---

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

FORM 10-KSB

|(Mark One)
|----------
|[ X]      
|          
|          
|          
|[    ]    
|          
|          

COMMISSION FILE NUMBER:000-50569

TERRACE VENTURES INC.(Name
of small business issuer 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)                                       
|                                                                     |                                                  
|(360) 220-5218                                                       |                                                  
|Issuer's telephone number                                            |                                                  
|                                                                     |                                                  
|Securities registered under Section 12(b) of the Exchange
      Act: | NONE.                                            
|                                                                     |                                                  
|Securities registered under Section 12(g) of the Exchange
      Act: | Common Stock, $0.001
        Par Value Per Share.

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

Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [    ]

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

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

State the aggregate market value of the voting and non-voting
  common equity held by non-affiliates computed by reference to the price at which
  the common equity was sold, or the average bid and asked price of such common
  equity, as of a specified date within the past 60 days. (See definition of affiliate
  in Rule 12b-2of the Exchange Act.): $2,818,396 as of April 30, 2007
  based on $0.155 being the average bid and asked price of the registrants
  common stock on the OTC Bulletin Board on April 27, 2007.

State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date. 34,183,200
Shares of Common Stock as of April 30, 2007.

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

1

---

TERRACE VENTURES INC.ANNUAL REPORT ON FORM
10-KSBFOR THE YEAR ENDED APRIL 30, 2007

INDEX

PAGE

|PART I     |                                                                                                                                                    | 4 
|---------- | -------------------------------------------------------------------------------------------------------------------------------------------------- | --
|           |                                                                                                                                                    |   
|ITEM 1.    | Description of Business.                                                                                                                           | 4 
|ITEM 2.    | Description of Property.                                                                                                                           | 8 
|ITEM 3.    | Legal Proceedings.                                                                                                                                 | 12
|ITEM 4.    | Submission of Matters to a Vote of Security Holders.                                                                                               | 12
|           |                                                                                                                                                    |   
|PART II    |                                                                                                                                                    | 13
|           |                                                                                                                                                    |   
|ITEM 5.    | Market for Common Equity and Related Stockholder Matters
      And Small Business Issuer Purchases Of Equity Securities                            | 13
|ITEM 6.    | Managements Discussion and Analysis or Plan of Operation.                                                                                         | 14
|ITEM 7.    | Financial Statements.                                                                                                                              | 21
|ITEM 8.    | Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure.                                                        | 22
|ITEM 8A.   | Controls and Procedures.                                                                                                                           | 22
|ITEM 8B.   | Other Information.                                                                                                                                 | 22
|           |                                                                                                                                                    |   
|PART III   |                                                                                                                                                    | 23
|           |                                                                                                                                                    |   
|ITEM 9.    | Directors, Executive Officers, Promoters, Control Persons
      And Corporate Governance; Compliance with Section 16(A) of the Exchange
      Act. | 23
|ITEM 10.   | Executive Compensation.                                                                                                                            | 25
|ITEM 11.   | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters.                                              | 27
|ITEM 12.   | Certain Relationships and Related Transactions, And Director
      Independence.                                                                   | 29
|ITEM 13.   | Exhibits.                                                                                                                                          | 30
|ITEM 14.   | Principal Accountant Fees and Services.                                                                                                            | 31
|           |                                                                                                                                                    |   
|SIGNATURES | 32                                                                                                                                                

2

---

GLOSSARY OF TECHNICAL TERMS

The following defined technical terms are used in this Annual
Report on Form 10-KSB:

batholith
    A large mass of igneous rock extending to
      great depth with its upper portion dome-like in shape. It has crystallized
      below surface, but may be exposed as a result of erosion of the overlying
      rock. Smaller masses of igneous rocks are known as bosses or plugs.Canadian Cordillera
    The name used to describe the mountains
      of western Canada, which includes not only the mountainous and plateau
      regions, but also the submerged regions on the continental shelf and
      slope.igneous
    A type of rock which has been formed by
      the consolidation of magma, a molten substance from the earths core.massive
    Solid (without fractures) wide (thick)
      rock unit.mineralization
    The concentration of metals and their
      chemical compounds within a body of rock.ore
    A mixture of minerals and gangue from
      which at least one metal can be extracted at a profit.molybdenum
    A refractory metallic element used
      principally as an alloying agent in steel, cast iron, and superalloys to
      enhance strength, toughness, and wear and corrosion resistance.pluton
    Body of rock exposed after solidification
      at great depth.pyroclastic
    Pertaining to fragmented (clastic) rock
      material formed by a volcanic explosion or ejection from a volcanic vent.quartz
    A mineral whose composition is silicon
      dioxide. A crystalline form of silica.reserve
    For the purposes of this Annual Report on Form 10-KSB: that part
      of a mineral deposit which could be economically and legally extracted or
      produced at the time of the reserve determination. Reserves consist of:(1)
    Proven (Measured) Reserves.Reserves for which: (a)
      quantity is computed from dimensions revealed in outcrops, trenches,
      workings or drill holes; grade and/or quality are computed from the
      results of detailed sampling; and (b) the sites for inspection, sampling
      and measurement are spaced so closely and the geologic character is so
      well defined that size, shape, depth and mineral content of reserves are
      well-established.(2)
    Probable (Indicated) Reserves.Reserves for which
      quantity and grade and/or quality are computed from information similar to
      that used for proven (measured) reserves, but the sites for inspection,
      sampling and measurement are farther apart or are otherwise less
      adequately spaced. The degree of assurance, although lower than that for
      proven (measured) reserves, is high enough to assume continuity between
      points of observation.sedimentary rock
    A rock formed by the accumulation and
      cementation of mineral grains transported by wind, water, or ice to the
      site of deposition or chemically precipitated at the depositional site.tuffs
    Rock formed from pyroclastic material.vein
    An occurrence of ore with an irregular
      development in length, width and depth usually from an intrusion of
      igneous rock.


3

---

PART I

Certain statements contained in this Annual Report on Form
10-KSB constitute "forward-looking statements. These statements, identified by
words such as plan, "anticipate, "believe, "estimate, "should," "expect"
and similar expressions include our expectations and objectives regarding our
future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future events
and are subject to risks, uncertainties and other factors that may cause our
actual results, performance or achievements, or industry results, to be
materially different from those described in the forward-looking statements.
Such risks and uncertainties include those set forth under the caption
"Management's Discussion and Analysis or Plan of Operation" and elsewhere in
this Annual Report. We advise you to carefully review the reports and documents
we file from time to time with the Securities and Exchange Commission (the
SEC), particularly our Quarterly Reports on Form 10-QSB and our Current
Reports on Form 8-K.

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.

Foreign Currency and Exchange Rates

For purposes of consistency and to express United States
dollars throughout this Annual Report, Canadian dollars have been converted into
United States currency at the rate of CDN$1.00 being approximately equal to
US$0.91, which is the approximate average exchange rate during recent
months.

|ITEM 1. | DESCRIPTION OF BUSINESS.
|------- | ------------------------

General

We were incorporated on February 20, 2001 under the laws of the
State of Nevada. We are an exploration stage company engaged in the acquisition
and exploration of mineral properties. We own a 100% undivided interest in a
mineral claim that we refer to as the Peach Mineral Claim (the Peach Claim)
located in the Nicola, Simalkameen and Osoyoos Mining Divisions of the Province
of British Columbia, Canada.

Our plan of operation is to continue to carry on with our
exploration work on the Peach Claim in order to ascertain whether it possesses
commercially exploitable deposits of gold. Further exploration of this mineral
claim is required before a final determination as to its viability can be made.
No commercially viable mineral deposit may exist on our mineral claim. We can
provide no assurance that our mineral claim contains a mineral deposit until
appropriate exploratory work is done and an evaluation based on that work
concludes further work programs are justified. At this time, we have no reserves
on our mineral claim.

We have not earned any revenues to date. We do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral property. We are presently in the exploration stage of our business and
we can provide no assurance that we will discover proven reserves on our
property, or if such deposits are discovered, that we will enter into further
substantial exploration programs.

RECENT CORPORATE DEVELOPMENTS

Since our most recently completed quarter ended January 31,
2007, we have experienced the following significant corporate developments:

|1. | On August 10, 2007 the Companys board of directors
      determined not to proceed with the proposed merger with Solara based on
      the results of its review of the due diligence materials provided by
      Solara to the Company. The Company previously entered into a letter of
      intent dated February 28, 2007 with the principal shareholder of Solara
      Technologies, Inc., a private British Columbia company engaged in the
      development of both hardware and software for the self service vending
      industry. Pursuant to the terms of the letter of intent, Terrace and
      Solara intended to complete a merger of the two companies with the
      resulting issuer changing its business to that of Solara. The proposed
      merger was subject to a number of conditions, including, Terrace providing
      Solara with a loan of $200,000 prior to closing of the merger, the parties
      entering into a formal agreement outlining the terms of the merger; and
      each of the parties
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

---

|   | satisfactorily completing their respective due diligence
      review. On May 18, 2007, pursuant to the terms of the letter of intent,
      the Company entered into a loan agreement (the Loan Agreement), pursuant
      to which the Company loaned a total of US$200,000 to Solara (the Loan).
      Under the terms of the Loan Agreement, Solara was required to: (i) enter
      into a formal merger agreement within 60 days of the date of the Loan
      Agreement; (ii) obtain shareholder approval of the proposed merger within
      90 days of the date of the Loan Agreement; (iii) provide required
      financial statements within 90 days of the Loan Agreement; and (iv)
      complete the proposed merger within 120 days of the Loan Agreement. The
      formal merger agreement was not entered into by the parties as required
      under the terms of the Loan Agreement, and as a result the Company has
      requested that Solara repay the Loan.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | On July 12, 2007, we issued 2,570,000 shares of our
      common stock at a price of $0.10 per share to 27 subscribers pursuant to
      Regulation S promulgated under the Securities Act of 1933 (the Securities
      Act). The shares represent the first tranche of a private placement of up
      to 5,000,000 shares at a price of $0.10 US per share approved by the
      Companys Board of Directors on March 7, 2007. There is no assurance that
      any additional shares will be issued under the private placement. The
      proceeds of the private placement were used to fund $200,000 of loans to
      the Companys former merger candidate, Solara Technologies Inc., to retire
      corporate debt and for general corporate purposes.                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3. | On June 4, 2007, Ian Brodie resigned as the Executive
      Vice President of the Company and Frank Anderson resigned as the Vice
      President of Finance of the Company. There were no disagreements between
      Messrs. Anderson and Brodie and the Company regarding any matter relating
      to the Companys operations, policies or practices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4. | On May 31, 2007, Gordon F. Burley resigned as a Director
      of the Company. Mr. Burleys resignation was for personal reasons. There
      was no disagreement between Mr. Burley and the Company regarding any
      matter relating to the Companys operations, policies or practices. The
      number of directors has been reduced to one. The Company has no
      replacement director to fill the vacancy by Mr. Burleys resignation.
      Howard Thomson serves as the sole director of the
  Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Acquisition of the Peach Mineral Claim

We purchased the Peach Claim property from Don Archibald for
cash consideration of $5,000 pursuant to a purchase agreement dated August 15,
2001. The Peach Claim property is comprised of one mineral claim with a total
area of approximately 500 hectares, located in Nicola, Simalkameen and Osoyoos
Mining Divisions, approximately 40 kilometres west of Kelowna, British Columbia,
Canada, see Description of Property, below.

