UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

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

For the quarterly period ended September 30, 2005
                               ------------------

                                       OR

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

For the transition period from ___________ to _____________

Commission file number 005-79737

                                    AVP, INC.
                    -----------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                 98-0142664
   -------------------------------                 ----------------
   (State or other jurisdiction of                 (I.R.S. Employer
    incorporation or organization)                Identification No.)

               6100 Center Drive, Suite 900, Los Angeles, CA 90045
            --------------------------------------------------------
               (Address of principal executive offices - Zip code)

                                (310) 426 - 8000
                                ----------------
              (Registrant's telephone number, including area code)

<PAGE>

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act 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 whether the registrant is a shell company (as defined in
the Exchange Act Rule 12b-2).

     Yes |_|      No |X|

         As of October 31, 2005, the Registrant had approximately 100,023,393
shares of common stock outstanding.


                                       2
<PAGE>

                               AVP, INC.

                                INDEX

                                                                            Page
                                                                            ----

PART I.   FINANCIAL INFORMATION......................... .....................4

ITEM 1.   FINANCIAL STATEMENTS.......................... .....................4

   Balance Sheet as of September 30, 2005
   (Unaudited).......................................... .....................5

   Statements of Operations for the three
   and nine months ended September 30, 2005 and 2004
   (Unaudited).......................................... .....................6

   Statement of Changes in Stockholders' Deficiency for
   the nine months ended September 30, 2005
   (Unaudited).......................................... .....................7

   Statements of Cash Flows for
   the nine months ended September 30, 2005 and 2004
   (Unaudited).......................................... .....................8

   Notes to Financial Statements (Unaudited)............ ....................10

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR
          PLAN OF OPERATION............................. ....................17

ITEM 3.   CONTROLS AND PROCEDURES....................... ....................26

PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS............................. ....................27

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................27

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.............. ....................27


                                       3
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                                    AVP, INC.
                         Index to Financial Statements
                         Period Ended September 30, 2005

                                                                         PAGES
                                                                         -----

          Financial Statements

          Unaudited Balance Sheet                                          5

          Unaudited Statements of Operations                               6

          Unaudited Statement of Changes in Stockholders' Deficiency       7

          Unaudited Statements of Cash Flows                             8 - 9

          Unaudited Notes to Financial Statements                       10 - 16


                                       4
<PAGE>


                                    AVP, INC.
                                  Balance Sheet
                               September 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
<S>                                                                                         <C>
ASSETS
CURRENT ASSETS
    Cash and cash equivalents                                                               $  1,784,242
    Accounts receivable, net of
       allowance for doubtful accounts of $10,000                                              2,075,489
    Prepaid expenses                                                                             317,350
    Deferred commission-related party                                                             63,335
                                                                                            ------------
    TOTAL CURRENT ASSETS                                                                       4,240,416
                                                                                            ------------

PROPERTY AND EQUIPMENT, net                                                                      462,552
                                                                                            ------------

OTHER ASSETS
    Investment in sales-type lease                                                               562,319
    Other assets                                                                                  41,206
                                                                                            ------------
    TOTAL OTHER ASSETS                                                                           603,525
                                                                                            ------------

    TOTAL ASSETS                                                                            $  5,306,493
                                                                                            ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
    Current portion of long-term debt                                                       $  1,130,070
    Accounts payable                                                                           1,062,516
    Accrued expenses                                                                           1,983,326
    Accrued interest                                                                             294,812
    Deferred revenue                                                                             501,104
                                                                                            ------------
    TOTAL CURRENT LIABILITIES                                                                  4,971,828
                                                                                            ------------

OTHER LIABILITIES
    Long-term deferred revenue                                                                   225,000
    Long-term debt - less current portion                                                        683,334
                                                                                            ------------
    TOTAL OTHER LIABILITIES                                                                      908,334
                                                                                            ------------

    TOTAL LIABILITIES                                                                          5,880,162
                                                                                            ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIENCY

    Preferred stock, 2,000,000 shares authorized:

      Series A convertible preferred stock, $.001 par value, 1,000,000 shares authorized,             --
      no shares issued and outstanding

      Series B convertible preferred stock, $.001 par value, 250,000 shares authorized,
      116,412 shares issued and outstanding                                                          116

    Common stock, $.001 par value, 300,000,000 shares authorized,
    100,023,393 shares issued and outstanding                                                    100,023

    Additional paid-in capital                                                                30,560,760

    Accumulated deficit                                                                      (31,234,568)
                                                                                            ------------

    TOTAL STOCKHOLDERS' DEFICIENCY                                                              (573,669)
                                                                                            ------------

    TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                          $  5,306,493
                                                                                            ============
</TABLE>

                        See notes to financial statements


                                       5
<PAGE>

                                    AVP, INC.
                            Statements of Operations
             Three and Nine Months Ended September 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Three Months Ended           Nine Months Ended
                                                       September 30,                 September 30,
                                              ----------------------------    ----------------------------
                                                 2005            2004            2005            2004
                                              ------------    ------------    ------------    ------------
<S>                                           <C>             <C>             <C>             <C>
REVENUE
     Sponsorships                             $  8,508,522    $  4,863,801    $ 11,932,917    $  9,597,215
     Other                                       1,305,739       1,435,309       2,294,745       2,256,015
                                              ------------    ------------    ------------    ------------
     TOTAL REVENUE                               9,814,261       6,299,110      14,227,662      11,853,230


EVENT COSTS                                      8,222,872       5,512,285      10,992,451       8,620,145
                                              ------------    ------------    ------------    ------------
     Gross Profit                                1,591,389         786,825       3,235,211       3,233,085
                                              ------------    ------------    ------------    ------------

OPERATING EXPENSES
     Marketing                                     622,711         615,779       1,719,411       1,787,534
     Administrative                              1,398,162       1,364,705       3,589,770       3,153,459
     Stock compensation expense                     84,623              --       5,296,612           5,714
                                              ------------    ------------    ------------    ------------
     TOTAL OPERATING EXPENSES                    2,105,496       1,980,484      10,605,793       4,946,707
                                              ------------    ------------    ------------    ------------

     OPERATING LOSS                               (514,107)     (1,193,659)     (7,370,582)     (1,713,622)
                                              ------------    ------------    ------------    ------------

OTHER INCOME (EXPENSE)
     Interest expense                              (24,292)        (82,938)       (122,863)       (158,485)
     Interest income                                41,745          15,612          94,755          50,389
                                              ------------    ------------    ------------    ------------
     TOTAL OTHER INCOME (EXPENSE)                   17,453         (67,326)        (28,108)       (108,096)
                                              ------------    ------------    ------------    ------------

     LOSS BEFORE INCOME TAXES                     (496,654)     (1,260,985)     (7,398,690)     (1,821,718)

INCOME TAXES                                            --              --              --              --
                                              ------------    ------------    ------------    ------------

     NET LOSS                                 $   (496,654)   $ (1,260,985)   $ (7,398,690)   $ (1,821,718)
                                              ============    ============    ============    ============

Basic and diluted loss per share              $      (0.00)   $      (0.04)   $      (0.09)   $      (0.06)
                                              ============    ============    ============    ============

Weighted average common shares
     outstanding                               100,023,393      29,738,610      82,353,011      29,738,610
                                              ============    ============    ============    ============
</TABLE>

