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UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-KSB

[ x ] Annual Report Pursuant To Section 13 Or 15(D) Of The Securities
  Exchange Act Of 1934

For the fiscal year ended DECEMBER 31, 2005

[]
  Transition Report Under Section 13 Or 15(D) Of The Securities Exchange Act Of
  1934

For the transition period from _____to _____

Commission File Number: 0-30695

TURINCO, INC.(Name of
small business issuer in its charter)

|Nevada                                           | 87-0618509                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     
|                                                 |                                     
|Suite 2610, 1066 West Hastings Street            |                                     
|Vancouver, British Columbia, Canada              | V6E 3X2                             
|(Address of principal executive offices)         | (Zip Code)                          
|                                                 |                                     
|(604) 684-4691                                   |                                     
|Issuer's telephone number                        |                                     

Securities registered under Section 12(b) of the Exchange Act:
None.

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001

Check whether the issuer (1) filed all reports required to be
  filed by Section 13 or 15(d) of the Exchange Act during the past 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 []

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is not contained in this form, and no disclosure
  will be contained, to the best of registrant's knowledge, in definitive proxy
  or information statements incorporated by reference in Part III of this Form
  10-KSB or any amendment to this Form 10-KSB. **[ x ]**

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act). Yes []
  No [ x ]

State issuer's revenues for its most recent fiscal year
$NIL

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. (See definition of
affiliate in Rule 12b-2of the Exchange Act.) $31,552,575 as of March
24, 2006.

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date. 15,391,500
common shares, no par value outstanding as of March 27, 2006.

Transitional Small Business Disclosure Format (check one): Yes
  []
  No [ x ]

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ITEM 1. DESCRIPTION OF BUSINESS.

FORWARD-LOOKING STATEMENTS

The information in this Annual Report on Form 10-KSB contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements involve risks and uncertainties,
including statements regarding our capital needs, business plans and
expectations. Such forward-looking statements involve risks and uncertainties
regarding the our planned VOIP business, availability of funds, government
regulations, common share prices, operating costs, capital costs, our ability to
deploy our planned business and generate revenues and other factors. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may", "will", "should",
"expect", "plan", "intend", "anticipate", "believe", "estimate", "predict",
"potential" or "continue", the negative of such terms or other comparable
terminology. These statements are based on certain assumptions and analyses made
by our management in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors they believe are appropriate in the circumstances. Actual events or
results may differ materially. In evaluating these statements, you should
consider various factors, including the risks outlined below, and, from time to
time, in other reports we file with the SEC. These factors may cause our actual
results to differ materially from any forward-looking statement. We disclaim any
obligation to publicly update these statements, or disclose any difference
between its actual results and those reflected in these statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements.

Overview

We are engaged in the development of business opportunities in
  the telecommunications industry which are focused on the provision of voice
  over the internet (VOIP) telephone services. Our business plan is to be a provider
  of VOIP services dedicated to serving our associates with complete turnkey IP
  telephone solutions which enable fast deployment of voice services over existing
  data networks.

We have been engaged since March 2005 in the acquisition and
  implementation of digital technology that will enable us to provide VOIP telecommunication
  services for prospective customers. In August 2005, we completed a transaction
  whereby we acquired all of the issued and outstanding shares of Arvana Networks
  Inc. (Arvana Networks). Arvana Networks is a company incorporated
  in Barbados that wholly owns Arvana Participações, a company incorporated
  in Brazil (Arvana Par). Arvana Pars business activities to
  date have been directed towards development of a VOIP telephone services business
  to be located in Rio de Janeiro, Sao Paulo and other major cities in Brazil
  in 2006. Arvana Pars activities have included market analysis, development
  of business plans, identifying appropriate local associates and development
  of technical plans required in order to launch VOIP telephone services in Brazil
  in 2006.

As discussed below, and via Arvana Par, we entered into an investment
  agreement with a local associate in 2005 for the establishment of its planned
  VOIP telephone services business in Brazil. This business was planned to be
  carried out by Arvana Comunicações do Brasil S. A. (Arvana Com),
  a Brazilian company that is 75% owned by Arvana Par and 25% owned by Gloinfo
  500 Soluções EM Telemática Ltda. (Gloinfo). Gloinfo
  was planned to be our local partner in Brazil. We have since agreed in principal
  with Gloinfo to terminate our agreement and develop our planned Brazilian VOIP
  business independent of Gloinfo. Our plans for the development of the Arvana
  Com business are set forth below.

We are presently in the development stage of our business. We
have yet to achieve any revenues and the Company requires substantial additional
financing in order to continue with the plan of operations which, in the opinion
of management, will provide a profit. Our ability to continue as a going concern
is dependent upon our ability to obtain additional financing.

- 2 -

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Corporate Organization

We were incorporated under the laws of the State of Nevada on
June 16, 1977. Our authorized capital is comprised of 100,000,000 shares of
common stock, par value of $0.001.

We operate through our wholly owned subsidiaries which include
the following:

|1. | Arvana Networks Inc., a company incorporated in Barbados
      in January 2005. 
|-- | --------------------------------------------------------------------------------
|   |                                                                                 
|2. | Arvana Participações S.A., a company incorporated in
      Brazil in April 2005.

We acquired Arvana Networks in August 2005 in a transaction whereby
  we issued 4,500,000 shares of our common stock to the former shareholders of
  Arvana Networks. Arvana Networks business activities to date have been
  directed towards market analysis, developing business plans and searching out
  appropriate local associates in order to launch VOIP telephone services in Rio
  de Janeiro, Sao Paulo and other major cities in Brazil in 2006.

Arvana Networks has an agreement with IP Horizon LLC (IPH),
one of our greater than 5% shareholders, 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 will also provide
termination services to Arvana Networks, at its cost plus an administration fee
not to exceed 13 percent. As discussed in Note 7(g) to our audited financial
statements for the year ended December 31, 2005, these shares are not considered
issued for accounting purposes because the Company had not yet received the
assets to be acquired in connection with this transaction.

IP Telephony Background

Voice over the internet is defined as the use of the internet
protocol (IP) to establish voice communications in much the same way that
e-mails are sent and received. The analog voice signal is digitized into packets
which can then be sent and received using a private data network or the public
Internet (or a combination of the two), to a destination server where the
packets are re-assembled. This process happens in real-time so that two or more
people can carry on a conversation. Arvana Networks owns and is developing
proprietary software to ensure connectivity, detailed billing, and to facilitate
the provision of telephone service with quality and reliability.

To use IP telephony, a customer simply needs a broadband
Internet connection and one of the following:

a) A small adapter which converts the voice signal to data and
transmits it over the internet. A regular phone is plugged into the adapter, so
nothing appears different from the callers viewpoint.

b) An IP phone  this operates just like a regular phone except
it can be plugged directly into an Internet connection.

c) Softphone  a software application which enables a PC with a
microphone and speakers to be used as a phone.

Calls can then be made over the Internet to other IP users
anywhere in the world at no cost beyond the monthly subscription. Where the call
is to a traditional telephone or mobile phone, it is routed to the point on the
Internet closest to the person being called, where it is passed to a local
carrier to be terminated on the phone of the person being called.

Our Plan of Operations

Our plan of operations is to target markets in developing and
mature countries with established telephone communication networks where there
is a competitive advantage for VOIP telephony over existing telecommunication
networks.

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In each country that we target, we intend to build our own
network of Internet access points, called POPs, which will enable a large
majority of the population to access the network through a local call. Once
established, these networks will bypass the existing phone carriers trunk lines
and will enable us to complete calls at our own highly competitive rates.

To minimize time to market, we plan to partner with local
companies in targeted markets who we believe will enable us to assemble all the
required components of the service.

We intend to generate revenues through three main types of
service using our proposed networks:

|1. | Inexpensive call handling for both outbound and inbound
      calls.                                                                                                                                                                                                                                                                           
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                
|2. | Monthly subscriptions to our voice service offering a
      further significant reduction in telephony costs. We anticipate that our
      primary focus will be on the corporate market where long distance and
      international calls are frequent, and thus where the savings and call
      features we offer are of the greatest value.
|   |                                                                                                                                                                                                                                                                                                                                                
|3. | Long distance/international calling cards for both the
      corporate and consumer markets.                                                                                                                                                                                                                                                   

Our plan is to link all of the above services using an
underlying Arvana network infrastructure. Our network infrastructures is planned
to be comprised of a series of access gateways located in major cities and
regions across each country. For example, in the first implementation in Brazil,
the initial gateways are expected to be located in eight major cities, connected
directly to our planned Arvana network operations centre in Rio de Janeiro. Each
gateway is planned to incorporate sufficient phone lines to handle the peak
number of calls in each respective area, enabling anyone to gain access to the
Arvana network for the cost of a local call. We plan to offer a calling card
system that will use this our network infrastructure to provide local access for
long distance and international calls.

We plan to enable corporate subscribers to use their
analog/digital gateway to route long distance calls from their existing PBX to
the Arvana service, while local calls remain routed to the local carrier.

A primary source of revenue is expected to be of the provision
of long distance and international calling services to enterprises which have
several national or international offices, or have a need to communicate with
their employees, major customers, and suppliers remotely. Our Arvana service is
planned to permit each subscriber to call another subscriber anywhere on an
unlimited time basis at no incremental cost. We also plan to offer the
origination and termination of calls on the public switched network (PSTN),
enabling an Arvana user to call any other phone user in the world at competitive
rates.

We plan to bill business customers through a monthly
subscription which we anticipate to include a base bundle of minutes and a core
set of call features, such as caller identification and voicemail. We also
expect to offer an international numbering plan such that a company in
Argentina, for example, can have a US number which could be dialled by their US
customers and have the phone ring in Buenos Aires.

We plan to complement the above Arvana services by providing
long distance/international telephone calling cards which are prepaid and
provide access to our digital network locally from any landline phone, cell
phone or payphone. Arvana expects to provide businesses with branded calling
cards for promotions as well as corporate cards for employees who travel,
enabling them to minimize the cost of long distance calling.

Our initial focus will be on providing Arvanas services in
Brazil. Brazil is the 5th largest telecom market in the world with over 100
million phone lines and well over two million broadband users. Broadband growth
in the region is developing rapidly.

IP Horizon LLC is Arvanas technology and termination associate
  and a significant shareholder. IP Horizon is controlled by Draper Holdings Business
  Trust. IP Horizon has expertise in carrier-class digital telephony systems,
  provides comprehensive management/billing software, a high capacity calling
  card

- 4 -

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management system and contributed hardware and software to
Arvana. IP Horizon is also able to provide competitive international call
termination rates.

Arvana Comunicações

The Company, Arvana Networks and Arvana Par entered into an
investment agreement dated October 6, 2005 (the Investment Agreement) with
Gloinfo and Paulo Messina, an unrelated party. Arvana Par is a wholly owned
subsidiary of Arvana Networks. Gloinfo is a Brazilian limited company that is
controlled by Mr. Messina.

The Investment Agreement provided for subscription for the
capital stock of Arvana Com by each of Arvana Par and Gloinfo. Arvana Com is a
Brazilian corporation that was formed to carry out a VOIP business in Brazil as
a jointly owned venture between Arvana Par and Gloinfo. As a result of the
initial closing under the Investment Agreement on October 6, 2006, Arvana Par
presently owns 75% of Arvana Com and Gloinfo owns 25%.

