---

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,
2010

[ ] 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 reportingcompany [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 19, 2010, the Registrant had 9,470,660 shares of common stockoutstanding.

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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-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, 2010 are not necessarily indicative of the results that can be expected for
the year ended April 30, 2010.

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

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Report of Independent Registered Public Accounting
  Firm

To the Board of Directors 
  Terrace Ventures Inc.

We have reviewed the accompanying balance sheet of Terrace
  Ventures Inc. as of January 31, 2010, and the statements of operations and
  accumulated deficit, changes in stockholders equity (deficit), and statements
  of cash flows for the nine month periods ended January 31, 2010 and January 31,
  2009, and for the period February 20, 2001 (date of inception) to January 31,
  2010. 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, 2009, and the related statements of
  operations and accumulated deficit, changes in stockholders equity (deficit),
  and cash flows for the year then ended (not presented herein); and in our report
  dated August 7, 2009, 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, 2009 is fairly stated, in all
  material respects, in relation to the balance sheet from which it has been
  derived.

Sarna & Company, Certified Public Accountants 
  Westlake
  Village, California 
  March 22, 2010

F-1

---

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

|ASSETS                                                                                                                                                                                   |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -
|                                                                                                                                                                                         |  
|                                                                                                                                                                                         |  
|                                                                                                                                                                                         |  
|                                                                                                                                                                                         |  
|Current Assets:                                                                                                                                                                          |  
|Cash                                                                                                                                                                                     | $
|Loan Receivable                                                                                                                                                                          |  
|                                                                                                                                                                                         |  
|Total Current Assets                                                                                                                                                                     |  
|                                                                                                                                                                                         |  
|Other Asset - Investment                                                                                                                                                                 |  
|                                                                                                                                                                                         |  
|TOTAL ASSETS                                                                                                                                                                             | $
|                                                                                                                                                                                         |  
|                                                                                                                                                                                         |  
|LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)                                                                                                                                           |  
|                                                                                                                                                                                         |  
|Current Liabilities:                                                                                                                                                                     |  
|Accounts Payable and                                                                                                                                                                     |  
|Accrued Expenses                                                                                                                                                                         | $
|Loan Payable                                                                                                                                                                             |  
|                                                                                                                                                                                         |  
|Total Current Liabilities                                                                                                                                                                |  
|                                                                                                                                                                                         |  
|Stockholders' Deficit:                                                                                                                                                                   |  
|Common Stock, $0.001
      par value 
                80,000,000 and 400,000,000
      shares 
                authorized, 9,470,660
      and 47,353,200 
                shares issued |  
|Additional Paid in Capital                                                                                                                                                               |  
|Deficit Accumulated
      During 
                the Exploration Stage                                                                                                                  |  
|                                                                                                                                                                                         |  
|Total Stockholders' Equity/(Deficit)                                                                                                                                                     |  
|                                                                                                                                                                                         |  
|TOTAL LIABILITIES AND 
           STOCKHOLDERS' EQUITY/(DEFICIT)                                                                                                                         | $

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 |  
|                                                     |   | 2010               |   |   | 2009              |   |   | 2010         |  
|Revenues                                             | $ | -0-                |   | $ | -0-               |   | $ | -0-          |  
|Operating Expenses                                   |   | (22,741            | ) |   | (224,205          | ) |   | (73,398      | )
|Loss Before Other 
           Income and Expenses    |   | (22,741            | ) |   | (224,205          | ) |   | (73,398      | )
|Other Income:                                        |   |                    |   |   |                   |   |   |              |  
|Interest Income                                      |   | -0-                |   |   | -0-               |   |   | -0-          |  
|Other Expense:                                       |   |                    |   |   |                   |   |   |              |  
|Unrealized Loss 
                On Investment       |   | -0-                |   |   | -0-               |   |   | -0-          |  
|Loss Before Provision 
           for Income Taxes   |   | (22,741            | ) |   | (224,205          | ) |   | (73,398      | )
|Provision for 
           Income Taxes               |   | -0-                |   |   | -0-               |   |   | -0-          |  
|Net Loss                                             |   | (22,741            | ) |   | (224,205          | ) |   | (73,398      | )
|Accumulated Deficit, 
           Beginning of Period |   | (1,930,201         | ) |   | (1,588,998        | ) |   | (1,879,544   | )
|Accumulated Deficit, 
           End of Period       | $ | (1,952,942         | ) | $ | (1,833,203        | ) | $ | (1,952,942   | )
|                                                     |   |                    |   |   |                   |   |   |              |  
|Net Loss per Share                                   | $ | (0.00              | ) | $ | (0.02             | ) | $ | (0.01        | )
|Weighted Average 
           Shares Outstanding      |   | 9,470,660          |   |   | 9,350,640         |   |   | 9,470,660    |  