                        See notes to financial statements


                                       6
<PAGE>

                                    AVP, INC.
                Statement of Changes in Stockholders' Deficiency
                      Nine Months Ended September 30, 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                   Series A                      Series B
                                                Preferred Stock               Preferred Stock               Common Stock
                                           ---------------------------   ---------------------------   ---------------------------
                                              Shares         Amount          Shares        Amount         Shares       Amount
                                           ------------   ------------   ------------   ------------   ------------   ------------
<S>                                               <C>                           <C>              <C>          <C>            <C>
Balance, January 1, 2005                             --   $         --             --   $         --     29,738,610   $     29,738


Merger of AVP, Inc. into the Association
    ("the reverse merger")                           --             --             --             --     22,514,742         22,515

Conversion of 10% convertible notes payable          --             --             --             --     17,076,825         17,077

Conversion of redeemable preferred
    stock                                            --             --             --             --     23,171,880         23,172

Private placement units
(net of offering costs of $753,038)                  --             --        147,364            147             --             --

Conversion to common stock                           --             --        (30,952)           (31)     7,521,336          7,521

Compensation expense from issuance of
    warrants                                         --             --             --             --             --             --

Net loss                                             --             --             --             --             --             --
                                           ------------   ------------   ------------   ------------   ------------   ------------

Balance, September 30, 2005                          --   $         --        116,412   $        116    100,023,393   $    100,023
                                           ============   ============   ============   ============   ============   ============

<CAPTION>


                                                  Additional                      Total
                                                  Paid-in         Accumulated     Stockholders'
                                                  Capital         Deficit         Deficiency
                                                 ------------    ------------    ------------
<S>                                                      <C>             <C>
Balance, January 1, 2005                         $ 16,091,502    $(23,835,878)   $ (7,714,638)


Merger of AVP, Inc. into the Association
    ("the reverse merger")                           (974,439)             --        (951,924)

Conversion of 10% convertible notes payable         2,273,271              --       2,290,348

Conversion of redeemable preferred
    stock                                           3,634,428              --       3,657,600

Private placement units
(net of offering costs of $753,038)                 4,246,876              --       4,247,023

Conversion to common stock                             (7,490)             --              --

Compensation expense from issuance of
    warrants                                        5,296,612              --       5,296,612

Net loss                                                   --      (7,398,690)     (7,398,690)
                                                 ------------    ------------    ------------

Balance, September 30, 2005                      $ 30,560,760    $(31,234,568)   $   (573,669)
                                                 ============    ============    ============
</TABLE>

                        See notes to financial statements


                                       7
<PAGE>

                                    AVP, INC.
                            Statements of Cash Flows
                  Nine Months Ended September 30, 2005 and 2004
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                          Nine Months
                                                                      Ended September 30,
                                                                   --------------------------
                                                                      2005           2004
                                                                   -----------    -----------
<S>                                                                <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                      $(7,398,690)   $(1,821,718)
     Adjustments to reconcile net loss to net cash
         flows from operating activities:
         Depreciation and amortization of property and equipment       112,085         37,894
         Amortization of deferred commissions                          190,004        220,778
         Other amortization                                              6,033          6,033
         Amortization of deferred costs                                     --      1,352,100
         Amortization of deferred rent                                  24,850        124,090
         Compensation from issuance of stock options and warrants    5,296,612          5,714
     Decrease (increase) in operating assets:
         Accounts receivable                                        (1,426,353)    (1,930,448)
         Investment in and due from joint venture                           --        291,084
         Prepaid expenses                                             (290,744)      (272,746)
         Other assets                                                   (4,500)         3,457
     Increase (decrease) in operating liabilities:
         Accounts payable                                              747,717        753,929
         Accrued expenses                                              994,174        578,224
         Accrued officer compensation                                  (43,208)       159,167
         Accrued interest                                              (21,817)       265,683
         Deferred revenue                                              176,054         50,756
                                                                   -----------    -----------


         NET CASH FLOWS FROM
             OPERATING ACTIVITIES                                   (1,637,783)      (176,003)
                                                                   -----------    -----------


CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in property and equipment                             (372,935)      (219,973)
     Investment in sales-type lease                                     66,004         72,026
                                                                   -----------    -----------

         NET CASH FLOWS FROM
             INVESTING ACTIVITIES                                     (306,931)      (147,947)
                                                                   -----------    -----------
</TABLE>

                        See notes to financial statements


                                       8
<PAGE>

                                    AVP, INC.
                            Statements of Cash Flows
                  Nine Months Ended September 30, 2005 and 2004
                                   (Unaudited)

                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                   Nine Months
                                                                Ended September 30,
                                                            --------------------------
                                                               2005           2004
                                                            -----------    -----------
<S>                                                         <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from sale of capital stock                    $ 5,000,061    $        --
     Offering costs                                            (753,038)            --
     Proceeds from borrowing                                         --      2,000,000
     Debt repayments                                         (1,150,000)            --
                                                            -----------    -----------

         NET CASH FLOWS FROM
             FINANCING ACTIVITIES                             3,097,023      2,000,000
                                                            -----------    -----------


         NET INCREASE IN CASH AND CASH EQUIVALENTS            1,152,309      1,676,050

         CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD         631,933         71,056
                                                            -----------    -----------

         CASH AND CASH EQUIVALENTS, END OF PERIOD           $ 1,784,242    $ 1,747,106
                                                            ===========    ===========

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
     Cash paid during the period for:
     Interest                                               $    66,934    $        --
                                                            -----------    -----------
     Income taxes                                                    --             --
                                                            -----------    -----------

SUPPLEMENTAL DISCLOSURE OF NON-CASH
 INVESTING AND FINANCING INFORMATION

     Net liabilities assumed in merger
         Cash                                               $     4,217    $        --
         Accounts payable                                      (261,857)            --
         Accrued expenses                                      (173,934)            --
                                                            -----------    -----------
                                                               (431,574)            --
                                                            -----------    -----------

     Conversion of Association redeemable preferred stock
         into common stock                                    3,657,600             --
                                                            -----------    -----------

     Conversion of 10% convertible notes payable into
         common stock                                         2,290,348             --
                                                            -----------    -----------
</TABLE>

                        See notes to financial statements


                                       9
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

1.       BASIS OF PRESENTATION

         The accompanying unaudited interim financial statements of AVP, Inc.
         have been prepared in accordance with accounting principles generally
         accepted in the United States of America and the rules of the
         Securities and Exchange Commission ("SEC"), and should be read in
         conjunction with the audited financial statements and notes thereto
         contained in AVP, Inc.'s latest Annual Report filed with the SEC on
         Form 10-KSB, as amended. In the opinion of management, all adjustments,
         consisting only of normal recurring adjustments, necessary for a fair
         presentation of financial position and the results of operations for
         the interim periods presented have been reflected herein. The results
         of operations for interim periods are not necessarily indicative of the
         results to be expected for the full year. Notes to the financial
         statements that would substantially duplicate the disclosure contained
         in the audited financial statements for the most recent fiscal year
         2004, as reported in the Form 10-KSB as previously filed with the SEC,
         have been omitted.

2.       MERGER

         On February 28, 2005, upon filing a certificate of merger with the
         Delaware Secretary of State, a wholly owned subsidiary of AVP, Inc.
         ("AVP") named Othnet Merger Sub, Inc., a Delaware corporation, and AVP
         Pro Beach Volleyball Tour, Inc., a Delaware corporation (the
         "Association"), consummated a merger pursuant to an Agreement and Plan
         of Merger dated as of June 29, 2004, as amended. As a result of the
         merger, the Association, which survived the merger, became AVP's wholly
         owned subsidiary, and AVP issued to Association stockholders common
         stock.

