  Inc., and
suspending  new  aircraft  production.

     On  December  27,  2002,  Commander  Aircraft  Company  filed  a  voluntary
petition  under Chapter 11 of the United States Bankruptcy Code for the District
of  Delaware.  Management's  plan  was  to  go  forward  and:

     -    Continue CAC's operations and provide service and support to the fleet
          of  Commander  aircraft  owners,  refurbishment  services,  parts, and
          pre-owned  aircraft  brokerage.
     -    Secure adequate Debtor in Possession ("DIP") financing to allow CAC to
          continue  to  operate.
     -    Develop,  secure,  and  establish  investor  funding  for  a financial
          reorganization  plan that would allow CAC to emerge from bankruptcy to
          the  satisfaction  of  its  creditors and with minimal dilution to its
          shareholders.

     Management  has been successful in fulfilling these objectives, culminating
in  a  court-confirmed  reorganization  plan,  dated December 10, 2003, with the
effective  date scheduled for on or before March 31, 2004, unless extended, with
Tiger  Aircraft  LLC or affiliate, which has been providing CAC with interim DIP
financing,  as  the  investor.

     Pursuant  to  the confirmed bankruptcy plan and agreement with Tiger, Tiger
will  invest  approximately  $2.8  million  in Aviation General, Incorporated in
return  for  an  80% ownership interest in AGI. Approximately $2 million will be
used  to settle with creditors in accordance with CAC's bankruptcy plan, and the
remainder  will  be  used  for  working  capital. Pursuant to the agreement with
Tiger,  AGI  must  secure the approval of the agreement from its shareholders as
well  as their authorization to amend the Company's Certificate of Incorporation
to  increase  the  Company's  authorized common shares from 20,000,000 shares to
100,000,000  shares.  The  Company  currently  has  20,000,000  common  shares
authorized  and  approximately 7,000,000 common shares (excluding Treasury stock
which  will  be  retired)  issued and outstanding. The agreement with Tiger will
necessitate  the issuance of approximately 28,000,000 new common shares of stock
to  Tiger,  resulting  in  a total of approximately 35,000,000 shares issued and
outstanding.

     CAC  plans  to resume new aircraft production following the consummation of
the  transaction with Tiger and proceed to operate within the business model and
strategies  articulated  in  this  document.

NOTE  R  -  SUBSEQUENT  EVENTS

     On  December  10,  2003  the  Company's  wholly owned subsidiary, Commander
Aircraft  Company  (Commander),  received confirmation of the First Amended Plan
under  Chapter  11  of the Bankruptcy Code filed by Commander on July 5, 2003 as
amended on July 30, 2003 and December 10, 2003. The plan outlines the classes of
claims  and  their  treatments  as  follows:


                                       40
<PAGE>

     Class A (Administrative Claims). Class A consists of Administrative Claims,
including  Professional  Claims,  whether  secured  or  unsecured, including the
Debtor  in  Possession Loan. Claims in Class A approved and Allowed by the Court
shall  be  paid in full, in cash, by Commander on the Effective Date of the Plan
or  as  soon  thereafter  as the amount thereof can be fixed, unless a different
treatment is agreed to or provided for in this Plan. Administrative Claims which
by  their terms are not due and payable on or before the Effective Date shall be
paid  as  and  when  due. This class is not impaired. As of December 31,2002 the
Company  had  $350,000  in  Class  A  claims  payable.

     Class  B  (Priority  Claims).  Class B consists of Priority Claims under 11
U.S.C.  507  other  than  Administrative Claims and Priority Tax Claims. Allowed
Claims  in Class B shall be paid in full, in cash, by Commander on the Effective
Date  of  the  Plan  or  as  soon thereafter as the amount thereof can be fixed,
unless  a  different  treatment  is agreed to or provided for in this Plan. This
class is not impaired. As of December 31, 2002 the Company had $112,000 in Class
B  claims  payable.