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    |  |  | 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-5

---

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

|                                                           |  |              |   |   |            |   |   |            |  |   | Deficit     |   |   |                  |  
|---------------------------------------------------------- |  | ------------ | - | - | ---------- | - | - | ---------- |  | - | ----------- | - | - | ---------------- | -
|                                                           |  |              |   |   |            |   |   |            |  |   | Accumulated |   |   |                  |  
|                                                           |  | Common Stock |   |   | Additional |   |   | During the |  |   | Total       |  
|                                                           |  |              |   |   | Dollar     |   |   | Paid in    |  |   | Exploration |   |   | Stockholders'    |  
|                                                           |  | Shares       |   |   | Amount     |   |   | Capital    |  |   | Stage       |   |   | Equity (Deficit) |  
|                                                           |  |              |   |   |            |   |   |            |  |   |             |   |   |                  |  
|                                                           |  |              |   |   |            |   |   |            |  |   |             |   |   |                  |  
|Balances April 30, 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 January 31, 2010                    |  | ----         |   |   | ----       |   |   | ----       |  |   | (73,398     | ) |   | (73,398          | )
|                                                           |  |              |   |   |            |   |   |            |  |   |             |   |   |                  |  
|Balances January 31, 2010                                  |  | 9,470,660    |   | $ | 9,471      |   | $ | 1,811,424  |  | $ | (1,952,942  | ) | $ | (132,047         | )

See Notes to Financial Statements.

F-6

---

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

|                                                                                   |   | NINE MONTHS ENDED |   |   |              |  
|---------------------------------------------------------------------------------- | - | ----------------- | - | - | ------------ | -
|                                                                                   |   | JANUARY 31,       |   |   | INCEPTION to |  
|                                                                                   |   | 2010              |   |   | 2009         |  
|                                                                                   |   |                   |   |   |              |  
|Cash Flows from                                                                    |   |                   |   |   |              |  
|Operating Activities:                                                              |   |                   |   |   |              |  
|                                                                                   |   |                   |   |   |              |  
|Net Loss                                                                           | $ | (73,398           | ) | $ | (309,582     | )
|                                                                                   |   |                   |   |   |              |  
|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-               |   |   | 13,775       |  
|Notes Receivable                                                                   |   | -0-               |   |   | 214,892      |  
|Loan Receivable                                                                    |   | (3,800            | ) |   | -0-          |  
|Increase(Decrease)
      in: 
                       
      Accounts Payable       |   | 47,508            |   |   | (24,063      | )
|                                                                                   |   |                   |   |   |              |  
|Net
      Cash Provided/(Used) 
                by Operating Activities            |   | (29,690           | ) |   | (104,978     | )
|                                                                                   |   |                   |   |   |              |  
|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                                                            |   | 32,300            |   |   | 41,000       |  
|Payments on Loans                                                                  |   | (100              | ) |   | (140,600     | )
|Proceeds Related to 
                  Issuance
      of Common Stock              |   | -0-               |   |   | 205,000      |  
|                                                                                   |   |                   |   |   |              |  
|Net
      Cash Provided by 
                    
      Financing Activities        |   | 32,200            |   |   | 105,400      |  
|                                                                                   |   |                   |   |   |              |  
|                                                                                   |   |                   |   |   |              |  
|Net Increase in Cash                                                               | $ | 2,510             |   | $ | 422          |  
|                                                                                   |   |                   |   |   |              |  
|Cash at Beginning of Period                                                        |   | 132               |   |   | 100          |  
|                                                                                   |   |                   |   |   |              |  
|Cash at End of Period                                                              | $ | 2,642             |   | $ | 522          |  

See Notes to Financial Statements

F-7

---

|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. 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.

