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EX-31.1 - CERTIFICATION - TERRACE VENTURES INCexhibit31-1.htm
EX-32.1 - CERTIFICATION - TERRACE VENTURES INCexhibit32-1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended January 31, 2011

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

For the transition period from ________to ________

COMMISSION FILE NUMBER 000-50569

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

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

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

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

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

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

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

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

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

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


PART I - FINANCIAL INFORMATION

ITEM 1.         FINANCIAL STATEMENTS.

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

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

2



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

ASSETS        
             
    (Unaudited)     (Audited)  
    January 31, 2011     April 30, 2010  
             
Current Assets:            
     Cash $  1,296   $  1,169  
     Loan Receivable   -0-     -0-  
             
                   Total Current Assets   1,296     1,169  
             
Other Asset - Investment   -0-     -0-  
             
TOTAL ASSETS $  1,296   $  1,169  
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)        
             
Current Liabilities:            
     Accounts Payable and            
           Accrued Expenses $  160,062   $  118,132  
     Loans Payable   27,000     27,000  
     Loans Payable – Related Parties   14,200     14,200  
     Stock Subscriptions Payable   28,480     -0-  
             
                   Total Current Liabilities   229,742     159,332  
             
Stockholders' Deficit:            
       Common Stock, $0.001 par value
            80,000,000 shares authorized,
            9,470,660 shares issued




9,471






9,471


     Additional Paid in Capital   1,811,424     1,811,424  
     Deficit Accumulated During
            the Exploration Stage


(2,049,341

)


(1,979,058

)
             
                   Total Stockholders' Equity/(Deficit)   (228,446 )   (158,163 )
             
TOTAL LIABILITIES AND
       STOCKHOLDERS' EQUITY/(DEFICIT)

$

1,296


$

1,169

See Notes to Financial Statements

F-1



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

    THREE MONTHS ENDED     NINE MONTHS ENDED        
    JANUARY 31,     JANUARY 31,     INCEPTION to  
    2011     2010     2011     2010     JANUARY 31, 2011  
Revenues $  -0-   $  -0-   $  -0-   $  -0-   $  -0-  
Operating Expenses   (28,998)     (22,741)     (70,283)     (73,398)     (1,034,852)  
Loss Before Other
     Income and Expenses
  (28,998)     (22,741)     (70,283)     (73,398)     (1,034,852)  
Other Income:
     Interest Income
  -0-     -0-     -0-     -0-     14,491  
Other Expense:
     Unrealized Loss
           On Investment
  -0-     -0-     -0-     -0-     (1,028,980)  
Loss Before Provision
     for Income Taxes
  (28,998)     (22,741)     (70,283)     (73,398)     (2,049,341)  
Provision for
     Income Taxes
  -0-     -0-     -0-     -0-     -0-  
Net Loss   (28,998)     (22,741)     (70,283)     (73,398)     (2,049,341)  
Accumulated Deficit,
     Beginning of Period
  (2,020,343)     (1,930,201)     (1,979,058)     (1,879,544)     -0-  
Accumulated Deficit,
     End of Period
$ (2,049,341)   $ (1,952,942)   $ (2,049,341)   $ (1,952,942)   $ (2,049,341)  
                               
                               
Net Loss per Share $  (0.00)   $  (0.00)   $  (0.01)   $  (0.01)   $  (0.33)  
Weighted Average
     Shares Outstanding
9,470,660 9,470,660 9,470,660 9,470,660 6,344,646

See Notes to Financial Statements

F-2



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

                      Deficit        
                      Accumulated        
    Common Stock     Additional     During the     Total  
          Dollar     Paid in     Exploration     Stockholders'  
    Shares     Amount     Capital     Stage     Equity(Deficit)  
                               
Inception
   February 20, 2001
  ----   $  ----   $  ----   $  ----   $  
-----
 
                               
Common Stock Issued
   $0.001 per share
   April 9, 2001
 

4,000,000
   

4,000
   

----
   

----
   

4,000
 
                               
Net Loss,
   April 30, 2001
 
----
   
----
   
----
   
(1,410
)  
(1,410
)
                               
Balances
   April 30, 2001
 
4,000,000
   
4,000
   
----
   
(1,410
)  
2,590
 
                               
Common Stock Issued
   $0.01 per share
   August 15, 2001
 

2,500,000
   

2,500
   

22,500
   

----
   

25,000
 
                               
Net Loss,
   April 30, 2002
 
----
   
----
   
----
   
(19,196
)  
(19,196
)
                               
