---

UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION
  Washington, DC 20549

FORM 10-QSB

ý Quarterly
  Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended October 31, 2005

o Transition
  Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period ________ to ________

Commission File Number 000-50569

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

|NEVADA                                                 |  | 91-2147101                          
|------------------------------------------------------ |  | ------------------------------------
|(State or other jurisdiction of incorporation
      or |  | (I.R.S. Employer Identification No.)
|organization)                                          |  |                                     
|                                                       |  |                                     
|                                                       |  |                                     
|810 PEACE PORTAL DRIVE, SUITE 202                      |  |                                     
|BLAINE,
      WA                                       |  | 98230                               
|(Address of principal executive offices)               |  | (Zip Code)                          
|                                                       |  |                                     
|                                                       |  |                                     
|(360)
      220-5218                                   |  |                                     
|Issuer's telephone number                              |  |                                     

NOT APPLICABLE 
  Former name, former address and former fiscal year, if changed since last report

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

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:  As of December 14, 2005, the Issuer had7,542,500Shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (check one):
      Yes o No
  ý

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PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B, 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 six months ended October 31, 2005 are not necessarily indicative of the results that can be
expected for the year ending April 30, 2006.

2

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|TERRACE VENTURES INC.
|---------------------
|                     
|FINANCIAL STATEMENTS 
|                     
|OCTOBER 31, 2005     



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INDEX TO FINANCIAL STATEMENTS

Page

|Accountants'
      Review Report                    | 1  
|--------------------------------------------------- | ---
|Financial Statements:                               |    
|Balance
      Sheets                                | 2  
|Statements
      of Operations                      |    
|and
      Accumulated Deficit                       | 3  
|Statements
      of Changes in Stockholders Equity | 4  
|Statements
      of Cash Flows                      | 5  
|Notes
      to Financial Statements                 | 6-9
|Supplemental Statements:                            |    
|Statements
      of Operating Expenses              | 11 



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Report of Independent Registered Public Accounting Firm

|To the Board of Directors
|-------------------------
|Terrace Ventures Inc.    

We have reviewed the accompanying balance sheet of Terrace Ventures
  Inc. as of October 31, 2005, and the statements of operations and accumulated
  deficit, changes in stockholders equity, and statements of cash flows
  for the three month and six month periods ended October 31, 2005 and October
  31, 2004, and for the period February 20, 2001 (date of inception) to October
  31, 2005. These interim financial statements are the responsibility of the management
  of Terrace Ventures Inc.

We conducted our review in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). A review of interim
  financial information consists principally of applying analytical procedures
  and making inquiries of persons responsible for financial and accounting matters.
  It is substantially less in scope than an audit conducted in accordance with
  the standards of the Public Company Accounting Oversight Board (United States),
  the objective of which is the expression of an opinion regarding the financial
  statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications
  that should be made to the accompanying interim financial statements in order
  for them to be in conformity with accounting principles generally accepted in
  the United States of America.

Our review was made for the purpose of expressing limited assurance
  that there are no material modifications that should be made to the financial
  statements in order for them to be in conformity with U.S. generally accepted
  accounting principles. The supplemental statement of operating expenses is presented
  for the purposes of additional analysis and is not a required part of the basic
  financial statements. Such information has been subjected to the inquiry and
  analytical procedures applied in the review of the basic financial statements,
  and we are not aware of any material modifications that should be made thereto.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. As discussed in Note 6 to
  the financial statements, the Company has suffered recurring losses from operations,
  which raise substantial doubt about its ability to continue as a going concern.
  The financial statements do not include any adjustments that might result from
  the outcome of this uncertainty.

We have previously audited, in accordance with standards of the
  Public Company Accounting Oversight Board (United States), the balance sheet
  of Terrace Ventures Inc. as of April 30, 2005, and the related statements of
  operations and accumulated deficit, changes in stockholders equity, and
  cash flows for the year then ended (not presented herein); and in our report
  dated July 10, 2005, we expressed an unqualified opinion on those financial
  statements which included an explanatory paragraph describing Terrace Ventures
  Inc.s ability to continue as a going concern as described in Note 6 to
  the financial statements. In our opinion, the information set forth in the accompanying
  balance sheet as of April 30, 2005 is fairly stated, in all material respects,
  in relation to the balance sheet from which it has been derived.