COMPETITION

We are an exploration stage company engaged in a mineral
resource exploration and development. We compete with other mineral resource
exploration and development companies for financing and for the acquisition of
new mineral properties. Many of the mineral resource exploration and development
companies with whom we compete have greater financial and technical resources
than we do. Accordingly, these competitors may be able to spend greater amounts
on acquisitions of mineral properties of merit, on exploration of their mineral
properties and on development of their mineral properties. In addition, they may
be able to afford greater geological expertise in the targeting and exploration
of mineral properties. This competition could result in competitors having
mineral properties of greater quality and interest to prospective investors who
may finance additional exploration and development. This competition could
adversely impact our ability to finance further exploration and to achieve the
financing necessary for us to develop our mineral properties.

The mineral exploration industry, in general, is intensively
competitive and, even if commercial quantities of ore are discovered, a ready
market may not exist for the sale of the ore. Numerous factors beyond our
control may affect the marketability of any substances discovered. These factors
include market fluctuations, the proximity and capacity of natural resource
markets and processing equipment, government regulations, including regulations
relating to prices, taxes, royalties, land tenure, land use, importing and
exporting of minerals and environmental protection. The exact effect of these
factors cannot be accurately predicted, but the combination of these factors may
result in us not receiving an adequate return on invested capital.

5

---

COMPLIANCE WITH GOVERNMENT REGULATION

We are required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to the
exploration of minerals in the Province of British Columbia, Canada. The main
agency that governs the exploration of minerals in the Province of British
Columbia, Canada, is the Ministry of Energy, Mines and Petroleum Resources.

The Ministry of Energy, Mines and Petroleum Resources manages
the development of British Columbia's mineral resources, and implements policies
and programs respecting their development while protecting the environment. In
addition, the Ministry regulates and inspects the exploration and mineral
production industries in British Columbia to protect workers, the public and the
environment.

The material legislation applicable to us is the Mineral Tenure
Act, administered by the Mineral Titles Branch of the Ministry of Energy, Mines
and Petroleum Resources, and the Mines Act as well as the Health, Safety and
Reclamation Code and the Mineral Exploration Code. The Mineral Tenure Act and
its regulations govern the procedures involved in locating, recording and
maintaining mineral titles in British Columbia. The Mineral Tenure Act also
governs the issuance of leases which are long term entitlements to minerals,
designed as production tenures. The Mineral Tenure Act does not apply to
minerals held by crown grant or by freehold tenure.

All mineral exploration activities carried out on a mineral
claim or mining lease in British Columbia must be in compliance with the Mines
Act. The Mines Act applies to all mines during exploration, development,
construction, production, closure, reclamation and abandonment. It outlines the
powers of the Chief Inspector of Mines, to inspect mines, the procedures for
obtaining permits to commence work in, on or about a mine and other procedures
to be observed at a mine. Additionally, the provisions of the Health, Safety and
Reclamation Code for mines in British Columbia contain standards for employment,
occupational health and safety, accident investigation, work place conditions,
protective equipment, training programs, and site supervision. Also, the Mineral
Exploration Code contains standards for exploration activities including
construction and maintenance, site preparation, drilling, trenching and work in
and about a water body.

Additional approvals and authorizations may be required from
other government agencies, depending upon the nature and scope of the proposed
exploration program. If the exploration activities require the falling of
timber, then either a free use permit or a license to cut must be issued by the
Ministry of Forests. Items such as waste approvals may be required from the
Ministry of Environment, Lands and Parks if the proposed exploration activities
are significantly large enough to warrant them. Waste approvals refer to the
disposal of rock materials removed from the earth which must be reclaimed. An
environmental impact statement may be required.

Our mineral claim will expire on November 30, 2007. The minimum
exploration work that must be performed or the fee payable in lieu of
exploration work for keeping our claim current is equal to approximately $7.28
(CDN$8.00) annually per hectare. Our mineral claim consists of 500 hectares. As
our mineral claim is effective until November 30, 2007, we must file
confirmation of the completion of exploration work in the minimum amount of
approximately $3,640 (CDN$4,000) or make a payment in lieu or exploration work
in the minimum amount by November 30, 2007. If we fail to complete the minimum
required amount of exploration work or fail to make a payment in lieu of this
exploration work, then our mineral claim will lapse on November 30, 2007, and we
will lose all interest that we have in our mineral claim. We intend to pay the
required fee or perform the minimum exploration work required to meet this
amount to extend our mineral claim for an additional year upon the expiry of our
mineral claim, unless the results of our exploration program indicate that the
claim is not commercially viable.

ENVIRONMENTAL REGULATIONS

We will have to sustain the cost of reclamation and
environmental remediation for all exploration work undertaken. Both reclamation
and environmental remediation refer to putting disturbed ground back as close to
its original state as possible. Other potential pollution or damage must be
cleaned up and renewed along standard guidelines outlined in the usual permits.
Reclamation is the process of bringing the land back to its natural state after
completion of exploration activities. Environmental remediation refers to the
physical activity of taking steps to remediate, or remedy, any environmental
damage caused. The amount of these costs is not known at this time as we do not
know the extent of the exploration program that will be undertaken beyond
completion of the recommended work program. Because there is presently no
information on the size, tenor, or

6

---

quality of any resource or reserve at this time, it is
impossible to assess the impact of any capital expenditures on earnings, our
competitive position or on us in the event that a potentially economic deposit
is discovered.

Prior to undertaking mineral exploration activities, we must
make an application under the British Columbia Mines Act for a permit, if we
anticipate disturbing land. A permit is issued within 45 days of a complete and
satisfactory application. We do not anticipate any difficulties in obtaining a
permit, if needed. The initial exploration activities on the Peach Claim (grid
establishment, geological mapping, soil sampling, and geophysical surveys) do
not involve ground disturbance and as a result do not require a work permit. Any
follow-up trenching and/or drilling will require permits, applications for which
will be submitted well in advance of the planned work.

If we enter the production phase, the cost of complying with
permit and regulatory environment laws will be greater because the impact on the
project area is greater. Permits and regulations will control all aspects of the
production program if the project continues to that stage. Examples of
regulatory requirements include:

| | (i)   | Water discharge will have to meet drinking water
      standards;                                                                               
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                 
| | (ii)  | Dust generation will have to be minimal or otherwise
      re-mediated;                                                                         
| |       |                                                                                                                                                 
| | (iii) | Dumping of material on the surface will have to be
      re-contoured and re-vegetated with natural vegetation;                                 
| |       |                                                                                                                                                 
| | (iv)  | An assessment of all material to be left on the surface
      will need to be environmentally benign;                                           
| |       |                                                                                                                                                 
| | (v)   | Ground water will have to be monitored for any potential
      contaminants;                                                                    
| |       |                                                                                                                                                 
| | (vi)  | The socio-economic impact of the project will have to be
      evaluated and if deemed negative, will have to be re-mediated;
  and             
| |       |                                                                                                                                                 
| | (vii) | There will have to be an impact report of the work on the
      local fauna and flora including a study of potentially endangered
      species.

EMPLOYEES

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

SUBSIDIARIES

Sporg Technology Corp., a Nevada corporation and Solara
Acquisition Corp., a Nevada corporation, are our wholly-owned subsidiaries.

RESEARCH AND DEVELOPMENT EXPENDITURES

We have not incurred any research expenditures since our
incorporation. We have expended approximately $24,266 on our exploration program
as of the date of this annual report

PATENTS AND TRADEMARKS

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

7

---

|ITEM 2. | DESCRIPTION OF PROPERTY.
|------- | ------------------------

We own a 100% interest in the Peach Claim. We do not own any
property other than the Peach Claim. 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.

Acquisition of the Peach Claim

We purchased the Peach Claim property from Don Archibald for
cash consideration of $5,000 pursuant to a purchase agreement dated August 15,
2001. Title to our mineral claim is not held in our name. Title to the claim is
recorded in the name of Don Archibald in trust, a British Columbia resident from
whom we purchased our mineral claim. In the event Mr. Archibald were to transfer
legal title to our mineral claim to another party, we may not have a claim
against the third party and may be forced to commence an action against Mr.
Archibald. There is no assurance that we would succeed in recovering legal title
to our mineral claim or recover damages from Mr. Archibald in such instance.

Description of Property and Location of Peach Mineral
Claim

The Peach Claim property is comprised of one mineral claim with
  a total area of approximately 500 hectares, located in Nicola, Simalkameen and
  Osoyoos Mining Divisions, approximately 40 kilometres west of Kelowna, British
  Columbia, Canada, see “Figure 1” below. The claim is accessible
  by a gravel road. We obtained information on the area from the British Columbia
  Ministry of Energy, Mines and Petroleum Resources and Geological Consultants
  in 2001.



8

---



The Peach Claim is recorded with the Ministry of Energy, Mines
and Petroleum Resources, Province of British Columbia, Canada under the
following name, tag and tenure number:

Name of Mineral Claim
    Tag Number
    Tenure Number
    Expiry DatePEACH #1
    210577
    385660
    November 30, 2007


Our mineral claim will expire on November 30, 2007. The minimum
exploration work that must be performed or the fee payable in lieu of
exploration work for keeping our claim current is equal to approximately $7.28
(CDN$8.00) annually per hectare. Our mineral claim consists of 500 hectares. As
our mineral claim is effective until November 30, 2007, we must file
confirmation of the completion of exploration work in the minimum amount of
approximately $3,640 (CDN$4,000) or make a payment in lieu or exploration work
in the minimum amount by November 30, 2007. If we fail to complete the minimum
required amount of exploration work or fail to make a payment in lieu of this
exploration work, then our mineral claim will lapse on November 30, 2007, and we
will lose all interest that we have in our mineral claim. We intend to pay the
required fee or perform the minimum exploration work required to meet this
amount to extend our mineral claim for an additional year upon the expiry of our
mineral claim, unless the results of our exploration program indicate that the
claim is not commercially viable.

Exploration History of the Peach Claim

The area of the Peach Claim property has been extensively
explored for copper and molybdenum deposits during the late 1960s and early
1970s. Soil geochemistry, induced polarization surveys and airborne
magnetometer surveys were conducted between 1966 and 1969 in the area of the
Peach Claim property. From 1990 to 1995, Fairfield conducted soil geochemistry,
stream sediment sampling, prospecting and geological mapping in the area of the
Peach Claim property.

During 1990 and 1991, prospecting and reconnaissance rock
sampling revealed numerous gold/silver bearing quartz vein and stringer
occurrences on the Crest 10 and Pen 13 claims which are now partially covered by
the Peach Claim. Trenching during 1994 at one of the showings near Brenda Lake,
to the north of the current Peach Claim, uncovered gold-quartz veins. Five short
holes totalling 124 metres were diamond drilled at this showing in 1995 but no
significant gold mineralization was encountered.

