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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended April 30, 2010

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

For the transition period from _____ to _____

COMMISSION FILE NUMBER 000-50569

TERRACE VENTURES INC.(Exact name of registrant as specified in its charter)

|NEVADA                                                               | 91-2147101                                     
|-------------------------------------------------------------------- | -----------------------------------------------
|State or other jurisdiction of incorporation or
      organization   | (I.R.S. Employer Identification No.)           
|                                                                     |                                                
|Suite 202, 810 Peace Portal Drive,                                   |                                                
|Blaine, WA                                                           | 98230                                          
|(Address of principal executive offices)                             | (Zip Code)                                     
|                                                                     |                                                
|Registrant's telephone number, including area code                   | (360) 220-5218                                 
|                                                                     |                                                
|Securities registered under Section 12(b) of the Exchange
      Act: | NONE.                                          
|                                                                     |                                                
|Securities registered under Section 12(g) of the Exchange
      Act: | Common Stock, $0.001 Par Value Per
      Share.

Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes [   ]     No [X]

Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes [   ]     No [X]

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X]No [   ]

Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (s. 229.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). Yes [   ]     No [ 
 ]

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this
chapter) is not contained herein, and will not 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-K or any amendment to this
Form 10-K. [   ]

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large accelerated filer [   ] |                                               | Accelerated
      filer                       [ 
       ]
|----------------------------- | --------------------------------------------- | ---------------------------------------------------------
|Non-accelerated filer   [   ] | (Do not check if a smaller reporting company) | Smaller reporting company [X]                            

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

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 the last business day of the registrants most recently completed
second fiscal quarter: $250,826 based on a price of $0.0325,being the closing price for the Registrants common stock as quoted on
the OTC Bulletin Board on October 31,2009.

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.
As of September 10, 2010, the Registrant had 9,470,660 shares of common
stock outstanding.

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TERRACE VENTURES INC.

ANNUAL REPORT ON FORM 10-KFOR THE YEAR ENDED
APRIL 30, 2010

TABLE OF CONTENTS

|           |           |                                                                                                                     | **PAGE**
|---------- | --------- | ------------------------------------------------------------------------------------------------------------------- | --------
|           |           |                                                                                                                     |         
|           |           |                                                                                                                     |         
|PART I     | 3        
|           |           |                                                                                                                     |         
|           | ITEM 1.   | BUSINESS.                                                                                                           | 3       
|           | ITEM 1A.  | RISK FACTORS                                                                                                        | 4       
|           | ITEM 2.   | PROPERTIES.                                                                                                         | 6       
|           | ITEM 3.   | LEGAL PROCEEDINGS                                                                                                   | 6       
|           |           |                                                                                                                     |         
|PART II    | 7        
|           |           |                                                                                                                     |         
|           | ITEM 5.   | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
      MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. | 7       
|           | ITEM 7.   | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS.                        | 8       
|           | ITEM 8.   | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                         | 11      
|           | ITEM 9.   | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
      AND FINANCIAL DISCLOSURE.                         | 12      
|           | ITEM 9AT. | CONTROLS AND PROCEDURES.                                                                                            | 12      
|           | ITEM 9B.  | OTHER INFORMATION.                                                                                                  | 14      
|           |           |                                                                                                                     |         
|PART III   | 15       
|           |           |                                                                                                                     |         
|           | ITEM 10.  | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                              | 15      
|           | ITEM 11.  | EXECUTIVE COMPENSATION.                                                                                             | 16      
|           | ITEM 12.  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      AND RELATED STOCKHOLDER MATTERS                | 17      
|           | ITEM 13.  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.                                    | 19      
|           | ITEM 14.  | PRINCIPAL ACCOUNTING FEES AND SERVICES.                                                                             | 20      
|           |           |                                                                                                                     |         
|PART IV    | 20       
|           |           |                                                                                                                     |         
|           | ITEM 15.  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.                                                                            | 20      
|           |           |                                                                                                                     |         
|SIGNATURES | 22       

Page 2

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PART I

The information in this discussion contains forward-looking
statements. These forward-looking statements involve risks and uncertainties,
including statements regarding the Company's capital needs, business strategy
and expectations. 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. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks described below, and, from time to time, in other reports the Company
files with the United States Securities and Exchange Commission (the SEC).
These factors may cause the Company's actual results to differ materially from
any forward-looking statement. The Company disclaims any obligation to publicly
update these statements, or disclose any difference between its actual results
and those reflected in these statements.

As used in this Annual Report, the terms we, us, our,
Terrace, and the Company mean Terrace Ventures Inc. and its subsidiaries,
unless otherwise indicated. All dollar amounts in this Annual Report are
expressed in U.S. dollars, unless otherwise indicated.

ITEM
1.            
BUSINESS.

Overview

We were incorporated on February 20, 2001 under the laws of the
State of Nevada.

We do not have any business operations or significant assets.
We had previously entered into a Share Purchase Agreement dated April 29, 2010,
as amended, with Marktech Acquisition Corp. (the "Vendor"), Worldbid
International Inc. ("Worldbid") and Geobiz Systems Inc., our wholly-owned
subsidiary ("Geobiz") whereby Geobiz agreed to acquire all of the issued and
outstanding shares of Worldbid in consideration of $250,000. The parties of the
agreement were unable to close the transaction by the closing date, being June
30, 2010. Accordingly, we are actively seeking and evaluating alternative
business opportunities. Our ability to seek out and acquire an alternative
business opportunity is subject to our obtaining financing, of which there is no
assurance.

Recent Corporate Developments

The following corporate developments occurred since the filing
of our Form 10-Q for the nine months ended January 31, 2010:

|1. | On June 8 2010, our Board of Directors approved a private
      placement offering of up to 5,000,000 Units at a price of $0.01 US per
      Unit, with each Unit consisting of one share of our common stock and one
      share purchase warrant (the Foreign Private Placement). Each share
      purchase warrant entitles the holder to purchase an additional share of
      common stock exercisable for a period of two years at a price of $0.01 US
      per share. The private placement offering will be made to persons who are
      not U.S. Persons as defined in Regulation S. We have received any
      proceeds under the Foreign Private Placement. We have not issued any Units
      under the Foreign Private Placement and there is no assurance that the
      private placement offering or any part of it will be completed.       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2. | Also, on June 8 2010, our Board of Directors approved a
      private placement offering of up to 5,000,000 Units at a price of $0.01 US
      per Unit, with each Unit consisting of one share of our common stock and
      one share purchase warrant (the U.S. Private Placement). Each share
      purchase warrant entitles the holder to purchase an additional share of
      common stock exercisable for a period of two years at a price of $0.01 US
      per share. The private placement offering will be made to persons who are
      Accredited Investors as defined in Regulation D. We have not received
      any proceeds under the U.S. Private Placement. We have not issued any
      Units under the U.S. Private Placement and there is no assurance that the
      private placement offering or any part of it will be
  completed.

3

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Employees

We have no employees as of the date of this Annual Report on
Form 10-K other than our sole executive officer and director. We conduct our
business largely through agreements with consultants and arms-length third
parties.

Research And Development Expenditures

We have not incurred any research expenditures since our
incorporation.

Patents And Trademarks

We do not own, either legally or beneficially, any patent or
trademark.

ITEM
1A.           RISK
FACTORS.

The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.

If we do not obtain additional financing, our business will
fail.

As at April 30, 2010, we had cash in the amount of $1,169. We
are in the process of seeking out and evaluating alternative business
opportunities. In order to acquire an alternative business opportunity, of which
there is no assurance, and to meet our ongoing expenditures, we will need to
raise substantial financing.

Our Board of Directors has approved the Foreign Private
Placement of up to 5,000,000 Units for gross proceeds of $50,000 and the U.S.
Private Placement of up to 5,000,000 Units for gross proceeds of $50,000. There
is no assurance that we will be able to complete the sale of any securities
under the Foreign Private Placement or the U.S. Private Placement. There is no
assurance that we will be able to complete the sale of any securities under
these offerings. If we are unable to obtain sufficient financing to meet our
ongoing expenditures, our business will fail.

We have yet to attain profitable operations and because we
will need additional financing to continue our business operations, our
accountants believe that there is substantial doubt about our ability to
continue as a going concern.

We have incurred a net loss of $1,979,058 for the period from
February 20, 2001 (inception) to April 30, 2010 and have no revenues to date.
Our future is dependent upon our ability to obtain suitable business opportunity
and obtain substantial financing in order to meet our current obligations and to
continue our operations. These factors raise substantial doubt that we will be
able to continue as a going concern.

We may conduct further offerings in the future in which case
investors shareholdings will be diluted.

Since our inception, we have relied on equity sales of our
common stock to fund our operations. We may conduct additional equity offerings
in the future to finance any future business projects that we decide to
undertake. If common stock is issued in return for additional funds, the price
per share could be lower than that paid by our current stockholders. We
anticipate continuing to rely on equity sales of our common stock in order to
fund our business operations. If we issue additional stock, investors
percentage interest in us will be diluted. The result of this could reduce the
value of their stock.

