UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q

(Mark One)

| | x | Quarterly
                                                                                                       Report Pursuant to Section
                                                                                                       13 Or 15(d)
                                                                                                       Of The Securities Exchange
                                                                                                       Act Of 1934
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the quarterly
period ended July 31, 2012



| |  ̈ | Transition
                                                                                                           Report Pursuant to
                                                                                                           Section 13 Or 15(d)
                                                                                                           Of The Securities Exchange
                                                                                                           Act of 1934
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



For the transition
period from ________ to ________



COMMISSION FILE NUMBER 000-50569



TERRACE
VENTURES INC.

(Exact name of registrant as specified
in its charter)



|NEVADA                                                                                 |  | 91-2147101                          
|-------------------------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization)                         |  | (I.R.S. Employer Identification No.)
|                                                                                       |  |                                     
|Suite 201, 810 Peace Portal Drive,                                                     |  |                                     
|Blaine, WA                                                                             |  | 98230                               
|(Address of principal executive offices)                                               |  | (Zip Code)                          
|                                                                                      
|(360)
    220-5218                                                                    
|(Registrant’s telephone number, including area code)                                  
|                                                                                      
|Not
    Applicable                                                                    
|(Former name, former address and former fiscal year, if
    changed since last report)



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



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit to post such files).xYes ̈No



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

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



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ̈YesxNo



Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable date: As of September 11, 2012, the Registrant
had 33,160,660 shares of common stock outstanding.











PART I - FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS.



The accompanying unaudited financial statements
have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include
all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows,
and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the three months ended July 31, 2012 are not necessarily indicative
of the results that can be expected for the year ended April 30, 2013.



As used in this Quarterly Report, the
terms “we,” “us,” “our,” “Terrace,” and the “Company” mean Terrace
Ventures Inc. unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise
indicated.



2







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEET



|                                                                                                                    |  | (Unaudited) |            |   | (Audited) |  
|------------------------------------------------------------------------------------------------------------------- |  | ----------- | ---------- | - | --------- | -
|                                                                                                                    |  | JULY 31,    |            |   | April 30, |  
|                                                                                                                    |  | 2012        |            |   | 2012      |  
|                                                                                                                    |  |             |            |   |           |  
|ASSETS                                                                                                             
|Current Assets:                                                                                                     |  |             |            |   |           |  
|Cash                                                                                                                |  | $           | 54,675     |   |           | $
|Prepaid Expense                                                                                                     |  |             | 5,377      |   |           |  
|Total Current Assets                                                                                                |  |             | 60,052     |   |           |  
|Investment in Mineral Rights                                                                                        |  |             | 20,000     |   |           |  
|TOTAL ASSETS                                                                                                        |  | $           | 80,052     |   |           | $
|                                                                                                                    |  |             |            |   |           |  
|LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                     
|                                                                                                                    |  |             |            |   |           |  
|Current Liabilities:                                                                                                |  |             |            |   |           |  
|Accounts Payable and Accrued Expenses                                                                               |  | $           | 106,378    |   |           | $
|Loans Payable                                                                                                       |  |             | 7,000      |   |           |  
|Note Payable                                                                                                        |  |             | 20,000     |   |           |  
|Stock Subscriptions Outstanding                                                                                     |  |             | -0-        |   |           |  
|                                                                                                                    |  |             |            |   |           |  
|Total Current Liabilities                                                                                           |  |             | 133,378    |   |           |  
|                                                                                                                    |  |             |            |   |           |  
|Stockholders' Equity:                                                                                               |  |             |            |   |           |  
|Common Stock, $0.001 par value 400,000,000 shares authorized, 33,160,660 and 29,470,660 shares issued, respectively |  |             | 33,161     |   |           |  
|Additional Paid in Capital                                                                                          |  |             | 2,172,234  |   |           |  
|Deficit Accumulated During the Exploration Stage                                                                    |  |             | (2,258,721 | ) |           |  
|                                                                                                                    |  |             |            |   |           |  
|Total Stockholders' Equity (Deficit)                                                                                |  |             | (53,326    | ) |           |  
|                                                                                                                    |  |             |            |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                                |  | $           | 80,052     |   |           | $



See Notes to Financial Statements.



3







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF OPERATIONS AND ACCUMULATED
DEFICIT



|                                         |  | THREE MONTHS ENDED |            |   | INCEPTION to  |  
|---------------------------------------- |  | ------------------ | ---------- | - | ------------- | -
|                                         |  | JULY 31, 2012      |            |   | JULY 31, 2011 |  
|                                         |  |                    |            |   |               |  
|Revenues                                 |  | $                  | -0-        |   |               | $
|                                         |  |                    |            |   |               |  
|Operating Expenses                       |  |                    | (36,846    | ) |               |  
|                                         |  |                    |            |   |               |  
|Loss Before Other Income                 |  |                    |            |   |               |  
|And Expenses                             |  |                    | (36,846    | ) |               |  
|                                         |  |                    |            |   |               |  
|Other Income                             |  |                    |            |   |               |  
|Interest Income                          |  |                    | -0-        |   |               |  
|                                         |  |                    |            |   |               |  
|Other Expense                            |  |                    |            |   |               |  
|Loss on Investment                       |  |                    | -0-        |   |               |  
|                                         |  |                    |            |   |               |  
|Loss Before Provision for                |  |                    |            |   |               |  
|Income Taxes                             |  |                    | (36,846    | ) |               |  
|                                         |  |                    |            |   |               |  
|Provision for Income Taxes               |  |                    | -0-        |   |               |  
|                                         |  |                    |            |   |               |  
|Net Loss                                 |  |                    | (36,846    | ) |               |  
|                                         |  |                    |            |   |               |  
|Accumulated Deficit, Beginning of Period |  |                    | (2,221,875 | ) |               |  
|                                         |  |                    |            |   |               |  
|Accumulated Deficit, End of Period       |  | $                  | (2,258,721 | ) |               | $
|                                         |  |                    |            |   |               |  
|Net Loss per Share                       |  | $                  | (0.00      | ) |               | $
|                                         |  |                    |            |   |               |  
|Weighted Average Shares Outstanding      |  |                    | 31,930,654 |   |               |  



See Notes to Financial Statements.



