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

FORM 10-KSB

(Mark One)

[ X] Annual Report Pursuant To Section 13 Or 15(d)
  Of The Securities Exchange Act Of 1934
  For the fiscal year ended April 30, 2006

[ ] Transition Report Under Section 13 Or 15(d) Of The Securities
  Exchange Act Of 1934 
  For the transition period from _____ to _____

COMMISSION FILE NUMBER:000-50569

TERRACE VENTURES INC.(Name of small business issuer in its charter)

|NEVADA                                                         |  | 91-2147101                       
|-------------------------------------------------------------- |  | ---------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (IRS 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 is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. [ ]

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 [  ] No
  [ X ]

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified
date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.): $4,537,473 as of April 28, 2006.

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 31,949,920 Shares of Common Stock as of April 30, 2006.

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

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TERRACE VENTURES INC. 
  ANNUAL REPORT ON FORM 10-KSB 
  FOR THE YEAR ENDED APRIL 30, 2006

INDEX

|           |                                                                                                                        | PAGE
|---------- | ---------------------------------------------------------------------------------------------------------------------- | ----
|           |                                                                                                                        |     
|PART I     |                                                                                                                        | 4   
|           |                                                                                                                        |     
|ITEM 1.    | Description of Business.                                                                                               | 4   
|ITEM 2.    | Description of Prooperty.                                                                                              | 9   
|ITEM 3.    | Legal Proceedings.                                                                                                     | 13  
|ITEM 4.    | Submission of Matters to a Vote of Security Holders.                                                                   | 13  
|           |                                                                                                                        |     
|PART II    |                                                                                                                        | 14  
|           |                                                                                                                        |     
|ITEM 5.    | Market for Common Equity and Related Stockholder Matters.                                                              | 14  
|ITEM 6.    | Managements Discussion and Analysis or Plan of Operation.                                                             | 15  
|ITEM 7.    | Financial Statements.                                                                                                  | 24  
|ITEM 8.    | Changes in and Disagreements with Accountants on Accounting
      and Financial Disclosure.                            | 25  
|ITEM 8A.   | Controls and Procedures.                                                                                               | 25  
|ITEM 8B.   | Other Information.                                                                                                     | 25  
|           |                                                                                                                        |     
|PART III   |                                                                                                                        | 26  
|           |                                                                                                                        |     
|ITEM 9.    | Directors, Executive Officers, Promoters and Control Persons;
      Compliance with Section 16(A) of the Exchange Act. | 26  
|ITEM 10.   | Executive Compensation.                                                                                                | 28  
|ITEM 11.   | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters.                  | 30  
|ITEM 12.   | Certain Relationships and Related Transactions.                                                                        | 32  
|ITEM 13.   | Exhibits.                                                                                                              | 33  
|ITEM 14.   | Principal and Accountant Fees and Services.                                                                            | 34  
|           |                                                                                                                        |     
|SIGNATURES | 35                                                                                                                    

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GLOSSARY OF TECHNICAL TERMS

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

andesite
      Volcanic rock (or lava) characteristically
          medium dark in color and containing 54 to 62 percent silica and moderate
          amounts of iron and magnesium.assay
      A chemical test performed on a sample
          of ores or minerals to determine the amount of valuable metals contained.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.chert
      A sedimentary form of amorphous
          or extremely fine-grained silic, partially hydrous, found in concretions
          and beds.feldspar
      A group of rock-forming minerals.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.meta-volcanic
      Metamorphosed volcanic rocks.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.volcanics
      Volcanically formed rocks.


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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$0.89, 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 carry out 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. See Item 6. Managements Discussion and Analysis or Plan of Operation  Plan of Operation and Description of
Property.

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 the last fiscal year ended April 30, 2005, we have experienced the following significant corporate developments in our business:

