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 March 31, 2006

                                       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)


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 May 10, 2006, the Registrant had 16,009,099 shares of common stock
outstanding.

Traditional Small Business Disclosure Format (check one): Yes |X| No |_|


                                       1
<PAGE>

                                    AVP, INC.



                                      INDEX

                                                                            Page
                                                                            ----

PART I.FINANCIAL INFORMATION                                                   3

ITEM 1.FINANCIAL STATEMENTS                                                    3

      Consolidated Balance Sheet as of March 31, 2006
      (Unaudited)                                                              4

      Consolidated Statements of Operations for
      the three months ended March 31, 2006 and 2005
      (Unaudited)                                                              5

      Consolidated Statement of Changes in Stockholders' Deficiency for
      the three months ended March 31, 2006
      (Unaudited)                                                              6

      Consolidated Statements of Cash Flows for
      the three months ended March 31, 2006 and 2005
      (Unaudited)                                                              7

      Consolidated Notes to Financial Statements (Unaudited)                   9

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION              19

ITEM 3.CONTROLS AND PROCEDURES                                                25

PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS                                                      26

ITEM 6.EXHIBITS AND REPORTS ON FORM 8- K                                      26


                                       2
<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                    AVP, INC.
                          Index to Financial Statements
                           Period Ended March 31, 2006


                                                                            PAGE

Financial Statements

Unaudited Consolidated Balance Sheet                                           4

Unaudited Consolidated Statements of Operations                                5

Unaudited Consolidated Statements of Changes in Stockholders' Deficiency       6

Unaudited Consolidated Statements of Cash Flows                              7-8

Unaudited Notes to Consolidated Financial Statements                           9

                                       3
<PAGE>

                                    AVP, INC.

                           CONSOLIDATED BALANCE SHEET

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                 March 31,
                                                                                   2006
                                                                               ------------
<S>                                                                            <C>
ASSETS
CURRENT ASSETS
     Cash and cash equivalents                                                 $    759,892
     Accounts receivable, net of
       allowance for doubtful accounts of $49,232                                   263,732
     Prepaid expenses                                                             1,650,121
     Current portion of investment in sales-type lease                              113,876
                                                                               ------------

     TOTAL CURRENT ASSETS                                                         2,787,621
                                                                               ------------

PROPERTY AND EQUIPMENT, net                                                         306,279
                                                                               ------------

OTHER ASSETS
     Investment in sales-type lease                                                 387,020
     Other assets                                                                    36,633
                                                                               ------------

     TOTAL OTHER ASSETS                                                             423,653
                                                                               ------------

     TOTAL ASSETS                                                              $  3,517,553
                                                                               ============

LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
     Notes payable                                                             $    183,334
     Accounts payable                                                               296,769
     Accrued expenses                                                             1,233,757
     Accrued interest                                                                21,673
     Deferred revenue                                                             2,731,915
                                                                               ------------

     TOTAL CURRENT LIABILITIES                                                    4,467,448
                                                                               ------------

OTHER LIABILITIES
     Long-term deferred revenue                                                     131,250
                                                                               ------------

     TOTAL LIABILITIES                                                            4,598,698
                                                                               ------------

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, 74,708 shares issued and outstanding                                  74

     Common stock, $.001 par value, 80,000,000 shares authorized,
     12,817,919 shares issued and outstanding                                        12,819

     Additional paid-in capital                                                  33,194,342

     Accumulated deficit                                                        (34,288,380)
                                                                               ------------

     TOTAL STOCKHOLDERS' DEFICIENCY
                                                                                 (1,081,145)
                                                                               ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                            $  3,517,553
                                                                               ============
</TABLE>

                       See notes to financial statements.

                                       4
<PAGE>

                                    AVP, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)

                                                   Three Months Ended March 31,
                                                     2006              2005
                                                  ------------     ------------

REVENUE
     Sponsorships                                 $         --     $         --
     Other                                             122,816          103,956
                                                  ------------     ------------

     TOTAL REVENUE                                     122,816          103,956

EVENT COSTS                                                 --               --
                                                  ------------     ------------

     Gross Profit                                      122,816          103,956
                                                  ------------     ------------

OPERATING EXPENSES
     Marketing                                         555,950          411,600
     Administrative (includes stock-based
        compensation of $10,726 for 2006
        and $3,498,022 for 2005)                     1,068,338        4,518,384
                                                  ------------     ------------
     TOTAL OPERATING EXPENSES                        1,624,288        4,929,984
                                                  ------------     ------------
OPERATING LOSS                                      (1,501,472)      (4,826,028)
                                                  ------------     ------------

OTHER INCOME (EXPENSE)
     Interest expense                                   (8,213)         (70,558)
     Interest income                                    21,139           15,356
                                                  ------------     ------------
     TOTAL OTHER INCOME (EXPENSE)                       12,926          (55,202)
                                                  ------------     ------------

LOSS BEFORE INCOME TAXES                            (1,488,546)      (4,881,230)

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

NET LOSS                                          $ (1,488,546)    $ (4,881,230)
                                                  ============     ============

Basic and diluted loss per share                  $      (0.12)    $      (0.95)
                                                  ============     ============

Weighted average common shares outstanding          12,468,848        5,135,713
                                                  ============     ============


                       See notes to financial statements.


                                       5
<PAGE>

                                    AVP, INC.

         CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

                                   (Unaudited)

<TABLE>
<CAPTION>
                     Series A         Series B
                   Preferred Stock  Preferred Stock             Common Stock
                   -------------   --------------------    ------------------------
                                                                                        Additional                         Total
                                                                                         Paid-in       Accumulated     Stockholders'
                   Shares  Amount   Shares      Amount       Shares        Amount        Capital          Deficit        Deficiency
                   ------  ------  ---------    -------    ------------   ----------   ------------    ------------    ------------
<S>                   <C>  <C>        <C>       <C>          <C>          <C>          <C>             <C>             <C>
Balance,
December 31, 2005     --   $  --      94,488    $    94      11,669,931   $   11,670   $ 32,183,810    $(32,799,834)   $   (604,260)

Conversion of
Series B Preferred
Stock to common
stock                 --      --     (19,780)       (20)        480,654          481           (461)             --              --

Payment of accrued
registration
penalty in
common stock          --      --          --         --             667            1            934              --             935

Issuance of common
stock to
non-employees for
services              --      --          --         --         666,667          667        999,333              --       1,000,000

Compensation
expense
from issuance
of warrants           --      --          --         --              --           --         10,726              --          10,726

Net loss              --      --          --         --              --           --             --      (1,488,546)     (1,488,546)
                   -----   -----   ---------    -------    ------------   ----------   ------------    ------------    ------------

Balance,
March 31, 2006        --   $  --      74,708    $    74      12,817,919   $   12,819   $ 33,194,342    $(34,288,380)   $ (1,081,145)
                   =====   =====   =========    =======    ============   ==========   ============    ============    ============
</TABLE>

                       See notes to financial statements.


                                       6
<PAGE>

                                    AVP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                     Three Months Ended March 31,
                                                                                          2006           2005
                                                                                       -----------    -----------
<S>                                                                                    <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
      Net loss                                                                         $(1,488,546)   $(4,881,230)
      Adjustments to reconcile net loss to net cash flows from operating activities:
           Depreciation and amortization of property and equipment                          36,545         22,101
           Interest income on investment in sales-type lease                               (12,843)       (15,356)
           Amortization of deferred commissions                                                 --         63,335
           Gain on property and equipment                                                   (9,864)            --
           Other amortization                                                                2,011          2,011
           Compensation from issuance of stock options and warrants                         10,726      3,498,022
      Decrease (increase) in operating assets:
           Accounts receivable                                                             202,903       (453,706)
           Prepaid expenses                                                               (492,067)      (527,476)
           Other assets                                                                         (3)        (4,500)
      Increase (decrease) in operating liabilities:
           Accounts payable                                                               (414,534)       164,381
           Accrued expenses                                                               (341,742)       208,347
           Accrued interest                                                               (104,316)       (56,127)
           Deferred revenue                                                              2,597,165      2,969,847
                                                                                       -----------    -----------

           NET CASH FLOWS FROM OPERATING ACTIVITIES                                        (14,565)       989,649
                                                                                       -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES
      Investment in property and equipment                                                 (64,216)      (137,384)
      Investment in sales-type lease                                                        92,400         39,600
      Proceeds from disposal of property and equipment                                      19,665             --
                                                                                       -----------    -----------

           NET CASH FLOWS FROM INVESTING ACTIVITIES                                         47,849        (97,784)
                                                                                       -----------    -----------
</TABLE>

                       See notes to financial statements.


                                       7
<PAGE>

                                    AVP, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (Unaudited)

                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                       Three Months Ended March 31,
                                                                           2006           2005
                                                                        -----------    -----------
<S>                                                                     <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from sale of capital stock                                $        --    $ 5,000,061
     Offering costs                                                              --       (753,038)
     Debt repayments                                                       (416,737)      (950,000)
                                                                        -----------    -----------

         NET CASH FLOWS FROM FINANCING ACTIVITIES                          (416,737)     3,297,023
                                                                        -----------    -----------

         NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS              (383,453)     4,188,888

         CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   1,143,345        631,933
                                                                        -----------    -----------

         CASH AND CASH EQUIVALENTS, END OF PERIOD                       $   759,892    $ 4,820,821
                                                                        ===========    ===========

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
     Cash paid during the year for:
     Interest                                                           $   110,447    $        --
                                                                        ===========    ===========
     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 in common stock        $        --    $ 2,290,348
                                                                        ===========    ===========

     Payment of accrued registration penalty in common stock            $       935    $        --
                                                                        ===========    ===========

     Issuance of common stock to non-employees for services             $ 1,000,000    $        --
                                                                        ===========    ===========
</TABLE>


                       See notes to financial statements.


                                       8
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated 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 on Form 10-KSB filed with the SEC. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of AVP's 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 consolidated financial statements
which would substantially duplicate the disclosures contained in the
consolidated audited financial statements for the most recent fiscal year 2005,
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 named Othnet Merger Sub,
Inc., a Delaware corporation, and the Association of Volleyball Professionals,
Inc. (the "Association") consummated a merger ("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 common stock to Association stockholders.

In the second half of 2004, AVP issued $2,360,000 principal amount of 10%
convertible notes and, as required by the Merger, 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) (the "Bridge
Financing"). 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 (the "Units
Offering"), concurrently with the Merger closing.

Each share of Series B preferred stock is convertible into 24.3 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, the outstanding shares of the Association's
common stock were converted into 2,973,861 shares of AVP common stock. The
Association also had outstanding options and warrants that, as a result of the
Merger, now represent the right to purchase 8,842,839 shares of AVP common
stock.

As part of the Merger, the Association's preferred stockholders converted
$3,657,600 of redeemable preferred stock into 2,317,188 shares of AVP common
stock. In addition, as part of the Merger, holders of Bridge Financing
convertible notes converted $2.1 million into 1,707,672 shares of AVP common
stock. In February 2005, the two television networks waived their put rights on
their redeemable Series A preferred stock that AVP previously issued to them,
and subsequently converted the preferred stock into common stock pursuant to the
Merger.


