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 October 31, 2013

 [  ]  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.  
Yes  [X]   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  [X]   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).
Yes  [  ]   No  [X]

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 17, 2014, the Registrant had 33,160,660 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 six months ended October 31, 2013 are not necessarily indicative of the results that can be expected for the year ended April 30, 2014.

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)
October 31, 2013
(Expressed in US dollars)
(unaudited)

Index

Balance Sheets.	F-1
Statements of Operations.	F-2
Statements of Cash Flows.	F-3
Notes to the Financial Statements.	F-4

 

TERRACE VENTURES INC.
(An Exploration Stage Company)
Balance Sheets
(Expressed in US dollars)

	October 31,    2013   $		April 30,   2013    $
	(unaudited)
ASSETS
Current Assets
Cash	5		716
Total Current Assets	5		716
Mineral property costs	5,675		5,675
Total Assets	5,680		6,391
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued liabilities (Note 5)	213,550		179,211
Loans payable (Note 4)	51,053		7,000
Total Liabilities	264,603		186,211
Going Concern (Note 1)
Commitments (Note 3)
Subsequent Event (Note 6)
Stockholders’ Deficit
Common stock Authorized: 400,000,000 shares, par value $0.001 Issued and outstanding: 33,160,660 shares	33,161		33,161
Additional paid-in capital	2,172,234		2,172,234
Deficit accumulated during the development stage	(2,464,318	)	(2,385,215	)
Total Stockholders’ Deficit	(258,923	)	(179,820	)
Total Liabilities and Stockholders’ Deficit	5,680		6,391

(The accompanying notes are an integral part of these financial statements)

F-1

 

TERRACE VENTURES INC.
(An Exploration Stage Company)
Statements of Operations
(Expressed in US dollars)
(unaudited)

	Three Months Ended   October 31, 2013    $		Three Months Ended   October 31, 2012    $		Six Months Ended   October 31, 2013  $		Six Months Ended    October 31, 2012    $		Accumulated from February 20, 2001   (date of inception)    to October 31, 2013    $
Revenue
Operating Expenses
Bad debts	–		–		–		–		214,892
Consulting fees	2,500		–		5,000		–		149,450
Impairment of mineral property cost	–		–		–		–		2,500
General and administrative	1,296		655		1,706		1,788		51,793
Management fees (Note 4)	7,500		7,500		15,000		15,000		243,100
Mineral exploration costs	22,371		33,601		22,371		39,243		119,843
Professional fees	23,748		23,593		32,670		43,583		610,049
Transfer agent and regulatory fees	813		5,505		1,274		8,086		57,120
Total Operating Expenses	58,227		70,854		78,021		107,700		1,448,747
Loss Before Other Income (Expense)	(58,227	)	(70,854	)	(78,021	)	(107,700	)	(1,448,747	)
Other Income (Expense)
Interest expense	(876	)	–		(1,082	)	–		(3,738	)
Interest income	–		–		–		–		14,491
Write-down of investment securities	–		–		–		–		(1,028,980	)
Write-off of accounts payable	–		2,656		–		2,656		2,656
Total Other Income (Expense)	(876	)	2,656		(1,082	)	2,656		(1,015,571	)
Net Loss	(59,103	)	(68,198	)	(79,103	)	(105,044	)	(2,464,318	)
Net Loss Per Share, Basic and Diluted	–		–		–		–
Weighted Average Shares Outstanding	33,160,660		33,160,660		33,160,660		32,719,465

(The accompanying notes are an integral part of these financial statements)

F-2

 

TERRACE VENTURES INC.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in US dollars)
(unaudited)