4

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Because our stock is a penny stock, stockholders will be
more limited in their ability to sell their stock.

The shares of our common stock constitute penny stocks under
the Securities Exchange Act of 1934 (the Exchange Act). The shares will remain
classified as a penny stock for the foreseeable future. The classification as a
penny stock makes it more difficult for a broker/dealer to sell the stock into a
secondary market, which makes it more difficult for a purchaser to liquidate his
or her investment. Any broker/dealer engaged by the purchaser for the purpose of
selling his or her shares will be subject to rules 15g-1 through 15g-10 of the
Exchange Act. Rather than having to comply with these rules, some broker-dealers
will refuse to attempt to sell a penny stock.

The "penny stock" rules adopted by the SEC under the Exchange
Act subjects the sale of the shares of our common stock to certain regulations
which impose sales practice requirements on broker/dealers. For example, the
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared by the SEC,
that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the brokers or dealers duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
|   |                                                                                                                                                                                                                                          
|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.                                                                              

Legal remedies, which may be available to an investor in "penny
stocks, are as follows:

|(a) | if "penny stock" is sold to an investor in violation of
      his or her rights listed above, or other federal or states securities
      laws, the investor may be able to cancel his or her purchase and get his
      or her money back.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                            
|(b) | if the stocks are sold in a fraudulent manner, the
      investor may be able to sue the persons and firms that caused the fraud
      for damages.                                                                                        
|    |                                                                                                                                                                                                                                            
|(c) | if the investor has signed an arbitration agreement,
      however, he or she may have to pursue his or her claim through
      arbitration.                                                                                               

If the person purchasing the securities is someone other than
an accredited investor or an established customer of the broker/dealer, the
broker/dealer must also approve the potential customer's account by obtaining
information concerning the customer's financial situation, investment experience
and investment objectives. The broker/dealer must also make a determination
whether the transaction is suitable for the customer and whether the customer
has sufficient knowledge and experience in financial matters to be reasonably
expected to be capable of evaluating the risk of transactions in such
securities. Accordingly, the SEC's rules may limit the number of potential
purchasers of the shares of our common stock.

5

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ITEM
2.            
PROPERTIES.

We rent office space at Suite 202, 810 Peace Portal Drive,
Blaine, WA 98230, consisting of approximately 1,124 square feet, at a cost of
$250 per month. This rental is on a month-to-month basis without a formal
contract. We pay a fee of $500 per month for office related services provided in
connection with our office rental.

ITEM
3.             LEGAL
PROCEEDINGS.

We are not a party to any other legal proceedings and, to our
knowledge, no other legal proceedings are pending, threatened or
contemplated.

6

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PART II

|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
      STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
|------- | -------------------------------------------------------------------------------------------------------------------

MARKET INFORMATION

Our shares are quoted on the OTC Bulletin Board under the
symbol TVER. The high and the low prices for our shares for each quarter of
our last two fiscal years of actual trading were:

|Quarter Ended            | High   | Low   
|------------------------ | ------ | ------
|                         |        |       
|Fiscal Year 2010         |        |       
|April 30, 2010           | $0.04  | $0.03 
|January
        31, 2010 | $0.11  | $0.03 
|October 31, 2009         | $0.15  | $0.04 
|July
        31, 2009    | $0.10  | $0.05 
|                         |        |       
|Fiscal Year 2009         |        |       
|April 30, 2009           | $0.275 | $0.05 
|January
        31, 2009 | $0.15  | $0.075
|October 31, 2008         | $0.30  | $0.075
|July 31, 2008            | $0.325 | $0.075

The above quotations have been adjusted to reflect the 1-for-5
reverse stock split effected October 1, 2009. Quotations provided by the OTCBB
reflect inter-dealer prices, without retail mark-up, markdown or commission and
may not represent actual transactions. The high and low bid price information
provided above was obtained from the OTC Bulletin Board. The market quotations
provided reflect inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions.

REGISTERED HOLDERS OF OUR COMMON STOCK

As of September 10, 2010, there were one hundred and five
(105)registered holders of our common stock. We believe that a large
number of stockholders hold stock on deposit with their brokers or investment
bankers registered in the name of stock depositories.

DIVIDENDS

We have not declared any dividends on our common stock since
our inception. There are no dividend restrictions that limit our ability to pay
dividends on our common stock in our Articles of Incorporation or bylaws.
Chapter 78 of the Nevada Revised Statutes (the NRS), does provide certain
limitations on our ability to declare dividends. Section 78.288 of Chapter 78 of
the NRS prohibits us from declaring dividends where, after giving effect to the
distribution of the dividend:

|(a) | we would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(b) | except as may be allowed by our Articles of
      Incorporation, our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed, if we were to be
      dissolved at the time of the distribution, to satisfy the preferential
      rights upon dissolution of stockholders who may have preferential rights
      and whose preferential rights are superior to those receiving the
      distribution.

We have neither declared nor paid any cash dividends on our
capital stock and do not anticipate paying cash dividends in the foreseeable
future. Our current policy is to retain any earnings in order to finance the
expansion of our operations. Our board of directors will determine future
declaration and payment of dividends, if any, in light of the then-current conditions they
deem relevant and in accordance with the Nevada Revised Statutes.

7

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RECENT SALES OF UNREGISTERED SECURITIES

Other than as disclosed in our Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K, we did not complete any sales of unregistered
securities during the year ended April 30, 2010.

|ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS
      OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|------- | --------------------------------------------------------------------------------------------

PLAN OF OPERATION

We are currently in the process of reorganizing our business
and are seeking and evaluating alternative business opportunities. As a result,
we are unable to provide an accurate estimate of our financial requirements for
the next twelve months. However, as at April 30, 2010, we currently have a
working capital deficit of $158,163 and will need substantial financing in the
near term in order to meet our current obligations as they become due and to
meet our ongoing reporting obligations under the Exchange Act. In addition, if
our management is successful in identifying a suitable business opportunity for
us to pursue, we will likely need significantly more financing in order to
pursue the new business opportunity.

RESULTS OF OPERATIONS

|Summary of Year End Results |   |                      |   |   |            |   |  |                       | 
|--------------------------- | - | -------------------- | - | - | ---------- | - |  | --------------------- | 
|                            |   |                      |   |   |            |   |  |                       | 
|                            |   | Year Ended April 30, |   |   | Percentage |  
|                            |   | 2010                 |   |   | 2009       |   |  | Increase / (Decrease) | 
|Revenue                     | $ | --                   |   | $ | --         |   |  | n/a                   | 
|Expenses                    |   | (99,514              | ) |   | (355,923   | ) |  | (72.0)%               | 
|Net Loss                    | $ | (99,514              | ) | $ | (355,923   | ) |  | (72.0)%               | 

Revenues

We have not earned any revenues since our inception and we do
not anticipate earning revenues in the near future. We are an exploration stage
company and are presently seeking and evaluating alternative business
opportunities.

Operating Expenses

The major components of our expenses for the year ended April
30, 2009 and 2008 are outlined in the table below:

|                       |   | Year Ended April 30 |  |   | Percentage | 
|---------------------- | - | ------------------- |  | - | ---------- | 
|                       |   | 2010                |  |   | 2009       | 
|Accounting             | $ | 25,320              |  | $ | 24,120     | 
|Bad Debt Expense       |   | --                  |  |   | 214,892    | 
|Bank Charges           |   | 290                 |  |   | 111        | 
|Cancelled Merger Costs |   | 8,300               |  |   | --         | 
|Legal                  |   | 29,115              |  |   | 76,916     | 
|Office Administration  |   | 30,000              |  |   | 30,000     | 
|Office Expenses        |   | --                  |  |   | 340        | 

8

---

|Regulatory Expenses/Fees |   | 3,714  |  |   | 4,386   |  |  | (15.3)% | 
|------------------------ | - | ------ |  | - | ------- |  |  | ------- | 
|Rent                     |   | 1,875  |  |   | 3,000   |  |  | (37.5)% | 
|Telephone                |   | 900    |  |   | 1,470   |  |  | (38.8)% | 
|Travel & Entertainment   |   | --     |  |   | 688     |  |  | (100)%  | 
|Total Operating Expenses | $ | 99,514 |  | $ | 355,923 |  |  | (72.0)% | 

Our operating expenses decreased from $355,923, during the year
ended April 30, 2009, to $99,514, during the year ended April 30, 2010. The
decease in our operating expenses is due to the fact that we recorded bad debts
of $214,892 during the year ended April 30, 2009.

Accounting and legal expenses primarily related to expenses
incurred in connection with meeting our ongoing reporting obligations under the
Exchange Act.

Office administration expenses consist of amounts incurred to
our sole executive officer and director for his management consulting services.

