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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-QSB

[X]Quarterly Report under Section 13 or 15(d) of the Securities
  Exchange Act of 1934
  For the quarterly period ended January 31, 2007

[ ]Transition Report under Section 13 or 15(d) of the
  Exchange Act 
  For the transition period from ________to ________

Commission File Number 000-50569

TERRACE VENTURES INC.(Exact name of small business issuer as specified in its charter)

|NEVADA                                           | 91-2147101                       
|------------------------------------------------ | ---------------------------------
|(State or other jurisdiction of incorporation or | (IRS Employer Identification No.)
|organization)                                    |                                  

810 PEACE PORTAL DRIVE, SUITE 202 BLAINE, WA 98230(Address of principal executive offices)

(360) 220-5218Issuer's telephone number

NOT APPLICABLEFormer 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 12 months (or
  for such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days. Yes
  [ X ]   No [ ]

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

State the number of shares outstanding of each of the issuer's
  classes of common equity, as of the latest practicable date: 34,183,200 Shares
  of Common Stock as of March 15, 2007.

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

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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 nine months ended January 31, 2007 are not necessarily indicative of the results that can be
expected for the year ending April 30, 2007.

2

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TERRACE VENTURES INC.

FINANCIAL STATEMENTS

JANUARY 31, 2007

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INDEX TO FINANCIAL STATEMENTS

|                                                              | Page
|------------------------------------------------------------- | ----
|Report of Independent Registered Public
      Accounting Firm | 1   
|                                                              |     
|Financial Statements:                                         |     
|                                                              |     
|Balance Sheets                                                | 2   
|                                                              |     
|Statements of Operations
      and Accumulated Deficit        | 3   
|                                                              |     
|Statements of Changes
      in Stockholders Deficit          | 4-5 
|                                                              |     
|Statements of Cash
      Flows                                | 6   
|                                                              |     
|Notes to Financial
      Statements                           | 7-11
|                                                              |     
|Supplemental Statements:                                      |     
|                                                              |     
|Statements of
      Operating Expenses                        | 13  

---

Report of Independent Registered Public Accounting Firm

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

We have reviewed the accompanying balance sheet of Terrace
  Ventures Inc. as of January 31, 2007, and the statements of operations and accumulated
  deficit, changes in stockholders deficit, and statements of cash flows
  for the nine month periods ended January 31, 2007 and January 31, 2006, and
  for the period February 20, 2001 (date of inception) to January 31, 2007. 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 5 to
  the financial statements, the Company has suffered recurring losses from operations,
  which raise substantial doubt about its ability to continue as a going concern.
  The financial statements do not include any adjustments that might result from
  the outcome of this uncertainty.

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, 2006, and the related statements of
  operations and accumulated deficit, changes in stockholders deficit, and
  cash flows for the year then ended (not presented herein); and in our report
  dated July 19, 2006, 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 5 to
  the financial statements. In our opinion, the information set forth in the accompanying
  balance sheet as of April 30, 2006 is fairly stated, in all material respects,
  in relation to the balance sheet from which it has been derived.

/s/ Sarna & Company
  Sarna & Company
  Certified Public Accountants
  Westlake Village, California
  March 12, 2007

F-1

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

|ASSETS                                |   |                  |  |   |                      | 
|------------------------------------- | - | ---------------- |  | - | -------------------- | 
|                                      |   |                  |  |   |                      | 
|                                      |   | (Unaudited)      |  |   | (Audited)            | 
|                                      |   | January 31, 2007 |  |   | April
      30, 2006 | 
|                                      |   |                  |  |   |                      | 
|Current Assets:                       |   |                  |  |   |                      | 
|Cash                                  | $ | 4,264            |  | $ | 171                  | 
|Trust Account Receivable              |   | 2,467            |  |   | 576                  | 
|Prepaid Expenses                      |   | 26,500           |  |   | -0-                  | 
|                                      |   |                  |  |   |                      | 
|Total Current Assets                  |   | 33,231           |  |   | 747                  | 
|                                      |   |                  |  |   |                      | 
|Other Assets - Investment             |   | -0-              |  |   | -0-                  | 
|                                      |   |                  |  |   |                      | 
|TOTAL ASSETS                          | $ | 33,231           |  | $ | 747                  | 
|                                      |   |                  |  |   |                      | 
|                                      |   |                  |  |   |                      | 
|LIABILITIES AND STOCKHOLDERS' DEFICIT |   |                  |  |  
|                                      |   |                  |  |   |                      | 
|Current Liabilities:                  |   |                  |  |   |                      | 
|Accounts Payable and                  |   |                  |  |   |                      | 
|Accrued Expenses                      | $ | 69,380           |  | $ | 73,478               | 
|Due to Shareholder                    |   | 11,295           |  |   | 21,150               | 
|                                      |   |                  |  |   |                      | 
|Total Current Liabilities             |   | 80,675           |  |   | 94,628               | 
|                                      |   |                  |  |   |                      | 
|Stockholders' Deficit:                |   |                  |  |   |                      | 
|Common Stock, $0.001 par value        |   |                  |  |   |                      | 
|400,000,000
      shares authorized,  |   |                  |  |   |                      | 
|34,183,200 and 31,949,920             |   |                  |  |   |                      | 
|shares
      issued                   |   | 34,183           |  |   | 31,950               | 
|Additional Paid in Capital            |   | 1,317,387        |  |   | 996,280              | 
|Deficit Accumulated During            |   |                  |  |   |                      | 
|the Exploration Stage                 |   | <1,399,014>      |  |   | <1,122,111>          | 
|                                      |   |                  |  |   |                      | 
|Total Stockholders' Deficit           |   | <47,444>         |  |   | <93,881>             | 
|                                      |   |                  |  |   |                      | 
|TOTAL LIABILITIES AND                 |   |                  |  |   |                      | 
|STOCKHOLDERS' DEFICIT                 | $ | 33,231           |  | $ | 747                  | 