Geology of Peach Mineral Claim

Much of the Peach Claim property is covered by glacial drift.
Outcrops are essentially restricted to old trenches, roadcuts, ridge tops and
stream gullies. The property is underlain by volcanic and sedimentary rocks of
the Nicola Group. In the northern third of the property a number of quartz veins
have been found cutting argillite and siliceous volcanic rocks.

The Peach Claim property lies within the Intermontane Belt of
the Canadian Cordillera. The area is mainly underlain by westerly younging,
Upper Triassic sedimentary and volcaniclastic rocks of the Nicola Group. These
are intruded by plutonic rocks of the Early Jurassic Pennask batholith. The
oldest rocks in the area, informally called the Peachland Creek formation, are
divided into an older, predominately mafic tuffaceous and volcanic unit to the
east and a more felsic suite of dacitic ash tuffs, flows and subvolcanic
intrusions to the west.

The youngest rocks in the Nicola Group are the Whistle Creek
formation which consists primarily of bedded to massive, amphibole and pyroxene
bearing ash and lapilli tuffs of andesitic composition as well as some
tuffaceous siltstone and argillite. The Nicola Group rocks are intruded by small
bodies of unknown age ranging in composition from diorite through quartz diorite
to granodiorite. The Pennask batholith is believed to be Early Jurassic in age,
is massively to weakly foliated and ranges in composition from quartz diorite to
granodiorite.

To the west of the Peach Claim area, the Hidden Lake stock is
comprised of a massive hornblende-bearing granodiorite. To the north of the
Peach Claim area, the Princeton Group comprises maroon coloured volcanic flows
with rare interbedded arkosic sandstone which are overlain by flat-lying to
gently dipping, bedded, grey dust tuffs.

9

---

Physiography, Climate and Infrastructure

The Peach Claim property is situated on the edge of the
Okanagan Plateau of south central British Columbia. The typical topography here
is gently rolling, with rounded ridge tops and deeply incised dendritic stream
valleys. Locally steep mountain slopes dominate. The claims lie at elevations
ranging from 1,524 metres (5,000 feet) above sea level in the southeast corner,
to a high of 1,768 metres (5,800 feet) in the southwest and northeast. The
forest vegetation on the property consists of mainly fir, pine, spruce and
aspen, some of which have been harvested by logging.

The climate is characterised by relatively low precipitation
with temperatures ranging from minus 20° Celsius (-4° Fahrenheit) in the winter
to over 30° Celsius (86° Fahrenheit) in the summer. The summer months are
generally dry, while a snow pack of up to two metres (6.5 feet) may accumulate
during the winter. The property is easily accessible from late May to late
November, although some work such as geophysical surveys and drilling could take
place year round.

The Peach Claim property is accessed by gravel logging roads.
The City of Kelowna lies 40 kilometres to the east-northeast. It is the major
service centre for the Okanagan Valley region. Provincial highways, rail freight
lines, and an airport serve the city. Sufficient equipment, service suppliers
and exploration personnel can be obtained in Kelowna.

Power is readily available from nearby transmission lines
running to the formerly producing Brenda mine. Water in sufficient quantities
for drilling is available from nearby streams and lakes.

Recommendations of Geological Report and the Geological
Exploration Program

We engaged Paul Reynolds, B.Sc., P.Geo., to prepare a geological
  evaluation report on the Peach Claim. Mr. Reynolds is a consulting professional
  geologist registered with the Geological Section of the Association of Professional
  Engineers and Geoscientists of the Province of British Columbia, Canada.

The work completed by Mr. Reynolds in preparing the geological
report consisted of the review of geological data from previous exploration. The
acquisition of this data involved the research and investigation of historic
files to locate and retrieve data information acquired by previous exploration
companies in the area of the mineral claim. The work involved in this data
acquisition included report reproduction and compilation of pre-existing
information.

We received the geological evaluation report on the Peach Claim
prepared by Mr. Reynolds on September 25, 2001. This report is entitled
"Geological Summary Report on the Peach Property. The geological report
summarizes the results of the history of the exploration of the mineral claim,
the regional and local geology of the mineral claim and the mineralization and
the geological formations identified as a result of the prior exploration. The
geological report also gives conclusions regarding potential mineralization of
the mineral claim and recommends a further geological exploration program on the
mineral claim.

In his initial geological report, Mr. Reynolds, recommended
that a three phase exploration program, at an approximate cost of $22,500, be
undertaken on the property to assess its potential to host high grade gold
mineralization within quartz and sulphide veins, with a fourth phase of diamond
drilling and/or mechanical trenching subject to positive results from earlier
exploratory work.

The four phase program consists of the following:

Phase
    Exploration Program
    Status
    CostPhase I
    A thorough assessment of the known showings along with
      basic geological mapping and rock sampling.
    Completed in June, 2002.
    $5,000Phase II
    Prospecting, geological outcrop mapping,
      and detailed soil sampling in areas of interest.
    Completed in late 2004.
    $7,500


10

---

Phase
    Exploration Program
    Status
    CostPhase III
    Soil sampling to be conducted on a flagged grid
      within prospective areas identified by the two previous phases.
    To be completed in late 2007
    $5,000Phase IV
    Subject to positive results from the
      previous phases, mechanical trenching and/or diamond drilling.
    To be completed based on
      results of Phase III.
    To be determined based on the
      Results of Phase III


The phased program of exploration activities is intended to
generate and prioritize targets to test by trenching or drilling. The initial
exploration activities on the Peach Claim (grid establishment, geological
mapping, soil sampling and geophysical surveys) do not involve ground
disturbance and as a result do not require a work permit. Any follow-up
trenching and/or drilling will require permits, applications for which will be
submitted well in advance of the planned work.

We completed Phase I of our planned four phase exploration
program on the Peach Claim property in June, 2002. The total cost for the first
phase was approximately $5,000. Following the successful completion of Phase I,
our geologist recommended that we complete a second phase consisting of
geological prospecting, geological outcrop mapping, and detailed soil sampling
in areas of interest. Phase II of our exploration program was completed in late
2004. The cost of completing Phase II of our exploration program was $7,500. We
received a geological report on the results of Phase II of our exploration
program on July 27, 2005. Pursuant to the results of the Phase II report, our
independent geologist recommended we proceed with Phase III of our exploration
program. See Current State of Exploration below.

The geological review and interpretations required at the end
  of each phase of the exploration program is comprised of reviewing the data
  acquired and analyzing this data to assess the potential mineralization of the
  mineral claim. Geological review entails the geological study of an area to
  determine the geological characteristics, identification of rock types and any
  obvious indications of mineralization. The purpose of undertaking the geological
  review is to determine if there is sufficient indication of mineralization to
  warrant additional exploration. Positive results at each stage of the exploration
  program would be required to justify continuing with the next stage. Such positive
  results would include the identification of the zones of mineralization. As
  mentioned, positive results have been achieved for Phase I and II of the work
  program and the commencement and completion of work on Phase III is considered
  justified.

CURRENT STATE OF EXPLORATION

Our mineral claim presently does not have any mineral reserves.
The exploration of the Peach Claim is currently in the preliminary stages. Our
planned exploration program is exploratory in nature and no mineral reserves may
ever be found. We completed Phases I and II of our planned four phase
exploration program on the Peach Claim property. The total cost for Phases I and
II was approximately $12,500. Based on the results of Phase II of the
exploration program, we determined to proceed with Phase III subject to
obtaining additional financing.

Phase I  June 2002 Exploration Program

Phase I of our exploration program was completed in June, 2002.
The Phase I exploratory program was conducted by Mr. Reynolds over a period of
three days and consisted of rock sampling and an assessment of areas previously
reported to have potential mineralization. On June 27, 2002, Mr. Reynolds, our
consulting geologist, completed his review of Phase I work results on our Peach
Claim and provided us with a report containing his conclusions. Mr. Reynolds
concluded that the results were favorable and he recommended we proceed to Phase
II of our exploration program.

11

---

Phase II  September 2004 Exploration Program

Phase II of our exploration program was designed to follow-up
prospecting, sampling and mapping of the earlier exploration carried out by
Fairfield Minerals Ltd. The target of the 2004 program was the location of a
gold bearing quartz vein system similar to the Siwash North deposit, previously
found and bulk sampled by Fairfield. Using Fairfield assessment reports as
guides, a program of follow-up sampling, prospecting and mapping was carried out
over four areas of anomalous samples. The September 2004 exploration program was
successful in locating gold mineralized quartz float and bedrock in areas with
anomalous soil sample sites from surveys done by Fairfield Minerals Ltd. Our
geologist concluded that further exploration work should be undertaken on the
Peach Claim property to assess its potential to host high grade gold
mineralization within quartz (and sulphide) veins. We budgeted to expend $5,000
on our planned exploration program over the next twelve months.

Phase III - 2006 Exploration Program

The third phase of exploration will build upon the first two
  phases. Originally, it was recommended that a soil geochemical survey be conducted
  over prospective areas identified by the first two phases. Given the success
  in following up soil anomalies developed by the previous operator, Fairfield
  Minerals Ltd., it was recommended that we continue to follow up previous soil
  sample anomalies in an effort to discover further gold mineralization. Soil
  sampling on localized grids near gold bearing quartz showings may be helpful
  in tracing possible extents to the showings. We intend to complete Phase III
  of our exploration program in late 2007.

|ITEM 3. | LEGAL PROCEEDINGS.
|------- | ------------------

None.

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

None.

12

---

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED
      STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
      SECURITIES
|------- | -----------------------------------------------------------------------------------------------------------------------------

Market Information

Our shares of common stock commenced trading on the OTC
Bulletin Board under the symbol TVNT on July 19, 2005. As a result of a
four-for-one forward split of our issued and outstanding common stock, the
symbol under which our shares traded on the OTC Bulletin Board changed from
TVNT to TVEN, effective December 19, 2005. The high and the low bid prices
for our shares for the past two fiscal years, as reported by the OTC Bulletin
Board were:

|Quarter Ended    | High   | Low  
|---------------- | ------ | -----
|                 |        |      
|Fiscal year 2007 |        |      
|April 30, 2007   | $0.185 | $0.10
|January 31, 2007 | $0.15  | $0.06
|October 31, 2006 | $0.25  | $0.08
|July 31, 2006    | $0.44  | $0.14
|                 |        |      
|Fiscal year 2006 |        |      
|April 30, 2006   | $0.57  | $0.23
|January 31, 2006 | $0.58  | $0.10
|October 31, 2005 | $0.35  | $0.15
|July 31, 2005    | $0     | $0   

The trades reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not represent actual transactions.

Holders Of Our Common Stock

As of April 30, 2007 we had 74 registered shareholders and
34,183,200 shares of our common stock issued and outstanding.

Dividends

We have not declared any dividends on our common stock since
our inception on February 20, 2001. There are no dividend restrictions that
limit our ability to pay dividends on our common stock in our Articles of
Incorporation or Bylaws. Our governing statute, Chapter 78 - Private
Corporations of the Nevada Revised Statutes (the NRS), does provide
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) | 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 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
      (except as otherwise specifically allowed by our Articles of
      Incorporation).

RECENT SALES OF UNREGISTERED SECURITIES

Other than as disclosed on the Companys quarterly reports on
Form 10-QSB or current reports on Form 8-K during the period covered by this
report, the Company has not sold any equity securities that were not registered
under the Securities Act during the fiscal year ended April 30, 2007.