|"Sarna & Company"           
|----------------------------
|Sarna & Company             
|Certified Public Accountants
|Westlake Village, California
|November 30, 2005           

1

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

|                                     |   | (Unaudited) |  |   | (Audited) | 
|------------------------------------ | - | ----------- |  | - | --------- | 
|                                     |   | October 31, |  |   | April 30, | 
|                                     |   | 2005        |  |   | 2005      | 
|                                     |   |             |  |   |           | 
|Current Assets                       |   |             |  |   |           | 
|Cash                                 | $ | 31          |  | $ | 22        | 
|                                     |   |             |  |   |           | 
|Total Current Assets                 |   | 31          |  |   | 22        | 
|                                     |   |             |  |   |           | 
|                                     |   |             |  |   |           | 
|TOTAL ASSETS                         | $ | 31          |  | $ | 22        | 
|                                     |   |             |  |   |           | 
|                                     |   |             |  |   |           | 
|LIABILITIES AND STOCKHOLDERS' EQUITY
|                                     |   |             |  |   |           | 
|                                     |   |             |  |   |           | 
|Current Liabilities                  |   |             |  |   |           | 
|Cash Overdraft                       | $ | -0-         |  | $ | 8         | 
|Accounts Payable and                 |   |             |  |   |           | 
|Accrued
      Expenses               |   | 65,448      |  |   | 55,950    | 
|                                     |   |             |  |   |           | 
|Total Current Liabilities            |   | 65,448      |  |   | 55,958    | 
|                                     |   |             |  |   |           | 
|Stockholders' Equity                 |   |             |  |   |           | 
|Common Stock, $0.001 par value       |   |             |  |   |           | 
|100,000,000 shares authorized,       |   |             |  |   |           | 
|7,042,500
      shares issued        |   | 704         |  |   | 704       | 
|Additional Paid
      in Capital     |   | 82,546      |  |   | 82,546    | 
|Accumulated deficit                  |   | <148,667>   |  |   | <134,478> | 
|Total Stockholders' Equity <Deficit> |   | <65,417>    |  |   | <51,228>  | 
|                                     |   |             |  |   |           | 
|TOTAL LIABILITIES AND                |   |             |  |   |           | 
|STOCKHOLDERS' EQUITY                 | $ | 31          |  | $ | 22        | 

|See Notes to Financial Statements
|---------------------------------
|                                 
|2                                

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

|                           |   | THREE MONTHS ENDED |  |   | SIX MONTHS ENDED |  |   |              | 
|-------------------------- | - | ------------------ |  | - | ---------------- |  | - | ------------ | 
|                           |   | OCTOBER 31,        |  |   | OCTOBER 31,      |  |   | INCEPTION to | 
|                           |   | 2005               |  |   | 2004             |  |   | 2005         | 
|Revenues                   | $ | 0                  |  | $ | 0                |  | $ | 0            | 
|Operating Expenses         |   | <9,459>            |  |   | <9,347>          |  |   | <14,189>     | 
|Loss Before Provision for  |   |                    |  |   |                  |  |   |              | 
|Income Taxes               |   | <9,459>            |  |   | <9,347>          |  |   | <14,189>     | 
|Provision for Income Taxes |   | <0>                |  |   | <0>              |  |   | <0>          | 
|Net Loss                   |   | <9,459>            |  |   | <9,347>          |  |   | <14,189>     | 
|Deficit, Beginning         |   |                    |  |   |                  |  |   |              | 
|of Period                  |   | <139,208>          |  |   | <104,514>        |  |   | <134,478>    | 
|Accumulated Deficit, End   |   |                    |  |   |                  |  |   |              | 
|of Period                  | $ | <148,667>          |  | $ | <113,861>        |  | $ | <148,667>    | 
|                           |   |                    |  |   |                  |  |   |              | 
|                           |   |                    |  |   |                  |  |   |              | 
|Net Loss per Share         | $ | <0.001>            |  | $ | <0.001>          |  | $ | <0.002>      | 
|Weighted Average           |   |                    |  |   |                  |  |   |              | 
|Shares Outstanding         |   | 7,042,500          |  |   | 7,042,500        |  |   | 7,042,500    | 

|See Notes to Financial Statements
|---------------------------------
|                                 
|3                                