Balances
   April 30, 2002
 
6,500,000
   
6,500
   
22,500
   
(20,606
)  
8,394
 
                               
Common Stock Issued
   $0.10 per share
   September 30, 2002
 

142,500
   

143
   

14,107
   

----
   

14,250
 
                               
Net Loss,
   April 30, 2003
 
----
   
----
   
----
   
(17,632
)  
(17,632
)
                               
Balances
   April 30, 2003
 
6,642,500
   
6,643
   
36,607
   
(38,238
)  
5,012
 
                               
Common Stock Issued
   $0.10 per share
   November 6, 2003
 

400,000
   

400
   

39,600
   

----
   

40,000
 
                               
Net Loss,
   April 30, 2004
 
----
   
----
   
----
   
(58,708
)  
(58,708
)
                               
Balances
   April 30, 2004
 
7,042,500
   
7,043
   
76,207
   
(96,946
)  
(13,696
)
                               
Net Loss,
   April 30, 2005
 
----
   
----
   
----
   
(37,532
)  
(37,532
)
                               
Balances
   April 30, 2005
 
7,042,500
   
7,043
   
76,207
   
(134,478
)  
(51,228
)

See Notes to Financial Statements

F-3


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

                      Deficit        
                      Accumulated        
    Common Stock     Additional     During the     Total  
          Dollar     Paid in     Exploration     Stockholders'  
    Shares     Amount     Capital     Stage     Equity (Deficit)  
                               
Balances, April 30, 2005   7,042,500     7,043     76,207     (134,478 )   (51,228 )
                               
Common Stock Issued
   $1.00 per share
   November 23,2005
 

500,000
   

500
   

499,500
   

----
   

500,000
 
                               
4-for-1 Stock Split,
   December 19, 2005
 
22,627,500
   
22,627
   
(22,627
)  
----
   
----
 
                               
Common Stock Issued
   $0.25 per share
   February 3, 2006
 

400,000
   

400
   

99,600
   

----
   

100,000
 
                               
Common Stock Issued
   $0.25 per share
   March 13, 2006
 

380,000
   

380
   

94,620
   

----
   

95,000
 
                               
Common Stock Issued
   $0.25 per share
   March 31, 2006
 

999,920
   

1,000
   

248,980
   

----
   

249,980
 
                               
Net Loss, Period Ended
   April 30, 2006
 
----
   
----
   
----
   
(987,633
)  
(987,633
)
                               
Balances
   April 30, 2006
 
31,949,920
   
31,950
   
996,280
   
(1,122,111
)  
(93,881
)
                               
Common Stock Issued
   $0.25 per share
   May 24, 2006
 

220,080
   

220
   

54,800
   

----
   

55,020
 
                               
Common Stock Issued
   $0.30 per share
   June 5, 2006
 

335,000
   

335
   

100,165
   

----
   

100,500
 
                               
Common Stock Issued
   $0.10 per share
   January 23, 2007
 

1,678,200
   

1,678
   

166,142
   

----
   

167,820
 
                               
Net Loss, Period Ended
   April 30, 2007
 
----
   
----
   
----
   
(301,060
)  
(301,060
)
                               
Balances
   April 30, 2007
 
34,183,200
   
34,183
   
1,317,387
   
(1,423,171
)  
(71,601
)

See Notes to Financial Statements

F-4



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

                      Deficit        
                      Accumulated        
    Common Stock     Additional     During the     Total  
          Dollar     Paid in     Exploration     Stockholders'  
    Shares     Amount     Capital     Stage     Equity (Deficit)  
                               
Balances
   April 30, 2007
 
34,183,200
   
$ 34,183
   
$1,317,387
   
$(1,423,171
)  
$ (71,601
)
                               
Common Stock Issued
   $0.10 per share
   July 12, 2007
 

2,570,000
   

2,570
   

254,755
   

----
   

257,325
 
                               
Net Loss, Period Ended
   April 30, 2008
 
----
   
----
   
----
   
(100,450
)  
(100,450
)
                               
Balances
   April 30, 2008
 
36,753,200
   
$ 36,753
   
$1,572,142
   
$(1,523,621
)  
$ 85,274
 
                               
Common Stock Issued
   $0.10 per share
   October 10, 2008
 

10,000,000
   

10,000
   

190,000
   

----
   

200,000
 
                               
Common Stock Issued
   $0.02 per share
   April 8, 2009
 

600,000
   

600
   

11,400
   

----
   

12,000
 
                               
Net Loss, Period Ended
   April 30, 2009
 
----
   
----
   
----
   
(355,923
)  
(355,923
)
                               