13

---

|ITEM 6. | MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION.
|------- | ----------------------------------------------------------------

PLAN OF OPERATION

Our plan of operation is to continue to conduct mineral
exploration activities on the Peach Claim in order to assess whether the claim
possesses commercially exploitable mineral deposits. Our exploration program is
designed to explore for commercially viable deposits of gold minerals. We have
not, nor has any predecessor, identified any commercially exploitable reserves
of these minerals on our mineral claim.

The exploration of the Peach Claim is currently in the
preliminary stages. Our planned exploration program is exploratory in nature and
no mineral reserves may ever be found. We completed Phases I and II of our
planned four phase exploration program on the Peach Claim property. The total
cost for Phases I and II was approximately $12,500. Based on the results of
Phase II of the exploration program, we determined to proceed with Phase III
subject to obtaining additional financing. Phase III of our exploration program
consists of soil sampling to be conducted on a flagged grid within prospective
areas identified by the two previous phases. We intend to complete Phase III of
our exploration program in late 2007.

Cash Requirements

During this exploration stage, our president will only be
devoting approximately six hours per week of his time to our business. We do not
foresee this limited involvement as negatively impacting our company over the
next twelve months as all exploratory work has been and will continue to be
performed by outside consultants. Additionally, we will not have a need to hire
any employees over the next twelve months; nor do we plan to make any purchases
of equipment over the next twelve months due to reliance upon outside
consultants to provide all tools needed for the exploratory work being
conducted. Our total expenditures over the next twelve months are anticipated to
be as follows:

Category
    Planned Expenditures Over
      the Next Twelve MonthsProfessional Fees
    $15,000Mineral Exploration costs
    $5,000Miscellaneous
    $4,000TOTAL
    $24,000


Subject to obtaining additional financing, we intend to
complete Phase III of the exploration of the Peach Claim in late 2007. A
decision on proceeding beyond the planned Phase III will be made by assessing
whether the results of Phase III are sufficiently positive to enable us to
obtain the financing we will need for us to continue through additional stages
of the exploration program. This assessment will include an assessment of the
market for financing of mineral exploration projects at the time of our
assessment and an evaluation of our cash reserves after the completion of Phase
III. The decision whether or not to proceed will be based on the recommendations
of our geological consultant.

RESULTS OF OPERATIONS

|Summary of Year End Results |   |          |   |   |                           |   |  |                       |  
|--------------------------- | - | -------- | - | - | ------------------------- | - |  | --------------------- | -
|                            |   |          |   |   | Year
      Ended April 30 |   |  |                       |  
|                            |   |          |   |   |                           |   |  | Percentage            |  
|                            |   | 2007     |   |   | 2006                      |   |  | Increase / (Decrease) |  
|Revenue                     | $ | --       |   | $ | --                        |   |  | n/a                   |  
|Expenses                    |   | (301,060 | ) |   | (987,633                  | ) |  | (69.5%                | )
|Net Loss                    | $ | (301,060 | ) | $ | (987,633                  | ) |  | (69.5%                | )

14

---

Revenue

We have not earned any revenues since our inception and we do
not anticipate earning revenues until such time as we have entered into
commercial production of our mineral property. We are currently in the
exploration stage of our business and we can provide no assurances that we will
discover commercially exploitable mineral deposits on our property, or if such
resources are discovered, that we will be able to enter into commercial
production of our mineral property.

Expenses

Our operating expenses for the fiscal years ended April 30,
2007 and 2006 are outlined in the table below:

|                         | Year
      Ended April 30 | 
|------------------------ | ------------------------- | 
|                         |                           | 
|                         | 2007                      | 
|Accounting               | $16,320                   | 
|Bank Charges             | 223                       | 
|Consulting               | 108,250                   | 
|Legal                    | 33,485                    | 
|Office Administration    | 28,100                    | 
|Office Expenses          | 912                       | 
|Regulatory Expenses/Fees | 9,491                     | 
|Rent                     | 3,000                     | 
|Travel & Entertainment   | 779                       | 
|Total                    | $200,560                  | 

The increases in our expenses for the year ended April 30, 2007
as compared to the comparative period in 2006 are primarily due to an increase
in our consulting expenses and an increase in professional expenses associated
with our reporting requirements under the Exchange Act and as a result of our
merger negotiations with Solara.

Investment in Sporg Corporation

We presently hold 1,589,967 shares representing approximately
6.5% of Sporg Corporation. The shares were acquired as part of the interim
financing provided to Sporg under the failed Merger Agreement with Sporg. The
investment was recorded at cost as there was no available market for these
shares. As a result of Sporgs intention to file a proposal under the Canada
Bankruptcy Act, the cost of these shares has been reduced for a permanent
decline in value to zero resulting in an unrealized loss of $1,028,980.

LIQUIDITY AND FINANCIAL CONDITION

|Working Capital         |                         |  |                         |  |                             | 
|----------------------- | ----------------------- |  | ----------------------- |  | --------------------------- | 
|                        |                         |  |                         |  | Percentage                  | 
|                        | At April
      30, 2007 |  | At April
      30, 2006 |  | Increase
      / (Decrease) | 
|Current Assets          | $115,742                |  | $747                    |  | 15,394.2%                   | 
|Current Liabilities     | (187,343)               |  | (94,628)                |  | 98%                         | 
|Working Capital Deficit | $(71,601)               |  | $(93,881)               |  | (23.7)%                     | 

15

---

|Cash Flows                                     |                     |  |           | 
|---------------------------------------------- | ------------------- |  | --------- | 
|                                               | Year Ended April 30 | 
|                                               | 2007                |  | 2006      | 
|Cash Flows used in Operating Activities        | $(276,661)          |  | $(16,351) | 
|Cash Flows from (used in) Investing Activities | (100,500)           |  | (928,480) | 
|Cash Flows from (used in) Financing Activities | 469,265             |  | 944,980   | 
|Net Increase (Decrease) in Cash During Period  | $92,104             |  | $149      | 

We had cash on hand of $92,275 and a working capital deficit of
$71,601 as of April 30, 2007 compared to working capital deficit $93,881 as of
April 30, 2006. We anticipate that we will incur approximately $24,000 for
operating expenses, including professional legal and accounting expenses
associated with our reporting requirements under the Exchange Act during the
next twelve months. Accordingly, we will need to obtain additional financing in
order to complete our full business plan, see Financing Requirements,
below.

Loan Agreement with Solara Technologies Inc.

On May 18, 2007, we entered into a loan agreement with Solara.
Under the terms of the Loan Agreement, we loaned a total of $200,000 to Solara.
The loan matures May 25, 2008, and accrues interest at a rate of 8% per annum
payable on maturity. The loan was made pursuant to the terms of the letter of
intent dated February 28, 2007 between the Company and Solara. The loan is
secured by an assignment of certain tax credits which Solara represents that it
is entitled to claim and receive and have a value of not less than $200,000.
Under the terms of the Loan Agreement, Solara was required to: (i) enter into a
formal merger agreement within 60 days of the date of the Loan Agreement; (ii)
obtain shareholder approval of the proposed merger within 90 days of the date of
the Loan Agreement; (iii) provide required financial statements within 90 days
of the Loan Agreement; and (iv) complete the proposed merger within 120 days of
the Loan Agreement. The formal merger agreement was not entered into by the
parties as required under the terms of the Loan Agreement, and as a result the
Company has requested that Solara repay the Loan.

Financing Requirements

As at April 30, 2007, we had total assets of $115,742 and a working
  capital deficit of $71,601. From inception to April 30, 2007, we have suffered
  aggregate losses in the amount of $1,423,171 and net cash outflows from operations.
  We expect to continue to incur substantial losses until we complete the development
  of our business. For these reasons our auditors stated in their report that
  they have substantial doubt that we will be able to continue as a going concern.
  Our current operating funds are not sufficient to complete the full exploration
  of the mineral claim and begin mining efforts should the mineral claim prove
  commercially viable. Therefore, we will need to obtain additional financing
  in order to complete our full business plan.

On July 12, 2007, we issued 2,570,000 shares of our common
stock at a price of $0.10 per share to 27 subscribers pursuant to Regulation S
promulgated under the Securities Act of 1933 (the Securities Act). The shares
represent the first tranche of a private placement of up to 5,000,000 shares at
a price of $0.10 US per share approved by the Companys Board of Directors on
March 7, 2007. There is no assurance that any additional shares will be issued
under the private placement. The proceeds of the private placement were used to
fund $200,000 of loans to the Companys former merger candidate, Solara
Technologies Inc., to retire corporate debt and for general corporate
purposes.

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 of additional sales of our equity
securities or arrange for debt or other financing for to fund our planned
mining, development and exploration activities.

OFF-BALANCE SHEET ARRANGEMENTS

None.

16

---

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.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
disclosed in Note 1 to the audited financial statements included in this Annual
Report.

Use of Estimates

Management uses estimates and assumptions in preparing the
financial statements included in this Annual Report 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

We have been in the exploration stage since our inception and
have not yet realized any revenues from our planned operations. We are primarily
engaged in the acquisition and exploration of mining properties. Upon the
location of commercially mineable reserves, we plan to prepare for mineral
extraction and enter the development stage.

Mineral Property Acquisition and Exploration
Costs

We expense all costs related to the acquisition and exploration
of mineral properties in which we have secured exploration rights prior to
establishment of proven and probable reserves. To date, we have not established
the commercial feasibility of any exploration prospects; therefore, all costs
are being expensed.

Depreciation, Amortization and Capitalization

We record 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.

RISKS AND UNCERTAINTIES

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

We have incurred a net loss of $1,423,171 for the period from
February 20, 2001 (inception) to April 30, 2007, and have no revenues to date.
Our future is dependent upon our ability to obtain financing and upon future
profitable operations from the development of our mineral claim. These factors
raise substantial doubt that we will be able to continue as a going concern.

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

Our current operating funds are sufficient to complete the
proposed exploration program; however, they will be insufficient to complete a
full exploration of the mineral claim and begin mining efforts should the
mineral claim prove commercially viable. Therefore, we will need to obtain
additional financing in order to complete our full business plan. As at April
30, 2007, we had cash in the amount of $92,275. Our plan of operation calls
for

17

---

significant expenses in connection with the exploration of our
mineral claim. We do not have sufficient cash on hand to complete Phase III of
our proposed exploration program. We also require additional financing to
sustain our business operations if we are not successful in earning revenues.
Obtaining additional financing would be subject to a number of factors,
including the market prices for the mineral property and gold. These factors may
make the timing, amount, terms or conditions of additional financing unavailable
to us.

Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.

Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be made by us in
the exploration of the mineral claim may not result in the discovery of mineral
deposits. Problems such as unusual or unexpected formations and other conditions
are involved in mineral exploration and often result in unsuccessful exploration
efforts. If the results of our Phase III exploration do not reveal viable
commercial mineralization, we may decide to abandon our claim and acquire new
claims for new exploration. The acquisition of additional claims will be
dependent upon us possessing capital resources at the time in order to purchase
such claims. If no funding is available, we may be forced to abandon our
operations.