---

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

|                    |  | Common Stock |  |   | Additional |  |   | Accumulated |  |   | Total    |  
|------------------- |  | ------------ |  | - | ---------- |  | - | ----------- |  | - | -------- | -
|                    |  |              |  |   | Dollar     |  |   | Paid in     |  |   | Deficit  |  
|                    |  | Shares       |  |   | Amount     |  |   | Capital     |  |   |          |  
|Inception           |  |              |  |   |            |  |   |             |  |   |          |  
|February 20, 2001   |  | ----         |  | $ | ----       |  | $ | ----        |  | $ | ----     |  
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Common Stock Issued |  |              |  |   |            |  |   |             |  |   |          |  
|$0.001 per share    |  |              |  |   |            |  |   |             |  |   |          |  
|April 9, 2001       |  | 4,000,000    |  |   | 400        |  |   | 3,600       |  |   | ----     |  
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Net Loss,           |  |              |  |   |            |  |   |             |  |   |          |  
|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,           |  |              |  |   |            |  |   |             |  |   |          |  
|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,           |  |              |  |   |            |  |   |             |  |   |          |  
|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,           |  |              |  |   |            |  |   |             |  |   |          |  
|April 30, 2004      |  | ----         |  |   | ----       |  |   | ----        |  |   | (58,708  | )
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Balances            |  |              |  |   |            |  |   |             |  |   |          |  
|April 30, 2004      |  | 7,042,500    |  |   | 704        |  |   | 82,546      |  |   | (96,946  | )
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Net Loss,           |  |              |  |   |            |  |   |             |  |   |          |  
|April 30, 2005      |  | ----         |  |   | ----       |  |   | ----        |  |   | (37,532  | )
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Balances            |  |              |  |   |            |  |   |             |  |   |          |  
|April 30, 2005      |  | 7,042,500    |  |   | 704        |  |   | 82,546      |  |   | (134,478 | )
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Net Loss,           |  |              |  |   |            |  |   |             |  |   |          |  
|October 31, 2005    |  | ----         |  |   | ----       |  |   | ----        |  |   | (14,189  | )
|                    |  |              |  |   |            |  |   |             |  |   |          |  
|Balances            |  |              |  |   |            |  |   |             |  |   |          |  
|October 31, 2005    |  | 7,042,500    |  | $ | 704        |  | $ | 82,546      |  | $ | (148,667 | )

|See Notes to Financial Statements
|---------------------------------
|                                 
|4                                

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

THREE MONTHS ENDED
      
      
      SIX MONTHS ENDED
      
      
      INCEPTION toOCTOBER 31,
      
      
      OCTOBER 31,
      
      
      OCTOBER 31,2005
      
      
      2004
      
      
      2005
      
      
      2004
      
      
      2005Cash Flows fromOperating Activities:Net Loss
      $
      <9,459> $
      
      
      <9,347>
      
      $
      <14,189>
      
      $
      <16,915>
      
      $
      <148,667>Adjustments to Reconcile NetIncome to Net CashProvided/<Used> by OperatingActivities:Increase<Decrease> in:Cash Overdraft
      
      <8>
      
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      -0-Accounts Payable
      
      9,498
      
      
      15,317
      
      
      14,198
      
      
      13,311
      
      
      65,448Net Cash Provided/<Used>by Operating
        Activities
      
      31
      
      
      5,970
      
      
      9
      
      
      <3,604>
      
      
      83,219Cash Flows fromInvesting Activities
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      -0-Cash Flows fromFinancing Activities:Proceeds Related toIssuance of Common Stock
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      83,250Net Cash Provided byFinancing
        Activities
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      -0-
      
      
      83,250Net Increase <Decrease>in Cash
      
      31
      
      
      5,970
      
      
      9
      
      
      <3,604>
      
      
      31Cash at Beginning of Period
      
      -0-
      
      
      3,560
      
      
      22
      
      
      13,134
      
      
      -0-Cash at End of Period
      $
      31
      
      $
      9,530
      
      $
      31
      
      $
      9,530
      
      $
      31


|See Notes to Financial Statements
|---------------------------------
|                                 
|5                                

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|TERRACE VENTURES INC.         
|------------------------------
|(AN EXPLORATION STAGE COMPANY)
|NOTES TO FINANCIAL STATEMENTS 
|OCTOBER 31, 2005              
|(Unaudited)                   

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

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

Basis of Presentation

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

Use of Estimates

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

Exploration Stage Company

The Company has been in the exploration stage since its formation
  and has not yet realized any revenues from its planned operations. The Company
  is primarily engaged in the acquisition and exploration of mining properties.
  Upon the location of commercially minable reserves, the Company plans to prepare
  for mineral extraction and enter the development stage. To date, the exploration
  stage of the Companys operations consists of the contracting with a geologist
  to sample and assess the mining viability of the Companys claim.