                                       9
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

2. MERGER (CONTINUED)

Concurrent with the Merger, AVP raised $5,000,061 through the Units Offering,
representing 147,364 shares of Series B Convertible Preferred Stock, which are
convertible into 3,580,945 shares of AVP common stock.

Pursuant to the merger agreement and in conjunction with the Merger, AVP was
obligated to grant warrants to purchase 5,677,590 shares of common stock.

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 constituted
a majority of the Board of Directors.

Because AVP was a publicly traded shell corporation at the time of the Merger,
the transaction was accounted for as a capital transaction. For accounting
purposes, the equivalent of the Association issuing stock for AVP's net assets,
accompanied by a recapitalization of the Association. 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
AVP.

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.

On March 9, 2005, Othnet changed its name to its current name, AVP, Inc.

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 was required to pay a penalty to the Series B preferred stock
stockholders of approximately $50,000 for each month that the penalty condition
was 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 Certificate of
Incorporation increasing the number of authorized shares of common stock to
300,000,000 shares and to amend the Articles of Incorporation to effect a 1 for
10 reverse stock split. The Certificate of Incorporation was subsequently
amended to reduce the authorized shares of common stock to 80,000,000.

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 agreement, the authorization of additional
shares and the reverse stock split, which was effective on December 16, 2005.


                                       10
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

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.
If this rescission is accepted by all players to whom it is made, AVP could be
required to make aggregate payments of up to $245,000, which includes statutory
interest, based on options outstanding as of March 31, 2006. AVP may continue to
be liable under federal and state securities laws for amounts with respect to
which the rescission offer is not accepted. As management believes there is only
a remote likelihood the rescission offer will be accepted by 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.

The following options, warrants and other incremental shares to purchase shares
of common stock were excluded from the computation of diluted earnings (loss)
per share for the periods presented as their effect would be antidilutive.

                                        Three Months Ended March 31,
                                          2006                 2005
                                       ----------            ----------
Options and Warrants                   15,482,688            11,053,950
Convertible Debt                               --             1,129,261
Series B Preferred Stock                1,815,404             3,580,945
                                       ----------            ----------
Total                                  17,298,092            15,764,156
                                       ==========            ==========


                                       11
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

5. STOCK BASED COMPENSATION

On January 1, 2006, the Company adopted the fair value recognition provisions of
SFAS No. 123(R). Prior to January 1, 2006, the Company had accounted for
stock-based payments under the recognition and measurement provisions of
Accounting Principles Board ("APB") Opinion 25 and related interpretations, as
permitted by SFAS No. 123, "Accounting for Stock-Based Compensation." In
accordance with APB 25, no compensation expense was required to be recognized
for options granted that had an exercise price equal to the market value of the
underlying common stock on the date of grant.

Under the modified prospective method of SFAS No. 123(R), compensation expense
was recognized during the three months ended March 31, 2006 and includes
compensation expense for all stock-based payments granted prior to, but not yet
vested as of January 1, 2006, based on the grant date fair value estimated in
accordance with the original provisions of SFAS No. 123. There were no stock
based grants between January 1, 2006 and March 31, 2006. The Company's financial
results for the prior periods have not been restated.

AVP adopted SFAS No. 148 effective for the year ended December 31, 2002, and has
accounted for its stock-based compensation in accordance with APB No. 25,
"Accounting for Stock Issued to Employees", until January 2006, at which time
AVP adopted SFAS No. 123(R). Under APB 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. The reported net income and net income per
share for the three months ended March 31, 2005 do not reflect the impact of the
adoption of SFAS No. 123(R). If AVP had elected to recognize compensation
expense based upon the fair value at the grant date for options under its
stock-based compensation plans consistent with the methodology prescribed by
SFAS No. 123, AVP's net loss for the three months ending March 31, 2005 would
increase to the following pro forma amounts. The pro forma net loss did not
increase since there were no employee grants for the three months ending March
31, 2005.

                                                              Three Months Ended
                                                                  March 31,
                                                               -------------
                                                                   2005
                                                               -------------

Net loss applicable to common
stockholders, as reported                                      $  (4,881,230)

Less, stock-based employee compensation
expense determined under
fair-value-based methods for all
awards, net of related tax effects                                        --
                                                               -------------

Pro forma net loss                                             $  (4,881,230)
                                                               =============

Basic and diluted loss per share of common stock:
      As reported                                              $      (0.95)
                                                               =============
      Pro forma                                                $      (0.95)
                                                               =============

The fair value of these options was estimated at the dates of grant using the
Black-Scholes option pricing model, with the following assumptions for the three
months ended March 31, 2005:

                                             Three Months Ended
                                                 March 31,
                                          -------------------------
                                                    2005
                                          -------------------------

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


                                       12
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

5. STOCK BASED COMPENSATION (CONTINUED)

As a result of adopting SFAS No. 123(R), during the three months ended March 31,
2006, the Company's net loss is $10,726 greater than if it had continued to
account for stock based compensation under APB 25 as it did for the three months
ended March 31, 2005. Basic and diluted earnings per share for the three months
ended March 31, 2006 would have been ($0.12) if the Company had not adopted SFAS
No. 123(R), compared to basic and diluted earnings per share of ($0.12). The
adoption of SFAS No. 123(R) had no impact on the Company's cash flows.

Consistent with the valuation method used for the disclosure only provisions of
SFAS No. 123, the Company is using the Black-Scholes option-pricing model to
value compensation expense. Forfeitures are estimated at the date of grant based
on historical rates and reduce the compensation expense recognized. The expected
term of options granted from historical data on employee exercises is not yet
determinable. The risk-free interest rate is based on the U.S. Treasury yield
curve in effect at the date of grant. Expected volatility is based on the
historical volatility of the Company's stock. As of March 31, 2006, the Company
had approximately $80,770 of unrecognized compensation expense expected to be
recognized over a weighted average period of approximately 1.9 years.