4







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT)



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



See Notes to Financial Statements.



5







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT) - CONTINUED



|                                                     |  |              |            |  |            |   |        |            |  |   | Deficit     |   |  |                  |           
|---------------------------------------------------- |  | ------------ | ---------- |  | ---------- | - | ------ | ---------- |  | - | ----------- | - |  | ---------------- | ----------
|                                                     |  |              |            |  |            |   |        |            |  |   | Accumulated |   |  |                  |           
|                                                     |  | Common Stock |            |  | Additional |   |        | During the |  |   | Total       |  
|                                                     |  |              |            |  | Dollar     |   |        | Paid in    |  |   | Exploration |   |  | Stockholders'    |           
|                                                     |  | Shares       |            |  | Amount     |   |        | Capital    |  |   | Stage       |   |  | Equity (Deficit) |           
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Balances, April 30, 2005                             |  |              | 7,042,500  |  |            |   | 704    |            |  |   | 82,546      |   |  |                  | (134,478  
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Common Stock Issued $1.00 per share November 23,2005 |  |              | 500,000    |  |            |   | 50     |            |  |   | 499,950     |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|4-for-1 Stock Split, December 19, 2005               |  |              | 22,627,500 |  |            |   | 29,416 |            |  |   | (29,416     | ) |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Common Stock Issued $0.25 per share February 3, 2006 |  |              | 400,000    |  |            |   | 400    |            |  |   | 99,600      |   |  |                  | —         
|Common Stock Issued $0.25 per share March 13, 2006   |  |              | 380,000    |  |            |   | 380    |            |  |   | 94,620      |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Common Stock Issued $0.25 per share March 31, 2006   |  |              | 999,920    |  |            |   | 1,000  |            |  |   | 248,980     |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Net Loss, Period Ended April 30, 2006                |  |              | —          |  |            |   | —      |            |  |   | —           |   |  |                  | (987,633  
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Balances April 30, 2006                              |  |              | 31,949,920 |  |            |   | 31,950 |            |  |   | 996,280     |   |  |                  | (1,122,111
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Common Stock Issued $0.25 per share May 24, 2006     |  |              | 220,080    |  |            |   | 220    |            |  |   | 54,800      |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Common Stock Issued $0.30 per share June 5, 2006     |  |              | 335,000    |  |            |   | 335    |            |  |   | 100,165     |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Common Stock Issued $0.10 per share January 23, 2007 |  |              | 1,678,200  |  |            |   | 1,678  |            |  |   | 166,142     |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Net Loss, Period Ended April 30, 2007                |  |              | —          |  |            |   | —      |            |  |   | —           |   |  |                  | (301,060  
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Balances April 30, 2007                              |  |              | 34,183,200 |  |            | $ | 34,183 |            |  | $ | 1,317,387   |   |  | $                | (1,423,171
|Common Stock Issued $0.10 per share July 12, 2007    |  |              | 2,570,000  |  |            |   | 2,570  |            |  |   | 254,755     |   |  |                  | —         
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Net Loss, Period Ended April 30, 2008                |  |              | —          |  |            |   | —      |            |  |   | —           |   |  |                  | (100,450  
|                                                     |  |              |            |  |            |   |        |            |  |   |             |   |  |                  |           
|Balances April 30, 2008                              |  |              | 36,753,200 |  |            | $ | 36,753 |            |  | $ | 1,572,142   |   |  | $                | (1,523,621



See Notes to Financial Statements.



6







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT) - CONTINUED



|                                                     |  |              |             |   |            |   |         |            |  |   | Deficit     |  |  |                  |           
|---------------------------------------------------- |  | ------------ | ----------- | - | ---------- | - | ------- | ---------- |  | - | ----------- |  |  | ---------------- | ----------
|                                                     |  |              |             |   |            |   |         |            |  |   | Accumulated |  |  |                  |           
|                                                     |  | Common Stock |             |   | Additional |   |         | During the |  |   | Total       | 
|                                                     |  |              |             |   | Dollar     |   |         | Paid in    |  |   | Exploration |  |  | Stockholders'    |           
|                                                     |  | Shares       |             |   | Amount     |   |         | Capital    |  |   | Stage       |  |  | Equity (Deficit) |           
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Balances April 30, 2008                              |  |              | 36,753,200  |   |            | $ | 36,753  |            |  | $ | 1,572,142   |  |  | $                | (1,523,621
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Common Stock Issued $0.10 per share October 10, 2008 |  |              | 10,000,000  |   |            |   | 10,000  |            |  |   | 190,000     |  |  |                  | —         
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Common Stock Issued $0.20 per share April 8, 2009    |  |              | 600,000     |   |            |   | 600     |            |  |   | 11,400      |  |  |                  | —         
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Net Loss, Period Ended April 30, 2009                |  |              | —           |   |            |   | —       |            |  |   | —           |  |  |                  | (355,923  
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Balances April 30, 2009                              |  |              | 47,353,200  |   |            |   | 47,353  |            |  |   | 1,773,542   |  |  |                  | (1,879,544
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|1-for-5 Reverse Stock Split, October 1, 2009         |  |              | (37,882,540 | ) |            |   | (37,882 | )          |  |   | 37,882      |  |  |                  | —         
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Net Loss, Period Ended April 30, 2010                |  |              | —           |   |            |   | —       |            |  |   | —           |  |  |                  | (99,514   
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Balances April 30, 2010                              |  |              | 9,470,660   |   |            |   | 9,471   |            |  |   | 1,811,424   |  |  |                  | (1,979,058
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Common Stock Issued $0.01 per share March 24, 2011   |  |              | 20,000,000  |   |            |   | 20,000  |            |  |   | 180,000     |  |  |                  | —         
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Net Loss, Period Ended April 30, 2011                |  |              | —           |   |            |   | —       |            |  |   | —           |  |  |                  | (97,195   
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Balances April 30, 2011                              |  |              | 29,470,660  |   |            |   | 29,471  |            |  |   | 1,991,424   |  |  |                  | (2,076,253
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Net Loss, Period Ended April 30, 2012                |  |              | —           |   |            |   | —       |            |  |   | —           |  |  |                  | (145,622  
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Balances April 30, 2012                              |  |              | 29,470,660  |   |            |   | 29,471  |            |  |   | 1,991,424   |  |  |                  | (2,221,875
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Common Stock Issued $0.05 per share May 22, 2012     |  |              | 3,690,000   |   |            |   | 3,690   |            |  |   | 180,810     |  |  |                  | —         
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Net Loss, Period Ended July 31, 2012                 |  |              | —           |   |            |   | —       |            |  |   | —           |  |  |                  | (36,846   
|                                                     |  |              |             |   |            |   |         |            |  |   |             |  |  |                  |           
|Balances July 31, 2012                               |  |              | 33,160,660  |   |            |   | 33,161  |            |  |   | 2,172,234   |  |  |                  | (2,258,721