See Notes to Financial Statements

F-2

---

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

|                      |   | THREE MONTHS ENDED |  |   | NINE MONTHS ENDED |  |   |              | 
|--------------------- | - | ------------------ |  | - | ----------------- |  | - | ------------ | 
|                      |   | JANUARY 31,        |  |   | JANUARY 31,       |  |   | INCEPTION to | 
|                      |   | 2007               |  |   | 2006              |  |   | 2007         | 
|Revenues              | $ | -0-                |  | $ | -0-               |  | $ | -0-          | 
|Operating Expenses    |   | <85,495>           |  |   | <8,425>           |  |   | <176,403>    | 
|Loss Before Other     |   |                    |  |   |                   |  |   |              | 
|Income and Expenses   |   | <85,495>           |  |   | <8,425>           |  |   | <176,403>    | 
|Other Expense:        |   |                    |  |   |                   |  |   |              | 
|Unrealized Loss       |   |                    |  |   |                   |  |   |              | 
|On Investment         |   | -0-                |  |   | -0-               |  |   | <100,500>    | 
|Loss Before Provision |   |                    |  |   |                   |  |   |              | 
|for Income Taxes      |   | <85,495>           |  |   | <8,425>           |  |   | <276,903>    | 
|Provision for         |   |                    |  |   |                   |  |   |              | 
|Income Taxes          |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Net Loss              |   | <85,495>           |  |   | <8,425>           |  |   | <276,903>    | 
|Accumulated Deficit,  |   |                    |  |   |                   |  |   |              | 
|Beginning of Period   |   | <1,313,519>        |  |   | <113,861>         |  |   | <1,122,111>  | 
|Accumulated Deficit,  |   |                    |  |   |                   |  |   |              | 
|End of Period         | $ | <1,399,014>        |  | $ | <122,286>         |  | $ | <1,399,014>  | 
|                      |   |                    |  |   |                   |  |   |              | 
|                      |   |                    |  |   |                   |  |   |              | 
|Net Loss per Share    | $ | <0.00>             |  | $ | <0.00>            |  | $ | <0.01>       | 
|Weighted Average      |   |                    |  |   |                   |  |   |              | 
|Shares Outstanding    |   | 33,344,100         |  |   | 29,503,333        |  |   | 32,692,187   | 

See Notes to Financial Statements

F-3

---

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

|                    |  |              |  |   |            |  |   |            |  |   | 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    |  |   | 4,000      |  |   | ----       |  |   | ----        |   |   | 4,000           |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Net Loss,           |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2001      |  | ----         |  |   | ----       |  |   | ----       |  |   | (1,410      | ) |   | (1,410          | )
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Balances            |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2001      |  | 4,000,000    |  |   | 4,000      |  |   | ----       |  |   | (1,410      | ) |   | 2,590           |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Common Stock Issued |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|$0.01 per share     |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|August 15, 2001     |  | 2,500,000    |  |   | 2,500      |  |   | 22,500     |  |   | ----        |   |   | 25,000          |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Net Loss,           |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2002      |  | ----         |  |   | ----       |  |   | ----       |  |   | (19,196     | ) |   | (19,196         | )
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Balances            |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2002      |  | 6,500,000    |  |   | 6,500      |  |   | 22,500     |  |   | (20,606     | ) |   | 8,394           |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Common Stock Issued |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|$0.10 per share     |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|September 30, 2002  |  | 142,500      |  |   | 143        |  |   | 14,107     |  |   | ----        |   |   | 14,250          |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Net Loss,           |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2003      |  | ----         |  |   | ----       |  |   | ----       |  |   | (17,632     | ) |   | (17,632         | )
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Balances            |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2003      |  | 6,642,500    |  |   | 6,643      |  |   | 36,607     |  |   | (38,238     | ) |   | 5,012           |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Common Stock Issued |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|$0.10 per share     |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|November 6, 2003    |  | 400,000      |  |   | 400        |  |   | 39,600     |  |   | ----        |   |   | 40,000          |  
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Net Loss,           |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2004      |  | ----         |  |   | ----       |  |   | ----       |  |   | (58,708     | ) |   | (58,708         | )
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Balances            |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2004      |  | 7,042,500    |  |   | 7,043      |  |   | 76,207     |  |   | (96,946     | ) |   | (13,696         | )
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Net Loss,           |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2005      |  | ----         |  |   | ----       |  |   | ----       |  |   | (37,532     | ) |   | (37,532         | )
|                    |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|Balances            |  |              |  |   |            |  |   |            |  |   |             |   |   |                 |  
|April 30, 2005      |  | 7,042,500    |  |   | 7,043      |  |   | 76,207     |  |   | (134,478    | ) |   | (51,228         | )