Gloinfo has been engaged, in addition to its other business
activities, in developing and providing voice services based on VOIP technology
in Brazil under the trademarks Intervoz and Televoz. Gloinfo commenced its VOIP
operations in early 2005. Gloinfos primary business is the provision of
internet protocol (IP) based infrastructure services to some 350 independent
subscribers in Brazil.

Upon execution of the Investment Agreement, Gloinfo contributed
certain equipment relating to the VOIP business presently being carried on by
Gloinfo and certain billing and operating software for the provision of the
Intervoz and Televoz services. In turn, Arvana Par subscribed for additional
share capital of Arvana Com representing a 75% interest in Arvana Com for a
total subscription investment of R$5,000,000.00 (five million Reais) (equivalent
to $2,197,319 based on a foreign exchange rate of R$2.2755 per US $1.00 as of
October 6, 2005). Arvana Par has an eighteen month period during which to
complete this investment which may be paid for in cash, assets and/or credits.
Arvana Par may also loan funds or lease equipment to Arvana Com, on industry
standard terms, and will be permitted to convert into share capital, in
satisfaction of its subscription obligations in respect of the Investment and
subject to applicable Brazilian law, the outstanding amount of any loan or value
of any leased equipment.

The following agreements were executed upon completion of the
initial closing:

|(a) | Gloinfo and Arvana Com entered into an equipment lease
      agreement in the form required by the Investment Agreement whereby Arvana
      Com has leased to Gloinfo the VOIP equipment and the billing and operating
      software for the provision of the Intervoz and Televoz services originally
      transferred by Gloinfo to Arvana Com upon execution of the Investment
      Agreement; 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                       
|(b) | Gloinfo and Arvana Com entered into an office space lease
      agreement in the form required by the Investment Agreement;                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                       
|(c) | Arvana Par and Gloinfo entered into a shareholders
      agreement on the completion of the First Closing that provides, among
      other things, Arvana Par with a right of first refusal regarding the
      shares at any time held by Gloinfo in Arvana Com, and which provides each
      party with the right to participate pro rata in future issuances of Arvana
      Coms share capital.

Arvana Par and Gloinfo also entered into a services agreement
whereby Gloinfo has agreed to provide support to Arvana Pars management and
employees in the development of hardware and software VOIP solutions as required
for the implementation of Arvana Pars business plans. Arvana Par agreed to
reimburse Gloinfo for any expenditures for goods and services made on behalf of
Arvana Par.

- 5 -

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Subsequent to the initial closings under the Investment
Agreement, Arvana Com applied for a SCM (Serviço de Comunicação
Multimídia) license from ANATEL (Agência Nacional de
Telecomunicações), the Brazilian government regulatory authority that is
responsible for regulating telecommunications activities in Brazil. In January
2006, ANATEL issued a public announcement that it had granted a SCM license to
Arvana Com, as discussed below under Government Regulation.

The Investment Agreement called for a final closing to take
place upon satisfaction of the following conditions precedent:

|(a) | ANATEL will have issued to Arvana Com the SCM license;
      and                                                                                                                                                                                                                                                                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                 
|(b) | Gloinfo and Arvana Com will have provided to Arvana Par
      all information and financial statements relating to Arvana Com and the
      business assets acquired by the Company from Gloinfo pursuant to the
      Investment Agreement as reasonably necessary for Turinco to meet its
      disclosure obligations under the Exchange Act.

The final closing specified the transfer by Gloinfo of the
Brazilian VOIP business to Arvana Com. This transfer would include the transfer
by Gloinfo to Arvana Com of Gloinfos employees employed in the Brazilian VOIP
business but would not include the assumption by Arvana Com of any debts or
liabilities of Gloinfo associated with the Brazilian VOIP business.

Arvana Com Termination Agreement

Subsequent to December 31, 2005, the Companys management
entered into negotiations with the principals of Gloinfo with the intention of
terminating the Investment Agreement by agreement. The contemplated termination
of the Investment Agreement would include the acquisition by Arvana Par of 100%
of Arvana Com and the separation of the operating activities of Arvana Com from
the activities and facilities of Gloinfo.

The main terms of the termination that have been agreed to in
principle by Gloinfo are as follows:

|(a) | The terms of the investment agreement will be cancelled
      and Gloinfo will transfer its 25% ownership to Arvana Par.                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                   
|(b) | The customers that were to be transferred to Arvana Com
      following the final closing will remain with Gloinfo.                                                                                                                               
|    |                                                                                                                                                                                                                                                   
|(c) | The employees that were to be transferred following the
      final closing will remain with Gloinfo.                                                                                                                                             
|    |                                                                                                                                                                                                                                                   
|(d) | Some employees that were hired into the project will be
      terminated and the termination costs will be shared 75% by Arvana Com and
      25% by Gloinfo.                                                                                     
|    |                                                                                                                                                                                                                                                   
|(e) | Arvana Com will obtain the Televoz branding and the
      website associated with this product from Gloinfo.                                                                                                                                    
|    |                                                                                                                                                                                                                                                   
|(f) | The billing system software will be licensed to Arvana
      Com and the source code provided to the technology department.                                                                                                                       
|    |                                                                                                                                                                                                                                                   
|(g) | Arvana Com will retain ownership and operating control of
      the technology platform currently used by Gloinfo to service their
      customers. Gloinfo will purchase and install a new technology platform
      within an estimated 90 days.

We are presently negotiating a definitive termination agreement
with Gloinfo pursuant to which the Investment Agreement will be terminated.
There is no assurance that we will reach a termination agreement with Gloinfo or
that the terms of the termination agreement will include all of the terms stated
above that have been agreed to in principle by Gloinfo.

- 6 -

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The Company plans to continue developing the VOIP business
independent of Gloinfo once the equipment has been returned by Gloinfo. The
Arvana Com platform will be used for new customers to be acquired by Arvana Com
using the Televoz branding for VOIP and calling card service.

Additional Acquisitions and New Business
Opportunities

The Company plans to consider and evaluate prospective
acquisitions and new business opportunities in the VOIP market which would offer
the Company the ability to deploy VOIP telephone solutions and develop and
expand the Companys customer base and business. The Company anticipates that it
will require additional financing in order to fund any prospective acquisitions
or new business opportunities.

Management Team

The Company has been working at developing a management team
for the development of this business. In August, Michael Jervis was hired to
assist in the development of the Companys business and was appointed as
president and chief executive officer of the Company on October 17, 2005. Mr.
Jervis has extensive management experience in the telecommunications and
subscription television industries. Concurrent with the appointment of Mr.
Jervis, Iain Drummond was appointed vice-president of business development and
Karen Engleson was appointed corporate secretary of the Company. Mr. Drummond
has over 30 years experience in global information technology marketing. Mr.
Drummond commenced his career in Europe where he handled large private sector
accounts for International Computers Ltd. (now Fujitsu). He subsequently managed
a number of their overseas subsidiaries in South-east Asia, India, and the
Middle East before being appointed president of the Canadian subsidiary in 1987.
Ms. Engleson is a senior finance executive and has held a number of
controllership positions with one of the largest cable operators in Canada. She
has been responsible for many functions, including the preparation of the
monthly financial statements, budgeting and forecasting, operational controls,
remittance processing, collections, management information systems and
facilities management. Since July of 1996, Ms. Engleson has been the controller
for Multivision, the largest wireless cable operator in Bolivia. The Company
hired David Troy as chief technology officer in August 2005. Mr. Troy has over
20 years experience with programming, systems, and software design and
implementation. He has developed and implemented several pioneering software
systems, including integrated provisioning, customer relations management,
telephony, and management systems. He also has experience with a wide range of
networking, software, and hardware platforms. In September 2005, the Company
hired Glenn Dalgliesh as network architect.

Government Regulation

We will be required to acquire licenses and permits under the
telecommunication laws in those countries in which we plan to offer VOIP
telephony services.

In Brazil, the National Agency for Telecommunications (Anatel)
regulates the provision of telecommunications services. Anatel has granted to
Arvana Com an SCM (Multimedia Communication Service) license which allows the
transmission of multimedia information (data, voice and image), using any means,
to subscribers in its service area. From a regulatory point of view, an SCM
subscriber can communicate with a Public Switched Telephone Network (PSTN)
subscriber. SCM regulation establishes, however, that the service provider is
not allowed to offer any service with characteristics of conventional fixed
telephony, specifically the forwarding, through the SCM network, of telephone
traffic simultaneously originated and terminated in PSTN networks.

In order to be able to provide services in which a call
initiated by a PSTN subscriber can be connected to another PSTN subscriber with
the Internet providing some part of the connectivity, Arvana Comunicações has
applied for a Serviço Telefônico Fixo Comutado (STFC) license. The Company
expects this license to be granted within six months.

The STFC license will enable Arvana Comunicações to provide
carrier pre-select long distance and calling card services.

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Competition

We will compete against established companies in the
telecommunications industries in the markets that we target for development of
our VOIP services. Our main competition is expected to be the incumbent
telephone companies and VOIP suppliers. In Brazil, competition is expected to
come from Brasil Telecom, Embratel, Intelig, Global Village Telecom, Transit,
Primeira Escolha and A5-Alphamayo, to name a few. Many of our competitors are
large, established telecommunications companies with significantly greater
financial and technological resources than we have. Established competitors have
established customers and offer brand name recognition in the markets in which
they compete. Further, established competitors will have greater access to
capital in order to defend their customer base or to expand the
telecommunications services that they offer to include VOIP telephony services
to their existing customers in direct competition to us. Additionally, there are
many competitors that are presently offering and plan to offer VOIP telephony
services to customers that we plan to target for our VOIP telephony services.
These competitors may be able to expand their operations faster than we can due
to greater to access to capital and financial resources and due to established
brand names and customer recognition.

Research and Development Expenditures

Arvana Networks has spent several months implementing voice
services in Brazil. As part of this implementation we have successfully
customized and deployed several scalable, open-source software systems,
including:

- SIP proxy platform for voice, video and presence applications.
- A distributed far-end NAT traversal solution.
- Scalable, open-source relational databases.
- Various reporting and management interfaces, including SIP trace and Ping
  tools
- Graphing and performance management solutions.
- Trouble Ticket and Work Order management system.

We spent $52,834 in research and development activities during
  the year ended December 31, 2005. 
  We did not have any research and development expenditures during the year ended
  December 31, 2004.

- 8 -

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ITEM 2. DESCRIPTION OF PROPERTIES.

We sublease approximately 1300 square feet of office space at
1066 West Hastings Street in Vancouver, British Columbia, Canada that we use for
our principal executive offices. Our monthly lease payments total $4,000
Canadian dollars.

ITEM 3. LEGAL PROCEEDINGS.

We currently are not a party to any material legal proceedings
and to our knowledge, no such proceedings are threatened or contemplated.

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

No matters were submitted to a vote of our security holders,
through the solicitation of proxies or otherwise, during our fourth quarter
ended December 31, 2005.

- 9 -

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PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.

Market Information

Our common shares are quoted on the OTC Bulletin Board under
the symbol TURI and on the Frankfurt Stock Exchange under the symbol T5U.F. The
following table indicates the high and low bid prices of our common shares
during the periods indicated:

OTCBB:

QUARTER ENDED
    HIGH BID
    LOW BIDDecember 31, 2005
    $2.39
    $1.50September 30, 2005
    $2.40
    $2.05June 30, 2005
    $2.10
    $0.25


FRANKFURT (in Euros):

QUARTER ENDED
    HIGH BID
    LOW BIDDecember 31, 2005
    1.60
    1.46September 30, 2005
    1.70
    1.70June 30, 2005
    N/A
    N/A


The source of the high and low bid information for the OTCBB is
the NASD OTC Bulletin Board. The market quotations provided reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not represent
actual transactions.

