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SECURITIESAND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KSB

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|   | Annual Report Pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934 |

For the fiscal year ended:December  31,  2005

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|   | Transition Report Pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934 |

For the transitionperiod from                     to                    

Commission FileNumber 000-51200

Terra Nova AcquisitionCorporation

(Name of Small Business Issuerin Its Charter)

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| Delaware                                                |  | 98-0434371                                         |
| (State of Incorporation)                                |  | (SmallBusiness Issuer I.R.S. Employer I.D. Number) |
| 2 Bloor Street West, Suite 3400,Toronto,Ontario, Canada |  | M4W3E2                                             |
| (Address of principal executiveoffices)                 |  | (zip code)                                         |
|                                                         |

(416) 644-6000

(Issuer’s Telephone Number, IncludingArea Code)

Securities registered pursuant to Section 12(b)of the Act:

None

Securitiesregistered pursuant to Section 12(g) of the Act:

Units consisting of one share of Common Stock, parvalue $.0001 per share, and two WarrantsCommon Stock, $.0001 parvalue per share Warrants to purchase shares of Common Stock

Check whether the issuer is not required to file reportspursuant to Section 13 or 15(d) of the Exchange Act. 

Check whether the Issuer (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Exchange Act during the past12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filingrequirement for the past 90 days. Yes  No 

Check if there is no disclosure of delinquent filers inresponse to Item 405 of Regulation S-B contained in this form, and nodisclosure will be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-KSB or any amendment to thisForm 10-KSB. 

Indicate by check mark whether theregistrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct)Yes  No 

Issuer’s revenuesfor the fiscal year ended December  31,  2005 were $0.

As of March  21,  2006, the aggregate market valueof the common stock held by non-affiliates of the Registrant wasapproximately $29,129,925.

As of March  23,2006, there were 6,720,000 shares of Common Stock, $.0001 par value pershare, outstanding.

Transitional Small BusinessDisclosure Format (check one):    Yes     No 

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PART I

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| ITEM 1.  | DESCRIPTION OF BUSINESS |

TerraNova Acquisition Corporation is a blank check company formed onJuly  21,  2004 to effect a merger, capital stock exchange,asset acquisition or other similar business combination with anoperating business. Our efforts in identifying a prospective targetbusiness will not be limited to a particular industry, although we areconcentrating on businesses with high-quality management teams andwhich are not likely to be subject to significant low cost competitionor rapid technological change.

On April  22,  2005, weconsummated our initial public offering of 4,800,000 units with eachunit consisting of one share of our common stock and two warrants, eachto purchase one share of our common stock at an exercise price of $5.00per share. On April  26,  2005, we consummated the closing ofan additional 720,000 units which were subject to the over-allotmentoption. The units were sold at an offering price of $6.00 per unit,generating total gross proceeds of $33,120,000. After deducting theunderwriting discounts and commissions and the offering expenses, thetotal net proceeds to us from the offering were approximately$29,556,400, of which $28,648,800 was deposited into a trust fund andthe remaining proceeds ($907,600) were available to be used to providefor business, legal and accounting due diligence on prospectivebusiness combinations and continuing general and administrativeexpenses. Through December  31,  2005, we have usedapproximately $297,831 of the net proceeds that were not deposited intothe trust fund to pay general and administrative expenses. The netproceeds deposited into the trust fund remain on deposit in the trustfund earning interest. As of December  31,  2005, there is$29,305,705 held in the trust fund.

We are not presently engagedin, and we will not engage in, any substantive commercial businessuntil we consummate a business combination. We intend to utilize ourcash, including the funds held in the trust fund, capital stock, debtor a combination of the foregoing in effecting a business combination.A business combination may involve the acquisition of, or merger with,a company which does not need substantial additional capital but whichdesires to establish a public trading market for its shares, whileavoiding what it may deem to be adverse consequences of undertaking apublic offering itself. These include time delays, significant expense,loss of voting control and compliance with various Federal and statesecurities laws. In the alternative, we may seek to consummate abusiness combination with a company that may be financially unstable orin its early stages of development or growth.

Selection of atarget business and structuring of a business combination

Weanticipate that target business candidates will be brought to ourattention from various unaffiliated sources, including investmentbankers, venture capital funds, private equity funds, leveraged buyoutfunds, management buyout funds and other members of the financialcommunity, who may present solicited or unsolicited proposals. Ourofficers, directors and stockholders as well as their affiliates mayalso bring to our attention target business candidates. We have, andmay again in the future, engage professional firms that specialize inbusiness acquisitions to assist us in our search for a target business.If we do, we may be required to pay such firm a finder’s fee orother compensation. In no event, however, will we pay any of ourinitial officers, directors or stockholders (collectively, our‘‘Founders’’) or any entity with which they areaffiliated any finder’s fee or other compensation for servicesrendered to us prior to or in connection with the consummation of abusiness combination.

Subject to the requirement that ourinitial business combination must be with a target business with a fairmarket value that is at least 80% of our net assets at the timeof the acquisition, our management has virtually unrestrictedflexibility in identifying and selecting a prospective target business.In evaluating a prospective target business, our management considers,among other factors, the following:

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|  | •  | financial condition and resultsof operation; |

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|  | •  | growthpotential; |

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|  | •  | experience andskill of management and availability of additional personnel; |

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|  | •  | capital requirements; |

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|  |              |                      |
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|  | •  | competitiveposition; |

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|  | •  | barriers toentry; |

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|  | •  | stage of developmentof the products, processes or services; |

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|  | •  | degree of current or potentialmarket acceptance of the products, processes or services; |

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|  | •  | proprietary features and degreeof intellectual property or other protection of the products, processesor services; |

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|  | •  | regulatoryenvironment of the industry; and |

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|  | •  | costs associated with effectingthe business combination. |

These criteria are not intended to beexhaustive. Any evaluation relating to the merits of a particularbusiness combination will be based, to the extent relevant, on theabove factors as well as other considerations deemed relevant by ourmanagement in effecting a business combination consistent with ourbusiness objective. In evaluating a prospective target business, weconduct extensive due diligence reviews which encompass, among otherthings, meetings with incumbent management and inspection offacilities, as well as review of financial and other information whichwill be made available to us.

Fair Market Value of TargetBusiness

The initial target business that we acquire must havea fair market value equal to at least 80% of our net assets atthe time of such acquisition. The fair market value of such businesswill be determined by our board of directors based upon standardsgenerally accepted by the financial community, such as actual andpotential sales, earnings and cash flow and book value. If our board isnot able to independently determine that the target business has asufficient fair market value, we will obtain an opinion from anunaffiliated, independent investment banking firm with respect to thesatisfaction of such criteria. We will not be required to obtain anopinion from an investment banking firm as to the fair market value ifour board of directors independently determines that the targetbusiness has sufficient fair market value.

Opportunity forstockholder approval of business combination

Prior to thecompletion of a business combination, we will submit the transaction toour stockholders for approval, even if the nature of the acquisition issuch as would not ordinarily require stockholder approval underapplicable state law. In connection with seeking stockholder approvalof a business combination, we will furnish our stockholders with proxysolicitation materials prepared in accordance with the SecuritiesExchange Act of 1934, which, among other matters, will include adescription of the operations of the target business and auditedhistorical financial statements of the business.

In connectionwith the vote required for any business combination, our Founders haveagreed to vote their respective shares of common stock owned by themimmediately prior to our initial public offering (‘‘FounderShares’’) in accordance with the vote of the majority ofthe shares of our common stock sold in such offering (‘‘IPOShares’’). This voting arrangement shall not apply to anyshares included in units purchased by our Founders in our initialpublic offering or purchased by them after such offering in the openmarket. We will proceed with the business combination only if amajority of the IPO Shares present at the meeting to approve a businesscombination are voted in favor of such business combination andstockholders holding less than 20% of the IPO Shares exercisetheir conversion rights.

Conversion rights

At the timewe seek stockholder approval of any business combination, we will offerthe holders of IPO Shares the right to have such shares converted tocash if the stockholder votes against the business combination and thebusiness combination is approved and completed. The actual per-shareconversion price will be equal to the amount in the trust fund,inclusive of any interest, as of two business days prior to theconsummation of the business combination, divided by the total numberof IPO Shares. As of December  31,  2005, the per-shareconversion price would have been $5.31. An eligible stockholder mayrequest conversion at any time after the mailing to our stockholders ofthe proxy statement and prior to 

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the vote taken with respect to a proposedbusiness combination at a meeting held for that purpose, but therequest will not be granted unless the stockholder votes against thebusiness combination and the business combination is approved andcompleted. Any request for conversion, once made, may be withdrawn atany time up to the date of the meeting. It is anticipated that thefunds to be distributed to stockholders entitled to convert theirshares who elect conversion will be distributed promptly aftercompletion of a business combination. We will not complete any businesscombination if stockholders owning 20% or more of the IPO Sharesexercise their conversion rights. Holders of IPO Shares who converttheir stock into their share of the trust fund still have the right toexercise any warrants they continue to hold that they purchased as partof the units.

Liquidation if no business combination

Ifwe do not complete a business combination by October  22,2006, or by April  22,  2007 if the extension criteriadescribed below have been satisfied, we will be dissolved and willdistribute to all holders of IPO Shares, in proportion to the number ofIPO Shares held by them, an aggregate sum equal to the amount in thetrust fund, inclusive of any interest, plus any remaining net assets.The Founders have waived their rights to participate in any liquidationdistribution with respect to their Founder Shares. There will be nodistribution from the trust fund with respect to our warrants.

If we enter into either a letter of intent, an agreement inprinciple or a definitive agreement to complete a business combinationprior to October  22,  2006, but are unable to complete thebusiness combination prior to this date, then we will have anadditional six months in which to complete the business combinationcontemplated by the letter of intent, agreement in principle ordefinitive agreement. If we are unable to do so by April22,  2007, we will then liquidate. Upon notice from us, thetrustee of the trust fund will commence liquidating the investmentsconstituting the trust fund and will turn over the proceeds to ourtransfer agent for distribution to our stockholders. We anticipate thatour instruction to the trustee would be given promptly after theexpiration of the applicable time periods.

If we were to expendall of the net proceeds of our initial public offering, other than theproceeds deposited in the trust fund, the per-share liquidation priceas of December  31,  2005 would have been $5.31. However, theproceeds deposited in the trust fund could become subject to the claimsof our creditors which could be prior to the claims of our publicstockholders. Our chief executive officer has agreed that, if weliquidate prior to the consummation of a business combination, he willbe personally liable to pay debts and obligations to various vendors orother entities that are owed money by us for services rendered orproducts sold to us, or to any target business, to the extent they haveclaims against the funds in our trust account.