LIQUIDITY AND CAPITAL RESOURCES

|Cash Flows                                    |   |                           |  |   |          |  
|--------------------------------------------- | - | ------------------------- |  | - | -------- | -
|                                              |   | Year
      Ended April 30 | 
|                                              |   | 2010                      |  |   | 2009     |  
|Net Cash used in Operating Activities         | $ | 1,037                     |  | $ | (130,643 | )
|Net Cash used in Investing Activities         |   | --                        |  |   | --       |  
|Net Cash from Financing Activities            |   | --                        |  |   | 116,900  |  
|Net Increase (Decrease) in Cash During Period | $ | 1,037                     |  | $ | (13,743  | )

|Working Capital         |   |                         |   |   |                         |   |  |                       | 
|----------------------- | - | ----------------------- | - | - | ----------------------- | - |  | --------------------- | 
|                        |   |                         |   |   |                         |   |  | Percentage            | 
|                        |   | At
      April 30, 2010 |   |   | At
      April 30, 2009 |   |  | Increase / (Decrease) | 
|Current Assets          | $ | 1,169                   |   | $ | 4,632                   |   |  | (74.8)%               | 
|Current Liabilities     |   | (159,332                | ) |   | (63,281                 | ) |  | 151.8%                | 
|Working Capital Deficit | $ | (158,163                | ) | $ | (58,649                 | ) |  | 169.7%                | 

We had cash on hand of $1,169 and a working capital deficit of
$158,163 as of April 30, 2010 compared to a working capital deficit of $58,649
as of April 30, 2009. The increase in our working capital deficit is due to: (i)
an increase in accounts payable and accrued expenses as a result of our lack of
capital to meet ongoing costs, and (ii) the fact that our sole source of
financing came in the form of short term loans.

Financing Requirements

Currently, we do not have sufficient financial resources to
meet our ongoing operating expenditures. As such, our ability to complete our
plan of operation is dependent upon our ability to obtain additional financing
in the near term.

Our Board of Directors has approved two private placement
offerings for up to an aggregate of 10,000,000 Units for proceeds of up to
$100,000 as follows:

Foreign Private Placement

On June 8 2010, our Board of Directors approved a private
placement offering of up to 5,000,000 Units at a price of $0.01 US per Unit,
with each Unit consisting of one share of our common stock and one share
purchase warrant (the Foreign Private Placement). Each share purchase warrant
entitles the holder to purchase an additional share of common stock exercisable
for a period of two years at a price of $0.01 US per share. The private
placement offering will be made to persons who are not U.S. Persons as defined
in Regulation S. We have received any proceeds under the Foreign
Private Placement. There is no assurance that the private placement offering or
any part of it will be completed.

9

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U.S. Private Placement

Also, on June 8 2010, our Board of Directors approved a private
placement offering of up to 5,000,000 Units at a price of $0.01 US per Unit,
with each Unit consisting of one share of our common stock and one share
purchase warrant (the U.S. Private Placement). Each share purchase warrant
entitles the holder to purchase an additional share of common stock exercisable
for a period of two years at a price of $0.01 US per share. The private
placement offering will be made to persons who are accredited investors as
defined in Regulation D. We have not received any proceeds under the U.S.
Private Placement. There is no assurance that the private placement offering or
any part of it will be completed.

We anticipate continuing to rely on equity sales of our common
shares in order to continue to fund our business operations. Issuances of
additional shares will result in dilution to our existing shareholders. There is
no assurance that we will achieve any additional sales of our equity securities
or arrange for debt or other financing to fund our business operations.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant 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

The preparation of financial statements in conformity with
United States generally accepted accounting principles requires our management
to make estimates and assumptions that affect the reported amount 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.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

Our significant accounting policies are disclosed in Note 1 to
the audited financial statements included in this Annual Report.

10

---

ITEM
8.            
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Audited Financial Statements for the Years Ended April 30, 2010
and 2009, including:

|1. | Report of Independent Registered Public Accounting
  Firm;                                                                                                                    
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                               
|2. | Balance Sheets as at April 30, 2010 and
  2009;                                                                                                                               
|   |                                                                                                                                                                               
|3. | Statements of Operations and Accumulated Deficit for the
      years ended April 30, 2010 and 2009 and the period from inception on
      February 20, 2001 to April 30, 2010;
|   |                                                                                                                                                                               
|4. | Statements of Changes in Stockholders Equity/Deficit for
      the period from inception through April 30, 2010;                                                             
|   |                                                                                                                                                                               
|5. | Statements of Cash Flows for the years ended April 30,
      2009 and 2008 and the period from inception to April 30,
  2010;                                                 
|   |                                                                                                                                                                               
|6. | Notes to the Financial Statements; and                                                                                                                                        
|   |                                                                                                                                                                               
|7. | Supplemental Statement: Statements of Operating Expenses
      for the years ended April 30, 2010 and 2009 and the period from inception
      to April 30, 2010.             

11

---



---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)BALANCE SHEET

|ASSETS                                                                                                                                                                                |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                                                                      |  
|                                                                                                                                                                                      |  
|                                                                                                                                                                                      |  
|                                                                                                                                                                                      |  
|Current Assets:                                                                                                                                                                       |  
|Cash                                                                                                                                                                                  | $
|Loan Receivable                                                                                                                                                                       |  
|                                                                                                                                                                                      |  
|Total Current Assets                                                                                                                                                                  |  
|                                                                                                                                                                                      |  
|Other Asset  Investment                                                                                                                                                              |  
|                                                                                                                                                                                      |  
|TOTAL ASSETS                                                                                                                                                                          | $
|                                                                                                                                                                                      |  
|                                                                                                                                                                                      |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                                                                                        |  
|                                                                                                                                                                                      |  
|Current Liabilities:                                                                                                                                                                  |  
|Accounts Payable
      and                                                                                                                                                            |  
|Accrued
      Expenses                                                                                                                                                                | $
|Loans Payable                                                                                                                                                                         |  
|Loans Payable  Related Parties                                                                                                                                                       |  
|                                                                                                                                                                                      |  
|Total Current Liabilities                                                                                                                                                             |  
|                                                                                                                                                                                      |  
|Stockholders' Equity:                                                                                                                                                                 |  
|Common Stock,
      $0.001 par value 
                    400,000,000
      shares authorized, 
                    9,470,660
      and 47,353,200 shares 
                    issued |  
|Additional Paid in Capital                                                                                                                                                            |  
|Deficit
      Accumulated During the Exploration Stage                                                                                                                                |  
|                                                                                                                                                                                      |  
|Total Stockholders' Equity (Deficit)                                                                                                                                                  |  
|                                                                                                                                                                                      |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)                                                                                                                            | $

See Notes to Financial Statements.

2

---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT

|                                               |   | YEAR ENDED     |   |   | YEAR ENDED     |   |   | INCEPTION to   |  
|---------------------------------------------- | - | -------------- | - | - | -------------- | - | - | -------------- | -
|                                               |   | APRIL 30, 2010 |   |   | APRIL 30, 2009 |   |   | APRIL 30, 2010 |  
|                                               |   |                |   |   |                |   |   |                |  
|Revenues                                       | $ | -0-            |   | $ | -0-            |   | $ | -0-            |  
|                                               |   |                |   |   |                |   |   |                |  
|Operating Expenses                             |   | (99,514        | ) |   | (355,923       | ) |   | (964,569       | )
|                                               |   |                |   |   |                |   |   |                |  
|Loss Before Other Income And
      Expenses    |   | (99,514        | ) |   | (355,923       | ) |   | (964,569       | )
|                                               |   |                |   |   |                |   |   |                |  
|Other Income                                   |   |                |   |   |                |   |   |                |  
|Interest Income                                |   | -0-            |   |   | -0-            |   |   | 14,491         |  
|                                               |   |                |   |   |                |   |   |                |  
|Other Expense                                  |   |                |   |   |                |   |   |                |  
|Unrealized Loss
      on Investment            |   | -0-            |   |   | -0-            |   |   | (1,028,980     | )
|                                               |   |                |   |   |                |   |   |                |  
|Loss Before Provision for
      Income Taxes   |   | (99,514        | ) |   | (355,923       | ) |   | (1,979,058     | )
|                                               |   |                |   |   |                |   |   |                |  
|Provision for Income Taxes                     |   | -0-            |   |   | -0-            |   |   | -0-            |  
|                                               |   |                |   |   |                |   |   |                |  
|Net Loss                                       |   | (99,514        | ) |   | (355,923       | ) |   | (1,979,058     | )
|                                               |   |                |   |   |                |   |   |                |  
|Accumulated Deficit,
      Beginning of Period |   | (1,879,544     | ) |   | (1,523,621     | ) |   | -0-            |  
|                                               |   |                |   |   |                |   |   |                |  
|Accumulated Deficit, End of
      Period       | $ | (1,979,058     | ) | $ | (1,879,544     | ) | $ | (1,979,058     | )
|                                               |   |                |   |   |                |   |   |                |  
|Net Loss per Share                             | $ | (0.01          | ) | $ | (0.05          | ) | $ | (0.31          | )
|                                               |   |                |   |   |                |   |   |                |  
|Weighted Average Shares
      Outstanding      |   | 9,470,660      |   |   | 8,615,640      |   |   | 6,378,749      |  

See Notes to Financial Statements.