         In the second half of 2004, AVP issued $2,360,000 principal amount of
         10% convertible notes and, as required by the merger agreement, loaned
         $2,000,000 of the proceeds of the notes to the Association (the notes
         were issued in units that included common stock and common stock
         purchase warrants). It was a condition to the closing of the merger,
         among other things, that at least $2,000,000 principal amount of the
         notes (and accrued interest) be converted into common stock. Another
         condition was the closing of a private placement of units of Series B
         Convertible Preferred Stock and common stock purchase warrants, gross
         proceeds of which was $5,000,061, concurrently with the merger closing.

         Each share of Series B preferred stock is convertible into 243 shares
         of AVP common stock and carries the number of votes that equals the
         number of shares into which it is convertible.

         In accordance with the merger agreement, the outstanding shares of the
         Association's common stock were converted into 29,738,610 shares of AVP
         common stock. The Association also had outstanding options and warrants
         that, as a result of the merger agreement, now represent the right to
         purchase 88,428,387 shares of the AVP common stock.

         As part of the merger, the Association's preferred stockholder's
         converted $3,657,600 of redeemable preferred stock into 23,171,880
         shares of AVP common stock. In addition, as part of the merger, holders
         of the 10% convertible notes converted them into 17,076,825 shares of
         AVP common stock.


                                       10
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

2.       MERGER (CONTINUED)

         Concurrent with the merger, AVP raised through private placement
         $5,000,061 of private placement units representing 147,364 shares of
         Series B Convertible Preferred Stock, which are convertible into
         35,809,452 shares of AVP common stock.

         An Association note holder has indicated its intention to exercise its
         option to convert its $1,000,000 note payable into 11,292,614 shares of
         AVP common stock.

         In conjunction with the merger, AVP was obligated to issue warrants to
         purchase 56,775,904 shares of common stock as consideration for
         services that facilitated the merger.

         As a result of the merger, AVP has 100,023,393 shares of common stock
         outstanding at September 30, 2005 and will have outstanding stock
         options and warrants to acquire AVP common stock aggregating
         154,724,733 shares.

         Upon consummation of the merger and the private offering, the
         Association's former stockholders held common stock entitling them to
         cast 58.22% of votes entitled to be cast at an election of AVP
         directors; the Association's executive officers became AVP's executive
         officers, and Association designees hold five of six Board of Directors
         seats.

         Accordingly, the Association, which was the acquired entity from the
         legal standpoint, is the acquirer from the accounting standpoint, and
         AVP, which was the acquirer from the legal standpoint, is the
         accounting acquiree.

         Because AVP was a publicly traded shell corporation at the time of the
         merger, the transaction is being accounted for as a capital
         transaction, the equivalent of AVP's issuing stock for the
         Association's net assets, accompanied by a recapitalization of AVP. The
         accounting is identical to that resulting from a reverse acquisition,
         except that there are no adjustments to the historical carrying values
         of the assets and liabilities of the Association.

         AVP agreed to register for resale the shares of common stock underlying
         the Series B preferred stock. The agreement provided that if a
         registration statement was not filed by April 15, 2005 or did not
         become effective by June 28, 2005, AVP must pay a penalty to the Series
         B preferred stock stockholder of approximately $50,000 for each month
         that the penalty condition is not satisfied, until August 28, 2005,
         when the monthly penalty increased to $100,000 for each month. The
         registration statement became effective on November 1, 2005 and,
         accordingly, AVP incurred $311,505 in penalties.

         On August 23, 2005 the stockholders gave approval to amend the Articles
         of Incorporation increasing the number of authorized shares of common
         stock to 300,000,000 shares and to effect a 1 for 10 reverse stock
         split. AVP expects to effectuate the 1 for 10 reverse stock split
         within 60 days from the date of effectiveness of the registration
         statement.


                                       11
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

  2.     MERGER (CONTINUED)

         As such, for all disclosures referencing shares authorized and issued,
         shares reserved for issuance, per share amounts and other disclosures
         relating to equity, amounts have been retroactively restated to reflect
         share quantities as altered by the terms of the merger agreements and
         the authorization of additional shares.

3.       RESCISSION OFFER

         Options granted in 2004 to AVP players under AVP's 2002 Stock Option
         Plan were not exempt from registration or qualification under federal
         and state securities laws and AVP did not obtain the required
         registrations or qualifications. As a result, AVP intends to make a
         rescission offer to the holders of these options beginning
         approximately 30 days after the effective date of its registration
         statement. If this rescission is accepted, AVP could be required to
         make aggregate payments to the holders of options of up to $240,000,
         which includes statutory interest, based on options outstanding as of
         September 30, 2005. If any or all of the offerees reject the rescission
         offer, AVP may continue to be liable for this amount under federal and
         state securities laws. As management believes there is only a remote
         likelihood the rescission offer will be accepted by any of the option
         holders in an amount that would result in a material expenditure by
         AVP, no liability has been recorded. Management does not believe that
         this rescission offer will have a material effect on AVP's financial
         position, results of operations or cash flows.

4.       NET LOSS PER BASIC AND DILUTED SHARE OF COMMON STOCK

         Basic earnings (loss) per share is calculated using the average number
         of common shares outstanding. Diluted earnings (loss) per share is
         computed on the basis of the average number of common shares
         outstanding during the period increased by the dilutive effect of
         outstanding stock options using the "treasury stock" method. Options
         and other incremental shares to purchase 194,305,461 and 115,365,047
         shares of common stock at September 30, 2005 and 2004, respectively,
         were excluded from the computation of diluted earnings (loss) per share
         as their effect would be anti-dilutive.


                                       12
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

5.       STOCK OPTIONS

         AVP adopted SFAS No. 148 effective for the year ended December 31,
         2002, and has elected to continue to account for its stock-based
         compensation in accordance with the provisions of APB No. 25,
         Accounting for Stock Issued to Employees. Under APB No. 25,
         compensation expense is recognized over the vesting period based on the
         excess of the fair market value over the exercise price on the grant
         date.

         If AVP had elected to recognize compensation expense based upon the
         fair value at the grant date for awards under its stock-based
         compensation plans consistent with the methodology prescribed by SFAS
         No. 123, AVP's net loss would increase to the following pro forma
         amounts:

<TABLE>
<CAPTION>
                                             Three Months Ended September 30,          Nine Months Ended September 30,
                                        ----------------------------------------    ----------------------------------------
                                               2005                  2004                  2005                  2004
                                        ------------------    ------------------    ------------------    ------------------
<S>                                     <C>                   <C>                   <C>                   <C>
Net loss applicable to common
stockholders, as reported               $         (496,654)   $       (1,260,985)   $       (7,398,690)   $       (1,821,718)

Less stock based employee
compensation expense determined under
fair-value-based methods for all
awards, net of related tax effects              (4,479,997)              (33,322)           (4,479,997)              (99,966)
                                        ------------------    ------------------    ------------------    ------------------

Pro forma net loss                      $       (4,976,651)   $       (1,294,307)   $      (11,878,687)   $       (1,921,684)
                                        ==================    ==================    ==================    ==================

Net loss per share of common stock:
Basic and diluted

        As reported                     $            (0.00)   $            (0.04)   $            (0.09)   $            (0.06)
                                        ==================    ==================    ==================    ==================

        Pro forma                       $            (0.05)   $            (0.04)   $            (0.14)   $            (0.06)
                                        ==================    ==================    ==================    ==================
</TABLE>


         The fair value for these options was estimated at the date of grant
         using the Black-Scholes option pricing model with the following
         assumptions for the nine months ended September 30, 2005 and 2004:

                                             2005                 2004
                                       -----------------     ----------------

Risk-free interest rate                  3.66 - 3.93%         3.86 - 4.19 %
Expected life                              4 years            4 to 10 years
Expected volatility                          100%                  0%
Expected dividend yield                       0%                   0%


                                       13
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

5.       STOCK OPTIONS (CONTINUED)

         The following table contains information on the stock options for the
         nine months ended September 30, 2005 and the year ended December 31,
         2004. The outstanding options expire from December 31, 2005 to
         September 1, 2013.