Competition

In identifying, evaluating and selecting a target business, weexpect to encounter intense competition from other entities having abusiness objective similar to ours. There are numerous blank checkcompanies that have completed initial public offerings that are seekingto carry out a business plan similar to our business plan.Additionally, we may be subject to competition from other companieslooking to expand their operations through the acquisition of a targetbusiness. Many of these entities are well established and haveextensive experience identifying and effecting business combinationsdirectly or through affiliates. Many of these competitors possessgreater technical, human and other resources than us and our financialresources will be relatively limited when contrasted with those of manyof these competitors. While we believe there are numerous potentialtarget businesses that we could acquire, our ability to compete inacquiring certain sizable target businesses will be limited by ouravailable financial resources. This inherent competitive limitationgives others an advantage in pursuing the acquisition of a targetbusiness. Further:

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|  | •  | our obligation to seekstockholder approval of a business combination may delay the completionof a transaction; |

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|  | •  | our obligation toconvert into cash shares of common stock held by our publicstockholders in certain instances may reduce the resources available tous for a business combination; and |

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|  | •  | our outstandingwarrants and options, and the future dilution they potentiallyrepresent, may not be viewed favorably by certain targetbusinesses. |

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Any of these factors may place us ata competitive disadvantage in successfully negotiating a businesscombination. Our management believes, however, that our status as apublic entity and potential access to the United States public equitymarkets may give us a competitive advantage over privately-heldentities having a similar business objective as us in acquiring atarget business on favorable terms.

If we succeed in effecting abusiness combination, there will be, in all likelihood, intensecompetition from competitors of the target business. We cannot assureyou that, subsequent to a business combination, we will have theresources or ability to compete effectively.

Employees

We have three executive officers. These individuals are notobligated to contribute any specific number of hours to our matters andintend to devote only as much time as they deem necessary to ouraffairs. The amount of time they devote in any time period will varybased on the availability of suitable target businesses to investigate.We do not intend to have any full time employees prior to theconsummation of a business combination.

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Risks associated with ourbusiness

In addition to other information included in thisreport, the following factors should be considered in evaluating ourbusiness and future prospects.

We are a development stagecompany with no operating history and very limited resources.

We are a recently incorporated development stage company with nooperating results to date. Since we do not have an operating history,you will have no basis upon which to evaluate our ability to achieveour business objective, which is to acquire an operating business. Wewill not generate any revenues until, at the earliest, after theconsummation of a business combination.

If thirdparties bring claims against us, the proceeds held in trust could bereduced and the per-share liquidation price received by stockholderswill be less than $5.31 per share.

Our placing of funds intrust may not protect those funds from third party claims against us.The proceeds held in trust could be subject to claims which could takepriority over the claims of our public stockholders. We cannot assureyou that the per-share liquidation price will not be less than the$5.31 per share held in trust as of December  31,  2005 dueto claims of creditors. If we liquidate before the completion of abusiness combination, Vahan Kololian, our chief executive officer, hasagreed that he will be personally liable to ensure that the proceeds inthe trust fund are not reduced by the claims of target businesses orvarious vendors or other entities that are owed money by us forservices rendered or products sold to us. However, we cannot assure youthat he will be able to satisfy those obligations. Furthermore, evenafter our liquidation (including the distribution of the monies thenheld in the trust fund), under the Delaware General Corporation Law,stockholders may be held liable for claims by third parties against acorporation to the extent of distributions received by them in adissolution. Accordingly, we cannot assure you that third parties willnot seek to recover from our stockholders amounts owed to them byus.

Because there are numerous companies with abusiness plan similar to ours seeking to effectuate a businesscombination, it may be more difficult for us to do so.

There are numerous similarly structured blank check companies whichhave completed initial public offerings in the United States withbusiness plans similar to ours and there are a number of additionalofferings for blank check companies that are still in the registrationprocess but have not completed initial public offerings. While some ofthose companies must complete a business combination in specificindustries, a number of them may consummate a business combination inany industry they choose. Therefore, we may be subject to competitionfrom these and other companies seeking to consummate a business plansimilar to ours. Because of this competition, we cannot assure you thatwe will be able to effectuate a business combination within therequired time periods.

Since we have not currentlyselected a particular industry or target business with which tocomplete a business combination, we are unable to currently ascertainthe merits or risks of the industry or business in which we mayultimately operate.

We may consummate a businesscombination with a company in any industry we choose and are notlimited to any particular industry or type of business. Accordingly,there is no basis for investors to evaluate the possible merits orrisks of the target business’ operations. To the extent wecomplete a business combination with a financially unstable company oran entity in its development stage, we may be affected by numerousrisks inherent in the business operations of those entities. Althoughour management will endeavor to evaluate the risks inherent in aparticular industry or target business, we cannot assure you that wewill properly ascertain or assess all of the significant risk factors.We also cannot assure you that an investment in our securities will notultimately prove to be less favorable than a direct investment, if anopportunity were available, in a target business.

Wemay issue shares of our common stock and preferred stock to complete abusiness combination, which would reduce the equity interest of ourstockholders and likely cause a change in control of ourownership.

Our certificate of incorporation authorizes theissuance of up to 30,000,000 shares of common stock, par value $.0001per share, and 1,000,000 shares of preferred stock, par value $.0001per share. We 

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currently have 11,520,000 authorized butunissued shares of our common stock available for issuance (afterappropriate reservation for the issuance of shares upon full exerciseof our outstanding warrants and the purchase option initially grantedto EarlyBirdCapital, Inc., the representative of the underwriters inour initial public offering) and all of the 1,000,000 shares ofpreferred stock available for issuance.

Although we currentlyhave no commitments to issue our securities, we will, in alllikelihood, issue a substantial number of additional shares of ourcommon stock or preferred stock, or a combination of common andpreferred stock, to complete a business combination. The issuance ofadditional shares of our common stock or any number of shares of ourpreferred stock:

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|  | •  | maysignificantly reduce the equity interest of stockholders; |

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|  | •  | may subordinate the rights ofholders of common stock if the preferred stock includes rights seniorto the common stock; |

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|  | •  | willlikely cause a change in control if a substantial number of our sharesof common stock are issued, which may affect, among other things, ourability to use our net operating loss carry forwards, if any, and mostlikely also result in the resignation or removal of our presentofficers and directors; and |

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|  | •  | may adversely affect prevailingmarket prices for our common stock. |

Similarly, if weissue debt securities, it could result in:

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|  | •  | default and foreclosure on ourassets if our operating revenues after a business combination wereinsufficient to pay our debt obligations; |

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|  | •  | acceleration of our obligationsto repay the indebtedness even if we have made all principal andinterest payments when due if the debt security contains covenants thatrequire the maintenance of certain financial ratios or reserves and anysuch covenant is breached without a waiver or renegotiation of thatcovenant; |

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|  | •  | our immediatepayment of all principal and accrued interest, if any, if the debtsecurity is payable on demand; and |

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|  | •  | our inability to obtainadditional financing, if necessary, if the debt security containscovenants restricting our ability to obtain additional financing whilesuch security is outstanding. |

The ability of ourstockholders to exercise their conversion rights may not allow us toeffectuate the most desirable business combination or optimize ourcapital structure.

When we seek stockholder approval ofany business combination, we will offer each public stockholder theright to have his, her or its shares of common stock converted to cashif the stockholder votes against the business combination and thebusiness combination is approved and completed. Such holder must bothvote against such business combination and then exercise his, her orits conversion rights to receive a pro rata portion of the trustaccount. Accordingly, if our business combination requires us to usesubstantially all of our cash to pay the purchase price, because wewill not know how many stockholders may exercise such conversionrights, we may either need to reserve part of the trust account forpossible payment upon such conversion, or we may need to arrange thirdparty financing to help fund our business combination in case a largerpercentage of stockholders exercise their conversion rights than weexpect. Therefore, we may not be able to consummate a businesscombination that requires us to use all of the funds held in the trustaccount as part of the purchase price, or we may end up having aleverage ratio that is not optimal for our business combination. Thismay limit our ability to effectuate the most attractive businesscombination available to us.

Our current officersand directors may resign upon consummation of a business combinationand we will have only limited ability to evaluate the management of thetarget business.

Our ability to successfully effect abusiness combination will be totally dependent upon the efforts of ourkey personnel. The future role of our key personnel in the targetbusiness, however, cannot presently be ascertained. Although it ispossible that some of our key personnel will remain associated invarious 

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capacities with the target business followinga business combination, it is likely that the management of the targetbusiness at the time of the business combination will remain in place.Moreover, our key personnel will be able to remain with the companyafter the consummation of a business combination only if they are ableto negotiate employment or consulting agreements in connection with thebusiness combination, the terms of which, including the compensation tobe paid to such individuals, would be determined at such time betweenthe respective parties. However, the ability of our key personnel toremain with the company after the consummation of a businesscombination will not be the determining factor in our decision as towhether or not we will proceed with any potential business combination.While we intend to closely scrutinize the management of a prospectivetarget business in connection with evaluating the desirability ofeffecting a business combination, we cannot assure you that ourassessment of management will prove to be correct. These individualsmay be unfamiliar with the requirements of operating a public companywhich could cause us to have to expend time and resources helping thembecome familiar with such requirements. This could be expensive andtime-consuming and could lead to various regulatory issues which mayadversely affect our operations.

Our officers anddirectors allocate their time to other businesses thereby causingconflicts of interest in their determination as to how much time todevote to our affairs. This could have a negative impact on our abilityto consummate a business combination.

Our officers anddirectors are not required to commit their full time to our affairs,which may result in a conflict of interest in allocating their timebetween our operations and other businesses. We do not intend to haveany full time employees prior to the consummation of a businesscombination. All of our executive officers are engaged in several otherbusiness endeavors and are not obligated to contribute any specificnumber of hours to our affairs. If our executive officers’ otherbusiness affairs require them to devote more substantial amounts oftime to such affairs, it could limit their ability to devote time toour affairs and could have a negative impact on our ability toconsummate a business combination.

Some of ourofficers and directors may in the future become affiliated withentities engaged in business activities similar to those intended to beconducted by us and, accordingly, may have conflicts of interest indetermining which entity a particular business opportunity should bepresented to.

Some of our officers and directors may inthe future become affiliated with entities, including other‘‘blank check’’ companies, engaged in businessactivities similar to those intended to be conducted by us.Additionally, our officers and directors may become aware of businessopportunities which may be appropriate for presentation to us as wellas the other entities with which they have fiduciary obligations to.Accordingly, they may have conflicts of interest in determining towhich entity a particular business opportunity should be presented. Wecannot assure you that these conflicts will be resolved in our favor.

A number of our directors own shares of our commonstock which will not participate in liquidation distributions andtherefore they may have a conflict of interest in determining whether aparticular target business is appropriate for a businesscombination.

A number of our directors own stock in ourcompany, but have waived their right to receive distributions upon ourliquidation with respect to their Founder Shares. Additionally, some ofour directors beneficially own warrants to purchase additional sharesof our common stock. The shares and warrants owned by our directors andofficers will be worthless if we do not consummate a businesscombination. The personal and financial interests of our directors andofficers may influence their motivation in identifying and selecting atarget business and completing a business combination timely.Consequently, our directors’ and officers’ discretion inidentifying and selecting a suitable target business may result in aconflict of interest when determining whether the terms, conditions andtiming of a particular business combination are appropriate and in ourstockholders’ best interest.