3

---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

|                                                             |  |              |  |   |            |  |   |            |  |   | Deficit       |   |   |           |  
|------------------------------------------------------------ |  | ------------ |  | - | ---------- |  | - | ---------- |  | - | ------------- | - | - | --------- | -
|                                                             |  |              |  |   |            |  |   |            |  |   | Accumulated   |   |   | Total     |  
|                                                             |  | Common Stock |  |   | Additional |  |   | During the |  |   | Stockholders' |  
|                                                             |  |              |  |   | Dollar     |  |   | Paid in    |  |   | Exploration   |   |   | Equity    |  
|                                                             |  | Shares       |  |   | Amount     |  |   | Capital    |  |   | Stage         |   |   | (Deficit) |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Inception, February 20, 2001                                 |  | ----         |  | $ | ----       |  | $ | ----       |  | $ | ----          |   | $ | ----      |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.001 per share April
      9, 2001     |  | 4,000,000    |  |   | 400        |  |   | 3,600      |  |   | ----          |   |   | 4,000     |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2001                        |  | ----         |  |   | ----       |  |   | ----       |  |   | (1,410        | ) |   | (1,410    | )
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Balances, April 30, 2001                                     |  | 4,000,000    |  |   | 400        |  |   | 3,600      |  |   | (1,410        | ) |   | 2,590     |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.01 per share August
      15, 2001    |  | 2,500,000    |  |   | 250        |  |   | 24,750     |  |   | ----          |   |   | 25,000    |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2002                        |  | ----         |  |   | ----       |  |   | ----       |  |   | (19,196       | ) |   | (19,196   | )
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Balances, April 30, 2002                                     |  | 6,500,000    |  |   | 650        |  |   | 28,350     |  |   | (20,606       | ) |   | 8,394     |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.10 per share September
      30, 2002 |  | 142,500      |  |   | 14         |  |   | 14,236     |  |   | ----          |   |   | 14,250    |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2003                        |  | ----         |  |   | ----       |  |   | ----       |  |   | (17,632       | ) |   | (17,632   | )
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Balances, April 30, 2003                                     |  | 6,642,500    |  |   | 664        |  |   | 42,586     |  |   | (38,238       | ) |   | 5,012     |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.10 per share November
      6, 2003   |  | 400,000      |  |   | 40         |  |   | 39,960     |  |   | ----          |   |   | 40,000    |  
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2004                        |  | ----         |  |   | ----       |  |   | ----       |  |   | (58,708       | ) |   | (58,708   | )
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Balances, April 30, 2004                                     |  | 7,042,500    |  |   | 704        |  |   | 82,546     |  |   | (96,946       | ) |   | (13,696   | )
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2005                        |  | ----         |  |   | ----       |  |   | ----       |  |   | (37,532       | ) |   | (37,532   | )
|                                                             |  |              |  |   |            |  |   |            |  |   |               |   |   |           |  
|Balances, April 30, 2005                                     |  | 7,042,500    |  |   | 704        |  |   | 82,546     |  |   | (134,478      | ) |   | (51,228   | )

See Notes to Financial Statements.

4

---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED

|                                                           |  |              |  |   |            |  |   |            |   |   | Deficit       |   |   |           |  
|---------------------------------------------------------- |  | ------------ |  | - | ---------- |  | - | ---------- | - | - | ------------- | - | - | --------- | -
|                                                           |  |              |  |   |            |  |   |            |   |   | Accumulated   |   |   | Total     |  
|                                                           |  | Common Stock |  |   | Additional |  |   | During the |   |   | Stockholders' |  
|                                                           |  |              |  |   | Dollar     |  |   | Paid in    |   |   | Exploration   |   |   | Equity    |  
|                                                           |  | Shares       |  |   | Amount     |  |   | Capital    |   |   | Stage         |   |   | (Deficit) |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Balances, April 30, 2005                                   |  | 7,042,500    |  |   | 704        |  |   | 82,546     |   |   | (134,478      | ) |   | (51,228   | )
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $1.00 per share November
      23,2005 |  | 500,000      |  |   | 50         |  |   | 499,950    |   |   | ----          |   |   | 500,000   |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|4-for-1 Stock Split, December 19, 2005                     |  | 22,627,500   |  |   | 29,416     |  |   | (29,416    | ) |   | ----          |   |   | ----      |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $0.25 per share February
      3, 2006 |  | 400,000      |  |   | 400        |  |   | 99,600     |   |   | ----          |   |   | 100,000   |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $0.25 per share March
      13, 2006   |  | 380,000      |  |   | 380        |  |   | 94,620     |   |   | ----          |   |   | 95,000    |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $0.25 per share March
      31, 2006   |  | 999,920      |  |   | 1,000      |  |   | 248,980    |   |   | ----          |   |   | 249,980   |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2006                      |  | ----         |  |   | ----       |  |   | ----       |   |   | (987,633      | ) |   | (987,633  | )
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Balances April 30, 2006                                    |  | 31,949,920   |  |   | 31,950     |  |   | 996,280    |   |   | (1,122,111    | ) |   | (93,881   | )
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $0.25 per share May 24,
      2006     |  | 220,080      |  |   | 220        |  |   | 54,800     |   |   | ----          |   |   | 55,020    |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $0.30 per share June 5,
      2006     |  | 335,000      |  |   | 335        |  |   | 100,165    |   |   | ----          |   |   | 100,500   |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Common Stock Issued $0.10 per share January
      23, 2007 |  | 1,678,200    |  |   | 1,678      |  |   | 166,142    |   |   | ----          |   |   | 167,820   |  
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2007                      |  | ----         |  |   | ----       |  |   | ----       |   |   | (301,060      | ) |   | (301,060  | )
|                                                           |  |              |  |   |            |  |   |            |   |   |               |   |   |           |  
|Balances April 30, 2007                                    |  | 34,183,200   |  | $ | 34,183     |  | $ | 1,317,387  |   | $ | (1,423,171    | ) | $ | (71,601   | )

See Notes to Financial Statements.

5

---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - CONTINUED

|                                                           |  |              |   |   |            |   |   |            |  |   | Deficit       |   |   |           |  
|---------------------------------------------------------- |  | ------------ | - | - | ---------- | - | - | ---------- |  | - | ------------- | - | - | --------- | -
|                                                           |  |              |   |   |            |   |   |            |  |   | Accumulated   |   |   | Total     |  
|                                                           |  | Common Stock |   |   | Additional |   |   | During the |  |   | Stockholders' |  
|                                                           |  |              |   |   | Dollar     |   |   | Paid in    |  |   | Exploration   |   |   | Equity    |  
|                                                           |  | Shares       |   |   | Amount     |   |   | Capital    |  |   | Stage         |   |   | (Deficit) |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Balances April 30, 2007                                    |  | 34,183,200   |   | $ | 34,183     |   | $ | 1,317,387  |  | $ | (1,423,171    | ) | $ | (71,601   | )
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.10 per share July 12,
      2007    |  | 2,570,000    |   |   | 2,570      |   |   | 254,755    |  |   | ----          |   |   | 257,325   |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2008                      |  | ----         |   |   | ----       |   |   | ----       |  |   | (100,450      | ) |   | (100,450  | )
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Balances April 30, 2008                                    |  | 36,753,200   |   | $ | 36,753     |   | $ | 1,572,142  |  | $ | (1,523,621    | ) | $ | 85,274    |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.10 per share October
      10, 2008 |  | 10,000,000   |   |   | 10,000     |   |   | 190,000    |  |   | ----          |   |   | 200,000   |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Common Stock Issued $0.20 per share April 8,
      2009    |  | 600,000      |   |   | 600        |   |   | 11,400     |  |   | ----          |   |   | 12,000    |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2009                      |  | ----         |   |   | ----       |   |   | ----       |  |   | (355,923      | ) |   | (355,923  | )
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Balances April 30, 2009                                    |  | 47,353,200   |   |   | 47,353     |   |   | 1,773,542  |  |   | (1,879,544    | ) |   | (58,649   | )
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|1-for-5 Reverse Stock Split, October 1, 2009               |  | (37,882,540  | ) |   | (37,882    | ) |   | 37,882     |  |   | ----          |   |   | ----      |  
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Net Loss, Period Ended April 30, 2010                      |  | ----         |   |   | ----       |   |   | ----       |  |   | (99,514       | ) |   | (99,514   | )
|                                                           |  |              |   |   |            |   |   |            |  |   |               |   |   |           |  
|Balances April 30, 2010                                    |  | 9,470,660    |   |   | 9,471      |   |   | 1,811,424  |  |   | (1,979,058    | ) |   | (158,163  | )

See Notes to Financial Statements.