<TABLE>
<CAPTION>
                                                              Weighted Average
                                           Number of Shares   Exercise Price
                                            ---------------   ---------------
<S>                                             <C>          <C>
Options outstanding at January 1, 2004           77,744,235   $          0.02
     Granted                                      7,654,849              0.16
     Exercised                                           --                --
     Cancelled                                           --                --
                                            ---------------   ---------------

Options outstanding at December 31, 2004         85,399,084              0.03
     Granted                                     32,095,930              0.22
     Converted Othnet options                     2,004,284              0.25
     Exercised                                           --                --
     Cancelled                                           --                --
                                            ---------------   ---------------

Options outstanding at September 30, 2005       119,499,298   $          0.09
                                            ===============   ===============
</TABLE>

         The weighted average fair value of options granted was $0.14 in 2005
         and $-0- in 2004.

         The following table summarizes information about AVP's stock-based
         compensation plan at September 30, 2005:

         Options outstanding and exercisable by price range as of September 30,
         2005:

<TABLE>
<CAPTION>
                                           Options Outstanding                            Options Exercisable
                              --------------------------------------------------     -------------------------------
                                                    Weighted
                                                     Average
                                                    Remaining         Weighted                           Weighted
              Range of                             Contractual        Average                            Average
              Exercise             Number            Life in          Exercise           Number          Exercise
               Prices           Outstanding           Years             Price          Exercisable         Price
         -----------------    ----------------     -------------     -----------     --------------    -------------
<S>                               <C>                 <C>                <C>           <C>                   <C>
         $   .00  -  .03           61,189,433          4.3                $0.00         61,189,433            $0.00
             .04  -  .09           16,554,802          7.9                 0.08         10,748,639             0.08
             .09  -  .16            7,654,849          3.6                 0.16          7,015,498             0.16
             .17  -  .25           34,100,214          3.7                 0.22         34,100,214             0.22
         -----------------    ----------------     -------------     -----------     --------------    -------------
         $   .00  -  .25          119,499,298          4.6                $0.09        113,053,784            $0.09
         =================    ================     =============     ===========     ==============    =============
</TABLE>


         In connection with stock options granted to employees to purchase
         common stock, AVP did not record any stock-based compensation expense
         in the nine months ended September 30, 2005 and 2004.


                                       14
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

5.       STOCK OPTIONS (CONTINUED)

         Other Stock Options

         Non-qualified stock options granted to other individuals aggregating
         35,225,435 shares expire from June 2006 to June 2010.

         The following table contains information on all of AVP's non-plan stock
         options for the nine months ended September 30, 2005 and the year ended
         December 31, 2004.


                                                              Weighted Average
                                            Number of Shares  Exercise Price
                                            ---------------   ---------------

Options outstanding at January 1, 2004            3,029,303   $          0.03
     Granted                                             --                --
     Exercised                                           --                --
     Cancelled                                           --                --
                                            ---------------   ---------------

Options outstanding at December 31, 2004          3,029,303              0.03
     Granted                                     24,910,560              0.31
     Converted Othnet options                     7,285,572              0.24
     Exercised                                           --                --
     Cancelled                                           --                --
                                            ---------------   ---------------

Options outstanding at September 30, 2005        35,225,435   $          0.27
                                            ===============   ===============


         The weighted average fair value of options granted was $0.21 in 2005
         and -0- in 2004.

         The following table summarizes information about AVP's non-qualified
         stock options at September 30, 2005:

         Options outstanding and exercisable by price range as of September 30,
         2005:

<TABLE>
<CAPTION>
                                           Options Outstanding                            Options Exercisable
                              --------------------------------------------------     -------------------------------
                                                    Weighted
                                                     Average
                                                    Remaining         Weighted                           Weighted
              Range of                             Contractual        Average                            Average
              Exercise             Number            Life in          Exercise           Number          Exercise
               Prices           Outstanding           Years             Price          Exercisable         Price
         -----------------    ----------------     -------------     -----------     --------------    -------------
<S>                               <C>                 <C>                <C>           <C>                   <C>
            $  .03 - .15          6,610,248           4.5                $0.09          6,610,248          $0.09
               .16 - .34         19,211,860           2.9                 0.22         19,211,860           0.22
               .35 - .50          9,403,327           4.2                 0.50          9,403,327           0.50
         ------------------    -------------     --------------    ------------     --------------    -----------

            $  .03 - .50         35,225,435           3.6                $0.27         35,225,435          $0.27
         ==================    =============     ==============    ============     ==============    ===========
</TABLE>


         In connection with stock options granted to non-employees to purchase
         common stock as a result of the private placement, AVP recorded
         consulting expense of $5,296,612 and $-0- for the nine months ended
         September 30, 2005 and 2004, respectively. Such amounts represent, for
         each non-employee stock option, the valuation under SFAS 123 on the
         date of the grant.


                                       15
<PAGE>

                                    AVP, INC.

                          Notes to Financial Statements
                                   (Unaudited)

6.       COMMITMENTS AND CONTINGENCIES

         Operating Lease

         AVP is obligated under a noncancellable operating lease for its office
         facilities. The lease expires March 31, 2010 subject to a five-year
         renewal option.

         The future minimum rental payments, excluding cost escalations, as of
         September 30, 2005 are as follows:

                       Years Ending December 31,
                       -------------------------
                                2005                              $    81,000
                                2006                                  329,000
                                2007                                  338,000
                                2008                                  347,000
                                2009                                  356,000
                             Thereafter                                91,000
                                                              ----------------

                                Total                             $ 1,542,000
                                                              ================

         Officer Indemnification

         Under the organizational documents, AVP's directors are indemnified
         against certain liabilities arising out of the performance of their
         duties to AVP. AVP also has an insurance policy for its directors and
         officers to insure them against liabilities arising from the
         performance of their duties required by their positions with AVP. AVP's
         maximum exposure under these arrangements is unknown as this would
         involve future claims that may be made against AVP that have not yet
         occurred. However, based on experience, AVP expects the risk of loss to
         be remote.

         Employment Agreements

         AVP has entered into "at will" employment agreements with three
         officers. In addition to base salary, the employment agreements provide
         for annual performance bonuses and profit sharing bonuses. The
         performance bonuses range from 30% to 50% of the respective officer's
         base salary. The performance bonuses awarded, if any, will be based
         upon achieving certain milestones and targets as determined by the
         Board of Directors' Compensation Committee. The employment agreements
         also provide that AVP will set aside 10% of the net profits, as defined
         or as determined by the Compensation Committee, to establish a Profit
         Sharing Bonus Pool. The Compensation Committee and AVP's President
         will determine the allocation of the Profit Sharing Bonus Pool among
         officers eligible to participate in the Profit Sharing Bonus Pool.