It is probablethat we will only be able to complete one business combination, whichwill cause us to be solely dependent on a single business and a limitednumber of products or services. 

As of December31,  2005, we had $29,305,705 on deposit in a trust fund that wemay use to complete a business combination. Our initial businesscombination must be with a business with a fair market value

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of at least 80% of our net assets atthe time of such acquisition. Consequently, it is probable that we willconsummate a business combination with a single operating business.Accordingly, the prospects for our success may be:

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|  | •  | solely dependent upon theperformance of a single business, or |

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|  | •  | dependent upon the developmentor market acceptance of a single or limited number of products,processes or services. |

In this case, we will not be able todiversify our operations or benefit from the possible spreading ofrisks or offsetting of losses, unlike other entities which may have theresources to complete several business combinations in differentindustries or different areas of a single industry.

Because of our limited resources and structure, we maynot be able to consummate an attractive business combination.

We expect to encounter intense competition from other entitieshaving a business objective similar to ours, including venture capitalfunds, leveraged buyout funds and operating businesses competing foracquisitions. Many of these entities are well established and haveextensive experience in identifying and effecting business combinationsdirectly or through affiliates. Many of these competitors possessgreater technical, human and other resources than we do and ourfinancial resources will be relatively limited when contrasted withthose of many of these competitors. While we believe that there arenumerous potential target businesses that we could acquire, our abilityto compete in acquiring certain sizable target businesses will belimited by our available financial resources. This inherent competitivelimitation gives others an advantage in pursuing the acquisition ofcertain target businesses. Further, the obligation we have to seekstockholder approval of a business combination may delay theconsummation of a transaction, and our obligation to convert into cashthe shares of common stock held by public stockholders in certaininstances may reduce the resources available for a businesscombination. Additionally, our outstanding warrants and options, andthe future dilution they potentially represent, may not be viewedfavorably by certain target businesses. Any of these obligations mayplace us at a competitive disadvantage in successfully negotiating abusiness combination. Additionally, because of our structure, there maybe fewer attractive target businesses available to acquire or privatelyheld target businesses may not be not inclined to enter into atransaction with a publicly held blank check company like us.

We may be unable to obtain additional financing, ifrequired, to complete a business combination or to fund the operationsand growth of the target business, which could compel us to restructurethe transaction or abandon a particular business combination.

Although we believe our current assets will be sufficient to allowus to consummate a business combination, in as much as we have not yetidentified any prospective target business, we cannot ascertain thecapital requirements for any particular transaction. If we requirefurther funds, either because of the size of the business combinationor the depletion of our available cash in search of a target business,or because we become obligated to convert into cash a significantnumber of shares from dissenting stockholders, we will be required toseek additional financing. We cannot assure you that such financingwould be available on acceptable terms, if at all. To the extent thatadditional financing proves to be unavailable when needed to consummatea particular business combination, we would be compelled to restructurethe transaction or abandon that particular business combination andseek an alternative target business candidate. In addition, if weconsummate a business combination, we may require additional financingto fund the operations or growth of the target business. The failure tosecure additional financing could have a material adverse effect on thecontinued development or growth of the target business. None of ourofficers, directors or stockholders is required to provide anyfinancing to us in connection with or after a business combination.

Our Founders, including our officers and directors,control a substantial interest in us and thus may influence certainactions requiring stockholder vote.

Our board of directorsis divided into three classes, each of which will generally serve for aterm of three years with only one class of directors being elected ineach year. It is unlikely that there will be an 

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annual meeting of stockholders to elect newdirectors prior to the consummation of a business combination, in whichcase all of the current directors will continue in office at leastuntil the consummation of the business combination. If there is anannual meeting, as a consequence of our‘‘staggered’’ board of directors, only aminority of the board of directors will be considered for election andour Founders, because of their ownership position, will haveconsiderable influence regarding the outcome. Accordingly, our Founderswill continue to exert control at least until the consummation of abusiness combination.

Our outstanding warrants mayhave an adverse effect on the market price of common stock and make itmore difficult to effect a business combination.

Wecurrently have outstanding warrants to purchase 11,040,000 shares ofcommon stock and an option to purchase 240,000 shares of common stockand warrants to purchase an additional 480,000 shares of common stock.To the extent we issue shares of common stock to effect a businesscombination, the potential for the issuance of substantial numbers ofadditional shares upon exercise of these warrants and options couldmake us a less attractive acquisition vehicle in the eyes of a targetbusiness as such securities, when exercised, will increase the numberof issued and outstanding shares of our common stock and reduce thevalue of the shares issued to complete the business combination.Accordingly, our warrants and options may make it more difficult toeffectuate a business combination or increase the cost of the targetbusiness. Additionally, the sale, or even the possibility of sale, ofthe shares underlying the warrants and options could have an adverseeffect on the market price for our securities or on our ability toobtain future public financing. If and to the extent these warrants andoptions are exercised, you may experience dilution to yourholdings.

If we are unable to effect a businesscombination and are forced to liquidate, our warrants will expireworthless.

If we do not complete a business combination byOctober  22,  2006, or by April  22,  2007 ifcertain criteria have been satisfied, we will be dissolved and willdistribute to all holders of IPO Shares, in proportion to the number ofIPO Shares held by them, an aggregate sum equal to the amount in thetrust fund, inclusive of any interest, plus any remaining net assets.In such event, there will be no distribution with respect to ouroutstanding warrants. Accordingly, the warrants will expireworthless.

If our Founders exercise theirregistration rights, it may have an adverse effect on the market priceour common stock and the existence of these rights may make it moredifficult to effect a business combination.

Our Foundersare entitled to demand that we register the resale of their shares ofcommon stock at any time after the date on which their shares arereleased from escrow. If our Founders exercise their registrationrights with respect to all of their shares of common stock, then therewill be an additional 1,200,000 shares of common stock eligible fortrading in the public market. The presence of this additional number ofshares of common stock eligible for trading in the public market mayhave an adverse effect on the market price of our common stock. Inaddition, the existence of these rights may make it more difficult toeffectuate a business combination or increase the cost of the targetbusiness, as the stockholders of the target business may be discouragedfrom entering into a business combination with us or will request ahigher price for their securities as a result of these registrationrights and the potential future effect their exercise may have on thetrading market for our common stock.

Our securitiesare quoted on the OTC Bulletin Board, which limits the liquidity andprice of our securities. 

Our securities are traded on theOTC Bulletin Board, an NASD-sponsored and operated inter-dealerautomated quotation system for equity securities not included on TheNasdaq Stock Market. Quotation of our securities on the OTC BulletinBoard limits the liquidity and price of our securities more than if oursecurities were quoted or listed on The Nasdaq Stock Market or anational exchange.

10

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If we are deemed to be aninvestment company, we may be required to institute burdensomecompliance requirements and our activities may be restricted, which maymake it difficult for us to complete a business combination.

If we are deemed to be an investment company under the InvestmentCompany Act of 1940, we may be subject to certain restrictions that maymake it more difficult for us to complete a business combination,including:

|  |              |                                                   |
|--|--------------|---------------------------------------------------|
|  | •  | restrictions onthe nature of our investments; and |

|  |              |                                            |
|--|--------------|--------------------------------------------|
|  | •  | restrictions on the issuance ofsecurities. |

In addition, we may have imposed upon us burdensomerequirements, including:

|  |              |                                       |
|--|--------------|---------------------------------------|
|  | •  | registration as an investmentcompany; |

|  |              |                                                        |
|--|--------------|--------------------------------------------------------|
|  | •  | adoption of aspecific form of corporate structure; and |

|  |              |                                                                                                     |
|--|--------------|-----------------------------------------------------------------------------------------------------|
|  | •  | reporting, record keeping,voting, proxy and disclosure requirements and other rules andregulations. |

We do not believe that our anticipated principalactivities will subject us to the Investment Company Act of 1940. Tothis end, the proceeds held in trust may only be invested by the trustagent in ‘‘government securities’’ withspecific maturity dates. By restricting the investment of the proceedsto these instruments, we intend to meet the requirements for theexemption provided in Rule 3a-1 promulgated under the InvestmentCompany Act of 1940. If we were deemed to be subject to the act,compliance with these additional regulatory burdens would requireadditional expense that we have not allotted for.

Because we may acquire a company located outside of theUnited States, we may be subject to various risks of the foreignjurisdiction we ultimately operate in. 

If we acquire acompany that has sales or operations outside the United States, wecould be exposed to risks that negatively impact our future sales orprofitability following a business combination. Additionally, if theacquired company is in a developing country or a country that is notfully market-oriented our operations may not develop in the same way orat the same rate as might be expected in the United States or anothercountry with an economy similar to the market-oriented economies ofmember countries which are members of the Organization for EconomicCooperation and Development. The OECD is an international organizationhelping governments through the economic, social and governancechallenges of a globalised economy. The additional risks we may beexposed to if the target business we acquire is located outside of theUnited States include but are not limited to:

|  |              |                             |
|--|--------------|-----------------------------|
|  | •  | tariffs and trade barriers; |

|  |              |                                                          |
|--|--------------|----------------------------------------------------------|
|  | •  | regulations related to customsand import/export matters; |

|  |              |                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------|
|  | •  | tax issues, such as tax lawchanges and variations in tax laws as compared to the United States; |

|  |              |                         |
|--|--------------|-------------------------|
|  | •  | government instability; |

|  |              |                              |
|--|--------------|------------------------------|
|  | •  | an inadequate bankingsystem; |

|  |              |                       |
|--|--------------|-----------------------|
|  | •  | currencyfluctuations; |

|  |              |                           |
|--|--------------|---------------------------|
|  | •  | foreignexchange controls; |

|  |              |                                                                     |
|--|--------------|---------------------------------------------------------------------|
|  | •  | restrictions on therepatriation of profits or payment of dividends; |

|  |              |                                                                    |
|--|--------------|--------------------------------------------------------------------|
|  | •  | crime, strikes, riots, civildisturbances, terrorist attacks, wars; |

|  |              |                                              |
|--|--------------|----------------------------------------------|
|  | •  | nationalization orexpropriation of property; |

|  |              |                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------|
|  | •  | law enforcement authorities andcourts that are weak or inexperienced in commercial matters; and |

|  |              |                                                             |
|--|--------------|-------------------------------------------------------------|
|  | •  | deterioration of politicalrelations with the United States. |

11

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Because any target businesswith which we attempt to complete a business combination will berequired to provide our stockholders with financial statements preparedin accordance with and reconciled to United States generally acceptedaccounting principles, the pool of prospective target businesses may belimited. 

