---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31,
2011

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGEACT OF 1934

For the transition period from ________to ________

COMMISSION FILE NUMBER000-50569

TERRACE VENTURES
INC.(Exact name of registrant as specified in its
charter)



|NEVADA                                                               | 91-2147101                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|Suite 202, 810 Peace Portal Drive,                                   |                                     
|Blaine, WA                                                           | 98230                               
|(Address of principal executive offices)                             | (Zip Code)                          

(360) 220-5218(Registrants telephone number,
including area code)

Not Applicable(Former name, former address and
former fiscal year, if changed since last report)

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

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

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

|Large accelerated filer [ ]                                                   | Accelerated filer [ ]        
|----------------------------------------------------------------------------- | -----------------------------
|Non-accelerated filer [_] (Do not check if a smaller
      reporting company) | Smaller reporting company [X]

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

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
As of March 18, 2011, the Registrant had 9,470,659 shares of common
stockoutstanding.

---

PART I - FINANCIAL INFORMATION

ITEM 1.       
 FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three and nine months ended January
31, 2011 are not necessarily indicative of the results that can be expected for
the year ending April 30, 2011.

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

2

---

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

|ASSETS                                                                                                                                       |   |                  |   |  
|-------------------------------------------------------------------------------------------------------------------------------------------- | - | ---------------- | - | -
|                                                                                                                                             |   |                  |   |  
|                                                                                                                                             |   | (Unaudited)      |   |  
|                                                                                                                                             |   | January 31, 2011 |   |  
|                                                                                                                                             |   |                  |   |  
|Current Assets:                                                                                                                              |   |                  |   |  
|Cash                                                                                                                                         | $ | 1,296            |   | $
|Loan Receivable                                                                                                                              |   | -0-              |   |  
|                                                                                                                                             |   |                  |   |  
|Total Current Assets                                                                                                                         |   | 1,296            |   |  
|                                                                                                                                             |   |                  |   |  
|Other Asset - Investment                                                                                                                     |   | -0-              |   |  
|                                                                                                                                             |   |                  |   |  
|TOTAL ASSETS                                                                                                                                 | $ | 1,296            |   | $
|                                                                                                                                             |   |                  |   |  
|                                                                                                                                             |   |                  |   |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY/(DEFICIT)                                                                                         |   |                  |   |  
|                                                                                                                                             |   |                  |   |  
|Current Liabilities:                                                                                                                         |   |                  |   |  
|Accounts Payable and                                                                                                                         |   |                  |   |  
|Accrued Expenses                                                                                                                             | $ | 160,062          |   | $
|Loans Payable                                                                                                                                |   | 27,000           |   |  
|Loans Payable  Related
      Parties                                                                                                        |   | 14,200           |   |  
|Stock Subscriptions Payable                                                                                                                  |   | 28,480           |   |  
|                                                                                                                                             |   |                  |   |  
|Total Current Liabilities                                                                                                                    |   | 229,742          |   |  
|                                                                                                                                             |   |                  |   |  
|Stockholders' Deficit:                                                                                                                       |   |                  |   |  
|Common
      Stock, $0.001 par value 
                 
      80,000,000 shares authorized, 
                 
      9,470,660 shares issued |   | 9,471            |   |  
|Additional Paid in Capital                                                                                                                   |   | 1,811,424        |   |  
|Deficit
      Accumulated During 
                  the
      Exploration Stage                                                              |   | (2,049,341       | ) |  
|                                                                                                                                             |   |                  |   |  
|Total Stockholders' Equity/(Deficit)                                                                                                         |   | (228,446         | ) |  
|                                                                                                                                             |   |                  |   |  
|TOTAL LIABILITIES AND 
             STOCKHOLDERS'
      EQUITY/(DEFICIT)                                                                     | $ | 1,296            |   | $