See Notes to Financial Statements

F-4

---

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

|                       |  |              |  |   |            |  |   |            |   |   | 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    | ) | $ | (51,228         | )
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$1.00 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|November 23,2005       |  | 500,000      |  |   | 50         |  |   | 499,950    |   |   | ----        |   |   | 500,000         |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|4-for-1 Stock Split,   |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|December 19, 2005      |  | 22,627,500   |  |   | 29,416     |  |   | (29,416    | ) |   | ----        |   |   | ----            |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$0.25 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|February 3, 2006       |  | 400,000      |  |   | 400        |  |   | 99,600     |   |   | ----        |   |   | 100,000         |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$0.25 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|March 13, 2006         |  | 380,000      |  |   | 380        |  |   | 94,620     |   |   | ----        |   |   | 95,000          |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$0.25 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|March 31, 2006         |  | 999,920      |  |   | 1,000      |  |   | 248,980    |   |   | ----        |   |   | 249,980         |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Net Loss, Period Ended |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|April 30, 2006         |  | ----         |  |   | ----       |  |   | ----       |   |   | (987,633    | ) |   | (987,633        | )
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Balances               |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|April 30, 2006         |  | 31,949,920   |  |   | 31,950     |  |   | 996,280    |   |   | (1,122,111  | ) |   | (93,881         | )
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$0.25 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|May 24, 2006           |  | 220,080      |  |   | 220        |  |   | 54,800     |   |   | ----        |   |   | 55,020          |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$0.30 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|June 5, 2006           |  | 335,000      |  |   | 335        |  |   | 100,165    |   |   | ----        |   |   | 100,500         |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Common Stock Issued    |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|$0.10 per share        |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|January 23, 2007       |  | 1,678,200    |  |   | 1,678      |  |   | 166,142    |   |   | ----        |   |   | 167,820         |  
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Net Loss, Period Ended |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|January 31, 2007       |  | ----         |  |   | ----       |  |   | ----       |   |   | (276,903    | ) |   | (276,903        | )
|                       |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|Balances               |  |              |  |   |            |  |   |            |   |   |             |   |   |                 |  
|January 31, 2007       |  | 34,183,200   |  | $ | 34,183     |  | $ | 1,317,387  |   | $ | (1,399,014  | ) | $ | (47,444         | )

See Notes to Financial Statements

F-5

---

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

|                                         |   | NINE MONTHS ENDED |  |   |              | 
|---------------------------------------- | - | ----------------- |  | - | ------------ | 
|                                         |   | JANUARY 31,       |  |   | INCEPTION to | 
|                                         |   | 2007              |  |   | 2006         | 
|                                         |   |                   |  |   |              | 
|Cash Flows from                          |   |                   |  |   |              | 
|Operating Activities:                    |   |                   |  |   |              | 
|                                         |   |                   |  |   |              | 
|Net Loss                                 | $ | <276,903>         |  | $ | <36,037>     | 
|                                         |   |                   |  |   |              | 
|Adjustments to Reconcile Net             |   |                   |  |   |              | 
|Income to
      Net Cash Provided/<Used> |   |                   |  |   |              | 
|by Operating Activities:                 |   |                   |  |   |              | 
|Unrealized
      Loss on Investment      |   | 100,500           |  |   | -0-          | 
|<Increase>/Decrease
      in:            |   |                   |  |   |              | 
|Trust Account Receivable                 |   | <1,891>           |  |   | <540>        | 
|Prepaid
      Expenses                   |   | <26,500>          |  |   | -0-          | 
|Increase<Decrease>
      in:             |   |                   |  |   |              | 
|Accounts
      Payable                   |   | <4,098>           |  |   | 30,756       | 
|                                         |   |                   |  |   |              | 
|Net Cash Provided/<Used>                 |   |                   |  |   |              | 
|by
      Operating Activities            |   | <208,892>         |  |   | <5,821>      | 
|                                         |   |                   |  |   |              | 
|Cash Flows from                          |   |                   |  |   |              | 
|Investing Activities:                    |   |                   |  |   |              | 
|                                         |   |                   |  |   |              | 
|Stock Investment                         |   | <100,500>         |  |   | <494,000>    | 
|                                         |   |                   |  |   |              | 
|Net Cash Used                            |   |                   |  |   |              | 
|by
      Investing Activities            |   | <100,500>         |  |   | <494,000>    | 
|                                         |   |                   |  |   |              | 
|Cash Flows from                          |   |                   |  |   |              | 
|Financing Activities:                    |   |                   |  |   |              | 
|                                         |   |                   |  |   |              | 
|Loans from Shareholders                  |   | 145               |  |   | -0-          | 
|Payments on Loans                        |   | <10,000>          |  |   | -0-          | 
|Proceeds Related to                      |   |                   |  |   |              | 
|Issuance
      of Common Stock           |   | 323,340           |  |   | 500,000      | 
|                                         |   |                   |  |   |              | 
|Net Cash Provided
      by               |   |                   |  |   |              | 
|Financing Activities                     |   | 313,485           |  |   | 500,000      | 
|                                         |   |                   |  |   |              | 
|                                         |   |                   |  |   |              | 
|Net Increase <Decrease> in Cash          | $ | 4,093             |  | $ | 179          | 
|                                         |   |                   |  |   |              | 
|Cash at Beginning of Period              |   | 171               |  |   | 22           | 
|                                         |   |                   |  |   |              | 
|Cash at End of Period                    | $ | 4,264             |  | $ | 201          | 