In accordance with requirements of United StatesFederal securities laws, in order to seek stockholder approval of abusiness combination, a proposed target business will be required tohave certain financial statements which are prepared in accordancewith, or which can be reconciled to, U.S. generally accepted accountingprinciples and audited in accordance with U.S. generally acceptedauditing standards. To the extent that a proposed target business doesnot have financial statements which have been prepared with, or whichcan be reconciled to, U.S. GAAP, and audited in accordance with U.S.GAAS, we will not be able to acquire that proposed target business.These financial statement requirements may limit the pool of potentialtarget businesses.

|               |                        |
|---------------|------------------------|
| ITEM 2.  | DESCRIPTION OFPROPERTY |

We maintain our executive offices at 2 Bloor StreetWest, Suite 3400, Toronto, Ontario, Canada pursuant to an agreementwith TerraNova Management Corp., an affiliate of Vahan Kololian, ourchairman of the board and chief executive officer, Lee W. Chung, ourchief financial officer and director, and Jesse Gill, our vicepresident and director. We pay TerraNova Management Corp. a monthly feeof $7,500 for providing us with office space and certain office andsecretarial services. We believe, based on rents and fees for similarservices in the Toronto, Ontario, Canada metropolitan area, that thefee charged by TerraNova Management Corp. is at least as favorable aswe could have obtained from an unaffiliated person. We consider ourcurrent office space adequate for our current operations.

|              |                   |
|--------------|-------------------|
| ITEM3.  | LEGAL PROCEEDINGS |

None.

|               |                                                    |
|---------------|----------------------------------------------------|
| ITEM 4.  | SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS |

None.

12

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PART II

|               |                                                         |
|---------------|---------------------------------------------------------|
| ITEM 5.  | MARKET FOR COMMON EQUITY AND RELATEDSTOCKHOLDER MATTERS |

Market Information

Our units,common stock and warrants are traded on the Over-the-Counter BulletinBoard under the symbols TNVAU, TNVA and TNVAW, respectively. Thefollowing table sets forth the range of high and low closing bid pricesfor the units, common stock and warrants for the periods indicatedsince such units commenced public trading on April  19,  2005and since such common stock and warrants commenced public trading onMay  3,  2005. The over-the-counter market quotations reflectinter-dealer prices, without retail mark-up, mark-down or commissionand may not necessarily reflect actual transactions.

|                |
|----------------|
|                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|           |  | Units |  | CommonStock |  | Warrants |
|           |  | High |  | Low |  | High |  | Low |  | High |  | Low |
| 2006:          |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |
| FirstQuarter*  |  |   | 6.50 |   |  |   | 5.85 |   |  |   | 5.29 |   |  |   | 5.08 |   |  |   | 0.74 |   |  |   | 0.40 |   |
| 2005:          |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |  |   |   |   |
| FourthQuarter  |  |   | 6.20 |   |  |   | 5.80 |   |  |   | 5.13 |   |  |   | 4.95 |   |  |   | 0.60 |   |  |   | 0.38 |   |
| Third Quarter  |  |   | 6.25 |   |  |   | 5.80 |   |  |   | 5.00 |   |  |   | 4.90 |   |  |   | 0.61 |   |  |   | 0.47 |   |
| Second Quarter |  |   | 6.45 |   |  |   | 5.90 |   |  |   | 5.10 |   |  |   | 4.80 |   |  |   | 0.65 |   |  |   | 0.55 |   |
|                |

|  |
|--|
|  |  |
|  |

|   |                         |
|---|-------------------------|
| * | ThroughMarch  21,  2006 |

Holders

As ofMarch  23,  2006, there was one holder of record of ourunits, nine holders of record of our common stock and one holder ofrecord of our warrants.

Dividends

We have not paid anycash dividends on our common stock to date and do not intend to paycash dividends prior to the completion of a business combination. Thepayment of dividends in the future will be contingent upon our revenuesand earnings, if any, capital requirements and general financialcondition subsequent to completion of a business combination. Thepayment of any dividends subsequent to a business combination will bewithin the discretion of our then board of directors. It is the presentintention of our board of directors to retain all earnings, if any, foruse in our business operations and, accordingly, our board does notanticipate declaring any dividends in the foreseeable future.

13

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Recent Sales of Unregistered Securitiesand Use of Proceeds

In July  2004, we sold the followingshares of common stock without registration under the Securities Act of1933, as amended:

|                        |  |                  |         |        |  |  |
|------------------------|--|------------------|---------|--------|--|--|
| Stockholders           |  | Number of Shares |
| TerraNovaPartners L.P. |  |             | 506,250 |   |
| Randy Benson           |  |             | 56,250  |   |
| Brendan Calder         |  |             | 56,250  |   |
| Roynat Capital Inc.    |  |             | 56,250  |   |
| Randall Oliphant       |  |             | 35,000  |   |
| Tim Creasy             |  |             | 20,000  |   |
| George Koulakian       |  |             | 20,000  |   |
|                        |

Such shares were issued inconnection with our organization pursuant to the exemption fromregistration contained in Section 4(2) of the Securities Act as theywere sold to sophisticated, wealthy individuals. The shares issued tothe individuals above were sold at a purchase price of $0.033 pershare. TerraNova Partners L.P. subsequently transferred 35,000 sharesof common stock to James Meekison. On March  3,  2005, ourboard of directors authorized a stock dividend of 0.6 shares of commonstock for each outstanding share of common stock, effectively loweringthe purchase price to $0.0208 per share. Randall Oliphant subsequentlytransferred his shares of common stock to Rockcliff Group Limited, aprivate entity he controls. Roynat Capital Inc. subsequentlytransferred its shares of common stock to Roynat Merchant Capital Inc.,an affiliate of Roynat Capital Inc.

Initial PublicOffering

On April  22,  2005, we consummated ourinitial public offering of 4,800,000 units with each unit consisting ofone share of our common stock and two warrants, each to purchase oneshare of our common stock at an exercise price of $5.00 per share. OnApril  26,  2005, we consummated the closing of an additional720,000 units which were subject to the over-allotment option. Theunits were sold at an offering price of $6.00 per unit, generatingtotal gross proceeds of $33,120,000. The managing underwriter in theoffering was EarlyBirdCapital, Inc. The securities sold in the offeringwere registered under the Securities Act of 1933 on a registrationstatement on Form S-1 (No. 333-122439). The Securities and ExchangeCommission declared the registration statement effective on April18,  2005.

We paid a total of $2,649,600 in underwritingdiscounts and commissions and approximately $914,000 for costs andexpenses related to the offering, including $432,000 for theunderwriters’ non-accountable expense allowance of 1.5%of the gross proceeds.

After deducting the underwritingdiscounts and commissions and the offering expenses, the total netproceeds to us from the offering were approximately $29,556,400, ofwhich $28,648,800 was deposited into a trust fund and the remainingproceeds ($907,600) became available to be used to provide forbusiness, legal and accounting due diligence on prospective businesscombinations and continuing general and administrative expenses. Thenet proceeds deposited into the trust fund remain on deposit in thetrust fund and have earned $656,905 in interest through December31,  2005.

|               |                                                                |
|---------------|----------------------------------------------------------------|
| ITEM 6.  | MANAGEMENT’SDISCUSSION AND ANALYSIS OR PLAN OF OPERATION |

The followingdiscussion should be read in conjunction with the Company’sConsolidated Financial Statements and footnotes thereto contained inthis report.

Forward Looking Statements

The statementsdiscussed in this Report include forward looking statements thatinvolve risks and uncertainties detailed from time to time in theCompany’s reports filed with the Securities and ExchangeCommission.

14

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Plan of Operations

We were formedon July  21,  2004, to serve as a vehicle to effect a merger,capital stock exchange, asset acquisition or other similar businesscombination with an operating business. Until consummation of ourinitial public offering in April  2005, all of our activityrelated to our formation and initial public offering. Since then, wehave been searching for prospective target businesses to acquire. Weintend to utilize cash derived from the proceeds of our recentlycompleted public offering, our capital stock, debt or a combination ofcash, capital stock and debt, in effecting a business combination.

Net income for the year ended December  31,  2005 of$245,602 consisted of $668,164 of interest income reduced by $63,750for a monthly administrative services agreement, $71,232 for insurance,$54,092 for professional fees, $38,132 for traveling expenses, $158,685for income taxes and $36,671 for other expenses.

For the periodfrom July  21,  2004 (inception) through December31,  2004, we had a net loss of $1,605, attributable toorganization and formation expenses.

Net income for the periodfrom July  21,  2004 (inception) to December  31,2005 of $243,997 consisted of $668,164 of interest income reduced by$63,750 for a monthly administrative services agreement, $71,232 forinsurance, $54,092 for professional fees, $38,132 for travelingexpenses, $158,685 for incomes taxes and $38,276 for otherexpenses.

We consummated our initial public offering onApril  22,  2005. On April  26,  2005, weconsummated the closing of an additional 720,000 units that weresubject to the underwriters’ over-allotment option. Grossproceeds from our initial public offering were $33,120,000. We paid atotal of $3,081,600 in underwriting discounts and commissions, andapproximately $482,000 was paid for costs and expenses related to theoffering. After deducting the underwriting discounts and commissionsand the offering expenses, the total net proceeds to us from theoffering were approximately $29,556,400, of which $28,648,800 wasdeposited into the trust account (or $5.19 per share sold in theoffering). The remaining proceeds are available to be used by us toprovide for business, legal and accounting due diligence on prospectiveacquisitions and continuing general and administrative expenses. Wewill use substantially all of the net proceeds of this offering toacquire a target business, including identifying and evaluatingprospective acquisition candidates, selecting the target business, andstructuring, negotiating and consummating the business combination. Tothe extent that our capital stock is used in whole or in part asconsideration to effect a business combination, the proceeds held inthe trust fund as well as any other net proceeds not expended will beused to finance the operations of the target business.

Webelieve we will have sufficient available funds outside of the trustfund to operate through April  22,  2007, assuming that abusiness combination is not consummated during that time. We do notbelieve we will need to raise additional funds following this offeringin order to meet the expenditures required for operating our business.However, we may need to raise additional funds through a privateoffering of debt or equity securities if such funds are required toconsummate a business combination that is presented to us. We wouldonly consummate such a financing simultaneously with the consummationof a business combination.

Commencing on April  18,2005 and ending upon the acquisition of a target business, we beganincurring a fee from TerraNova Management Corp., an affiliate of VahanKololian, our chairman of the board and chief executive officer, Lee W.Chung, our chief financial officer and Jesse Gill, our vice president,of $7,500 per month for providing us with office space and certaingeneral and administrative services. In addition, in November2004 and March  2005, TerraNova Partners L.P. advanced $70,000 and$20,000, respectively, to us for payment on our behalf of offeringexpenses. These loans were repaid following our initial public offeringfrom the net proceeds of the offering.

As indicated in ouraccompanying financial statements, such financial statements have beenprepared assuming that we will continue as a going concern. Asdiscussed elsewhere in this Annual Report, we are required toconsummate a business combination by October  22,  2006, orby April 22, 2007 if certain criteria have been satisfied. Thepossibility of a business combination not being consummated raisessubstantial doubt about our ability to continue as a going concern, andthe financial statements do not include any adjustments that mightresult from the outcome of this uncertainty.