See Notes to Financial Statements.



7







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENTS OF CASH FLOWS



|                                                                                       |  | THREE MONTHS ENDED |         |   | INCEPTION to  |  
|-------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------- | -
|                                                                                       |  | JULY 31, 2012      |         |   | JULY 31, 2011 |  
|Cash Flows from Operating Activities:                                                  |  |                    |         |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Net Loss                                                                               |  | $                  | (36,846 | ) |               | $
|Adjustments to Reconcile Net Loss To Net Cash Provided/(Used) by Operating Activities: |  |                    |         |   |               |  
|Amortization Expense                                                                   |  |                    | 5,642   |   |               |  
|Impairment Expense                                                                     |  |                    | -0-     |   |               |  
|Prepaid expense                                                                        |  |                    | -0-     |   |               |  
|Unrealized Loss on Investment                                                          |  |                    | -0-     |   |               |  
|(Increase)/Decrease in:                                                                |  |                    |         |   |               |  
|Increase/(Decrease) in:                                                                |  |                    |         |   |               |  
|Accounts Payable                                                                       |  |                    | 21,722  |   |               |  
|Loan Payable                                                                           |  |                    | -0-     |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Net Cash Used in                                                                       |  |                    |         |   |               |  
|Operating Activities                                                                   |  |                    | (9,482  | ) |               |  
|                                                                                       |  |                    |         |   |               |  
|Cash Flows from Investing Activities:                                                  |  |                    |         |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Investment in Stock                                                                    |  |                    | -0-     |   |               |  
|Investment in Mineral Rights                                                           |  |                    | -0-     |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Net Cash Used in Investing Activities                                                  |  |                    | -0-     |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Cash Flows from                                                                        |  |                    |         |   |               |  
|Financing Activities:                                                                  |  |                    |         |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Note Payable                                                                           |  |                    | (5,000  | ) |               |  
|Loans from Shareholders                                                                |  |                    | -0-     |   |               |  
|Payments on Loans                                                                      |  |                    | -0-     |   |               |  
|Proceeds from Issuance of Common Stock                                                 |  |                    | -0-     |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Net Cash (Used in) Provided by Financing Activities                                    |  |                    | (5,000  | ) |               |  
|                                                                                       |  |                    |         |   |               |  
|Net Increase (Decrease) in Cash                                                        |  |                    | (14,482 | ) |               |  
|                                                                                       |  |                    |         |   |               |  
|Cash at Beginning of Period                                                            |  |                    | 69,157  |   |               |  
|                                                                                       |  |                    |         |   |               |  
|Cash at End of Period                                                                  |  | $                  | 54,675  |   |               | $



On May 31, 2012 the company issued 3,690,000 shares of stock.
Stock Subscriptions Outstanding was reduced with a corresponding increase to common stock



See Notes to Financial Statements.



8







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



In accordance with FASB ASC 915, the Company
has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations.



Stock-Based Compensation



Stock-based compensation is accounted for
using the Equity-Based Payments to Non-Employees Topic of the FASB ASC (FASB ASC Topic 718), which establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions
in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s
equity instruments or that may be settled by the issuance of those equity instruments. The Company determines the value of stock
issued at the date of grant. It also determines at the date of grant, the value of stock at fair market value or the value of services
rendered (based on contract or otherwise) whichever is more readily determinable.



Shares issued to employees are expensed upon issuance.



9







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED



Stock-Based Compensation - CONTINUED



The Company uses the fair value method for equity instruments
granted to employees and will use the Black Scholes model for measuring the fair value of options, if issued. The stock based fair
value compensation is determined as of the date of the grant or the date at which the performance of the services is completed
(measurement date) and is recognized over the vesting periods.



No stock options have been issued by Terrace Ventures, Inc.



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 FASB ASC 740, “Accounting for Income Taxes". Under this statement, 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



FASB ASC 825, “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.



10







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED



Investments



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



Per Share Information



The Company follows FASB ASC 260 “Earnings
Per Share” which establishes standards for the computation, presentation and disclosure requirements for basic and diluted
earnings per share for entities with publicly-held common shares and potential common stock issuances. Basic earnings (loss) per
share are computed by dividing net income by the weighted average number of common shares outstanding. In computing diluted earnings
per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities,
such as convertible notes, stock options, and warrants. Common stock equivalent shares are excluded from the computation if their
effect is antidilutive.



NOTE 2 – PREPAID EXPENSE



Prepaid expense at July 31, 2012 consists
of the remainder of the unamortized amount of the original $10,000 paid to renegotiate the Pengram notes. These prepaid fees are
fully amortized at December 31, 2012.



NOTE 3 – INVESTMENT IN MINERAL
RIGHTS



On April 26, 2011, we entered into an agreement
with Pengram Corporation (“Pengram”) dated April 26, 2011, as amended on June 29, 2011, (the “Earn-In Agreement”).
Under the terms of the Earn-In Agreement, the Company will earn up to a 75% interest in Pengram’s agreement with Scoonover
Exploration LLC and JR Exploration LLC (the “Underlying Agreement”) to acquire the Golden Snow Property, by paying
to Pengram up to $175,000 in a promissory note and direct payments, and expending up to $1,750,000 in exploration work. The Golden
Snow project consists of 111 mineral claims located in the Eureka Mining District in Eureka County, Nevada.