     Class  C  (Priority  Tax  Claims).  Class C consists of Priority Tax Claims
Pursuant  to  11  U.S.C.  507(a)(8).  In  full  and complete satisfaction of the
obligation  of  Commander  and  all  co-debtors  (including  responsible parties
against  whom  trust  fund  taxes  have  been or may potentially be assessed) on
Claims  in Class C, such claims shall be paid in full in deferred cash payments,
with  simple  interest  at  6%  p.a. running from the Effective Date of the Plan
until  paid,  amortized  over  20  equal   quarterly  payments.    Any  contrary
interpretation  of  the foregoing provision notwithstanding, Commander shall pay
each  Class  C  claim or relevant portion thereof in full on or before the sixth
anniversary  of  the  assessment  date  of each portion of such claim; provided,
however,  that  any  Creditor  to  which  this  provision applies must apply all
payments  on  Class  C  claims  to  such claims in the order of assessment. If a
holder  of  a  Class  C claim declares Commander to be in default of Commander's
obligations  to  it under the Plan, and such default is not cured within 20 days
after  receipt  by  Commander and its counsel of the notice thereof by certified
mail,  then  the  entire liability shall become immediately due and payable, and
such  creditor may exercise any rights available under applicable non-bankruptcy
law  to  collect  such  liability from Commander or any co-debtor or responsible
party.  As  of  December  31,  2002  the  Company had $150,000 in Class C claims
payable.

     Class  D  (Secured  Claim  of  Nyltiak).  Class  D  consists of the secured
pre-petition claim of Nyltiak Investments, LLC. The holder of the claim in Class
D  shall  retain  its pre-petition lien on the Commander's Assets, and Commander
shall cure any pre- and post-petition arrearages (including all accrued interest
at  the non-default rate, fees, and other charges) in cash on the Effective Date
of the Plan, and shall, on the Effective Date of the Plan, make a payment in the
amount  necessary  to  reduce  the  outstanding balance to $500,000, which shall
fully  satisfy  the  replacement lien and administrative claim. Any non-monetary
defaults of Commander and any co-Debtor existing on the Petition Date and/or the
Effective  Date  shall be waived and deemed cured, with all interest paid at the
non-default  rate  with no late fees. All pre-payment penalties shall be waived.
Thereafter, Commander shall pay the claim in accordance with the contract terms,
except  that the following terms of the loan documents dated July 22, 2002 shall
be  deleted  and  of  no further force or effect as to any party or guarantor to
said documents: Securities Purchase Agreement, Section 4 ("Covenants," including
reservation  of  shares),  Section  5  ("Right  of  First Offer"), and Section 6
("Transfer  Agent Instructions"); Secured Convertible Note, Article I (option to
convert  note  into AGI shares), Article III, Sections 3.2 and 3.2 (Redemption),
Article  IV,  Section  4.2 (default for failure to issue conversion shares), and
Article  V,  Section  5.10 (notice of corporate events); and the entirety of the
Investor  Rights  Agreement.  Tiger  Aircraft,  LLC, shall provide an additional
guaranty  to  the  Nyltiak  loan  in a form substantially similar to that of the
existing  guarantors. Provided payments hereunder are not in default, the Debtor
may sell Inventory in the ordinary course of business free and clear of the lien
of  Nyltiak,  which lien shall be replaced by a replacement lien on Inventory of
the  types  to  which  its  pre-petition lien attaches, manufactured or acquired
after  the Petition Date, in an amount equal to the value of the Nyltiak lien on
Inventory  sold  after the Petition Date. This class is impaired. As of December
31,  2002,  the  Company  had  $650,000  in  Class  D  claims  payable.