	Six Months Ended   October 31, 2013    $		Six Months Ended   October 31, 2012    $		Accumulated from  February 20, 2001    (date of inception)   to October 31, 2013   $
Operating Activities
Net loss for the period	(79,103	)	(105,044	)	(2,464,318	)
Adjustments to reconcile net loss to net cash used in operating activities:
Foreign exchange translation loss	696		–		696
Impairment of mineral property costs	–		–		2,500
Write-down of investment securities	–		–		1,028,980
Write-off of accounts payable	–		2,656		2,656
Changes in operating assets and liabilities:
Prepaid expenses	–		6,284		–
Accounts payable and accrued liabilities	34,339		40,077		210,894
Net Cash Used in Operating Activities	(44,068	)	(56,027	)	(1,218,592	)
Investing Activities
Mineral property acquisition costs	–		–		(3,175	)
Investment in investment securities	–		–		(1,028,980	)
Net Cash Used in Investing Activities	–		–		(1,032,155	)
Financing Activities
Proceeds from loans payable	43,357		–		50,357
Repayment of loans payable	–		(5,000	)	(5,000	)
Proceeds from related party	–		–		157,395
Repayment of related party	–		–		(157,395	)
Proceeds from issuance of common stock	–		–		2,020,895
Proceeds from share subscriptions received	–		–		184,500
Net Cash Provided by (Used in) Financing Activities	43,357		(5,000	)	2,250,752
Increase (Decrease) in Cash	(711	)	(61,027	)	5
Cash, Beginning of Period	716		69,157		–
Cash, End of Period	5		8,130		5
Cash and Cash Equivalents consists of:
Cash	1		1,116		1
Funds held in trust by lawyer	4		7,014		3,355
Total Cash and Cash Equivalents	5		8,130		3,356
Non-cash Investing and Financing Activities
Mineral properties acquired via loan payable	–		–		5,000
Supplemental Disclosures:
Interest paid	–		–		–
Income taxes paid	–		–		–

(The accompanying notes are an integral part of these financial statements)

F-3

 

TERRACE VENTURES INC.
(An Exploration Stage Company)
Notes to the financial statements
October 31, 2013
(Expressed in US dollars)
(unaudited)

1. Basis of Presentation

Terrace Ventures Inc. (“the Company”) was incorporated on February 20, 2001 in the State of Nevada. The Company is an exploration stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”. The Company is in the business of acquiring, exploring, and developing mineral properties.

These financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets and discharge its liabilities in the normal course of business. During the period ended October 31, 2013, the Company has not generated any revenues, has a Working Capital Deficit of $264,598, and has an Accumulated Deficit of $2,464,318. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

2. Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

3. Mineral Properties

On April 26, 2011 (as amended on July 31, 2012, November 17, 2012, May 30, 2013, and December18, 2013), the Company entered into an agreement to acquire up to a 75% interest in 83 mineral claims located in the Eureka Mining District in Eureka County, Nevada.

To earn the first 25% interest, the Company must:

• issue a $25,000 promissory note which was originally due on June 10, 2011 (issued); and
• incur exploration expenditures of $250,000 on or before June 30, 2014.

To earn an additional 25% interest, the Company must:

• pay $75,000 on or before June 30, 2014; and
• incur total exploration expenditures of $750,000 on or before December 31, 2014.

To earn a further 25% interest, the Company must:

• pay $100,000 on or before June 30, 2015; and
• incur total exploration expenditures of $1,250,000 on or before December 31, 2015.

On June 29, 2011, the $25,000 promissory note was extended to September 27, 2011 and the Company agreed to pay interest at a rate of 10% per annum. On December 31, 2011, the promissory note was increased to $30,000 with $5,000 due on March 31, 2012, $5,000 due on June 30, 2012, $10,000 due on September 30, 2012, and $10,000 due on December 31, 2012. On April 27, 2012, the Company paid $5,000 of the promissory note. On July 11, 2012, the Company paid $5,000 of the promissory note. On September 20, 2012, the $10,000 due on September 30, 2012 and December31, 2012 were each extended to February 28, 2013. On November 9, 2012, the remainder of the promissory note was cancelled.

F-4

 

TERRACE VENTURES INC.
(An Exploration Stage Company)
Notes to the financial statements
October 31, 2013
(Expressed in US dollars)
(unaudited)

4. Loans Payable

(a) As at October 31, 2013, the Company had Loans Payable of $7,080 (April 30, 2013 - $7,000), which is non-interest bearing, unsecured, and due on demand.

(b) On June 14, 2013, the Company received loan proceeds of $20,000 which bears interest at 8% per annum, is unsecured, and due on demand.

(c) On August 23, 2013, the Company received loan proceeds of Cdn$25,000 (US$23,973) which bears interest at 10% per annum, is unsecured, and due on demand.