                                       13
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

6. STOCK OPTIONS

                               Stock Option Plans

On August 23, 2005, the stockholders approved the adoption of the 2005 Stock
Incentive Plan. Under the 2005 Plan, AVP may grant awards of stock options
(including stock purchase warrants) and restricted stock grants to its officers,
directors, employees, consultants, players, and independent contractors. AVP may
issue an aggregate of 30,000,000 shares of its common stock under the 2005 Plan,
including approximately 14,000,000 shares subject to management warrants and
options converted from stock options to purchase shares of the Association,
pursuant to the merger agreement. AVP may grant both incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code, and options,
warrants, and other rights to buy AVP's common stock that are not qualified as
incentive stock options. No stock options may be granted at an exercise price
less than the fair market value of our common stock on the date of grant. The
exercise price of incentive stock options granted to holders of more than 10% of
AVP's Common Stock must be at least 110% of the fair market value of the Common
Stock on the date of grant. Stock options granted under the 2005 Plan will
expire no more than ten years from the date on which the option is granted,
unless the Board of Directors determines an alternative termination date. If
incentive stock options are granted to holders of more than 10% of AVP's Common
Stock, such options will expire no more than five (5) years from the date the
option is granted. Except as otherwise determined by the Board of Directors or
the Compensation Committee, stock options granted under the 2005 Plan will vest
and become exercisable on the anniversary of the date of grant of such option at
a rate of 25% per year over four years from the date of grant.

The exercise price of each optioned share is determined by the Committee;
however the exercise price for incentive stock options will not be less than
100%, and in the case of a nonqualified stock option, not less than 85%, of the
fair market value of the optioned shares on the date of grant. The expiration
date of each option shall be determined by the Committee at the date of grant;
however, in no circumstances shall the option be exercisable after 10 years from
the date of grant.

The following table contains information on the stock options under the Plan for
the period ended March 31, 2006 and the year ended December 31, 2005. The
outstanding options expire from April 2008 to September 2013.

<TABLE>
<CAPTION>
                                                                                Weighted Average
                                                       Number of Shares          Exercise Price
                                                       ----------------        ----------------
<S>                                                         <C>                <C>
Options outstanding at January 1, 2005                      8,555,241          $        .32
    Granted                                                 3,259,593                  2.19
    Converted Othnet options                                  200,428                  2.50
    Exercised                                                      --                    --
    Cancelled                                                      --                    --
                                                       ----------------        ----------------
Options outstanding at December 31, 2005                   12,015,262                   .87
    Granted                                                        --                    --
    Exercised                                                      --                    --
    Cancelled                                                      --                    --
                                                       ----------------        ----------------
Options outstanding at March 31, 2006                      12,015,262          $        .87
                                                       ================        ================
</TABLE>

The weighted average fair value per share of options granted was $-0- in 2006
and $1.38 in 2005.


                                       14
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

6. STOCK OPTIONS (CONTINUED)

                         Stock Option Plans (Continued)

The following table summarizes information about AVP's stock-based compensation
plan at March 31, 2006:

Options outstanding and exercisable by price range as of March 31, 2006:

<TABLE>
<CAPTION>
                                        Options Outstanding                       Options Exercisable
                          ------------------------------------------------    -------------------------------
                                              Weighted
                                              Average          Weighted                          Weighted
       Range of                              Remaining         Average                           Average
       Exercise              Number         Contractual        Exercise          Number          Exercise
        Prices             Outstanding     Life in Years        Price         Exercisable         Price
    --------------         ----------     -----------         ------------    -----------       ------------
<S>  <C>                   <C>                    <C>         <C>              <C>              <C>
    $ .01  -   .30          6,118,943             3.8         $       0.03      6,118,943       $       0.03
      .31  -   .90          1,655,480             7.4                 0.77      1,655,480               0.77
      .91  -  1.60            780,818             3.1                 1.60        716,568               1.60
     1.61  -  2.80          3,460,021             3.3                 2.21      3,409,931               2.22
                           ----------                                         -----------
    $ .01  -  2.80         12,015,262             4.1         $       0.87     11,900,922       $       0.86
    ==============         ==========     ===========         ============    ===========       =============
</TABLE>

In connection with stock options granted to employees to purchase common stock,
AVP recorded $10,726 of stock-based compensation expense for the period ended
March 31, 2006 and $-0- for the period ended March 31, 2005.


                                       15
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

6. STOCK OPTIONS (CONTINUED)

                               Other Stock Options

The following table contains information on all of AVP's non-plan stock options
for the period ended March 31, 2006 and the year ended December 31, 2005.

<TABLE>
<CAPTION>
                                                                            Weighted
                                                                            Average
                                                                            Exercise
                                                        Number of Shares     Price
                                                        --------------    ------------
<S>                                                            <C>         <C>
Options outstanding at January 1, 2005                         302,930     $      0.30
         Granted                                             2,491,056            1.99
         Converted Othnet options                              728,557            2.39
         Exercised                                                  --             --
         Cancelled                                             (55,118)           4.42
                                                            ----------    ------------
Options outstanding at December 31, 2005                     3,467,425            1.89
         Granted                                                    --             --
         Exercised                                                  --             --
         Cancelled                                                  --             --
                                                            ----------    ------------
Options outstanding at March 31, 2006                        3,467,425     $      1.89
                                                            ==========    ============
</TABLE>

The weighted average fair value of options granted was $-0- in 2006 and $2.26 in
2005.