F-8

---

|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-9

---

|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 - PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended January
  31, 2010 and January 31, 2009 represents the minimum state income tax expense
  of the Company, which is not considered significant.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

Operating Leases

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

Litigation

The Company is not presently involved in any litigation.

NOTE 4 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

NOTE 5  GOING CONCERN

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

F-10

---

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

NOTE 5  GOING CONCERN - CONTINUED

The consolidated financial statements of the Company have been
  prepared assuming that the Company will continue as a going concern, which contemplates,
  among other things, the realization of assets and the satisfaction of liabilities
  in the normal course of business. The Company has incurred cumulative net losses
  of $1,952,942 since its inception and requires capital for its contemplated
  operational and marketing activities to take place. The Company's ability to
  raise additional capital through the future issuances of common stock is unknown.
  The obtainment of additional financing, the successful development of the Company's
  contemplated plan of operations, and its transition, ultimately, to the attainment
  of profitable operations are necessary for the Company to continue operations.
  The ability to successfully resolve these factors raise substantial doubt about
  the Company's ability to continue as a going concern. The consolidated financial
  statements of the Company do not include any adjustments that may result from
  the outcome of these aforementioned uncertainties.

NOTE 6  MERGER AGREEMENTS/STOCK ISSUANCES

On July 9, 2008, the Company entered into an interim agreement
  with Pyro Pharmaceuticals, Inc. (Pyro), a privately held Delaware
  corporation engaged in the business of developing therapeutics against multi-drug
  resistant infectious microorganisms.

Under the terms of the Interim Agreement, the Company and Pyro
  agreed to complete a business combination of the two companies such that following
  completion of the business combination the shareholders of Pyro, immediately
  prior to the business combination, would own 60% of the issued and outstanding
  shares of the Company and the shareholders of Company, immediately prior to
  the business combination and after giving effect to a proposed $2.5 million
  private placement referred to below, would hold 40% of the Company. In addition,
  the Company agreed to pay the reasonable legal and accounting costs of Pyro
  in connection with the preparation and closing of a definitive agreement. Upon
  execution of the Interim Agreement, the Company advanced an initial $10,000
  to Pyro for the above noted legal and accounting costs.

F-11

---

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

NOTE 6  MERGER AGREEMENTS/STOCK ISSUANCES  CONTINUED

The closing of the business combination was subject to a number
  of conditions, including, among other conditions: (i) the Company completing
  a private placement of 25,000,000 units for total proceeds of $2,500,000; (ii)
  delivery of all financial statements of Pyro required under applicable securities
  rules; (iii) each party satisfactorily completing its due diligence review of
  Pyro; and (iv) the approval of the shareholders of Pyro. Under the terms of
  the Interim Agreement, the parties were required to enter into a formal agreement
  no later than December 31, 2008.

On July 15, 2008, the Companys Board of Directors approved
  a private placement offering of up to 12,500,000 units at a price of $0.10 per
  Unit, with each Unit consisting of one share of the Companys common stock
  and one share purchase warrant. Each whole warrant entitled the holder to purchase
  an additional share of common stock exercisable for a period of 12 months at
  a price of $0.15 per share. The offering was to be made in the United States
  to persons who are accredited investors as defined in Regulation D of the Securities
  Act of 1933.

The Companys Board of Directors also approved a concurrent
  private placement offering of up to 12,500,000 Units to persons who are not
  U.S. Persons as defined in Regulation S of the Securities Act of
  1933. The Units would be identical to those to be offered under the U.S. Private
  Placement as described above.