Holders of Common Stock

As at March 24, 2006, we had 15,391,500 shares of common stock
issued and outstanding that were held by approximately 65 registered holders.
This number does not include beneficial owners of the Company's common shares
whose shares are held in the names of various securities brokers, dealers and
registered clearing agencies.

Dividends

There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend:

|1. | We would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                             
|2. | Our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed to satisfy the rights of
      shareholders who have preferential rights superior to those receiving the
      distribution.

We have not declared any dividends and we do not plan to
declare any dividends in the foreseeable future.

- 10 -

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Recent Sales of Unregistered Securities

We have reported sales of securities without registration under
the Securities Act of 1933 during our fiscal year ended December 31, 2005 on the
following Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K that
we have filed with the Securities and Exchange Commission.

Report
    Date of Filing with SECCurrent Report on Form 8-K
    May 23, 2005Quarterly Report on Form 10-QSB for the six months ended
      June 30, 2005
    August 15, 2005Current Report on Form 8-K
    August 19, 2005Current Report on Form 8-K
    October 21, 2005Current Report on Form 8-K
    January 19, 2006


We have not completed any sales of securities without
registration pursuant to the Securities Act of 1933 during the fiscal year ended
December 31, 2005 that were not reported on the Quarterly Reports on Form 10-QSB
and Current Reports on Form 8-K described above.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.

PLAN OF OPERATIONS

Our plan of operation for the next twelve months to undertake
and achieve the following objectives:

|1. | Arvana Networks plans to complete a current research
        and development program which is anticipated to include advancements in
        our SIP-based Internet Telephony Service Provider (ITSP) call platform
        c/w VOIP Gateways and SS7 signalling translation; a Dedicated Calling
        Card Platform; a Billing System for VOIP ITSP platform (includes signup,
        customer bill presentment, and real-time call authorization and balance
        tracking); and an associated Accounting System into which data is fed
        from the Calling Card Platform, the Billing System, and other subsystems.
        These research and development activities are planned to be carried out
        at Arvana Networks technology resources centered in Annapolis Maryland.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Arvana Com plans to initiate a web-based VOIP telephone
        service under the branding of Televoz which will solicit subscribers in
        Brazil, Argentina and Bolivia who frequently make long distance calls
        to North America and Europe.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3. | The acquisition of the STFC license in Brazil which
        will enable Arvana Comunicações to move forward with its plan
        to provide low cost calling for business users within Brazil and a variety
        of calling card services also targeted to business applications and international
        ethnic communities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4. | The phase one development of associations and facilities
        in Argentina and Bolivia based on the experience and developments achieved
        in Brazil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|5. | The continued exploration of opportunities in VOIP telephony
        in Europe and the Middle East.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

We anticipate to spend approximately $2,000,000 to proceed with
our plan of operations over the next twelve months. We had cash in the amount of
$836,064 and working capital in the amount of $584,627 as of December 31, 2005.
Based on our planned expenditures, we will require a minimum of $1,500,000 in
additional financing. Also, we anticipate that we will require additional
financing in order to pursue

- 11 -

---

development of associations and opportunities in VOIP telephony
  that are over and above our plans for Brazil. If we achieve less than the full
  amount of financing that we require, we will scale back our development and
  expansion plans based on our available financial resources.

During the next twelve month period, we anticipate that our
revenues will not exceed our operating expenses. Accordingly, we will be
required to obtain additional financing in order to continue our plan of
operations. We believe that debt financing will not be an alternative for
funding additional phases of exploration as we do not have tangible assets to
secure any debt financing. We anticipate that additional funding will be in the
form of equity financing from the sale of our common stock. However, we do not
have any financing arranged and we cannot provide investors with any assurance
that we will be able to raise sufficient funding from the sale of our common
stock to fund our plan of operations.

RESULTS OF OPERATIONS

References in the discussion below to 2005 are to our fiscal
year ended December 31, 2005. Similarly, references to 2004 are to our fiscal
year ended December 31, 2004. References to 2006 are to our current fiscal year
that will end December 31, 2006.

Our operations for the years ended December 31, 2005 and 2004
are summarized below. We were inactive during all periods prior to December 31,
2004. Our current activities relating to the development of our planned VOIP
telephone services business are only reflected in the results of operations for
the year ended December 31, 2005.

Year ended December 31,
      **2005**
    Year ended December 31,
      **2004**Administration
    $960,575
    $4,235Depreciation
    $200
    $0Research and Development
    $52,834
    $0Stock Based Compensation
    $8,232,540
    $0Loss on acquisition of Arvana Networks & Arvana Com
    $7,246,459
    $0Net Loss for the Period
    $16,492,608
    $4,235


Revenues

The Company has not earned revenues from its VOIP business to
date. The Companys ability to earn revenues will be subject to its ability to
successfully implement its plan of operations. The ability of Arvana Com to earn
revenues from the Brazilian VOIP telephone services business was contingent upon
the granting of the necessary SCM license which was granted to the Company by
the regulatory agency ANATEL. This license has been granted in January 2006. The
Company anticipates that Arvana Com will not achieve revenues until completion
of planned separation of the operations of Arvana Com and Gloinfo under the
contemplated termination of the investment agreement.

Administration Expenses

During the year ended December 31, 2005, the Company had
expenses of $960,575 compared to expenses of $4,235 for fiscal 2004. Expenses
increased during fiscal 2005 due to the activities

- 12 -

---

associated with the Arvana Networks transaction, the
investigation of business interests in Brazil and the negotiation of the
investment agreement for Arvana Com. The majority of the expenses consisted of
administrative, legal, travel and consulting fees. Costs attributable to
consulting and travel related to the development of the business in Brazil, the
completion of private placements and the investment agreement with Arvana
Networks. Expenses for fiscal 2004 were for minimum operating requirements.

Research and Development

Our research and development expenses were attributable to the
hiring of staff in connection with our planned VOIP telephone services business.
We hired a chief technology officer in August 2005 and a network architect in
September 2005. These individuals are responsible for specifying and overseeing
the implementation and management of the Companys technology and hardware
platform. Research and development expenses associated with technical operations
were $52,834 for fiscal 2005.

Stock-based Compensation

The Company recorded stock compensation expense in the amount
of $8,232,540 during fiscal 2005. This stock compensation expense reflects the
value of shares issued to date by us by means of certain private placements at a
lower than quoted market price at the time of closing. The difference between
the trading price and the cash proceeds has been included in stock-based
compensation. Of this amount, $752,400 was attributable to the issue of 330,000
shares as finders fees related to the Arvana Networks transaction and the
introduction of the Company to IP Horizons LLC (IPH). The balance of the stock
compensation expense was attributable to private placements completed by us, as
discussed below under Liquidity and Capital Resources  Cash Flows from
Investing Activities.

Loss on the acquisition of Arvana Networks

The loss on the acquisition of Arvana Networks expense of
$7,013,310 was attributable to the excess of the purchase price over the fair
market value of the assets acquired and liabilities assumed. Assets acquired
included $5,800 in cash and $131,747 in other assets acquired and liabilities in
the amount of $310,857.

Loss on acquisition of Arvana Comunicações

The amount of $233,149 was written off in the period and arose
  from the excess of purchase price over fair value of assets acquired and liabilities
  assumed.

Net Loss for the Period

The Company incurred a net loss of $16,492,608 for the year
ended December 31, 2005. The loss reflects the increased administration and
research and development expenses associated with the development of our VOIP
telephone services business, the loss on the acquisition of Arvana Networks and
the stock compensation expense associated with the completion of certain share
issuances by way of private placement.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2005, the Company had cash of $836,064 and
working capital of $584,627. This compares to cash of $1,232 and working capital
of $1,232 as of December 31, 2004. The increase in cash and working capital is
the result of financings completed by us during fiscal 2005, as outlined
below.

Plan of Operations

The Company estimates that its total expenditures over the next
twelve months will be at least $2,000,000, as discussed above under the heading
Plan of Operations, which amount will include projected administration costs.
The Company anticipates that it will require a minimum of approximately
$1,500,000 in additional financing to proceed with our plan of operations over
the next twelve months. In

- 13 -

---

addition, the Company anticipates that it will require
additional financing in order to pursue the acquisition of any opportunities in
the VOIP business beyond the specific opportunities that are outlined above. If
the Company is unable to achieve the necessary additional financing, then it
plans to reduce the amounts that it spend on the development of its VOIP
business opportunities and its administrative expenses in order to be within the
amount of capital resources that are available to the Company.

Cash Used in Operating Activities

The Company used cash in operations in the amount of $856,106
during the year ended December 31, 2005. Cash used in operations was
attributable primarily to administration expenses incurred with the commencement
of the Companys business of the development of VOIP telephone services.

Cash Used in Investing Activities

The Company netted cash in its investing activities in the
amount of $29,248 during the year ended December 31, 2005. The Company acquired
cash in the amount of $62,465 through completion of the Arvana Comunicações
transaction. The Company acquired equipment in the amount of $39,017.

Cash Flows from Financing Activities

The Company netted $1,661,690 from financing activities during
the twelve months ended December 31, 2005.

The Company completed a private placement of 3,000,000 shares
of common stock at a price of $0.10 per share for total proceeds of $300,000
during the second quarter of fiscal 2005 prior to the Arvana Networks
transaction. For accounting purposes, the shares issued were recorded at their
fair value of $6,000,000 ($2.00 per share) based on the quoted market price of
the Companys common stock on the date of issuance. The $5,700,000 difference
between the trading price and the cash proceeds is included in stock based
compensation.

In addition to the above, the Company completed private
placements of 1,632,000 shares of common stock at a price of $1.25 per share for
total proceeds of $2,040,000. In total, we raised $2,121,250 from the issuance
of common stock, net of offering expenses. The proceeds from the private
placements have been used and are continuing to be used for the development of
the Companys VOIP business, with expenses associated with the Arvana Networks
transaction, the investment agreement with Gloinfo for Arvana Com and for
administration expenses. For accounting purposes, these transactions have been
recorded using the market price at the date of issue, being $2.28 per share. As
a result, the Company recorded stock-based compensation expense in the amount of
$1,680,960 in connection with these share issuances.

The Company repaid a related party loans in the amount of $460,460
  during the year ended December 31, 2005 which was advanced to fund administration
  and business development expenses.

Amounts due from Shareholder

The Company issued 1,500,000 shares to IP Horizon, LLC (IPH)
upon completion of the Arvana Networks transaction. IPH was one of the
shareholders of Arvana Networks at the time of the Arvana Networks transaction.
IPH was issued these shares in exchange for a commitment to deliver equipment,
software and network hardware for the initial launching of the Companys VOIP
telephone services in Brazil. IPH also agreed to provide termination services to
Arvana Networks for these VOIP telephone services at its cost plus an
administration fee not to exceed 13 percent. As of December 31, 2005, the
Company had not received the 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.

- 14 -

---

Going Concern

The Company has not attained profitable operations and is
dependent upon obtaining financing to pursue its plan of operations. For these
reasons our auditors stated in their report on our audited financial statements
that they have substantial doubt we will be able to continue as a going
concern.

Future Financings

The Company anticipates continuing to rely on equity sales of
its shares of common stock in order to continue to fund its business operations.
There is no assurance that the Company will achieve any additional sales of its
equity securities or arrange for debt or other financing to fund its plan of
operations.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

CRITICAL ACCOUNTING POLICIES

Basis of Presentation

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s financial statements include the accounts of the
Company, its wholly-owned subsidiaries Arvana Networks, Arvana Par, and its 75%
ownership of Arvana Com. All significant inter-company transactions and balances
have been eliminated.