6

---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)STATEMENTS OF CASH FLOWS

|                                    |   | YEAR ENDED     |   |   | YEAR ENDED     |   |   | INCEPTION to   |  
|----------------------------------- | - | -------------- | - | - | -------------- | - | - | -------------- | -
|                                    |   | APRIL 30, 2010 |   |   | APRIL 30, 2009 |   |   | APRIL 30, 2010 |  
|Cash Flows from                     |   |                |   |   |                |   |   |                |  
|Operating Activities:               |   |                |   |   |                |   |   |                |  
|                                    |   |                |   |   |                |   |   |                |  
|Net Loss                            | $ | (99,514        | ) | $ | (355,923       | ) | $ | (1,979,058     | )
|Adjustments to Reconcile Net Loss   |   |                |   |   |                |   |   |                |  
|To Net Cash Provided/(Used) by      |   |                |   |   |                |   |   |                |  
|Operating Activities:               |   |                |   |   |                |   |   |                |  
|Unrealized Loss on
      Investment |   | -0-            |   |   | -0-            |   |   | 1,028,980      |  
|(Increase)/Decrease in:             |   |                |   |   |                |   |   |                |  
|Loans Receivable                    |   | 4,500          |   |   | (4,500         | ) |   |                |  
|Notes Receivable                    |   | -0-            |   |   | 214,892        |   |   | -0-            |  
|Increase/(Decrease) in:             |   |                |   |   |                |   |   |                |  
|Accounts Payable                    |   | 54,851         |   |   | 14,888         |   |   | 118,132        |  
|Loans Payable                       |   | 27,000         |   |   | -0-            |   |   | 27,000         |  
|Loans Payable  Related Parties     |   | 14,200         |   |   | -0-            |   |   | 14,200         |  
|                                    |   |                |   |   |                |   |   |                |  
|Net Cash Used by                    |   |                |   |   |                |   |   |                |  
|Operating
      Activities          |   | 1,037          |   |   | (130,643       | ) |   | (790,746       | )
|                                    |   |                |   |   |                |   |   |                |  
|Cash Flows from                     |   |                |   |   |                |   |   |                |  
|Investing Activities:               |   |                |   |   |                |   |   |                |  
|                                    |   |                |   |   |                |   |   |                |  
|Investment in Stock                 |   | -0-            |   |   | -0-            |   |   | (1,028,980     | )
|                                    |   |                |   |   |                |   |   |                |  
|Net Cash Used by                    |   |                |   |   |                |   |   |                |  
|Investing
      Activities          |   | -0-            |   |   | -0-            |   |   | (1,028,980     | )
|                                    |   |                |   |   |                |   |   |                |  
|Cash Flows from                     |   |                |   |   |                |   |   |                |  
|Financing Activities:               |   |                |   |   |                |   |   |                |  
|                                    |   |                |   |   |                |   |   |                |  
|Loans from Shareholders             |   | -0-            |   |   | 41,000         |   |   | -0-            |  
|Payments on Loans                   |   | -0-            |   |   | (136,100       | ) |   | -0-            |  
|Proceeds from Issuance of           |   |                |   |   |                |   |   |                |  
|Common Stock                        |   | -0-            |   |   | 212,000        |   |   | 1,820,895      |  
|                                    |   |                |   |   |                |   |   |                |  
|Net Cash Provided by                |   |                |   |   |                |   |   |                |  
|Financing Activities                |   | -0-            |   |   | 116,900        |   |   | 1,820,895      |  
|                                    |   |                |   |   |                |   |   |                |  
|Net Increase (Decrease) in Cash     |   | 1,037          |   |   | (13,743        | ) |   | 1,169          |  
|                                    |   |                |   |   |                |   |   |                |  
|Cash at Beginning of Period         |   | 132            |   |   | 13,875         |   |   | -0-            |  
|                                    |   |                |   |   |                |   |   |                |  
|Cash at End of Period               | $ | 1,169          |   | $ | 132            |   | $ | 1,169          |  

See Notes to Financial Statements.

7

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TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

Terrace Ventures Inc. was incorporated on February 20, 2001 in
  the state of Nevada. The Company acquires and develops certain mineral rights in
  Canada.

Basis of Presentation

The Company reports revenue and expenses using the accrual
  method of accounting for financial and tax reporting purposes.

Use of Estimates

Management uses estimates and assumptions in preparing these
  financial statements in accordance with generally accepted accounting
  principles. Those estimates and assumptions affect the reported amounts of
  assets and liabilities, the disclosure of contingent assets and liabilities, and
  the reported revenues and expenses.

Exploration Stage Company

The Company has been in the exploration stage since its
  formation and has not yet realized any revenues from its planned operations. The
  Company is primarily engaged in the acquisition and exploration of mining
  properties. Upon the location of commercially minable reserves, the Company
  plans to prepare for mineral extraction and enter the development stage.

Pro Forma Compensation Expense

The Company accounts for options and restricted stock granted
  to employees and directors in accordance with the fair value method of SFAS No.
  123, Accounting for Stock-Based Compensation (SFAS No. 123), as amended
  by SFAS No. 148, Accounting for Stock-Based Compensation Transition and
    Disclosure an amendment of FASB Statement No. 123 and related
  interpretations. As such, compensation expense is recorded on stock option and
  restricted stock grants based on the fair value of the options or restricted
  stock granted, which is estimated on the date of grant using the Black-Scholes
  option-pricing model for stock options granted, and is recognized on a
  straight-line basis over the vesting period.

8

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TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
  CONTINUED

Mineral Property Acquisition and Exploration Costs

The Company expenses all costs related to the acquisition and
  exploration of mineral properties in which it has secured exploration rights
  prior to establishment of proven and probable reserves. To date, the Company has
  not established the commercial feasibility of any exploration prospects,
  therefore, all costs are being expensed.

Depreciation, Amortization and Capitalization

The Company records depreciation and amortization when
  appropriate using both straight-line and declining balance methods over the
  estimated useful life of the assets (five to seven years). Expenditures for
  maintenance and repairs are charged to expense as incurred. Additions, major
  renewals and replacements that increase the property's useful life are
  capitalized. Property sold or retired, together with the related accumulated
  depreciation, is removed from the appropriate accounts and the resultant gain or
  loss is included in net income.

Income Taxes

The Company accounts for its income taxes in accordance with
  Statement of Financial Accounting Standards No. 109, "Accounting for Income
  Taxes". Under Statement 109, a liability method is used whereby deferred tax
  assets and liabilities are determined based on temporary differences between
  basis used for financial reporting and income tax reporting purposes. Income
  taxes are provided based on tax rates in effect at the time such temporary
  differences are expected to reverse. A valuation allowance is provided for
  certain deferred tax assets if it is more likely than not, that the Company will
  not realize the tax assets through future operations.

Fair Value of Financial Instruments

Financial accounting Standards Statement No. 107, "Disclosures
  About Fair Value of Financial Instruments", requires the Company to disclose,
  when reasonably attainable, the fair market values of its assets and liabilities
  which are deemed to be financial instruments. The Company's financial
  instruments consist primarily of cash and certain investments.

9

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TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
  CONTINUED

Investments

Investments that are purchased in other companies are valued at
  cost less any impairment in the value that is other than temporary in nature.

Per Share Information

The Company computes per share information by dividing the net
  loss for the period presented by the weighted average number of shares
  outstanding during such period.

NOTE 2  LOANS PAYABLE

Loans payable consist of short term monies advanced. These
  loans are unsecured, bear no interest rate and no specified maturity date.

NOTE 3  LOANS PAYABLE  RELATED PARTIES

Loans payable related parties consist of various short term
  monies advanced by shareholders. These loans are unsecured, bear no interest
  rate and no specified maturity date.

NOTE 4 - PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended April 30,
  2010 and April 30, 2009 represents the minimum state income tax expense of the
  Company, which is not considered significant.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company currently rents administrative office space under a
  monthly renewable contract.

Litigation

The Company is not presently involved in any litigation.

10

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TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently issued accounting pronouncements will have no
  significant impact on the Company and its reporting methods.

NOTE 7  GOING CONCERN

Future issuances of the Companys equity or debt securities
  will be required in order for the Company to continue to finance its operations
  and continue as a going concern. The Companys present revenues are insufficient
  to meet operating expenses.

The consolidated financial statements of the Company have been
  prepared assuming that the Company will continue as a going concern, which
  contemplates, among other things, the realization of assets and the satisfaction
  of liabilities in the normal course of business. The Company has incurred
  cumulative net losses of $1,979,058 since its inception and requires capital for
  its contemplated operational and marketing activities to take place. The
  Company's ability to raise additional capital through the future issuances of
  common stock is unknown. The obtainment of additional financing, the successful
  development of the Company's contemplated plan of operations, and its
  transition, ultimately, to the attainment of profitable operations are necessary
  for the Company to continue operations. The ability to successfully resolve
  these factors raise substantial doubt about the Company's ability to continue as
  a going concern. The consolidated financial statements of the Company do not
  include any adjustments that may result from the outcome of these aforementioned
  uncertainties.