The proceeds of the U.S. Private Placement and the Foreign Private
  Placement offerings were to be used to meet the closing conditions of the proposed
  business combination between the Company and Pyro. The Company was unable to
  raise the required financing as of December 31, 2008 and as a result, was unable
  to complete the business combination with Pyro. In addition, the Companys
  Board of Directors rescinded these proposed private placement offerings.

On January 22, 2009, the Companys Board of Directors approved
  a private placement offering of up to 7,500,000 Units at a price of $0.02 per
  Unit, with each Unit consisting of one share of the Companys common stock
  and one share purchase warrant. Each whole warrant entitles the holder to purchase
  an additional share of common stock exercisable for a period of two years at
  a price of $0.03 per share. The offering was made to persons who are not U.S.
  Persons as defined in Regulation S of the Securities Act of 1933. Proceeds
  of this offering were to be used to retire indebtedness and for general corporate
  purposes.

F-12

---

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

NOTE 6  MERGER AGREEMENTS/STOCK ISSUANCES  CONTINUED

On April 8, 2009, the company issued 600,000 Units under this
  private placement offering for total proceeds of $12,000. Also on this date
  the Companys board of directors terminated the offering of any further
  Units under this offering.

On April 8, 2009, the Board of Directors approved a private placement
  offering of up to 3,000,000 units at a price of $0.04 per Unit, with each Unit
  consisting of one share of common stock and one share purchase warrant. Each
  share purchase warrant entitles the holder to purchase an additional share of
  common stock exercisable for a period of two years at a price of $0.05 per share.
  The private placement offering will be made to persons who are not U.S.
  Persons as defined in Regulation S. The proceeds of the private placement
  offering will be used to retire corporate indebtedness and for general corporate
  purposes.

On April 9, 2009, the Company acquired 100% of the issued and
  outstanding shares of Geobiz Systems Inc., a Nevada Corporation. Geobiz Systems
  Inc. was incorporated on April 9, 2009, and had no activity for the period April
  9, 2009 to April 30, 2009.

On April 29, 2009, the Company and its wholly-owned subsidiary,
  Geobiz Systems Inc., entered into a Share Purchase Agreement with Marktech Acquisition
  Corp. and Worldbid International Inc. whereby Geobiz will acquire all of the
  issued and outstanding shares of Worldbid from Marktech. Under the terms of
  the Agreement, the Company will pay an aggregate of $250,000 for Worldbid as
  follows:

(a) $10,000 payable to the Marktech on the Closing date.

(b) The issuance to Marktech at Closing of promissory notes as
  follows:
       (i) $15,000 payable 6 months following Closing, with no interest.
        (ii) $50,000 payable 12 months following Closing, with no interest. 
        (iii) $75,000 payable 24 months following Closing, with no interest. 
       (iv) $100,000 payable 36 months following Closing, with no interest.

(c) These notes shall be convertible at the option of the holder
  into common shares of the Company at a price of $0.05 per share.

F-13

---

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

NOTE 6  MERGER AGREEMENTS/STOCK ISSUANCES  CONTINUED

Worldbid owns and operates an international business-to-business
  and government-to-business facilitation service, which combines proprietary
  software with the power of the Internet to bring buyers and sellers together
  from around the world for interactive trade.

Closing of the Agreement is subject to a number of conditions,
  including Worldbid delivering the financial statements required under the Securities
  Exchange Act of 1934 and the United States Securities and Exchange Commission
  rules promulgated thereunder, and completion of satisfactory due diligence by
  the Company and Geobiz.

Under the terms of the Agreement, closing was to occur ten days following receipt of financial statements of Worldbid as required under the Agreement or such other date as is mutually agreed upon by the parties, but in any event not more than 105 days from the date of the Agreement.    On August 12, 2009, the Company entered into an Amendment Agreement to the Agreement with Geobiz, Marktech and Worldbid, whereby the parties agreed to extend the closing date of the Agreement to no later than December 31, 2009.  On March 17, 2010, the parties entered into an amendment agreement dated for reference December 31, 2009, to further extended the closing date of the Agreement to no later than June 30, 2010.