Foreign currency translation and transactions

Our functional currency is the United States dollar.

Long term assets and liabilities of Arvana Par and Arvana Com
denominated in a foreign currency are translated into US dollars at the exchange
rate in effect at the transaction date. Monetary assets and liabilities are
translated at the period end 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 the Companys financial
statements under administration expenses as they were insignificant.

Transactions conducted in currencies other than the respective
functional currency of each of the entities 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 the Statement of Operations under administration expenses.

Stock Compensation Expense

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.

- 15 -

---

TABLE OF CONTRACTUAL OBLIGATIONS

Our known contractual obligations as of December 31, 2005,
being the end of our last fiscal year, were as follows:

Payment due by periodType of Contractual Obligation
    Total
    Less than 1
      Year
    1 - 3 Years
    3 - 5 Years
    More than 5
      YearsLong-Term Debt Obligations
    $0
    $0
    $0
    $0
    $0Capital (Finance) Lease Obligations
    $0
    $0
    $0
    $0
    $0Operating Lease Obligations
    $0
    $0
    $0
    $0
    $0Purchase Obligations
    $0
    $0
    $0
    $0
    $0Other Long-Term Liabilities Reflected on the
      Company's Balance Sheet under the GAAP of the primary financial statements
    $0
    $0
    $0
    $0
    $0Total
    $0
    $0
    $0
    $0
    $0


- 16 -

---

ITEM 7. FINANCIAL STATEMENTS.

Our audited financial statements for the year ended December
31, 2005, as set forth below, are included with this Annual Report on Form
10-KSB. Our audited financial statements are prepared on the basis of accounting
principles generally accepted in the United States and are expressed in U.S.
dollars.

PAGEAuditors
          Report - Dohan and Company
      F-1Auditors Report - Madsen &
        Associates CPA's Inc.
      F-2Consolidated Balance
          Sheets, December 31, 2005 and 2004
      F-3Consolidated
          Statements of Operations for the years ended December 31, 2005 and 2004
          and cumulative amounts from the beginning of the development stage on
          January 1, 2005 to December 31, 2005
      F-4Consolidated Statements
          of Cash Flows for the years ended December 31, 2005 and 2004 and cumulative
          amounts from the beginning of the development stage on January 1, 2005
          to December 31, 2005
      F-5Consolidated
          Statements of Changes in Stockholders Equity for the years ended
          December 31, 2005 and 2004
      F-6Notes to Consolidated
          Financial Statements
      F-7


- 17 -

---

|Dohan and Company            | 7700 North Kendall Drive, 200
|---------------------------- | -----------------------------
|Certified Public Accountants | Miami, Florida 33156-7564    
|A Professional Association   | Telephone (305) 274-1366     
|                             | Facsimile (305) 274-1368     
|                             | E-mail info@uscpa.com        
|                             | Internet www.uscpa.com       

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

Stockholders and Board of Directors
  Turinco, Inc. and Subsidiaries (A Development Stage Company)
  Vancouver, British Columbia

We have audited the accompanying consolidated balance sheet
  of Turinco, Inc. and Subsidiaries (A Development Stage Company) as of December
  31, 2005, and the related consolidated statements of operations, cash flows
  and changes in stockholders’ equity for the period from the beginning
  of the development stage (January 1, 2005) to December 31, 2005. These consolidated
  financial statements are the responsibility of the Company's management. Our
  responsibility is to express an opinion on these financial statements based
  on our audits.

We conducted our audit in accordance with the standards of
  the Public Company Accounting Oversight Board (United States of America). Those
  standards require that we plan and perform the audit to obtain reasonable assurance
  about whether the financial statements are free of material misstatement. The
  Company is not required to have, nor were we engaged to perform, an audit of
  its internal control over financial reporting. Our audit included consideration
  of internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose
  of expressing an opinion on the effectiveness of the Company’s internal
  control over financial reporting. Accordingly, we express no such opinion. An
  audit includes examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements. An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall financial statement presentation. We believe
  that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Turinco, Inc. and Subsidiaries (A Development Stage Company) at December 31,
  2005, and the results of their operations and their cash flows for the period
  from the beginning of the development stage (January 1, 2005) to December 31,
  2005 ended in conformity with U.S. generally accepted accounting principles.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. As discussed in Note 1 to
  the financial statements, the Company incurred a loss of $16,492,608 for the
  period from the beginning of the development stage (January 1, 2005) to December
  31, 2005, which raises substantial doubt about its ability to continue as a
  going concern. Management’s plans in regard to these matters are also
  described in Note 1. The financial statements do not include adjustments that
  might result from the outcome of this uncertainty.

*/s/ Dohan and Company, P.A.*
  Certified Public Accountants

Miami, Florida
  March 28, 2006

F-1

---

684 East Vine St, # 3 
  Murray, Utah 84107 
  Telephone 801-268-2632 
  Fax 801-262-3978

MADSEN & ASSOCIATES, CPA's INC.
  Certified Public Accountants and Business Consultants

Board of Directors 
  Turinco, Inc. 
  Salt Lake City, Utah

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying balance sheet of Turinco, Inc.
  (development stage company) at December 31, 2004 and the related statements
  of operations, stockholders' equity, and cash flows for the years ended December
  31, 2004, and 2003 and the period June 16, 1977 (date of inception) to December
  31, 2004. These financial statements are the responsibility of the Companys
  management. Our responsibility is to express an opinion on these financial statements
  based on our audits. We conducted our audit in accordance with the standards
  of the Public Company Accounting Oversight Board (United States). Those standards
  require that we plan and perform the audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. An audit
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
  fairly, in all material respects, the financial position of Turinco, Inc. at
  December 31, 2004 and the results of operations, and cash flows for the years
  ended December 31, 2004, and 2003 and the period June 16, 1977 to December 31,
  2004, in conformity with accounting principles generally accepted in the United
  States of America.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. The Company does not have
  the necessary working capital to service its debt and pursue its planned activity,
  which raises substantial doubt about its ability to continue as a going concern.
  Managements plans in regard to these matters are described in the notes
  to the financial statements. These financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

|February 11, 2005    |                                  
|-------------------- | ---------------------------------
|Salt Lake City, Utah | s/Madsen & Associates, CPA's Inc.

F-2

---

|TURINCO, INC.                  
|-------------------------------
|(A DEVELOPMENT STAGE COMPANY)  
|CONSOLIDATED BALANCE SHEETS    
|AS AT DECEMBER 31              
|(EXPRESSED IN US
      DOLLARS)

|                                                                                                                 |   | 2005        |   |   | 2004    |  
|---------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ------- | -
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 |   |             |   |   |         |  
|ASSETS                                                                                                           |   |             |   |   |         |  
|                                                                                                                 |   |             |   |   |         |  
|Current                                                                                                          |   |             |   |   |         |  
|Cash and cash equivalents                                                                                        | $ | 836,064     |   | $ | 1,232   |  
|Receivables                                                                                                      |   | 527         |   |   | -       |  
|Amounts due from related parties
      (Note 6)                                                                  |   | 27,998      |   |   | -       |  
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 |   | 864,589     |   |   | 1,232   |  
|Deferred income tax asset, net of valuation
      allowance of $418,466 (2004 - $32,413)                         |   | -           |   |   | -       |  
|Property and equipment(Note 5)                                                                                   |   | 118,689     |   |   | -       |  
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 | $ | 983,278     |   | $ | 1,232   |  
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 |   |             |   |   |         |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                             |   |             |   |   |         |  
|                                                                                                                 |   |             |   |   |         |  
|Current                                                                                                          |   |             |   |   |         |  
|Accounts payable and accrued liabilities                                                                         | $ | 259,203     |   | $ | -       |  
|Amounts due to related
      parties (Note 6)                                                                    |   | 20,760      |   |   | -       |  
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 |   | 279,963     |   |   | -       |  
|                                                                                                                 |   |             |   |   |         |  
|Commitments(Note 11)                                                                                             |   |             |   |   |         |  
|                                                                                                                 |   |             |   |   |         |  
|Stockholders' equity                                                                                             |   |             |   |   |         |  
|Common stock (Note 7)                                                                                            |   |             |   |   |         |  
|100,000,000
      common shares authorized at $0.001 par value;                                                  |   |             |   |   |         |  
|13,891,500 common
      shares issued and outstanding as at Dec. 31, 2005 (8,253,000 at December
      31, 2004) |   | 13,892      |   |   | 8,253   |  
|Additional paid-in
      capital                                                                                 |   | 17,277,362  |   |   | 88,310  |  
|Deficit                                                                                                          |   | (95,331     | ) |   | (95,331 | )
|Deficit accumulated
      during the development stage                                                           |   | (16,492,608 | ) |   | -       |  
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 |   | 703,315     |   |   | 1,232   |  
|                                                                                                                 |   |             |   |   |         |  
|                                                                                                                 | $ | 983,278     |   | $ | 1,232   |  

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

F-3

---

|TURINCO, INC.                        
|-------------------------------------
|(A DEVELOPMENT STAGE COMPANY)        
|CONSOLIDATED STATEMENTS OF OPERATIONS
|(EXPRESSED IN US
      DOLLARS)      

|                                                      |   |                     |   |   |                      |   |   | Cumulative amounts        |  
|----------------------------------------------------- | - | ------------------- | - | - | -------------------- | - | - | ------------------------- | -
|                                                      |   |                     |   |   |                      |   |   | from the beginning of the |  
|                                                      |   | For the years ended |   |   | development stage on |  
|                                                      |   | December 31,        |   |   | January 1, 2005 to   |  
|                                                      |   | 2005                |   |   | 2004                 |   |   | December 31, 2005         |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|OPERATING COSTS                                       |   |                     |   |   |                      |   |   |                           |  
|Administration                                        | $ | 960,575             |   | $ | 4,235                |   | $ | 960,575                   |  
|Depreciation                                          |   | 200                 |   |   | -                    |   |   | 200                       |  
|Research and development                              |   | 52,834              |   |   | -                    |   |   | 52,834                    |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|                                                      |   | 1,013,609           |   |   | 4,235                |   |   | 1,013,609                 |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|OTHER ITEMS                                           |   |                     |   |   |                      |   |   |                           |  
|Stock-based compensation
      (Note 7)               |   | 8,232,540           |   |   | -                    |   |   | 8,232,540                 |  
|Loss on acquisition of Arvana Networks
      (Note 3) |   | 7,013,310           |   |   | -                    |   |   | 7,013,310                 |  
|Loss on acquisition
      of Arvana Com (Note 4)      |   | 233,149             |   |   | -                    |   |   | 233,149                   |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Net loss for the period before income taxes           |   | (16,492,608         | ) |   | (4,235               | ) |   | (16,492,608               | )
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Income tax recovery (Note 9)                          |   | -                   |   |   | -                    |   |   | -                         |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Net loss of the period                                |   | (16,492,608         | ) |   | (4,235               | ) |   | (16,492,608               | )
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Other comprehensive income                            |   | -                   |   |   | -                    |   |   | -                         |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Comprehensive loss for the period                     | $ | (16,492,608         | ) | $ | (4,235               | ) | $ | (16,492,608               | )
|                                                      |   |                     |   |   |                      |   |   |                           |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Loss per share
      - basic and diluted              | $ | (1.58               | ) | $ | (0.00                | ) |   |                           |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|                                                      |   |                     |   |   |                      |   |   |                           |  
|Weighted average number of common shares outstanding  |   | 10,442,000          |   |   | 8,073,000            |   |   |                           |  