Mineral exploration is highly speculative, involves
substantial expenditures, and is frequently non-productive.

Mineral exploration involves a high degree of risk and
exploration projects are frequently unsuccessful. Few prospects that are
explored end up being ultimately developed into producing mines. To the extent
that we continue to be involved in mineral exploration, the long-term success of
our operations will be related to the cost and success of our exploration
programs. We cannot assure you that our mineral exploration efforts will be
successful. The risks associated with mineral exploration include:

| | (i)   | the identification of potential economic mineralization
      based on superficial analysis;
| | ----- | --------------------------------------------------------------------------------------------
| | (ii)  | the quality of our management and our geological and
      technical expertise; and         
| | (iii) | the capital available for exploration and
    development.                                  

Substantial expenditures are required to determine if a project
has economically viable mineralization. It may take several years to establish
proven and probable reserves and to develop and construct mining and processing
facilities. Because of these uncertainties, our current and future exploration
programs may not result in the discovery of reserves, the expansion of our
existing reserves or the further development of our mines.

Even if we discover proven reserves of precious metals on
our mineral claim, we may not be able to successfully commence commercial
production.

Our mineral claim does not contain any known bodies of ore. If
our exploration programs are successful in discovering proven reserves on our
mineral claim, we will require additional funds in order to place the mineral
claim into commercial production. The expenditures to be made by us in the
exploration of mineral claims in all probability will be lost as it is an
extremely remote possibility that the mineral claim will contain proven
reserves. If our exploration programs are successful in discovering proven
reserves, we will require additional funds in order to place the Peach Claim
into commercial production. The funds required for commercial mineral production
can range from several million to hundreds of millions. We currently do not have
sufficient funds to place our mineral claim into commercial production.
Obtaining additional financing would be subject to a number of factors,
including the market price for gold and the costs of exploring for or mining
these materials. These factors may make the timing, amount, terms or conditions
of additional financing unavailable to us. Because we will need additional
financing to fund our exploration activities there is substantial doubt about
our ability to continue as a going concern. At this time, there is a risk that
we will not be able to obtain such financing as and when needed.

18

---

The price of gold is highly volatile and a decrease in the
price of gold can have a material adverse effect on our business.

The profitability of mining operations is directly related to
the market prices of metals. The market prices of metals fluctuate significantly
and are affected by a number of factors beyond our control, including, but not
limited to, the rate of inflation, the exchange rate of the dollar to other
currencies, interest rates, and global economic and political conditions. Price
fluctuations of metals from the time development of a mine is undertaken to the
time production can commence can significantly affect the profitability of a
mine. Accordingly, we may begin to develop one or more of our mines at a time
when the price of metals makes such exploration economically feasible and,
subsequently, incur losses because the price of metals decreases. Adverse
fluctuations of the market prices of metals may force us to curtail or cease our
business operations.

Because access to our mineral claim may be restricted by
inclement weather, we may be delayed in our exploration.

Access to the Peach Claim may be restricted through some of the
year due to weather in the area. As a result, any attempt to test or explore the
property is largely limited to the times when weather permits such activities.
These limitations can result in significant delays in exploration efforts. Such
delays can have a significant negative effect on our exploration efforts.

The Peach Claim comprises one mineral claim with a total area
of approximately 500 hectares, located in Nicola, Simalkameen and Osoyoos Mining
Divisions, approximately 40 kilometres west of Kelowna, British Columbia,
Canada. This is an essentially undeveloped area in British Columbia. The area
consists of many mountains and lakes with heavy forestation. An unpaved gravel
road is the only access. Winters are often severe with rain, freezing rain,
wind, and snow common between November and March, making the road often unsafe
and impassable for travel.

As we undertake exploration of our mineral claim, we will be
subject to compliance with government regulation that may increase the
anticipated cost of our exploration program.

There are several governmental regulations that materially
restrict mineral exploration. We will be subject to the laws of the Province of
British Columbia as we carry out our exploration program. We may be required to
obtain work permits, post bonds and perform remediation work for any physical
disturbance to the land in order to comply with these laws. While our planned
exploration program budgets for regulatory compliance, there is a risk that new
regulations could increase our costs of doing business and prevent us from
carrying out our exploration program.

Title to our Peach Claim is registered in the name of
another person. Our failure to register legal title to the claim in our name may
result in the loss of our interest in the claim.

Under British Columbia law, title to British Columbia mineral
claims can only be held by individuals, British Columbia corporations or foreign
corporations extra-provincially registered in British Columbia. Since we are a
Nevada corporation and we are not extra-provincially registered in British
Columbia, Canada, we are not legally allowed to hold claims in British Columbia.
Title to the Peach Claim is not held in our name. Title to the claim is being
held in trust by Don Archibald, a British Columbia resident from whom we
purchased our mineral claim. In the event Mr. Archibald were to transfer legal
title to our mineral claim to another party, we may not have a claim against the
third party and may be forced to commence an action against Mr. Archibald. There
is no assurance that we would succeed in recovering legal title to our mineral
claim or recover damages from Mr. Archibald in such instance.

Because our executive officers do not have formal training
specific to the technicalities of mineral exploration, there is a higher risk
that our business will fail.

Our management lacks technical training and experience with
exploring for, starting, and operating a mine. With no direct training or
experience in these areas, our management may not be fully aware of the specific
requirements related to working within this industry. Our management's decisions
and choices may not take into account standard engineering or managerial
approaches mineral exploration companies commonly use. Consequently, our
operations, earnings, and ultimate financial success could suffer irreparable
harm due to management's lack of experience in this industry.

19

---

Because our executive officers have only agreed to provide
their services on a part-time basis, they may not be able or willing to devote a
sufficient amount of time to our business operations, causing our business to
fail.

Our directors and officers are employed on a full time basis by
other companies. Because we are in the early stages of our business, Mr. Thomson
will not be spending a significant amount of time on our business. Mr. Thomson
expects to expend approximately 6 to 8 hours per week on our business. Competing
demands on Mr. Thomson's time may lead to a divergence between their interests
and the interests of other shareholders.

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

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation system.

Because our securities constitute "penny stocks" within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the trading price of our common
stock is less than $5.00 per share, the common stock will be subject to rule
15g-9 under the Exchange Act. 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.                                                                              

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock.

20

---



|ITEM 7. | FINANCIAL STATEMENTS.
|------- | ---------------------

|Index to Financial Statements:                                      | Page                                                                                                                                                                                
|------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                    |                                                                                                                                                                                     
|Audited financial statements as of April 30, 2007,
      including: |                                                                                                                                                                                     
|                                                                    |                                                                                                                                                                                     
|1.                                                                  | Report of Independent
      Registered Public Accounting Firm;                                                                                                                      
|                                                                    |                                                                                                                                                                                     
|2.                                                                  | Balance Sheets
      as at April 30, 2007 and 2006;                                                                                                                                 
|                                                                    |                                                                                                                                                                                     
|3.                                                                  | Statements
      of Operations and Accumulated Deficit for the years ended April 30, 2007
      and 2006 and the period from inception on February 20, 2001 to April 30,
      2007;
|                                                                    |                                                                                                                                                                                     
|4.                                                                  | Statements
      of Changes in Stockholders Equity/Deficit for the period from inception
      through April 30, 2007;                                                             
|                                                                    |                                                                                                                                                                                     
|5.                                                                  | Statements
      of Cash Flows for the years ended April 30, 2007 and 2006 and the period
      from inception to April 30, 2007;                                                   
|                                                                    |                                                                                                                                                                                     
|6.                                                                  | Notes to the
      Financial Statements; and                                                                                                                                        
|                                                                    |                                                                                                                                                                                     
|7.                                                                  | Supplemental Statement: Statements of Operating Expenses
      for the years ended April 30, 2007 and 2006 and the period from inception
      to April 30, 2007.                   

21

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors 
  Terrace Ventures Inc. 
  Blaine, Washington

We have audited the accompanying balance sheets of Terrace Ventures
  Inc., an exploration stage company, as of April 30, 2007 and April 30, 2006,
  and the related statements of operations and accumulated deficit, changes in
  stockholders equity (deficit), and cash flows for the years then ended,
  and for the period February 20, 2001 (date of inception) to April 30, 2007.
  These financial statements are the responsibility of Terrace Ventures Inc.s
  management. Our responsibility is to express an opinion on these financial statements
  based on our audits.

We conducted our audits in accordance with standards of the Public
  Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audits provide
  a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
  fairly, in all material respects, the financial position of Terrace Ventures
  Inc., an exploration stage company, as of April 30, 2007 and April 30, 2006,
  and the results of its operations, changes in stockholders equity (deficit)
  and cash flows for the years then ended, and for the period February 20, 2001
  (date of inception) to April 30, 2007, in conformity with accounting principles
  generally accepted in The United States of America.

Our audit was made for the purpose of forming an opinion on the
  basic financial statements taken as a whole. The supplemental statement of operating
  expenses is presented for the purposes of additional analysis and is not a required
  part of the basic financial statements, and in our opinion, is fairly stated
  in all material respects in relation to the basic financial statements taken
  as a whole.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. As discussed in Note 5 to
  the financial statements, the Company has suffered recurring losses from operations,
  which raise substantial doubt about its ability to continue as a going concern.
  The financial statements do not include any adjustments that might result from
  the outcome of this uncertainty.



Sarna & Company, 
  Certified Public Accountants 
  Westlake Village, California 
  August 3, 2007

---

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

|                                               |   |            |   |   |            |  
|---------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                               |   | APRIL 30,  |   |   | APRIL 30,  |  
|                                               |   | 2007       |   |   | 2006       |  
|                                               |   |            |   |   |            |  
|ASSETS                                         |  
|Current Assets:                                |   |            |   |   |            |  
|Cash                                           | $ | 92,275     |   | $ | 171        |  
|Receivable  Trust                             |   | 3,467      |   |   | 576        |  
|Notes Receivable                               |   | 20,000     |   |   | -0-        |  
|                                               |   |            |   |   |            |  
|Total Current Assets                           |   | 115,742    |   |   | 747        |  
|                                               |   |            |   |   |            |  
|Other Asset  Investment                       |   | -0-        |   |   | -0-        |  
|                                               |   |            |   |   |            |  
|TOTAL ASSETS                                   | $ | 115,742    |   | $ | 747        |  
|                                               |   |            |   |   |            |  
|                                               |   |            |   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |  
|                                               |   |            |   |   |            |  
|Current Liabilities:                           |   |            |   |   |            |  
|Accounts Payable
      and                     |   |            |   |   |            |  
|Accrued
      Expenses                         | $ | 30,123     |   | $ | 73,478     |  
|Due to Shareholder                             |   | 11,295     |   |   | 21,150     |  
|Common Stock Payable                           |   | 145,925    |   |   | -0-        |  
|                                               |   |            |   |   |            |  
|Total Current Liabilities                      |   | 187,343    |   |   | 94,628     |  
|                                               |   |            |   |   |            |  
|Stockholders' Equity:                          |   |            |   |   |            |  
|Common Stock, $0.001
      par value           |   |            |   |   |            |  
|400,000,000
      shares authorized,           |   |            |   |   |            |  
|34,183,200 and 31,949,920 shares               |   |            |   |   |            |  
|issued                                         |   | 34,183     |   |   | 31,950     |  
|Additional Paid
      in Capital               |   | 1,317,387  |   |   | 996,280    |  
|Deficit Accumulated During                     |   |            |   |   |            |  
|The
      Exploration Stage                    |   | (1,423,171 | ) |   | (1,122,111 | )
|                                               |   |            |   |   |            |  
|Total Stockholders' Equity (Deficit)           |   | (71,601    | ) |   | (93,881    | )
|                                               |   |            |   |   |            |  
|TOTAL LIABILITIES AND                          |   |            |   |   |            |  
|STOCKHOLDERS' EQUITY (DEFICIT)                 | $ | 115,742    |   | $ | 747        |  

See Notes to Financial Statements.