See Notes to Financial Statements

F-1

---

|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 | 
|                                                                                 |   | 2011               |  |   | 2010              |  |   | 2011         | 
|Revenues                                                                         | $ | -0-                |  | $ | -0-               |  | $ | -0-          | 
|Operating Expenses                                                               |   | (28,998)           |  |   | (22,741)          |  |   | (70,283)     | 
|Loss Before Other 
           Income and Expenses                                |   | (28,998)           |  |   | (22,741)          |  |   | (70,283)     | 
|Other Income: 
           Interest Income                                        |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Other Expense: 
           Unrealized Loss 
                
      On Investment |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Loss Before Provision 
           for Income Taxes                               |   | (28,998)           |  |   | (22,741)          |  |   | (70,283)     | 
|Provision for 
           Income Taxes                                           |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Net Loss                                                                         |   | (28,998)           |  |   | (22,741)          |  |   | (70,283)     | 
|Accumulated Deficit, 
           Beginning of Period                             |   | (2,020,343)        |  |   | (1,930,201)       |  |   | (1,979,058)  | 
|Accumulated Deficit, 
           End of Period                                   | $ | (2,049,341)        |  | $ | (1,952,942)       |  | $ | (2,049,341)  | 
|                                                                                 |   |                    |  |   |                   |  |   |              | 
|                                                                                 |   |                    |  |   |                   |  |   |              | 
|Net Loss per Share                                                               | $ | (0.00)             |  | $ | (0.00)            |  | $ | (0.01)       | 
|Weighted Average 
           Shares Outstanding                                  |   | 9,470,660          |  |   | 9,470,660         |  |   | 9,470,660    | 

See Notes to Financial Statements

F-2

---

|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-3

---

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    |  |  | 7,043      |  |  | 76,207     |   |  | (134,478    | ) |  | (51,228          | )
|                                                                         |  |              |  |  |            |  |  |            |   |  |             |   |  |                  |  
|Common Stock Issued 
         $1.00 per share 
         November 23,2005 |  | 500,000      |  |  | 500        |  |  | 499,500    |   |  | ----        |   |  | 500,000          |  
|                                                                         |  |              |  |  |            |  |  |            |   |  |             |   |  |                  |  
|4-for-1 Stock Split, 
         December 19, 2005                         |  | 22,627,500   |  |  | 22,627     |  |  | (22,627    | ) |  | ----        |   |  | ----             |  
|                                                                         |  |              |  |  |            |  |  |            |   |  |             |   |  |                  |  
|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 
         April 30, 2007                          |  | ----         |  |  | ----       |  |  | ----       |   |  | (301,060    | ) |  | (301,060         | )
|                                                                         |  |              |  |  |            |  |  |            |   |  |             |   |  |                  |  
|Balances 
        
      April 30, 2007                                  |  | 34,183,200   |  |  | 34,183     |  |  | 1,317,387  |   |  | (1,423,171  | ) |  | (71,601          | )

See Notes to Financial Statements

F-4

---

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

|                                                                         |  |              |   |  |            |   |  |            |  |  | Deficit     |   |  |                  |  
|------------------------------------------------------------------------ |  | ------------ | - |  | ---------- | - |  | ---------- |  |  | ----------- | - |  | ---------------- | -
|                                                                         |  |              |   |  |            |   |  |            |  |  | Accumulated |   |  |                  |  
|                                                                         |  | Common Stock |   |  | Additional |   |  | During the |  |  | Total       |  
|                                                                         |  |              |   |  | Dollar     |   |  | Paid in    |  |  | Exploration |   |  | Stockholders'    |  
|                                                                         |  | Shares       |   |  | Amount     |   |  | Capital    |  |  | Stage       |   |  | Equity (Deficit) |  
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Balances 
        
      April 30, 2007                                  |  | 34,183,200   |   |  | $ 34,183   |   |  | $1,317,387 |  |  | $(1,423,171 | ) |  | $ (71,601        | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Common Stock Issued 
         $0.10 per share 
         July 12, 2007    |  | 2,570,000    |   |  | 2,570      |   |  | 254,755    |  |  | ----        |   |  | 257,325          |  
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Net Loss, Period Ended 
         April 30, 2008                          |  | ----         |   |  | ----       |   |  | ----       |  |  | (100,450    | ) |  | (100,450         | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Balances 
        