5. Related Party Transactions

(a) During the six months ended October 31, 2013, the Company incurred Management Fees of $15,000 (2012 - $15,000) to the President of the Company.

(b) As at October 31, 2013, the Company owes $58,982 (April 30, 2013 - $45,682) to the President of the Company for management fees and general operation expenses. The amount is included in Accounts Payable and is non-interest bearing, unsecured, and due on demand.

6. Subsequent Event

(a) On January 2, 2014, the Company received loan proceeds of $2,500 which bears interest at 10% per annum, is unsecured, and due on demand.

(b) On January 27, 2014, the Company received loan proceeds of $10,000 which bears interest at 8% per annum, is unsecured, and due on demand.

F-5

 

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.   

Our business plan is to assemble a portfolio of mineral properties with gold potential and to engage in the exploration and development of these properties.  We currently have an earn-in agreement to acquire 75% interest in Pengram Corporation's agreement with Scoonover Exploration LLC and JR Exploration LLC (the “Underlying Agreement”) to acquire the Golden Snow Property. The Golden Snow Property consists of 128 mineral claims located in the Eureka Mining District in Eureka County, Nevada.

Earn-In Agreement

On April 26, 2011, we entered into an agreement with Pengram Corporation ("Pengram") dated April 26, 2011, as amended on June 29, 2011, September 20, 2012, November 17, 2012, May 30, 2013 and December 18, 2013 (the "Earn-In Agreement") whereby we will earn up to a 75% interest in Pengram's agreement with Scoonover Exploration LLC and JR Exploration LLC (the “Underlying Agreement”) to acquire the Golden Snow Property by paying to Pengram up to $175,000 and expending up to $1,250,000 to do exploration work on the Golden Snow Property as follows:

(i) The first 25% interest in the Underlying Agreement upon the Company completing cumulative exploration expenditures on the Property totalling $250,000 by June 30, 2014.

(ii) An additional 25% interest in the Underlying Agreement upon the Company:

a. paying Pengram $75,000 on or before June 30, 2014; and

b. completing cumulative exploration expenditures on the Property totalling $750,000 by December 31, 2014.

(iii) An additional 25% interest in the Underlying Agreement upon the Company:

a. paying Pengram $100,000 on or before June 30, 2015; and

b. completing exploration expenditures on the Property totalling $1,250,000 by December 31, 2015.

The Company is also obligated to pay all advance royalties, county and BLM claim fees and Nevada state taxes during the currency of the Earn-In Agreement. There is no assurance that the Company will be able to perform its obligations under the Earn-In Agreement. 

3

 

PLAN OF OPERATION

Over the next twelve months, our plan of operation is to focus our resources on the exploration of the Gold Snow Property.  Subject to obtaining sufficient financing, we plan to retain a consulting geologist to conduct a review of the property in order to recommend an exploration program to be conducted in summer of 2014.  Once our consulting geologist has provided us with their findings, we will determine whether to proceed with an exploration program on these properties.

During the next twelve months, we will be required to make a number of payments in order to maintain our interest to acquire a 75% interest in the Golden Snow Project.  Under the terms of our Earn-In Agreement, in order to keep the Golden Snow Property in good standing, we are required: (i) to pay to Pengram $75,000 being the amount payable on June 30, 2014; (ii) complete cumulative exploration expenditures of $250,000 by June 30, 2014; (iii) pay the Bureau of Land Management maintenance and claim fees by September 1, 2014; and (iv) pay any advance royalty payments.  If we are unable to make the payments to Claremont or the Bureau of Land Management we will lose our interest in the Golden Snow Property.

As the agreement is an option, we may decide at any time not to proceed in which case we would not be liable to pay any funds beyond the amounts due at the time we provide notice that we are not proceeding.  There is no assurance that we will exercise the option.

As at October 31, 2013, we had $5 cash on hand.  Accordingly, we have insufficient cash on hand to proceed with our exploration on the Golden Snow Project and meet our ongoing operating costs.  As such, we will require substantial financing in order to meet our obligations.  There is no assurance that we will be able to acquire such financing on terms that are acceptable to us, or at all. 