|1. | On July 10, 2006, our Agreement and Plan of Merger Agreement dated May 24, 2006 with Sporg Corporation (Sporg), a private company engaged in the internet registration services, Sporg Technology Corp., and Gordon F.
Burley (the Merger Agreement) expired and has not been extended by the parties. We have recently been notified that Sporg filed a notice of intention to make a proposal under the Canada Bankruptcy Act, and are no longer pursuing any
merger with Sporg. Under the terms of the Merger Agreement, our wholly-owned subsidiary, Sporg Technology Corp. (the Subsidiary), was
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|   | to merge with Sporg and immediately thereafter we would merge with the Subsidiary and change our name to Sporg Technology Corp (the Merger). Concurrent with the completion of the Merger, our principal shareholder,
Gordon F. Burley, was to surrender for cancellation 15,800,000 shares of our common stock held by him. We also approved a private placement of up to 2,000,000 shares of our common stock at a price of $0.30 per share to permit us to provide up to
$525,000 of interim financing to Sporg pending completion of the Merger. Also under the terms of the Merger Agreement, we would issue two shares of our common stock in exchange for each outstanding share of common stock of Sporg, and grant
options and warrants to purchase our shares to the existing option and warrant holders of Sporg. Closing of the Merger was subject to a number of conditions, including: (i) delivery of required financial statements by Sporg; (ii) Terrace providing
the interim financing; (iii) Terrace obtaining a financing proposal from a reputable investment dealer for equity financing of not less than $3,000,000; (iv) substantial revisions to Sporgs agreements with its senior management; and (v)
termination of any investor rights agreement with a major investor of Sporg.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|2. | During the year ended April 30, 2006, we acquired 1,428,429 shares of the common stock of Sporg at a price of $0.65 per share in private placement transactions completed during the year. On June 5, 2006, we acquired an
additional 161,538 shares of Sporg at a price of $0.65 per share in a private placement transaction. We now hold 1,589,967 shares representing approximately 6.5% of Sporg. The shares were acquired as part of the interim financing provided to
Sporg under the Merger Agreement. Terrace is presently holding the Sporg shares for investment purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|3. | During the year ended April 30, 2006, our board of directors approved an offering (the Offering) of up to 4,000,000 (post-4:1 split) shares of our common stock at a price of $0.25 for gross proceeds of
$1,000,000. The Offering was made pursuant to Regulation S of the Securities Act of 1933. As of the date of this Annual Report, we issued the 4,000,000 (post-4:1 split) shares of our common stock to ten investors pursuant to the Offering, for
gross proceeds of $1,000,000. These shares were issued pursuant to the exemptions from registration contained in Regulation S promulgated under the Securities Act of 1933 on the basis of representations made by the subscribers that the
subscribers were not U.S. persons, as that term is defined under Regulation S, and that the subscribers were not acquiring the shares for the account or benefit of a U.S. person. See Recent Sales of Unregistered Securities,
below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|4. | On March 21, 2006, our board of directors adopted our 2006 Stock Incentive Plan (the 2006 Option Plan). The purpose of the 2006 Option Plan is to advance the interests of our company and our stockholders by
strengthening our ability to obtain and retain the services of the types of employees, consultants, officers and directors who will contribute to our long term success. The 2006 Option Plan is administered by our board of directors or by a committee
of two or more directors appointed by the board of directors (the "Administrator"). Subject to the provisions of the 2006 Option Plan, the 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") and non-qualified stock 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 is 5,000,000 shares. The maximum number of shares available for
issuance under the 2006 Option Plan will be increased effective the first day of each of our fiscal quarters beginning with May 1, 2006 by an amount equal to: 15% of the total increase in the number of our shares outstanding in the prior fiscal
quarter or a lesser number as may be determined by our board of directors. The exact terms of the option granted are contained in an option agreement between us and the person to whom such option is granted. The exercise price for incentive stock
options and non-qualified options must be no less than 75% of the fair market value of the common stock on the date of grant. The 2006 Option Plan terminates on March 21, 2016 unless sooner terminated by action of the board of directors. All awards
granted under the 2006 Option Plan expire ten years from the date of grant, or such shorter period as is determined by the 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|5. | In connection with our adoption of the 2006 Option Plan, we granted to Howard Thomson, our Chief Executive Officer, Chief Financial Officer, and a member of our board of directors, fully vested non-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|   | qualified stock options to purchase 200,000 shares of our common stock at a price of $0.27 US per share for a term expiring March 21, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|6. | On March 21, 2006, we entered into a management consulting agreement with Howard Thomson, pursuant to which Mr. Thomson 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 directors may determine in their discretion. The agreement may be terminated by us at any time on three months notice to Mr. Thomson and Mr. Thomson
may terminate the agreement on 30 days notice. The agreement is for an initial term of two years.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|7. | On January 16, 2006, Howard Thomson was appointed as a member of our board of directors. On the same day, Gordon F. Burley resigned as our President, Secretary, Treasurer, Chief Executive Officer and Chief Financial Officer. In
place of Mr. Burley, Mr. Thomson, was appointed as our President, Secretary, Treasurer, Chief Executive Officer and Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|8. | Effective December 19, 2005, we completed a four-for-one forward split of our issued and outstanding common stock. Immediately after the stock split, our 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 a result of the stock
split, the symbol under which our shares traded on the OTC Bulletin Board changed from TVNT to TVEN, effective December 19, 2005.                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|9. | On November 23, 2005, Ryan S. McCleery resigned as a member of our board of directors and as the Chief Financial Officer, Secretary and Treasurer of Terrace. In place of Mr. McCleery, Gordon F. Burley was appointed as our Chief
Financial Officer, Secretary and Treasurer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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 Figure 1 under Item 2. Description of Property, below. The claim is accessible by a gravel
road. We obtained information on the area from the British Columbia Department of Mines and Geological Consultants in 2001. We believed the timing was opportune at that time to obtain this property at the price paid.

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

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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.

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 is the Ministry of Energy, Mines and Petroleum Resources (the Ministry).  The Ministry 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, 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 the location, recording and maintenance of 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.

We have not budgeted for regulatory compliance costs in the proposed work program recommended by the geological report. British Columbia law requires that a holder of title to mineral claims must spend at least $187 (CDN$210) per 25 hectare
unit per year in order to keep the property in good standing, which we have done.

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 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

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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.

RESEARCH AND DEVELOPMENT EXPENDITURES

We have not incurred any research or development expenditures since our incorporation.

SUBSIDIARIES

Sporg Technology Corp., a Nevada corporation, is our sole wholly-owned subsidiary.

PATENTS AND TRADEMARKS

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

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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
  Department of Mines and Geological Consultants in 2001. We believed the timing
  was opportune at that time to obtain this property at the price paid.

9

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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
    May
      30, 2007


The Province of British Columbia owns the land covered by the
mineral claim. In order to maintain our mineral claim in good standing, we must
complete exploration work on the mineral claims and file confirmation of the
completion of work on the mineral claims with the applicable mining recording
office of the British Columbia Ministry of Energy, Mines and Petroleum
Resources. The completion of mineral exploration work or payment in lieu of
exploration work in any year will extend the existence of our mineral claim for
one additional year. As our mineral claim is effective until May 30, 2007, we
must file confirmation of the completion of exploration work in the minimum
amount of approximately $187 (CDN$210) per 25 hectare unit or make a payment in
lieu or exploration work in the minimum amount by May 30, 2007. The Peach Claim
is 500 hectares in size, therefore the work requirement for each year is $3,738
(CDN$4,200). 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 May 30, 2007, and we will lose all interest that we
have in this mineral claim. Mr. Archibald recorded our claim to cover the main
area of potential gold mineralization.

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.