See Notes to Financial Statements

F-6

---

TERRACE VENTURES INC.
  (AN EXPLORATION STAGE COMPANY)
  NOTES TO FINANCIAL STATEMENTS
  JANUARY 31, 2007
  (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.

Pro Forma Compensation Expense

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

Mineral Property Acquisition and Exploration Costs

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

F-7

---

TERRACE VENTURES INC.
  (AN EXPLORATION STAGE COMPANY)
  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
  JANUARY 31, 2007
  (Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Depreciation, Amortization and Capitalization

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

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

Income Taxes

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

Fair Value of Financial Instruments

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

Investments

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

Per Share Information

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

F-8

---

TERRACE VENTURES INC.
  (AN EXPLORATION STAGE COMPANY)
  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
  JANUARY 31, 2007
  (Unaudited)

NOTE 2 - PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended January
  31, 2007 and January 31, 2006 represents the minimum state income tax expense
  of the Company, which is not considered significant.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

Operating Leases

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

Litigation

The Company is not presently involved in any litigation.

NOTE 4 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

NOTE 5  GOING CONCERN

Future issuances of the Companys equity or debt securities
  will be required in order for the Company to continue to finance its operations
  and continue as a going concern. The Companys present revenues are insufficient
  to meet operating expenses. The consolidated financial statements of the Company
  have been prepared assuming that the Company will continue as a going concern,
  which contemplates, among other things, the realization of assets and the satisfaction
  of liabilities in the normal course of business. The Company has incurred cumulative
  net losses of $1,399,014 since its inception and requires capital for its
  contemplated operational and marketing activities to take place. The Company's
  ability to raise additional capital through the future issuances of common stock
  is unknown. The obtainment of additional financing, the successful development
  of the Company's contemplated plan of operations, and its transition, ultimately,
  to the attainment of profitable operations are necessary for the Company to
  continue operations. The ability to successfully resolve these factors raise
  substantial doubt about the Company's ability to continue as a going concern.
  The consolidated financial statements of the Company do not include any adjustments
  that may result from the outcome of these aforementioned uncertainties.

F-9

---

TERRACE VENTURES INC.
  (AN EXPLORATION STAGE COMPANY)
  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
  JANUARY 31, 2007
  (Unaudited)

NOTE 6  STOCK SPLIT

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

NOTE 7  INVESTMENT IN CLOSELY HELD STOCK

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

To fund this acquisition, on November 23, 2005 the Companys
  director authorized a private placement of 4,000,000 post-split shares of the
  Companys common stock, at a price of $0.25 per share. As of July 31,
  2006, all 4,000,000 shares of the Companys common stock were issued at
  a price of $0.25 per share, for a total of $1,000,000 in accordance
  with this private placement offering.

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

NOTE 8  MERGER AGREEMENT/STOCK ISSUANCES

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

F-10

---

TERRACE VENTURES INC.
  (AN EXPLORATION STAGE COMPANY)
  NOTES TO FINANCIAL STATEMENTS (CONTINUED)
  JANUARY 31, 2007
  (Unaudited)

NOTE 8  MERGER AGREEMENT/STOCK ISSUANCES - CONTINUED

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

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

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

NOTE 9  STOCK OPTIONS

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

NOTE 10  SUBSEQUENT EVENTS

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

On March 7, 2007, the Company approved a private placement
  of up to 5,000,000 shares of the Companys common stock at a price of $0.10
  per share to fund the Solara Loan and for working capital purposes. This offering
  is intended to be made to non-US investors pursuant to Regulation S of the United
  States Securities Act of 1933.