                                       41
<PAGE>

     Class  E  (Secured  Claim of the IRS). Class E consists of the claim of the
Internal  Revenue  Service  secured  by  a  pre-petition  tax  lien. In full and
complete  satisfaction  of  the  obligation  of  Commander  and  all  co-debtors
(including  responsible parties against whom trust fund taxes may potentially be
assessed)  on  the  claim  in Class E, the holder of such claim shall retain its
pre-petition  lien  until  paid in full, and such claim shall be paid in full in
deferred  cash  payments,  with  simple  interest  at  6%  p.a. running from the
Effective  Date  of  the  Plan  until  paid,  amortized  over 20 equal quarterly
payments.  If a holder of a Class E claim declares Commander to be in default of
Commander's  obligations  to  it  under  the Plan, and such default is not cured
within  20 days after receipt by Commander and its counsel of the notice thereof
by  certified  mail,  then the entire liability shall become immediately due and
payable,  and  such  creditor may exercise any rights available under applicable
non-bankruptcy  law to collect such liability from Commander or any co-debtor or
responsible  party. Provided payments hereunder are not in default which has not
been  cured  as provided in the preceding sentence, Commander may sell inventory
in  the ordinary course of business free and clear of the lien of the IRS, which
lien  shall  be  replaced  by  a  replacement  lien on inventory manufactured or
acquired after the Petition Date in an amount equal to the value of the IRS lien
on inventory sold after the Petition Date, said replacement lien to be junior to
the  lien  of  Nyltiak on inventory of the types to which Nyltiak's pre-petition
lien  attaches. This class is impaired. As of December 31, 2002, the Company had
$552,891  in  Class  E  claims  payable.

     Class  F  (Secured  Claim  of Uptown Bank). Class F consists of the secured
claim  of  Uptown  National  Bank  of  Chicago  or  its  successor  in interest,
Bridgeview  Bank and TrustIn full and complete satisfaction of the obligation of
Commander and all co-debtors on the claim in Class F, the holder of the claim in
Class  F shall retain its pre-petition lien on Commander's assets, and Commander
shall  pay  interest and other accrued charges through the Effective Date at the
contract  rate  in  cash on the effective date of the Plan. Thereafter, interest
shall  accrue  at  the  rate  of  8%  p.a.  on the outstanding principal balance
allocable  to  each  aircraft. Upon the sale of any aircraft which is Collateral
for this claim, the Debtor shall pay the loan balance allocable to such aircraft
in  full,  with  all  accrued  interest  and other charges, and the lien on such
aircraft  shall  thereupon  be released. Each 6 months after the Effective Date,
the  Debtor shall pay all accrued interest to date, plus a curtailment of 10% of
the  then-outstanding  principal  balance. In the event any portion of the claim
remains  unpaid  on  the  second  anniversary  of the Effective Date, the Debtor
shall,  as  to each aircraft which is Collateral for the Claim, either (a) fully
pay  in  cash  the  balance  of  the  claim  allocable  to such aircraft, or (b)
surrender  the  aircraft  to the Holder of the Claim in full satisfaction of the
claim  allocable  to  such  aircraft. This class is impaired. As of December 31,
2002,  the  Company  had  $1,242,648  in  Class  F  claims  payable.

     Class  G (Any other Secured Claim). Class G consists of any Allowed Secured
Claim  other than those in Classes A, D, E, F, J, or L. Any holder of an Allowed
Claim  in  Class G shall retain its pre-petition lien on Commander's Assets, and
Commander  shall  cure  any  pre-  and  post-petition  arrearages in cash on the
Effective  Date of the Plan (such that the claim of the U.S. Department of Labor
and  any  other  such  claim due in full under the terms thereof will be paid in
cash on the Effective Date of the Plan). Any dispute as to the allowance of such
Claim or the amount thereof, and/or the amount necessary to cure such arrearages
shall  be  submitted  to the Court for determination, with any undisputed amount
paid on the Effective Date of the plan and any additional amount upon entry of a
Final  Order  fixing  the amount thereof. Any non-monetary defaults of Commander
and  any  co-Debtor  existing  on  the

     Petition  Date  and/or the Effective Date shall be waived and deemed cured.
Thereafter,  Commander shall pay the claim in accordance with the contract terms
or applicable law. With respect to the claim of the U.S. Department of Labor, to
the  extent  of  payments  made  under  Classes  B,  I  and/or J directly to the
employees on whose behalf or for whose wages which the Department of Labor claim
was brought, such payments shall be credited to the payment due on such claim to
the  Department  of Labor. To the extent that the amounts reflected in the USDOL
claim are not paid (either directly or to the wage claimants as provided herein)
in  full  in  cash  by  the  Effective Date, the USDOL, seven days after written
notice  to  the  debtor,  shall  exercise  any and all of its administrative and
judicial  remedies  to  collect  any  amounts  due  the

                                       42
<PAGE>

     USDOL from any debtor or non-debtor without further Court Order. This class
is not impairedAs of December 31, 2002 the Company had $78,841 in Class G claims
payable.