NOTE 7  REVERSE STOCK SPLIT

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

NOTE 7  SUBSEQUENT EVENTS

On March 16, 2010, the Board of Directors approved a private placement offering of up to $200,000 of 10% convertible notes.  The private placement offering will be made to persons who are not “U.S. Persons” as defined in Regulation S.  The proceeds of the private placement offering will be used to retire corporate indebtedness and for general corporate purposes.

F-14

---

SUPPLEMENTAL STATEMENT

F-15

---

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

|                            |   | THREE MONTHS ENDED |  |   | NINE MONTHS ENDED |  |   |              | 
|--------------------------- | - | ------------------ |  | - | ----------------- |  | - | ------------ | 
|                            |   | JANUARY 31,        |  |   | JANUARY 31,       |  |   | INCEPTION to | 
|                            |   | 2010               |  |   | 2009              |  |   | 2010         | 
|                            |   |                    |  |   |                   |  |   |              | 
|Operating Expenses:         |   |                    |  |   |                   |  |   |              | 
|Accounting & Audit          | $ | 4,090              |  | $ | 4,080             |  | $ | 20,660       | 
|Bad Debt Expense            |   | -0-                |  |   | 214,892           |  |   | -0-          | 
|Bank Charges                |   | 117                |  |   | 20                |  |   | 245          | 
|Consulting                  |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Exploration and Development |   | -0-                |  |   | -0-               |  |   | -0-          | 
|Legal                       |   | 9,510              |  |   | 15,607            |  |   | 25,116       | 
|Office Administration       |   | 7,500              |  |   | 7,500             |  |   | 22,500       | 
|Office Expenses             |   | -0-                |  |   | 43                |  |   | -0-          | 
|Regulatory Expenses/Fees    |   | 924                |  |   | 661               |  |   | 2,702        | 
|Rent                        |   | 375                |  |   | 750               |  |   | 1,500        | 
|Telephone                   |   | 225                |  |   | 652               |  |   | 675          | 
|Travel & Entertainment      |   | -0-                |  |   | -0-               |  |   | -0-          | 
|                            |   |                    |  |   |                   |  |   |              | 
|Total Operating Expenses    | $ | 22,741             |  | $ | 244,205           |  | $ | 73,398       | 

See Notes to Financial Statements

F-16

---

|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.
On April 29, 2009, we and our wholly-owned subsidiary, Geobiz Systems Inc.
("Geobiz"), entered into a Share Purchase Agreement (the "Worldbid Agreement")
with Marktech Acquisition Corp. (the "Vendor") and Worldbid International Inc.
("Worldbid") whereby Geobiz will acquire all of the issued and outstanding
shares of Worldbid. Under the terms of the Worldbid Agreement, we will pay an
aggregate of $250,000 for Worldbid as follows:

| | (a) | $10,000 payable to the Vendor on the closing date;
    and                    
| | --- | ------------------------------------------------------------------------------
| |     |                                                                               
| | (b) | the issuance of the following promissory notes to the
      Vendor at closing:
| |     |                                                                               
| |     | (i)                                                                           
| |     |                                                                               
| |     | (ii)                                                                          
| |     |                                                                               
| |     | (iii)                                                                         
| |     |                                                                               
| |     | (iv)                                                                          

which notes shall be convertible at
the option of the holder into common shares of our common stock at a price of
$0.05 per share.

Closing of the Worldbid Agreement is subject to a number of
conditions, including:

| | (a) | Worldbid delivering the financial statements required
      under the Securities Exchange Act of 1934 (the Exchange Act) and the SEC
      rules promulgated thereunder; and
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                               
| | (b) | Completion of satisfactory due diligence by us and
      Geobiz.                                                                                                              

Under the terms of the Worldbid Agreement, closing was to occur
ten days following receipt of financial statements of Worldbid as required under
the Worldbid Agreement or such other date as is mutually agreed upon by the
parties, but in any event not more than 105 days from the date of the Worldbid
Agreement. On August 12, 2009, we entered into an amendment agreement to the
Worldbid Agreement pursuant to which the closing date of the Worldbid Agreement
had been extended to no later than December 31, 2009. On March 17, 2010, we
entered into a second amendment agreement dated for reference December 31, 2009
to amend the Worldbid Agreement pursuant to which the closing date of the
Worldbid Agreement has been extended to no later than June 30, 2010. There is no
assurance that the closing will be completed as planned or at all.