The following table summarizes information about AVP's non-qualified stock
options at March 31, 2006:

Options outstanding and exercisable by price range as of March 31, 2006:

<TABLE>
<CAPTION>
                                         Options Outstanding                              Options Exercisable
                       --------------------------------------------------------     --------------------------------
                                                 Weighted
                                                 Average            Weighted                             Weighted
                                                Remaining           Average                               Average
  Range of Exercise           Number           Contractual          Exercise            Number           Exercise
       Prices               Outstanding       Life in Years          Price           Exercisable           Price
----------------------     --------------     ---------------     -------------     ---------------     ------------
<S> <C>                          <C>               <C>                   <C>               <C>                <C>
    $ .30 - 1.50                 661,025           4.0                   $0.89             661,025            $0.89
     1.60 - 3.40               2,806,400           2.9                    2.12           2,806,400             2.12
                           --------------                                           ---------------

    $ .30 - 3.40               3,467,425           3.1                   $1.89           3,467,425            $1.89
======================     ==============     ===============     =============     ===============     ============
</TABLE>

In connection with warrants granted to non-employees to purchase Common Stock in
connection with the Units Offering, AVP recorded consulting expense of $-0- for
the period ended March 31, 2006 and $3,498,022 for the period ended March 31,
2005. Such amounts represent, for each non-employee stock option, the valuation
under SFAS 123 on the date of the grant. These grants were fully vested on the
grant date.


                                       16
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

7. COMMITMENTS AND CONTINGENCIES

                                 Operating Lease

The Company leases its corporate office facilities under a non-cancellable
operating lease expiring in March 2010. The lease agreement contains a renewal
option for an additional five-year term. In addition, the lease agreement
provides for rental escalations at defined intervals during the lease term. Rent
expense is recognized on the straight-line method over the term of the lease.
The difference between rent expense recognized and rent payable under the rental
escalation clauses is reflected in accrued expenses.

The future minimum rental payments under the non-cancellable operating lease
commitment are as follows:

For the Years Ending March 31,
------------------------------
         2007                                                     $  331,000
         2008                                                        340,000
         2009                                                        350,000
         2010                                                        360,000
                                                               --------------

         Total                                                   $ 1,381,000
                                                               ==============

Rent expense charged to operations was $78,157 for the three months ended March
31, 2006 and $89,841 for the three months ended March 31, 2005.

                             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 by EBITDA or such other appropriate specification of the AVP for such
fiscal year to establish a Profit Sharing Bonus Pool. The Chief Executive
Officer will determine the allocation of the Profit Sharing Bonus Pool among
officers eligible to participate in the Profit Sharing Bonus Pool.

                                Legal proceedings

A complaint was filed by Carl Schneider and Schneider Productions, LLC on
October 24, 2005 in the United States District Court, Central District of
California, in which the plaintiffs seek damages for copyright infringement in
connection with the allegedly unauthorized use of a still photograph in a
television commercial that was broadcast on NBC and FSN in 2005. Discovery has
only recently commenced and therefore management is unable to determine or
predict the outcome of this claim or the impact on the Company's consolidated
financial condition or results of operations. Accordingly, the Company has not
recorded a provision for this matter in their consolidated financial statements.


                                       17
<PAGE>

                                    AVP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

8. CAPITAL TRANSACTIONS

In February 2006, AVP entered a production and distribution agreement with Fox
Broadcasting Company ("FBC") in connection with two events. Under the agreement,
FBC will have the exclusive right to telecast the finals of two 2006 AVP
tournaments throughout the U.S., its territories, and possessions. In
consideration for its services valued at $1,000,000, FBC received 666,667 shares
of Common Stock, par value $0.001 per share, of AVP.

9. RECENTLY ISSUED ACCOUNTING STANDARDS

In February 2006, the FASB issued the new standard, Statement of Financial
Accounting Standard No. 155, "Accounting for Certain Hybrid Instruments," which
is an amendment of FASB Statements No. 133 and 140. SFAS No. 155 allows
financial instruments that have embedded derivatives to be accounted for as a
whole (eliminating the need to bifurcate the derivative from its host), if the
holder elects to account for the whole instrument on a fair value basis. This
statement is effective for all financial instruments acquired or issued after
the beginning of an entity's first fiscal year that begins after September 15,
2006. The adoption of this Statement is not expected to have any impact on AVP's
financial position or results of operations.

10. SUBSEQUENT EVENT

On April 12, 2006, AVP entered a multi-year sponsorship agreement ("Agreement")
with Crocs, Inc. ("Crocs") pursuant to which Crocs shall become the title
sponsor of the AVP Tour through the final event of the 2008 AVP Tour season. The
Agreement is significant to AVP's 2006 projected revenue.

In the Agreement, AVP agreed to issue warrants to purchase up to 1,000,000
shares of common stock of AVP. The vesting period is as follows: (i) 200,000
shares on April 12, 2006 and (ii) 200,000 shares on each January 15th for the
years 2007 through 2010; however no shares shall be granted in 2008, 2009 or
2010 if Crocs reduces its sponsorship in 2008, or in either 2009 or 2010 is not
extended or in such earlier years if the Agreement is terminated by either party
for breach prior to the final event of the 2008 AVP Tour season. The exercise
price of the warrant is $.80. The registration rights are subject to Securities
Act rules, AVP agrees to file a registration statement for resale of the shares
underlying the warrants by April 12, 2007. The expiration date of the warrant is
April 12, 2012 (sixth anniversary of the execution of the Agreement).