      April 30, 2008                                  |  | 36,753,200   |   |  | $ 36,753   |   |  | $1,572,142 |  |  | $(1,523,621 | ) |  | $ 85,274         |  
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Common Stock Issued 
         $0.10 per share 
         October 10, 2008 |  | 10,000,000   |   |  | 10,000     |   |  | 190,000    |  |  | ----        |   |  | 200,000          |  
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Common Stock Issued 
         $0.02 per share 
         April 8, 2009    |  | 600,000      |   |  | 600        |   |  | 11,400     |  |  | ----        |   |  | 12,000           |  
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Net Loss, Period Ended 
         April 30, 2009                          |  | ----         |   |  | ----       |   |  | ----       |  |  | (355,923    | ) |  | (355,923         | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Balances 
        
      April 30, 2009                                  |  | 47,353,200   |   |  | 47,353     |   |  | 1,773,542  |  |  | (1,879,544  | ) |  | (58,649          | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|1-for-5 Reverse 
         Stock Split, 
         October 1, 2009         |  | (37,882,540  | ) |  | (37,882    | ) |  | 37,882     |  |  | ----        |   |  | ----             |  
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Net Loss, Period Ended 
         April 30, 2010                          |  | ----         |   |  | ----       |   |  | ----       |  |  | (99,514     | ) |  | (99,514          | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Balances 
        
      April 30, 2010                                  |  | 9,470,660    |   |  | 9,471      |   |  | 1,811,424  |  |  | (1,979,058  | ) |  | (158,163         | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Net Loss, Period Ended 
         January 31, 2011                        |  | ----         |   |  | ----       |   |  | ----       |  |  | (70,283     | ) |  | (70,283          | )
|                                                                         |  |              |   |  |            |   |  |            |  |  |             |   |  |                  |  
|Balances 
        
      January 31, 2011                                |  | 9,470,660    |   |  | 9,471      |   |  | 1,811,424  |  |  | (2,049,341  | ) |  | (228,446         | )

See Notes to Financial Statements.