10

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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 in 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.
    $5,000


11

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Phase
    Exploration Program
    Status
    CostPhase II
    Prospecting, geological outcrop mapping, and
      detailed soil sampling in areas of interest.
    Completed in late 2004.
    $7,500Phase III
      Soil sampling to be conducted on a flagged grid
        within prospective areas identified by the two previous phases.
      To be commenced in late 2006  early 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 in Phases
III of the exploration program will be 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.
We have only recently commenced exploration of the Peach Claim and this
exploration is currently in the preliminary stages. Our planned exploration
program is exploratory in nature and no mineral reserves may ever be found.

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.

12

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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. We
plan to commence Phase III of our exploration program in mid 2006.

Phase III - 2006 Exploration Program

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 commence Phase III of our exploration program in late 2006 to early
2007.

ITEM 3. LEGAL PROCEEDINGS.

None.

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

None.

13

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PART II

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

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 since July 19, 2005, as reported by the OTC Bulletin Board
were:

QUARTER
      HIGH ($)
      LOW ($)July 31, 2006
    $0.42
    $0.25April 30, 2006
    $0.51
    $0.25January 31, 2006
    $0.40
    $0.08October 31, 2005
    $0.07
    $0.04July 31, 2005
    $0.06
    $0.05


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, 2006 we had seventy two (72) registered
shareholders and 31,949,920 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

Since our previous fiscal year ended April 30, 2005, we have
completed the following unregistered sales of our securities:

|1. | On June 6, 2006, we issued 160,080 (post-4:1 split)
      shares of our common stock at a price of $0.25 per share to two investors.
      These shares were issued pursuant to the exemptions from registration
      contained in Regulation S promulgated under the Securities Act of 1933 on
      the basis of representations made by the investors that the investors were
      not U.S. persons, as that term is defined under Regulation S, and that
      the investors were not acquiring the shares for the account or benefit of
      a U.S. person. All securities issued were endorsed with a restrictive
      legend confirming that the securities
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

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|   | cannot be resold without registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act.                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|2. | On May 24, 2006, we issued an aggregate of 60,000 (post-4:1 split) shares of our common stock at a price of $0.25 per share to three investors. These shares were issued pursuant to the exemptions from registration contained in
Regulation S promulgated under the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities cannot be resold without registration under the Securities Act or an applicable exemption from
the registration requirements of the Securities Act.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | On March 31, 2006, we issued 999,920 (post-4:1 split) shares of our common stock at a price of $0.25 per share to an investor. These shares were issued pursuant to the exemptions from registration contained in Regulation S
promulgated under the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities cannot be resold without registration under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act.                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|4. | On March 14, 2006, we issued 340,000 (post-4:1 split) shares of our common stock at a price of $0.25 per share to an investor. These shares were issued pursuant to the exemptions from registration contained in Regulation S
promulgated under the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities cannot be resold without registration under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act.                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5. | On March 13, 2006, we issued 40,000 shares (post-4:1 split) of our common stock at a price of $0.25 per share to an investor. These shares were issued pursuant to the exemptions from registration contained in Regulation S
promulgated under the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities cannot be resold without registration under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act.                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6. | On February 3, 2006, we issued 400,000 (post-4:1 split) shares of our common stock at a price of $0.25 per share to an investor. These shares were issued pursuant to the exemptions from registration contained in Regulation S
promulgated under the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities cannot be resold without registration under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act.               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|7. | On November 23, 2005, we issued 2,000,000 (post-4:1 split) shares of our common stock at a price of $0.25 per share to an investor. These shares were issued pursuant to the exemptions from registration contained in Regulation
S promulgated under the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities cannot be resold without registration under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act.            

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.

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 was completed in late 2004, at a cost

15

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of $7,500. Based on the results of Phase II of the exploration
program we determined to proceed with Phase III subject to obtaining additional
financing.

Our plan of operation is to proceed with Phase III of the
exploration of the Peach Claim in late 2006 to early 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.

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 approximately $15,000.

Category
      Planned Expenditures Over the Next Twelve MonthsProfessional
      Fees(1)
    $8,000Mineral
      Exploration costs
    $5,000Miscellaneous
    $2,000TOTAL
    $15,000


|(1) | Includes legal and accounting expenses associated with
      our reporting requirements under the Securities Exchange Act of 1934 (the
      Exchange Act).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------

RESULTS OF OPERATIONS

Summary of Year End Results

|         | Year Ended April 30
|-------- | -------------------
|         |                    
|         | 2006               
|Revenue  | $ --               
|Expenses | (987,633)          
|Net Loss | $(987,633)         

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.

16

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Expenses

The major components of our operating expenses are outlined in
the table below:

|                         | Year Ended April 30
|------------------------ | -------------------
|                         |                    
|                         | 2006               
|Accounting               | $11,080            
|Exploration Expense      | --                 
|Legal                    | 34,039             
|Office Administration    | 6,000              
|Office Expenses          | 1,152              
|Regulatory Expenses/Fees | 3,882              
|Rent                     | 3,000              
|Telephone                | --                 
|Travel & Entertainment   | --                 
|Total                    | $59,153            

The majority of our operating expenses for the year ended April
30, 2006 consisted of professional fees incurred by us in meeting our ongoing
reporting obligations under federal securities laws. The increases in our
expenses for the year ended April 30, 2006 as compared to the comparative period
in 2005 are primarily due to increase in our professional expenses associated
with our reporting obligations under the Exchange Act and as a result of our
merger negotiations with Sporg Corporation.

During the fiscal year ended April 30, 2006, we acquired
1,428,429 shares (6%) of the outstanding common stock in Sporg. The shares were
acquired for investment purposes. 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
totalling $928,480 has been reduced for a permanent decline in value to zero,
with the resulting loss of $928,480 accounting for 94% of our net loss for the
year. The shares were acquired as part of the interim financing provided to
Sporg under the terms of the Merger Agreement with Sporg. Terrace is presently
holding the Sporg shares for investment purposes.