RESULTS OF OPERATIONS

Three Months and Six Months Summary

		Three Months Ended October 31,					Percentage    Increase /  (Decrease)		Six Months Ended October 31,					Percentage    Increase /  (Decrease)
		2013			2012				2013			2012
Revenue	$	-		$	-		n/a	$	-		$	-		n/a
Operating Expenses		(58,277	)		(70,854	)	(17.8%)		(78,021	)		(107,700	)	(27.6%)
Other Income (Expenses)		(876	)		2,656		(133.0%)		(1,082	)		2,656		(140.7%)
Net Income (Loss)	$	(59,103	)	$	(68,198	)	(13.3%)	$	(79,103	)	$	(105,044	)	(24.7%)

Revenues

We have not earned any revenues since our inception and we do not anticipate earning revenues in the near future. 

4

 

Expenses

The major components of our expenses for the three and six months ended October 31, 2013 and 2012 are outlined in the table below:

		Three Months Ended   October 31,					Percentage     Increase /  (Decrease)		Six Months Ended   October 31,					Percentage     Increase /  (Decrease)
		2013			2012				2013			2012
Operating Expenses:
Consulting fees		2,500			-		100.0%		5,000			-		100.0%
General and administrative		1,296			655		97.9%		1,706			1,788		(4.6%)
Management fees		7,500			7,500		0.0%		15,000			15,000		0.0%
Mineral exploration costs		22,371			33,601		(33.4%)		22,371			39,243		(43.0%)
Professional fees		23,748			23,593		0.7%		32,670			43,583		(25.0%)
Transfer agent and regulatory fees		813			5,505		(85.2%)		1,274			8,086		(84.2%)
Sub-total	$	58,277		$	70,854		(17.8%)	$	78,021		$	107,700		(27.6%)
Other Expenses:
Interest expense		876			-		100.0%		1,082			-		100.0%
Write-off of payables		-			(2,656	)	(100.0%)		-			(2,656	)	(100.0%)
Sub-total	$	876		$	(2,656	)	(133.0%)	$	1,082		$	(2,656	)	(140.7%)
Total Expenses	$	(59,103	)	$	(68,198	)	(13.3%)	$	(79,103	)	$	(105,044	)	(24.7%)

Our operating expenses decreased during the three months ended October 31, 2013. This decrease in our operating expenses is primarily due to decreases in mineral exploration costs and transfer agent and regulatory fees. The decrease was partially offset by increases in general and administrative expenses, professional fees and consulting fees.

Our operating expenses decreased during the six months ended October 31, 2013. This decrease in our operating expenses is primarily due to decreases in mineral exploration costs, professional fees and transfer agent and regulatory fees. The decrease was partially offset by increases in consulting fees.

Mineral exploration costs primarily relate to expenses incurred in connection with the Earn-In Agreement with Pengram.

Professional fees primarily relate to expenses incurred in connection with meeting our ongoing reporting obligations under the Exchange Act.

Management fees consist of amounts incurred to our sole executive officer and director for his management consulting services.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

		At October 31, 2013			At April 30, 2013		Percentage   Increase /  (Decrease)
Current Assets	$	5		$	716		(99.3%)
Current Liabilities		(264,603	)		(186,211	)	41.7%
Working Capital Deficit	$	(264,598	)	$	(185,495	)	42.6%

5

 

Cash Flows

		Six Months Ended
		October 31, 2013			October 31, 2012
Net Cash Used by Operating Activities	$	(44,068	)	$	(56,027	)
Net Cash From Investing Activities		-			-
Net Cash Provided By (Used In) Financing Activities		43,357			(5,000	)
Net Increase (Decrease) in Cash During Period	$	(711	)	$	(61,207	)

We had cash of $5 and a working capital deficit of $264,598 as of October 31, 2013 compared to a working capital deficit of $185,495 as of April 30, 2013.  The increase in our working capital deficit is due to an increase in accounts payable and loans payable as a result of our lack of capital to meet ongoing costs.

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.

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 2 to the interim financial statements included in this Quarterly Report.

ITEM 3.            QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.            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 October 31, 2013 (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, 2013 (the “2013 Annual Report”).

6

 

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in our 2013 Annual Report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2013 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 October 31, 2013 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

7

 

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 October 31, 2013, we had cash on hand of $5. Our plan of operation calls for significant expenses in order to meet our obligations under the Earn-In Agreement.  There is no guarantee that we will exercise our option.