                                       16
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Background

AVP, Inc. was originally incorporated under the name Malone Road Investments,
Ltd., on August 6, 1990 in the Isle of Man. The corporation was redomesticated
in the Turks and Caicos Islands in 1992, and subsequently domesticated as a
Delaware corporation in 1994. Pursuant to Delaware law, the corporation is
deemed to have been incorporated in Delaware as of the date of its formation in
the Isle of Man. The company changed its name to PL Brands, Inc. in 1994;
changed its name to Othnet, Inc. in March 2001; and changed its name to the
current one on March 9, 2005. AVP had no business operations other than to
attempt to locate and consummate a business combination with an operating
company since December 2001.

                                 AVP Acquisition

On February 28, 2005, a wholly owned subsidiary of AVP and AVP Pro Beach
Volleyball Tour, Inc., f/k/a Association of Volleyball Professionals, Inc., a
Delaware corporation (the "Association"), consummated a merger pursuant to an
Agreement and Plan of Merger dated as of June 29, 2004, as amended. The name of
the subsidiary before it merged with the Association was Othnet Merger Sub, Inc.
As a result of the merger, the Association became AVP's wholly owned subsidiary,
and AVP issued to Association stockholders AVP common stock.

                               Recent Developments

On August 23, 2005, AVP's stockholders approved a one-for-ten reverse stock
split, which AVP expects to effect by the end of 2005.

There can be no assurance that the reverse stock split will increase the market
price of our Common Stock or that any increase will be proportional to the
reverse-split ratio. For example, using the $0.15 per share closing price of our
Common Stock on October 20, 2005, there can be no assurance that the post-split
market price of our Common Stock would be $1.50 or greater. Accordingly, the
total market capitalization of our Common Stock immediately after the reverse
stock split or at any time thereafter could be lower than the total market
capitalization before the reverse stock split.

AVP's Business

AVP owns and operates professional beach volleyball events in the United States
through its wholly owned subsidiary, the Association. AVP's revenue comes from
national, regional, and local sponsorships; ticket sales (admissions), Beach
Club (corporate hospitality) sales, food and beverage sales, and merchandise
sales; trademark licensing; and other ancillary sources.

AVP produced 14 men's and 14 women's professional beach volleyball tournaments
throughout the United States in 2005. AVP has more than 125 of the top
professional players under exclusive contracts, as well as a base of spectators
and television viewers that AVP believes represents an attractive audience for
national, regional, and local sponsors. AVP produced 14 events from April
through October 2005, in Fort Lauderdale, FL; Tempe, AZ; Austin, TX; Santa
Barbara, CA; San Diego, CA; Belmar, NJ; Hermosa Beach, CA; Huntington Beach, CA;
Manhattan Beach, CA; Chicago, IL; Las Vegas, NV; Oahu, HA; Cincinnati, OH; and
Boulder, CO. The tournaments returned to each city in which events were held in
2004; the Cincinnati and Boulder events were new for 2005.


                                       17
<PAGE>

AVP's beach volleyball tournament season customarily commences in early April
and continues until late September or early October.

Results of Operations for the three months ended September 30, 2005 and 2004

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------    ----------------------------------------
                Operating Loss and Net Loss                                                     % Revenue
-------------------------------------------------------------------------------    ----------------------------------------
                                          Three Months Ended September 30,                Three Months Ended September 30,
                                            2005                   2004                  2005                  2004
                                      ------------------     ------------------    -----------------    -------------------
<S>                                         <C>                  <C>                           <C>                   <C>
Operating Loss                           $ (514,107)          $ (1,193,659)                 (5%)                  (19%)
Net Loss                                 $ (496,654)          $ (1,260,985)                 (5%)                  (20%)
</TABLE>

The 57% decrease in the three month operating loss primarily reflects an
increase of $3.5 million in recognized revenue for the three months ended
September 30, 2005 (see "Revenue" section below) which offset an increase in
event costs of $2.7 million.

Revenue

The following chart reflects comparative revenues with respect to AVP's
significant revenue drivers. The majority of AVP's revenues are derived from
sponsorship and advertising contracts with national and local sponsors. AVP
recognizes sponsorship revenue pro rata based upon prize money per event as the
events occur during the tour season and collection is reasonably assured. AVP's
beach volleyball tournament season customarily commences in early April and
continues until late September or early October.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
                             Summary Revenue
--------------------------------------------------------------------------
                                                                                Percentage
                                   Three Months Ended September 30,              Increase
                                     2005                  2004                 (Decrease)
                               -----------------     -----------------      -----------------
<S>                                 <C>                  <C>                             <C>
Sponsorship                         $ 8,508,522          $  4,863,801                    75%
Activation Fees                         396,973               505,245                  (21%)
Local Revenue                           667,008               363,574                    83%
Miscellaneous Revenue                   241,758               566,490                  (57%)
Interest Income                          41,745                15,612                   167%
                               -----------------     -----------------

Total Revenue                       $ 9,856,006            $6,314,722                    56%
                               =================     =================
</TABLE>

Sponsorship revenue for the three months ended September 30, 2005 increased
approximately $3.6 million as compared to the three months ended September 30,
2004. For the three months ended September 30, the average sponsorship revenue
per event for 2005 and 2004 were $1,063,565 and $972,760, respectively. The
increase in sponsorship revenue was primarily due to an increase in
contracted-for annual sponsorship revenue from $9.9 million in 2004 to $12.7
million in 2005, as well as eight events taking place in the three months ended
September 30, 2005 (out of 14 events in 2005) compared to only five events in
the three months ended September 30, 2004 (out of 12 events in 2004).
Accordingly, $8,508,522 of sponsorship revenue (out of $12.7 million of
contracted-for 2005 sponsorship revenue) is being allocated to the eight events
taking place in the three months ended September 30, 2005 compared to $4,863,801
of sponsorship revenue (out of $9.9 million of sponsorship revenue recognized in
2004) for the five events taking place in the comparable period.

The 21% decrease in activation fees is the result of one sponsor from 2004 not
returning as a sponsor in 2005.

Local revenue for the three months ended September 30, 2005 increased 83% as
compared to the three months ended September 30, 2004. This increase in local
revenue resulted from three additional events taken place during the three
months ended September 30, 2005, as well as increases in per event ticket sales
and Beach Club revenue. In particular, AVP was able to charge admissions
("gate") to more events than in previous years, which resulted in additional
ticketing revenue in 2005. For the eight events held in the three months ended
September 30, 2005, five events were gated and generated general admission
ticketing revenue, compared to three gated events out of five events for the
2004 three month period. Average local revenue per event for 2005 and 2004 third
quarters were $83,376 and $72,715, respectively.


                                       18
<PAGE>

The decrease in miscellaneous revenue primarily reflects a decrease in
merchandising revenue attributable to AVP's recognizing net merchandising
revenue for the three months ended September 30, 2005 versus recognizing gross
merchandising revenue as the company did for the three months ended September
30, 2004. In 2005, AVP engaged AEG Merchandise Inc. (a division of Anschutz
Entertainment Group) to serve as AVP's event merchandiser for 2005 and 2006. AVP
receives a royalty on all merchandising revenue. In 2004, AVP performed all
merchandising services in-house and gross merchandising revenue was included in
Miscellaneous Revenue (with costs of goods sold included in operating expenses
under marketing costs). The remaining decrease stemmed from a small decline in
site fees for one event and a small decline in trademark and recognized
international television licensing.

The increase in interest income of $26,133 reflects interest earned on the
realized proceeds from the private placement consummated on February 28, 2005.