3

---

Mr. Howard Thomson, our sole director and officer, was a
director of Worldbid International Inc. from December 13, 1999 to November 2,
2001 and the Secretary and Treasurer from December 13, 1999 to November 9, 2006.
Mr. Thomson was also an officer and director of Worldbid's former parent
company, Worldbid Corporation, from February 12, 1999 to August 31, 2006.

Worldbid owns and operates an international
business-to-business and government-to-business facilitation service, which
combines proprietary software with the power of the Internet to bring buyers and
sellers together from around the world for interactive trade. Worldbid designed
its Worldbid.com Internet website to enable companies throughout the world to
procure, source (buy) and tender (sell) products and services nationally and
internationally.

PLAN OF OPERATION

Our plan of operation is to complete the proposed acquisition
of Worldbid. There are no assurances that we will be able to complete the
proposed acquisition of Worldbid as planned or if at all.

Due to the lack of our operating history and our present
inability to generate revenues, our auditors have stated in their audit report
included in our audited financial statements for the year ended April 30, 2009
that there currently exists substantial doubt about our ability to continue as a
going concern.

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

|             |   | Three Months Ended |   |   | Percentage |   |  | Nine Months Ended |  |   | Percentage |  
|------------ | - | ------------------ | - | - | ---------- | - |  | ----------------- |  | - | ---------- | -
|             |   | January 31,        |   |   | Increase / |   |  | January 31,       |  |   | Increase / |  
|             |   | 2010               |   |   | 2009       |   |  | (Decrease)        |  |   | 2010       |  
|Revenue      | $ | -                  |   | $ | -          |   |  | n/a               |  | $ | -          |  
|Expenses     |   | (22,741            | ) |   | (244,205   | ) |  | (90.7)%           |  |   | (73,398    | )
|Other Income |   | -                  |   |   | -          |   |  | n/a               |  |   | -          |  
|Net Loss     | $ | (22,741            | ) | $ | (244,205   | ) |  | (90.7)%           |  | $ | (73,398    | )

Revenues

We have not earned any revenues since our inception and we do
not anticipate earning revenues in the near future. We are an exploration stage
company and are presently seeking to complete the proposed acquisition of
Worldbid.

Expenses

The major components of our expenses for the three and nine
months ended January 31, 2010 and 2009 are outlined in the table below:

|                             |   | Three Months Ended |  |   | Percentage |  |  | Nine Months Ended |  |   | Percentage | 
|---------------------------- | - | ------------------ |  | - | ---------- |  |  | ----------------- |  | - | ---------- | 
|                             |   | January 31,        |  |   | Increase / |  |  | January 31,       |  |   | Increase / | 
|                             |   | 2010               |  |   | 2009       |  |  | (Decrease)        |  |   | 2010       | 
|Accounting & Audit           | $ | 4,090              |  | $ | 4,080      |  |  | 0.2%              |  | $ | 20,660     | 
|Bad Debts                    |   | -                  |  |   | 214,892    |  |  | (100)%            |  |   | -          | 
|Bank Charges                 |   | 177                |  |   | 20         |  |  | 785%              |  |   | 245        | 
|Legal                        |   | 9,510              |  |   | 15,607     |  |  | (39.1)%           |  |   | 25,116     | 
|Office Administration        |   | 7,500              |  |   | 7,500      |  |  | n/a               |  |   | 22,500     | 
|Office Expenses              |   | -                  |  |   | 43         |  |  | (100)%            |  |   | -          | 
|Regulatory Expenses/Fees     |   | 924                |  |   | 661        |  |  | 39.8%             |  |   | 2,702      | 
|Rent                         |   | 375                |  |   | 750        |  |  | (50.0)%           |  |   | 1,500      | 
|Telephone                    |   | 225                |  |   | 652        |  |  | (65.5)%           |  |   | 675        | 
|Travel &
      Entertainment |   | -                  |  |   | -          |  |  | n/a               |  |   | -          | 
|Total Expenses               | $ | 22,741             |  | $ | 244,205    |  |  | (90.7)%           |  | $ | 73,398     | 

