The accompanying notes are an integral part of these consolidated financial statements.

F-2

The accompanying notes are an integral part of these consolidated financial statements.

F-3

The accompanying notes are an integral part of these consolidated financial statements.

F-4

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Arvana Inc., (the ‘Company’) (formerly Turinco, Inc.) is a development stage company incorporated under the laws of the State of Nevada on September 16, 1977, with authorized common stock of 2,500 shares with a par value of $0.25. On October 16, 1998, the authorized capital stock was increased to 100,000,000 shares with a par value of $0.001. On July 24, 2006, the shareholders approved a change of the Company’s name from Turinco, Inc. to Arvana Inc.

In 1998, the Company completed a common stock split of eight shares for each outstanding share. In 2005, the Company completed another common stock split of nine shares for each outstanding share. These consolidated financial statements have been prepared showing after stock split shares with a par value of $0.001.

The Company was inactive from 1982 until 2005, during which time the Company was in the process of seeking profitable business opportunities. In 2005, the Company was introduced to the emerging technology of Voice over Internet Protocol (VoIP) telephone services. Since then, the Company has been engaged in the exploration and development of the business plan for the provision of VoIP telephone services, and is actively engaged in implementing the digital technology of the VoIP solutions in market areas that present business opportunities.

Management identified a communications company in Germany that is presently in the carrier pre-select and wholesale carrier business carrying traffic to Turkey. On August 23, 2006, Arvana Inc. acquired this company through BCH Beheer and its wholly-owned subsidiary Hallotel Deutschland GmbH. The Company plans on expanding this business including VoIP and calling card services. The Company had planned on developing its VoIP business through its wholly-owned subsidiary Arvana Networks Inc. (‘Arvana Networks’), a company incorporated in Barbados, which wholly owns Arvana Participações (‘Arvana Par’) a company incorporated in Brazil. This business was planned to be carried out by Arvana Comunicações do Brasil S. A. (“Arvana Com”), a Brazilian company intended to be 75% owned by Arvana Par and 25% owned by Gloinfo 500 Soluções EM Telemática Ltda. (“Gloinfo”). Gloinfo was planned to be our local associate in Brazil. This business did not develop in accordance with our plan or expectations and we decided to withdraw from the telecommunications market in Brazil. The parties have since agreed with Gloinfo to terminate their agreement, and the Company acquired 100% ownership of Arvana Com.

These financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. At December 31, 2006, the Company has an accumulated deficit during the development stage of $18,235,538. To date, the Company has generated no revenue from its VoIP business but now has revenues through the acquisition of Hallotel and its carrier preselect and wholesale carrier business. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might arise from this uncertainty.

The continuation of the Company is dependent upon achieving a profitable level of operations as well as obtaining further long-term financing. During 2006, the Company completed private placements of its common stock raising $1,050,000 ($976,500 net of issuance costs) in cash for purposes of completing the BCH Beheer and Hallotel acquisition. As at December 31, 2006, it had $233,452 to fund its operational costs and the remaining commitment for the acquisition. Management plans to raise up to $3,000,000 in additional equity capital over the next twelve months to finance the commitments regarding the acquisition of BCH Beheer, its operations and capital requirements of the Company for the remainder of 2007 and for 2008. While the Company is expending its efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.

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While the Company has begun to generate revenues as a result of the acquisition of its German subsidiary its planned principal operations have not yet commenced. The Company’s target market segments and market strategies for its planned principal operations are still in development. Consequently the Company is currently in the development stage and presents its financial statements in accordance with Statement of Financial Accounting Standard (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises”. The Company expects to exit the development stage and enter the operating stage during fiscal 2007. The Company’s fiscal year end is December 31. The accompanying consolidated financial statements of Arvana Inc. for the years ended December 31, 2006 and 2005, and for the cumulative amounts from the beginning of the development stage on January 1, 2005, through December 31, 2006, have been prepared in accordance with accounting principles generally accepted in the United States for financial information with the instructions to Form 10-KSB and Regulation S-B. In the opinion of management, they include all adjustments, consisting only of normal recurring items, necessary for a fair presentation. Results are not necessarily indicative of results which may be achieved in the future.

The Company uses the temporal method when translating the Brazilian subsidiary operations. Long-term assets and liabilities denominated in a foreign currency are translated into US dollars at the exchange rate in effect on the transaction date. Revenue and expenses are translated at the average rates of exchange prevailing during the periods. The cumulative effects of these translation adjustments were included in administration expenses as they were insignificant.