     Class  H  (Unliquidated  tort/warranty  claims  for  pre-petition  personal
injury, property damage, or wrongful or death). Class H consists of all tort and
warranty claims for personal injury, property damage or wrongful death that were
unliquidated or in litigation as of the Petition Date, including any subrogation
claims.  The claim(s) in Class H shall be paid a total of $100,000.00 in cash on
the  Effective Date in full satisfaction of their claim(s) against Commander and
Aviation  General,  Incorporated. In the event more than one such claim is filed
before  the  Bar  Date  and  is  allowed,  such  amount  shall  be  placed in an
interest-bearing  account  until  the  allowed  amount  of the Class H claims is
liquidated,  such amount to be divided pro rata among the holders of such claims
upon  liquidation thereof. If there are no such claims ultimately allowed, or if
such  claims are allowed in an amount such that the Class H claims would receive
less  than  a  total of $100,000 were they included in Class I, the Debtor shall
apply  the  $100,000 to the payment of the Class I Claims and the Class H Claims
shall  be  treated  as Class I claims. In the event that Class H votes to accept
this  Plan,  no  holder  of  a Class H claim objects to this Plan or appeals the
Confirmation Order, and the holders of all Class H claims agree on or before the
Effective  Date  on allocation of payments to the holders of Class H claims, the
total  payment  to  the  holder(s)  of  Class  H  claims  shall  be increased to
$200,000.00 and shall be paid on the Effective Date in full satisfaction of such
claims.  This  class  is  impaired.  As  of  December  31, 2002, the Company had
$200,000  in  Class  H  payables.

     Class  I  (General  Unsecured  Claims).  Class  I   consists  of  Unsecured
Non-Priority  Claims  other  than  those  in Class H, J, or L. General unsecured
claims shall be paid as follows: $500,000 shall be placed in an interest-bearing
bank  account  on  the  Effective Date of the Plan, and shall be distributed pro
rata  to  the  holders of allowed Class I claims within 30 days of the Effective
Date.  The  pro-rata  share  of  the claimed amount of any claims which are then
subject  to  objections  as  to  which  a Final Order has not been entered shall
remain in the bank account until a Final Order is entered. When Final Orders are
entered  disallowing  or  allowing  and  liquidating  all  Class  I  claims, the
remaining  funds  in the bank account shall be distributed to the holders of all
Class  I  claims  pro rata. This class is impaired. As of December 31, 2002, the
Company  had  $1,810,000  in  Class  I  payables.

     Class  J  (Small Claims administrative convenience class). Class J consists
of  any  Claims (other than Class K or L claims) in an amount less than $500.00,
or  as  to  which  the  holder  thereof elects to receive treatment as a Class J
claim. Class J claims shall be paid in cash on the Effective Date of the Plan in
the  allowed  amount  thereof  (or  $500.00 in the event of holders of claims in
other  classes  electing  treatment under Class J), in full satisfaction of such
claims.  This  class  is  not impaired. As of December 31, 2003, the Company had
$12,500  in  Class  J  payables.

     Class  K  (Equity Claims). Class K consists of any Claims based upon Equity
Interests.  The existing stock of the Debtor, 100% of which is owned by Aviation
General,  Incorporated,  shall  be  cancelled.  This  class  is  impaired.