4

---

Our operating expenses decreased from $244,205, during the
three months ended January 31, 2009, to $22,741, during the three months ended
January 31, 2010. The decease in our operating expenses is due to the fact that
we recorded bad debts of $214,892 during the three months ended January 31,
2009.

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, 2010 |   |   | At
      April 30, 2009 |   |  | Increase / (Decrease) | 
|Current Assets          | $ | 10,942                    |   | $ | 4,632                   |   |  | 136.2%                | 
|Current Liabilities     |   | (142,989                  | ) |   | (63,281                 | ) |  | 126.0%                | 
|Working Capital Deficit | $ | (132,047                  | ) | $ | (58,649                 | ) |  | 125.1%                | 

|Cash Flows                                |   |                   |   |   |                  |  
|----------------------------------------- | - | ----------------- | - | - | ---------------- | -
|                                          |   | Nine Months Ended |  
|                                          |   | January 31, 2010  |   |   | January 31, 2009 |  
|Net Cash Used by Operating Activities     | $ | (29,690           | ) | $ | (104,978         | )
|Net Cash From Investing Activities        |   | -                 |   |   | -                |  
|Net Cash Provided By Financing Activities |   | 32,200            |   |   | 105,400          |  
|Net Increase in Cash During Period        | $ | 2,510             |   | $ | 422              |  

We had cash on hand of $2,642 and a working capital deficit of
$132,047 as of January 31, 2010 compared to a working capital deficit of $58,649
as of April 30, 2009. 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 our sole source of
financing came in the form of short term loans.

Financing Requirements

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

On March 16, 2009, Board of Directors approved a private
placement offering of up to $200,000 of 10% convertible notes (the Convertible
Notes Offering). The Convertible Notes Offering will be completed pursuant the
terms of Regulation S of the Securities Act. There is no assurance that the
Convertible Notes Offering or any part of it will be completed.

On April 8, 2009, our Board of Directors approved a private
placement offering of up to 3,000,000 pre-split (600,000 post-split) Units at a
price of $0.04 pre-split ($0.20 post-split) per Unit, with each Unit consisting
of one share of our common stock and one share purchase warrant.

5

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Each
share purchase warrant entitles the holder to purchase an additional share of
common stock exercisable for a period of two years at a price of $0.05 pre-split
($0.25 post split) per share. The private placement offering will be made to
persons who are not U.S. Persons as defined in Regulation S. The proceeds of
the private placement offering will be used to retire corporate indebtedness and
for general corporate purposes. There is no assurance that the private placement
offering or any part of it will be completed.

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

OFF-BALANCE SHEET ARRANGEMENTS

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

CRITICAL ACCOUNTING POLICIES

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

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, 2010 (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, 2009 (the 2009 Annual Report).

Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

6

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Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in our 2009 Annual Report, we believe that our financial statements
contained in our Quarterly Report on Form 10-Q for the quarter ended January 31,
2010 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, 2010 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.

7

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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, 2010, we had cash in the amount of $2,642. We
have entered into a share purchase agreement to acquire all of the issued and
outstanding shares of Worldbid. In order to complete our acquisition of
Worldbid, we will need to raise additional financing.

On March 16, 2010, our Board of Directors approved a private
placement offering of up to $200,000 of 10% convertible notes (the "Convertible
Notes Offering"). The Convertible Notes Offering will be completed pursuant to
Regulation S promulgated under the Securities Act of to persons who are not
U.S. Persons as contemplated under Regulation S of the Securities Act. There
is no assurance that the Convertible Notes Offering or any part of it will be
completed.