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

F-4

---

|TURINCO, INC.                        
|-------------------------------------
|(A DEVELOPMENT STAGE COMPANY)        
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(EXPRESSED IN US
      DOLLARS)      

|                                                                                                |   |                     |   |   |                      |   |   | Cumulative amounts        |  
|----------------------------------------------------------------------------------------------- | - | ------------------- | - | - | -------------------- | - | - | ------------------------- | -
|                                                                                                |   |                     |   |   |                      |   |   | from the beginning of the |  
|                                                                                                |   | For the years ended |   |   | development stage on |  
|                                                                                                |   | December 31,        |   |   | January 1, 2005 to   |  
|                                                                                                |   | 2005                |   |   | 2004                 |   |   | December 31, 2005         |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                            |   |                     |   |   |                      |   |   |                           |  
|Net loss for the period                                                                         | $ | (16,492,608         | ) | $ | (4,235               | ) | $ | (16,492,608               | )
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Adjustments to reconcile net loss
      for the period to net cash used in operating activities |   |                     |   |   |                      |   |   |                           |  
|Depreciation                                                                                    |   | 200                 |   |   | -                    |   |   | 200                       |  
|Stock-based compensation                                                                        |   | 8,232,540           |   |   | -                    |   |   | 8,232,540                 |  
|Loss
      on acquisition of Arvana Networks                                                    |   | 7,013,310           |   |   | -                    |   |   | 7,013,310                 |  
|Loss on acquisition
      of Arvana Comunicacoes                                                |   | 233,149             |   |   | -                    |   |   | 233,149                   |  
|Increase in receivables                                                                         |   | 27,694              |   |   | -                    |   |   | 27,694                    |  
|Increase in payables and accrued
      liabilities                                              |   | 129,609             |   |   | -                    |   |   | 129,609                   |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Net cash used in operations                                                                     |   | (856,106            | ) |   | (4,235               | ) |   | (856,106                  | )
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                            |   |                     |   |   |                      |   |   |                           |  
|Acquisition of equipment                                                                        |   | (39,017             | ) |   | -                    |   |   | (39,017                   | )
|Cash of Arvana Networks
      on acquisition date                                               |   | 5,800               |   |   | -                    |   |   | 5,800                     |  
|Cash of Arvana Comunicacoes on acquisition
      date                                           |   | 62,465              |   |   | -                    |   |   | 62,465                    |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Net cash provided by investing activities                                                       |   | 29,248              |   |   | -                    |   |   | 29,248                    |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                            |   |                     |   |   |                      |   |   |                           |  
|Amounts due to / from related parties                                                           |   | (460,460            | ) |   | -                    |   |   | (460,460                  | )
|Contribution to
      capital                                                                   |   | 900                 |   |   | -                    |   |   | 900                       |  
|Proceeds from issuance of common
      stock                                                    |   | 2,121,250           |   |   | 4,000                |   |   | 2,121,250                 |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Net cash provided by financing activities                                                       |   | 1,661,690           |   |   | 4,000                |   |   | 1,661,690                 |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Increase in cash and cash equivalents                                                           |   | 834,832             |   |   | (235                 | ) |   | 834,832                   |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Cash and cash equivalents, beginning of
      year                                              |   | 1,232               |   |   | 1,467                |   |   | 1,232                     |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Cash and cash equivalents, end of year                                                          | $ | 836,064             |   | $ | 1,232                |   | $ | 836,064                   |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|                                                                                                |   |                     |   |   |                      |   |   |                           |  
|Supplementary information                                                                       |   |                     |   |   |                      |   |   |                           |  
|Interest paid                                                                                   | $ | -                   |   | $ | -                    |   | $ | -                         |  
|Taxes Paid                                                                                      |   | -                   |   |   | -                    |   |   | -                         |  

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

F-5

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|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

1. Nature of business and ability to continue as a going concern

Turinco, Inc., (the Company) is a development stage
  company and was incorporated under the laws of the State of Nevada on June 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.

In 1998 the Company completed a forward common stock split of
  eight shares for each outstanding share. In 2005, the Company completed another
  forward 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 this year, 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
  the Internet (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.

The Company plans on developing the first phase of this 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. The Companys
  business activities to date have been directed towards the acquisition of Arvana
  Comunicações, market analysis, developing business plans, searching
  out appropriate local partners and developing technical plans in order to launch
  VOIP telephone services in Rio de Janeiro, Sao Paulo and other major cities
  in Brazil in 2006.

These consolidated financial statements for the year ended December
  31, 2005 include the accounts of the Company, its subsidiary Arvana Networks
  (including its wholly owned subsidiary Arvana Par) and a 75% ownership in Arvana
  Comunicações do Brasil S. A. (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, 2005, the Company has an accumulated deficit during the development
  stage of $16,492,608. To date, the Company has generated no revenue from its
  VOIP 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 the year, the Company completed private placements of its common stock
  raising $2,340,000 ($2,121,250 net of issuance costs) in cash for working capital
  purposes, and at December 31, 2005 had $836,064 remaining to fund its operational
  costs. Management plans to raise $5,000,000 in additional equity capital over
  the next twelve months to finance the operations and capital requirements of
  the Company in 2006. While the Company is expending its best efforts to achieve
  the above plans, there is no assurance that any such activity will generate
  sufficient funds for operations.

F-6

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

2. Summary of Significant Accounting Policies

a) Basis of presentationThe 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s fiscal year end is December 31. The accompanying consolidated
  financial statements of Turinco, Inc. for the years ended December 31, 2005
  and 2004 and for the cumulative amounts from the beginning of the development
  stage on January 1, 2005 through December 31, 2005 have been prepared in accordance
  with accounting principles generally accepted in the United States. Also, they
  are audited and in the opinion of management, 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.

Included in the financial statements are the accounts of the
  Company, its wholly-owned subsidiaries Arvana Networks, Arvana Par, and the
  accounts of Arvana Com. All significant inter-company transactions and balances
  have been eliminated.

b) EstimatesThe preparation of consolidated financial statements in conformity with
  US GAAP requires management to make estimates and assumptions that affect the
  reported amounts of assets and liabilities and disclosure of contingent assets
  and liabilities at the date of the financial statements and the reported amounts
  of revenues and expenses during the reporting period. Actual results could differ
  from those estimates.

c) Foreign currency translation and transactionsTurinco, Inc.s functional currency is the United States dollar.

The Company uses the integrated method when translating the 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.

Transactions conducted in currencies other than the respective
  functional currency of the Company 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.

The exchange rate prevailing at December 31, 2005 was 2.334,
  stated in the Brazilian Real per one US dollar. The average exchange rate during
  the year ended December 31, 2005 was 2.434 stated in the Brazilian Real per
  one US dollar.

d) Comprehensive incomeThe Company has adopted SFAS No. 130, Reporting Comprehensive Income,
  which establishes standards for reporting and presentation of comprehensive
  income, its components and accumulated balances. The Company has no items of
  other comprehensive income in any year presented. Therefore, net income presented
  in the consolidated statements of operations equals comprehensive income.

F-7

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|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

e) Cash equivalentsThe Company considers all highly liquid investments, with terms to maturity
  of three months or less when acquired, to be cash equivalents.

f) 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:

Machinery & equipment
      10 yearsOffice equipment
      5 yearsComputer hardware
      5 yearsComputer software
      1 year


The majority of the equipment was acquired in September 2005
  or later.

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.

g) Financial instrumentsFinancial instruments of the Company are comprised of cash and cash equivalents,
  receivables, accounts payable and accrued liabilities, and amounts due to and
  from related parties. Except as indicated in Note 6, on December 31, 2005, the
  estimated fair values of financial instruments were considered by management
  to be not materially different from their carrying value due to their short
  term to maturity or capacity for prompt liquidation.

h) Concentration of credit riskCash is the only financial instrument that potentially subjects the Company
  to concentration of credit risk. The Company maintains cash in bank accounts
  that, at times, may exceed federally insured limits. The Company has not experienced
  any losses in such accounts and believes it is not exposed to any significant
  risks on its cash in bank accounts.

i) Asset retirement obligationsThe Company records the fair value of an asset retirement obligation as
  a liability in the period in which it incurs a legal obligation associated with
  the retirement of tangible long-lived assets that result from the acquisition,
  construction, development, and/or normal use of the long-lived assets. The Company
  also records a corresponding asset which is amortized over the life of the asset.
  Subsequent to the initial measurement of the asset retirement obligation, the
  obligation is adjusted at the end of each period to reflect the passage of time
  (accretion expense) and changes in the estimated future cash flows underlying
  the obligation (asset retirement cost). The Company does not have any asset
  retirement obligations for the periods presented.

F-8

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

j) Income taxesIncome taxes are provided in accordance with Statement of Financial Accounting
  Standards No. 109 "Accounting for Income Taxes". A deferred tax asset
  or liability is recorded for all temporary differences between financial and
  tax reporting and net operating loss carryforwards. Deferred tax expense (benefit)
  results from the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when,
  in the opinion of management, it is more likely than not that some portion or
  all of the deferred tax assets will not be realized. Deferred tax assets and
  liabilities are adjusted for the effects of changes in tax laws and rates on
  the date of enactment.

k) Stock-based compensationThe Company accounts for all stock-based payments to employees and non-employees
  using the fair value based method. Under the fair value method, stock-based
  payments are measured at the fair value of the consideration received, or the
  fair value of the equity instruments issued, or liabilities incurred, whichever
  is more reliably measurable. The cost of stock-based payments to non-employees
  that are fully vested and non-forfeitable at the grant date is measured and
  recognized at that date. There were no options granted or outstanding for the
  years ended December 31, 2005 and 2004.

l) Net loss per shareBasic loss per share is computed using the weighed average number of common
  shares outstanding during the year. Diluted loss per share is computed using
  the weighted average number of common shares and potentially dilutive common
  stock equivalents, including stock options and warrants. As of December 31,
  2005 and 2004, there were no potentially dilutive instruments.

m) New accounting pronouncementsOn December 16, 2004, the Financial Accounting Standards Board (FASB)
  issued Statement of Financial Accounting Standards (SFAS) No. 123
  (revised 2004), Share-Based Payment. SFAS No. 123(R) would require
  the Company to measure all employee stock-based compensation awards using a
  fair value method and record such expense in its consolidated financial statements.
  In addition, SFAS No. 123(R) will require additional accounting related to the
  income tax effects and additional disclosure regarding the cash flow effects
  resulting from share-based payment arrangements. For non-public entities, SFAS
  No. 123(R) is effective for the first interim or annual reporting period beginning
  after December 15, 2005.

In December 2004, FASB issued SFAS No. 153 to amend Opinion 29
  by eliminating the exception for non-monetary exchanges of similar productive
  assets and replaces it with general exception for exchanges of non-monetary
  assets that do not have commercial substance. A non-monetary exchange is defined
  to have commercial substance if the future cash flows of the entity are expected
  to change significantly as a result of the exchange. The provision of this Statement
  is effective for non-monetary asset exchanges occurring in fiscal periods beginning
  after June 15, 2005, and should be applied prospectively.