     Class  L  (Corporate  Family  Claims).  Class  L  consists of any Claims of
Aviation  General,  Incorporated,  and/or  Strategic  Jet Services, Inc. Class L
claims  shall be discharged and shall not be paid; in consideration thereof, all
claims  of  Commander  and  the  Estate  against  Aviation General, Incorporated
("AGI"),  and/or  Strategic  Jet  Services,  Inc.  ("SJS"),  existing  as of the
Confirmation  Date  shall be released. Nothing in this plan shall relieve AGI or
SJS of any obligation to the Debtor expressly set forth in this Plan, nor of any
obligation  owed  directly  to  any  Creditor.

     Commander  will  fund  this  Plan primarily from the issuance of new stock.
Commander's  existing  100% shareholder, Aviation General, Incorporated ("AGI"),
has  agreed  to  purchase,  on the Effective Date of the Plan, 2000 newly-issued
shares  of the stock of Commander, which stock shall be sold to it for $1000 per
share  ($2,000,000).  Such shares shall not be subject to Nyltiak's lien. To the
extent  additional  funds  are  needed  to  implement  this  Plan or for working
capital,  AGI  has  agreed  to  purchase at that same price up to 800 additional
shares  of  stock of Commander ($800,000), upon the request of Commander, at any
time  during  the  5  years  after  the  Effective  Date  of  the  Plan.

                                       43
<PAGE>

     AGI shall fund this acquisition through the sale to Tiger Aircraft, LLC, of
shares  constituting  80% of the share capital of AGI for a total purchase price
of  $2.8  million  (of  which $2.3 million will be paid in cash on the effective
date  and  $500,000 in a demand note at 6% interest). Tiger shall also guarantee
payment of the remaining claim in Class D, and shall guarantee AGI's performance
of  Commander's  option  to  sell  the  800  additional  Commander  shares  at
$1000/share.

     "Effective  Date" means March 31, 2004, or such earlier date as Tiger, AGI,
and  Commander  may jointly agree upon, provided that the Effective Date may not
be  earlier  than  the first Business Day after the Confirmation Order becomes a
Final Order. The date of March 31, 2004, may be extended only on written consent
of  counsel  for  the  Creditors  Committee,  counsel for the U.S. Department of
Labor,  and  counsel  for Nyltiak Investments, LLC. In the event that Tiger does
not  close  under  the Stock Purchase Agreement by March 31, 2003 (or such later
date  as  may  be  agreed by the Debtor, AGI, Tiger, the Committee, the DoL, and
Nyltiak),  this  Confirmation  Order  shall  be  void and of no further force or
effect

     The  following  is a summary of the quarterly results of operations for the
years  ended  December  31:
<TABLE>
<CAPTION>
                                                       2002
                                              Three  months  ended
                                March  31   June  30   September  30  December  31
<S>                            <C>         <C>           <C>          <C>
     Total  net  sales         $1,504,821  $4,729,309    $ 1,674,338  $   534,948
     Gross  margin                272,232     108,986         47,220      505,543
     Net  loss                   (290,185)   (411,956)    (1,288,804)  (2,294,166)
     Net loss per share,
       basic and diluted            (0.04)      (0.06)         (0.18)       (0.32)
</TABLE>

<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  income                   38,183     113,049        252,353       46,448
     Net income per share,
       basic and diluted             0.01        0.02           0.04         0.01
</TABLE>

                                       44
<PAGE>

     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.


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

On November 4, 2003, the Aviation General, Incorporated appointed Murrell, Hall,
McIntosh  &  Co  PLLP  as  its  independent  auditors.

On  February  14,  2003,  Grant  Thornton  LLP  ("Grant  Thornton")  resigned as
independent auditors of Aviation General, Incorporated (the "Registrant"). Grant
Thornton  advised the Registrant that the reason for its resignation was that it
had  determined  that in light of the Registrant's financial condition and size,
the   Registrant  does   not  meet  Grant  Thornton's   current   criteria   for
public-company  audit  clients.