Obtaining financing would be subject to a number of factors outside of our control, including market conditions and additional costs and expenses that might exceed current estimates.  These factors may make the timing, amount, terms or conditions of financing unavailable to us in which case we will be unable to complete our plan of operation on our mineral properties and to meet our obligations under our option agreements.

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 $2,464,318 for the period from February 20, 2001 (inception) to October 31, 2013 and have no revenues to date. Our future is dependent upon our ability to obtain financing.  Our auditors have expressed substantial doubt about our ability to continue as a going concern given our accumulated losses.  This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise.  If we fail to raise sufficient capital, we will not be able to complete our business plan.  As a result, we may have to liquidate our business and investors may lose their investment.

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

Investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises.  The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake.  These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.

8

 

We have no known mineral reserves and if we cannot find any, we will have to cease operations.

We have no mineral reserves.  If we do not find a mineral reserve containing gold or if we cannot explore the mineral reserve, either because we do not have the money to do it or because it will not be economically feasible to do it, we will have to cease operations and you will lose your investment.  Mineral exploration, particularly for gold, is highly speculative.  It involves many risks and is often non-productive.  Even if we are able to find mineral reserves on our properties, our production capability is subject to further risks including:

- Costs of bringing the property into production including exploration work, preparation of production feasibility studies, and construction of production facilities, all of which we have not budgeted for

- Availability and costs of financing;

- Ongoing costs of production; and

- Environmental compliance regulations and restraints.

The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the lack of milling facilities and processing equipment near our mineral properties, and such other factors as government regulations, including regulations relating to allowable production, importing and exporting of minerals, and environmental protection.

Given the above noted risks, the chances of finding reserves on our mineral properties are remote and funds expended on exploration will likely be lost.

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

Our mineral properties do not contain any known bodies of ore.  If our exploration programs are successful in discovering proven reserves on our mineral properties, we will require additional funds in order to place the mineral properties into commercial production.  The expenditures to be made by us in the exploration of mineral properties in all probability will be lost as it is an extremely remote possibility that the mineral claims will contain proven reserves.  If our exploration programs are successful in discovering proven reserves, we will require additional funds in order to place the mineral properties into commercial production.  The funds required for commercial mineral production can range from several millions to hundreds of millions.  We currently do not have sufficient funds to place our mineral claims into commercial production.  Obtaining additional financing would be subject to a number of factors, including the market price for gold and the costs of exploring for or mining these materials.  These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.  Because we will need additional financing to fund our exploration activities there is substantial doubt about our ability to continue as a going concern.  At this time, there is a risk that we will not be able to obtain such financing as and when needed.

We face significant competition in the mineral exploration industry.

We compete with other mining and exploration companies possessing greater financial resources and technical facilities than we do in connection with the acquisition of mineral exploration claims and leases on precious metal prospects and in connection with the recruitment and retention of qualified personnel.  There is significant competition for precious metals and, as a result, we may be unable to acquire an interest in attractive mineral exploration properties on terms we consider acceptable on a continuing basis.

There is no assurance that we will be able to comply with our obligations under the Earn-In Agreement.

In order comply with our obligations under the Earn-In Agreement we are required to make a series of cash payments and meet the annual claim maintenance fees.  In order to meet these payments we will need to obtain substantial financing.  If we are unable to meet these payments, we will lose our options to acquire these properties.

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Because our sole director and executive officer does not have formal training specific to the technicalities of mineral exploration, there is a higher risk that our business will fail. 

Howard Thomson, our sole director and executive officer, does not have any formal training as a geologist or in the technical aspects of managing a mineral exploration company.  Mr. Thomson’s lack of expertise could cause irreparable harm to our operations, earnings, and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry.

Because the prices of metals fluctuate, if the price of metals for which we are exploring decreases below a specified level, it may no longer be profitable to explore for those metals and we will cease operations.

