Terrace Ventures (TVER) 10-Q 2010 Q1 Quarterly report

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 endedJuly 31, 2009

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 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 website,
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 September 11, 2009, the Registrant had 47,353,200 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 months ended July 31, 2009 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

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 July 31, 2009, and the statements of operations and accumulated deficit, changes in stockholders’ equity (deficit), and statements of cash flows for the three month periods ended July 31, 2009 and July 31, 2008, and for the period February 20, 2001 (date of inception) to July 31, 2009. 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, 2008 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived.

“Sarna & Company”

Sarna & Company, Certified Public Accountants
Westlake Village, California
September 10, 2009

F-1

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

ASSETS
		(Unaudited)			(Audited)
		JULY 31,			April 30,
		2009			2009
Current Assets:
Cash	$	18		$	132
Receivable – Trust		-0-			-0-
Notes Receivable		4,500			4,500
Total Current Assets		4,518			4,632
Other Asset – Investment		-0-			-0-
TOTAL ASSETS	$	4,518		$	4,632
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable and
Accrued Expenses	$	73,141		$	63,281
Loan Payable		2,250			-0-
Total Current Liabilities		75,391			63,281
Stockholders' Equity:
Common Stock, $0.001 par value
400,000,000 shares authorized,
47,353,200 shares issued		47,353			47,353
Additional Paid in Capital		1,773,542			1,773,542
Deficit Accumulated During
the Exploration Stage		(1,891,768	)		(1,879,544	)
Total Stockholders' Equity (Deficit)		(70,873	)		(58,649	)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)	$	4,518		$	4,632

See Notes to Financial Statements.

F-2

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

		THREE MONTHS ENDED						INCEPTION to
		JULY 31, 2009			JULY 31, 2008			JULY 31, 2009
Revenues	$	-0-		$	-0-		$	-0-
Operating Expenses		(12,224	)		(35,521	)		(877,279	)
Loss Before Other Income
And Expenses		(12,224	)		(35,521	)		(877,279	)
Other Income
Interest Income		-0-			-0-			14,491
Other Expense
Unrealized Loss
on Investment		-0-			-0-			(1,028,980	)
Loss Before Provision for
Income Taxes		(12,224	)		(35,521	)		(1,891,768	)
Provision for Income Taxes		-0-			-0-			-0-
Net Loss		(12,224	)		(35,521	)		(1,891,768	)
Accumulated Deficit,
Beginning of Period		(1,879,544	)		(1,523,621	)		-0-
Accumulated Deficit,
End of Period	$	(1,891,768	)	$	(1,559,142	)	$	(1,891,768	)
Net Loss per Share	$	(0.00	)	$	(0.00	)	$	(0.06	)
Weighted Average
Shares Outstanding		47,353,200			36,753,200			30,529,662

See Notes to Financial Statements.

F-3

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

							Deficit
							Accumulated			Total
	Common Stock				Additional		During the			Stockholders'
			Dollar		Paid in		Exploration			Equity
	Shares		Amount		Capital		Stage			(Deficit)
Inception,
February 20, 2001	----	$	----	$	----	$	----		$	----
Common Stock Issued
$0.001 per share
April 9, 2001	4,000,000		400		3,600		----			4,000
Net Loss, Period Ended
April 30, 2001	----		----		----		(1,410	)		(1,410	)
Balances, April 30, 2001	4,000,000		400		3,600		(1,410	)		2,590
Common Stock Issued
$0.01 per share
August 15, 2001	2,500,000		250		24,750		----			25,000
Net Loss, Period Ended
April 30, 2002	----		----		----		(19,196	)		(19,196	)
Balances, April 30, 2002	6,500,000		650		28,350		(20,606	)		8,394
Common Stock Issued
$0.10 per share
September 30, 2002	142,500		14		14,236		----			14,250
Net Loss, Period Ended
April 30, 2003	----		----		----		(17,632	)		(17,632	)
Balances, April 30, 2003	6,642,500		664		42,586		(38,238	)		5,012
Common Stock Issued
$0.10 per share
November 6, 2003	400,000		40		39,960		----			40,000
Net Loss, Period Ended
April 30, 2004	----		----		----		(58,708	)		(58,708	)
Balances, April 30, 2004	7,042,500		704		82,546		(96,946	)		(13,696	)
Net Loss, Period Ended
April 30, 2005	----		----		----		(37,532	)		(37,532	)
Balances, April 30, 2005	7,042,500		704		82,546		(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