NOTE 8  REVERSE STOCK SPLIT

On September 2, 2009, the Board of Directors approved a
  one-for-five reverse split of the Companys common stock. Upon the completion of
  the reverse stock split, which was effective on October 1, 2009, the Companys
  authorized shares of common stock was decreased from 400,000,000 shares, par
  value $0.001 per share, to 80,000,000 shares, par value $0.001 per share. Issued
  and outstanding common stock was reduced from 47,353,200 shares to approximately
  9,470,660 shares. Weighted Average Shares Outstanding and Net Loss per Share
  have been restated on the Statements of Operations and Accumulated Deficit for
  the effect of the reverse stock split.

11

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TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)NOTES TO FINANCIAL STATEMENTS (CONTINUED)

NOTE 9  SUBSEQUENT EVENTS

On June 8, 2010 our Board of Directors approved two private
  placement offerings for up to an aggregate of 10,000,000 Units for proceeds of
  up to $100,000 as follows:

Foreign Private Placement

On June 8, 2010, our Board of Directors approved a private
  placement offering of up to 5,000,000 Units at a price of $0.01 US per unit,
  with each Unit consisting of one share of our common stock and one share
  purchase warrant (the Foreign Private Placement). Each share purchase warrant
  entitles the holder to purchase an additional share of common stock exercisable
  for a period of two years at a price of $0.01 US per share. The private
  placement offering will be made to persons who are not U.S. Persons as defined
  in Regulation S. We have received any proceeds under the Foreign Private
  Placement. There is no assurance that the private placement offering or any part
  of it will be completed.

U.S. Private Placement

Also, on June 8, 2010, our Board of Directors approved a
  private placement offering of up to 5,000,000 Units at a price of $0.01 US per
  Unit, with each Unit consisting of one share of our common stock and one share
  purchase warrant (the U.S. Private Placement). Each share purchase warrant
  entitles the holder to purchase an additional share of common stock exercisable
  for a period of two years at a price of $.01 US per share. The pivate placement
  offering will be made to persons who are Accredited Investors as defined in
  Regulation D. We have not received any proceeds under the U.S. Private
  Placement. There is no assurance that the private placement offering or any part
  of it will be completed.

12

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SUPPLEMENTAL STATEMENT

---

TERRACE VENTURES INC.(AN EXPLORATION STAGE
      COMPANY)STATEMENT OF OPERATING EXPENSES

|                             |   | YEAR ENDED     |  |   | YEAR ENDED     |  |   | INCEPTION to   | 
|---------------------------- | - | -------------- |  | - | -------------- |  | - | -------------- | 
|                             |   | APRIL 30, 2010 |  |   | APRIL 30, 2009 |  |   | APRIL 30, 2009 | 
|                             |   |                |  |   |                |  |   |                | 
|Operating Expenses:          |   |                |  |   |                |  |   |                | 
|Accounting                   | $ | 25,320         |  | $ | 24,120         |  | $ | 132,100        | 
|Bad Debt Expense             |   | -0-            |  |   | 214,892        |  |   | 214,892        | 
|Bank Charges                 |   | 290            |  |   | 111            |  |   | 744            | 
|Cancelled Merger Costs       |   | 8,300          |  |   | -0-            |  |   | 8,300          | 
|Consulting                   |   | -0-            |  |   | -0-            |  |   | 114,150        | 
|Exploration Expense          |   | -0-            |  |   | -0-            |  |   | 24,266         | 
|Legal                        |   | 29,115         |  |   | 76,916         |  |   | 255,717        | 
|Office Administration        |   | 30,000         |  |   | 30,000         |  |   | 144,600        | 
|Office Expenses              |   | -0-            |  |   | 340            |  |   | 4,271          | 
|Regulatory Expenses/Fees     |   | 3,714          |  |   | 4,386          |  |   | 30,165         | 
|Rent                         |   | 1,875          |  |   | 3,000          |  |   | 24,825         | 
|Telephone                    |   | 900            |  |   | 1,470          |  |   | 5,831          | 
|Travel &
      Entertainment |   | -0-            |  |   | 688            |  |   | 4,708          | 
|                             |   |                |  |   |                |  |   |                | 
|                             |   |                |  |   |                |  |   |                | 
|Total Operating Expenses     | $ | 99,514         |  | $ | 355,923        |  | $ | 964,569        | 

See Notes to Financial Statements.

14

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|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- | -------------------------------------------------------------------------------------

None.

ITEM
9AT.         CONTROLS AND
PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of April 30, 2010 (the Evaluation Date). This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed below.

Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are 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 Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in this report, we believe that our financial statements contained in
our Annual Report on Form 10-K for the year ended April 30, 2010 fairly present
our financial condition, results of operations and cash flows in all material
respects.

Management's Annual Report on Internal Control Over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Internal control over financial reporting includes those
policies and procedures that: (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of its
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in
the effectiveness of any system of internal control, and accordingly, even
effective internal control can provide only reasonable assurance with respect to
financial statement preparation and may not prevent or detect material
misstatements. In addition, effective internal control at a point in time may
become ineffective in future periods because of changes in conditions or due to
deterioration in the degree of compliance with our established policies and
procedures.

A material weakness is a significant deficiency, or combination
of significant deficiencies, that results in there being a more than remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected.

Under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, management conducted an
evaluation of the effectiveness of our internal control over financial
reporting, as of the Evaluation Date, based on the framework set forth in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on its evaluation under this framework, management
concluded that our internal control over financial reporting was not effective
as of the Evaluation Date.

12

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Management assessed the effectiveness of the Companys internal
control over financial reporting as of Evaluation Date and identified the
following material weaknesses:

Insufficient Resources:We have an inadequate number of
personnel with requisite expertise in the key functional areas of finance and
accounting.

Inadequate Segregation of Duties: We have an inadequate
number of personnel to properly implement control procedures.

Insufficient Written Policies & Procedures:We have
insufficient written policies and procedures for accounting and financial
reporting.

Inadequate Financial Statement Closing Process:We have
an inadequate financial statement closing process.

Lack of Audit Committee & Outside Directors on the
Companys Board of Directors:We do not have a functioning audit committee
and outside directors on the Companys Board of Directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures.

Management is committed to improving its internal controls and
will (1) continue to use third party specialists to address shortfalls in
staffing and to assist the Company with accounting and finance responsibilities,
(2) increase the frequency of independent reconciliations of significant
accounts which will mitigate the lack of segregation of duties until there are
sufficient personnel and (3) prepare and implement sufficient written policies
and checklists for financial reporting and closing processes and (4) may
consider appointing outside directors and audit committee members in the future.

Management, including our Chief Executive Officer and the Chief
Financial Officer, has discussed the material weakness noted above with our
independent registered public accounting firm. Due to the nature of this
material weakness, there is a more than remote likelihood that misstatements
which could be material to the annual or interim financial statements could
occur that would not be prevented or detected.

This Annual Report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the our
registered public accounting firm pursuant to temporary rules of the SEC that
permit us to provide only management's report in this Annual Report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial
reporting that occurred during the fiscal year ended April 30, 2010 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

Limitations on the Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and the
Chief Financial Officer, do not expect that the our controls and procedures will
prevent all potential errors or fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

13

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ITEM
9B.           OTHER
INFORMATION.

On June 8, 2010, our Board of Directors terminated the
convertible notes offering approved on March 16, 2010 and approved two private
placement offerings for up to an aggregate of 10,000,000 Units for proceeds of
up to $100,000 as follows:

Foreign Private Placement

On June 8, 2010, our Board of Directors approved a private
placement offering of up to 5,000,000 Units at a price of $0.01 US per Unit,
with each Unit consisting of one share of our common stock and one share
purchase warrant (the Foreign Private Placement). Each share purchase warrant
entitles the holder to purchase an additional share of common stock exercisable
for a period of two years at a price of $0.01 US per share. The private
placement offering will be made to persons who are not U.S. Persons as defined
in Regulation S. We have received any proceeds under the Foreign Private
Placement. We have not issued any Units under the Foreign Private Placement and
there is no assurance that the private placement offering or any part of it will
be completed.

U.S. Private Placement

Also, on June 8, 2010, our Board of Directors approved a
private placement offering of up to 5,000,000 Units at a price of $0.01 US per
Unit, with each Unit consisting of one share of our common stock and one share
purchase warrant (the U.S. Private Placement). Each share purchase warrant
entitles the holder to purchase an additional share of common stock exercisable
for a period of two years at a price of $0.01 US per share. The private
placement offering will be made to persons who are Accredited Investors as
defined in Regulation D. We have not received any proceeds under the U.S.
Private Placement. We have not issued any Units under the U.S. Private Placement
and there is no assurance that the private placement offering or any part of it
will be completed.