The Company uses the current rate method when translating the German subsidiary operations. All assets and liabilities denominated in a foreign currency are translated into US dollars at the exchange rate in effect on the balance sheet date. Revenue and expenses are translated at the average rates of exchange prevailing during the periods. The cumulative effects of these translation adjustments are presented as a component of comprehensive income.

Transactions conducted in foreign currencies are recorded using the exchange rate in effect on the transaction date. At the period end, monetary assets and liabilities are translated to the functional currency of each entity using the exchange rate in effect at the period end date. Transaction gains and losses are recorded in foreign exchange gain or loss in administration expenses as they were insignificant.

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The exchange rate prevailing at December 31, 2006, was 2.14, stated in the Brazilian Real per one US dollar. The average exchange rate during the twelve-month period ended December 31, 2006, was 2.18 stated in the Brazilian Real per one US dollar. For the Euro, the exchange rate prevailing at December 31, 2006, was .76 US dollars per Euro. The average exchange rate from the BCH Beheer acquisition date of August 23, 2006 to December 31, 2006, was .78.

Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable primarily includes trade receivables from customers. The Company estimates doubtful accounts on an item-by-item basis and includes over aged accounts as part of the allowance for doubtful accounts, which are generally ones that are ninety days or greater overdue.

i)	Property and equipment:

Property and equipment is stated at cost less accumulated depreciation and is depreciated on a straight line basis, commencing when the assets are put into use over the estimated useful lives of the assets as follows:

In accordance with SFAS 144, Accounting for Impairment or Disposal of Long-Lived Assets , the Company reviews the carrying value of long-lived assets for impairment whenever events and circumstances indicate that the carrying value of the assets might be impaired and the carrying value may not be recoverable. Recoverability of these assets is measured by comparison of the carrying value of the assets to the undiscounted cash flows estimated to be generated by those assets over the remaining economic life. If the undiscounted cash flows are not sufficient to recover the carrying value of such assets, the assets are considered impaired. The impairment loss is measured by comparing the fair value of the assets to their carrying values. Fair value is determined by either a quoted market price or a value determined by a discounted cash flow technique, whichever is more appropriate under the circumstances involved. No impairment was required to be recorded during the periods presented in these consolidated financial statements.

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On August 18, 2005, Arvana Inc. (“Arvana”) completed a transaction with Arvana Networks whereby 100% of the 4,500,000 shares (1,500,000 shares which are described below) of Arvana Networks were exchanged for an equal number of shares in Arvana Inc. Arvana Networks’ business activities to date have been directed towards the development of a technology platform and billing system that would allow us to implement in multiple markets, developing business plans and searching out appropriate local partners in order to launch VoIP telephone services.

Arvana Networks had an agreement with IP Horizon LLC (“IPH”), whereby IPH was issued 1,500,000 shares in exchange for a commitment to deliver equipment, software and network hardware for the initial launching of VoIP service in Brazil. IPH was to provide termination services to Arvana Networks, at its cost plus an administration fee not to exceed 13 percent.

As at December 31, 2006, the Company had not received the full complement of assets to be acquired in connection with this transaction or other consideration. Accordingly, the 1,500,000 shares are not reflected on our financial statements as having been issued. The following agreement has been reached with IPH with respect to this transaction:

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As both Arvana and Arvana Networks are development stage companies, the share exchange transaction was outside the scope of Statement of Financial Accounting Standard No. 141, “Business Combination”. Consequently, the transaction was recorded at the fair value of the 3.0 million Arvana’s common shares issued for the transaction based on the quoted market price of the Company’s common stock on the date of the agreement of $2.28 per share. This agreed upon consideration paid for the transaction was calculated based on the fair value of the assets recorded on Arvana Networks financial statements at the time of the transaction and on the compensation expenses given to management of Arvana Networks for pre-operating services provided to Arvana Networks and to retain their services. As such, the purchase price of the transaction was allocated among the $5,800 in cash and $131,747 in other assets acquired and $310,857 in liabilities assumed based on the fair value and the excess of purchase price over fair value of assets acquired and liabilities assumed was recorded in 2005 as compensation expense paid of $7,013,310 to the management of Arvana Networks at the time of the transaction.

4.	Arvana Comunicações Transaction

On October 6, 2005, the Company, through its wholly-owned subsidiaries, completed the first closing of an investment agreement with Gloinfo 500 Soluções EM Telemática Ltda. (“Gloinfo”) and Paulo Messina (described below) for the acquisition of Arvana Comunicações.