F-11

---

SUPPLEMENTAL STATEMENT



F-12

---

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

|                            |   | THREE MONTHS ENDED |  |   | NINE MONTHS ENDED |  |   |              | 
|--------------------------- | - | ------------------ |  | - | ----------------- |  | - | ------------ | 
|                            |   | JANUARY 31,        |  |   | JANUARY 31,       |  |   | INCEPTION to | 
|                            |   | 2007               |  |   | 2006              |  |   | 2007         | 
|                            |   |                    |  |   |                   |  |   |              | 
|Operating Expenses:         |   |                    |  |   |                   |  |   |              | 
|Accounting & Audit          | $ | 3,920              |  | $ | 4,870             |  | $ | 16,380       | 
|Bank Charges                |   | 107                |  |   | -0-               |  |   | 181          | 
|Consulting                  |   | 60,000             |  |   | -0-               |  |   | 81,250       | 
|Exploration and Development |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Legal                       |   | 11,944             |  |   | 13,479            |  |   | 46,080       | 
|Office Administration       |   | 7,500              |  |   | -0-               |  |   | 20,600       | 
|Office Expenses             |   | -0-                |  |   | 30                |  |   | 252          | 
|Regulatory Expenses/Fees    |   | 1,274              |  |   | 2,719             |  |   | 9,410        | 
|Rent                        |   | 750                |  |   | 750               |  |   | 2,250        | 
|Telephone                   |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Travel & Entertainment      |   | -0-                |  |   | -0-               |  |   | -0-          | 
|                            |   |                    |  |   |                   |  |   |              | 
|                            |   |                    |  |   |                   |  |   |              | 
|Total Operating Expenses    | $ | 85,495             |  | $ | 21,848            |  | $ | 176,403      | 

See Notes to Financial Statements

F-13

---

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, 2006 and our Current Reports on Form 8-K. These factors may cause our actual results to differ materially from any forward-looking
statement.

General

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

We recently entered into a letter of intent with Dorn Beattie, the principal shareholder of Solara Technologies, Inc. (Solara), a private British Columbia company engaged in the development of both hardware and software for the self
service industry. Pursuant to the terms of the letter of intent, we intend to complete a merger with Solara such that following its completion the shareholders of Solara, immediately prior to the merger, will own 70% of the issued and outstanding
shares of the resulting entity and our shareholders, immediately prior to the merger, will hold 30% of the resulting entity. Our plan of operation is to complete the proposed merger of Solara and Terrace over the next twelve months. Until the
proposed merger is completed, of which there is no assurance, we intend to continue to carry on with our exploration work on the Peach Claim in order to ascertain whether it possesses commercially exploitable deposits of gold. Further exploration of
this mineral claim is required before a final determination as to its viability can be made. No commercially viable mineral deposit may exist on our mineral claim. We can provide no assurance that our mineral claim contains a mineral deposit until
appropriate exploratory work is done and an evaluation based on that work concludes further work programs are justified. At this time, we have no reserves on our mineral claim.

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

3

---

RECENT CORPORATE DEVELOPMENTS

Since our most recently completed quarter ended October 31, 2006, we have experienced the following significant corporate developments in our business:

|1. | We entered into a letter of intent dated February 28, 2007
        with the principal shareholder of Solara Technologies, Inc. (Solara),
        a private British Columbia company engaged in the development of both
        hardware and software for the self service vending industry. Pursuant
        to the terms of the letter of intent, Terrace and Solara intend to complete
        a merger of the two companies such that following completion of the merger
        the shareholders of Solara, immediately prior to the merger will own 70%
        of the issued and outstanding shares of the resulting entity and the shareholders
        of Terrace, immediately prior to the merger will hold 30% of the resulting
        entity. If the merger is completed, we will take all steps necessary to
        ensure that at closing the board of directors of the resulting entity
        will consist of three members: the existing director of Terrace; one director
        nominated by Solara; and one director nominated by both of the board members.
        Under the terms of the letter of intent the closing of the merger is subject
        to a number of conditions, including: (i) delivery of all financial statements
        of Solara required under applicable securities rules; (ii) Terrace providing
        Solara with a loan of $200,000 (the Solara Loan) prior
        to closing of the merger; (iii) the parties entering into a formal agreement
        outlining the terms of the merger by no later than March 15, 2007; and
        (iv) each of the parties satisfactorily completeing their respective due
        diligence review. There is no assurance that the proposed transaction
        will be completed as planned or at all.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | On March 7, 2007, we approved a private placement of up to 5,000,000 shares of Terraces common stock at a price of $0.10 per share to fund the Solara Loan and for working capital purposes (the Offering). The
Offering is intended to be made to non-US investors pursuant to Regulation S of the United States Securities Act of 1933. There is no assurance that the Offering will be completed on the above terms or at all.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|3. | On January 17, 2007, we completed an issuance of 1,678,200 units at a price of $0.10 per unit for gross proceeds of $167,820. Each unit consists of one share of our common stock and one share purchase warrant entitling the
holder to purchase an additional share of our common stock for a period of one year from the date of the issuance at an exercise price of $0.10 per share. The issuance was completed pursuant to Regulation S of the Securities Act. See Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

PLAN OF OPERATION

Our plan of operation is to complete the proposed merger of Solara and Terrace over the next twelve months. Until the proposed merger is completed, of which there is no assurance, we intend to continue to conduct mineral exploration activities on
the Peach Claim in order to assess whether the claim possesses commercially exploitable mineral deposits. Our exploration program is designed to explore for commercially viable deposits of gold minerals. We have not, nor has any predecessor,
identified any commercially exploitable reserves of these minerals on our mineral claim.