Balances
   April 30, 2009
 
47,353,200
   
47,353
   
1,773,542
   
(1,879,544
)  
(58,649
)
                               
1-for-5 Reverse
   Stock Split,
   October 1, 2009
 

(37,882,540
)  

(37,882
)  

37,882
   

----
   

----
 
                               
Net Loss, Period Ended
   April 30, 2010
 
----
   
----
   
----
   
(99,514
)  
(99,514
)
                               
Balances
   April 30, 2010
 
9,470,660
   
9,471
   
1,811,424
   
(1,979,058
)  
(158,163
)
                               
Net Loss, Period Ended
   January 31, 2011
 
----
   
----
   
----
   
(70,283
)  
(70,283
)
                               
Balances
   January 31, 2011
 
9,470,660
   
9,471
   
1,811,424
   
(2,049,341
)  
(228,446
)

See Notes to Financial Statements.

F-5



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

    NINE MONTHS ENDED        
    JANUARY 31,     INCEPTION to  
    2011     2010     JANUARY 31, 2011  
                   
Cash Flows from                  
    Operating Activities:                  
                   
     Net Loss $  (70,283 ) $  (73,398 ) $  (2,049,341 )
                   
     Adjustments to Reconcile Net                  
         Income to Net Cash Provided/(Used) 
         by Operating Activities:









           Unrealized Loss on Investment   -0-     -0-     1,028,980  
           (Increase)/Decrease in:                  
               Trust Account Receivable   -0-     -0-     -0-  
               Notes Receivable   -0-     -0-     -0-  
               Loan Receivable   -0-     (3,800 )   -0-  
           Increase(Decrease) in:                  
               Accounts Payable   41,930     47,508     160,062  
               Loans Payable   -0-     -0-     27,000  
               Loans Payable – Related Parties   -0-     -0-     14,200  
               Stock Subscriptions Payable   28,480     -0-     28,480  
                   
         Net Cash Provided/(Used)                  
           by Operating Activities   127     (29,690 )   (790,619 )
                   
Cash Flows from                  
   Investing Activities:                  
                   
     Stock Investment   -0-     -0-     (1,028,980 )
                   
         Net Cash Used                  
           by Investing Activities   -0-     -0-     (1,028,980 )
                   
Cash Flows from                  
   Financing Activities:                  
                   
     Loans from Shareholders   -0-     32,300     157,495  
     Payments on Loans   -0-     (100 )   (157,495 )
     Proceeds Related to                  
         Issuance of Common Stock   -0-     -0-     1,820,895  
                   
         Net Cash Provided by                  
           Financing Activities   -0-     32,200     1,820,895  
                   
                   
Net Increase in Cash $  127   $  2,510   $  1,296  
                   
Cash at Beginning of Period   1,169     132     -0-  
                   
Cash at End of Period $  1,296   $  2,642   $  1,296  

See Notes to Financial Statements

F-6



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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

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

Basis of Presentation

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

Use of Estimates

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

Exploration Stage Company

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

Pro Forma Compensation Expense

The Company accounts for options and restricted stock granted to employees and directors in accordance with the fair value method of SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure an amendment of FASB Statement No. 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-7



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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Mineral Property Acquisition and Exploration Costs

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

Depreciation, Amortization and Capitalization

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

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

Income Taxes

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

Fair Value of Financial Instruments

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

F-8



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

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Investments

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

Per Share Information

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

NOTE 2 – LOANS PAYABLE

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

NOTE 3 – LOANS PAYABLE – RELATED PARTIES

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

NOTE 4 - PROVISION FOR INCOME TAXES

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

NOTE 5 - COMMITMENTS AND CONTINGENCIES

Operating Leases

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

Litigation

The Company is not presently involved in any litigation.

F-9



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

NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

NOTE 7 – GOING CONCERN

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

The consolidated financial statements of the Company have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $2,049,341 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

NOTE 8 – REVERSE STOCK SPLIT

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

F-10



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

NOTE 9 – STOCK ISSUANCES

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

F-11


SUPPLEMENTAL STATEMENT

F-12



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

    THREE MONTHS ENDED     NINE MONTHS ENDED        
    JANUARY 31,     JANUARY 31,     INCEPTION to  
    2011     2010     2011     2010     JANUARY 31, 2011  
                               