14

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PART III

ITEM
10.           DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table sets forth the name and positions of our
sole executive officer and director.

|Name           | Age | Positions                                                                                                
|-------------- | --- | ---------------------------------------------------------------------------------------------------------
|Howard Thomson | 64  | President, Secretary, Treasurer,
      Chief Executive Officer, Chief Financial Officer and Sole Director

Set forth below is a brief description of the background and
business experience of our sole executive officer and director:

Howard Thomsonis our President, Secretary, Treasurer,
  Chief Executive Officer, Chief Financial Officer, and the sole member of our
  Board of Directors. Mr. Thomson was appointed a director on January 16, 2006
  and has served as our President, Secretary, Treasurer, Chief Executive Officer
  and Chief Financial Officer since January 16, 2006. Mr. Thomson was employed
  from 1981 to 1998 in senior management positions with the Bank of Montreal,
  including five years as Branch Manager, four years as Regional Marketing Manager
  and five years as Senior Private Banker. Mr. Thomson retired from the Bank of
  Montreal in 1998. From February 1999 to August 2006, Mr. Thomson served as a
  director and officer of Royalite Petroleum Company Inc. (formerly Worldbid Corporation),
  a public company quoted on the OTC Bulletin Board, engaged in the acquisition
  and exploration of oil and gas properties. Since February 16, 2008, Mr. Thomson
  has served as the sole executive officer and sole director of Greenlite Ventures
  Inc., a public company quoted on the OTC Bulletin Board, engaged in the exploration
  of mineral properties.

Mr. Thomson provides his services on a part-time basis as required
  for our business. Mr. Thomson presently commits approximately 6 to 8 hours a
  week of his business time to our business. On March 21, 2006, we entered into
  a management agreement with Howard Thomson. See Employment Contracts
  below.

Terms of Office

Our directors are appointed for one year terms to hold office
until the next annual general meeting of the holders of the our common stock, as
provided by Article 330 of Chapter 78 Private Corporations of the Nevada
Revised Statutes, or until removed from office in accordance with our by-laws.
Our officers are appointed by our board of directors and hold office until
removed by our board.

We do not pay to our directors any compensation for each
director serving as a director on our board of directors. We anticipate that
compensation may be paid to officers in the event that we determine to proceed
with additional exploration programs beyond the fourth phase of our exploration
program.

Significant Employees

We have no significant employees other than our sole officer
and director. We conduct our business through agreements with consultants and
arms-length third parties.

Committees of the Board Of Directors

Our audit committee presently consists of our sole director. We
do not have a compensation committee, nominating committee, an executive
committee of our board of directors, stock plan committee or any other
committees. Our sole director performs the functions of a nominating committee
and oversees the process by which individuals may be nominated to our board of
directors. The current size of our board of directors does not facilitate the
establishment of a separate committee. We hope to establish a separate
nominating committee consisting of independent directors, if the number of our
directors is expanded.

15

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Audit Committee Financial Expert

We have no audit committee financial expert serving on our
audit committee. We believe the cost related to retaining a financial expert at
this time is prohibitive. Further, because of our stage of development, we
believe the services of a financial expert are not warranted.

Code Of Ethics

We adopted a Code of Ethics applicable to our Chief Executive
Officer, Chief Financial Officer, Corporate Controller and certain other finance
executives, which is a "code of ethics" as defined by applicable rules of the
SEC. Our Code of Ethics was attached as an exhibit to our Annual Report on Form
10-KSB for the year ended April 30, 2004. If we make any amendments to our Code
of Ethics other than technical, administrative, or other non-substantive
amendments, or grant any waivers, including implicit waivers, from a provision
of our Code of Ethics to our Chief Executive Officer, Chief Financial Officer,
or certain other finance executives, we will disclose the nature of the
amendment or waiver, its effective date and to whom it applies in a Current
Report on Form 8-K filed with the SEC.

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 10% of our
equity securities (collectively, the Reporting Persons), to file reports of
ownership and changes in ownership with the SEC. Reporting Persons are required
by SEC regulations to furnish us with copies of all forms they file pursuant to
Section 16(a). Based solely on our review of such reports received by the
Company, no other reports were required for those persons.

ITEM
11.           EXECUTIVE
COMPENSATION.

Summary Compensation Table

The following table sets forth total compensation paid to or
earned by our named executive officers, as that term is defined in Item
402(m)(2) of Regulation S-K, during the fiscal years ended April 30, 2010 and
2009.

|SUMMARY COMPENSATION TABLE                                                 
|---------------------------------------------------------------------------
|Name & Principal 
        Position                                         
|Howard Thomson 
        President, Secretary, 
        Treasurer, CEO & CFO

Outstanding Equity Awards at Fiscal Year End

As at April 30, 2010, we had no outstanding equity awards.

Employment Contracts

Other than as described below, we are not party to any
employment contracts.

On March 21, 2006, we entered into a management consulting
agreement with Mr. Thomson, pursuant to which he agreed to act as our President,
Secretary, Treasurer, Chief Executive Officer and Chief Financial Officer and
provide certain management consulting services in consideration of which we
agreed to pay a fee of $2,500 per month and make a payment of $2,500 for prior
services provided in the month of February, 2006. Pursuant to the terms of the agreement, Mr. Thomson may
also be granted incentive stock options from time to time as the board of
Terrace may determine in their discretion. The agreement may be terminated by
Terrace at any time on three months notice to Mr. Thomson and Mr. Thomson may
terminate on 30 days notice. The management consulting agreement with Mr.
Thomson expired effective March 21, 2008. Although this agreement has expired,
we have agreed to continue to pay Mr. Thomson $2,500 for his management
services.

16

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|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
|-------- | -----------------------------------------------------------------------------------------------------

EQUITY COMPENSATION PLANS

On March 21, 2006, our Board of Directors approved the 2006
Stock Incentive Plan (the "2006 Option Plan"). The 2006 Option Plan provides
that the option price be the fair market value of the stock at the date of grant
as determined by our Board of Directors. Options granted become exercisable and
expire as determined by our Board of Directors.

The following table sets forth certain information concerning
all equity compensation plans previously approved by stockholders and all
previous equity compensation plans not previously approved by stockholders, as
of the most recently completed fiscal year.

|                                                                 | Number of Securities to be Issued
      Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price
      of Outstanding Options, Warrants and Rights | Number of Securities 
      Remaining Available
      for Future Issuance Under Equity Compensation Plans (Excluding
    Securities Reflected in column (a))
|---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------
|Plan Category                                                    | (a)                                                                                               | (b)                                                                               | (c)                                                                                                                                                         
|Equity Compensation Plans Approved By Security Holders           | Nil                                                                                               | N/A                                                                               | N/A                                                                                                                                                         
|Equity Compensation Plans Not Approved By Security
      Holders | Nil                                                                                               | N/A                                                                               | 1,503,499                                                                                                                                                   

2006 Stock Incentive Plan

On March 21, 2006, we established our 2006 Stock Incentive
Plan. The purpose of the 2006 Option Plan is to enhance the long-term
stockholder value of Terrace by offering opportunities to our directors,
officers, employees and eligible consultants and any entity that directly or
indirectly is in control of or is controlled by Terrace (a Related Company) to
acquire and maintain stock ownership in Terrace in order to give these persons
the opportunity to participate in our growth and success, and to encourage them
to remain in our service or a Related Company.

The 2006 Option Plan is administered by our Board of Directors
or by a committee of two or more non-employee directors appointed by our Board
of Directors (the "Plan Administrator"). Subject to the provisions of the 2006
Option Plan, the Plan Administrator has full and final authority to grant the
awards of stock options and to determine the terms and conditions of the awards
and the number of shares to be issued pursuant thereto. Options granted under
the 2006 Option Plan may be either "incentive stock options," which qualify for
special tax treatment under the Internal Revenue Code of 1986, as amended, (the
"Code"), non-qualified stock options or restricted shares.

All of our employees and members of our Board of Directors are
eligible to be granted options. Individuals who have rendered or are expected to
render advisory or consulting services to us are also eligible to receive
options. The maximum number of shares of our Common Stock with respect to which
options or rights may be granted under the 2006 Option Plan to any participant is
1,000,000 shares with the number of authorized shares under the 2006 Option Plan
increasing on the first day of each quarter beginning with the fiscal quarter
commencing May 1, 2006 by the lesser of the following amounts: (1) 15% of the
total increase in the number of shares of Common Stock outstanding during the
previous fiscal quarter; or (2) a lesser number of shares of Common Stock as may
be determined by the Board, subject to certain adjustments to prevent
dilution.

17

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The exact terms of the option granted are contained in an
option agreement between us and the person to whom such option is granted.
Eligible employees are not required to pay anything to receive options. The
exercise price for incentive stock options must be no less than 75% of the fair
market value of the Common Stock on the date of grant. The exercise price for
non-qualified stock options is determined by the Plan Administrator in its sole
and complete discretion. An option holder may exercise options from time to
time, subject to vesting. Options will vest immediately upon death or disability
of a participant and upon certain change of control events.

The Plan Administrator may amend the 2006 Option Plan at any
time and in any manner, subject to the following: (1) no recipient of any award
may, without his or her consent, be deprived thereof or of any of his or her
rights thereunder or with respect thereto as a result of such amendment or
termination; and (2) any outstanding incentive stock option that is modified,
extended, renewed, or otherwise altered must be treated in accordance with
Section 424(h) of the Code.