Pursuant to Securities Purchase Agreement dated May 4, 2006, AVP sold 2,941,180
shares of common stock and five-year warrants to purchase 588,236 shares of
common stock at price of $1.00 per share, to accredited investors, for a total
price $2,500,003. Oppenheimer & Co., Inc. acted as the placement agent and in
addition to its commission, received a warrant to purchase 282,353 shares of
common stock on substantially the same terms as the warrants sold to investors.
The sale of the securities is exempt from registration pursuant under Securities
Act section 4(2), due to the limited number of investors, all of which are
accredited. The Securities Purchase Agreement requires AVP to file a re-sale
registration statement within 30 days from closing and gives the investors
rights of first negotiation regarding future issuances of common stock, subject
to exceptions.


                                       18
<PAGE>

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

Background

We originally incorporated under the name Malone Road Investments, Ltd., on
August 6, 1990, in the Isle of Man. We re-domesticated in the Turks and Caicos
Islands in 1992 and subsequently domesticated as a Delaware corporation in 1994.
Pursuant to Delaware law, we are deemed to have been incorporated in Delaware as
of the date of our formation in the Isle of Man. We changed our name to PL
Brands, Inc. in 1994; changed our name to Othnet, Inc. in March 2001; and
changed our name to AVP, Inc. on March 9, 2005. Since December 2001 until the
Merger (as defined below), we had no business operations other than to attempt
to locate and consummate a business combination with an operating company.

AVP's Business

We own and operate professional beach volleyball tournaments in the United
States. The AVP tour is the sole nationally recognized U.S. professional beach
volleyball tour. Every top U.S. men's and women's beach volleyball professional,
including the women's gold and bronze medalists in the 2004 Olympic Games,
competes on the AVP tour. We have more than 200 of the top professional players
under exclusive contracts, as well as a growing base of spectators and
television viewers that we believe represent an attractive audience for
national, regional, and local sponsors. Our business includes establishing and
managing tournaments; sponsorship sales and sales of broadcast, licensing, and
trademark rights; sales of food, beverage, and merchandise at the tournaments;
contracting with players in the tour; and associated activities.

AVP's beach volleyball tournament season customarily commences in early April
and continues until late September or early October. For 2006, we have scheduled
16 men's and 16 women's events to be held in Fort Lauderdale, FL; Tempe, AZ;
Santa Barbara, CA; Huntington Beach, CA; Hermosa Beach, CA; Sacramento, CA;
Seaside Heights, NJ; Atlanta, GA; Birmingham, AL; Chicago, IL; Manhattan Beach,
CA; Brooklyn (Coney Island), NY; Boulder, CO; Cincinnati, OH; Las Vegas, NV; and
Lake Tahoe, NV. Ten of the 16 cities are the same as last year.

AVP Acquisition

On February 28, 2005, Association of Volleyball Professionals, Inc. (the
"Association") and a wholly owned subsidiary of AVP, then known as Othnet, Inc.,
consummated a merger pursuant to a merger agreement, signed in June 2004, as
amended (the "Merger"). As a result of the Merger, the Association became our
wholly owned subsidiary, and the Association's former stockholders (including
holders of stock options and stock purchase warrants) beneficially owned 61.2%
of all common stock beneficially owned by all beneficial owners of our capital
stock. On December 16, 2005, AVP effectuated a 1-for-10 reverse stock split,
which is reflected in all share amounts referred to in this report.


                                       19
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005

<TABLE>
<CAPTION>
OPERATING INCOME (LOSS) AND NET INCOME (LOSS)
----------------------------------------------------------------------------    -----------------------------------
               OPERATING INCOME (LOSS) AND NET INCOME (LOSS)                                % OF REVENUE
----------------------------------------------------------------------------    -----------------------------------
                                            2006                 2005                 2006                2005
                                      -----------------    -----------------    -----------------    --------------
<S>                                       <C>                  <C>                       <C>                 <C>
Operating Income (Loss)               $    (1,501,472)     $    (4,826,028)              (1223)%             (4642)%
Net Income (Loss)                     $    (1,488,546)     $    (4,881,230)              (1212)%             (4695)%
</TABLE>

The 69% decrease in operating loss in 2006 primarily reflects a decrease in
consulting expense of $3,487,296 as no new options or warrants were granted
during the three months ending March 31, 2006, compared to 1,266,794 of warrants
granted for the three months ended March 31, 2005. The reduction in consulting
expense offset increases in depreciation, player recruitment expenses as well as
salary increases and additional new hires.

Excluding such warrant consulting expense, net loss for the three months ended
March 31, 2005 would have been approximately $1,383,208 compared to $1,477,820
for 2006, an increase of 7%.

REVENUE
-----------------------------------------------------------

                          SUMMARY REVENUE
-----------------------------------------------------------
                                                                     Percentage
                                                                      Increase
                                          2006          2005         (Decrease)
                                    -------------      --------      ----------
Sponsorship                         $          --      $     --               -%
Activation Fees                                --            --               -%
Local Revenue                                  --            --               -%
Miscellaneous Revenue                     122,816       103,956              18%
                                    -------------      --------      ----------
Total Revenue                       $     122,816      $103,956              18%
                                    =============      ========      ==========

The preceding chart compares revenues from 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
during the tour, as the events occur and collection is reasonably assured, in
the proportion that prize money for an event bears to total prize money for the
season. AVP's beach volleyball tournament season customarily commences in early
April and continues until late September or early October. We did not produce
any beach volleyball events in the first quarters of 2006 or 2005. Accordingly,
we did not recognize any sponsorship revenue, activation fees, or local revenue
in the quarters ended March 31, 2006 and 2005.

The 18% increase in miscellaneous revenue primarily reflects an increase in
trademark licensing revenue in connection with volleyball and volleyball net
sales.