In June 2005, the FASB issued Statement 154, Accounting
  Changes and Error Corrections, which replaces APB Opinion 20 and FASB
  Statement 3. Statement 154 changes the requirements for the accounting and reporting
  of a change in accounting principle. Opinion 20 previously required that most
  voluntary changes in accounting principles be recognized by including the cumulative
  effect of the new accounting principle in net income of the period of change.
  Statement 154 now requires retrospective application of changes in accounting
  principle to prior period financial statements, unless it is impractical to
  determine either the period-specific effects or the cumulative effect of the
  change. The statement is effective for fiscal years beginning after December
  15, 2005.

The Company is presently assessing the impact of the implementation
  of these new standards.

F-9

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

3. Arvana Networks Transaction

On August 18, 2005, Turinco, Inc. (Turinco) 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 Turinco, Inc. Arvana Networks business activities
  to date have been directed towards market analysis, developing business plans
  and searching out appropriate local partners in order to launch VOIP telephone
  services in Rio de Janeiro, Sao Paulo and other major cities in Brazil in 2006.

Arvana Networks has 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 will also provide termination services to Arvana Networks, at
  its cost plus an administration fee not to exceed 13 percent. As discussed in
  Note 7(g), these shares are not considered issued for accounting purposes because
  the Company had not yet received the assets to be acquired in connection with
  this transaction.

As both Turinco and Arvana Networks are development stage
  companies, 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 3.0 million Turinco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
  has been 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 has been recorded 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 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 has
  been recorded as the loss on acquisition of Arvana Com.

F-10

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

First Closing

The first closing required the Company to acquire 75% of Arvana
  Coms shares (which has been acquired as of October 6, 2005 for no further
  consideration). Upon completion of the first closing, the Company entered into
  an office space leasing agreement, a software leasing agreement, an equipment
  lease agreement, and a shareholder agreement with Gloinfo (the 25% owner of
  Arvana Com), which will enable Gloinfo to have the opportunity to participate
  pro-rata in future issuances of Arvana Coms share capital.

Interim period between the first and second closing

Arvana Com has applied for the licenses to operate in the VOIP
  business subsequent to the first closing. In conjunction with these applications,
  Arvana Com has also entered into agreements with Gloinfo to provide services
  to Arvana Com and be reimbursed for costs incurred. In addition, loans of up
  to R$250,000 may be provided to Gloinfo for the sole use in the conduct of the
  VOIP operation of Arvana Com. These loans would bear 1% interest if repayments
  are late.

Second closing

Subsequent to December 31, 2005, the Companys management
  entered into negotiations with the principals of Gloinfo with the intention
  of changing the provisions of the Investment agreement to acquire 100% of Arvana
  Com, and achieve complete operating separation from the activities and facilities
  of Gloinfo.

5. Property and equipment

|          |   |         |  |   | Accumulated  |  |   | Net              | 
|--------- | - | ------- |  | - | ------------ |  | - | ---------------- | 
|2005      |   | Cost    |  |   | Amortization |  |   | Book
      Value | 
|          |   |         |  |   |              |  |   |                  | 
|Equipment | $ | 45,092  |  | $ | 200          |  | $ | 44,892           | 
|Computers |   | 61,117  |  |   | -            |  |   | 61,117           | 
|Software  |   | 12,680  |  |   | -            |  |   | 12,680           | 
|          |   |         |  |   |              |  |   |                  | 
|          | $ | 118,889 |  | $ | 200          |  | $ | 118,689          | 

The Company has not taken any amortization on most of its equipment
  as utilization of the equipment has not yet begun. The net carrying amount of
  equipment not being amortized was $ 117,386 as of December 31, 2005.

6. Related Parties

At December 31, 2005, the Company was owed $27,998 from a company
  with a director in common. The loan bears no interest and has no specific terms
  of repayment.

At December 31, 2005, the Company owed $3,260 to a director for
  reimbursement of expenses. These loans bear no interest and have no specific
  terms of repayment.

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. The amount owing bears no interest.

For the year ended December 31, 2005, $162,899 was incurred by
  the Company for services rendered by

F-11

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

directors, the President, the Chief Financial Officer and
  the Corporate Secretary of Turinco, Inc. 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 issued
  250,000 common shares valued at $500,000 based on the market value to a
  company with a common director. See Note 7(b).

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. See Note 7(f).

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. See Note 7(f).

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. See Note 7(i).

The fair value of the amounts due from and due to related
  parties is not determinable as they have no fixed terms of repayment.

7. Share Capital

(a) During 2005 an officer of the Company returned 1,350,000
  post split common shares for cancellation and the Company completed a forward
  stock split of nine shares for each outstanding share. This report has been
  prepared showing post split shares from inception.

(b) During May 2005 the Company completed a private placement
  of 3,000,000 common shares for $300,000 ($0.10 per share). For accounting
  purposes, the shares issued were recorded at their fair value of $6,000,000
  ($2.00 per share) based on the quoted market price of the Companys
  common shares on the date of issuance. The $5,700,000 difference between
  the trading price and the cash proceeds is included in stock-based compensation.
  250,000 of these shares were issued to a company with a director in common.

(c) In July, the Company issued 400,000 common shares for
  proceeds of $500,000 ($1.25 per share). For accounting purposes, the
  shares issued were recorded at their fair value of $912,000 ($2.28 per
  share) based on the quoted market price of the Companys common shares
  on the date of issuance. The difference of $412,000 between the trading
  price and the cash proceeds is included in stock based compensation.

(d) On August 4, 2005, 1,017,000 post split common shares
  were returned for cancellation, for no consideration.

(e) In August 2005, the Company issued 792,000 common shares
  for proceeds of $990,000 ($1.25 per share). For accounting purposes,
  the shares issued were recorded at their fair value of $1,805,760 ($2.28
  per share) based on the quoted market price of the Companys common shares
  on the date of issuance. The $815,760 difference between the trading price
  and the cash proceeds is included in stock-based compensation.

(f) In August 2005, the Company issued 330,000 common shares
  with a total value of $752,400 ($2.28 per share) as finders fees
  relating to the introduction of the Company to IP Horizon and the transaction
  with

F-12

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

Arvana Networks. This amount is included in stock-based compensation.
  90,000 of these shares were issued to a company with a director in common (see
  Note 6). 130,000 of these shares were issued to a director of the Company.

(g) On August 18, 2005, 100% of the shares of Arvana Networks
  were exchanged for 4,500,000 restricted common shares of Turinco, Inc. 685,300
  shares are further restricted in accordance with terms of the service agreement
  and can be earned over a two year period as follows: 342,700 shares can be released
  in August 2006 and 342,600 shares can be released in August 2007.

Turinco, through its wholly owned subsidiary Arvana Networks
  has an agreement with IPH, whereby IPH was issued 1,500,000 of the 4,500,000
  restriction common shares of Turinco, in exchange for a commitment to deliver
  equipment, software and network hardware for the initial launching of VOIP services
  in Brazil. IPH will also provide termination services to Arvana Networks, at
  its cost plus an administration fee not to exceed 13 percent. As of December
  31, 2005, the Company had not received the assets acquired in connection with
  this transaction or any other consideration. These restricted shares cannot
  be sold to a third party however they can be returned if the terms of the agreement
  are not met. As a result of the terms not being met, these shares will not be
  considered issued for accounting purposes until the period when the Company
  receives the equipment and the conditions of the contract are met.

(h) In October 2005, the Company issued 440,000 Common shares
  for proceeds of $550,000 ($1.25 per share). For accounting purposes,
  the shares issued were recorded at their fair value of $1,003,200 ($2.28
  per share) based on the quoted market price of the Companys common share
  on the date of issuance. The $453,200 difference between the trading price
  and the cash proceeds is included in stock-based compensation.

(i) In October 2005, the Company issued 43,500 common shares
  with a total value of $99,181 ($2.28 per share) as finders fees relating
  to the acquisition of Arvana Com. The shares were issued to a company with a
  director in common.

(j) The Company follows SFAS No. 123, 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.

(k) Prior to December 31, 2005, the Company had not granted
  any stock options or warrants.

8. Segmented Information

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,
  $11,362 is located in Canada, and $107,327 is located in Brazil.

F-13

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|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

9. Deferred Income Taxes

Income tax benefits attributable to losses from United States
  of America operations was $Nil for the years ended December 31, 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:

|                                                                      |   | 2005        |   |   | 2004   |  
|--------------------------------------------------------------------- | - | ----------- | - | - | ------ | -
|                                                                      |   |             |   |   |        |  
|Loss for the year                                                     | $ | (16,492,608 | ) | $ | (4,235 | )
|                                                                      |   |             |   |   |        |  
|Computed "expected" tax benefit                                       | $ | (5,607,487  | ) | $ | (1,440 | )
|Non deductible expenses                                               |   | 5,262,928   |   |   |        |  
|Lower effective income tax rate on loss of
      foreign subsidiaries |   | 8,162       |   |   | -      |  
|Change in valuation allowance                                         |   | 336,397     |   |   | 1,440  |  
|                                                                      |   |             |   |   |        |  
|Income tax recovery                                                   | $ | -           |   | $ | -      |  

The tax effects of temporary differences that give rise to significant
  portions of the deferred tax assets and deferred tax liabilities at December
  31, 2005 and 2004 are presented below:

|                                                   |   | 2005     |   |   | 2004    |  
|-------------------------------------------------- | - | -------- | - | - | ------- | -
|Deferred tax assets:                               |   |          |   |   |         |  
|Net operating loss carry forwards
      - US       | $ | 149,562  |   | $ | 32,413  |  
|Net operating loss
      carry forwards - Brazil   |   | 217,890  |   |   | -       |  
|Net operating loss carry forwards
       Barbados |   | 51,014   |   |   | -       |  
|                                                   |   | 418,466  |   |   | 32,413  |  
|Valuation allowance                                |   | (418,466 | ) |   | (32,413 | )
|Total deferred tax assets                          | $ | -        |   | $ | -       |  

The valuation allowance for deferred tax assets as of December
  31, 2005 and 2004 was $418,466 and $32,413, 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.

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 $1,300,000 prior to
  the expiration of the net operating loss carryforwards. Of the $1,284,798 operating
  loss carryforwards, $439,890 is attributable to the US, and expires between
  2025 to 2026; $640,852 is attributable to Brazil and can be carried forward
  indefinitely. The remaining $204,056 is attributable to Barbados and will expire
  in 2016.

F-14

---

|TURINCO, INC.                             
|------------------------------------------
|(A development stage company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|Years Ended December 31, 2005 and 2004    
|(expressed in US dollars)                 
|(Audited)                                 

10. Subsequent events

Subsequent to December 31, 2005, the Companys management
  entered into negotiations with the principals of Gloinfo with the intention
  of acquiring 100% of Arvana Com and achieving complete operating separation
  from the activities and facilities of Gloinfo. If the acquisition is completed,
  the Company may have to incur termination costs for employees hired as part
  of the project. These costs, if incurred, are expected to be minimal.

11. Commitments

Arvana Networks has a contract for corporate secretarial services
  in the amount of $1,000 per month or $12,000 per year to Binnema Management
  Services in Barbados.

In connection with contracts entered into with consultants,
  Arvana Networks has $25,417 in potential termination obligations, should
  the consulting contracts be terminated for other than cause.

F-15

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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

Engagement of Dohan and Company

The Company engaged Dohan and Company, Certified Public
Accountants, as its principal independent registered public accounting firm
effective January 25, 2006. Concurrent with this appointment, BDO Dunwoody LLP,
Chartered Accountants ("BDO Dunwoody"), resigned as our principal independent
registered public accounting firm effective January 25, 2006. The decision to
change principal independent registered public accounting firm was approved by
our board of directors.