We anticipate that our operating expenses will increase
significantly as we undertake our plan of operation and pursue our exploration
program for the Peach Claim. Our expenses will continue to increase if our board
of directors decides to proceed beyond Phase III of our exploration program to
Phase IV, or if we complete a merger with Sporg. We are continuing to review the
possibility of completing the merger on some other basis, but there is no
assurance that we will be able to reach a satisfactory agreement for the merger.

LIQUIDITY AND FINANCIAL CONDITION

|Working Capital         |                         |                         |                      
|----------------------- | ----------------------- | ----------------------- | ---------------------
|                        |                         |                         | Percentage           
|                        | At April
      30, 2006 | At April
      30, 2005 | Increase / (Decrease)
|Current Assets          | $747                    | $22                     | 3,295.5%             
|Current Liabilities     | (94,628)                | (51,250)                | 84.6%                
|Working Capital Deficit | $(93,881)               | $(51,228)               | 83.3%                

17

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|Cash Flows                                           |                     |          
|---------------------------------------------------- | ------------------- | ---------
|                                                     | Year Ended April 30
|                                                     | 2006                | 2005     
|Cash Flows used in Operating Activities              | $(16,351)           | $(13,112)
|Cash Flows from (used in) Investing Activities       | (928,480)           | -        
|Cash Flows from (used in) Financing
      Activities | 944,980             | -        
|Net Increase (Decrease) in Cash During Period        | $149                | $(13,112)

We had cash on hand of $171 and a working capital deficit of
$93,881 as of April 30, 2006 compared to working capital deficit $51,228 as of
April 30, 2005. During the year ended April 30, 2006, our board of directors
approved an offering (the Offering) of up to 4,000,000 (post-4:1 split) shares
of our common stock at a price of $0.25 for gross proceeds of $1,000,000. The
Offering was made pursuant to Regulation S of the Securities Act of 1933. During
the year we issued the 4,000,000 (post-4:1 split) shares of our common stock to
ten investors pursuant to the Offering, for gross proceeds of $1,000,000. The
proceeds of the Offering were used to acquire our 6.5% stockholding interest in
Sporg. The shares were acquired as part of the interim financing provided to
Sporg under the terms of the proposed Merger Agreement with Sporg. We are
presently holding the Sporg shares for investment purposes.

We anticipate that we will incur approximately $15,000 for
operating expenses, including professional legal and accounting expenses
associated with our reporting requirements under the Exchange Act during the
next twelve months.

Financing Requirements

As at April 30, 2006, we had cash in the amount of $171. Our
current operating funds are not sufficient to complete the proposed exploration
program and will be insufficient 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. Our plan of operation calls for 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. We currently do not have any
arrangements for financing and we may not be able to obtain financing when
required. 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.

From inception to April 30, 2006, we have suffered aggregate
losses in the amount of $1,122,111 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.

OFF-BALANCE SHEET ARRANGEMENTS

None.

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.

18

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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 minable
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 $1,122,111 for the period from February 20, 2001 (inception) to April 30, 2006, 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 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.  As at April 30, 2006, we had cash in the amount of $171.  Our plan of operation calls for 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.
 We currently do not have any arrangements for financing and we may not be able to obtain financing when required.  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.

19

---

Since this is an exploration project, we face a high risk of business failure due to our inability to predict the success of our business.

We have just begun the initial stages of exploration of our mineral claim, and thus have no way to evaluate the likelihood that we will be able to operate the business successfully. We were incorporated on February 20, 2001, and to date have been
involved primarily in organizational activities, the acquisition of the mineral claim, obtaining a summary geological report and performing certain limited work on our mineral claim. We have not earned any revenues to date.

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

You 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.

20

---

We have no known mineral reserves and if we cannot find any we will have to acquire additional mineral claims or cease our operations.

We have no mineral reserves. If we do not find a mineral reserve containing gold or if we cannot explore the mineral reserve, either because we do not have the money to do it or because it will not be economically feasible to do so, we will have to
cease operations and you will lose your investment. Mineral exploration, particularly for gold, is highly speculative. It involves many risks and is often non-productive. The chances of finding reserves on our mineral properties are remote and funds
expended on exploration will likely be lost. If the results of exploration do not reveal mineral reserves, we may decide to abandon our claim and acquire new claims for exploration. The acquisition of additional claims will be dependent upon our
possessing sufficient capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations. We have not entered into any discussions, understandings, arrangements or other agreements,
preliminary or otherwise, for acquiring any additional mineral claims and/or funding arrangements for the purpose of acquiring additional mineral claims.

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 we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability.

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are
unable to generate significant revenues from the exploration of our mineral claim, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful,
and we can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will most likely fail.

Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure.
At the present time we have no coverage to insure against these hazards. The payment of such liabilities may have a material adverse effect on our financial position.

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.

21

---

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.

Howard Thomson and Gordon F. Burley, our executive officers and directors, do not have any formal training as geologists or in the technical aspects of management of a mineral exploration company. 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.

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 and Mr. Burley 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. Mr. Burley expects to spend approximately 5 to 7 hours per week on our business. Competing demands on Mr. Thomson's and Mr. Burley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:

22

---

|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.

23

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ITEM 7. FINANCIAL STATEMENTS.



24

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TERRACE VENTURES INC.