F-2

---

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

|                           |   | YEAR ENDED     |   |   | YEAR ENDED     |   |   | INCEPTION to   |  
|-------------------------- | - | -------------- | - | - | -------------- | - | - | -------------- | -
|                           |   | APRIL 30, 2007 |   |   | APRIL 30, 2006 |   |   | APRIL 30, 2007 |  
|                           |   |                |   |   |                |   |   |                |  
|Revenues                   | $ | -0-            |   | $ | -0-            |   | $ | -0-            |  
|                           |   |                |   |   |                |   |   |                |  
|Operating Expenses         |   | (200,560       | ) |   | (59,153        | ) |   | (394,191       | )
|                           |   |                |   |   |                |   |   |                |  
|Loss Before Other Income   |   |                |   |   |                |   |   |                |  
|And Expenses               |   | (200,560       | ) |   | (59,153        | ) |   | (394,191       | )
|                           |   |                |   |   |                |   |   |                |  
|Other Expense:             |   |                |   |   |                |   |   |                |  
|Unrealized Loss            |   |                |   |   |                |   |   |                |  
|on Investment              |   | (100,500       | ) |   | (928,480       | ) |   | (1,028,980     | )
|                           |   |                |   |   |                |   |   |                |  
|Loss Before Provision for  |   |                |   |   |                |   |   |                |  
|Income Taxes               |   | (301,060       | ) |   | (987,633       | ) |   | (1,423,171     | )
|                           |   |                |   |   |                |   |   |                |  
|Provision for Income Taxes |   | -0-            |   |   | -0-            |   |   | -0-            |  
|                           |   |                |   |   |                |   |   |                |  
|Net Loss                   |   | (301,060       | ) |   | (987,633       | ) |   | (1,423,171     | )
|                           |   |                |   |   |                |   |   |                |  
|Accumulated Deficit,       |   |                |   |   |                |   |   |                |  
|Beginning of Period        |   | (1,122,111     | ) |   | (134,478       | ) |   | -0-            |  
|                           |   |                |   |   |                |   |   |                |  
|Accumulated Deficit,       |   |                |   |   |                |   |   |                |  
|End of Period              | $ | (1,423,171     | ) | $ | (1,122,111     | ) | $ | (1,423,171     | )
|                           |   |                |   |   |                |   |   |                |  
|Net Loss per Share         | $ | (0.01          | ) | $ | (0.03          | ) | $ | (0.05          | )
|                           |   |                |   |   |                |   |   |                |  
|Weighted Average           |   |                |   |   |                |   |   |                |  
|Shares Outstanding         |   | 33,064,940     |   |   | 31,949,920     |   |   | 26,917,922     |  

See Notes to Financial Statements.

F-3

---

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

DeficitAccumulatedCommon Stock
      
      
      Additional
      
      
      During the
      
      
      TotalDollar
      
      
      Paid in
      
      
      Exploration
      
      
      Stockholders'Shares
      
      
      Amount
      
      
      Capital
      
      
      Stage
      
      
      Equity (Deficit)Inception,February 20, 2001
      
      ----
      
      $
      ----
      
      $
      ----
      
      $
      ----
      
      $
      ----Common Stock Issued$0.001 per shareApril 9, 2001
      
      4,000,000
      
      
      400
      
      
      3,600
      
      
      ----
      
      
      4,000Net Loss, Period EndedApril 30, 2001
      
      ----
      
      
      ----
      
      
      ----
      
      
      (1,410
      )
      
      (1,410
      )Balances, April 30, 2001
      
      4,000,000
      
      
      400
      
      
      3,600
      
      
      (1,410
      )
      
      2,590Common Stock Issued$0.01 per shareAugust 15, 2001
      
      2,500,000
      
      
      250
      
      
      24,750
      
      
      ----
      
      
      25,000Net Loss, Period EndedApril 30, 2002
      
      ----
      
      
      ----
      
      
      ----
      
      
      (19,196
      )
      
      (19,196
      )Balances, April 30, 2002
      
      6,500,000
      
      
      650
      
      
      28,350
      
      
      (20,606
      )
      
      8,394Common Stock Issued$0.10 per shareSeptember 30, 2002
      
      142,500
      
      
      14
      
      
      14,236
      
      
      ----
      
      
      14,250Net Loss, Period EndedApril 30, 2003
      
      ----
      
      
      ----
      
      
      ----
      
      
      (17,632
      )
      
      (17,632
      )Balances, April 30, 2003
      
      6,642,500
      
      
      664
      
      
      42,586
      
      
      (38,238
      )
      
      5,012Common Stock Issued$0.10 per shareNovember 6, 2003
      
      400,000
      
      
      40
      
      
      39,960
      
      
      ----
      
      
      40,000Net Loss, Period EndedApril 30, 2004
      
      ----
      
      
      ----
      
      
      ----
      
      
      (58,708
      )
      
      (58,708
      )Balances, April 30, 2004
      
      7,042,500
      
      
      704
      
      
      82,546
      
      
      (96,946
      )
      
      (13,696
      )Net Loss, Period EndedApril 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.

F-4

---

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

DeficitAccumulatedCommon Stock
      
      
      Additional
      
      
      During the
      
      
      TotalDollar
      
      
      Paid in
      
      
      Exploration
      
      
      Stockholders'Shares
      
      
      Amount
      
      
      Capital
      
      
      Stage
      
      
      Equity (Deficit)Balances, April 30, 2005
      
      7,042,500
      
      
      704
      
      
      82,546
      
      
      (134,478
      )
      
      (51,228
      )Common Stock Issued$1.00 per shareNovember 23,2005
      
      500,000
      
      
      50
      
      
      499,950
      
      
      ----
      
      
      500,0004-for-1 Stock Split,December 19, 2005
      
      22,627,500
      
      
      29,416
      
      
      (29,416
      )
      
      ----
      
      
      ----Common Stock Issued$0.25 per shareFebruary 3, 2006
      
      400,000
      
      
      400
      
      
      99,600
      
      
      ----
      
      
      100,000Common Stock Issued$0.25 per shareMarch 13, 2006
      
      380,000
      
      
      380
      
      
      94,620
      
      
      ----
      
      
      95,000Common Stock Issued$0.25 per shareMarch 31, 2006
      
      999,920
      
      
      1,000
      
      
      248,980
      
      
      ----
      
      
      249,980Net Loss, Period EndedApril 30, 2006
      
      ----
      
      
      ----
      
      
      ----
      
      
      (987,633
      )
      
      (987,633
      )BalancesApril 30, 2006
      
      31,949,920
      
      
      31,950
      
      
      996,280
      
      
      (1,122,111
      )
      
      (93,881
      )Common Stock Issued$0.25 per shareMay 24, 2006
      
      220,080
      
      
      220
      
      
      54,800
      
      
      ----
      
      
      55,020Common Stock Issued$0.30 per shareJune 5, 2006
      
      335,000
      
      
      335
      
      
      100,165
      
      
      ----
      
      
      100,500Common Stock Issued$0.10 per shareJanuary 23, 2007
      
      1,678,200
      
      
      1,678
      
      
      166,142
      
      
      ----
      
      
      167,820Net Loss, Period EndedApril 30, 2007
      
      ----
      
      
      ----
      
      
      ----
      
      
      (301,060
      )
      
      (301,060
      )BalancesApril 30, 2007
      
      34,183,200
      
      $
      34,183
      
      $
      1,317,387
      
      $
      (1,423,171
      )
      $
      (71,601
      )


See Notes to Financial Statements.

F-5

---

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

|                                |   | YEAR ENDED         |   |   | YEAR ENDED         |   |   | INCEPTION to       |  
|------------------------------- | - | ------------------ | - | - | ------------------ | - | - | ------------------ | -
|                                |   | APR
      30, 2007 |   |   | APR
      30, 2006 |   |   | APR
      30, 2007 |  
|Cash Flows from                 |   |                    |   |   |                    |   |   |                    |  
|Operating Activities:           |   |                    |   |   |                    |   |   |                    |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Loss                        | $ | (301,060           | ) | $ | (987,633           | ) | $ | (1,423,171         | )
|Unrealized Loss on Investment   |   | 100,500            |   |   | 928,480            |   |   | 1,028,980          |  
|(Increase) in Receivable-Trust  |   | (2,891             | ) |   | (576               | ) |   | (3,467             | )
|(Increase) in Notes Receivable  |   | (20,000            | ) |   | -0-                |   |   | (20,000            | )
|Increase/(Decrease) in          |   |                    |   |   |                    |   |   |                    |  
|Accounts Payable                |   | (43,355            | ) |   | 22,228             |   |   | 30,123             |  
|Increase/(Decrease) in          |   |                    |   |   |                    |   |   |                    |  
|Due to Shareholder              |   | (9,855             | ) |   | 21,150             |   |   | 11,295             |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Cash Used by                |   |                    |   |   |                    |   |   |                    |  
|Operating Activities            |   | (276,661           | ) |   | (16,351            | ) |   | (376,240           | )
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash Flows from                 |   |                    |   |   |                    |   |   |                    |  
|Investing Activities:           |   |                    |   |   |                    |   |   |                    |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Investment in Stock             |   | (100,500           | ) |   | (928,480           | ) |   | (1,028,980         | )
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Cash Used by                |   |                    |   |   |                    |   |   |                    |  
|Investing Activities            |   | (100,500           | ) |   | (928,480           | ) |   | (1,028,980         | )
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash Flows from                 |   |                    |   |   |                    |   |   |                    |  
|Financing Activities:           |   |                    |   |   |                    |   |   |                    |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Proceeds from Issuance of       |   |                    |   |   |                    |   |   |                    |  
|Common Stock                    |   | 469,265            |   |   | 944,980            |   |   | 1,497,495          |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Cash Provided by            |   |                    |   |   |                    |   |   |                    |  
|Financing Activities            |   | 469,265            |   |   | 944,980            |   |   | 1,497,495          |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Increase (Decrease) in Cash |   | 92,104             |   |   | 149                |   |   | 92,275             |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash at Beginning of Period     |   | 171                |   |   | 22                 |   |   | -0-                |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash at End of Period           | $ | 92,275             |   | $ | 171                |   | $ | 92,275             |  

See Notes to Financial Statements.

F-6

---

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.

F-7

---

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.

F-8

---

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 - PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended April 30,
  2007 and April 30, 2006 represents the minimum state income tax expense of the
  Company, which is not considered significant.