Operating Expenses:                              
     Accounting & Audit $  3,960   $  4,090   $  20,420   $  20,660   $  152,520  
     Bad Debt Expense   -0-     -0-     -0-     -0-     214,892  
     Bank Charges   155     117     270     245     1,014  
     Cancelled Merger Costs   -0-     -0-     -0-     -0-     8,300  
     Consulting   1,000     -0-     1,000     -0-     115,150  
     Exploration and Development   -0-     -0-     -0-     -0-     24,266  
     Legal   15,614     9,510     21,883     25,116     277,600  
     Office Administration   7,500     7,500     22,500     22,500     167,100  
     Office Expenses   -0-     -0-     -0-     -0-     4,271  
     Regulatory Expenses/Fees   169     924     2,410     2,702     32,575  
     Rent   375     375     1,125     1,500     25,950  
     Telephone   225     225     675     675     6,506  
     Travel & Entertainment   -0-     -0-     -0-     -0-     4,708  
                               
                               
               Total Operating Expenses $  28,998   $  22,741   $  70,283   $  73,398   $  1,034,852  

See Notes to Financial Statements

F-13


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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

OVERVIEW

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

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

PLAN OF OPERATION

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

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

    Three Months Ended     Percentage       Nine Months Ended     Percentage  
    January 31,     Increase /       January 31,     Increase /  
    2011     2010     (Decrease)       2011     2010     (Decrease)  
Revenue $  -   $  -     n/a     $  -   $  -     n/a  
Expenses   (28,998 )   (22,741 )   (27.5 )%     (70,283 )   (73,398 )   (4.2 )%
Net Loss $  (28,998 ) $  (22,741 )   (27.5 )%   $  (70,283 ) $  (73,398 )   (4.2 )%

3


Revenues

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

Expenses

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

    Three Months Ended     Percentage     Nine Months Ended     Percentage  
    January 31,     Increase /     January 31,     Increase /  
    2011     2010     (Decrease)     2011     2010     (Decrease)  
Accounting and Audit $  3,960   $  4,090     (3.2)% $  20,420   $  20,660     (1.2)%
Bank Charges   115     177     (35.0)%   270     245     10.2%  
Consulting   1,000     -     100%     1,000     -     100%  
Legal   15,614     9,510     64.2%     21,883     25,116     (12.9)%
Office Administration   7,500     7,500     0.0%     22,500     22,500     0.0%  
Regulatory Expenses/Fees   169     924     (81.7)%   2,410     2,702     (10.8)%
Rent   375     375     0.0%     1,125     1,500     (25.0)%
Telephone   225     225     0.0%     675     675     0.0%  
Total Operating Expenses $ 28,988 $ 22,741 27.5% $ 70,283 $ 73,398 (4.2)%

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

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

4



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

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

Financing Requirements

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

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

Foreign Private Placement

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

U.S. Private Placement

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

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

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

OFF-BALANCE SHEET ARRANGEMENTS

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

5


CRITICAL ACCOUNTING POLICIES

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

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

ITEM 3.          QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T.       CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

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

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

Changes in Internal Control Over Financial Reporting

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

6


PART II - OTHER INFORMATION

ITEM 1.          LEGAL PROCEEDINGS.

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

ITEM 1A.       RISK FACTORS.

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

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

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

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

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

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

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

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

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

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

7


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

1.

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

   
2.

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

   
3.

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

   
4.

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

   
5.

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

   
6.

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

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

1.

if "penny stock" is sold to an investor in violation of his or her rights listed above, or other federal or states securities laws, the investor may be able to cancel his or her purchase and get his or her money back.

   
2.

if the stocks are sold in a fraudulent manner, the investor may be able to sue the persons and firms that caused the fraud for damages.

   
3.

if the investor has signed an arbitration agreement, however, he or she may have to pursue his or her claim through arbitration.

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

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

None.

ITEM 3.          DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 5.          OTHER INFORMATION.

None.

8


ITEM 6. EXHIBITS.

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

Notes:
(1) Filed with the SEC as an exhibit to our Registration Statement on Form 10-SB originally filed on February 2, 2004.
(2) Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on December 27, 2005.
(3) Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on September 8, 2004.
(4) Filed with the SEC as an exhibit to our Quarterly Report on Form 10-QSB filed on March 22, 2006.
(5) Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on July 15, 2008.
(6) Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on October 2, 2008.
(7) Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on April 29, 2009.
(8) Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on August 13, 2009.

9


SIGNATURES

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

      TERRACE VENTURES INC.
         
         
         
Date: March 22, 2011   By: /s/ Howard Thomson
        HOWARD THOMSON
        Chief Executive Officer, Chief Financial Officer,
        President, Secretary and Treasurer
        (Principal Executive Officer & Principal Accounting
        Officer)