15

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|               |                     |
|---------------|---------------------|
| ITEM 7.  | FINANCIALSTATEMENTS |

This information appears following Item 14 of thisReport and is incorporated herein by reference.

|              |                                                                                   |
|--------------|-----------------------------------------------------------------------------------|
| ITEM8.  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING AND FINANCIAL CHANGES. |

None.

|               |                        |
|---------------|------------------------|
| ITEM8A.  | CONTROL AND PROCEDURES |

Disclosurecontrols and procedures are controls and other procedures that aredesigned to ensure that information required to be disclosed in companyreports filed or submitted under the Securities Exchange Act of 1934(the ‘‘Exchange Act’’) is recorded, processed,summarized and reported, within the time periods specified in theSecurities and Exchange Commission’s rules and forms. Disclosurecontrols and procedures include without limitation, controls andprocedures designed to ensure that information required to be disclosedin company reports filed or submitted under the Exchange Act isaccumulated and communicated to management, including our chiefexecutive officer and treasurer, as appropriate to allow timelydecisions regarding disclosure.

As required by Rules 13a-15 and15d-15 under the Exchange Act, our chief executive officer and chieffinancial officer carried out an evaluation of the effectiveness of thedesign and operation of our disclosure controls and procedures as ofDecember  31,  2005. Based on their evaluation, theyconcluded that our disclosure controls and procedures wereeffective.

Our internal control over financial reporting is aprocess designed by, or under the supervision of, our chief executiveofficer and chief financial officer and effected by our board ofdirectors, management and other personnel, to provide reasonableassurance regarding the reliability of our financial reporting and thepreparation of our financial statements for external purposes inaccordance with generally accepted accounting principles. Internalcontrol over financial reporting includes policies and procedures thatpertain to the maintenance of records that in reasonable detailaccurately reflect the transactions and dispositions of our assets;provide reasonable assurance that transactions are recorded asnecessary to permit preparation of our financial statements inaccordance with generally accepted accounting principles, and that ourreceipts and expenditures are being made only in accordance with theauthorization of our board of directors and management; and providereasonable assurance regarding prevention or timely detection ofunauthorized acquisition , use or disposition of our assets that couldhave a material effect on our financial statements.

During themost recently completed fiscal quarter, there has been no change in ourinternal control over financial reporting that has materially affectedor is reasonably likely to materially affect, our internal control overfinancial reporting.

|                |                  |
|----------------|------------------|
| ITEM 8B.  | OTHERINFORMATION |

None.

16

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PART III

|               |                                                                                                                |
|---------------|----------------------------------------------------------------------------------------------------------------|
| ITEM 9.  | DIRECTORS, EXECUTIVE OFFICERS,PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THEEXCHANGE ACT. |

Directors and Executive Officers

Ourcurrent directors and executive officers are as follows:

|                |  |        |    |          |  |                                                  |  |  |  |  |
|----------------|--|--------|----|----------|--|--------------------------------------------------|--|--|--|--|
| Name           |  | Age    |    | Position |
| Vahan Kololian |  |   | 52 |     |  | Chairman of the Boardand Chief Executive Officer |
| Lee W. Chung   |  |   | 40 |     |  | Chief Financial Officer and Director             |
| Jesse Gill     |  |   | 26 |     |  | Vice President andDirector                       |
| Brendan Calder |  |   | 59 |     |  | Director                                         |
| Roman Fedus    |  |   | 58 |     |  | Director                                         |
| Randy Benson   |  |   | 46 |     |  | Director                                         |
|                |

Vahan Kololian has been ourchairman of the board and chief executive officer since our inception.Mr.  Kololian has been the chairman of the board, president andchief executive officer of Precinda Corporation, a private industrialholding company based in Toronto, since its formation in March2000. He has also been a partner of TerraNova Partners L.P., a privateinvestment firm and an affiliate of Precinda Corporation, sinceSeptember  2004 and president of TerraNova Management Corp., themanager of TerraNova Partners L.P., since September  2004. InJanuary  1991, Mr.  Kololian co-founded Polar CapitalCorporation, a Toronto and Calgary based merchant banking firm, andserved as its president until March  2000. He also served aspresident of Polar Enterprise Partners Inc., a private fund managed byPolar Capital Corporation, from its inception in June  1997 untilMarch  2000. From September  1988 to March  1990, he wasa director and partner of Gordon Capital Corporation, an investmentbank. Mr.  Kololian commenced his career at Burns Fry Ltd., aninvestment bank now owned by Nesbitt Burns (which is owned by the Bankof Montreal), where Mr.  Kololian served in various professionalroles in the investment banking and mergers and acquisitions groupsfrom September  1981 to September  1988. Mr.  Kololianis a director of Manicouagan Minerals Inc. and Western Goldfields Inc.Mr.  Kololian is a member of The World Presidents'Organization and a member of The Law Society of Upper Canada. He holdsa B.A. from the University of Western Ontario and an LL.B. from theUniversity of Ottawa.

Lee W. Chung has been our chieffinancial officer and a member of our board of directors since ourinception. Mr.  Chung has been the chief financial officer andvice president of finance of Precinda Corporation since May  2002.He has also been a partner of TerraNova Partners L.P. sinceSeptember  2004 and a vice president of TerraNova Management Corp.since September  2004. From January  1997 to May  2002,Mr.  Chung served as corporate controller of Husky InjectionMolding Systems Ltd., a supplier of injection molding equipment andservices to the plastics industry. From November  1991 toJanuary  1997, he served as finance manager of Nortel NetworksCorporation, a New York and Toronto Stock Exchange listedtelecommunications company. Mr.  Chung holds a Bachelor ofCommerce and Finance degree from the University of Toronto and is aChartered Accountant.

Jesse Gill has been our vicepresident and a member of our board of directors since our inception.Mr.  Gill has been a partner of TerraNova Partners L.P. sinceSeptember  2004. He has also been a vice president of TerraNovaManagement Corp. since September  2004. From March  2003until August  2004, Mr.  Gill was an analyst at Littlejohn& Co. LLC, a Greenwich, Connecticut based private equity firm. FromJuly  2001 until February  2003, he was an investment bankerin the Leveraged Finance / Financial Sponsors Group at Credit SuisseFirst Boston in New York, New York. Mr.  Gill holds a Bachelor ofCommerce degree from McGill University.

Brendan Calderhas been a member of our board of directors since our inception. SinceJanuary  2001, Mr.  Calder has been an adjunct professor ofstrategic management at the Rotman School of Management of theUniversity of Toronto. From January  1996 until March  2000,Mr.  Calder was the chairman of the board, president and chiefexecutive officer of CIBC Mortgages in Toronto Ontario. He was also

17

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president and a director of Firstline TrustCompany from April  1988 to January  1996. Mr.  Calderis a director of FirstService Corporation, Custom Direct Income FundInc., and Filogix Corporation. Mr.  Calder is a member of TheWorld Presidents' Organization. Mr.  Calder holds a Bachelorof Mathematics degree from the University of Waterloo.

RomanFedus has been a member of our board of directors since ourinception. Mr.  Fedus holds the position of manager, merchantbanking with Roynat Capital Inc., a Canadian merchant bank providingequity, subordinated debt and structured finance to mid-marketbusinesses in Canada, since January  2004. From May  2002until December  2003, he served as a senior manager of theMezzanine Finance Group at the Canadian Imperial Bank of Commerce. FromAugust  1996 until November  2001, he served as assistantvice president of Manulife Capital, an investment division of ManulifeFinancial Corporation, a Canadian based financial services company.Mr.  Fedus holds a B.A. from McMaster University and an M.B.A.from the University of Toronto.

Randy Benson has been amember of our board of directors since our inception. Since July2005, Mr.  Benson has served as the chief restructuring officer atHollinger Inc., a Toronto Stock Exchange listed company with interestsin newspaper publishing and commercial real estate. From February2005 to April  2005, Mr.  Benson served as a special advisorto the board of directors of CFM Products, a barbeque and fireplacemanufacturer. From October  2003 to February  2005, Mr.Benson served as the chief restructuring officer at Ivaco, Inc., aCanadian company producing steel and fabricated steel products.Mr.  Benson was chief financial officer of Call-Net EnterprisesInc., a Toronto Stock Exchange listed telecommunications companyoffering local and long distance voice, data and online services acrossCanada, from June  2000 to December  2002, and was a specialadvisor to the board of directors of Call-Net Enterprises fromOctober  1999 to June  2000. From June  1989 toJune  1999, Mr.  Benson was employed in various executivecapacities for Beatrice Foods Canada and its successor, Parmalat CanadaLtd., a food-group company in Canada, including serving as president ofits largest operating division. Mr.  Benson holds a B.B.A. and anM.B.A. from York University.

Section 16(a) Beneficial OwnershipReporting Compliance

Section 16(a) of the Securities ExchangeAct of 1934, as amended, requires our officers, directors and personswho beneficially own more than ten percent of our common stock to filereports of ownership and changes in ownership with the SEC. Thesereporting persons are also required to furnish us with copies of allSection 16(a) forms they file. Based solely on copies of such formsreceived or written representations from certain reporting persons thatno Form 5s were required for those persons, we believe that, during thefiscal year ended December  31,  2005, all filingrequirements applicable to our officers, directors and greater than tenpercent beneficial owners were complied with.

Code ofEthics

In April  2005, our board of directors adopted acode of ethics that applies to our directors, officers and employees aswell as those of our subsidiaries. A copy of our code of ethics isattached as an exhibit to this Annual Report. Requests for copies ofour code of ethics should be sent in writing to Terra Nova AcquisitionCorporation, 2 Bloor Street West, Suite 3400, Toronto, Ontario, CanadaM4W 3E2.

|                |                       |
|----------------|-----------------------|
| ITEM 10.  | EXECUTIVECOMPENSATION |

Commencing April  18,  2005 and endingupon the acquisition of a target business, we will pay TerraNovaManagement Corp., an affiliate of Vahan Kololian, Lee W. Chung andJesse Gill, a fee of $7,500 per month for providing us with certaingeneral and administrative services including office space, utilitiesand secretarial support. Other than this $7,500 per-month fee, nocompensation of any kind, including finders and consulting fees, willbe paid to any of our founding stockholders, including all of ourofficers and directors, or any of their respective affiliates, forservices rendered prior to or in connection with a businesscombination. However, our existing stockholders will be reimbursed forany out-of-pocket expenses incurred in connection with activities onour behalf such as identifying potential target businesses andperforming due diligence on suitable business combinations. There is nolimit on the amount of these out-of-pocket expenses and there will beno review of the reasonableness of the expenses 

18

----

by anyone other than our board of directors,which includes persons who may seek reimbursement, or a court ofcompetent jurisdiction if such reimbursement is challenged.