NOTE 4 – LOANS PAYABLE



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



11







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 5 – NOTE PAYABLE



Note payable consists of short term monies
due to Pengram Corporation. The company has agreed to pay Pengram Corporation by way of a series of promissory notes (see Note
3), bearing no interest, payable per schedule detailed in Note 7.



NOTE 6 - PROVISION FOR INCOME TAXES



The provision for income taxes for the
periods ended July 31, 2012 and July 31, 2011 represents the minimum state income tax expense of the Company, which is not considered
significant.



NOTE 7 - COMMITMENTS AND CONTINGENCIES



Pengram Corporation Agreement –
Golden Snow Project



The Company is obligated to Pengram Corporation
for up to $175,000 in a promissory note and direct payments, and $1,750,000 in exploration expenses as follows:





| | (i) | The first 25% interest in the Underlying Agreement upon the Company:
| | --- | --------------------------------------------------------------------

| | a. | Paying Pengram $25,000 by way of a promissory note, bearing interest at a rate of 10% per annum,
due on September 27, 2011;
| | -- | ---------------------------------------------------------------------------------------------------------------------------

| | b. | Completing exploration expenditures on the Property totaling $250,000 by December 31, 2012.
| | -- | -------------------------------------------------------------------------------------------

| | (ii) | An additional 25% interest in the Underlying Agreement upon the Company:
| | ---- | ------------------------------------------------------------------------

| | a. | Paying Pengram $50,000 on or before May 31, 2013;
| | -- | -------------------------------------------------

| | b. | Completing cumulative exploration expenditures on the Property totaling $500,000 by December 31,
2013:
| | -- | ------------------------------------------------------------------------------------------------------





| | (iii) | An additional 25% interest in the Underlying Agreement upon the Company:
| | ----- | ------------------------------------------------------------------------







| | c. | Paying Pengram $100,000 on or before May 31, 2014;
| | -- | --------------------------------------------------

| | d. | Completing cumulative exploration expenditures on the Property totaling $1,000,000 by December
31, 2014.
| | -- | --------------------------------------------------------------------------------------------------------





12







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 7 - COMMITMENTS AND CONTINGENCIES
- CONTINUED



Pengram Corporation Agreement –
Golden Snow Project - Continued



The Company is also obligated to pay all
advance royalties, county and BLM claim fees and Nevada state taxes during the currency of the Earn-In Agreement.



On December 31, 2011, Pengram, in consideration
of $5,000 (which has been paid), agreed to accept, in substitution for the $25,000 promissory note set out above, a series of non-interest
bearing promissory notes totaling $30,000 payable on the following dates:



|March 31, 2012           |  | $ | 5,000   |  
|------------------------ |  | - | ------- | -
|June 30, 2012            |  |   | 5,000   |  
|September 30, 2012       |  |   | 10,000  |  
|December 31, 2012        |  |   | 10,000  |  
|TOTAL                    |  |   | 30,000  |  
|Less: Amount Paid        |  |   | (10,000 | )
|Note Payable,            |  |   |         |  
|Balance at July 31, 2012 |  | $ | 20,000  |  



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 8 - RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS



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



NOTE 9 – 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.



13







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 9 – GOING CONCERN - Continued



The 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 $2,258,721 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 financial statements of the Company
do not include any adjustments that may result from the outcome of these aforementioned uncertainties.



NOTE 10 – REVERSE STOCK SPLIT



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



NOTE 11 – STOCK ISSUANCES



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



14







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 11 – STOCK ISSUANCES - CONTINUED

Foreign Private Placement



On June 8, 2010, our Board of Directors
approved a private placement offering of up to 5,000,000 Units at a price of $0.01 US per unit, with each Unit consisting of one
share of our common stock and one share purchase warrant (the Foreign Private Placement”). Each share purchase warrant entitled
the holder to purchase an additional share of common stock exercisable for a period of two years at a price of $0.01 US per share.
The private placement offering was made to persons who are not “U.S. Persons” as defined in Regulation S. Subsequent
to the offering, the corporation received subscriptions for an aggregate of 14,700,000 shares and payment in full of the subscription
proceeds. In order to allow for the oversubscriptions to the Foreign Offering, on March 24, 2011, the Corporation increased the
number of Shares being issued under the Offering to 14,700,000 Shares. Upon the issuance of the Shares, the Corporation terminated
this Foreign Offering.



U.S. Private Placement



Also, on June 8, 2010, our Board of Directors
approved a private placement offering of up to 5,000,000 Units at a price of $0.01 US per Unit, with each Unit consisting of one
share of our common stock and one share purchase warrant (the “U.S. Private Placement”). Each share purchase warrant
entitled the holder to purchase an additional share of common stock exercisable for a period of two years at a price of $.01 US
per share. The private placement offering was made to persons who are “Accredited Investors” as defined in Regulation
D. Subsequent to the offering, the corporation received subscriptions for an aggregate of 5,300,000 shares and payment in full
of the subscription proceeds. In order to allow for the oversubscriptions to the US Offering, on March 24, 2011, the Corporation
increased the number of Shares being issued under the Offering to 5,300,000 Shares. Upon the issuance of the Shares, the Corporation
terminated this US Offering.



On April 26, 2011 our Board of Directors
approved two concurrent private placements as follows:



Foreign Private Placement



On April 26, 2011, our Board of Directors
approved a private placement offering of up to 2,500,000 shares of our common stock at a price of $0.10 US per share to persons
who are not “US Persons” as defined in Regulation S if the Securities Act of 1933.



15







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)



NOTE 11 – STOCK ISSUANCES - CONTINUED



U.S. Private Placement



Also, on April 26, 2011, our Board of Directors
approved a private placement offering of up to 2,500,000 shares of our common stock at a price of $0.10 US per share. The offering
was made in the United States to persons who are accredited investors as defined in Regulation D of the Securities Act of 1933.



On May 22, 2012, the Company issued 3,690,000
shares of common stock at a price of $0.05 per share.