NOTE 3 - 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.

NOTE 4 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

NOTE 5  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.

F-9

---

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

NOTE 5  GOING CONCERN - CONTINUED

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 $1,423,171 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 6  STOCK SPLIT

On December 19, 2005, the Company completed a four-for-one forward
  split of its issued and outstanding common stock. As a result of this stock
  split, the Companys authorized capital increased from 100,000,000 shares
  of common stock with a par value of $0.001 per share, of which 7,542,500 shares
  were issued and outstanding, to 400,000,000 shares of common stock with a par
  value of $0.001 per share, of which 30,170,000 were issued and outstanding as
  of December 19, 2005.

NOTE 7  INVESTMENT IN CLOSELY HELD STOCK

During the year ended April 30, 2006, the Company acquired a
  5.9% interest in Sporg Corporation, a Nevada Corporation located in Vancouver,
  Canada, with the intention of executing an Agreement and Plan of Merger. This
  investment was recorded under the cost method of accounting, as there is no
  available market for these shares. The cost of these 1,428,429 shares, totaling
  $928,480, was reduced for a permanent decline in value to zero, with the resulting
  unrealized loss of $928,480 reported in the year ended April 30, 2006.

F-10

---

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

NOTE 7  INVESTMENT IN CLOSELY HELD STOCK  CONTINUED

To fund this acquisition, on November 23, 2005 the Companys
  director authorized a private placement of 4,000,000 post-split shares of the
  Companys common stock, at a price of $0.25 per share. As of April 30,
  2007, all 4,000,000 shares of the Companys common stock were issued at
  a price of $0.25 per share, for a total of $1,000,000 in accordance with this
  private placement offering.

On June 5, 2006, the Company acquired additional shares of Sporg
  Corporation at a cost of $100,500, bringing the Companys total interest
  in Sporg to 6.5% . The cost of these shares was reduced for a permanent decline
  in value to zero, resulting in an unrealized loss of $100,500 reported in the
  year ended April 30, 2007.

NOTE 8  MERGER AGREEMENT/STOCK ISSUANCES

On May 26, 2006, the Company entered into a merger agreement
  with Sporg Corporation. In connection with this agreement, the Company approved
  a private placement of its common stock of up to 2,000,000 shares at a price
  of $0.30 per share to permit it to provide up to $525,000 of interim financing
  to Sporg pending completion of the merger. On June 5, 2006, the Company issued
  335,000 shares of its common stock at a price of $0.30 per share for a total
  of $100,500 in connection with this private placement. The proceeds were paid
  to Sporg Corporation as part of the interim financing agreement. On July 10,
  2006, the merger agreement expired and was not extended by the parties. The
  $100,500 paid as part of the financing agreement has been reflected in the financial
  statements as an unrealized loss, as the recoverability of this investment is
  uncertain.

On May 24, 2006, the Company issued 60,000 shares of its common
  stock at a price of $0.25 per share for a total of $15,000. This issuance represents
  part of a private placement of 4,000,000 shares of common stock approved by
  the Companys director on November 23, 2005.

On June 6, 2006, the Company issued 160,080 shares of its common
  stock at a price of $0.25 per share, for a total of $40,020. This issuance represents
  the balance of a private placement of 4,000,000 shares of common stock approved
  by the Companys director on November 23, 2005.

F-11

---

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

NOTE 8  MERGER AGREEMENT/STOCK ISSUANCES - CONTINUED

On August 28, 2006, the Companys board of directors authorized
  an offering on a private placement basis, of up to 5,000,000 units at a price
  of $0.10 per unit. Each unit consists of one common share of the Companys
  stock and one share purchase warrant, with each warrant entitling the holder
  to purchase an additional common share at a price of $0.10 per share, for a
  period ending one year from closing. The proceeds of this offering are to be
  used for mineral exploration and general corporate expenses. On January 23,
  2007, 1,678,200 shares and 1,678,200 warrants were issued under this private
  placement, for a total contribution of $167,820.

On February 28, 2007, the Company entered into a letter of intent
  with Solara Technologies, Inc. (Solara), a private British Columbia
  company engaged in the development of both hardware and software for the self
  service vending industry. Under the terms of the letter of intent the closing
  of the merger is subject to a number of conditions, including delivery of all
  financial statements of Solara required under applicable securities rules, the
  Company providing Solara with a loan of $200,000 (the Solara Loan)
  prior to closing of the merger, the parties entering into a formal agreement
  outlining the terms of the merger no later than March 15, 2007, and each of
  the parties satisfactorily completing their respective due diligence review.

As of April 30, 2007, $20,000 was loaned to Solara, and is reflected
  in the financial statements as Notes Receivable.

NOTE 9  STOCK OPTIONS

On March 21, 2006, the Company entered into a stock option agreement
  with a director of the Company. The options provide for the purchase of 200,000
  shares of Company common stock at $0.27 per share. Compensation cost for stock
  options is measured as the excess, if any, of the estimated fair market value
  of the Companys stock at the date of grant over the amount the recipient
  must pay to acquire the stock. At the date of grant, fair market value approximated
  the strike price. The options expire on March 21, 2008.

F-12

---

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

NOTE 10  SUBSEQUENT EVENTS

On March 7, 2007, the Company approved a private placement of
  up to 5,000,000 shares of the Companys common stock at a price of $0.10
  per share to fund the Solara Loan and for working capital purposes. This offering
  was made to non-US investors pursuant to Regulation S of the United States Securities
  Act of 1933. As of April 30, 2007, $145,925 representing advances on 1,460,000
  shares was received and is reflected in the financial statements as Common Stock
  Payable. Subsequent to April 30, 2007, an additional $111,000 was received,
  for a total stock liability of 2,570,000 shares.

On August 10, 2007 the Company’s board of directors determined
  not to proceed with the proposed merger with Solara based on the results of
  its review of the due diligence materials provided by Solara to the Company.
  As a result of this, the Company has requested that Solara repay all monies
  advanced to Solara by the Company. Management believes that advances made in
  accordance with this loan agreement are still recoverable.

F-13

---

SUPPLEMENTAL STATEMENT

---

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

|                               |   | YEAR ENDED    |  |   | YEAR ENDED    |  |   | INCEPTION to   | 
|------------------------------ | - | ------------- |  | - | ------------- |  | - | -------------- | 
|                               |   | APRIL 30,2007 |  |   | APRIL 30,2006 |  |   | APRIL 30, 2007 | 
|                               |   |               |  |   |               |  |   |                | 
|Operating Expenses:            |   |               |  |   |               |  |   |                | 
|Accounting                     | $ | 16,320        |  | $ | 11,080        |  | $ | 52,060         | 
|Bank Charges                   |   | 223           |  |   | -0-           |  |   | 223            | 
|Consulting                     |   | 108,250       |  |   | -0-           |  |   | 108,250        | 
|Exploration Expense            |   | -0-           |  |   | -0-           |  |   | 24,266         | 
|Legal                          |   | 33,485        |  |   | 34,039        |  |   | 109,623        | 
|Office Administration          |   | 28,100        |  |   | 6,000         |  |   | 54,600         | 
|Office Expenses                |   | 912           |  |   | 1,152         |  |   | 3,681          | 
|Regulatory Expenses/Fees       |   | 9,491         |  |   | 3,882         |  |   | 19,414         | 
|Rent                           |   | 3,000         |  |   | 3,000         |  |   | 16,950         | 
|Telephone                      |   | -0-           |  |   | -0-           |  |   | 1,344          | 
|Travel & Entertainment         |   | 779           |  |   | -0-           |  |   | 3,780          | 
|                               |   |               |  |   |               |  |   |                | 
|                               |   |               |  |   |               |  |   |                | 
|Total
      Operating Expenses | $ | 200,560       |  | $ | 59,153        |  | $ | 394,191        | 

See Notes to Financial Statements.

F-15

---

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

None.

|ITEM 8A. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

Under the supervision and with the participation of our
management, including the Chief Executive Officer and Chief Financial Officer,
we have evaluated the effectiveness of our disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of the end of the period covered by
this report. Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer has concluded that these disclosure controls and procedures
are effective.

There were no changes in our internal control over financial
reporting during the quarter ended April 30, 2007 that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.

|ITEM 8B. | OTHER INFORMATION.
|-------- | ------------------

None.

22

---

PART III

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

Our current executive officers and directors are:

|Name           | Age | Position                                                          
|-------------- | --- | ------------------------------------------------------------------
|Howard Thomson | 61  | President, Secretary,
      Treasurer, CEO, CFO, and Sole Director

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

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
5 years as Branch Manager, 4 years as Regional Marketing Manager and 5 years as
Senior Private Banker. Mr. Thomson retired from the Bank of Montreal in 1998.
Since February, 1999, Mr. Thomson has served as a director and officer of
Royalite Petroleum Company Inc. (formerly Worldbid Corporation), a public
company quoted on the OTC Bulletin Board, specializing in international
business-to-business and government-to-business facilitation service.

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, pursuant to which Mr. Thomson
will provide certain management consulting services to us. In consideration for
his services, we agreed to pay to Mr. Thomson $2,500 per month. Pursuant to the
agreement, Mr. Thomson may be granted incentive stock options. The agreement is
for a term of two years.

Mr. Thomson does not have formal training as geologists or in
the technical or managerial aspects of management of a mineral exploration
company. His prior managerial and consulting positions have not been in the
mineral exploration industry. Accordingly, we will have to rely on the technical
services of others to advise us on the managerial aspects specifically
associated with a mineral exploration company. We do not have any employees who
have professional training and experience in the mining industry. We rely on our
independent geological consultant, Paul Reynolds, B. Sc., P.Geo., to make
recommendations to us on work programs on our property, to hire appropriately
skilled persons on a contract basis to complete work programs and to supervise,
review, and report on such programs to us.

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 determines 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.

23

---

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.

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 regulation to furnish us with copies of all forms they file pursuant to
Section 16(a). Based on our review of the copies of such forms received by us,
other than as described below, no other reports were required for those persons.
We believe that during the year ended April 30, 2007, all Reporting Persons
complied with all Section 16(a) filing requirements applicable to them.