								Deficit
								Accumulated			Total
	Common Stock				Additional			During the			Stockholders'
			Dollar		Paid in			Exploration			Equity
	Shares		Amount		Capital			Stage			(Deficit)
Balances, April 30, 2005	7,042,500		704		82,546			(134,478	)		(51,228	)
Common Stock Issued
$1.00 per share
November 23,2005	500,000		50		499,950			----			500,000
4-for-1 Stock Split,
December 19, 2005	22,627,500		29,416		(29,416	)		----			----
Common Stock Issued
$0.25 per share
February 3, 2006	400,000		400		99,600			----			100,000
Common Stock Issued
$0.25 per share
March 13, 2006	380,000		380		94,620			----			95,000
Common Stock Issued
$0.25 per share
March 31, 2006	999,920		1,000		248,980			----			249,980
Net Loss, Period Ended
April 30, 2006	----		----		----			(987,633	)		(987,633	)
Balances
April 30, 2006	31,949,920		31,950		996,280			(1,122,111	)		(93,881	)
Common Stock Issued
$0.25 per share
May 24, 2006	220,080		220		54,800			----			55,020
Common Stock Issued
$0.30 per share
June 5, 2006	335,000		335		100,165			----			100,500
Common Stock Issued
$0.10 per share
January 23, 2007	1,678,200		1,678		166,142			----			167,820
Net Loss, Period Ended
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			Total
	Common Stock				Additional		During the			Stockholders'
			Dollar		Paid in		Exploration			Equity
	Shares		Amount		Capital		Stage			(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	)
Net Loss, Period Ended
July 31, 2009	----		----		----		(12,224	)		(12,224	)
Balances
July 31, 2009	47,353,200	$	47,353	$	1,773,542	$	(1,891,768	)	$	(70,873	)

See Notes to Financial Statements.

F-6

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

		THREE MONTHS ENDED						INCEPTION to
		JULY 31, 2009			JULY 31, 2008			JULY 31, 2009
Cash Flows from
Operating Activities:
Net Loss	$	(12,224	)	$	(35,521	)	$	(1,891,768	)
Adjustments to Reconcile Net Loss
To Net Cash Provided/(Used) by
Operating Activities:
Unrealized Loss on Investment		-0-			-0-			1,028,980
(Increase)/Decrease in:
Loan Receivable		-0-			-0-			(4,500	)
Increase/(Decrease) in:
Accounts Payable		9,860			126			73,141
Loan Payable		2,250			-0-			2,250
Net Cash Used by
Operating Activities		(114	)		(35,395	)		(791,897	)
Cash Flows from
Investing Activities:
Investment in Stock		-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-			41,000			157,395
Payments on Loans		-0-			(50,100	)		(157,395	)
Proceeds from Issuance of
Common Stock		-0-			57,000			1,820,895
Net Cash Provided by
Financing Activities		-0-			48,000			1,820,895
Net Increase (Decrease) in Cash		(114	)		12,605			18
Cash at Beginning of Period		132			13,875			-0-
Cash at End of Period	$	18		$	26,480		$	18

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 July 31, 2009 and July 31, 2008 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 $1,891,768 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.

NOTE 7 – SUBSEQUENT EVENTS

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, expected to be effective on October 1, 2009, the Company’s authorized shares of common stock will be 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 is to be reduced from 47,353,200 shares to approximately 9,470,640 shares.

F-14

SUPPLEMENTAL STATEMENT

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

		THREE MONTHS ENDED				INCEPTION to
		JULY 31,2009		JULY 31,2008		JULY 31, 2009
Operating Expenses:
Accounting	$	-0-	$	12,000	$	106,780
Bad Debt Expense		-0-		-0-		214,892
Bank Charges		114		46		568
Consulting		-0-		-0-		114,150
Exploration Expense		-0-		-0-		24,266
Legal		3,516		14,285		230,118
Office Administration		7,500		7,500		122,100
Office Expenses		-0-		208		4,271
Regulatory Expenses/Fees		119		119		26,570
Rent		750		750		23,700
Telephone		225		-0-		5,156
Travel & Entertainment		-0-		613		4,708
Total Operating Expenses	$	12,224	$	35,521	$	877,279

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 "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 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 to the Vendor 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; and
	(iv)	$100,000 payable 36 months following closing, with no interest,

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

Closing of the 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 United States Securities and Exchange Commission rules promulgated thereunder; and
(b)	Completion of satisfactory due diligence by us 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, we entered into an Amendment Agreement to the Agreement with Geobiz, the Vendor and Worldbid whereby the parties agreed to extend the closing date of the Agreement to no later than December 31, 2009. There is no assurance that the closing will be completed as planned or at all.