Since our formation, we have not granted any stock options or stockappreciation rights or any awards under long-term incentive plans.

|                |                                                               |
|----------------|---------------------------------------------------------------|
| ITEM 11.  | SECURITY OWNERSHIP OF CERTAINBENEFICIAL OWNERS AND MANAGEMENT |

The following table sets forthinformation regarding the beneficial ownership of our common stock asof March  23,  2006 by:

|  |              |                                                                                                             |
|--|--------------|-------------------------------------------------------------------------------------------------------------|
|  | •  | each person known by us to bethe beneficial owner of more than 5% of our outstanding sharesof common stock; |

|  |              |                                        |
|--|--------------|----------------------------------------|
|  | •  | each ofour officers and directors; and |

|  |              |                                           |
|--|--------------|-------------------------------------------|
|  | •  | all our officers and directorsas a group. |

Unless otherwise indicated, we believe thatall persons named in the table have sole voting and investment powerwith respect to all shares of common stock beneficially owned bythem.

|                                                                |  |                                         |           |                  |  |        |      |         |  |  |
|----------------------------------------------------------------|--|-----------------------------------------|-----------|------------------|--|--------|------|---------|--|--|
| Nameand Address of Beneficial Owner(1)                         |  | Amount and Natureof BeneficialOwnership |           | Percent of Class |
| VahanKololian                                                  |  |                                    | 1,004,000 | (2)         |  |   | 14.9 | %  |
| Fir Tree, Inc.(3)                                              |  |                                    | 596,500   | (4)         |  |   | 8.9  | %  |
| Roynat Merchant Capital Inc.(5)                                |  |                                    | 340,000   |             |  |   | 5.1  | %  |
| BrendanCalder                                                  |  |                                    | 98,500    | (6)         |  |   | 1.5  | %  |
| Randy Benson                                                   |  |                                    | 90,000    |             |  |   | 1.3  | %  |
| Roman Fedus                                                    |  |                                    | 0         | (7)         |  |   |      | *  |
| Lee Chung                                                      |  |                                    | 0         | (8)         |  |   |      | *  |
| JesseGill                                                      |  |                                    | 0         | (8)         |  |   |      | *  |
| All directors and executive officers as a group (6individuals) |  |                                    | 1,192,500 | (9)         |  |   | 17.7 | %  |
|                                                                |

|  |
|--|
|  |  |
|  |

|   |               |
|---|---------------|
| * | Less than 1%. |

|     |                                                                                                                                           |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Unless otherwise noted, the businessaddress of each of the following is 2 Bloor Street West, Suite 3400,Toronto, Ontario, Canada M4W 3E2. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | These shares are held by TerraNovaPartners L.P. 100% of the limited partnership interest ofTerraNova Partners L.P. is beneficially owned by Mr.Kololian.  Mr.  Kololian also controls 100% of thevoting interest in the general partner and 55% of the non-votingequity interest in the general partner. As such, Mr.  Kololianexercises voting and dispositive power over these shares. Does notinclude 1,500,000 shares of common stock issuable upon exercise ofwarrants held by TerraNova Partners L.P. not currently exercisable andthat will not become exercisable within the next 60 days. |

|     |                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------|
| (3) | The business address of Fir Tree, Inc. is535 Fifth Avenue, 31st Floor, New York, New York10017. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Represents (i) 369,830shares of common stock held by Sapling, LLC and (ii) 226,670 shares ofcommon stock held by Fir Tree Recovery Master Fund, L.P. Fir Tree, Inc.is the investment manager of both entities. Does not include (i)739,660 shares of common stock issuable upon exercise of warrants heldby Sapling, LLC not currently exercisable and that will not becomeexercisable within the next 60 days and (ii) 453,340 shares of commonstock issuable upon exercise of warrants held by Fir Tree RecoveryMaster Fund, L.P. not currently exercisable and that will not becomeexercisable within the next 60 days. The foregoing information wasderived from a Schedule 13G filed with the SEC on April  29,2005. |

|     |                                                                                                                                                                                                                                                                                                    |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | The business address ofRoynat Merchant Capital Inc. is c/o Roynat Capital Inc., 40 King StreetWest, 26th Floor, Toronto, Ontario, Canada M5H 1H1. The informationwith respect to the shares held by Roynat Merchant Capital Inc. wasderived from a Schedule 13G filed with the SEC on May  4,2005. |

19

----

|     |                                                                                                                                                                                                                                                                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | Represents90,000 shares of common stock held by Mr.  Calder and 8,500 sharesof common stock held by the Calbren Trust, a trust established for thebenefit of Mr.  Calder. Does not include 17,000 shares of commonstock issuable upon exercise of warrants held by the Calbren Trust notcurrently exercisable and that will not become exercisable within thenext 60 days. |

|     |                                                                                                                                                                                        |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | Does not includethe shares of common stock held by Roynat Merchant Capital Inc., ofwhich Mr.  Fedus is manager of the merchant banking department ofits affiliate, Roynat Capital Inc. |

|     |                                                                                                                                                                                                                                                                          |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8) | This person owns a non-voting equityinterest in the general partner of TerraNova Partners L.P. The sharesowned by TerraNova Partners L.P. are not included in this person'sbeneficial ownership because he has no power to vote or direct thedisposition of such shares. |

|     |                                                                                                                                                                           |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (9) | Doesnot include 1,500,000 shares of common stock issuable upon exercise ofwarrants not currently exercisable and that will not become exercisablewithin the next 60 days. |

All 1,200,000 shares of ouroutstanding common stock owned by our stockholders prior to our initialpublic offering have been placed in escrow with Continental StockTransfer & Trust Company, as escrow agent, pursuant to an escrowagreement described below.

Vahan Kololian may be deemed to beour ‘‘parent’’ and‘‘promoter,’’ as these terms are defined underthe Federal securities laws.

|               |                                               |
|---------------|-----------------------------------------------|
| ITEM12.  | CERTAIN RELATIONSHIPS AND RELATEDTRANSACTIONS |

In July  2004, we issued 750,000 shares ofour common stock to the following individuals for $25,000 in cash, atan average purchase price of approximately $0.033 per share as setforth below:

|                         |  |                  |         |                   |  |             |  |  |  |  |
|-------------------------|--|------------------|---------|-------------------|--|-------------|--|--|--|--|
| Name                    |  | Number of Shares |         | Relationship toUs |
| TerraNova Partners L.P. |  |             | 506,250 |              |  | Stockholder |
| Randy Benson            |  |             | 56,250  |              |  | Director    |
| Brendan Calder          |  |             | 56,250  |              |  | Director    |
| Roynat Capital Inc.     |  |             | 56,250  |              |  | Stockholder |
| Randall Oliphant        |  |             | 35,000  |              |  | Stockholder |
| Tim Creasy              |  |             | 20,000  |              |  | Stockholder |
| GeorgeKoulakian         |  |             | 20,000  |              |  | Stockholder |
|                         |

TerraNova Partners L.P.subsequently transferred 35,000 shares of common stock to JamesMeekison. On March  3,  2005, our board of directorsauthorized a stock dividend of 0.6 shares of common stock for eachoutstanding share of common stock, effectively lowering the purchaseprice to $0.0208 per share. Randall Oliphant subsequently transferredhis shares of common stock to Rockcliff Group Limited, a private entityhe controls. Roynat Capital Inc. subsequently transferred its shares ofcommon stock to Roynat Merchant Capital Inc., an affiliate of RoynatCapital Inc.

Pursuant to an escrow agreement between us, theFounders and Continental Stock Transfer & Trust Company, all of theFounders Shares were placed in escrow, with Continental acting asescrow agent, pursuant to an escrow agreement, until the earliestof:

|  |              |                 |
|--|--------------|-----------------|
|  | •  | April  18,2008; |

|  |              |                    |
|--|--------------|--------------------|
|  | •  | our liquidation;or |

|  |              |                                                                                                                                                                                                                                                                                                           |
|--|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | the consummation of aliquidation, merger, stock exchange or other similar transaction whichresults in all of our stockholders having the right to exchange theirshares of common stock for cash, securities or other propertysubsequent to our consummating a business combination with a targetbusiness. |

During the escrow period, these shares cannot be sold,but the Founders will retain all other rights as stockholders,including, without limitation, the right to vote their shares of commonstock and the right to receive cash dividends, if declared. Ifdividends are declared and payable in shares of common stock, suchdividends will also be placed in escrow. If we are unable to effect abusiness combination and liquidate, none of our Founders will receiveany portion of the liquidation proceeds with respect to common stockowned by them prior to our initial public offering.

20

----

We also entered into a registration rightsagreement with the Founders pursuant to which the holders of themajority of the Founders Shares will be entitled to make up to twodemands that we register these shares pursuant to an agreement to besigned prior to or on the date of this prospectus. The holders of themajority of these shares may elect to exercise these registrationrights at any time after the date on which these shares of common stockare released from escrow. In addition, these stockholders have certain‘‘piggy-back’’ registration rights onregistration statements filed subsequent to the date on which theseshares of common stock are released from escrow. We will bear theexpenses incurred in connection with the filing of any suchregistration statements.

Each of our Founders also entered intoa letter agreement with us and EarlyBirdCapital pursuant to which,among other things:

|  |              |                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | eachagreed to vote all Founder Shares owned by him in accordance with themajority of the IPO Shares if we solicit approval of our stockholdersfor a business combination; |

|  |              |                                                                                                                                                                                                                                                        |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | if we fail to consummate abusiness combination by October  22,  2006 (or by April22,  2007 under certain limited circumstances), each agreed totake all reasonable actions within his power to cause us to liquidateas soon as reasonably practicable; |

|  |              |                                                                                                                                                                           |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | each waived any and all rightshe may have to receive any distribution of cash, property or otherassets as a result of such liquidation with respect to his FounderShares; |

|  |              |                                                                                                                                                                                                                                                                                                                                                                                       |
|--|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | each agreed topresent to us for our consideration, prior to presentation to any otherperson or entity, any suitable opportunity to acquire an operatingbusiness, until the earlier of our consummation of a businesscombination, our liquidation or until such time as he ceases to be anofficer or director of ours, subject to any pre-existing fiduciaryobligations he might have; |

|  |              |                                                                                                                                                                                                                                                                                                                                              |
|--|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | each agreed that we could notconsummate any business combination which involves a company which isaffiliated with any of the Founders unless we obtain an opinion from anindependent investment banking firm reasonably acceptable toEarlyBirdCapital that the business combination is fair to ourstockholders from a financial perspective; |

|  |              |                                                                                                                                                                                                 |
|--|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | each agreed that he and hisaffiliates will not be entitled to receive and will not accept anycompensation for services rendered to us prior to the consummation ofour business combination; and |

|  |              |                                                                                                                                                                                                  |
|--|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | •  | each agreed that he and hisaffiliates will not be entitled to receive or accept a finder’sfee or any other compensation in the event he or his affiliatesoriginate a business combination. |

TerraNova Management Corp., anaffiliate of Vahan Kololian, Lee W. Chung and Jesse Gill, has agreedthat, through the acquisition of a target business, it will makeavailable to us a small amount of office space and certain office andsecretarial services, as we may require from time to time. We haveagreed to pay TerraNova Management Corp. $7,500 per month for theseservices.

During 2004 and 2005, TerraNova Partners L.P. advancedan aggregate of $90,000 to us to cover expenses related to our initialpublic offering. The loans were payable without interest on the earlierof November  24,  2005 or the consummation of our initialpublic offering. These loans were repaid from the net proceeds of theoffering.