The 2006 Option Plan terminates on March 21, 2016 unless sooner
terminated by action of our Board of Directors. All awards granted under the
2006 Option Plan expire ten years from the date of grant, or such shorter period
as is determined by the Plan Administrator. No option is exercisable by any
person after such expiration. If an award expires, terminates or is canceled,
the shares of our Common Stock not purchased thereunder may again be available
for issuance under the 2006 Option Plan.

We have not yet filed a registration statement under the
Securities Act to register the shares of our Common Stock reserved for issuance
under the 2006 Option Plan.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of September 10,
2010by: (i) each person (including any group) known to us to own more
than five percent (5%) of any class of our voting securities, (ii) each of our
directors and each of our named executive officers (as defined under Item
402(m)(2) of Regulation S-K), and (iii) officers and directors as a group.
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 Shares of Common
        Stock(1) | Percentage of Common Stock(1)
|---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | -----------------------------
|DIRECTORS AND OFFICERS
|Common Stock           | Howard Thomson 
        CEO, CFO, President, Secretary, 
        Treasurer & Director                                                                                         | 3,200,001 Shares 
        (direct)          | 33.8%                        
|Common Stock           | All Officers and Directors
        as a Group (1 person)                                                                                                                      | 3,200,001 Shares                            | 33.8%                        
|5% SHAREHOLDERS       
|Common Stock           | Howard Thomson 
        CEO, CFO, President, Secretary, 
        Treasurer & Director 
        Brookside, Ballymabin 
        Dunmore East, County Waterford 
        Ireland | 3,200,001 Shares 
        (direct)          | 33.8%                        

18

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|(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 September 10, 2010. As of September 10,
      2010, there were 9,470,660 shares of our common stock issued and
      outstanding.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CHANGES IN CONTROL

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

|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|-------- | --------------------------------------------------------------------------------

RELATED TRANSACTIONS

None of the following parties has, during our last two fiscal
years, had any material interest, direct or indirect, in any transaction with us
or in any presently proposed transaction that has or will materially affect us,
in which the Company is a participant:

| | (i)   | Any of our directors or officers;                                                                                                                                           
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (ii)  | Any person proposed as a nominee for election as a
      director;                                                                                                          
| | (iii) | Any person who beneficially owns, directly or indirectly,
      shares carrying more than 10% of the voting rights attached to our
      outstanding shares of common stock;
| | (iv)  | Any of our promoters; and                                                                                                                                                   
| | (v)   | Any relative or spouse of any of the foregoing persons
      who has the same house as such person.                                                                         

DIRECTOR INDEPENDENCE

Our common stock is quoted on the OTC Bulletin Board
inter-dealer quotation system, which does not have director independence
requirements. Under NASDAQ Rule 5605(a)(2), a director is not considered to be
independent if he or she is also an executive officer or employee of the
corporation. Our sole director, Howard Thomson, is also our sole executive
officer. As a result, we do not have any independent directors.

As a result of our limited operating history and minimal
resources, our management believes that it will have difficulty in attracting
independent directors. In addition, we would likely be required to obtain
directors and officers insurance coverage in order to attract and retain
independent directors. Our management believes that the costs associated with
maintaining such insurance is prohibitive at this time.

19

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|ITEM
14. | PRINCIPAL
ACCOUNTING FEES AND SERVICES.
|-------- | ---------------------------------------

During the fiscal years ended April 30, 2010 and 2009, we
retained our independent auditor, Sarna & Company, Certified Public
Accountants, to provide services in the following categories and amounts:

|                   | Year Ended April 30, 2010 | Year Ended April 30, 2009
|------------------ | ------------------------- | -------------------------
|Audit Fees         | $12,800                   | $12,800                  
|Audit-Related Fees | $NIL                      | $NIL                     
|Tax Fees           | $NIL                      | $NIL                     
|All Other Fees     | $NIL                      | $NIL                     
|Total              | $12,800                   | $12,800                  

Our Audit Committee has considered whether the provision of
non-audit services is compatible with maintaining the independence of Sarna
& Company, and has concluded that it is.

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

The policy of our Audit Committee is to pre-approve all audit
and permissible non-audit services to be performed by our independent auditors
during the fiscal year.

No services related to Audit-Related Fees, Tax
Fees or All Other Fees described above that were approved by the
Audit Committee pursuant to the waiver of pre-approval provisions set forth in
the applicable rules of the SEC.

PART IV

ITEM
15.           EXHIBITS,
FINANCIAL STATEMENT SCHEDULES.

|Exhibit |                                                                                                                                                                                                                         
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of
      Exhibit                                                                                                                                                                                            
|        |                                                                                                                                                                                                                         
|3.1     | Articles of
      Incorporation.(1)                                                                                                                                                                                     
|        |                                                                                                                                                                                                                         
|3.2     | Certificate of
      Change to Authorized Capital effective December 19, 2005.(2)                                                                                                                                       
|        |                                                                                                                                                                                                                         
|3.3     | Certificate of
      Change Pursuant to NRS 78.209 decreasing the authorized capital of common
      stock to 80,000,000 shares, par value $0.001 per share.(9)                                                         
|        |                                                                                                                                                                                                                         
|3.4     | Bylaws.(1)                                                                                                                                                                                                              
|        |                                                                                                                                                                                                                         
|10.1    | 2006 Stock
      Incentive Plan.(4)                                                                                                                                                                                     
|        |                                                                                                                                                                                                                         
|10.2    | Stock Option
      Agreement between the Company and Howard Thomson dated March 31,
      2006.(4)                                                                                                                      
|        |                                                                                                                                                                                                                         
|10.3    | Management
      Consulting Agreement dated March 21, 2006 between the Company and Howard
      Thomson.(4)                                                                                                             
|        |                                                                                                                                                                                                                         
|10.4    | Interim Agreement
      dated July 9, 2008 between the Company and Pyro Pharmaceuticals,
      Inc.(5)                                                                                                                  
|        |                                                                                                                                                                                                                         
|10.5    | Amendment
      Agreement dated September 26, 2008 to the Interim Agreement dated July 9,
      2008 between the Company and Pyro Pharmaceuticals, Inc.(6)                                                              
|        |                                                                                                                                                                                                                         
|10.6    | Share Purchase
      Agreement dated April 29, 2009 among Terrace Ventures Inc., Marktech
      Acquisition Corp., Worldbid International Inc. and Geobiz Systems
      Inc.(7)                                         
|        |                                                                                                                                                                                                                         
|10.7    | Amendment
      Agreement to Share Purchase Agreement dated August 12, 2009 among Terrace
      Ventures Inc., Marktech Acquisition Corp., Worldbid International Inc. and
      Geobiz Systems Inc.(8)                 
|        |                                                                                                                                                                                                                         
|10.8    | Amendment
      Agreement to Share Purchase Agreement dated for reference December 31,
      2009 among Terrace Ventures Inc., Marktech Acquisition Corp., Worldbid
      International Inc. and Geobiz Systems Inc.(10)
|        |                                                                                                                                                                                                                         
|14.1    | Code of
      Ethics.(3)                                                                                                                                                                                                
|        |                                                                                                                                                                                                                         
|21.1    | List of
      Subsidiaries.                                                                                                                                                                                             

20

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|Exhibit |                                                                                                                                                                                                                   
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                            
|        |                                                                                                                                                                                                                   
|31.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002.                                                                   
|        |                                                                                                                                                                                                                   
|32.1    | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to pursuant
        to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.

Notes:

|(1)  | Filed with the SEC as an exhibit to our Registration
      Statement on Form 10-SB originally filed on February 2, 2004.
|---- | ------------------------------------------------------------------------------------------------------------------------
|(2)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on December 27, 2005.                    
|(3)  | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on September 8, 2004.                  
|(4)  | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on March 22, 2006.                  
|(5)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on July 15, 2008.                        
|(6)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on October 2, 2008.                      
|(7)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on April 29, 2009.                       
|(8)  | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-K filed on August 13, 2009.                      
|(9)  | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on October 2, 2009.                      
|(10) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-Q filed on March 22, 2010.                    
|     |                                                                                                                         

21

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SIGNATURES

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

|      |                    |  |     | TERRACE VENTURES INC.                                             
|----- | ------------------ |  | --- | ------------------------------------------------------------------
|      |                    |  |     |                                                                   
|      |                    |  |     |                                                                   
|      |                    |  |     |                                                                   
|Date: | September 14, 2010 |  | By: | /s/ Howard Thomson                                                
|      |                    |  |     | HOWARD THOMSON                                                    
|      |                    |  |     | Chief Executive Officer, Chief
      Financial Officer ,          
|      |                    |  |     | President, Secretary and
      Treasurer                          
|      |                    |  |     | (Principal Executive Officer
      & Principal Accounting Officer)

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

|Date: | September 14, 2010 |  | By: | /s/ Howard Thomson                                      
|----- | ------------------ |  | --- | --------------------------------------------------------
|      |                    |  |     | HOWARD THOMSON                                          
|      |                    |  |     | Chief Executive Officer, Chief
      Financial Officer ,
|      |                    |  |     | President, Secretary, Treasurer
      and               
|      |                    |  |     | Director                                                

---