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Mr. Howard Thomson, our sole director and sole 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.

RECENT CORPORATE DEVELOPMENTS

On September 2, 2009, our Board of Directors approved a one-for-five reverse split of the Company’s common stock (the “Reverse Stock Split”). We believe that tightening the capital structure by completing the Reverse Stock Split will assist us in obtaining the financing required for growth and successful implementation of the our business plan. Upon completion of the Reverse Stock Split, our authorized capital of common stock will be decreased from 400,000,000 shares, par value $0.001 per share, to 80,000,000 shares, par value $0.001 per share, and the issued and outstanding common stock will be reduced from 47,353,200 shares to approximately 9,470,640 shares subject to rounding up of any fractional shares to the nearest whole number. The Reverse Stock Split is expected to be effective on October 1, 2009.

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 Summary
		Three Months Ended					Percentage
		July 31, 2009			July 31, 2008		Increase / (Decrease)
Revenue	$	-		$	-		n/a
Operating Expenses		(12,224	)		(35,521	)	(65.6)%
Other Income - Interest		-			-		n/a
Net Loss	$	(12,224	)	$	(35,521	)	(65.6)%

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.

4

Expenses

The major components of our expenses for the three months ended July 31, 2009 and 2008 are outlined in the table below:

		Three Months Ended			Percentage
		July 31, 2009		July 31, 2008	Increase / (Decrease)
Accounting	$	-	$	12,000	(100)%
Bank Charges		114		46	147.8%
Legal		3,516		14,285	(75.4)%
Office Administration		7,500		7,500	n/a
Office Expenses		-		208	(100)%
Regulatory Expenses/Fees		119		119	n/a
Rent		750		750	n/a
Telephone		225		-	100%
Travel & Entertainment		-		613	(100)%
Total Operating Expenses	$	12,224	$	35,521	(65.6)%

Our operating expenses decreased from $25,321 during the three months ended July 31, 2008, to $12,224, during the three months ended July 31, 2009. This decrease in our operating expenses is due to a substantial decrease in accounting and legal expenses during the three months ended July 31, 2009.

Expenses incurred for accounting and legal are 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 July 31, 2009			At April 30, 2009		Increase / (Decrease)
Current Assets	$	4,518		$	4,632		(2.5)%
Current Liabilities		(75,391	)		(63,281	)	19.1%
Working Capital Deficit	$	(70,873	)	$	(58,649	)	20.8%

Cash Flows
		Three Months Ended
		July 31, 2009			July 31, 2008
Net Cash Used by Operating Activities	$	(114	)	$	(35,595	)
Net Cash From Investing Activities		-			-
Net Cash Provided By Financing Activities		-			48,000
Net Increase (Decrease) in Cash During Period	$	(114	)	$	12,605

We had cash on hand of $18 and a working capital deficit of $70,873 as of July 31, 2009 compared to a working capital deficit of $58,649 as of April 30, 2009. The increase in our working capital deficit is due to an increase in accounts payable as a result of our lack of capital to meet ongoing costs.

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.

5

On April 8, 2009, our Board of Directors has approved a private placement offering of up to 3,000,000 Units at a price of $0.04 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 US 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 July 31, 2009 (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

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 July 31, 2009 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 July 31, 2009 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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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 July 31, 2009, we had cash in the amount of $18. 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 April 8, 2009, our Board of Directors approved a private placement offering of up to 3,000,000 Units at a price of $0.04 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 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

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 $1,891,768 for the period from February 20, 2001 (inception) to July 31, 2009 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.

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,

8

brokers/dealers selling such securities must, prior to effecting the transaction, provide their customers with a document that discloses the risks of investing in such securities.

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

(a)	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.
(b)	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.
(c)	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 4.              SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to our security holders during our fiscal quarter ended July 31, 2009.

ITEM 5.               OTHER INFORMATION.

None.

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)

9

Exhibit
Number	Description of Exhibit
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.

10

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:	September 14, 2009	By:	/s/ Howard Thomson
			HOWARD THOMSON
			Chief Executive Officer, Chief Financial Officer,
			President, Secretary and Treasurer
			(Principal Executive Officer & Principal Accounting
			Officer)