NOTE 12 – SUBSEQUENT EVENTS



As of September 10, 2012, all stock had been issued in accordance
with the stock subscription agreements in effect at July 31, 2012.



16







SUPPLEMENTAL STATEMENT



17







TERRACE VENTURES INC.

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF OPERATING EXPENSES



|                         |  | THREE MONTHS ENDED |        |  | INCEPTION to  |  
|------------------------ |  | ------------------ | ------ |  | ------------- | -
|                         |  | JULY 31, 2012      |        |  | JULY 31, 2011 |  
|Operating Expenses:      |  |                    |        |  |               |  
|Accounting               |  | $                  | 8,100  |  |               | $
|Amortization Expense     |  |                    | 5,642  |  |               |  
|Bad Debt Expense         |  |                    | -0-    |  |               |  
|Bank Charges             |  |                    | -0-    |  |               |  
|Cancelled Merger Costs   |  |                    | -0-    |  |               |  
|Consulting               |  |                    | -0-    |  |               |  
|Exploration Expense      |  |                    | -0-    |  |               |  
|Foreign Exchange Loss    |  |                    | -0-    |  |               |  
|Impairment Expense       |  |                    | -0-    |  |               |  
|Interest Expense         |  |                    | -0-    |  |               |  
|Legal                    |  |                    | 11,890 |  |               |  
|Office Administration    |  |                    | 7,743  |  |               |  
|Office Expenses          |  |                    | -0-    |  |               |  
|Property Maintenance     |  |                    | -0-    |  |               |  
|Regulatory Expenses/Fees |  |                    | 2,581  |  |               |  
|Rent                     |  |                    | 375    |  |               |  
|Telephone                |  |                    | 515    |  |               |  
|Travel & Entertainment   |  |                    | -0-    |  |               |  
|                         |  |                    |        |  |               |  
|Total Operating Expenses |  | $                  | 36,846 |  |               | $



See Notes to Financial Statements.



18







| | ITEM 2. | MANAGEMENT'S
                                                                                        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                                                                                        AND RESULTS OF OPERATIONS.
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS



Certain statements contained in this Quarterly
Report 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 "Part II – Item 1A. Risk Factors" and elsewhere in this Quarterly Report. We do not
intend to update the forward-looking information to reflect actual results or changes in the factors affecting such forward-looking
information. We advise you to carefully review the reports and documents, particularly our Annual Reports, Quarterly Reports and
Current Reports, that we file from time to time with the United States Securities and Exchange Commission (the “SEC”).



OVERVIEW



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



Our
business plan is to assemble a portfolio of mineral properties with gold potential and to engage in the exploration and development
of these properties. We currently have an earn-in agreement to acquire 75% interest in Pengram Corporation's agreement with Scoonover
Exploration LLC and JR Exploration LLC (the “Underlying Agreement”) to acquire the Golden Snow Property (as described
below).



Golden
Snow Project



Earn-in
Agreement



On April 26, 2011, we entered into an
agreement with Pengram Corporation ("Pengram") as amended on June 29, 2011 and July 31, 2012 (the "Earn-In Agreement")
whereby we will earn up to a 75% interest in Pengram's agreement with Scoonover Exploration LLC and JR Exploration LLC (the “Underlying
Agreement”) to acquire the Golden Snow Property by issuing a promissory note to Pengram of $25,000, paying to Pengram up
to $150,000 and expending up to $1,750,000 of exploration work on the Golden Snow Property. Under the terms of the Earn-In Agreement,
we will exercise our interest in the Underlying Agreement as follows:



| | (i) | The first 25% interest in the Underlying
                                                               Agreement upon us:
| | --- | --------------------------------------------------------------------------------------------------------------------------



| | a. | issuing Pengram a $25,000 promissory
                                                            note, bearing interest at a rate of 10% per annum, due on September
                                                            27, 2011 (which was issued); and
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | completing cumulative exploration
                                                            expenditures on the Golden Snow Property totalling $250,000 by December
                                                            31, 2012.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (ii) | An additional 25% interest in
                                                                the Underlying Agreement upon us:
| | ---- | -------------------------------------------------------------------------------------------------------------------------------



| | a. | paying Pengram $50,000 on or before
                                                               May 31, 2013; and
| | -- | --------------------------------------------------------------------------------------------------------------------



| | b. | completing cumulative exploration expenditures
                                                      on the Golden Snow Property totalling $500,000 by December 31, 2013;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | An additional 25% interest in
                                                                 the Underlying Agreement upon us:
| | ----- | --------------------------------------------------------------------------------------------------------------------------------



| | a. | paying Pengram $100,000 on or
                                                                 before May 31, 2014; and
| | -- | -----------------------------------------------------------------------------------------------------------------------



| | b. | completing cumulative exploration
                                                                 expenditures on the Golden Snow Property totalling $1,000,000
                                                                 by December 31, 2014.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19







We are also obligated to pay all advance
royalties, county and BLM claim fees and Nevada state taxes during the currency of the Earn-In Agreement. There is no assurance
that we be able to perform our obligations under the Earn-In Agreement.



On December 31, 2011, Pengram, in consideration
of $5,000 (which has been paid), agreed to accept, in substitution for the $25,000 promissory note set out above, a series of
non-interest bearing promissory notes totaling $30,000 payable on the following dates:



|Payment Due Date      |  | Amount |          
|--------------------- |  | ------ | ---------
|                      |  |        |          
|March 31, 2012        |  | $      | 5,000.00 
|June 30, 2012         |  |        | 5,000.00 
|September 30, 2012    |  |        | 10,000.00
|December 31,
    2012 |  |        | 10,000.00
|Total                 |  | $      | 30,000.00