During the period of BDO Dunwoodys engagement as the Companys
principal independent registered public accounting firm from September 9, 2005
to January 25, 2006, there were no disagreements with BDO Dunwoody on any matter
of accounting principles or practices, financial statement disclosure or review
scope or procedures. BDO Dunwoody did not report on any of our financial
statements and BDO Dunwoody did not advise us of any reportable event or default
listed in paragraph (iv) of Regulation S-B Item 304(a)(1).

The Company provided BDO Dunwoody with a copy of the foregoing
disclosures and has requested in writing that BDO Dunwoody furnish us with a
letter addressed to the Securities and Exchange Commission stating whether or
not they agree with such disclosures. The Company received the requested letter
from BDO Dunwoody wherein they have confirmed their agreement to the Companys
disclosures. A copy of BDO Dunwoodys letter has been filed as an exhibit to our
Current Report on Form 8-K dated January 31, 2006.

ITEM 8A. CONTROLS AND PROCEDURES.

As required by Rule 13a-15 under the Securities Exchange Act of
1934 (the Exchange Act), we carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures as of
December 31, 2005, being the date of our most recently completed fiscal year.
This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer, Mr. Michael Jervis, and our Chief Financial
Officer, Mr. Leonard Gordon. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by the
rules and forms of the Securities and Exchange Commission (the SEC) .

Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and our Chief
Financial Officer, to allow timely decisions regarding required disclosure.

During the fiscal quarter ended December 31, 2005, the Company
implemented new internal controls over purchasing and approvals with respect to
Arvana Comunicações, our subsidiary that was acquired during the quarter. With
this exception, there were no changes in our internal control over financial
reporting that have materially affected, or are reasonably likely to affect, our
internal control over financial reporting during the year ended December 31,
2005.

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, the registrants
principal executive and principal financial officers, or persons performing
similar functions, and effected by the registrants board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of

- 18 -

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financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:

|(a) | Pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the registrant;                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(b) | Provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with generally accepted accounting principles, and that
      receipts and expenditures of the registrant are being made only in
      accordance with authorizations of management and directors of the
      registrant; and
|    |                                                                                                                                                                                                                                                                                                                                                                                
|(c) | Provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      registrants assets that could have a material effect on the financial
      statements.                                                                                                                                              

ITEM 8B. OTHER INFORMATION.

Not applicable.

- 19 -

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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

Our current executive officers and directors are:

|Name                | Age | Position                                  
|------------------- | --- | ------------------------------------------
|Sir John Baring (1) | 58  | Chairman of the Board of
      Directors  
|Michael Jervis      | 69  | Director and Chief Executive Officer      
|Leonard Gordon      | 72  | Director and Chief Financial
      Officer
|Ross Wilmot (1)     | 62  | Director                                  
|Robert Russell (1)  | 35  | Director                                  
|Karen Engleson      | 55  | Corporate Secretary                       

(1) Member of our Audit Committee and our Compensation
Committee

Set forth below is a brief description of the background and
business experience of each of our executive officers and directors for the past
five years:

Sir John Baring was appointed Chief Executive Officer
  and director to the board of directors (the Board) on May 26, 2005.
  Following the appointment of Mr. Jervis as Chief Executive Officer on October
  17, 2005, Sir John Baring was appointed Chairman of the board. Sir John Baring
  brings more than 30 years of banking and investing experience to management.
  Since June 2002, Sir John Baring has acted as a managing and founding member
  of Mercator Management LLC, a leading fund management company.

Michael Jerviswas appointed President and Chief
Executive Officer on October 17, 2005. He was appointed a director on August 19,
2005. Mr. Jervis is an experienced telecommunications professional with a
background in telephony and subscription television. Prior to this, Mr. Jervis
held senior management positions in B.C. Telephone (now Telus), Premier
Cablevision, Rogers Cable TV, and Multivision Communications Corp. Mr. Jervis
was chief operating officer for Multivision Communications Corp. from 1997 until
May 2001 at which time he then became an independent business consultant. In
addition to serving on the board of Turinco, Mr. Jervis is on the board of
Multivision Communications.

Leonard Gordon was appointed Chief Financial Officer and
director on March 17, 2005. Mr. Gordon has been the Chief Executive Officer of
Commercial Scientific Corporation since 1994, a firm that provides consulting
services to development stage companies in the complex technology industries.
Prior to this, Mr. Gordon has accumulated 20 years experience in chief executive
and other senior management positions in the financial services, engineering and
high technology businesses.

Ross Wilmot was appointed director on August 19, 2005.
Mr. Wilmot is a Chartered Accountant and for the past ten years has provided
independent financial consulting services. In addition to serving on the board
of Turinco, Mr. Wilmot serves the following public companies, CTF Technologies
Inc., Orex Ventures Inc., Orko Gold Corporation, Avigo Resources Corp., and Verb
Exchange Inc. He is a director in all of the companies and Chief Financial
Officer in all but Verb Exchange. Mr. Wilmot is the Chairman of the audit
committee.

Robert Russell was appointed director on August 19,
2005. Mr. Russell is President and Chief Executive Officer of IP Horizon, LLC, a
major shareholder of Arvana and Arvanas technology and termination partner. IP
Horizon is a division of Draper Holdings Business Trust (DHBT). Mr. Russell was
recruited in 1999 by DHBT, a company known for accomplishments in television and
radio broadcasting.

- 20 -

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As President of DHBTs Technology Division, Mr. Russell has
spent the past 5 years constructing a new wing of the 30-year-old
communications and media conglomerate.

Karen Engleson jointed the Company in July, 2005 and was
appointed Corporate Secretary in October, 2005. She is acting as the Chief
Financial Officer of the subsidiary company Arvana Networks. Ms. Engleson is
presently the Chief Financial Officer of Multivision Communications Corp., a
company that provides subscription television, and wireless data services in the
country of Bolivia. Ms. Engleson was the Controller of Multivision
Communications Corp. from 1996 to May 2005, at which time she was appointed as
Chief Financial Officer of Multivision Communications. Prior to working with
Multivision Communications, Ms. Engleson was Controller of Financial Operations
for Rogers Cable TV, a major cable-TV operator in Canada. She was appointed
Corporate Secretary on October 17, 2005. Ms. Engleson has degree in Business
Administration from Simon Fraser University and a Certified General Accountants
designation.

Other Officers

Our officers also include Iain Drummond, our Vice-President of
Business Development, and David Troy, our Chief Technology Officer. Set forth
below is a brief description of the background and business experience of Mr.
Drummond and Mr. Troy:

Iain Drummond was appointed Vice-President of Business
Development, he has over 30 years experience in global information technology
marketing. Mr. Drummond commenced his career in Europe where he handled large
private sector accounts for International Computers Ltd. (now Fujitsu). He
subsequently managed a number of their overseas subsidiaries in South-east Asia,
India, and the Middle East before being appointed president of the Canadian
subsidiary in 1987.

David Troy was appointed Chief Technology Officer in
August, 2005. Mr. Troy has over 20 years experience with programming, systems,
and software design and implementation. He has developed and implemented several
pioneering software systems, including integrated provisioning, customer
relations management, telephony, and management systems. He also has experience
with a wide range of networking, software, and hardware platforms.

Terms of Office

Each member of our board of directors is elected annually and
holds office until the next annual meeting of shareholders or until his or her
successor has been elected or appointed, unless his or her office is earlier
vacated in accordance with our bylaws. Our officers serve at the discretion of
our board of directors and are appointed annually.

Family Relationships

Ms. Engleson is married to Michael Jervis.

Audit Committee and Audit Committee Financial Expert

Our board of directors has established an audit committee that
is comprised of Ross Wilmot, Chairman, Sir John Baring and Robert Russell.

Our board of directors has determined that Mr. Wilmot qualifies
as an audit committee financial expert, as defined by the rules of the SEC.
Our board of directors has further determined that Mr. Wilmot is independent
as that term is defined in Rule 121 of the American Stock Exchange (AMEX)
listing standards.

The audit committee recommends independent accountants to audit
its financial statements, discusses the scope and results of the audit with the
independent accountants, considers the adequacy of the

- 21 -

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internal accounting controls, considers the audit procedures of
the Company and reviews the non-audit services to be performed by the
independent accountants.

Compensation Committee

Our board of directors has established a compensation committee
that is comprised of Robert Russell, Chairman, Sir John Baring and Ross Wilmot.

Code of Ethics

We have adopted a Code of Ethics that applies to all the
Companys directors, officers and employees. A copy of our Code of Ethics is
attached to this Annual Report on Form 10-KSB as an exhibit.

Significant Employees

We do not have any other significant employees, other than our
directors and executive officers named above.

Compliance with Section 16(a) of the Securities Exchange
Act

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than ten percent
of the our equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
us with copies of all Section 16(a) forms they file. Based on our review of the
copies of such forms received by us, we believe that during the fiscal year
ended December 31, 2005 all such filing requirements applicable to our officers
and directors were complied with except as noted below:

|                                       | Number  | Transactions | Known
      Failures
|-------------------------------------- | ------- | ------------ | --------------------
|                                       | Of Late | Not Timely   | To File a Required  
|Name and
      Principal Position      | Reports | Reported     | Form                
|                                       |         |              |                     
|John Baring, Chairman Director         | One     | One          | None                
|Michael Jervis, Director and CEO       | One     | Nil          | None                
|Leonard Gordon, Director and CFO       | Nil     | Nil          | None                
|Ross Wilmot, Director                  | One     | Nil          | None                
|Robert Russell, Director               | One     | None         | One                 
|Karen Engleson, Corporate Secretary    | One     | Nil          | None                
|IP
      Horizon, LLC, 10% Shareholder | One     | One          | One                 

- 22 -

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ITEM 10. EXECUTIVE COMPENSATION.

Compensation of Executive Officers

The following table sets forth certain compensation information
  for Mr. Michael Jervis, our chief executive officer, and Sir John Baring, our
  former chief executive officer for the fiscal year ended December 31, 2005.
  Mr. Jervis and Sir John Baring are our named executive officers.

No executive officer of the Company earned total annual salary
and bonus exceeding $100,000 during the fiscal year ended December 31, 2005.

SUMMARY COMPENSATION TABLE**ANNUAL****COMPENSATION**
    LONG TERM COMPENSATIONAWARDS
    PAYOUTSName
    Title
    Year
    Salary
    Bonus
    Other AnnualCompen-
      sation
    Restricted StockAwarded
    Options/ SARs * (#)
    LTIP payouts ($)
    All Other Compen- sationMichael Jervis(1)
    Director and Chief Executive
      Officer
    2005
    $30,084
    0
    0
    0
    0
    0
    0Sir John Baring(2)
    Chairman and Former Chief
      Executive Officer
    2005
    $20,000
    0
    0
    0
    0
    0
    0


|(1) | Mr. Jervis was appointed as our chief executive officer
      on August 19, 2005                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                              
|(2) | Sir John Baring was our chief executive officer from May
        25, 2005 to August 19, 2005. Sir John Baring was paid $10,000 cash and
        the balance of $10,000 has been accrued for payment in stock.

No compensation was paid to Ms. Penny Smith, our former chief
executive officer, during any of fiscal 2005, 2004 or 2003.