GROSS PROFIT
--------------------------------------------------------------------------------
                              GROSS PROFIT
--------------------------------------------------------------------------------

                                                    2006                 2005
                                                  --------             --------
Revenue                                           $122,816             $103,956
Event Costs                                             --                   --
                                                  --------             --------
Gross Profit                                      $122,816             $103,956
                                                  ========             ========

Gross Profit %                                         100%                 100%
                                                  ========             ========

                                       20
<PAGE>

AVP's gross profit for 2006 increased approximately $19,000, or 18% above gross
profit in 2005, primarily due to an increase in trademark licensing revenue.
Since no events took place in the quarters ended March 31, 2006 and 2005 and no
event costs were recognized, the gross margin percentage achieved in 2006
remained unchanged at 100% from the prior year's.

<TABLE>
<CAPTION>
OPERATING EXPENSES
------------------------------------------   -----------------------------------
                   SUMMARY COSTS                        % OF REVENUE
------------------------------------------   -----------------------------------
                                                                           INCREASE
                                                                         (DECREASE) IN
                                                                         % OF REVENUE
                      2006         2005         2006          2005       2006 VS. 2005
                   ----------   ----------   ----------    ----------    -------------
<S>                <C>          <C>                   <C>           <C>              <C>
Event Costs        $       --   $       --            0%            0%               0%
Administrative      1,068,338    4,518,384          870%        4,346%            3476%
Marketing             555,950      411,600          453%          396%             (57%)
Interest Expense        8,213       70,558            7%           68%              61%

                   ----------   ----------   ----------    ----------    -------------
Total Costs        $1,632,501   $5,000,542         1330%         4810%            3480%
                   ==========   ==========   ==========    ==========    =============
</TABLE>

Event costs include the direct cost of producing an event and costs related to
television airing. 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. Since no events took
place in the quarters ended March 31, 2006 and 2005, no event costs were
recognized.

Administrative costs decreased 76% in 2006, due primarily to a significant
reduction in consulting expense as no options or warrants were granted for the
period ending March 31, 2006. For the period ending March 31, 2005,
administrative costs included a $3,498,022 charge to stock compensation for
non-employee warrants valued under SFAS 123 for warrants granted on February 28,
2005, as a result of the Merger. The decrease in consulting expense offset
increases in depreciation expense and 2006 salaries increases.

The 35% increase in marketing costs of $144,350 primarily reflects hiring of a
head of sales and other marketing personnel and increases in miscellaneous
marketing expenditures including logo redesign costs, as well as the cost of
holding an inaugural high performance camp to recruit top college volleyball
players to play on the AVP tour.

Interest expense in 2006 decreased 88% from 2005 due to elimination of
short-term debt to Management Plus Enterprises, Inc, (MPE), Anschutz
Entertainment Group, Inc. (AEG), Major League Volleyball, Inc. (MLV), and the
Bridge Financing from the Merger.


--------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION EXPENSE
--------------------------------------------------------------------------------
                                                                     PERCENTAGE
                                                                      INCREASE
                                  2006               2005            (DECREASE)
                              ---------------    ---------------    ------------


Depreciation Expense          $        36,545    $        22,101            65%
Amortization Expense                    2,011             65,346           (97%)
                              ---------------    ---------------

                              $        38,556    $        87,447           (56%)
                              ===============    ===============

The increase in depreciation expense of $14,444 resulted from an increase in
depreciable assets, including information technology equipment; activation
equipment; and transportation equipment (e.g., trailer).

Amortization expense decreased 97% from 2005, primarily due to the absence in
2006 of MPE deferred commission costs. The underlying MPE sponsorship sales
service contract was fully amortized in 2005.

                                       21
<PAGE>


--------------------------------------------------------------------------------
INTEREST INCOME
--------------------------------------------------------------------------------
                                                                     PERCENTAGE
                                2006                2005              INCREASE
                           --------------    ----------------    ---------------
    Interest Income              $21,139             $15,356                 38%

The increase in interest income of $5,783 reflects additional interest earned on
the proceeds realized from the Units Offering consummated on February 28, 2005.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities for the three months ended March 31, 2006
and 2005 were $(14,565) and $989,649, respectively. Working capital, consisting
of current assets less current liabilities, was $(1,679,827) at March 31, 2006
and $87,243 at March 31, 2005. The negative working capital at March 31, 2006
resulted from deferred revenue being recognized for sponsorship payments
received for events occurring after March 31, 2006, and using cash for payments
of accounts payable and accrued liabilities related to the merger and delayed
effectiveness of the registration statement.

At March 31, 2006 and 2005, accounts receivable had decreased $202,903 and
increased $453,706, respectively, and deferred revenues had increased $2,597,165
and $2,969,847, respectively, over their respective amounts at March 31, 2006
and 2005, as AVP collects revenues prior to holding certain events.

On April 12, 2006, AVP entered a multi-year sponsorship agreement ("Agreement")
with Crocs, Inc. ("Crocs") pursuant to which Crocs shall become the title
sponsor of the AVP Tour through the final event of the 2008 AVP Tour season. The
Agreement is significant to AVP's 2006 projected revenue.

Pursuant to Securities Purchase Agreement dated May 4, 2006, AVP sold 2,941,180
shares of common stock and five-year warrants to purchase 588,236 shares of
common stock at price of $1.00 per share, to accredited investors, for a total
price $2,500,003. Oppenheimer & Co., Inc. acted as the placement agent and in
addition to its commission, received a warrant to purchase 282,353 shares of
common stock on substantially the same terms as the warrants sold to investors.
The sale of the securities is exempt from registration pursuant under Securities
Act section 4(2), due to the limited number of investors, all of which are
accredited. The Securities Purchase Agreement requires AVP to file a re-sale
registration statement within 30 days from closing and gives the investors
rights of first negotiation regarding future issuances of common stock, subject
to exceptions.