Pro Forma Compensation Expense

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

6

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|TERRACE VENTURES INC.                     
|------------------------------------------
|(AN EXPLORATION STAGE COMPANY)            
|NOTES  TO FINANCIAL STATEMENTS (CONTINUED)
|OCTOBER 31, 2005                          
|(Unaudited)                               

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Mineral Rights

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

Depreciation, Amortization and Capitalization

The Company records depreciation and amortization when appropriate
  using both straight-line and declining balance methods over the estimated useful
  life of the assets (five to seven years).

Expenditures for maintenance and repairs are charged to expense
  as incurred. Additions, major renewals and replacements that increase the property's
  useful life are capitalized. Property sold or retired, together with the related
  accumulated depreciation, is removed from the appropriate accounts and the resultant
  gain or loss is included in net income.

Income Taxes

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

7

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|TERRACE VENTURES INC.                     
|------------------------------------------
|(AN EXPLORATION STAGE COMPANY)            
|NOTES  TO FINANCIAL STATEMENTS (CONTINUED)
|OCTOBER 31, 2005                          
|(Unaudited)                               

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Fair Value of Financial Instruments

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

Per Share Information

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

NOTE 2 - PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended October
  31, 2005 and October 31, 2004 represents the minimum state income tax expense
  of the Company, which is not considered significant.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

Operating Leases

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

Litigation

The Company is not presently involved in any litigation.

NOTE 4 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

8

---

|TERRACE VENTURES INC.                     
|------------------------------------------
|(AN EXPLORATION STAGE COMPANY)            
|NOTES  TO FINANCIAL STATEMENTS (CONTINUED)
|OCTOBER 31, 2005                          
|(Unaudited)                               

NOTE 6  GOING CONCERN

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

The 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 $148,667 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 Exploration 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 7  SUBSEQUENT EVENTS

On November 23, 2005, the Company issued 500,000 shares of its
  common stock at a price of $1.00 per share to a subscriber as part of a private
  placement of 1,000,000 shares of the Companys common stock. The Company
  intends to complete the balance of the private placement by December 31, 2005.
  There is no assurance that the balance of this private placement will be completed.

On November 23, 2005, the Company entered into an agreement to
  acquire, on a private placement basis, 760,000 shares of common stock of Sporg
  Corporation, a Nevada corporation engaged in the internet registration services
  business, at a price of $0.65 per share. This represents a 3.4% ownership interest
  in Sporg Corporation.

9

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SUPPLEMENTAL STATEMENTS



10

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|TERRACE VENTURES INC.           
|--------------------------------
|(AN EXPLORATION STAGE COMPANY)  
|STATEMENTS OF OPERATING EXPENSES
|(Unaudited)                     

|                               |   | THREE MONTHS ENDED |  |   | SIX MONTHS ENDED |  |   |              | 
|------------------------------ | - | ------------------ |  | - | ---------------- |  | - | ------------ | 
|                               |   | OCTOBER 31,        |  |   | OCTOBER 31,      |  |   | INCEPTION to | 
|                               |   | 2005               |  |   | 2004             |  |   | 2005         | 
|                               |   |                    |  |   |                  |  |   |              | 
|Operating Expenses:            |   |                    |  |   |                  |  |   |              | 
|Accounting & Audit             | $ | 3,000              |  | $ | 2,120            |  | $ | 6,000        | 
|Exploration and Development    |   | -0-                |  |   | -0-              |  |   | -0-          | 
|Legal                          |   | 5,603              |  |   | 4,364            |  |   | 6,516        | 
|Office Administration          |   | -0-                |  |   | 1,500            |  |   | -0-          | 
|Office Expenses                |   | 106                |  |   | 30               |  |   | 173          | 
|Regulatory Expenses/Fees       |   | -0-                |  |   | 583              |  |   | -0-          | 
|Rent                           |   | 750                |  |   | 750              |  |   | 1,500        | 
|Telephone                      |   | -0-                |  |   | -0-              |  |   | -0-          | 
|Travel & Entertainment         |   | -0-                |  |   | -0-              |  |   | -0-          | 
|                               |   |                    |  |   |                  |  |   |              | 
|                               |   |                    |  |   |                  |  |   |              | 
|Total
      Operating Expenses | $ | 9,459              |  | $ | 9,347            |  | $ | 14,189       | 

|See Notes to Financial Statements
|---------------------------------
|                                 
|11                               

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

As used in this Quarterly Report on Form 10-QSB, the terms "we", "us", "our", Terrace and our company mean Terrace Ventures Inc. unless otherwise indicated. All dollar amounts in this quarterly report are in U.S. dollars
unless otherwise stated.

FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. Any statements contained
herein that are not statements of historical facts may be deemed to be forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as may, will, should,
expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms or other comparable terminology.
Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks discussed below, and, from time to time, in other reports we file with the United States Securities and Exchange
Commission (the SEC), including our Annual Report on Form 10-KSB for the year ended April 30, 2005. These factors may cause our actual results to differ materially from any forward-looking statement.

OVERVIEW

We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We own a 100% undivided interest in a mineral claim that we refer to as the Peach mineral claim (the Peach Claim) located
in the Nicola, Simalkameen and Osoyoos Mining Divisions of the Province of British Columbia, Canada. Our plan of operation is to carry out exploration work on the Peach Claim in order to ascertain whether it possesses deposits of gold.  Further
exploration of the Peach Claim is required before a final determination as to its viability can be made. No commercially viable mineral deposit may exist on our mineral claim. We can provide no assurance that the Peach Claim contains a mineral
deposit until appropriate exploratory work is done and an evaluation based on that work concludes further work programs are justified. At this time, we have no reserves on our mineral claim.

Acquisition of the Peach Mineral Claim

We purchased the Peach Claim property from Don Archibald for cash consideration of $5,000 pursuant to a purchase agreement dated August 15, 2001.

Description of Peach Mineral Claim

The Peach Claim property is comprised of one mineral claim with a total area of approximately 1,236 acres, located in Nicola, Simalkameen and Osoyoos Mining Divisions, approximately 40 kilometres west of Kelowna, British Columbia, Canada.  The claim
is accessible by a gravel road.  We obtained information on the area from the British Columbia Department of Mines and Geological Consultants in 2001. We believed the timing was opportune at that time to obtain this property at the price paid.

Current State of Exploration

Our mineral claim presently does not have any mineral reserves. The property that is the subject to our mineral claim is undeveloped and does not contain any open-pit or underground mines. There is no plant or equipment located on the property that
is the subject of the mineral claim.  Power is readily available from nearby transmission lines.  Water in sufficient quantities for drilling is available from nearby streams and lakes.

3

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We have only recently commenced exploration of the Peach Claim and this exploration is currently in the preliminary stages. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

June 2002 Exploration Program

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

September 2004 Exploration Program

Phase II of our exploration program was designed to follow-up prospecting, sampling and mapping of the earlier exploration carried out by Fairfield Minerals Ltd. The target of the 2004 program was the location of a gold bearing quartz vein system
similar to the Siwash North deposit, previously found and bulk sampled by Fairfield. Using Fairfield assessment reports as guides, a program of follow-up sampling, prospecting and mapping was carried out over four areas of anomalous samples.  The
September 2004 exploration program was successful in locating gold mineralized quartz float and bedrock in areas with anomalous soil sample sites from surveys done by Fairfield Minerals Ltd. Our geologist concluded that further exploration work
should be undertaken on the Peach Property to assess its potential to host high grade gold mineralization within quartz (and sulphide) veins.  We budgeted to expend $5,000 on our planned exploration program over the next twelve months. We plan
to commence Phase III of our exploration program in mid 2006 subject to our ability to obtain additional financing.

Recent Corporate Developments

Since the beginning of the quarterly period ended October
  31, 2005, we have experienced the following corporate developments:

|1. | On December 5, 2005, the board of directors of Terrace approved a four-for-one split of Terraces issued and outstanding common stock. The split is expected to be effective on December 19, 2005. As a result of the stock split
and after giving effect to the share cancellation described above, our authorized capital will be increased from 100,000,000 shares of common stock with a par value of $0.001 per share, of which 7,542,500 shares are issued and outstanding, to
400,000,000 shares of common stock with a par value of $0.001 per share, of which 30,170,000 will be issued and outstanding.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2. | Effective on November 23, 2005, we issued 500,000 shares of our common stock at a price of $1.00 per share to a subscriber as part of a private placement of 1,000,000 shares of our common stock. We plan to complete the balance
of the private placement by December 31, 2005. There is no assurance that the balance of this private placement will be completed. See Recent Sales of Unregistered Securities, below.                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3. | On November 23, 2005, we entered into an agreement to acquire on a private placement basis 760,000 shares of common stock of Sporg Corporation (Sporg), a Nevada corporation, at a price of $0.65 US per share. Sporg
is engaged in the internet registration services business. We acquired the shares for investment purposes and are considering acquiring additional shares of Sporg in the future.                                                                                                                                                                                                        