Prices of metals are determined by such factors as expectations for inflation, the strength of the United States dollar, global and regional supply and demand, and political and economic conditions and production costs in metals producing regions of the world.  The aggregate effect of these factors on metal prices is impossible for us to predict.  In addition, the prices of precious metals are sometimes subject to rapid short-term and/or prolonged changes because of speculative activities.  The current demand for and supply of these metals affect the metal prices, but not necessarily in the same manner as current supply and demand affect the prices of other commodities.  The supply of these metals primarily consists of new production from mining.  If the prices of the metals are, for a substantial period, below our foreseeable cost of production, we could cease operations and investors could lose their entire investment.

The quotation price of our common stock may be volatile, with the result that an investor may not be able to sell any shares acquired at a price equal to or greater than the price paid by the investor.

Our common shares are quoted on the OTC Markets under the symbol "TVER”.  Companies quoted on the OTC Markets have traditionally experienced extreme price and volume fluctuations.  In addition, our stock price may be adversely affected by factors that are unrelated or disproportionate to our operating performance.  Market fluctuations, as well as general economic, political and market conditions such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock.  As a result of this potential volatility and potential lack of a trading market, an investor may not be able to sell any of our common stock that they acquire at a price equal or greater than the price paid by the investor.

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

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.  Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.  Because our securities constitute “penny stocks” within the meaning of the rules, the rules apply to us and to our securities.  The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them.  As long as the trading price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

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

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

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

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

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.

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

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

None.

ITEM 3.            DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.            MINE SAFETY DISCLOSURES.

None.

ITEM 5.            OTHER INFORMATION.

We have become aware that six of the persons who acquired shares under the our Regulation S private placement offering had misrepresented to us that they were “accredited investors” as that term is defined in National Instrument 45-106 as adopted by Canadian Securities Administrators. Although we are not legally required to do so, we have advised the British Columbia Securities Commission that we intend to make a rescission offer to those investors.  The exact terms of the offer have not been determined. If the offer is accepted by all of the investors the total cost of the rescission will be $62,000.

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ITEM 6.            EXHIBITS.

Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation.(1)
3.2	Certificate of Change to Authorized Capital effective December 19, 2005.(2)
3.3	Bylaws.(1)
10.1	2006 Stock Incentive Plan.(4)
10.2	Stock Option Agreement between the Company and Howard Thomson dated March 31, 2006.(4)
10.3	Management Consulting Agreement dated March 21, 2006 between the Company and Howard Thomson.(4)
10.4	Interim Agreement dated July 9, 2008 between the Company and Pyro Pharmaceuticals, Inc.(5)
10.5	Amendment Agreement dated September 26, 2008 to the Interim Agreement dated July 9, 2008 between the Company and Pyro Pharmaceuticals, Inc.(6)
10.6	Share Purchase Agreement dated April 29, 2009 among Terrace Ventures Inc., Marktech Acquisition Corp., Worldbid International Inc. and Geobiz Systems Inc.(7)
10.7	Amendment Agreement to Share Purchase Agreement dated August 12, 2009 among Terrace Ventures Inc., Marktech Acquisition Corp., Worldbid International Inc. and Geobiz Systems Inc.(8)
10.8	Earn-In Agreement (Golden Snow) dated April 26, 2011 between Pengram Corporation and Terrace Ventures Inc.(9)
10.9	Earn-In Extension Agreement (Golden Snow) dated June 29, 2011 between Pengram Corporation and Terrace Ventures Inc.(10)
10.10	Amendment Agreement dated November 17, 2012, between Pengram Corporation and Terrace Ventures Inc.(11)
10.11	Amendment Agreement dated for reference May 30, 2013, between Pengram Corporation and Terrace Ventures Inc.(11)
10.12	Amendment Agreement dated December 18, 2013, between Pengram Corporation and Terrace Ventures Inc.(12)
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.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

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) Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on April 28, 2011.

(10) Filed with the SEC as an exhibit to our Annual Report on Form 10-K filed on August 15, 2011.

(11) Filed with the SEC as an exhibit to our Current Report on Form 8-K filed on September 12, 2013.

(12) Filed with the SEC as an exhibit to our Quarterly Report on Form 10-Q filed on March 19, 2014.

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SIGNATURES

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

			TERRACE VENTURES INC.
Date:	March 18, 2014	By:	/s/ Howard Thomson
			HOWARD THOMSON
			Chief Executive Officer, Chief Financial Officer,
			President, Secretary and Treasurer
			(Principal Executive Officer & Principal Accounting Officer)