F-5

---

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

|                                                                                              |   | NINE MONTHS ENDED |   |   |              |  
|--------------------------------------------------------------------------------------------- | - | ----------------- | - | - | ------------ | -
|                                                                                              |   | JANUARY 31,       |   |   | INCEPTION to |  
|                                                                                              |   | 2011              |   |   | 2010         |  
|                                                                                              |   |                   |   |   |              |  
|Cash Flows from                                                                               |   |                   |   |   |              |  
|Operating Activities:                                                                         |   |                   |   |   |              |  
|                                                                                              |   |                   |   |   |              |  
|Net Loss                                                                                      | $ | (70,283           | ) | $ | (73,398      | )
|                                                                                              |   |                   |   |   |              |  
|Adjustments to
      Reconcile Net                                                            |   |                   |   |   |              |  
|Income to
      Net Cash
      Provided/(Used) 
               by
      Operating Activities: |   |                   |   |   |              |  
|Unrealized Loss on Investment                                                                 |   | -0-               |   |   | -0-          |  
|(Increase)/Decrease in:                                                                       |   |                   |   |   |              |  
|Trust Account Receivable                                                                      |   | -0-               |   |   | -0-          |  
|Notes Receivable                                                                              |   | -0-               |   |   | -0-          |  
|Loan Receivable                                                                               |   | -0-               |   |   | (3,800       | )
|Increase(Decrease) in:                                                                        |   |                   |   |   |              |  
|Accounts Payable                                                                              |   | 41,930            |   |   | 47,508       |  
|Loans Payable                                                                                 |   | -0-               |   |   | -0-          |  
|Loans Payable  Related Parties                                                               |   | -0-               |   |   | -0-          |  
|Stock Subscriptions Payable                                                                   |   | 28,480            |   |   | -0-          |  
|                                                                                              |   |                   |   |   |              |  
|Net Cash
      Provided/(Used)                                                                |   |                   |   |   |              |  
|by
      Operating Activities                                                                 |   | 127               |   |   | (29,690      | )
|                                                                                              |   |                   |   |   |              |  
|Cash Flows from                                                                               |   |                   |   |   |              |  
|Investing Activities:                                                                         |   |                   |   |   |              |  
|                                                                                              |   |                   |   |   |              |  
|Stock Investment                                                                              |   | -0-               |   |   | -0-          |  
|                                                                                              |   |                   |   |   |              |  
|Net Cash
      Used                                                                           |   |                   |   |   |              |  
|by
      Investing Activities                                                                 |   | -0-               |   |   | -0-          |  
|                                                                                              |   |                   |   |   |              |  
|Cash Flows from                                                                               |   |                   |   |   |              |  
|Financing Activities:                                                                         |   |                   |   |   |              |  
|                                                                                              |   |                   |   |   |              |  
|Loans from Shareholders                                                                       |   | -0-               |   |   | 32,300       |  
|Payments on Loans                                                                             |   | -0-               |   |   | (100         | )
|Proceeds Related to                                                                           |   |                   |   |   |              |  
|Issuance
      of Common Stock                                                                |   | -0-               |   |   | -0-          |  
|                                                                                              |   |                   |   |   |              |  
|Net Cash
      Provided by                                                                    |   |                   |   |   |              |  
|Financing Activities                                                                          |   | -0-               |   |   | 32,200       |  
|                                                                                              |   |                   |   |   |              |  
|                                                                                              |   |                   |   |   |              |  
|Net Increase in Cash                                                                          | $ | 127               |   | $ | 2,510        |  
|                                                                                              |   |                   |   |   |              |  
|Cash at Beginning of Period                                                                   |   | 1,169             |   |   | 132          |  
|                                                                                              |   |                   |   |   |              |  
|Cash at End of Period                                                                         | $ | 1,296             |   | $ | 2,642        |  

See Notes to Financial Statements

F-6

---

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

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

Basis of Presentation

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

Use of Estimates

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

Exploration Stage Company

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

Pro Forma Compensation Expense

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

F-7

---

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
  CONTINUED

Mineral Property Acquisition and Exploration Costs

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

Depreciation, Amortization and Capitalization

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

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

Income Taxes

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

Fair Value of Financial Instruments

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

F-8

---

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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
  CONTINUED

Investments

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

Per Share Information

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

NOTE 2  LOANS PAYABLE

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

NOTE 3  LOANS PAYABLE  RELATED PARTIES

Loans payable related parties consist of various short term
  monies advanced by shareholders. These loans are unsecured, bear no interest
  rate and no specified maturity date.

NOTE 4 - PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended January
  31, 2011 and January 31, 2010 represents the minimum state income tax expense of
  the Company, which is not considered significant.

NOTE 5 - 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.

F-9

---

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

NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

NOTE 7  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 $2,049,341 since its inception and requires capital for
  its contemplated operational and marketing activities to take place. The
  Company's ability to raise additional capital through the future issuances of
  common stock is unknown. The obtainment of additional financing, the successful
  development of the Company's contemplated plan of operations, and its
  transition, ultimately, to the attainment of profitable operations are necessary
  for the Company to continue operations. The ability to successfully resolve
  these factors raise substantial doubt about the Company's ability to continue as
  a going concern. The consolidated financial statements of the Company do not
  include any adjustments that may result from the outcome of these aforementioned
  uncertainties.

NOTE 8  REVERSE STOCK SPLIT

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

F-10

---

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

NOTE 9  STOCK ISSUANCES

As of January 31, 2011, the Company received $28,480 as
  advances on the purchase of shares of stock under a private placement offering.
  The shares and the share purchase warrants had not been issued as of January 31,
  2011, and the advance is included as a current liability in the financial
  statements.