Current State of Exploration

Our mineral claim presently does not have any mineral reserves.  The exploration of the Peach Claim is currently in the preliminary stages. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found. We
completed Phases I and II of our planned four

4

---

phase exploration program on the Peach Claim property. The
total cost for Phases I and II was approximately $12,500. Based on the results
of Phase II of the exploration program, we determined to proceed with Phase III
subject to obtaining additional financing.

Phase I  June 2002 Exploration Program

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

Phase II  September 2004 Exploration Program

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

Phase III - 2006 Exploration Program

Phase III of our exploration program consists of soil sampling
to be conducted on a flagged grid within prospective areas identified by the two
previous phases. We intend to commence Phase III of our exploration program in
early to mid 2007.

Cash Requirements For The Next Twelve Months

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

Category
    Planned Expenditures Over the Next Twelve MonthsProfessional Fees
    $8,000Management Fees
    $240,000Mineral
      Exploration costs
    $5,000Miscellaneous
    $2,000TOTAL
    $255,000


5

---

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

RESULTS OF OPERATIONS

Third Quarter and Nine Months Summary

|         |   | Three Months Ended January 31, |   |   |        | Nine Months Ended January 31, | 
|-------- | - | ------------------------------ | - | - | ------ | ----------------------------- | 
|         |   |                                |   |   |        |                               | 
|         |   |                                |   |   |        |                               | 
|         |   | 2007                           |   |   | 2006   |                               | 
|Revenue  | $ | -                              |   | $ | -      |                               | 
|Expenses |   | (85,495                        | ) |   | (8,425 | )                             | 
|Net Loss | $ | (85,495                        | ) | $ | (8,425 | )                             | 

Revenues

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

Operating Expenses

|                         |   | Three Months Ended |  |   |            |  |  | Nine Months Ended |  |   |            | 
|------------------------ | - | ------------------ |  | - | ---------- |  |  | ----------------- |  | - | ---------- | 
|                         |   | January 31         |  |   | Percentage |  |  | January 31        |  |   | Percentage | 
|                         |   |                    |  |   |            |  |  | Increase /        |  |   |            | 
|                         |   | 2007               |  |   | 2006       |  |  | (Decrease)        |  |   | 2007       | 
|Accounting & Audit       | $ | 3,920              |  | $ | 4,870      |  |  | (19.5)%           |  | $ | 16,380     | 
|Bank Charges             |   | 107                |  |   | -          |  |  | n/a               |  |   | 181        | 
|Consulting               |   | 60,000             |  |   | -          |  |  | n/a               |  |   | 81,250     | 
|Exploration and          |   | -                  |  |   | -          |  |  | n/a               |  |   | -          | 
|Development              |   |                    |  |   |            |  |  |                   |  |   |            | 
|Legal                    |   | 11,944             |  |   | 13,479     |  |  | (11.4)%           |  |   | 46,080     | 
|Office Administration    |   | 7,500              |  |   | -          |  |  | n/a               |  |   | 20,600     | 
|Office Expenses          |   | -                  |  |   | 30         |  |  | (100)%            |  |   | 252        | 
|Regulatory Expenses/Fees |   | 1,274              |  |   | 2,719      |  |  | (53.1)%           |  |   | 9,410      | 
|Rent                     |   | 750                |  |   | 750        |  |  | n/a               |  |   | 2,250      | 
|Telephone                |   | -                  |  |   | -          |  |  | n/a               |  |   | -          | 
|Travel & Entertainment   |   | -                  |  |   | -          |  |  | n/a               |  |   | -          | 
|Total Operating Expenses | $ | 85,495             |  | $ | 21,848     |  |  | 291.3%            |  | $ | 176,403    | 

6

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The majority of our operating expenses for the quarter ended
January 31, 2007 consisted of consulting fees paid to our management and
professional fees incurred by us in meeting our ongoing reporting obligations
under the Exchange Act. The increases in our expenses for the three months ended
January 31, 2007 as compared to the comparative period in 2006 are primarily due
to an increase in our consulting expenses.

Investment in Sporg Corporation

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

Net Loss

We recorded a net loss of $276,903 for the nine months ended
January 31, 2007, compared to a loss of $36,037 for the nine months ended
January 31, 2006 representing an increase of $240,866. The increase in net loss
was as a result of the increase in operating expenses for the reasons stated
above.

From inception to January 31, 2007, we have suffered aggregate
losses in the amount of $1,399,014 and net cash outflows from operations. We
expect to continue to incur substantial losses until we complete the development
of our business. We anticipate that our operating expenses will increase in the
event that we complete the proposed merger with Solara, and as we undertake our
plan of operation and pursue our exploration program for the Peach Claim. Our
expenses will continue to increase if our board of directors decides to proceed
beyond Phase III of our exploration program to Phase IV.