4

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|4. | On November 23, 2005, Ryan S. McCleery resigned as a member of our Board of Directors and as the Chief Financial Officer, Secretary and Treasurer of Terrace. In place of Mr. McCleery, Gordon F. Burley, our President, Chief
Executive Officer and a member of our Board of Directors, was appointed as our Chief Financial Officer, Secretary and Treasurer.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

PLAN OF OPERATION

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

We engaged Mr. Reynolds, B.Sc. P.Eng., our geological consultant, to prepare a geological evaluation report on the Peach Claim. We received this report entitled "Geological Summary Report on the Peach Property" on September 25, 2001. This report
summarized the results of the history of the exploration of the mineral claim, the regional and local geology of the mineral claim and the mineralization and the geological formations identified as a result of the prior exploration.  The geological
report also gave conclusions regarding potential mineralization of the mineral claim and recommended a four phase exploration program on the mineral claim.

We completed Phase I of our planned four phase exploration program on the Peach Claim property in June, 2002. The total cost for the first phase was approximately $5,000. Following the successful completion of Phase I, our geologist recommended
that we complete a second phase consisting of geological prospecting, geological outcrop mapping, and detailed soil sampling in areas of interest. Phase II was completed in late 2004, at a cost of $7,500. Based on the results of Phase II of the
exploration program we determined to proceed with Phase III subject to obtaining additional financing.

Our plan of operation is to proceed with Phase III of the exploration of the Peach Claim in mid-2006 subject to receiving additional financing. A decision on proceeding beyond the planned Phase III will be made by assessing whether the results of
Phase III are sufficiently positive to enable us to obtain the financing we will need for us to continue through additional stages of the exploration program.  This assessment will include an assessment of the market for financing of mineral
exploration projects at the time of our assessment and an evaluation of our cash reserves after the completion of Phase III. The decision whether or not to proceed will be based on the recommendations of our geological consultant. The decision of
the consultant whether or not to recommend proceeding will be based on a number of factors, including his subjective judgment and will depend primarily on the results of the immediately preceding stage. It is impossible to quantify in advance what
will be sufficiently positive.

During this exploration stage, our president will only be devoting approximately six hours per week of his time to our business. We do not foresee this limited involvement as negatively impacting our company over the next twelve months as all
exploratory work has been and will continue to be performed by outside consultants. Additionally, we will not have a need to hire any employees over the next twelve months; nor do we plan to make any purchases of equipment over the next twelve
months due to reliance upon outside consultants to provide all tools needed for the exploratory work being conducted. Our total expenditures over the next twelve months are anticipated to be approximately $15,000.

5

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LIQUIDITY AND FINANCIAL CONDITION

|Working Capital           |                     |   |                  |   |                       | 
|------------------------- | ------------------- | - | ---------------- | - | --------------------- | 
|                          | At October 31, 2005 |   | At April 30, 205 |   | Percentage            | 
|                          | (Unaudited)         |   | (Audited)        |   | Increase / (Decrease) | 
|Current Assets            | $31                 |   | $22              |   | 40.9%                 | 
|Current Liabilities       | $65,448             |   | $55,950          |   | 16.9%                 | 
|Working Capital (Deficit) | ($65,417            | ) | ($51,228         | ) | 27.6%                 | 

|Cash Flows                                     |                             |  |          | 
|---------------------------------------------- | --------------------------- |  | -------- | 
|                                               | Six Months Ended October 31 | 
|                                               | 2005                        |  | 2004     | 
|Cash Flows from (used in) Operating Activities | $9                          |  | ($3,604) | 
|Cash Flows from (used in) Investing Activities | $0                          |  | $0       | 
|Cash Flows from (used in) Financing Activities | $0                          |  | $0       | 
|Net Increase (decrease) in Cash During Period  | $9                          |  | ($3,604) | 

We had cash on hand of $31 and a working capital deficit of
$65,417 as of October 31, 2005 compared to working capital deficit $51,228 as of
April 30, 2004. Our operating expenses for the six months ended October 31, 2005
decreased to $14,189 from $16,915 during the comparative period of 2004. The
decrease in our operating expenses was primarily as a result of a decrease in
legal fees and office related expenses. We anticipate that we will incur
approximately $15,000for operating expenses, including professional
legal and accounting expenses associated with our reporting requirements under
the Exchange Act during the next twelve months.