PLAN
OF OPERATION



Over
the next twelve months, our plan of operation is to focus our resources on the exploration of the Gold Snow Property. Subject
to obtaining sufficient financing, we plan to conduct a drill program on the Golden Snow Property. The proposed drill program
would cost approximately $175,000, summarized as follows:



|Exploration Program Costs                      |  | Estimate |    |  | Rate ($) |   |        | Cost ($)
|---------------------------------------------- |  | -------- | -- |  | -------- | - | ------ | --------
|                                               |  |          |    |  |          |   |        |         
|Geology-Senior                                 |  |          | 10 |  |          | $ | 650.00 |         
|Geology-Junior                                 |  |          | 10 |  |          | $ | 350.00 |         
|Travel and Related Expenses (includes mileage) |  |          |    |  |          |   |        |         
|                                               |  |          |    |  |          |   |        |         
|                                               |  |          |    |  |          |   |        |         
|                                               |  |          |    |  |          |   |        |         
|Drilling                                       |  |          |    |  |          |   |        |         
|Drill Sample Assaying                          |  |          |    |  |          |   |        |         
|Drill Supervision (Senior)                     |  |          | 2  |  |          | $ | 650    |         
|Drill Geologist                                |  |          | 13 |  |          | $ | 400    |         
|Review of Results                              |  |          |    |  |          |   |        |         
|Travel and Related Expenses (includes mileage) |  |          |    |  |          |   |        |         
|Drill Site Preparation and Reclamation         |  |          |    |  |          |   |        |         
|                                               |  |          |    |  |          |   |        |         
|                                               |  |          |    |  |          |   |        |         
|                                               |  |          |    |  |          |   |        |         



During the next twelve months, we must
complete the following in order to maintain our interest under the Earn-In Agreement and keep the Golden Snow Property in good
standing:



| | (a) | complete cumulative exploration
                                                               expenditures on the Golden Snow Property totaling $250,000 by December
                                                               31, 2012; and
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | pay the Bureau of Land Management
                                                               maintenance and claim fees of approximately $17,165 by September
                                                               1, 2012.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As the agreement is an option, we may
decide at any time not to proceed in which case we would not be liable to pay any funds beyond the amounts due at the time we
provide notice that we are not proceeding. There is no assurance that we will exercise the option.



20







As at July 31, 2012, we had $54,675 cash
on hand. Accordingly, we have insufficient cash on hand to satisfy the exploration expenditure requirements under the Earn-In
Agreement and meet our ongoing operating costs. As such, we will require substantial financing in order to meet our obligations.
There is no assurance that we will be able to acquire such financing on terms that are acceptable to us, or at all.



RESULTS OF OPERATIONS



Three Months Summary



|                   |  | Three Months Ended |         |   | Percentage    |  
|------------------ |  | ------------------ | ------- | - | ------------- | -
|                   |  | July 31, 2012      |         |   | July 31, 2011 |  
|Revenue            |  | $                  | -       |   |               | $
|Operating Expenses |  |                    | (36,846 | ) |               |  
|Net Loss           |  | $                  | (36,846 | ) |               | $



Revenues



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



Expenses



The major components of our expenses for the three months ended
July 31, 2012 and 2011 are outlined in the table below:



|                         |  | Three Months Ended July 31 |        |  | Percentage |  
|------------------------ |  | -------------------------- | ------ |  | ---------- | -
|                         |  | 2012                       |        |  | 2011       |  
|Accounting               |  | $                          | 8,100  |  |            | $
|Amortization             |  |                            | 5,642  |  |            |  
|Bank Charges             |  |                            | -      |  |            |  
|Interest Expense         |  |                            | -      |  |            |  
|Legal                    |  |                            | 11,890 |  |            |  
|Office Administration    |  |                            | 7,743  |  |            |  
|Regulatory Expenses/Fees |  |                            | 2,581  |  |            |  
|Rent                     |  |                            | 375    |  |            |  
|Telephone                |  |                            | 515    |  |            |  
|Total Operating Expenses |  | $                          | 36,846 |  |            | $



Our operating expenses increased from
$19,912, during the three months ended July 31, 2011, to $36,846, during the three months ended July 31, 2012. The increase in
our operating expenses is due to increases in accounting, amortization, legal, office administration, regulatory expenses and
telephone. The increase was partially offset by decreases in bank charges and interest expense.



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



Amortization, exploration, impairment
and property maintenance expenses primarily relate to expenses incurred in connection with the Earn-In Agreement with Pengram.



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



21







LIQUIDITY AND CAPITAL RESOURCES



Working Capital

|                        |  | At July 31, 2012 |          |   | At April 30, 2012 |   |          | Percentage Increase / (Decrease) | 
|----------------------- |  | ---------------- | -------- | - | ----------------- | - | -------- | -------------------------------- | 
|Current Assets          |  | $                | 60,052   |   |                   | $ | 77,676   |                                  | 
|Current Liabilities     |  |                  | (133,378 | ) |                   |   | (301,156 | )                                | 
|Working Capital Deficit |  | $                | (73,326  | ) |                   | $ | (223,480 | )                                | 



Cash Flows

|                                          |  | Three Months Ended |        
|----------------------------------------- |  | ------------------ | -------
|                                          |  | July 31, 2012      |        
|Net Cash Used by Operating Activities     |  | $                  | (9,482 
|Net Cash From Investing Activities        |  |                    | -      
|Net Cash Provided By Financing Activities |  |                    | (5,000 
|Net Decrease in Cash During Period        |  | $                  | (14,482



We had cash on hand of $54,675 and a working
capital deficit of $73,326 as of July 31, 2012 compared to a working capital deficit of $223,480 as of April 30, 2012. The decrease
in our working capital deficit is due to a decrease in stock subscriptions outstanding and notes payable. The decrease was partially
offset by a decrease in cash and prepaid expenses and an increase in accounts payable and accrued expenses.



Financing Requirements



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



On May 22, 2012, we issued 3,290,000 shares
of our common stock at a price of $0.05 per share for proceeds of $164,500 pursuant to Regulation S of the Securities Act. Each
subscriber represented that they were not a “U.S. Person” as that term is defined in Regulation S of the Act.



On May 22, 2012, we issued 400,000 shares
of our common stock a price of $0.05 per share for proceeds of $20,000 pursuant to Regulation D of the Securities Act. The subscriber
represented that it was an “accredited investor” as defined in Regulation D of the Securities Act.



The proceeds of the private placement
offerings will be used to retire corporate indebtedness, complete work on our mineral properties and for general corporate purposes.