LIQUIDITY AND FINANCIAL CONDITION

Working Capital

|                          |   | At January 31, 2007 |   |   | At April 30, 2006 |   |  | Percentage                  |   
|------------------------- | - | ------------------- | - | - | ----------------- | - |  | --------------------------- | --
|                          |   | (Unaudited)         |   |   | (Audited)         |   |  | Increase
      / (Decrease) |   
|Current Assets            | $ | 33,231              |   | $ | 747               |   |  | 4,348.6%                    |   
|Current Liabilities       |   | (80,675             | ) |   | (94,628           | ) |  | (14.7                       | )%
|Working Capital (Deficit) | $ | (47,444             | ) |   | ($93,881          | ) |  | (49.5                       | )%

Cash Flows

|                                                     |   | Nine Months Ended January 31 |  
|---------------------------------------------------- | - | ---------------------------- | -
|                                                     |   | 2007                         |  
|Cash Flows from (used in) Operating
      Activities | $ | (208,892                     | )
|Cash Flows from (used in) Investing Activities       |   | (100,500                     | )
|Cash Flows from (used in) Financing
      Activities |   | 313,485                      |  
|Net Increase (decrease) in Cash During Period        | $ | 4,093                        |  

7

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We had cash on hand of $4,264 and a working capital deficit
  of $47,444 as of January 31, 2007 compared to a working capital deficit
  of $93,881 as of April 30, 2006. We anticipate that we will incur approximately
  $255,000 for operating expenses, including professional legal and accounting
  expenses associated with our reporting requirements under the Exchange Act during
  the next twelve months. Accordingly, we will need to obtain additional financing
  in order to complete our full business plan, see Financing Requirements,
  below.

Financing Requirements

As at January 31, 2007, we had total assets of $33,231 and a working capital deficit of $47,444. Our current operating funds are not sufficient to complete the proposed merger with Solara and 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.

On January 17, 2007, we completed an issuance of 1,678,200 units at a price of $0.10 per unit for gross proceeds of $167,820. Each unit consists of one share of our common stock and one share purchase warrant entitling the holder to purchase
an additional share of our common stock for a period of one year from the date of the issuance at an exercise price of $0.10 per share.  The issuance was completed pursuant to Regulation S of the Securities Act. The proceeds of this offering
were used for working capital and mineral exploration.

On March 7, 2007, we approved a private placement of up to 5,000,000 shares of Terraces common stock at a price of $0.10 per share to fund the Solara Loan and for working capital purposes (the Offering).  The Offering is
intended to be made to non-US investors pursuant to Regulation S of the United States Securities Act of 1933. There is no assurance that the Offering will be completed on the above terms or at all.

From inception to January 31, 2007, we have suffered aggregate losses in the amount of $1,399,014 and net cash outflows from operations.  We expect to continue to incur substantial losses until we complete the development of our business. For
these reasons our auditors stated in their report that they have substantial doubt that we will be able to continue as a going concern.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

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

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.

8

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Use of Estimates

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

Exploration Stage Company

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

Mineral Property Acquisition and Exploration Costs

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

Depreciation, Amortization and Capitalization

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

RISKS AND UNCERTAINTIES

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

We have incurred a net loss of $1,399,014 for the period from February 20, 2001 (inception) to January 31, 2007, and have no revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations
from the development of our mineral claim. These factors raise substantial doubt that we will be able to continue as a going concern.

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

Our current operating funds are sufficient to complete the proposed exploration program; however, they will be insufficient to complete the proposed merger with Solara and/or a full exploration of the mineral claim and begin mining efforts should
the mineral claim prove commercially viable. Therefore, we will need to obtain additional financing in order to complete our full business plan. As at January 31, 2007, we had cash in the amount of $4,264.  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. Obtaining additional financing would be subject to a number of factors, including the market prices

9

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for the mineral property and gold. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

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

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

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

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

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

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

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

Our mineral claim does not contain any known bodies of ore. If our exploration programs are successful in discovering proven reserves on our mineral claim, we will require additional funds in order to place the mineral claim into commercial
production. The expenditures to be made by us in the exploration of mineral claims in all probability will be lost as it is an extremely remote possibility that the mineral claim will contain proven reserves. If our exploration programs are
successful in discovering proven reserves, we will require additional funds in order to place the Peach Claim into commercial production. The funds required for commercial mineral production can range from several million to hundreds of millions. We
currently do not have sufficient funds to place our mineral claim into commercial production. Obtaining additional financing would be subject to a number of factors, including the market price for gold and the costs of exploring for or mining these
materials.

10

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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.