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 | 
|                                  |   | 2011               |  |   | 2010              |  |   | 2011         | 
|                                  |   |                    |  |   |                   |  |   |              | 
|Operating Expenses:               |   |                    |  |   |                   |  |   |              | 
|Accounting & Audit                | $ | 3,960              |  | $ | 4,090             |  | $ | 20,420       | 
|Bad Debt Expense                  |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Bank
      Charges                |   | 155                |  |   | 117               |  |   | 270          | 
|Cancelled Merger Costs            |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Consulting                        |   | 1,000              |  |   | -0-               |  |   | 1,000        | 
|Exploration and
      Development |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Legal                             |   | 15,614             |  |   | 9,510             |  |   | 21,883       | 
|Office Administration             |   | 7,500              |  |   | 7,500             |  |   | 22,500       | 
|Office
      Expenses             |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Regulatory Expenses/Fees          |   | 169                |  |   | 924               |  |   | 2,410        | 
|Rent                              |   | 375                |  |   | 375               |  |   | 1,125        | 
|Telephone                         |   | 225                |  |   | 225               |  |   | 675          | 
|Travel
      & Entertainment      |   | -0-                |  |   | -0-               |  |   | -0-          | 
|                                  |   |                    |  |   |                   |  |   |              | 
|                                  |   |                    |  |   |                   |  |   |              | 
|Total Operating Expenses          | $ | 28,998             |  | $ | 22,741            |  | $ | 70,283       | 

See Notes to Financial Statements

F-13

---

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

Certain statements contained in this Quarterly Report
constitute "forward-looking statements. These statements, identified by words
such as plan, "anticipate," "believe," "estimate," "should," "expect" and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Part II  Item 1A. Risk
Factors" and elsewhere in this Quarterly Report. We do not intend to update the
forward-looking information to reflect actual results or changes in the factors
affecting such forward-looking information. We advise you to carefully review
the reports and documents, particularly our Annual Reports, Quarterly Reports
and Current Reports, that we file from time to time with the United States
Securities and Exchange Commission (the SEC).

OVERVIEW

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

We do not have any business operations or significant assets.
We had previously entered into a Share Purchase Agreement dated April 29, 2010,
as amended, with Marktech Acquisition Corp. (the "Vendor"), Worldbid
International Inc. ("Worldbid") and Geobiz Systems Inc., our wholly-owned
subsidiary ("Geobiz") whereby Geobiz agreed to acquire all of the issued and
outstanding shares of Worldbid in consideration of $250,000. The parties of the
agreement were unable to close the transaction by the closing date, being June
30, 2010. Accordingly, we are now actively seeking and evaluating alternative
business opportunities. Our ability to seek out and acquire an alternative
business opportunity is subject to our obtaining financing, of which there is no
assurance.

PLAN OF OPERATION

We are currently in the process of reorganizing our business
and are seeking and evaluating alternative business opportunities. As a result,
we are unable to provide an accurate estimate of our financial requirements for
the next twelve months. However, as at January 31, 2011, we currently have a
working capital deficit of $228,446 and will need substantial financing in the
near term in order to meet our current obligations as they become due and to
meet our ongoing reporting obligations under the Securities Exchange Act of 1934
(the Exchange Act). In addition, if our management is successful in
identifying a suitable business opportunity for us to pursue, we will likely
need significantly more financing in order to pursue the new business
opportunity.

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

|         |   | Three Months Ended |   |   | Percentage |   |  |            | Nine Months Ended |  |   | Percentage |  
|-------- | - | ------------------ | - | - | ---------- | - |  | ---------- | ----------------- |  | - | ---------- | -
|         |   | January 31,        |   |   | Increase / |   |  |            | January 31,       |  |   | Increase / |  
|         |   | 2011               |   |   | 2010       |   |  | (Decrease) |                   |  |   | 2011       |  
|Revenue  | $ | -                  |   | $ | -          |   |  | n/a        |                   |  | $ | -          |  
|Expenses |   | (28,998            | ) |   | (22,741    | ) |  | (27.5      | )%                |  |   | (70,283    | )
|Net Loss | $ | (28,998            | ) | $ | (22,741    | ) |  | (27.5      | )%                |  | $ | (70,283    | )