24

---

|ITEM 10. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

The following table summarizes all compensation recorded by us
in the fiscal years ended April 30, 2006 and 2007 for our principal executive
officer, each of our other two most highly compensated executive officers
serving as such whose annual compensation exceeded $100,000, and up to two
additional individuals for whom disclosure would have been made in this table
but for the fact that the individual was not serving as an executive officer of
our company at the end of our fiscal year. Such officers are referred to herein
as our Named Executive Officers.

|Name &
      Principal Position | Year | Salary($) | **Bonus**($) | **Stock** Awards | Option
      **Awards** | Non-Equity
      Incentive Plan Compen- sation | Non-
      qualified Deferred Compen-
      sation Earnings | All Other
      **Compen-** sation ($) | Total
      ($)
|------------------------------- | ---- | --------- | ------------ | ---------------- | ----------------------- | ---------------------------------------------- | ----------------------------------------------------------- | -------------------------------------- | ---------------
|Howard Thomson                  |      |           |              |                  |                         |                                                |                                                             |                                        |                
|President,                      | 2007 | 28,100    | -            | -                | -                       | -                                              | -                                                           | -                                      | 28,100         
|Secretary and                   | 2006 | 6,000     | -            | -                | -                       | -                                              | -                                                           | -                                      | 6,000          
|Treasure, CEO                   |      |           |              |                  |                         |                                                |                                                             |                                        |                
|and CFO(1)                      |      |           |              |                  |                         |                                                |                                                             |                                        |                
|Ian Brodie,                     | 2007 | 54,125    | -            | -                | -                       | -                                              | -                                                           | -                                      | 54,125         
|Executive Vice                  | 2006 | -         | -            | -                | -                       | -                                              | -                                                           | -                                      | -              
|President                       |      |           |              |                  |                         |                                                |                                                             |                                        |                
|Frank Anderson                  | 2007 | 54,125    | -            | -                | -                       | -                                              | -                                                           | -                                      | 54,125         
|Vice President of               | 2006 | -         | -            | -                | -                       | -                                              | -                                                           | -                                      | -              
|Finance                         |      |           |              |                  |                         |                                                |                                                             |                                        |                

|(1) | Mr. Thomson was appointed as our President, Secretary,
      Treasurer, CEO and CFO on January 16, 2006. Effective March 21, 2006, Mr.
      Thomson entered into a consulting agreement with Terrace for an annual
      salary of $2,500 per month and a payment of $2,500 for prior services
      provided in the month of February, 2006. See Employment Contracts,
      below.                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | On October 5, 2006, we entered into a management
      consulting agreement with Ian Brodie. Pursuant to the terms of the
      agreement, Mr. Brodie was paid consulting fees of $10,000 per month, in
      consideration of which Mr. Brodie agreed to act as the Companys Executive
      Vice President. The Company ceased making payments to Mr. Brodie under the
      consulting agreement in March, 2007 and Mr. Brodie resigned as Executive
      Vice President on June 4, 2007. See Employment Contracts,
  below.                  
|(3) | On October 5, 2006, we entered into a management
      consulting agreement with Frank Anderson. Pursuant to the terms of the
      agreement, Mr. Anderson was paid consulting fees of $10,000 per month, in
      consideration of which Mr. Anderson agreed to act as the Companys Vice
      President of Finance. The Company ceased making payments to Mr. Anderson
      under the consulting agreement in March, 2007 and Mr. Anderson resigned as
      Vice President of Finance on June 4, 2007. See Employment Contracts,
      below.

25

---

Outstanding Equity Awards At Fiscal Year-End

The following table provides information concerning unexercised
options for each of our Named Executive Officers outstanding as of April 30,
2007.

|Name and           | Number of   | Number of     | Equity Incentive | Option Exercise | Option Expiration Date
|------------------ | ----------- | ------------- | ---------------- | --------------- | ----------------------
|Principal Position | Securities  | Securities    | Plan Awards:     | Price           |                       
|                   | Underlying  | Underlying    | Number of        |                 |                       
|                   | Unexercised | Unexercised   | Securities       |                 |                       
|                   | Options (#) | Options (#)   | Underlying       |                 |                       
|                   | Exercisable | Unexercisable | Unexercised      |                 |                       
|                   |             |               | Unearned         |                 |                       
|                   |             |               | Options          |                 |                       
|Howard Thomson     | 200,000     | -             | -                | $0.27           | Mar 21, 2008          

Director Compensation

During the fiscal year ended April 30, 2007 we did not pay our
  directors any fees for services provided as directors. We periodically grant
  stock incentive options to our directors in consideration for them providing
  their services as directors. Our 2006 Stock Incentive Plan permits the grant
  of incentive stock options to our directors. We pay a management consulting
  fee of $2,500 per month to Mr. Thomson, to act as our President, Secretary,
  Treasurer, Chief Executive Officer and Chief Financial Officer and to provide
  certain management consulting services.

EMPLOYMENT CONTRACTS

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

Howard Thomson. 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 agreement is for an initial term of two years.

Ian Brodie. On October 5, 2006, we entered into a
management consulting agreement with Ian Brodie. Pursuant to the terms of the
agreement, Mr. Brodie was to be paid consulting fees of $10,000 per month, in
consideration of which Mr. Brodie agreed to act as the Companys Executive Vice
President. Mr. Brodie may be granted, subject to the approval of the Companys
Board, incentive stock options to purchase shares of the Companys common stock
in such amounts and at such times as the Board, in its absolute discretion, may
from time to time determine. The Company ceased making payments to Mr. Brodie
under the consulting agreement in March, 2007 and Mr. Brodie resigned as
Executive Vice President on June 4, 2007.

Frank Anderson.On October 5, 2006, the Company entered
  into a management consulting agreement with Frank Anderson. Pursuant to the
  terms of the agreement, Mr. Anderson was to be paid consulting fees of $10,000
  per month, in consideration of which Mr. Anderson agreed to act as the Companys
  Vice President of Finance. Mr. Anderson may be granted, subject to the approval
  of the Companys Board, incentive stock options to purchase shares of the
  Companys common stock in such amounts and at such times as the Board,
  in its absolute discretion, may from time to time determine. The Company ceased
  making payments to Mr. Anderson under the consulting agreement in March, 2007
  and Mr. Anderson resigned as Vice President of Finance on June 4, 2007.

We conduct our business through agreements with consultants and
  arms-length third parties. Currently, we have a verbal agreement with our consulting
  geologists to provide us with consulting services on request. Our verbal agreement
  with our geologist includes his reviewing all of the results from the exploratory
  work performed upon the site and making recommendations based on those results
  in exchange for payments equal to the usual and customary rates received by
  geologists performing similar consulting services. Additionally, we have a verbal
  agreement with our outside auditors to perform requested accounting functions
  at their normal and customary rates.

26

---

|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -----------------------------------------------------------------------------------------------------

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of July 13, 2007
by: (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,
(iii) each of our named executive officers; and (iv) 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
    Amount and Nature
      of Beneficial Ownership
    Percentage of
      Common Stock(1)DIRECTORS AND EXECUTIVE OFFICERSCommon Stock
    Howard Thomson, Chief
      Executive Officer, Chief Financial Officer, President, Secretary and
      Treasurer, and Director Suite 202, 810 Peace Portal Drive, Blaine,
      WA 98230
    400,000 Shares
      
        Direct(2)
    1.1%Common Stock
    All Directors and Executive Officers
      as a Group (1 person)
    400,000 Shares
    1.1%5% STOCKHOLDERSCommon Stock
    Gordon F. Burley, #603 - 3600
      Windcrest Drive, North Vancouver, BC
    15,800,000 Shares
      Direct
    43%


| | * Represent less than 1%.
| | -------------------------
| |                          
| | (1)                      
| |                          
| | (2)                      

CHANGE IN CONTROL

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

EQUITY COMPENSATION PLAN INFORMATION

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, see 2006 Stock Incentive Plan,
below.

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.

27

---

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/AEquity Compensation Plans Not Approved By Security Holders
    200,000
    $0.27
    5,334,992


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 5,000,000 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.

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

28

---

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.

|ITEM 12. | CERTAIN RELATIONSHIPS
      AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE.
|-------- | --------------------------------------------------------------------------------------
|

None of the following parties has, since commencement of our
fiscal year ended April 30, 2007, 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 and the amount
involved exceeds the lesser of $120,000 or 1% of the average of the Companys
total assets for the last three completed fiscal years:

| | (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.                                                                         

29

---

|ITEM 13. | EXHIBITS.
|-------- | ---------

|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     | Bylaws.(1)                                                                                                                                                                                      
|        |                                                                                                                                                                                                 
|10.1    | Mineral Claim Purchase Agreement
      dated August 15, 2001 between Terrace Ventures Inc. and Don Archibald.(1)                                                                                
|        |                                                                                                                                                                                                 
|10.2    | 2006 Stock Incentive Plan.(4)                                                                                                                                                                   
|        |                                                                                                                                                                                                 
|10.3    | Stock Option Agreement between
      Terrace Ventures Inc. and Howard Thomson dated March 31, 2006.(4)                                                                                          
|        |                                                                                                                                                                                                 
|10.4    | Management Consulting Agreement
      dated March 21, 2006 between Terrace Ventures Inc. and Howard Thomson.(4)                                                                                 
|        |                                                                                                                                                                                                 
|10.5    | Agreement and Plan of Merger dated
      for reference May 24, 2006 among Terrace Ventures Inc., Sporg Technology
      Corp., Sporg Corporation and Gordon F. Burley.(5)                       
|        |                                                                                                                                                                                                 
|10.6    | Management Consulting Agreement
      with Ian Brodie.(7)                                                                                                                                       
|        |                                                                                                                                                                                                 
|10.7    | Management Consulting Agreement
      with Frank Anderson.(7)                                                                                                                                   
|        |                                                                                                                                                                                                 
|10.8    | Letter of Intent dated February
      28, 2007 between Terrace Ventures Inc. and Dorn Beattie.(8)                                                                                               
|        |                                                                                                                                                                                                 
|10.9    | Loan Agreement dated May 18, 2007
      between the Company and Solara Technologies Inc.(9)                                                                                                     
|        |                                                                                                                                                                                                 
|14.1    | Code of Ethics.(3)                                                                                                                                                                              
|        |                                                                                                                                                                                                 
|21.1    | List
      Of Subsidiaries.                                                                                                                                                                     
|        |                                                                                                                                                                                                 
|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 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 May 31, 2006.                         
|(6)    | Filed with the SEC as an exhibit to our Annual
      Report on Form 10-KSB filed on August 14, 2006.                    
|(7)    | Filed with the SEC as an exhibit to our Current
      Report on Form 8-K filed on October 11, 2006.                     
|(8)    | Filed with the SEC as an exhibit to our Current
      Report on Form 8-K filed on March 7, 2007.                        
|(9)    | Filed with the SEC as an exhibit to our Current
      Report on Form 8-K filed on May 24, 2007.                         

30

---

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

Audit Fees

During the fiscal years ended April 30, 2007 and 2006, we
retained our independent auditor, Sarna & Company, Certified Public
Accountants, to provide services in the following categories and amounts:

Year Ended April 30, 2007
    Year Ended April 30, 2006Audit Fees
    $16,320
    $11,080Audit Related Fees
    -
    -Tax Fees
    -
    -All Other Fees
    -
    -Total
    $16,320
    $11,080


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.

31

---

SIGNATURES

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

|      |                       |  | TERRACE
      VENTURES INC.
|----- | --------------------- |  | ---------------------------
|      | .                     |  |                            
|      |                       |  |                            
|Date: | August
      13, 2007 |  | By:                        
|      |                       |  |                            
|      |                       |  |                            
|      |                       |  |                            
|      |                       |  |                            

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

|Date: | August
      13, 2007 |  | By: | /s/ Howard Thomson                                           
|----- | --------------------- |  | --- | -------------------------------------------------------------
|      |                       |  |     | HOWARD THOMSON                                               
|      |                       |  |     | Chief Executive Officer, Chief Financial Officer             
|      |                       |  |     | President, Secretary and Treasurer                           
|      |                       |  |     | (Principal Executive Officer and Principal Financial Officer)

---