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



OFF-BALANCE SHEET ARRANGEMENTS



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



CRITICAL ACCOUNTING POLICIES



The preparation of financial statements
in conformity with United States generally accepted accounting principles requires our management to make estimates and assumptions
that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ
from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently
uncertain.



22







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



| | ITEM 3. | QUANTITATIVE
                                                                                        AND QUALITATIVE DISCLOSURES ABOUT MARKET
                                                                                        RISK.
| | ------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Not Applicable.



| | ITEM 4. | CONTROLS
                                                                                        AND PROCEDURES.
| | ------- | ----------------------------------------------------------------------------------------------------------------



Disclosure Controls and Procedures



We carried out an evaluation of the effectiveness
of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of July 31, 2012 (the
“Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material
weaknesses in internal control over financial reporting discussed in our Annual Report on Form 10-K for the year ended April 30,
2012 (the “2012 Annual Report”).



Notwithstanding the assessment that our
internal control over financial reporting was not effective and that there were material weaknesses as identified in our 2012
Annual Report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the quarter ended July
31, 2012 fairly present our financial condition, results of operations and cash flows in all material respects.



Changes in Internal Control Over Financial Reporting



There were no changes in our internal
control over financial reporting that occurred during the quarter ended July 31, 2012 that have materially affected, or that are
reasonably likely to materially affect, our internal control over financial reporting.



23







PART II - OTHER INFORMATION



| | Item 1. | Legal
                                                                                                                                       Proceedings.
| | ------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



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



| | ITEM 1A. | RISK
                                                                                         FACTORS.
| | -------- | ------------------------------------------------------------------------------------------------------



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



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



As of July 31, 2012, we had $54,675 cash
on hand and a working capital deficit of $73,326. Our plan of operation calls for significant expenses in order to meet our obligations
under the Earn-In Agreement. There is no guarantee that we will exercise our option.



We do not have other financing arrangements
in place. We will require additional financing to meet out our obligations under the Earn-in Agreement. Obtaining financing would
be subject to a number of factors outside of our control, including market conditions and additional costs and expenses that might
exceed current estimates. These factors may make the timing, amount, terms or conditions of financing unavailable to us in which
case we will be unable to complete our plan of operation on our mineral property and to meet our obligations under our Earn-In
Agreement



We have yet to earn revenue and our
ability to sustain our operations is dependent on our ability to raise financing. As a result, our accountants believe there is
substantial doubt about our ability to continue as a going concern.



We have a cumulative net loss of $2,258,721
for the period from our inception to July 31, 2012, and have no revenues to date. Our future is dependent upon our ability to
obtain financing. Our auditors have expressed substantial doubt about our ability to continue as a going concern given our accumulated
losses. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or
otherwise. If we fail to raise sufficient capital, we will not be able to complete our business plan. As a result, we may have
to liquidate our business and investors may lose their investment.



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



Investors should be aware of the difficulties
normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of
success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection
with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited
to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.



We have no known mineral reserves
and if we cannot find any, we will have to cease 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 it, 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. Even if we are able to find mineral reserves on our properties, our production capability is subject to
further risks including:



24







| | - | Costs
                                                                                                  of bringing the property into
                                                                                                  production including exploration
                                                                                                  work, preparation of production
                                                                                                  feasibility studies, and construction
                                                                                                  of production facilities, all
                                                                                                  of which we have not budgeted
                                                                                                  for;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | - | Availability
                                                                                                  and costs of financing;
| | - | --------------------------------------------------------------------------------------------------------------------------------------

| | - | Ongoing
                                                                                                  costs of production; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------

| | - | Environmental
                                                                                                  compliance regulations and restraints.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



The marketability of any minerals acquired
or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such
as market fluctuations, the lack of milling facilities and processing equipment near our mineral properties, and such other factors
as government regulations, including regulations relating to allowable production, importing and exporting of minerals, and environmental
protection.



Given
the above noted risks, the chances of finding reserves on our mineral properties are remote and funds expended on exploration
will likely be lost.



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



Our mineral properties do not contain
any known bodies of ore. If our exploration programs are successful in discovering proven reserves on our mineral properties,
we will require additional funds in order to place the mineral properties into commercial production. The expenditures to be made
by us in the exploration of mineral properties in all probability will be lost as it is an extremely remote possibility that the
mineral claims will contain proven reserves. If our exploration programs are successful in discovering proven reserves, we will
require additional funds in order to place the mineral properties into commercial production. The funds required for commercial
mineral production can range from several millions to hundreds of millions. We currently do not have sufficient funds to place
our mineral claims 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.



We face significant competition in
the mineral exploration industry.



We compete with other mining and exploration
companies possessing greater financial resources and technical facilities than we do in connection with the acquisition of mineral
exploration claims and leases on precious metal prospects and in connection with the recruitment and retention of qualified personnel.
There is significant competition for precious metals and, as a result, we may be unable to acquire an interest in attractive mineral
exploration properties on terms we consider acceptable on a continuing basis.



There is no assurance that we will
be able to comply with our obligations under the Earn-In Agreement.



In order comply with our obligations under
the Earn-In Agreement we are required to make a series of cash payments and meet the annual claim maintenance fees. In order to
meet these payments we will need to obtain substantial financing. If we are unable to meet these payments, we will lose our options
to acquire these properties.



Because our sole director and executive
officer does not have formal training specific to the technicalities of mineral exploration, there is a higher risk that our business
will fail.



Howard Thomson, our sole director and
executive officer, does not have any formal training as a geologist or in the technical aspects of managing a mineral exploration
company. Mr. Thomson’s lack of expertise could cause irreparable harm to our operations, earnings, and ultimate financial
success could suffer irreparable harm due to management's lack of experience in this industry.



25







Because the prices of metals fluctuate,
if the price of metals for which we are exploring decreases below a specified level, it may no longer be profitable to explore
for those metals and we will cease operations.