3

---

Revenues

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

Expenses

The major components of our expenses for the three and nine
months ended January 31, 2011 and 2010 are outlined in the table below:

|                         |   | Three Months Ended |  |   | Percentage |  |  | Nine Months Ended |  |   | Percentage | 
|------------------------ | - | ------------------ |  | - | ---------- |  |  | ----------------- |  | - | ---------- | 
|                         |   | January 31,        |  |   | Increase / |  |  | January 31,       |  |   | Increase / | 
|                         |   | 2011               |  |   | 2010       |  |  | (Decrease)        |  |   | 2011       | 
|Accounting and Audit     | $ | 3,960              |  | $ | 4,090      |  |  | (3.2)%            |  | $ | 20,420     | 
|Bank Charges             |   | 115                |  |   | 177        |  |  | (35.0)%           |  |   | 270        | 
|Consulting               |   | 1,000              |  |   | -          |  |  | 100%              |  |   | 1,000      | 
|Legal                    |   | 15,614             |  |   | 9,510      |  |  | 64.2%             |  |   | 21,883     | 
|Office Administration    |   | 7,500              |  |   | 7,500      |  |  | 0.0%              |  |   | 22,500     | 
|Regulatory Expenses/Fees |   | 169                |  |   | 924        |  |  | (81.7)%           |  |   | 2,410      | 
|Rent                     |   | 375                |  |   | 375        |  |  | 0.0%              |  |   | 1,125      | 
|Telephone                |   | 225                |  |   | 225        |  |  | 0.0%              |  |   | 675        | 
|Total Operating Expenses | $ | 28,988             |  | $ | 22,741     |  |  | 27.5%             |  | $ | 70,283     | 

Our operating expenses increased from $22,741, during the three
months ended January 31, 2010, to $28,988, during the three months ended January
31, 2011. The increase in our operating expenses is primarily due to increases
in consulting and legal expenses. These amounts were partially offset by
decreases in accounting and audit expenses, bank charges and regulatory expenses
and fees.

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

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

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital         |   |                           |   |   |                         |   |  |                       | 
|----------------------- | - | ------------------------- | - | - | ----------------------- | - |  | --------------------- | 
|                        |   |                           |   |   |                         |   |  | Percentage            | 
|                        |   | At
      January 31, 2011 |   |   | At
      April 30, 2010 |   |  | Increase / (Decrease) | 
|Current Assets          | $ | 1,296                     |   | $ | 1,169                   |   |  | 10.9%                 | 
|Current Liabilities     |   | (229,742                  | ) |   | (159,332                | ) |  | 44.2%                 | 
|Working Capital Deficit | $ | (228,446                  | ) | $ | (158,163                | ) |  | 44.4%                 | 

4

---

|Cash Flows                                |   |                   |  |   |                  |  
|----------------------------------------- | - | ----------------- |  | - | ---------------- | -
|                                          |   | Nine Months Ended | 
|                                          |   | January 31, 2011  |  |   | January 31, 2010 |  
|Net Cash Used by Operating Activities     | $ | 127               |  | $ | (29,690          | )
|Net Cash From Investing Activities        |   | -                 |  |   | -                |  
|Net Cash Provided By Financing Activities |   | -                 |  |   | 32,200           |  
|Net Increase in Cash During Period        | $ | 127               |  | $ | 2,510            |  

We had cash on hand of $1,296 and a working capital deficit of
$228,446 as of January 31, 2011 compared to a working capital deficit of
$158,163 as of April 30, 2010. The increase in our working capital deficit is
due to: (i) an increase in accounts payable and accrued expenses as a result of
our lack of capital to meet ongoing costs, and (ii) the fact that we recorded
stock subscriptions payable of $28,240.