FINANCIAL STATEMENTS

APRIL 30, 2006 AND APRIL 30, 2005









F-1

---

INDEX TO FINANCIAL STATEMENTS

|                                                        |                                                         | Page
|------------------------------------------------------- | ------------------------------------------------------- | ----
|                                                        |                                                         |     
|Report of Independent Registered Public Accounting Firm | F-3                                                    
|                                                        |                                                         |     
|                                                        | Financial Statements:                                   |     
|                                                        |                                                         |     
|                                                        | Balance Sheets                                          | F-4 
|                                                        |                                                         |     
|                                                        | Statements of Operations and Accumulated Deficit        | F-5 
|                                                        |                                                         |     
|                                                        | Statements of Changes in Stockholders Equity (Deficit) | F-6 
|                                                        |                                                         |     
|                                                        | Statements of Cash Flows                                | F-8 
|                                                        |                                                         |     
|                                                        | Notes to Financial Statements                           | F-9 
|                                                        |                                                         |     
|                                                        | Supplemental Statement:                                 |     
|                                                        |                                                         |     
|                                                        | Statements of Operating Expenses                        | F-15

F-2

---

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, 2006 and April 30, 2005,
  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, 2006.
  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 auditing standards
  generally accepted in The United States of America. Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. 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, 2006 and April 30, 2005,
  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, 2006, 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.



/s/ Sarna & Company

Sarna & Company, 
  Certified Public Accountants 
  Westlake Village, California 
  July 19, 2006

F-3

---

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

|                                               |   | APRIL 30,  |   |   | APRIL 30, |  
|---------------------------------------------- | - | ---------- | - | - | --------- | -
|                                               |   | 2006       |   |   | 2005      |  
|                                               |   |            |   |   |           |  
|ASSETS                                         |  
|                                               |   |            |   |   |           |  
|Current Assets:                                |   |            |   |   |           |  
|Cash                                           | $ | 171        |   | $ | 22        |  
|Receivable 
      Trust                       |   | 576        |   |   | -0-       |  
|                                               |   |            |   |   |           |  
|Total Current Assets                           |   | 747        |   |   | 22        |  
|                                               |   |            |   |   |           |  
|Other Asset  Investment                       |   | -0-        |   |   | -0-       |  
|                                               |   |            |   |   |           |  
|TOTAL ASSETS                                   | $ | 747        |   | $ | 22        |  
|                                               |   |            |   |   |           |  
|                                               |   |            |   |   |           |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |  
|                                               |   |            |   |   |           |  
|Current Liabilities:                           |   |            |   |   |           |  
|Accounts Payable
      and                     |   |            |   |   |           |  
|Accrued
      Expenses                         | $ | 73,478     |   | $ | 51,250    |  
|Due to Shareholder                             |   | 21,150     |   |   | -0-       |  
|                                               |   |            |   |   |           |  
|Total Current Liabilities                      |   | 94,628     |   |   | 51,250    |  
|                                               |   |            |   |   |           |  
|Stockholders' Equity:                          |   |            |   |   |           |  
|Common Stock, $0.001 par value                 |   |            |   |   |           |  
|400,000,000 shares authorized,                 |   |            |   |   |           |  
|31,949,920
      and 7,042,500 shares          |   |            |   |   |           |  
|issued                                         |   | 31,950     |   |   | 704       |  
|Additional Paid in Capital                     |   | 996,280    |   |   | 82,546    |  
|Deficit Accumulated
      During               |   |            |   |   |           |  
|The Exploration Stage                          |   | (1,122,111 | ) |   | (134,478  | )
|                                               |   |            |   |   |           |  
|Total Stockholders' Equity (Deficit)           |   | (93,881    | ) |   | (51,228   | )
|                                               |   |            |   |   |           |  
|TOTAL LIABILITIES AND                          |   |            |   |   |           |  
|STOCKHOLDERS' EQUITY (DEFICIT)                 | $ | 747        |   | $ | 22        |  

See Notes to Financial Statements.

F-4

---

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

YEAR ENDED
      
      
      YEAR ENDED
      
      
      INCEPTION toAPRIL 30, 2006
      
      
      APRIL 30, 2005
      
      
      APRIL 30, 2006Revenues
      $
      -0-
      
      $
      -0-
      
      $
      -0-Operating Expenses
      
      (59,153
      )
      
      (37,532
      )
      
      (193,631
      )Loss Before Other IncomeAnd Expenses
      
      (59,153
      )
      
      (37,532
      )
      
      (193,631
      )Other Expense:Unrealized Losson Investment
      
      (928,480
      )
      
      -0-
      
      
      (928,480
      )Loss Before Provision forIncome Taxes
      
      (987,633
      )
      
      (37,532
      )
      
      (1,122,111
      )Provision for Income Taxes
      
      -0-
      
      
      -0-
      
      
      -0-Net Loss
      
      (987,633
      )
      
      (37,532
      )
      
      (1,122,111
      )Accumulated Deficit,Beginning of Period
      
      (134,478
      )
      
      (96,946
      )
      
      -0-Accumulated Deficit,End of Period
      $
      (1,122,111
      )
      $
      (134,478
      )
      $
      (1,122,111
      )Net Loss per Share
      $
      (0.031
      )
      $
      (0.001
      )
      $
      (0.044
      )Weighted AverageShares Outstanding
      
      31,949,920
      
      
      28,170,000
      
      
      25,659,722


See Notes to Financial Statements.

F-5

---

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-6

---

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
      )Balances, April 30, 2006
      
      31,949,920
      
      $
      31,950
      
      $
      996,280
      
      $
      (1,122,111
      )
      $
      (93,881
      )


See Notes to Financial Statements.