Gross Profit

------------------------------------------------------------------------------
                                Gross Profit
------------------------------------------------------------------------------

                                          Three Months Ended September 30,
                                            2005                   2004
                                     -------------------     -----------------
Revenue                                      $9,814,261           $ 6,299,110
Event Costs                                   8,222,872             5,512,285
                                     -------------------     -----------------
Gross Profit                                $ 1,591,389             $ 786,825
                                     ===================     =================

Gross Profit %                                      16%                   12%
                                     ===================     =================

AVP's gross profit margin increased to 16% for the three months ended September
30, 2005 compared to 12% for the three months ended September 30, 2004 and
primarily reflects a larger percentage of revenue being recognized in connection
with the events taking place during the three months ended September 30, 2005
compared to the same period in 2004.

Operating Expenses

<TABLE>
<CAPTION>
-------------------------------------------------------------    ---------------------------------------
                       Summary Costs                                           % Revenue
-------------------------------------------------------------    ---------------------------------------       (Increase)
                                                                                                               Decrease as
                         Three Months Ended September 30,           Three Months Ended September 30,          % of Revenue
                            2005                 2004                  2005                 2004              2005 vs. 2004
                       ----------------    ------------------    -----------------    ------------------    ------------------
<S>                         <C>                   <C>                         <C>                   <C>                    <C>
Event Costs                 $8,222,872            $5,512,285                  84%                   87%                    3%
Administrative               1,398,162             1,364,705                  14%                   22%                    8%
Stock Compensation              84,623                    --                   1%                   --                    (1%)
Marketing                      622,711               615,779                   6%                   10%                    4%
Interest Expense                24,292                82,938                   0%                    1%                    1%
                       ----------------    ------------------    -----------------    ------------------    ------------------
Total Costs                $10,352,660            $7,575,707                 105%                  120%                   15%
                       ================    ==================    =================    ==================    ==================
</TABLE>

Event costs include the direct costs of producing an event and costs related to
television airing of network broadcasted events. Event costs are recognized on
an event-by-event basis and event costs billed and/or paid prior to their
respective events are recorded as deferred costs and expensed at the time the
event occurs.


                                       19
<PAGE>

The 49% increase in event costs was primarily due to three additional events
taking place during the three months ended September 30, 2005 (eight events
compared to only five events taking place during the three months ended
September 30, 2004). For the three months ended September 30, the average event
costs in 2005 and 2004 were $1,027,859 and $1,102,457, respectively, with a 3%
decrease in event costs as a percentage of revenue. The decrease in event costs
is primarily attributable to the fact that under AVP's 2005 and 2006 agreement
with Fox Sports Net, AVP no longer pays for its broadcast time or any production
costs in connection with the telecast of AVP events on cable television.

Stock compensation expense reflects a $84,623 charge to consulting expense as a
result of non-employee warrants valued under SFAS 123 for warrants granted.

Marketing costs did not fluctuate significantly for the three months ended
September 30, 2005 as compared to the three months ended September 30, 2004.

The decrease in interest expense of $58,646 reflects a reduction in short-term
debt.


<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Depreciation and Amortization Expense
-----------------------------------------------------------------------------------       Percentage
                                              Three Months Ended September 30,             Increase
                                                 2005                  2004               (Decrease)
                                           ------------------    ------------------    ------------------
<S>                                             <C>                    <C>                           <C>
Depreciation Expense                            $     48,018           $    30,799                   56%
Amortization Expense                                  66,333                75,737                 (12%)
                                           ------------------    ------------------
Total                                           $    114,351          $    106,536                    7%
                                           ==================    ==================
</TABLE>


The increase in depreciation expense of $17,219 resulted from an increase in
depreciable assets, including banners and flags and equipment; information
technology equipment (e.g., servers); activation equipment (e.g., kiosks and
digital information screens); and leasehold improvements (e.g., installation of
an air conditioning unit in AVP's server room).

The decrease in amortization expense of $9,404 resulted from the reduction in
deferred commission.

Results of Operations for the nine months ended September 30, 2005 and 2004

<TABLE>
<CAPTION>
--------------------------------------------------------------------------     -------------------------------------
              Operating Loss and Net Loss                                                   % Revenue
--------------------------------------------------------------------------     -------------------------------------
                                     Nine Months Ended September 30,                Nine Months Ended September 30,
                                        2005                  2004                  2005                 2004
                                 -------------------    ------------------     ----------------     ----------------
<S>                                    <C>                  <C>                          <C>                  <C>
Operating Loss                         $(7,370,582)         $ (1,713,622)                (52%)                (14%)
Net Loss                               $(7,398,690)         $ (1,821,718)                (52%)                (15%)
</TABLE>

The 330% increase in the nine month operating loss primarily reflects increased
administrative costs related to the merger and financing and registration
statement filing. Specifically the administrative cost incluse a $5,296,612
charge to consulting expense as a result of non-employee warrants valued under
SFAS 123, $657,000 of merger-related legal and accounting costs, $119,000 of SEC
reporting requirement costs, $190,000 of consulting fees payable in connection
with the merger, and $208,000 of related financing and registration costs and
fees. Such charges and costs were partially offset by a decrease in amortization
expense, which resulted from the elimination of cable network deferred costs
expensed in 2004.

Excluding such warrant consulting expense, merger-related costs and fees and
financial registration costs and fees, net loss for the nine months ended
September 30, 2005 would have been $927,688 compared to $1,821,718 for the same
period in 2004, a decrease of 49%.


                                       20
<PAGE>

Revenue

<TABLE>
<CAPTION>
-------------------------------------------------------------------------
                            Summary Revenue
-------------------------------------------------------------------------    Percentage
                                  Nine Months Ended September 30,             Increase
                                    2005                 2004                (Decrease)
                              ------------------   ------------------    ------------------
<S>                                 <C>                  <C>                           <C>
Sponsorship                         $11,932,917          $ 9,597,215                   24%
Activation Fees                         587,106              821,188                 (29%)
Local Revenue                         1,125,356              578,025                   95%
Miscellaneous Revenue                   582,283              856,802                 (32%)
Interest Income                          94,755               50,389                   88%
                              ------------------   ------------------
Total Revenue                      $ 14,322,417         $ 11,903,619                   20%
                              ==================   ==================
</TABLE>

Sponsorship revenue for the nine months ended September 30, 2005 increased
approximately $2.3 million as compared to the 2004 nine month period. For the
2005 and 2004 nine month periods, the average sponsorship revenue per event were
$917,917 and $872,474, respectively. The increase in sponsorship revenue was
primarily due to an increase in contracted-for annual sponsorship revenue from
$9.9 million in 2004 to $12.7 million in 2005, as well as thirteen events taking
place in the first nine months of 2005 (out of 14 events in 2005) compared to
only eleven events taking place in the nine months ended September 30, 2004 (out
of 12 events in 2004). Accordingly, $11,932,917 of sponsorship revenue (out of
$12.7 million of contracted-for 2005 sponsorship revenue) was allocated to the
thirteen events taking place in the nine months ended September 30, 2005
compared to $9,597,215 of sponsorship revenue (out of $9.9 million of
sponsorship revenue recognized in 2004) for the eleven events taking place in
the 2004 nine month period.

The 29% decrease in activation fees is the result of one sponsor from 2004 not
returning as a sponsor in 2005.

Local revenue for the nine months ended September 30, 2005 increased 95%, as
compared to the nine months ended September 30, 2004. This increase in local
revenue resulted from two additional events taking place during the nine months
ended September 30, 2005, as well as increases in per event ticket sales and
Beach Club revenue. In particular, AVP was able to gate more events than in
previous years, which resulted in additional ticketing revenue. For the 13
events held through September 30, 2005, nine events were gated and generated
general admission ticketing revenue. For the 2004 comparable period, only five
of the 11 events held were gated with general admission ticketing revenue. For
the 2005 and 2004 nine month periods, average local revenue per event were
$86,566 and $52,548, respectively.