Financing Requirements

As at December 14, 2005, we had cash in the amount of
approximately $6,000. Our current operating funds are not sufficient to complete
the proposed exploration program and will be insufficient to complete the full
exploration of the mineral claim and begin mining efforts should the mineral
claim prove commercially viable. Therefore, we will need to obtain additional
financing in order to complete our full business plan. We currently do not have
any operations and we have no income. Our plan of operation calls for
significant expenses in connection with the exploration of our mineral claim. We
do not have sufficient cash on hand to complete Phase III of our proposed
exploration program. We also require additional financing to sustain our
business operations if we are not successful in earning revenues.

From inception to October 31, 2005, we have suffered aggregate
losses in the amount of $148,667 and net cash outflows from operations. Since
our inception, we have used our common stock to raise money for our property
acquisition, for corporate expenses and to repay outstanding indebtedness. We
have not attained profitable operations and are dependent upon obtaining
financing to pursue any extensive exploration activities. For these reasons, our
auditors stated in their report to our audited financial statements for the year
ended April 30, 2005 that they have substantial doubt we will be able to
continue as a going concern. Obtaining additional financing is subject to a
number of factors, including the market prices for the mineral property and
gold. These factors may make the timing, amount, terms or conditions of
additional financing unavailable to us.

6

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Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

Use of Estimates

Management uses estimates and assumptions in preparing our 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

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

Mineral Property Acquisition and Exploration Costs

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

Depreciation, Amortization and Capitalization

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

7

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RISKS AND UNCERTAINTIES

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

We have incurred a net loss of $148,667 for the period from February 20, 2001 (inception) to October 31, 2005, and have no revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations from
the development of our mineral claim. These factors raise substantial doubt that we will be able to continue as a going concern.

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

Our current operating funds are sufficient to complete the proposed exploration program; however, they will be insufficient to complete the full exploration of the mineral claim and begin mining efforts should the mineral claim prove commercially
viable. Therefore, we will need to obtain additional financing in order to complete our full business plan.  As at December 14, 2005, we had cash in the amount of $6,000. We currently do not have any operations and we have no income. Our plan of
operation calls for significant expenses in connection with the exploration of our mineral claim.  We do not have sufficient cash on hand to complete Phase III of our proposed exploration program. We also require additional financing to sustain our
business operations if we are not successful in earning revenues. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of
factors, including the market prices for the mineral property and gold.  These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

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

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

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

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

8

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

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

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

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

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

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

The property comprises one mineral claim with a total area of approximately 1,236 acres, located in Nicola, Simalkameen and Osoyoos Mining Divisions, approximately 40 kilometres west of Kelowna, British Columbia, Canada.  This is an essentially
undeveloped area in British Columbia.  The area consists of many mountains and lakes with heavy forestation.  An unpaved gravel road is the only access. Winters are often severe with rain, freezing rain, wind, and snow common between November and
March, making the road often unsafe and impassable for travel.

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

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

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

Mr. Gordon F. Burley, our sole executive officer and director, does not have any formal training as a geologist or in the technical aspects of management of a mineral exploration company.  Our management lacks technical training and experience with
exploring for, starting, and operating a mine. With no direct training or experience in these areas, our management may not be fully aware of the specific requirements related to working within this industry. Our management's decisions and choices
may not take into account standard engineering or managerial approaches mineral exploration

9

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companies commonly use.  Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry.

Because our executive officer has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail.

Our sole director and officer is employed on a full time basis by other companies. Because we are in the early stages of our business, Mr. Burley will not be spending a significant amount of time on our business. Mr. Burley expects to expend
approximately 5 to 7 hours per week on our business. Competing demands on Mr. Burley's time may lead to a divergence between their interests and the interests of other shareholders.