F-7

---

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

|                                |   | YEAR ENDED         |   |   | YEAR ENDED         |   |   | INCEPTION to       |  
|------------------------------- | - | ------------------ | - | - | ------------------ | - | - | ------------------ | -
|                                |   | APR
      30, 2006 |   |   | APR
      30, 2005 |   |   | APR
      30, 2006 |  
|Cash Flows from                 |   |                    |   |   |                    |   |   |                    |  
|Operating Activities:           |   |                    |   |   |                    |   |   |                    |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Loss                        | $ | (987,633           | ) | $ | (37,532            | ) | $ | (1,122,111         | )
|Unrealized Loss on Investment   |   | 928,480            |   |   | -0-                |   |   | 928,480            |  
|(Increase) in Receivable-Trust  |   | (576               | ) |   | -0-                |   |   | (576               | )
|Increase in Accounts Payable    |   | 22,228             |   |   | 24,420             |   |   | 73,478             |  
|Increase in Due to Shareholder  |   | 21,150             |   |   | -0-                |   |   | 21,150             |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Cash Used by                |   |                    |   |   |                    |   |   |                    |  
|Operating
      Activities      |   | (16,351            | ) |   | (13,112            | ) |   | (99,579            | )
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash Flows from                 |   |                    |   |   |                    |   |   |                    |  
|Investing Activities:           |   |                    |   |   |                    |   |   |                    |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Investment in Stock             |   | (928,480           | ) |   | -0-                |   |   | (928,480           | )
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Cash Used by                |   |                    |   |   |                    |   |   |                    |  
|Investing
      Activities      |   | (928,480           | ) |   | -0-                |   |   | (928,480           | )
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash Flows from                 |   |                    |   |   |                    |   |   |                    |  
|Financing Activities:           |   |                    |   |   |                    |   |   |                    |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Proceeds from Issuance of       |   |                    |   |   |                    |   |   |                    |  
|Common Stock                    |   | 944,980            |   |   | -0-                |   |   | 1,028,230          |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Cash Provided by            |   |                    |   |   |                    |   |   |                    |  
|Financing Activities            |   | -0-                |   |   | -0-                |   |   | 1,028,230          |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Net Increase (Decrease) in Cash |   | 149                |   |   | (13,112            | ) |   | 171                |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash at Beginning of Period     |   | 22                 |   |   | 13,134             |   |   | -0-                |  
|                                |   |                    |   |   |                    |   |   |                    |  
|Cash at End of Period           | $ | 171                |   | $ | 22                 |   | $ | 171                |  

See Notes to Financial Statements.

F-8

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

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

Basis of Presentation

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

Use of Estimates

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

Exploration Stage Company

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

Pro Forma Compensation Expense

No stock options have been issued by Terrace Ventures Inc. Accordingly,
  no pro forma compensation expense is reported in these financial statements.

F-9

---

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

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-10

---

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Investments

Investments that are purchased in other companies are valued
  at cost less any impairments in the value that are 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,
  2006 and April 30, 2005 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-11

---

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

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 $1,122,111 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.

As a result of this stock split, weighted average shares outstanding
  and earnings per share for the year ended April 30, 2005 and for the period
  February 20, 2001 to April 30, 2006 have been restated for the effect of the
  split.

F-12

---

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

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, have been 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.

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,
  2006, 3,779,920 shares of the Companys common stock were issued at a price
  of $0.25 per share, for a total of $944,980.

NOTE 8  SUBSEQUENT EVENTS

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 July 10, 2006, the merger agreement
  expired and was not extended by the parties.

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.

On June 5, 2006, the Company acquired on a private placement
  basis 161,538 shares of common stock of Sporg Corporation, at a price of $0.65
  per share, for a total of $105,000, in furtherance of the proposed merger agreement
  between the Company and Sporg Corporation.

F-13

---











SUPPLEMENTAL STATEMENT











F-14

---

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

|                         |   | YEAR ENDED    |  |   | YEAR ENDED    |  |   | INCEPTION to   | 
|------------------------ | - | ------------- |  | - | ------------- |  | - | -------------- | 
|                         |   | APRIL 30,2006 |  |   | APRIL 30,2005 |  |   | APRIL 30, 2006 | 
|                         |   |               |  |   |               |  |   |                | 
|Operating Expenses       |   |               |  |   |               |  |   |                | 
|Accounting               | $ | 11,080        |  | $ | 7,240         |  | $ | 35,740         | 
|Exploration Expense      |   | -0-           |  |   | -0-           |  |   | 24,266         | 
|Legal                    |   | 34,039        |  |   | 19,102        |  |   | 76,138         | 
|Office Administration    |   | 6,000         |  |   | 6,000         |  |   | 26,500         | 
|Office Expenses          |   | 1,152         |  |   | 119           |  |   | 2,769          | 
|Regulatory Expenses/Fees |   | 3,882         |  |   | 1,747         |  |   | 9,923          | 
|Rent                     |   | 3,000         |  |   | 3,000         |  |   | 13,950         | 
|Telephone                |   | -0-           |  |   | -0-           |  |   | 1,344          | 
|Travel & Entertainment   |   | -0-           |  |   | 324           |  |   | 3,001          | 
|                         |   |               |  |   |               |  |   |                | 
|                         |   |               |  |   |               |  |   |                | 
|Total Operating Expenses | $ | 59,153        |  | $ | 37,532        |  | $ | 193,631        | 

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 year ended April 30, 2006 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 8B. OTHER INFORMATION.

None.

25

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PART III

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

Our current executive officers and directors are:

|Name             | Age | Position                                                     
|---------------- | --- | -------------------------------------------------------------
|Gordon F. Burley | 68  | Director                                                     
|Howard Thomson   | 60  | President, Secretary, Treasurer, CEO, CFO, and
      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.

Gordon Frederick Burleyis a member of our Board of
Directors. Mr. Burley was appointed as a director on February 20, 2001 and
served as our President from February 28, 2003 until January 16, 2006 when he
resigned. Mr. Burley has served as purchasing agent and estimator for LNS
Services Ltd., a design-build contractor, since 1996. From 1968 to 1996, Mr.
Burley was a self-employed contractor specializing in hospital and commercial
laundry and dry-cleaning installations.

Mr. Burley provides his services on a part-time basis as
required for our business. Mr. Burley presently commits approximately 5 to 7
hours a week of his business time to our business.