Prices of metals are determined by such
factors as expectations for inflation, the strength of the United States dollar, global and regional supply and demand, and political
and economic conditions and production costs in metals producing regions of the world. The aggregate effect of these factors on
metal prices is impossible for us to predict. In addition, the prices of precious metals are sometimes subject to rapid short-term
and/or prolonged changes because of speculative activities. The current demand for and supply of these metals affect the metal
prices, but not necessarily in the same manner as current supply and demand affect the prices of other commodities. The supply
of these metals primarily consists of new production from mining. If the prices of the metals are, for a substantial period, below
our foreseeable cost of production, we could cease operations and investors could lose their entire investment.



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



Since our inception, we have relied on
such equity sales of our common stock to fund our operations. We may conduct further equity offerings in the future to finance
our current projects or to finance subsequent projects that we decide to undertake. If common stock is issued in return for additional
funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity
sales of our common stock in order to fund our business operations. If we issue additional stock, the interests of existing shareholders
will be diluted.



The quotation price of our common stock
may be volatile, with the result that an investor may not be able to sell any shares acquired at a price equal to or greater than
the price paid by the investor.



Our common shares are quoted on the OTCBB
under the symbol "TVER”. Companies quoted on the OTCBB have traditionally experienced extreme price and volume fluctuations.
In addition, our stock price may be adversely affected by factors that are unrelated or disproportionate to our operating performance.
Market fluctuations, as well as general economic, political and market conditions such as recessions, interest rates or international
currency fluctuations may adversely affect the market price of our common stock. As a result of this potential volatility and
potential lack of a trading market, an investor may not be able to sell any of our common stock that they acquire at a price equal
or greater than the price paid by the investor.



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



The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price
of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system,
provided that current price and volume information with respect to transactions in such securities is provided by the exchange
or quotation system. Because our securities constitute “penny stocks” within the meaning of the rules, the rules apply
to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market
that might develop for them. As long as the trading price of our common stock is less than $5.00 per share, the common stock will
be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared by the SEC, that:



| | 1. | contains a description of the nature
                                                          and level of risk in the market for penny stocks in both public offerings
                                                          and secondary trading;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | contains a description of the broker’s
                                                          or dealer’s duties to the customer and of the rights and remedies
                                                          available to the customer with respect to a violation to such duties
                                                          or other requirements of securities laws;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | contains a brief, clear, narrative description
                                                          of a dealer market, including bid and ask prices for penny stocks and
                                                          the significance of the spread between the bid and ask price;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | contains a toll-free telephone number
                                                          for inquiries on disciplinary actions;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------



| | 5. | defines significant terms in the disclosure
                                                          document or in the conduct of trading in penny stocks; and
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



26







| | 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.



| | ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
| | ------- | ------------------------------------------------------------



None.



| | Item 3. | Defaults upon
Senior Securities.
| | ------- | --------------------------------



None.



| | Item 4. | MINE SAFETY
DISCLOSURES.
| | ------- | ------------------------



None.



| | Item 5. | Other Information.
| | ------- | ------------------



None.



| | ITEM 6. | EXHIBITS.
| | ------- | ---------



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



27







|Exhibit
    Number |  | Description of Exhibit                                                                                                                                                                        
|------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.7               |  | Amendment Agreement to Share Purchase Agreement dated August 12, 2009
    among Terrace Ventures Inc., Marktech Acquisition Corp., Worldbid International Inc. and Geobiz Systems Inc.(8)     
|10.8               |  | Earn-In Agreement (Golden Snow) dated April 26, 2011 between Pengram
    Corporation and Terrace Ventures Inc.(10)                                                                            
|10.9               |  | Earn-In Extension Agreement (Golden Snow) dated June 29, 2011 between
    Pengram Corporation and Terrace Ventures Inc.(11)                                                                   
|10.10              |  | Amendment Agreement dated July 31, 2012 between Pengram Corporation
    and Terrace Ventures Inc.(12)                                                                                         
|14.1               |  | Code of Ethics.(3)                                                                                                                                                                            
|31.1               |  | Certification of Chief Executive Officer and Chief Financial Officer
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                           
|32.1               |  | Certification of Chief Executive Officer and Chief Financial Officer
    pursuant to pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Notes:

| | (1) | Filed with the SEC as an exhibit to
                                                          our Registration Statement on Form 10-SB originally filed on February
                                                          2, 2004.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Filed with the SEC as an exhibit to
                                                          our Current Report on Form 8-K filed on December 27, 2005.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Filed with the SEC as an exhibit to
                                                          our Annual Report on Form 10-KSB filed on September 8, 2004.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Filed with the SEC as an exhibit to
                                                          our Quarterly Report on Form 10-QSB filed on March 22, 2006.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Filed with the SEC as an exhibit
                                                             to our Current Report on Form 8-K filed on July 15, 2008.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------

| | (6) | Filed with the SEC as an exhibit to
                                                          our Current Report on Form 8-K filed on October 2, 2008.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------

| | (7) | Filed with the SEC as an exhibit
                                                             to our Current Report on Form 8-K filed on April 29, 2009.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | (8) | Filed with the SEC as an exhibit
                                                             to our Annual Report on Form 10-K filed on August 13, 2009.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | Filed with the SEC as an exhibit
                                                             to our Current Report on Form 8-K filed on October 2, 2009.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (10) | Filed with the SEC as an exhibit
                                                              to our Current Report on Form 8-K filed on April 28, 2011.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | Filed with the SEC as an exhibit
                                                              to our Annual Report on Form 10-K filed on August 15, 2011.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | (11) | Filed with the SEC as an exhibit
                                                              to our Annual Report on Form 10-K filed on August 15, 2012.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



28







SIGNATURES



Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|      |                    |  |     | TERRACE VENTURES INC.                                       
|----- | ------------------ |  | --- | ------------------------------------------------------------
|      |                    |  |     |                                                             
|Date: | September 14, 2012 |  | By: | /s/ Howard Thomson                                          
|      |                    |  |     | HOWARD THOMSON                                              
|      |                    |  |     | Chief Executive Officer, Chief Financial Officer,           
|      |                    |  |     | President, Secretary and Treasurer                          
|      |                    |  |     | (Principal Executive Officer & Principal Accounting Officer)





29