Capital expenditures for the three months ended March 31, 2006 and 2005 were
$64,216 and $137,384, respectively. During the three months ended March 31,
2006, AVP purchased a scoreboard and a trailer in preparation for the 2006 tour
season, as well as, computer equipment. During the three months ended March 31,
2005, AVP purchased information technology equipment, activation equipment,
banners and flags in preparation for the 2005 tour season.

Cash flows provided from financing activities for 2006 and 2005 were $(416,737)
and $3,297,023, respectively. In February 2006, AVP paid the remaining principal
amount due on the promissory note to MPE with whom Leonard Armato, the Chief
Executive Officer and Chairman of the Board of Directors of the Company, was
affiliated. This note constituted the purchase price delivered by AVP to MPE for
the interests in MPE Sales, LLC in connection with sponsorship sales services.
In 2005, upon consummation of the Units Offering on February 28, 2005, AVP
realized proceeds of $4,247,023, net of offering costs of $753,038. Also, in
2005, AVP repaid $950,000 on the promissory note to MPE.


                                       22
<PAGE>

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
during the tour season, as the events occur and collection is reasonably
assured, in the proportion that prize money for an event bears to total prize
money for the season. Cash collected before the related events are recorded as
deferred revenue. Event costs are recognized on an event-by-event basis. Event
costs billed and/or paid before the related events are recorded as deferred
costs and expensed at the time the event occurs.

AVP also derives additional revenue from activation services, event ticket
sales, concession rights, event merchandising, promoter fees, licensing, and
sanctioning fees. Revenues and expenses from the foregoing ancillary activities
are recognized on an event-by-event basis as the revenues are realized and
collection is reasonably assured. Licensing revenue is recognized as royalties
are earned and collection is reasonably assured.

INCOME TAXES

AVP accounts for income taxes under the asset and liability method. Deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to the differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax basis. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date. A valuation allowance is
recorded to reduce deferred taxes to the amount that is more likely than not to
be realized.


                                       23
<PAGE>

RECENTLY ISSUED ACCOUNTING STANDARDS

In November 2004, the FASB issued SFAS No. 151, Inventory Costs. SFAS No. 151
amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the
accounting for abnormal amounts of idle facility expense, freight, handling
costs, and wasted material (spoilage). ARB 43 previously stated that "under some
circumstances, items such as idle facility expense, excessive spoilage, double
freight, and re-handling costs may be so abnormal as to require treatment as
current period charges". This Statement requires that those items be recognized
as current-period charges regardless of whether they meet the criterion of "so
abnormal".

In addition, this Statement requires that allocation of fixed production
overhead to the costs of conversion be based on the normal capacity of the
production facilities. The provisions of this Statement shall be effective for
inventory costs incurred during fiscal years beginning after June 15, 2005.
Earlier application is permitted for inventory costs incurred during fiscal
years beginning after the date this Statement is issued. The provisions of this
Statement shall be applied prospectively. The adoption of this Statement is not
expected to have any impact on AVP's financial statements.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), Share - Based
Payment. Statement 123(R) will provide investors and other users of financial
statements with more complete and neutral financial information by requiring
that the compensation cost relating to share - based payment transactions be
recognized in financial statements. That cost will be measured based upon the
fair value of the equity or liability instruments issued. Statement 123(R)
covers a wide range of share - based compensation arrangements including share
options, restricted share plans, performance - based awards, share appreciation
rights, and employee share purchase plans.

Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock - Based
Compensation, and supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees. Statement 123, as originally issued in 1995, established as
preferable a fair - value - based method of accounting for share - based payment
transactions with employees. However, that Statement permitted entities the
option of continuing to apply the guidance in Opinion 25, as long as the
footnotes to financial statements disclosed what net income would have been had
the preferable fair - value - based method been used. Public entities that file
as small business issuers will be required to apply Statement 123(R) as of the
first interim or annual reporting period that begins after December 15, 2005.
AVP is in the process of evaluating the impact of the adoption of SFAS 123(R) on
its financial position or results of operations for 2006. On January 1, 2006,
the Company adopted the fair value recognition provision of SFAS No. 123(R).

In February 2006, the FASB issued the new standard, "Statement of Financial
Accounting Standard No. 155, Accounting for Certain Hybrid Instruments," which
is an amendment of FASB Statements No. 133 and 140. SFAS No. 155 allows
financial instruments that have embedded derivatives to be accounted for as a
whole (eliminating the need to bifurcate the derivative from its host) if the
holder elects to account for the whole instrument on a fair value basis. This
statement is effective for all financial instruments acquired or issued after
the beginning of an entity's first fiscal year that begins after September 15,
2006. The adoption of this Statement is not expected to have any impact on AVP's
financial position or results of operations.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements as defined in Item 303(c) of
Regulation S-B.


                                       24
<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, that, as of March 31, 2006, 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.


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<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

A complaint was filed by Carl Schneider and Schneider Productions, LLC on
October 24, 2005 in the United States District Court, Central District of
California, in which the plaintiffs seek damages for copyright infringement in
connection with the allegedly unauthorized use of a still photograph in a
television commercial that was broadcast on NBC and FSN in 2005.

Discovery has only recently commenced and therefore management is unable to
determine or predict the outcome of this claim or the impact on the Company's
financial condition or results of operations. Accordingly, the Company has not
recorded a provision for this matter in its financial statements


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

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<PAGE>

                                   SIGNATURE

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 May,
2006.


                                        AVP, INC.
                                        (Registrant)


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



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