Howard Thomsonis our President, Secretary, Treasurer,
Chief Executive Officer, Chief Financial Officer, and a 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 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. Burley and Mr. Thomson do not have formal training as
geologists or in the technical or managerial aspects of management of a mineral
exploration company. Their 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.

26

---

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 officers and
directors. We conduct our business through agreements with consultants and
arms-length third parties.

Committees of the Board Of Directors

Our audit committee presently consists of members of our board
of directors. We presently do not have a compensation committee, nominating
committee, an executive committee of our board of directors, stock plan
committee or any other committees. However, our board of directors is
considering establishing various committees during the current fiscal year.

Audit Committee Financial Expert

We have no financial expert. We believe the cost related to
retaining a financial expert at this time is prohibitive. Further, because of
our start-up operations, 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 is 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, 2006, all Reporting Persons
complied with all Section 16(a) filing requirements applicable to them.

The following persons have failed to file, on a timely basis,
the identified reports required by Section 16(a) of the Securities Exchange Act
of 1934:

|                                                             |                    | Transactions | Known Failures
      to
|------------------------------------------------------------ | ------------------ | ------------ | -----------------------
|                                                             | Number of          | Not Timely   | File a Required        
|Name and Principal
      Position                            | Late
      Reports | Reported     | Form                   
|                                                             |                    |              |                        
|Howard Thomson,                                              | One                | One          | None                   
|Director,
      President, Secretary, Treasurer, CEO and CFO |                    |              |                        
|Gordon F. Burley,(1)                                         |                    |              |                        
|Director and 10%
      Owner                                 | One                | One          | None                   
|Ryan S. McCleery,(2)                                         |                    |              |                        
|Former Director, Former President, Former Secretary,         | One                | One          | None                   
|Former Treasurer,
      and Former CFO                       |                    |              |                        

27

---

Notes:

| | (1) | Mr. Burley resigned as our President, Secretary,
      Treasurer, Chief Executive Officer, and Chief Financial Office on January
      16, 2006. In Mr. Burleys place, Mr. Thomson, was appointed as our
      President, Secretary, Treasurer, Chief Executive Officer and Chief
      Financial Officer.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                            
| | (2) | Mr. McCleery resigned as our Secretary, Treasurer, Chief
      Financial Officer and as a member of our Board of Directors, on November
      23, 2005. In Mr. McCleerys place, Mr. Burley was appointed as our
      Secretary, Treasurer and Chief Financial Officer.                                   

ITEM 10. EXECUTIVE COMPENSATION.

Management Compensation

The following table summarizes the compensation awarded to,
earned by, or paid to our President and Chief Executive Officer and other
officers and directors who received annual compensation in excess of $100,000
(the Named Executive Officers) for each of Terraces three most recently
completed fiscal years.

SUMMARY COMPENSATION TABLEANNUAL **COMPENSATION**
      LONG TERM COMPENSATIONOther
      Awards
      Payouts
      All OtherName
      Title
      Year
      Salary
      Bonus
      Annual
      Restricted
      Options /
      LTIP
      Compen-Compen-
      Stock
      SARs*
      payouts
      sationsation
      Awarded
      (#)
      ($)Howard
      Director, President,
      2006
      $0
      $0
      $7,500
      0
      200,000
      $0
      $0Thomson
      Secretary, Treasurer,
      2005
      $0
      $0
      $0
      0
      0
      $0
      $0CEO
        and CFO(1)
      2004
      $0
      $0
      $0
      0
      0
      $0
      $0Gordon F.
      Director(2)
      2006
      $0
      $0
      $0
      0
      0
      $0
      $0Burley
      
      2005
      $0
      $0
      $0
      0
      0
      $0
      $02004
      $0
      $0
      $0
      0
      0
      $0
      $0Ryan S.
      Former Director,
      2006
      $0
      $0
      $0
      0
      0
      $0
      $0McCleery
      Former President,
      2005
      $0
      $0
      $0
      0
      0
      $0
      $0Former Secretary,
      2004
      $0
      $0
      $0
      0
      0
      $0
      $0Former Treasurer, andFormer
        CFO(3)


Notes:

|(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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                               
|(2) | Mr. Burley resigned as our President, Secretary,
      Treasurer, CEO and CFO on January 16, 2006. In place of Mr. Burley, Mr.
      Thomson, was appointed as the President, Secretary, Treasurer, Chief
      Executive Officer and Chief Financial Officer of Terrace.                                                                     
|    |                                                                                                                                                                                                                                                                                                                                               
|(3) | Mr. McCleery resigned as our Director, Secretary,
      Treasurer and CFO on November 23, 2005. In Mr. McCleerys place, Mr.
      Burley had been appointed as the Secretary, Treasurer and
  CFO.                                                                                                                                           

28

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EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION
VALUES

No stock options were exercised by our executive officers or
directors during the financial year ended April 30, 2006 and no stock options
have been exercised since April 30, 2006.

AGGREGATED OPTION/SAR EXERCISES DURING THE
      LAST FISCAL YEAR FISCAL YEAR-END OPTION/SAR VALUESName
      Common Shares
      Acquired on Exercise ($)
      Value Realized ($)
      Unexercised Options at
      Financial Year-End (#) exercisable /
      unexercisable
      Value of Unexercised In- The-Money Options/SARs at Financial Year-End
      ($) exercisable / unexercisableHoward Thomson President, Secretary, Treasurer, CEO
      and CFO, and Director
    Nil
    N/A
    200,000
    $0(1)


|(1) | The values for in-the-money options are calculated by
      determining the difference between the fair market value of the securities
      underlying the options as of April 28, 2006 ($0.33 per share on OTC BB)
      and the exercise price ($0.27 per share) of the individuals
    options.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

STOCK OPTION GRANTS

The following table sets forth information with respect to
stock options granted to each of Terraces Named Executive Officers during
Terraces most recent fiscal year ended April 30, 2006:

OPTION/SAR GRANTS IN APRIL 30, 2006
      (INDIVIDUAL GRANTS)Name of Executive Officer
    Number of Securities
      Underlying Options Granted
    % of Total Options Granted
      To Employees
    Exercise Price (per
      Share)
    Expiration DateHoward Thomson President, Secretary, Treasurer, CEO
      and CFO, and Director
    200,000
    N/A
    $0.27
    March 21, 2008


COMPENSATION ARRANGEMENTS

We also 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 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.