Arvana Com was incorporated in January 2005. In March 2005, the Company’s subsidiary Arvana Networks signed a letter of intent to acquire Arvana Com. The Company had supplied Arvana Com a non-interest bearing, no repayment term loan to be used for the pre-operating costs of the business. Arvana Com would not be able to operate without this loan and this capital was therefore at risk. Accordingly, the Company was considered the beneficiary of Arvana Com (because it absorbed the expected risk and residual gain of Arvana Com), and Arvana Com was treated as a Variable Interest Entity up until October 6, 2005. Upon completion of the first closing, the Company acquired 75% of Arvana Com’s shares, at no additional cost, and it is now considered a majority owned subsidiary for accounting purposes.

Similarly to the transaction between the Company and Arvana Networks, the share exchange transaction was scoped out of Statement of Financial Accounting Standard No. 141, “Business Combination”. Consequently, the transaction was recorded at the fair value of the net assets acquired of Arvana Com on the date of the agreement. The purchase price of the transaction has been allocated among the $62,465 in cash, $78,258 of equipment, $8,482 of receivables, and $382,354 in liabilities assumed based on their respective fair values. Accordingly, $233,149, being the excess of purchase price over fair value of assets acquired and liabilities assumed was recorded in 2005 as the loss on acquisition of Arvana Com.

In early 2006, management entered into negotiations with the principals of Gloinfo with the intention of terminating the Investment Agreement by mutual agreement. On October 31, 2006 the Company signed a definitive agreement with Gloinfo pursuant to which the Investment Agreement was terminated. The main terms of the termination of the Investment Agreement that have been agreed to by Gloinfo are as follows:

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On August 9, 2006, Arvana Inc.,, Brulex – Consultadoria Economica E Marketing Ltda. (the “Vendor”) and Hallotel Deutschland GmbH (“Hallotel”) entered into a share purchase agreement (the “Share Purchase Agreement”) pursuant to which the Company acquired control over Hallotel through the acquisition (the “Acquisition”) of all of the outstanding shares of BCH Beheer B.V., a wholly-owned subsidiary of the Vendor that owned all of the outstanding shares of Hallotel. The purchase price for the Acquisition was paid by way of:

Pursuant to the Share Purchase Agreement, the purchase price was increased by:

Prior to the acquisition date, Arvana had paid $26,941 for acquisition related expenses and this amount was included in the purchase price. A transaction fee was paid by issuing 208,300 additional shares of common stock of the Company, valued at $0.40 per share.

The Vendor has agreed that it will not sell or transfer any of the Company’s shares issued as part of the consideration for the Acquisition (or any interest therein) until one year after the closing date of the Acquisition. In addition, the Vendor has agreed to deposit such Company shares in escrow with the Company to be released from escrow twelve months after the closing date, except in the event of a claim made by the Company under the Share Purchase Agreement, in which case such Company shares will be released on a final resolution of the claim.

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The purchase price of the transaction, with a deemed value of $2,945,235 was allocated as to $105,659 in cash, $1,080,529 in accounts receivables, $15,371 in other current assets, $1,368,545 in accounts payable and accrued liabilities and, $2,605,499 to the value of monthly 16,500 subscribers held by Hallotel at the time of the acquisition. Equipment valued at $500,915 and software valued at $8,875 was held by Hallotel on the acquisition date.

Hallotel is a communications service provider offering carrier pre-select and wholesale carrier services and focused on the provision of long distance telephone calls between Germany, Austria, Switzerland and Turkey

The Company has not taken amortization on equipment if utilization of the equipment has not yet begun. The net carrying amount of equipment not yet placed in service was $111,096 as at December 31, 2006.

7.	Related Parties

For the year ended December 31, 2006, $298,560 was incurred by the Company for services rendered by directors, the past President, the Corporate Secretary of Arvana Inc. and the Corporate Secretary of Arvana Networks. At December 31, 2006, $47,551 ( 2005 - $17,500) was owed to these individuals.

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During the year ended December 31, 2006 the Company issued 451,875 common shares to Directors of the Company as settlement for outstanding debt. The shares were valued at the market price of the Company’s stock on the date of settlement.

At December 31, 2005, the Company was owed $27,998 from a company with a director in common for debt paid on the company’s behalf. This amount was repaid subsequent to year-end.

At December 31, 2005, the Company owed $3,260 to a director for reimbursement of expenses.

At December 31, 2005, the Company owed $17,500 to two directors for services rendered during the year. This amount is to be paid in stock at a future date with the number of common shares determined by the fair value of the shares on the settlement date.

For the year ended December 31, 2005, $162,899 was incurred by the Company for services rendered by directors, the President, the Chief Financial Officer and the Corporate Secretary and the President and Corporate Secretary of Arvana Networks. An additional amount of $60,451 was incurred by Arvana Networks prior to acquisition for services rendered by its directors and officers.