Financing Requirements

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

Our Board of Directors has approved two private placement
offerings for up to an aggregate of 10,000,000 Units for proceeds of up to
$100,000 as follows:

Foreign Private Placement

On June 8, 2010, our Board of Directors approved a private
placement offering of up to 5,000,000 Units at a price of $0.01 US per Unit,
with each Unit consisting of one share of our common stock and one share
purchase warrant (the Foreign Private Placement). Each share purchase warrant
will entitle the holder to purchase an additional share of common stock
exercisable for a period of two years at a price of $0.01 US per share. We have
received proceeds of $28,480 under this offering but have not issued any
securities. The private placement offering will be made to persons who are not
U.S. Persons as defined in Regulation S. We have received any proceeds under
the Foreign Private Placement. There is no assurance that the private placement
offering or any part of it will be completed.

U.S. Private Placement

Also, on June 8, 2010, our Board of Directors approved a
private placement offering of up to 5,000,000 Units at a price of $0.01 US per
Unit, with each Unit consisting of one share of our common stock and one share
purchase warrant (the U.S. Private Placement). Each share purchase warrant
will entitle the holder to purchase an additional share of common stock
exercisable for a period of two years at a price of $0.01 US per share. The
private placement offering will be made to persons who are accredited
investors as defined in Regulation D. We have not received any proceeds under
the U.S. Private Placement. There is no assurance that the private placement
offering or any part of it will be completed.

Effective, March 21, 2011, our Board of Directors determined
not to include the warrants and to only issue shares under the Foreign Private
Placement and the U.S. Private Placement offerings.

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

OFF-BALANCE SHEET ARRANGEMENTS

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

5

---

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.

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

ITEM
3.          QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T.       CONTROLS AND
PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of January 31, 2011 (the Evaluation Date). This evaluation
was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed in our Annual Report on Form 10-K for the year ended April
30, 2010 (the 2010 Annual Report).

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in our 2010 Annual Report, we believe that our financial statements
contained in our Quarterly Report on Form 10-Q for the quarter ended January 31,
2011 fairly present our financial condition, results of operations and cash
flows in all material respects.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial
reporting that occurred during the quarter ended January 31, 2011 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

6

---

PART II - OTHER INFORMATION

ITEM
1.          LEGAL
PROCEEDINGS.

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

ITEM 1A.       RISK
FACTORS.

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

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

As at January 31, 2011 we had no cash. We do not have any
business operations or significant assets. As a result, we are actively seeking
and evaluating alternative business opportunities. Our ability to seek out and
acquire an alternative business opportunity is subject to our obtaining
financing, of which there is no assurance.

Our Board of Directors has approved the Foreign Private
Placement of up to 5,000,000 Units for gross proceeds of $50,000 and the U.S.
Private Placement of up to 5,000,000 Units for gross proceeds of $50,000. There
is no assurance that we will be able to complete the sale of any securities
under the Foreign Private Placement or the U.S. Private Placement. There is no
assurance that we will be able to complete the sale of any securities under
these offerings. If we are unable to obtain sufficient financing to meet our
ongoing expenditures, our business will fail.

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

We have incurred a net loss of $2,049,341 for the period from
February 20, 2001 (inception) to January 31, 2011 and have no revenues to date.
Our future is dependent upon our ability to obtain suitable business opportunity
and obtain substantial financing in order to meet our current obligations and to
continue our operations. These factors raise substantial doubt that we will be
able to continue as a going concern.

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

Since our inception, we have relied on equity sales of our
common stock to fund our operations. We may conduct additional equity offerings
in the future to finance any future business projects that we decide to
undertake. If common stock is issued in return for additional funds, the price
per share could be lower than that paid by our current stockholders. We
anticipate continuing to rely on equity sales of our common stock in order to
fund our business operations. If we issue additional stock, investors
percentage interest in us will be diluted. The result of this could reduce the
value of their stock.

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

The shares of our common stock constitute penny stocks under
the Exchange Act. The shares will remain classified as a penny stock for the
foreseeable future. The classification as a penny stock makes it more difficult
for a broker/dealer to sell the stock into a secondary market, which makes it
more difficult for a purchaser to liquidate his or her investment. Any
broker/dealer engaged by the purchaser for the purpose of selling his or her
shares will be subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather
than having to comply with these rules, some broker-dealers will refuse to
attempt to sell a penny stock.