The  reports of Grant Thornton as of and for the fiscal years ended December 31,
2001  and 2000 did not contain an adverse opinion or a disclaimer of opinion and
were  not  qualified  or  modified  as to uncertainty, audit scope or accounting
principles, except that the report on the Registrant's 2001 financial statements
contained  an   explanatory  paragraph   describing  an  uncertainty  about  the
Registrant's ability to continue as a going concern. During the two fiscal years
ended  December  31,  2001,  and  during the subsequent interim periods prior to
February  14,  2003,  there were no (i) disagreements between Grant Thornton and
the  Registrant  on  any matter of accounting principles or practices, financial
statement  disclosure,  or  auditing scope or procedure, which disagreements, if
not resolved to the satisfaction of Grant Thornton, would have caused it to make
a  reference  to  the  subject matter of the disagreement in connection with its
reports on the Registrant's financial statements, or (ii) events as described in
Item  304(a)(1)(v)  of Regulation S-K under the Securities Exchange Act of 1934,
as  amended,  except  as  described  below.

On  February  21, 2003, the Registrant filed a report on Form 8-K disclosing the
resignation  of  Grant  Thornton,  and  on March 7, 2003 the Registrant filed an
amendment  to  the  report  on  Form  8-K.  The March 7 amendment included as an
exhibit  a  letter  from  Grant  Thornton dated March 5, 2003. The Registrant is
further  amending  the  report  on  Form  8-K  to  include under this Item 4 the
following  language,  which  was  contained  in  Grant Thornton's March 5 letter
previously filed as an exhibit. References to "we" and "us" in this excerpt from
Grant  Thornton's  letter  refer  to  Grant  Thornton.

"On  January 10, 2003, the Registrant filed a Form 10-QSB/A for the period ended
June  30,  2002,  in  which  the  Registrant  reported  that:

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

Management  reported this improper capitalization to us in November 2002. By way
of  a  letter  dated  February  14,  2003  (Internal  Control Communication), we
notified  the  Registrant's  Management  and  Audit Committee of certain matters
involving internal control and its operation that we considered to be reportable
conditions  under  standards  established by the American Institute of Certified
Public  Accountants.  More  particularly, we informed them  that "the reportable
condition  relating  to  `work  in process inventory [that] included significant
excess capacity costs that should have been expensed as incurred,'" in our view,
constituted  "a  material  weakness"   We  also  noted  in  our Internal Control
Communication  that:

     We  have been informed that management took appropriate remedial actions to
     amend  the  second  quarter  interim  financial  statements and implemented
     additional  controls  to  provide reasonable assurance that excess capacity
     costs are expensed and  not  capitalized  as  work  in  process  inventory.


                                       45
<PAGE>

Separately, and in addition to the matter involving the capitalization of excess
capacity  costs,  we  also pointed out in our February 14, 2003 Internal Control
Communication  that  the  Registrant's  "current principal financial officer and
existing accounting department staff may lack the requisite expertise needed for
assessing  and  applying  new  and  non-routine  accounting  principles  and for
preparing   required   financial   and   SEC  reporting  disclosures"  and  made
recommendations  for  improvement."

We  have  responded  to  this  concern  by  engaging  the services of an outside
Certified  Public  Accountant  on  a  consulting  basis  to assist our principal
financial  offer  with assessing and applying new and non-routine principles and
in  preparing  financial  and  SEC  reporting  disclosures.

The  Registrant  furnished  Grant  Thornton with a copy of this amendment to its
report and requested it to furnish the Registrant with a letter addressed to the
Commission  stating whether it agrees with the statements made by the Registrant
in  response  to Item 304(a) of Regulation S-K and, if not, stating the respects
in  which  it  does  not  agree.  A  copy of Grant Thornton's letter is filed as
Exhibit  16  to  the  amendment  to  Form  8-K.

In  light  of cost considerations and concerns that Grant Thornton has regarding
their  independence  as  a  result  of  monies owned to them by the Company, the
company  has  not  received  authorization from Grant Thornton to resubmit their
audit  of  the  Company's  financial statements for the year ending December 31,
2001  which  was  included  in  the  Company's  2001  which  was included in the
Company's  2001  10KSB previously filed and which is identical to that submitted
herewith  in  the  Company's  10KSB  for  2002.