We will reimburse our officers and directors for anyreasonable out-of-pocket business expenses incurred by them inconnection with certain activities on our behalf such as identifyingand investigating possible target businesses and businesscombinations.

Other than the $7,500 per-month administrative feeand reimbursable out-of-pocket expenses payable to our officers anddirectors, no compensation or fees of any kind, including finders andconsulting fees, will be paid to any of our Founders or to any of theirrespective affiliates for services rendered to us prior to or withrespect to the business combination.

All ongoing and futuretransactions between us and any of our officers and directors or theirrespective affiliates, will be on terms believed by us to be no lessfavorable than are available from unaffiliated third parties and willrequire prior approval in each instance by a majority of the members ofour board who do not have an interest in the transaction.

21

----

|               |          |
|---------------|----------|
| ITEM13.  | EXHIBITS |

(a) The followingExhibits are filed as part of this report.

|            |  |                                                                                                                                       |  |  |  |  |
|------------|--|---------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description                                                                                                                           |
| 3.1        |  | Amended and Restated Certificate of Incorporation. (1)                                                                                |
| 3.2        |  | By-laws. (1)                                                                                                                          |
| 4.1        |  | Specimen Unit Certificate. (1)                                                                                                        |
| 4.2        |  | Specimen Common Stock Certificate. (1)                                                                                                |
| 4.3        |  | Specimen Warrant Certificate. (1)                                                                                                     |
| 4.4        |  | Form of Unit Purchase Option to be granted to Representative.(1)                                                                      |
| 4.5        |  | Form of Warrant Agreement betweenContinental Stock Transfer & Trust Company and the Registrant.(1)                                |
| 10.1       |  | Letter Agreement among theRegistrant, EarlyBirdCapital, Inc. and Vahan Kololian. (1)                                                  |
| 10.2       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Roman Fedus. (1)                                                     |
| 10.3       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Randy Benson. (1)                                                    |
| 10.4       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Brendan Calder. (1)                                                  |
| 10.5       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Randall Oliphant. (1)                                                |
| 10.6       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Tim Creasy. (1)                                                      |
| 10.7       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and George Koulakian. (1)                                                |
| 10.8       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and TerraNova Partners, L.P. (1)                                         |
| 10.9       |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Lee W. Chung. (1)                                                    |
| 10.10      |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Jesse Gill. (1)                                                      |
| 10.11      |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and Roynat Capital Inc. (1)                                              |
| 10.12      |  | Letter Agreement among the Registrant,EarlyBirdCapital, Inc. and James Meekison. (1)                                                  |
| 10.13      |  | Form of Investment Management Trust Agreementbetween Continental Stock Transfer & Trust Company and theRegistrant. (1)            |
| 10.14      |  | Form of Stock EscrowAgreement between the Registrant, Continental Stock Transfer &Trust Company and the Initial Stockholders. (1) |
| 10.15      |  | Form of Letter Agreement between TerraNovaManagement Corp. and Registrant regarding administrative support.(1)                        |
| 10.16      |  | Form of Promissory Note issued toTerraNova Partners, L.P. (1)                                                                         |
| 10.17      |  | Form ofRegistration Rights Agreement among the Registrant and theInitialStockholders. (1)                                             |
| 10.18      |  | Form ofWarrant Purchase Agreements among Vahan KololianandEarlyBirdCapital, Inc. (1)                                                  |
| 31.1       |  | Certification of Chief Executive Officer pursuant to Section 302 ofthe Sarbanes-Oxley Act of 2002.                                    |
| 31.2       |  | Certification of Chief Financial Officer pursuant to Section 302 ofthe Sarbanes-Oxley Act of 2002                                     |
| 32         |  | Certification of Chief Executive Officer and Chief FinancialOfficer pursuant to Section 906 of the Sarbanes-Oxley Act of2002.         |
|            |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------|
| (1) | Incorporatedby reference to the Registrant’s Registration Statement on FormS-1 (SEC File No.  333-122439) |

|               |                                         |
|---------------|-----------------------------------------|
| ITEM14.  | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |

The firm of BDO Seidman, LLP is our principal accountant. Thefollowing is a summary of fees paid to our principal accountant forservices rendered.

22

----

Audit Fees

Through December31,  2005, the fees from our principal accountant totaled $51,685for the services they performed in connection with our initial publicoffering, including the financial statements in Form S-1 (andamendments), the Current Report on Form 8-K/A filed with the Securitiesand Exchange Commission on April  22,  2005, Form 10-KSB forDecember  31,  2005 and the review of our three 2005Quarterly Reports on Form 10-QSB. There were no audit services renderedprior to December  31,  2004.

Audit-Related Fees

During 2005 and 2004, our principal accountant did not renderassurance and related services reasonably related to the performance ofthe audit or review of financial statements.

Tax Fees

During 2005 and 2004, our principal accountant did not renderservices to us for tax compliance, tax advice and tax planning.

All Other Fees

During 2005 and 2004, there were no feesbilled for products and services provided by the principal accountantother than those set forth above.

Audit Committee Approval

We currently do not have an audit committee. However, our board ofdirectors has approved the services describedabove.

23

----

FinancialStatements

|                                                         |  |          |  |  |  |  |
|---------------------------------------------------------|--|----------|--|--|--|--|
| Report of Independent Registered Public Accounting Firm |  | F-2      |
| Balance Sheets                                          |  | F-3      |
| Statements of Operations                                |  | F-4      |
| Statements of Stockholders’Equity                 |  | F-5      |
| Statements of CashFlows                                 |  | F-6      |
| Summaryof Significant Accounting Policies               |  | F-7      |
| Notes to Financial Statements                           |  | F-8-F-11 |
|                                                         |

F-1

----

REPORT OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM

To the Board of Directors, TerraNova Acquisition Corporation

We have audited theaccompanying balance sheets of Terra Nova Acquisition Corporation (acorporation in the development stage) as of December  31,2005 and 2004 and the related statements of operations,stockholders’ equity and cash flows for the year endedDecember  31,  2005, the period from July  21,2004 (inception) to December  31,  2004 and the period fromJuly  21,  2004 (inception) to December  31,  2005,respectively. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express anopinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards ofthe Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes consideration of internalcontrol over financial reporting as a basis for designing auditprocedures that are appropriate in the circumstances, but not for thepurpose of expressing an opinion on the effectiveness of thecompany’s internal control over financial reporting.Accordingly, we express no such opinion. An audit also includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements, assessing the accountingprinciples used and significant estimates made by management, as wellas evaluating the overall financial statement presentation. We believethat our audits provide a reasonable basis for our opinion.

As discussed in Note 1, the Company’s Certificate ofIncorporation provides for mandatory liquidation of the Company, in theevent that the Company does not consummate a business combinationwithin 18  months from the date of the consummation of its initialpublic offering (‘‘Offering’’) (such date wouldbe October  22,  2006) or 24 months from the consummation ofthe Offering if certain extension criteria have been satisfied.

In our opinion, the financial statements referred to abovepresent fairly, in all material respects, the financial position ofTerra Nova Acquisition Corporation as of December  31,  2005and 2004, and the related statements of operations and cash flows forthe year ended December  31,  2005, the period fromJuly  21,  2004 (inception) to December  31,  2004and the period from July  21,  2004 (inception) toDecember  31,  2005 in conformity with accounting principlesgenerally accepted in the United States of America.

Theaccompanying financial statements have been prepared assuming that theCompany will continue as a going concern. As discussed in Note 1 to thefinancial statements, the Company is required to consummate a businesscombination by October  22,  2006, or by April 22, 2007 ifcertain criteria have been satisfied. The possibility of such businesscombination not being consummated raises substantial doubt about itsability to continue as a going concern, and the financial statements donot include any adjustments that might result from the outcome of thisuncertainty.

/s/ BDO Seidman, LLP BDOSeidman, LLP New York, NY March 10, 2006

F-2

----

Terra Nova AcquisitionCorporation(A corporation in the developmentstage)

Balance Sheets

|                                                                                                                                                                                        |  |                  |            |                  |  |        |         |         |  |  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|------------------|------------|------------------|--|--------|---------|---------|--|--|
|                                                                                                                                                                                   |  | December 31,2005 |            | December 31,2004 |
| Assets                                                                                                                                                                                 |  |             |       |             |  |   |    |    |
| CurrentAssets:                                                                                                                                                                         |  |             |       |             |  |   |    |    |
| Cash and cashequivalents                                                                                                                                                               |  | $                | 609,769    |             |  | $      | 69,895  |    |
| U.S. Government Securities held in Trust Fund (Note1)                                                                                                                                  |  |             | 29,084,736 |             |  |   | — |    |
| Accrued interest receivable, Trust Fund (Note 1)                                                                                                                                       |  |             | 220,969    |             |  |   | — |    |
| Prepaidexpenses                                                                                                                                                                        |  |             | 35,616     |             |  |   | — |    |
| Total current assets                                                                                                                                                                   |  |             | 29,951,090 |             |  |   | 69,895  |    |
| Deferredregistration costs (Note 1)                                                                                                                                                    |  |             | —    |             |  |   | 23,500  |    |
| Total assets                                                                                                                                                                           |  | $                | 29,951,090 |             |  | $      | 93,395  |    |
| Liabilities andStockholders’Equity                                                                                                                                               |  |             |       |             |  |   |    |    |
| Currentliabilities                                                                                                                                                                     |  |             |       |             |  |   |    |    |
| Accruedexpenses                                                                                                                                                                        |  | $                | 67,805     |             |  | $      | — |    |
| Note payable, stockholder (Note 3)                                                                                                                                                     |  |             | —    |             |  |   | 70,000  |    |
| Income taxes payable                                                                                                                                                                   |  |             | 57,788     |             |  |   | — |    |
| Total current liabilities                                                                                                                                                              |  |             | 125,593    |             |  |   | 70,000  |    |
| Common stock, subject to possible conversion, 1,103,448 sharesat conversion value (Note 1)                                                                                             |  |             | 5,858,210  |             |  |   | — |    |
| Commitment (Note4)                                                                                                                                                                     |
| Stockholders’ equity (notes1, 2, 5 and 6)                                                                                                                                        |  |             |       |             |  |   |    |    |
| Preferredstock, $.0001 par value, Authorized 1,000,000 shares; noneissued                                                                                                              |  |             |       |             |  |   |    |    |
| Common stock, $.0001 parvalue, Authorized 30,000,000 shares Issued and outstanding6,720,000 shares (which includes 1,103,448 subject to possibleconversion) and 1,200,000 respectively |  |             | 672        |             |  |   | 120     |    |
| Additional paid-in capital                                                                                                                                                             |  |             | 23,722,618 |             |  |   | 24,880  |    |
| Retainedearnings (deficit) accumulated during development stage                                                                                                                        |  |             | 243,997    |             |  |   | (1,605  | )  |
| Total stockholders’ equity                                                                                                                                                       |  |             | 23,967,287 |             |  |   | 23,395  |    |
| Total liabilities and stockholders’ equity                                                                                                                                       |  | $                | 29,951,090 |             |  | $      | 93,395  |    |
|                                                                                                                                                                                        |

See summary of significantaccounting policies and accompanying notes to financialstatements.