7

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The "penny stock" rules adopted by the SEC under the Exchange
Act subjects the sale of the shares of our common stock to certain regulations
which impose sales practice requirements on broker/dealers. For example, the penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the SEC, that:

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

Legal remedies, which may be available to an investor in "penny
stocks, are as follows:

|1. | if "penny stock" is sold to an investor in violation of
      his or her rights listed above, or other federal or states securities
      laws, the investor may be able to cancel his or her purchase and get his
      or her money back.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                            
|2. | if the stocks are sold in a fraudulent manner, the
      investor may be able to sue the persons and firms that caused the fraud
      for damages.                                                                                        
|   |                                                                                                                                                                                                                                            
|3. | if the investor has signed an arbitration agreement,
      however, he or she may have to pursue his or her claim through
      arbitration.                                                                                               

If the person purchasing the securities is someone other than
an accredited investor or an established customer of the broker/dealer, the
broker/dealer must also approve the potential customer's account by obtaining
information concerning the customer's financial situation, investment experience
and investment objectives. The broker/dealer must also make a determination
whether the transaction is suitable for the customer and whether the customer
has sufficient knowledge and experience in financial matters to be reasonably
expected to be capable of evaluating the risk of transactions in such
securities. Accordingly, the SEC's rules may limit the number of potential
purchasers of the shares of our common stock.

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

None.

ITEM
3.          DEFAULTS UPON SENIOR
SECURITIES.

None.

ITEM
5.          OTHER
INFORMATION.

None.

8

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ITEM 6. EXHIBITS.

|Exhibit |                                                                                                                                                                                                             
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                      
|3.1     | Articles of
      Incorporation.(1)                                                                                                                                                                         
|3.2     | Certificate of Change to Authorized Capital
      effective December 19, 2005.(2)                                                                                                                           
|3.3     | Bylaws.(1)                                                                                                                                                                                                  
|10.1    | 2006 Stock Incentive Plan.(4)                                                                                                                                                                               
|10.2    | Stock Option Agreement between
      the Company and Howard Thomson dated March 31, 2006.(4)                                                                                                                
|10.3    | Management Consulting Agreement dated March 21,
      2006 between the Company and Howard Thomson.(4)                                                                                                       
|10.4    | Interim Agreement dated July 9,
  2008 between the Company and Pyro Pharmaceuticals, Inc.(5)                                                                                                                
|10.5    | Amendment Agreement dated September 26, 2008 to
      the Interim Agreement dated July 9, 2008 between the Company and Pyro
      Pharmaceuticals, Inc.(6)                                                  
|10.6    | Share Purchase Agreement dated
      April 29, 2009 among Terrace Ventures Inc., Marktech Acquisition Corp.,
      Worldbid International Inc. and Geobiz Systems Inc.(7)                                   
|10.7    | Amendment Agreement to Share Purchase Agreement
      dated August 12, 2009 among Terrace Ventures Inc., Marktech Acquisition
    Corp., Worldbid International Inc. and Geobiz Systems Inc.(8)             
|14.1    | Code of Ethics.(3)                                                                                                                                                                                          
|31.1    | Certification of Chief Executive Officer and
      Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
      of 2002.                                                                 
|32.1    | Certification of Chief
      Executive Officer and Chief Financial Officer pursuant to pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.

|Notes:
|------
|(1)   
|(2)   
|(3)   
|(4)   
|(5)   
|(6)   
|(7)   
|(8)   

9

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SIGNATURES

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

|      |                      |  | TERRACE VENTURES INC.
|----- | -------------------- |  | ---------------------
|      |                      |  |                      
|      |                      |  |                      
|      |                      |  |                      
|Date: | March
      22, 2011 |  | By:                  
|      |                      |  |                      
|      |                      |  |                      
|      |                      |  |                      
|      |                      |  |                      
|      |                      |  |                      

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