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.

EMPLOYMENT CONTRACTS

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

29

---

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.

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 August 8, 2006
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
    Gordon F. Burley, Director #603 - 3600
      Windcrest Drive, North Vancouver, BC
    15,800,000 Shares Direct
    49.1%Common Stock
    Howard Thomson, Chief Executive Officer,
      Chief Financial Officer, President, Secretary and Treasurer, and
      Director 5B, Harbour Village, East Dunmore, County Waterford Ireland
    200,000 Shares Direct(1)
    *Common Stock
    All
      Directors and Executive Officers as a Group (2 persons)
    16,000,000 Shares
    49.7%5%
      STOCKHOLDERSCommon Stock
    Gordon F. Burley, Director #603 - 3600
      Windcrest Drive, North Vancouver, BC
    15,800,000 Shares Direct
    49.1%Common Stock
    Kahala Financial Corporation(3)Richmond House, Providenciales, Turks & Caicos, BWI
    2,000,000 Shares Direct
    6.2%


|*   | Represent less than 1%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Based on 32,170,000 shares of our common stock issued
        and outstanding as of August 8, 2006. Under Rule 13d-3, certain shares
        may be deemed to be beneficially owned by more than one person (if, for
        example, persons share the power to vote or the power to dispose of the
        shares). In addition, shares are deemed to be beneficially owned by a
        person if the person has the right to acquire the shares (for example,
        upon exercise of an option) within 60 days of the date as of which the
        information is provided. In computing the percentage ownership of any
        person, the amount of shares outstanding is deemed to include the amount
        of shares beneficially owned by such person (and only such person) by
        reason of these acquisition rights. As a result, the percentage of outstanding
        shares of any person as shown in this table does not necessarily reflect
        the persons actual ownership or voting power with respect to the
        number of shares of common stock actually outstanding on August 8, 2006.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | Consists of 200,000 options granted on March 21, 2006,
        exercisable at a price of $0.27 per share for a period of two years until
        March 21, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | Kahala Financial Corporation is a private company controlled
        by Richard W. Donaldson.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

30

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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.

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 / share
    4,800,000


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.

31

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

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

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

We have not yet filed a registration statement under the Securities Act of 1933 to register the shares of our Common Stock reserved for issuance under the 2006 Option Plan.

None of the following persons has any substantial or material interest, directly or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the special meeting except for our current and future
directors and executive officers inasmuch as they may be granted stock options or stock awards pursuant to our 2006 Option Plan:

|1. | each person who has been one of our directors or executive
        officers at any time since the beginning of our last fiscal year;
|-- | ------------------------------------------------------------------------------------------------------------------------------------
|2. | each nominee for election as one of our directors;
        or                                                                       
|3. | any affiliate or associate of any of the foregoing
        persons.                                                                 

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Except as described below, none of the following parties has, since our date of incorporation, 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,
other than noted in this section:

| | (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.                                                                           

We issued 4,000,000 shares of our common stock on March 9, 2001 at a price of $0.001 per share to our former president and to our current president, Gordon F. Burley. Each acquired 2,000,000 shares of our common stock and paid a total purchase
price of $2,000 for these shares. These shares were issued pursuant to Section 4(2) of the Securities Act and are restricted shares as defined in the Act. This issuance was made to our former president, and to Mr. Burley, our president, each of
whom is sophisticated individuals and by way of their positions are in a position of access to relevant and material information regarding our operations.

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.

32

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ITEM 13. EXHIBITS.

|ExhibitNumber | 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)                         
|              |                                                                                                                                                                                                       
|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.

|(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.                         

33

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ITEM 14. PRINCIPAL AND ACCOUNTANT FEES AND SERVICES.

Audit Fees

During the fiscal years ended April 30, 2006 and 2005, we
retained our independent auditor, Sarna & Company, Certified Public
Accountants, to provide services in the following categories and amounts:

Year Ended April 30, 2006
    Year Ended April 30, 2005Audit Fees
    $11,080
    $12,200Audit Related Fees
    -
    -Tax Fees
    -
    -All Other Fees
    -
    -Total
    $11,080
    $12,200


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 was approved by the Audit
Committee pursuant to the waiver of pre-approval provisions set forth in the
applicable rules of the SEC.

34

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SIGNATURES

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

|      |                       |  |     | TERRACE VENTURES INC.                                              
|----- | --------------------- |  | --- | -------------------------------------------------------------------
|      |                       |  |     |                                                                    
|      |                       |  |     |                                                                    
|Date: | August
      10, 2006 |  | By: | /s/
      Howard Thomson                                           
|      |                       |  |     | HOWARD THOMSON                                                     
|      |                       |  |     | President, Chief Executive Officer and                             
|      |                       |  |     | Chief Financial Officer                                            
|      |                       |  |     | (Principal Executive Officer and Principal Financial
      Officer)
|      |                       |  |     | Director                                                           

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
        10, 2006
      
      By:
      /s/
        Howard ThomsonHOWARD THOMSONPresident, Chief Executive Officer andChief Financial Officer(Principal Executive Officer and Principal Financial
        Officer)DirectorDate:
      August
        10, 2006
      
      By:
      /s/
        Gordon F. BurleyGORDON F. BURLEYDirector


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