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

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

Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for
them. As long as the trading price of our common stock is less than $5.00 per share, the common stock will be subject to rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock,
to deliver a standardized risk disclosure document prepared by the SEC, that:

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

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the
number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the
customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written acknowledgment of the receipt

10

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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.

As our business assets and our directors and officers are located outside of the United States, investors may be limited in their ability to enforce civil actions against our assets or our directors and officers.

Our business assets are located in Canada and our sole director and officer is a resident of Canada. Consequently, it may be difficult for United States investors to effect service of process within the United States upon our assets or our sole
director and officer, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under U.S. Federal Securities Laws. A judgment of a U.S. court predicated solely upon such civil liabilities may not be
enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully
in Canada against any of our assets or our sole director and officer predicated solely upon such civil liabilities.

ITEM 3. CONTROLS AND PROCEDURES

(A) Evaluation Of Disclosure Controls And Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation
of our disclosure controls and procedures.  Our disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving our disclosure control objectives.  Our principal executive officer and principal financial
officer have concluded that our disclosure controls and procedures are, in fact, effective at this reasonable assurance level as of the period covered.

(B) Changes In Internal Controls Over Financial Reporting

In connection with the evaluation of our internal controls during our last fiscal quarter, our principal executive officer and principal financial officer have determined that there are no changes to our internal controls over financial reporting
that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

11

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

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

Effective on November 23, 2005, we issued 500,000 shares of our common stock at a price of $1.00 per share to a subscriber as part of a private placement of 1,000,000 shares of the our common stock. We plan to complete the balance of the private
placement by December 31, 2005. There is no assurance that the balance of this private placement will be completed. These shares were issued pursuant to the exemptions to registration contained in Regulation S promulgated under the Securities Act of
1933 on the basis of representations made by the subscriber that the subscriber was not a U.S. person, as that term is defined under Regulation S, and that the subscriber was not acquiring those shares for the account or benefit of a
U.S. person.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

12

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

The following exhibits are either provided with this Quarterly
  Report on Form 10-QSB or are incorporated herein by reference:

|Exhibit Number | Description of Exhibit                                                                                                                                            
|-------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|               |                                                                                                                                                                   
|2.1            | Articles of Incorporation.(1)                                                                                                                                     
|               |                                                                                                                                                                   
|2.2            | Bylaws.(1)                                                                                                                                                        
|               |                                                                                                                                                                   
|6.1            | Mineral Claim Purchase Agreement dated
        August 15, 2001 between Terrace Ventures Inc. and Don Archibald.(1)                                                
|               |                                                                                                                                                                   
|14.1           | Code of Ethics.(2)                                                                                                                                                
|               |                                                                                                                                                                   
|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 pursuant to 18 U.S.C. Section 1350, as adopted
        pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

|(1) | Filed with the SEC as an exhibit to our Registration
      Statement on Form 10-SB originally filed on February 2, 2004.
|--- | ------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                         
|(2) | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on September 8, 2004.                  

REPORTS ON FORM 8-K

We did not file any Current Reports on Form 8-K during the
quarterly period ended October 31, 2005 nor did we file any Current Reports on
Form 8-K since the quarterly period ended October 31, 2005.

The following Current Reports on Form 8-K were filed since the
  beginning of the quarterly period ended October 31, 2005:

|Date
      of Report on Form 8-K 
      (YYYY/MM/DD) | Date
      of Filing with the SEC 
      (YYYY/MM/DD) | Description
      of the Form 8-K
|---------------------------------------------------- | ----------------------------------------------------- | ---------------------------------
|2005/11/23                                           | 2005/11/28                                            | Item 2.01 -                      
|                                                     |                                                       | Item 3.02 -                      
|                                                     |                                                       | Item 5.02 -                      

13

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|      |                   |  |     | TERRACE VENTURES INC.                              
|----- | ----------------- |  | --- | ---------------------------------------------------
|      |                   |  |     |                                                    
|      |                   |  |     |                                                    
|Date: | December 14, 2005 |  | By: | /s/
      Gordon F. Burley                         
|      |                   |  |     | GORDON F. BURLEY                                   
|      |                   |  |     | Chief Executive Officer and Chief Financial Officer
|      |                   |  |     | President, Secretary and Treasurer                 
|      |                   |  |     | Director                                           
|      |                   |  |     | (Principal Executive Officer)                      
|      |                   |  |     | (Principal Accounting Officer)                     

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