On April 8, 2009, our Board of Directors approved a private
placement offering of up to 3,000,000 pre-split (600,000 post split) Units at a
price of $0.04 pre-split ($0.20 post-split) US per Unit, with each Unit
consisting of one share of our common stock and one share purchase warrant. Each
share purchase warrant entitles the holder to purchase an additional share of
common stock exercisable for a period of two years at a price of $0.05 pre-split
($0.20 post-split) US per share. The private placement offering will be made to
persons who are not U.S. Persons as defined in Regulation S. There is no
assurance that the private placement offering or any part of it will be
completed.

There is no assurance that we will be able to complete the
share purchase under the Worldbid Agreement.

There is no assurance that the Worldbid Agreement will be
completed as planned or at all. We may decide not to complete the share purchase
under the Worldbid Agreement. Even if we decide to complete the share purchase
under the Worldbid Agreement, there is no assurance that we will have the
ability or sufficient financing to complete the share purchase.

We have yet to attain profitable operations and because we
will need additional 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 $1,952,942 for the period from
February 20, 2001 (inception) to January 31, 2010 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.

8

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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.

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.

9

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

None.

|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES.
|------- | --------------------------------

None.

|ITEM 4. | REMOVED AND RESERVED
|------- | --------------------

Not Applicable.

|ITEM 5. | OTHER INFORMATION.
|------- | ------------------

Private Placement Offering

On March 16, 2010, our sole Director approved a private
placement offering of up to $200,000 of 10% convertible notes (the "Convertible
Notes Offering"). The Convertible Notes Offering will be completed pursuant to
Regulation S promulgated under the Securities Act to persons who are not U.S.
Persons as contemplated under Regulation S of the Securities Act

We may pay a commission or finders fee of up to 10% of the
Convertible Notes Offering proceeds to duly licensed brokers or investment
dealers who introduce purchasers or to other person where permitted by law.

The proceeds of the Convertible Notes Offering will be used to
fund our business and for working capital purposes. The Offering will be
completed pursuant to the provisions of Regulation S of the Securities Act.
There is no assurance that the Offering will be completed on the above terms or
at all.

The above does not constitute an offer to sell or a
solicitation of an offer to buy any of the Companys securities in the United
States. The securities have not been registered under the Securities Act and may
not be offered or sold within the United States or to U.S. persons unless an
exemption from such registration is available.

Worldbid Share Purchase Agreement Extension

On March 17, 2010, we and our wholly-owned subsidiary, Geobiz
Systems Inc. ("Geobiz"), entered into an amendment agreement dated for reference
December 31, 2009 to the Share Purchase Agreement (the Worldbid Agreement)
with Marktech Acquisition Corp. (the "Vendor") and Worldbid International Inc.
("Worldbid") whereby Marktech agreed to extend the closing date of the proposed
acquisition of Worldbid from December 31, 2009 to June 30, 2010. There is no
assurance that the closing will be completed as planned or at all.

|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     | Certificate of Change Pursuant
      to NRS 78.209 decreasing the authorized capital of common stock to
      80,000,000 shares, par value $0.001 per share.(9)
|3.4     | 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

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|Exhibit |                                                                                                                                                                                                                           
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                    
|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)             
|10.8    | Amendment
        Agreement to Share Purchase Agreement dated for reference December 31,
        2009 among Terrace Ventures Inc., Marktech Acquisition Corp., Worldbid
        International Inc. and Geobiz Systems Inc.
|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)   

11

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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, 2010 |  | By: | /s/
      Howard Thomson                                 
|      |                |  |     | HOWARD THOMSON                                           
|      |                |  |     | Chief Executive Officer, Chief Financial
      Officer,  
|      |                |  |     | President, Secretary and Treasurer                       
|      |                |  |     | (Principal Executive Officer & Principal
      Accounting
|      |                |  |     | Officer)                                                 

---