Stock Option Grants

We did not grant any stock options to our named executive
officer during our fiscal year ended December 31, 2005, as illustrated in the
following table:

- 23 -

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**OPTION/SAR GRANTS IN LAST FISCAL
      YEAR** **(INDIVIDUAL GRANTS)**Name
    Number of Securities
      Underlying Options Granted
    % of Total Options
      Granted to Employees
    Exercise Price (per
      Share)
    Expiration DateMichael Jervis, Director and Chief Executive
      Officer
    Nil
    Not Applicable
    Not Applicable
    Not ApplicableSir John Baring Chairman and Former Chief
      Executive Officer
    Nil
    Not Applicable
    Not Applicable
    Not Applicable


Exercise of Stock Options and Year-End Option Values

No share purchase options were exercised by our named executive
officers during our fiscal year ended December 31, 2005. No stock options were
held by our named executive officers as of December 31, 2005.

Long-Term Incentive Plans

We do not have any long-term incentive plans, pension plans, or
similar compensatory plans for our directors or executive officers.

Compensation of Directors

Our directors are not paid any compensation for acting as our
directors. However, we periodically grant stock incentive options to our
directors in consideration for them providing their services as directors.We anticipate adopting a 2006 Stock Option Plan that will permit the grant
of incentive stock options to our directors.

Change of Control Agreements

We are not party to any change of control agreements with any
of our directors or executive officers.

Employment and Consulting Contracts

We have entered into a consulting agreement with Mr. Michael
Jervis, our president and chief executive officer, that provides for an initial
base consultant fee at the annual rate of $84,000 Canadian. Mr. Jervis is
entitled to expense reimbursements and certain incentives as they are approved
by the Board.

We are not party to any employment contracts with any of our
directors or executive officers.

- 24 -

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ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.

Security Ownership

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of March 24, 2006
by: (i) each of our directors, (ii) each of our executive officers, (iii) our
executive officers and directors as a group, and (iv) each beneficial
shareholder known to us to own more than 5% of our outstanding common stock.
Unless otherwise indicated, the shareholders listed possess sole voting and
investment power with respect to the shares shown.

Title of Class
    Name and Address of
      Beneficial Owner
    Number of Common
      Shares
    Percentage of Common
      Shares(1)Directors and **Officers**Common Stock
    Michael Jervis 1883 Parkway Blvd
      Coquitlam, B.C. V3E 3L5
    120,000
    0.9%Common Stock
    Sir John Baring 440 West
      24thStreet, Apt 11E New York, New York 10011
    130,000
    .8%Common Stock
    Ross Wilmot 13548 19thAvenue South Surrey B.C. V4A 6B4
    120,000
    0.8%Common Stock
    Robert Russell 808 Priscilla
      Street Salisbury, Maryland 21804
    0
    0%Common Stock
    Leonard Gordon 1880 Century Park
      East, Ste 1402 Los Angeles CA 90067
    0
    0%Common Stock
    Karen Engleson 1883 Parkway Blvd
      Coquitlam, B.C. V3E 3L5
    24,000
    .2%Common Stock
    All Directors and Executive
      Officers as a Group (6 persons)
    394,000
    2.6%5% Shareholders


- 25 -

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Title of Class
    Name and Address of
      Beneficial Owner
    Number of Common
      Shares
    Percentage of Common
      Shares(1)Common Stock
    IP Horizon LLC(2)
      808 Priscilla Street Salisbury, Maryland 21804
    1,500,000
    9.75%Common Stock
    Pensbreigh Holdings
      Ltd.(3) Chancery House High Street Bridgetown,
      Barbados
    1,067,000
    6.93%


|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are deemed to be beneficially owned by a person if the person has
      the right to acquire the shares (for example, upon exercise of an option)
      within 60 days of the date as of which the information is provided. In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights. As a result, the percentage of outstanding shares of any person as
      shown in this table does not necessarily reflect the persons actual
      ownership or voting power with respect to the number of shares of common
      stock actually outstanding on March 25, 2006. As of March 24, 2006, there
      were 15,391,500 shares of common stock issued and outstanding.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(2) | The beneficial owner of IP Horizon, LLC is Draper
      Holdings Business Trust.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | The beneficial owner of Pensbreigh Holdings Ltd. is Mr.
      Katsumi Sato.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Change of Control

We are not aware of any arrangement that might result in a
change in control in the future.

Equity Compensation Plan Information

We did not have any equity compensation plans under which
shares of common stock have been authorized for issuance to our officers,
directors, employees and consultants as of December 31, 2005.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Except as described below, none of the following persons has
any direct or indirect material interest in any transaction to which we were or
are a party during the past two years, or in any proposed transaction to which
the Company proposes to be a party:

|(A) | any director or officer;                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                         
|(B) | any proposed nominee for election as a
director;                                                                                                        
|    |                                                                                                                                                         
|(C) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or

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|(D) | any relative or spouse of any of the foregoing persons,
      or any relative of such spouse, who has the same house as such person or
      who is a director or officer of any parent or
subsidiary.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Acquisition of Arvana Networks

The following of our 5% shareholders were issued the number of
shares of our common stock set forth below in consideration of their sale of
shares of Arvana Networks in connection with our acquisition of Arvana Networks,
as more particularly described above under Item 1 - Description of
Business:

Name of Shareholder
    Number of Shares of Turinco Common
      Stock **Issued**IP Horizon, LLC
    1,500,000 (1)Pensbreigh Holdings
    1,067,000


|(1) | IPH was issued these shares in exchange for a commitment
      to deliver equipment, software and network hardware for the initial
      launching of the Companys VOIP telephone services in Brazil. IPH also
      agreed to provide termination services to Arvana Networks for these VOIP
      telephone services at its cost plus an administration fee not to exceed 13
      percent. As of December 31, 2005, the Company had not received the 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.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with the completion of the acquisition of Arvana
Networks, we paid an amount of $25,000 and issued 130,000 common shares to Sir
John Baring, 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 finders 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.

Executive Compensation

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 of Turinco, Inc. 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.

Accounts Payable and Accrued Liabilities

At December 31, 2005, accounts payable and accrued liabilities
included $20,760 owed by the Company to directors and officers and companies
controlled by directors and officers of the Company. These amounts are
unsecured, non-interest bearing and payable on demand.

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ITEM 13. EXHIBITS

The following exhibits are included with this Annual Report on
Form 10-KSB:

|Exhibit |                                                                                                                                                                                                                                                        
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                                                 
|        |                                                                                                                                                                                                                                                        
|        |                                                                                                                                                                                                                                                        
|3.1     | Articles of
        Incorporation(1)                                                                                                                                                                                                                   
|        |                                                                                                                                                                                                                                                        
|3.2     | Bylaws, as
        amended(1)                                                                                                                                                                                                                          
|        |                                                                                                                                                                                                                                                        
|10.1    | Agreement
        and Plan of Reorganization between the Company, Arvana Networks, Inc.
        and the Shareholders of Arvana Networks, Inc. dated August 18, 2005(2)                                                                                 
|        |                                                                                                                                                                                                                                                        
|10.2    | Investment
        Agreement dated October 6, 2006 between the Company, Arvana Networks,
        Inc., Arvana Participações S.A., Gloinfo 500 Soluções
        EM Telemática Ltda. and Paulo Messina (3)                                               
|        |                                                                                                                                                                                                                                                        
|10.3    | Amendment
        to Investment Agreement signed October 6, 2005 and dated October 4, 2005
        between the Company, Arvana Networks, Inc., Arvana Participações
        S.A., Gloinfo 500 Soluções EM Telemática Ltda. and Paulo
        Messina(3)
|        |                                                                                                                                                                                                                                                        
|14.1    | Code
        of Ethics (4)                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                        
|31.1    | Certification
        of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (4)                                                                                  
|        |                                                                                                                                                                                                                                                        
|31.2    | Certification
        of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (4)                                                                                  
|        |                                                                                                                                                                                                                                                        
|32.1    | Certification
        of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4)                                                                                  
|        |                                                                                                                                                                                                                                                        
|32.2    | Certification
        of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4)                                                                                  

|(1) | Previously filed with the SEC as an exhibit to the
      Companys registration statement on Form 10- SB filed with the SEC on May
      24, 2000.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                   
|(2) | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on August 19,
      2005.        
|    |                                                                                                                                                   
|(3) | Previously filed with the SEC as an exhibit to the
      Companys Quarterly Report on Form 10-QSB filed with the SEC on December
      14, 2005. 
|    |                                                                                                                                                   
|(4) | Filed as an Exhibit to this Annual Report on Form
      10-KSB.                                                                                   

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table sets forth information regarding the amount
  billed to us by our independent auditor, Dohan and Company, CPA's P.A., and
  our prior independent auditor, BDO Dunwoody LLP, for our last fiscal year ended
  December 31, 2005, and by our previous independent auditor, Madsen & Associates,
  CPAs Inc. for our previous fiscal year ended December 31, 2004:

Years
      ended December 312005
    2004Audit Fees:
    $77,000
    $2,930Audit Related Fees:
    $53,036
    NILTax Fees:
    NIL
    NILAll Other Fees:
    NIL
    NILTotal:
    $130,036
    $2,930


Audit Fees

Audit Fees are the aggregate fees billed by our independent auditor
  for the audit of our consolidated annual financial statements, reviews of interim
  financial statements and attestation services that are provided in connection
  with statutory and regulatory filings or engagements.

Approximately eighty-three percent of the hours expended on the
  principal accountant's engagement to audit our financial statements were attributed
  to work performed by persons other than the principal accountant's full-time,
  permanent employees. The principal accountant reviewed all work done by such
  individuals.

Audit-Related Fees

Audit-Related Fees are fees charged by our independent auditor
for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported under "Audit Fees." This category comprises fees billed for independent
accountant review of our interim financial statements and management discussion
and analysis, as well as advisory services associated with our financial
reporting.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

Our Audit Committee pre-approves all audit services to be
provided to us by our independent auditors. Our Audit Committees policy
regarding the pre-approval of non-audit services to be provided to us by our
independent auditors is that all such services shall be pre-approved by the
Audit Committee. Non-audit services that are prohibited to be provided by our
independent auditors may not be pre-approved. In addition, prior to the granting
of any pre-approval, our Audit Committee must be satisfied that the performance
of the services in question will not compromise the independence of the
independent auditors.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|TURINCO INC. |                                                      
|------------ | -----------------------------------------------------
|             |                                                      
|             |                                                      
|By:          | */s/ Michael Jervis*                                 
|             | Michael Jervis, President and Chief Executive Officer
|             |                                                      
|Date:        | March 28, 2006                                       

In accordance with the Securities Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|By:   | */s/ Michael Jervis*                                           | 
|----- | -------------------------------------------------------------- | 
|      | Michael Jervis, President and Chief Executive Officer          | 
|      | (Principal Executive Officer)                                  | 
|      | Director                                                       | 
|      |                                                                | 
|Date: | March 28, 2006                                                 | 
|      |                                                                | 
|      |                                                                | 
|      |                                                                | 
|By:   | /s/ Leonard Gordon                                             | 
|      | Leonard Gordon, Chief Financial Officer                        | 
|      | (Principal Financial Officer and Principal Accounting Officer) | 
|      | Director                                                       | 
|      |                                                                | 
|Date: | March 28, 2006                                                 | 
|      |                                                                | 
|      |                                                                | 
|      |                                                                | 
|By:   | /s/ Sir John Baring                                            | 
|      | Sir John Baring                                                | 
|      | Director                                                       | 
|      |                                                                | 
|Date: | March 28, 2006                                                 | 
|      |                                                                | 
|      |                                                                | 
|      |                                                                | 
|By:   | /s/ Ross Wilmot                                                | 
|      | Ross Wilmot                                                    | 
|      | Director                                                       | 
|      |                                                                | 
|Date: | March 28, 2006                                                 | 

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