During the year ended December 31, 2005, the Company paid an amount of $25,000 and issued 130,000 common shares to a director of the Company. These shares were valued at $296,400 based on the market value at the date of issue. The common shares were issued as a finder’s fee for the introduction of IPH to Arvana Networks. This amount is included in the stock-based compensation paid in the transaction with Arvana Networks.

In addition, as part of the finder’s fee relating to the transaction with Arvana Networks, 90,000 restricted common shares were issued, valued at $205,200 based on the market value at the date of issue to a company with a common director. This amount is included in the stock-based compensation resulting from the transaction with Arvana Networks.

In 2005, the Company issued 43,500 common shares, valued at $99,181 based on the market value at the date of issue to a company with a common director. The common shares were issued as a finders fee relating to the private placements closed throughout the year.

(a) During the quarter ended December 31, 2006, the Company issued shares for the settlement of debt owed to three directors for services rendered during fiscal 2006. The Company issued 451,875 shares in settlement of $180,750 in debt.

On October 31, 2006, the Company completed a private placement with three investors of 2,625,000 shares of our common stock at a price of US$0.40 per share for gross proceeds of US$1,050,000. A commission of US$73,500 was paid in connection with the private placement transaction. Net proceeds were $976,500.

During the quarter ended September 30, 2006, the Company issued 3,541,700 shares for part of the consideration for the purchase of BCH Beheer and its wholly-owned subsidiary Hallotel Deutschland GmbH. The Company also issued 208,300 shares as a finder’s fee for the same transaction.

(b) The Company follows SFAS No. 123R, “Accounting for Stock-Based Compensation,” in accounting for stock-based employee compensation plans and transactions in which an entity issued its equity instruments to acquire goods or services from non-employees. Where the fair value of equity instruments issued in connection with the provision of goods or services or the issuance of share capital is more reliably measurable than the fair value of the consideration received, the transaction is accounted for based on the fair value of the equity instruments issued and the difference between the fair value and recorded value of the transaction is recorded as stock-based compensation expense.

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(c) The Company has a stock option plan in place under which it is authorized to grant options to executive officers and directors, employees and consultants enabling them to acquire up to 10% of the issued and outstanding common stock of the Company. Under the plan, the exercise price of each option equals the market price of the Company's stock as calculated on the date of grant. The options can be granted for a maximum term of 10 years. On June 5, 2006, the Company granted 1,600,000 stock options to its directors and employees. Each option is exercisable into one common share until December 31, 2009 at an exercise price of $1.25. The options were valued at $1,424,000 using the Black-Scholes model,which will be expensed over the vesting period of the options. The Company recorded an expense of $232,400 in 2006 for the pro-rated portion of the full charge. The weighted average fair value of options granted during the year was $0.89.

As at December 31, 2006, the following incentive stock options are outstanding:

Stock option transactions and the number of share options outstanding are summarized as follows:

The following assumptions were used for the Black-Scholes valuation of stock options granted during the period:

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The Company has one reportable segment, being the development of the VoIP telephone services. This reportable segment was determined based on the nature of the products offered. Of the total property and equipment, $81,262 is located in North America, $30,837 is located in Brazil and $618,587 is located in Germany. All of the Company’s revenue was generated in Germany.

Income tax benefits attributable to losses from United States of America operations was $Nil for the years ended December 31, 2006 and 2005, and differed from the amounts computed by applying the United States of America federal income tax rate of 34 percent to pretax losses from operations as a result of the following:

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2006 and 2005 are presented below:

The valuation allowance for deferred tax assets as of December 31, 2006 and 2005 was $599,370 and $418,466, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

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Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in assessing the realizability of deferred tax assets. In order to fully realize the deferred tax asset attributable to net operating loss carryforwards, the Company will need to generate future taxable income of approximately $2,000,000 prior to the expiration of the net operating loss carryforwards. Of the $1,816,868 in operating loss carryforwards, $658,422 is attributable to the US, and expires between 2026 to 2027; $954,390 is attributable to Brazil and can be carried forward indefinitely. The remaining $204,056 is attributable to Barbados and will expire in 2016.

On February 20, 2007, the Company received a no interest loan from ValorInvest Ltd, a shareholder of the Company in the amount of 150,000 Euro. 80,000 Euro were used to pay down part of the payable to Brulex for the BCH Beheer transaction and 65,000 was advanced to Hallotel for capital expenditures and the development of the business.

The Company has the following commitments:

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