                                    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  2003  Proxy Statement, 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  following  table  reflects  the  required  disclosures  regarding Executive
Compensation  for  the  years  ended  December  31, 2002 and 2001, respectively.

<TABLE>
<CAPTION>
                                 Annual Compensation                         Long-Term Compensation
                           --------------------------------   -----------------------------------------------
                                                                       Awards                  Payouts
                                                              -----------------------   ---------------------
                                                                           Securities
                                                              Restricted   Underlying
                                                                 Stock       Options                All Other
                                                                 Awards      Awarded      LTIP       Compen-
                           Year   Salary (1)  Bonus   Other   (in shares)  (in shares)   Payouts    sation (2)
                           ----   ----------  ------  -----   -----------  -----------   -------    ----------

Wirt D. Walker III
<S>                        <C>    <C>        <C>          <C>   <C>          <C>              <C>   <C>
  Chairman and             2002   $ 127,846  $     -      -     10,000       120,000          -     $20,000
  Chief Executive
    Officer                2001   $ 128,077  $     -      -          -       120,000          -     $20,000

Mat  Goodman
  President/CEO            2002   $  68,457  $ 3,950      -     48,485        50,000          -     $     -
  Commander Aircraft
    Company, Inc.          2001   $  59,000  $70,072      -          -        53,133          -     $     -

John  DeHavilland
  Director                 2002   $  56,646  $     -      -          -             -          -     $20,000
                           2001   $  89,231  $65,385      -          -       180,000          -     $ 5,000

Glenn A. Jackson           2002   $   9,646  $     -      -          -             -          -     $     -
  Chief Financial
    Officer                2001   $       -  $     -      -          -             -          -     $     -
</TABLE>

(1)  Salary  and bonus payments include voluntary salary reduction contributions
     to  the  Company's  401(k)  savings  plan
(2)  Amounts  paid  as  director's  fees  unless  otherwise  indicated

Item  12.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management
--------------------------------------------------------------------------------

The following table sets forth as of December 31, 2002, certain information with
respect  to  the  beneficial  ownership of the Company's Common Stock by (i) any
person  known  by  the Company to be the beneficial owner of more than 5% of the
Company's voting securities, (ii) each director and each nominee for director to
the  Company,  (iii)  each  of  the  executive  officers  named  in  the Summary
Compensation  Table  appearing  herein,  and  (iv)  all  executive  officers and
directors  of  the  Company  as  a  group.

<TABLE>
<CAPTION>
Name                                   Number  of  Shares    Percent  of  Total
----                                   ------------------    ------------------
<S>                                        <C>                     <C>
Wirt  D.  Walker,  III  (1)(2)               916,447               12.0%

N.  Gene  Criss  (2)                         363,636                4.8%

John  deHavilland  (2)                       186,970                2.4%

Matthew  J.  Goodman  (2)                     81,977                1.0%

Carl  R.  Gull  (2)                           60,083                  *

Nyltiak  Investments,  LLC  (3)            1,176,471               15.1%

All  Officers  and  Directors              1,609,113               21.1%
as  a  Group  (5  persons)  (4)
-------------------------------
</TABLE>

*  less  than  one  percent

(1)  Includes 78,000 shares owned by a trust for the benefit of Mr. Walker's son
     and 117,000 shares owned by a trust for the benefit of Mr. Walker's mother,
     both  of  which  Mr. Walker is the trustee. Does not include 261,714 shares
     owned  by  KuwAm  Corporation,  of which Mr. Walker is a Managing Director.
(2)  Includes  shares  issuable  upon  exercise  of options that are exercisable
     within  60 days, as follows: Mr. Walker, 311,665 shares; Mr. Criss, 303,333
     shares;  Mr.  DeHavilland,  126,667 shares; Mr. Goodman, 61,177 shares; and
     Mr.  Gull,  60,083  shares.
(3)  Consists  of shares that are issuable upon conversion of a convertible note
     held by Nyltiak Investments, LLC. James E. Lawson is the managing member of
     Nyltiak  Investments  and  thus may be deemed to be the beneficial owner of
     shares  owned  by  it.
(4)  On  December 31, 2002, executive officers and directors of the Company as a
     group (5 persons) held options to purchase an aggregate of 1,661,083 shares
     of Common Stock, representing approximately 58.9% of outstanding options at
     that  date.  The  numbers  set  forth in this table include an aggregate of
     862,925  shares underlying options, which are exercisable within 60 days of
     such  date.