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

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

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

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

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

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

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

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

Under British Columbia law, title to British Columbia mineral claims can only be held by individuals, British Columbia corporations or foreign corporations extra-provincially registered in British Columbia. Since we are a Nevada corporation and we
are not extra-provincially registered in British Columbia, Canada, we are not legally allowed to hold claims in British Columbia. Title to the Peach Claim is not held in our name. Title to the claim is being held in trust by Don Archibald, a British
Columbia resident from whom we purchased our mineral claim. In the event Mr. Archibald were to transfer legal title to our mineral claim to another party, we may not have a claim against the third

11

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party and may be forced to commence an action against Mr. Archibald. There is no assurance that we would succeed in recovering legal title to our mineral claim or recover damages from Mr. Archibald in such instance.

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

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

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

Our directors and officers are employed on a full time basis by other companies. Because we are in the early stages of our business, Mr. Thomson and Mr. Burley will not be spending a significant amount of time on our business. Mr. Thomson expects to
expend approximately 6 to 8 hours per week on our business. Mr. Burley expects to spend approximately 5 to 7 hours per week on our business. Competing demands on Mr. Thomson's and Mr. Burleys time may lead to a divergence between their
interests and the interests of other shareholders.

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

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

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

|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;                                                                                                                                           

12

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|5. | defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                
|6. | contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

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

ITEM 3. CONTROLS AND PROCEDURES

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

There were no changes in our internal control over financial reporting during the quarter ended January, 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

13

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

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

During the three months ended January 31, 2007, we completed
the sales of the following securities that were not registered pursuant to the
Securities Act:

|1. | On January 17, 2007, we completed an issuance of 1,678,200
        units at a price of $0.10 per unit for gross proceeds of $167,820. Each
        unit consists of one share of our common stock and one share purchase
        warrant entitling the holder to purchase an additional share of our common
        stock for a period of one year from the date of the issuance at an exercise
        price of $0.10 per share. The issuance was completed pursuant to Regulation
        S of the Securities Act. The purchasers represented to us that they were
        not US persons, as that term is defined under Regulation S,
        and that the subscribers were not acquiring the shares for the account
        or benefit of U.S. persons. The proceeds of this offering were used for
        mineral exploration and general corporate expenses.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

|ExhibitNumber | Description of Exhibit                                                             
|------------- | -----------------------------------------------------------------------------------
|              |                                                                                    
|3.1           | Articles of Incorporation.(1)                                                      
|              |                                                                                    
|3.2           | Certificate of Change to Authorized
        Capital effective December 19, 2005.(2)
|              |                                                                                    
|3.3           | Bylaws.(1)                                                                         

14

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|10.1 | Mineral Claim Purchase Agreement dated
        August 15, 2001 between Terrace Ventures Inc. and Don Archibald.(1)                                                                                    
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                       
|10.2 | 2006 Stock Incentive Plan.(4)                                                                                                                                                                         
|     |                                                                                                                                                                                                       
|10.3 | Stock Option Agreement between Terrace
        Ventures Inc. and Howard Thomson dated March 31, 2006.(4)                                                                                              
|     |                                                                                                                                                                                                       
|10.4 | Management Consulting Agreement dated
        March 21, 2006 between Terrace Ventures Inc. and Howard Thomson.(4)                                                                                     
|     |                                                                                                                                                                                                       
|10.5 | Agreement and Plan of Merger dated for
        reference May 24, 2006 among Terrace Ventures Inc., Sporg Technology Corp.,
        Sporg Corporation and Gordon F. Burley.(5)                         
|     |                                                                                                                                                                                                       
|10.6 | Management Consulting Agreement with
        Ian Brodie.(7)                                                                                                                                           
|     |                                                                                                                                                                                                       
|10.7 | Management Consulting Agreement with
        Frank Anderson.(7)                                                                                                                                       
|     |                                                                                                                                                                                                       
|10.8 | Letter of Intent dated February 28,
        2007 between Terrace Ventures Inc. and Dorn Beattie.(8)                                                                                                   
|     |                                                                                                                                                                                                       
|14.1 | Code of Ethics.(3)                                                                                                                                                                                    
|     |                                                                                                                                                                                                       
|21.1 | List Of Subsidiaries.(6)                                                                                                                                                                              
|     |                                                                                                                                                                                                       
|31.1 | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to Section
        302 of the Sarbanes-Oxley Act of 2002.                                                       
|     |                                                                                                                                                                                                       
|32.1 | Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002.

Notes:

|(1) | Filed with the SEC as an exhibit to our Registration
      Statement on Form 10-SB originally filed on February 2, 2004.
|--- | ------------------------------------------------------------------------------------------------------------------------
|(2) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on December 27, 2005.                    
|(3) | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on September 8, 2004.                  
|(4) | Filed with the SEC as an exhibit to our Quarterly Report
      on Form 10-QSB filed on March 22, 2006.                  
|(5) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on May 31, 2006.                         
|(6) | Filed with the SEC as an exhibit to our Annual Report on
      Form 10-KSB filed on August 14, 2006.                    
|(7) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on October 11, 2006.                     
|(8) | Filed with the SEC as an exhibit to our Current Report on
      Form 8-K filed on March 7, 2007.                        

15

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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: March 15, 2007 | By:                  
|                     |                      
|                     |                      
|                     |                      
|                     |                      
|                     |                      
|                     |                      

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