The decrease in miscellaneous revenue is primarily due to a decrease in
merchandising revenue attributable to AVP's recognizing net merchandising
revenue for the nine months ended September 30, 2005 versus recognizing gross
merchandising revenue as the company did for the nine months ended September 30,
2004. In 2005, AVP engaged AEG Merchandise Inc. (a division of Anschutz
Entertainment Group) to serve as AVP's event merchandiser for 2005 and 2006. AVP
receives a royalty on all merchandising revenue. In 2004, AVP performed all
merchandising services in-house, and gross merchandising revenue was included in
Miscellaneous Revenue (with costs of goods sold included in operating expenses
under marketing costs). The remaining decrease stemmed from a small decline in
site fees for one event and a small decline in trademark and recognized
international television licensing.


                                       21
<PAGE>

The increase in interest income of $44,366 reflects interest earned on the
realized proceeds from the private placement consummated on February 28, 2005.

Gross Profit

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                    Gross Profit
--------------------------------------------------------------------------------------
                                              Nine Months Ended September 30,
                                              2005                       2004
                                     ----------------------     ----------------------
<S>                                            <C>                       <C>
Revenue                                        $14,227,662               $ 11,853,230
Event Costs                                     10,992,451                  8,620,145
                                     ----------------------     ----------------------
Gross Profit                                   $ 3,235,211               $  3,233,085
                                     ======================     ======================

Gross Profit %                                         23%                        27%
</TABLE>

AVP's gross profit margin for the nine months ended September 30, 2005 was 23%
compared to 27% for the nine months ended September 30, 2004. The decrease in
the gross profit margin primarily reflects increases in prize money, staging
costs and advertising costs. In 2004, AVP reached an agreement with the players
to extend the exclusive player agreements through December 31, 2008 and agreed
to increase prize money from $1.6 million in 2004 to a minimum of $3.0 million
in 2005 (an increase of 87.5%), with minimum prize money increasing by $500,000
in 2006, 2007 and 2008. Accordingly, management expects prize money to increase
at a significantly lower rate in the future. Staging costs also increased as a
result of AVP using an enhanced stadium for its 2005 events, which included
corporate suites at all events. AVP sold few corporate suites in the first two
quarters of 2005 but recognized significantly improved sales in the third
quarter 2005 and management expects increased corporate suite sales at the
majority of events in 2006 without a corresponding increase in staging costs.
Management expects gross profit margins to increase in the future through
increases in sponsorship revenue as well as by entering into agreements with
local promoters in which local promoters take on more of the event costs and pay
AVP promoter/sanctioning fees in return for the right to exploit local revenue
opportunities.

Operating Expenses

<TABLE>
<CAPTION>
-----------------------------------------------------------    ---------------------------------------
                      Summary Costs                                          % Revenue
-----------------------------------------------------------    ---------------------------------------       (Increase)
                                                                                                             Decrease as
                           Nine Months Ended September 30,        Nine Months Ended September 30,           % of Revenue
                            2005                2004                2005                  2004              2005 vs. 2004
                      -----------------    ----------------    ----------------     ------------------    ------------------
<S>                       <C>                  <C>                         <C>                    <C>                  <C>
Event Costs               $ 10,992,451         $ 8,620,145                 77%                    73%                  (4%)
Administrative               3,589,770           3,159,173                 25%                    27%                   2%
Stock Compensation           5,292,612                  --                 37%                    --                  (37%)
Marketing                    1,719,411           1,787,534                 12%                    15%                    3%
Interest Expense               122,863             158,485                  1%                     1%
                      -----------------    ----------------    ----------------     ------------------    ------------------
Total Costs               $ 21,721,107        $ 13,725,337                152%                   116%                 (36%)
                      =================    ================    ================     ==================    ==================
</TABLE>


Event costs include the direct costs of producing an event and costs related to
television airing of broadcasted events. Event costs are recognized on an
event-by-event basis, and event costs billed and/or paid prior to their
respective events are recorded as deferred costs and expensed at the time the
event occurs.

The increase in event costs was primarily due to two additional events taking
place during the nine months ended September 30, 2005 (13 events compared to 11
events taking place during the nine months ended September 30, 2004). For the
2005 and 2004 nine month periods, average event costs were $845,573 and
$783,650, respectively, with a 4% increase in event costs as a percentage of
revenue. The increase in event costs is primarily attributable to increases in
prize money, staging costs, and advertising, which offset a decrease in event
costs due to the elimination of any television broadcast fees or production
costs in connection with its cable events in 2005.


                                       22
<PAGE>

The 14% increase in administrative costs primarily reflects charges and
expenses related to the merger and financing and registration statement filing.
The increase in administrative costs includes merger-related legal
costs of $441,000, accounting fees of $216,000, SEC filing costs of $119,000,
consulting fees payable in connection with the merger of $190,000, and costs
related to financing and the registration of securities aggregating $208,000, as
well as budgeted 2005 salary increases. Increases in administrative costs were
partially offset by a decrease in amortization expense which resulted from the
elimination of cable network deferred costs expensed in 2004.

The $5,296,612 charge to stock compensation was the result of non-employee
warrants valued under SFAS 123 for warrants granted on February 28, 2005 as a
result of the merger.

The decrease in marketing costs of $68,123 primarily resulted from a reduction
in merchandise costs of $254,000 for the nine months ended September 30, 2005,
as a result of AVP's no longer conducting merchandise sales in-house and
therefore no longer incurring costs of good sold. The decrease in merchandising
costs was partially offset by a $72,000 increase in AVPNext expenses as well as
$116,000 of budgeted 2005 salary increases.

The 22% decrease in interest expense of $35,622 reflects a reduction in
short-term debt.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
Depreciation and Amortization Expense
-----------------------------------------------------------------------------------
                                                                                          Percentage
                                               Nine Months Ended September 30,             Increase
                                                 2005                  2004               (Decrease)
                                           ------------------    ------------------    ------------------
<S>                                             <C>                   <C>                          <C>
Depreciation Expense                            $    112,085          $    37,894                  196%
Amortization Expense                                 196,037              226,811                  (14%)
                                           ------------------    ------------------
Total                                           $    308,122          $   264,705                   16%
                                           ==================    ==================
</TABLE>

The increase in depreciation expense of $74,191 resulted from an increase in
depreciable assets, including banners and flags and equipment; information
technology equipment (e.g., servers); activation equipment (e.g., kiosks and
digital information screens); and leasehold improvements (e.g., installation of
an air conditioning unit in AVP's server room).

The decrease in amortization expense of $30,774 resulted from deferred
commissions.

Liquidity and Capital Resources

Cash flows from operating activities for the nine months ended September 30,
2005 and 2004 were $(1,637,783) and $(176,003), respectively. Working capital
deficiency, consisting of current assets less current liabilities, was $731,412
at September 30, 2005 and $3,220,725 at September 30, 2004. The negative working
capital for the nine months ended September 30, 2005 resulted from deferred
revenue being recognized for sponsorship payments received for events occurring
after September 30, 2005 and additional accounts payable and accrued expenses
related to the merger and registration statement. The negative working capital
for the nine months ended September 30, 2004 resulted from an increase in debt.
During the nine months ended September 30, 2004, AVP borrowed $2,000,000 in the
form of bridge financing notes.