Item  13.  Certain  Relationships  and  Related  Transactions
-------------------------------------------------------------

Note  E  -  Disclosures  About  Fair Value of Financial Instruments and Note I -
Related  Party  Transactions,  of the Notes to Consolidated Financial Statements
for  2002  are  hereby  incorporated  by  reference.

                                       46
<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  Public  Accountants                        16

          Financial  Statements:
          Consolidated  Balance  Sheets December 31, 2002                     17

          Consolidated  Statements  of  Operations  for  the
          years  ended  December  31,  2002 and  2001                         19

          Consolidated  Statement of Stockholders' Equity  for  the
          years  ended  2002 and  2001                                        20

          Consolidated  Statements  of  Cash  Flows  for  the
          years  ended December  31,  2002 and  2001                          21

          Notes  to  Consolidated  Financial  Statements                      23


        (2)   The following financial schedule for the years
        2002 and 2001 is submitted  herewith:

          Selected  Quarterly  Financial  Data  for  the
          years  ended December 31, 2002 and 2001 (unaudited)

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

         (3)   Exhibits included are hereby incorporated by
         reference to the Exhibit Index, page  48  of  this  report.






                                       47
<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.

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).

                                       48
<PAGE>

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.

10.17     Security  Purchase  Agreement  dated  July  22,  2002 between Aviation
          General,  Incorporated  and Nyltiak Investments, LLC  filed August 14,
          2002.

21        List  of  subsidiaries

31.2      Certification  of  Wirt D. Walker III

31.2      Certification  of  Glenn A. Jackson

32        Certification  of  Wirt D. Walker III  and  Glenn A. Jackson


Item  14.  Controls  and  Procedures
-------------------------------------

     Evaluation  of  Disclosure  Controls  and  Procedures.  The Company's Chief
Executive  Officer  and  the  Company's  principal  financial  officer,  after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as  defined  in the Securities Exchange Act of 1934 Rule 13a-14(c)and 15d-14(c)
as of the date of the financial statements included in this report on Form 10KSB
for  December  31,  2002,  have  concluded  that  as of the evaluation date, the
Company's  disclosure  controls  and  procedures  were adequate and effective to
ensure  that  material  information  relating  to  the Company and the Company's
consolidated  subsidiaries  would  be  made known to them by others within those
entities,  particularly  during  the  period in which this annual report on Form
10-KSB  was  being  prepared.

     Changes  in  Internal  Controls.  There  were no significant changes in the
Company's  internal controls or in other factors that could significantly effect
the  Company's  disclosure  controls and procedures subsequent to the evaluation
date, nor any significant deficiencies or material weaknesses in such disclosure
controls and procedures requiring corrective actions. As a result, no corrective
actions  were  taken.


                                       49
<PAGE>


                                   SIGNATURES


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

                              AVIATION  GENERAL  INCORPORATED




                              By:\s\  Wirt  D.  Walker  III
                                 -----------------------------------------------
                                 Wirt  D.  Walker  III

                              By:\s\  Glenn  A.  Jackson
                                 -----------------------------------------------
                                 Glenn  A.  Jackson


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


Principal  Executive  Officers:

Wirt  D.  Walker  III        Chairman                           March  24,  2004
                             Chief  Executive  Officer
                             President

Principal  Financial  Officer  and  Accounting  Officer:

Glenn  A.  Jackson           Chief  Financial  Officer          March  24,  2004


Directors:

Wirt  D.  Walker  III        Director                           March  24,  2004