                                       23
<PAGE>

At September 30, 2005 and 2004, accounts receivable had increased $1,426,353 and
$1,930,448, respectively, and deferred revenues had increased $176,054 and
$50,756, respectively, over their respective amounts at December 31, 2004 and
2003, as AVP invoices and collects payments prior to holding certain events.
Deferred revenue increased as a result of the receipt of payments that will be
recognized as revenue on an event-by-event basis.

Cash flows provided from financing activities for the nine months ended
September 30, 2005 and 2004 were $3,097,023 and $2,000,000, respectively. As a
result of the consummation of the $5,000,061 private placement of Series B
Convertible Preferred Stock on February 28, 2005, AVP realized proceeds of
$4,247,023, net of offering costs of $753,038. During the nine months ended
September 30, 2004, AVP borrowed $2,000,000 in the form of bridge financing
notes.

During the nine months ended September 30, 2005, AVP repaid $950,000 on a note
payable owed to Management Plus Enterprises, Inc., a related party, in
connection with sponsorship sales services and $200,000 to holders of the bridge
financing notes.

Capital expenditures for the nine months ended September 30, 2005 and 2004 were
$372,935 and $219,973, respectively. During the nine months ended September 30,
2005, AVP purchased sand, tents, banners and flags and a trailer for the tour
season, as well as, computer equipment.

In June 2004, the Association borrowed $2,000,000 from AVP, at an interest rate
of 10% per annum. As part of the merger, this liability was converted to equity.
In addition, NBC and Fox had the right to put their redeemable Series A
preferred stock investment back to the Association at the end of the 2005 and
2006 seasons for the amount of their respective investments. Prior to the
merger, both NBC and Fox agreed to waive their put rights and converted the
Association redeemable preferred stock holdings aggregating $3,657,600 into AVP
common stock.

Critical Accounting Policies

Revenue and Expense Recognition

The majority of AVP's revenues are derived from sponsorship and advertising
contracts with national and local sponsors. AVP recognizes sponsorship revenue
pro rata based upon prize money per event during the tour season as the events
occur and collection is reasonably assured. Cash collected before the related
events is recorded as deferred revenue. Event costs are recognized on an
event-by-event basis. Event costs billed and/or paid prior to their respective
events are recorded as deferred costs and expensed at the time the event occurs.

Income Taxes

AVP provides deferred income taxes to reflect the impact of temporary
differences between the recorded amounts of assets and liabilities for financial
reporting purposes and such amounts as measured by tax laws and regulations.
Temporary differences result from differences between the amounts reported for
financial statement purposes and corresponding amounts for tax purposes.
Deferred income tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.


                                       24
<PAGE>

Off-Balance Sheet Arrangements

As part of its ongoing business, AVP does not participate in transactions with
unconsolidated entities such as special purpose entities or structured finance
entities, which would have been established for the purpose of facilitating
off-balance sheet arrangements or other limited purposes.


                                       25
<PAGE>

ITEM 3.   CONTROLS AND PROCEDURES

AVP's management has evaluated, with the participation of its principal
executive and financial officers, the effectiveness of AVP's disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) as of
the end of the period covered by this report. Based on this evaluation, these
officers have concluded, subject to the following paragraphs, that, as of
September 30, 2005, AVP's disclosure controls and procedures are effective to
provide reasonable assurance that information required to be disclosed by AVP in
reports that it files or submits under the Exchange Act is accumulated and
communicated to AVP's management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.

Management determined that there were material weaknesses in its disclosure
controls and procedures with respect to recording and reporting of a business
combination in 2003 between companies under common control and in recording and
reporting capital transactions that resulted in conversions of preferred stock
to common stock in the second quarter of 2005. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. A significant
deficiency is a control deficiency, or combination of control deficiencies, that
adversely affects the Company's ability to initiate, authorize, record, process
or report external financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a
misstatement of the Company's annual or interim financial statements that is
more than inconsequential will not be prevented or detected.

Subsequent to December 31, 2004, it was determined that AVP did not have
adequate controls in place to properly record the merger in 2003 with Digital
Media Campus, Inc. in accordance with generally accepted accounting principles.
As a result, AVP has restated its financial statements for the years ended
December 31, 2004 and 2003 to reflect the correct accounting for the merger
transaction as a transfer between entities under common control. AVP was also
required to restate its interim quarterly financial statements for 2004 and all
of its annual and previously filed 2005 quarterly filings with the SEC as a
result of improperly accounting for the merger.

Subsequent to September 30, 2005, it was determined that AVP did not have
adequate controls in place to properly record capital transactions that had
occurred in the second quarter of 2005 in accordance with generally accepted
accounting principles. During the second quarter of 2005 certain Series B
preferred stockholders converted their Series B preferred stock into common
stock. However, the transactions were not properly recorded at the time they
occurred. As a result, AVP has restated its interim quarterly financial
statements and previous filed quarterly filing with SEC for the period ended
June 30, 2005 as a result of improperly accounting for these capital
transactions.

AVP has taken steps to correct the material weaknesses identified through the
addition of additional personnel and professional consultants with enhanced
financial accounting and reporting experience and will continue to evaluate the
material weaknesses and will take all necessary action to correct the internal
control deficiencies so identified. AVP will also further develop and enhance
its internal control policies, procedures, systems and staff to allow it to
mitigate the risk that material accounting errors might go undetected and be
included in its financial statements.


                                       26
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      None

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

      The matters submitted and the number of votes cast at the Annual
      Stockholders Meeting held on August 23, 2005 were as follows:

--------------------------------------------------------------------------------
1. Election of Directors                          Number of votes cast
--------------------------------------------------------------------------------
      Name of Nominee                             For        Withheld
--------------------------------------------------------------------------------
  Leonard Armato                              97,091,444      769,654
  Bruce Binkow                                97,091,444      769,654
  Philip Guarascio                            97,091,444      769,654
  Scott Painter                               97,091,444      769,654
  Jeffrey Wattenberg                          97,091,444      769,654
  Roger L. Werner, Jr.                        97,091,444      769,654
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                           Number of votes cast
-----------------------------------------------------------------------------------------------
                                                                                   Broker Non-
                                                  For       Against     Abstain       Votes
-----------------------------------------------------------------------------------------------
<S>                                           <C>         <C>           <C>         <C>
2. Ratification of appointment of auditors    95,878,028          39    1,983,031            0
-----------------------------------------------------------------------------------------------
3. Increase in authorized Common Stock to
   300,000,000 shares                         76,584,496     595,155      107,000            0
-----------------------------------------------------------------------------------------------
4. One for ten reverse stock split            95,572,018   1,786,370      502,712            0
-----------------------------------------------------------------------------------------------
5. Amended and restated certificate of
   incorporation, reducing authorized
   Commmon Stock to 80,000,000 shares         89,467,203   3,965,154    4,428,741            0
-----------------------------------------------------------------------------------------------
6. 2005 Incentive Stock Plan                  77,434,453   5,918,985    2,541,508   11,966,152
-----------------------------------------------------------------------------------------------
</TABLE>

ITEM 6.   EXHIBITS

      31.1 - Certification of President Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002

      31.2 - Certification of Chief Financial Officer Pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002

      32 - Certification of President and Chief Financial Officer Pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002


                                       27
<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant to the requirements of Section 13 or 15 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 duly authorized on the 15th day of
November, 2005.

                                            AVP, INC.
                                            (Registrant)

                                            By: /s/  Andrew Reif
                                            -------------------
                                            Andrew Reif
                                            Chief Operating Officer and
                                            Chief Financial Officer


                                       28