F-3

----

Terra Nova AcquisitionCorporation(A corporation in the developmentstage)

Statements of Operations

|                                                                               |  |                           |           |                                                        |  |                                                        |           |         |  |        |          |         |  |  |
|-------------------------------------------------------------------------------|--|---------------------------|-----------|--------------------------------------------------------|--|--------------------------------------------------------|-----------|---------|--|--------|----------|---------|--|--|
|                                                                          |  | YearEndedDecember 31,2005 |           | Period fromJuly 21, 2004(inception)toDecember 31, 2004 |  | Period fromJuly 21,2004(inception) toDecember 31, 2005 |
| Expenses:                                                                     |  |                      |      |                                                   |  |                                                   |      |    |  |   |     |    |
| Generaland administrative expenses (Note 4)                                   |  | $                         | (263,877  | )                                                 |  | $                                                      | (1,605    | )  |  | $      | (265,482 | )  |
| Operating Loss                                                                |  |                      | (263,877  | )                                                 |  |                                                   | (1,605    | )  |  |   | (265,482 | )  |
| Interest income                                                               |  |                      | 668,164   |                                                   |  |                                                   | —   |    |  |   | 668,164  |    |
| Net income (loss)before provision for incometaxes                             |  |                      | 404,287   |                                                   |  |                                                   | (1,605    | )  |  |   | 402,682  |    |
| Provision for income taxes (Note7)                                            |  |                      | 158,685   |                                                   |  |                                                   | —   |    |  |   | 158,685  |    |
| Net income (loss)                                                             |  |                      | 245,602   |                                                   |  |                                                   | (1,605    | )  |  |   | 243,997  |    |
| Adjustments:                                                                  |  |                      |      |                                                   |  |                                                   |      |    |  |   |     |    |
| Accretionof Trust Fund relating to common stock subject to possibleconversion |  |                      | (131,315  | )                                                 |  |                                                   | —   |    |  |   | (131,315 | )  |
| Net income (loss) attributable tocommon stockholders                          |  |                      | 114,287   |                                                   |  |                                                   | (1,605    | )  |  |   | 112,682  |    |
| Weighted averagecommon shares outstanding                                     |  |                      | 5,033,425 |                                                   |  |                                                   | 1,200,000 |    |  |   |     |    |
| Basicand diluted income (loss) per share                                      |  | $                         | .02       |                                                   |  | $                                                      | (.00      | )  |  |   |     |    |
|                                                                               |

See summary ofsignificant accounting policies and accompanying notes to financialstatements.

F-4

----

Terra Nova AcquisitionCorporation(A corporation in the developmentstage)

Statements of Stockholders’Equity

|                                                                                                                                                                             |  |              |           |                          |  |                                                |         |        |  |        |            |         |  |        |         |         |  |        |            |         |  |  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------------|-----------|--------------------------|--|------------------------------------------------|---------|--------|--|--------|------------|---------|--|--------|---------|---------|--|--------|------------|---------|--|--|
|                                                                                                                                                                        |  | Common Stock |           | AdditionalPaid-InCapital |  | Deficit accumulatedduring thedevelopment stage |         | Total  |
|                                                                                                                                                                        |  | Shares       |           | Amount                   |
| Balance, July 21, 2004 (inception)                                                                                                                                          |  |         | —   |                     |  | $                                              | — |   |  | $      | —    |    |  | $      | — |    |  | $      | —    |    |
| Issuance of stock to initialstockholders                                                                                                                                    |  |         | 1,200,000 |                     |  | $                                              | 120     |   |  | $      | 24,880     |    |  | $      | — |    |  | $      | 25,000     |    |
| Net loss for theperiod                                                                                                                                                      |  |         |      |                     |  |                                           | — |   |  |   | —    |    |  |   | (1,605  | )  |  |   | (1,605     | )  |
| Balance, December 31, 2004                                                                                                                                                  |  |         | 1,200,000 |                     |  | $                                              | 120     |   |  | $      | 24,880     |    |  | $      | (1,605  | )  |  | $      | 23,395     |    |
| Sale of 5,520,000 units and underwriter’s options, netof underwriters’ discount and offering expenses (includes1,103,448 shares subject to possible conversion) |  |         | 5,520,000 |                     |  |                                           | 552     |   |  |   | 29,555,948 |    |  |   | — |    |  |   | 29,556,500 |    |
| Proceeds in Trust Fund subject topossible conversion of 1,103,448 shares                                                                                                    |  |         |      |                     |  |                                           |    |   |  |   | (5,726,895 | )  |  |   | — |    |  |   | (5,726,895 | )  |
| Accretion of Trust Fund relating tocommon stock subject to possible conversion                                                                                              |  |         |      |                     |  |                                           | — |   |  |   | (131,315   | )  |  |   | — |    |  |   | (131,315   | )  |
| Net income for the year                                                                                                                                                     |  |         |      |                     |  |                                           | — |   |  |   | —    |    |  |   | 245,602 |    |  |   | 245,602    |    |
| Balance, December 31,2005                                                                                                                                                   |  |         | 6,720,000 |                     |  | $                                              | 672     |   |  | $      | 23,722,618 |    |  | $      | 243,997 |    |  | $      | 23,967,287 |    |
|                                                                                                                                                                             |

See summary of significantaccounting policies and accompanying notes to financialstatements.

F-5

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Terra Nova AcquisitionCorporation(A corporation in the developmentstage)

Statements of Cash Flows

|                                                                                    |  |                           |             |                                              |  |                                              |         |         |  |        |             |         |  |  |
|------------------------------------------------------------------------------------|--|---------------------------|-------------|----------------------------------------------|--|----------------------------------------------|---------|---------|--|--------|-------------|---------|--|--|
|                                                                               |  | YearEndedDecember 31,2005 |             | July 21, 2004(inception) toDecember 31, 2004 |  | July 21, 2004(inception) toDecember 31, 2005 |
| Cash Flows from OperatingActivities                                                |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Net income(loss)                                                                   |  | $                         | 245,602     |                                         |  | $                                            | (1,605  | )  |  | $      | 243,997     |    |
| Adjustments to reconcile net income (loss) tonet cash used in operatingactivities: |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Changesin operating assets andliabilities:                                         |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Increase ininterest earned on investments held in trust                            |  |                      | (656,905    | )                                       |  |                                         | — |    |  |   | (656,905    | )  |
| Increase inprepaid expenses                                                        |  |                      | (35,616     | )                                       |  |                                         | — |    |  |   | (35,616     | )  |
| Increase in accruedexpenses                                                        |  |                      | 67,805      |                                         |  |                                         | — |    |  |   | 67,805      |    |
| Increase in income taxes payable                                                   |  |                      | 57,788      |                                         |  |                                         | — |    |  |   | 57,788      |    |
| Net cash used in operatingactivities                                               |  |                      | (321,326    | )                                       |  |                                         | (1,605  | )  |  |   | (322,931    | )  |
| Cash Flows from InvestingActivities                                                |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Purchases ofU.S. Government Securities held in Trust Fund                          |  |                      | (57,732,800 | )                                       |  |                                         | — |    |  |   | (57,732,800 | )  |
| Maturities of U.S. Government Securities held in TrustFund                         |  |                      | 29,084,000  |                                         |  |                                         | — |    |  |   | 29,084,000  |    |
| Net cash used in investingactivities                                               |  |                      | (28,648,800 | )                                       |  |                                         | — |    |  |   | (28,648,800 | )  |
| Cash Flows from FinancingActivities                                                |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Proceeds frompublic offering of 5,520,000 units, net                               |  |                      | 29,556,400  |                                         |  |                                         | — |    |  |   | 29,556,400  |    |
| Proceeds fromsale of shares of common stock to initial stockholders                |  |                      | —     |                                         |  |                                         | 25,000  |    |  |   | 25,000      |    |
| Proceeds from underwriter’s option                                           |  |                      | 100         |                                         |  |                                         | — |    |  |   | 100         |    |
| Proceeds from note payable, stockholder                                            |  |                      | 20,000      |                                         |  |                                         | 70,000  |    |  |   | 90,000      |    |
| Repayment of note payable, stockholder                                             |  |                      | (90,000     | )                                       |  |                                         | — |    |  |   | (90,000     | )  |
| Deferred registration costs                                                        |  |                      | 23,500      |                                         |  |                                         | (23,500 | )  |  |   | —     |    |
| Net cash provided by financingactivities                                           |  |                      | 29,510,000  |                                         |  |                                         | 71,500  |    |  |   | 29,581,500  |    |
| Net increasein cash                                                                |  |                      | 539,874     |                                         |  |                                         | 69,895  |    |  |   | 609,769     |    |
| Cash and cash equivalents at beginning of the period                               |  |                      | 69,895      |                                         |  |                                         | — |    |  |   | —     |    |
| Cash and cashequivalents at end of the period                                      |  | $                         | 609,769     |                                         |  | $                                            | 69,895  |    |  | $      | 609,769     |    |
| Supplemental disclosure fromcash flow information:                                 |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Cashpaid during the period for income taxes                                        |  | $                         | 100,897     |                                         |  | $                                            | — |    |  | $      | 100,897     |    |
| Supplemental disclosure ofnon-cash activities:                                     |  |                      |        |                                         |  |                                         |    |    |  |   |        |    |
| Accretionof Trust Fund relating to common stock subject to possibleconversion      |  | $                         | 131,315     |                                         |  | $                                            | — |    |  | $      | 131,315     |    |
|                                                                                    |

See summary of significantaccounting policies and accompanying notes to financialstatements

F-6

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Terra Nova AcquisitionCorporation(A corporation in the developmentstage)

Summary of Significant AccountingPolicies

Cash & Cash Equivalents

TheCompany considers all highly liquid investments with originalmaturities of three months or less to be cash equivalents.

Securities Held in Trust Fund

The Company carriesits investment in U.S. government securities at cost, whichapproximates fair value.

Income Taxes

TheCompany follows Statement of Financial Accounting Standards No. 109(‘‘SFAS No. 109’’), ‘‘Accountingfor Income Taxes’’ which is an asset and liability approachthat requires the recognition of deferred tax assets and liabilitiesfor the expected future tax consequences of events that have beenrecognized in the Company’s financial statements or taxreturns.

There were no deferred taxes as atDecember  31,  2005 or December  31,  2004.

Net Income (Loss) Per Share

Basic net income (loss)per share is calculated by dividing net income (loss) attributable tocommon shareholders by the weighted average number of common sharesoutstanding during the period. No effect has been given to potentialissuances of common stock from warrants or the underwriter option inthe diluted computation, as the effect would not be dilutive.

Use of Estimates

The preparation of financialstatements in conformity with accounting principles generally acceptedin the United States of America requires management to make estimatesand assumptions that affect the reported amount of assets andliabilities at the date of the financial statements and the reportedamounts of expenses during the reporting period. Actual results coulddiffer from those estimates.

F-7

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TerraNova Acquisition Corporation(A corporation in the developmentstage)

Notes to Financial Statements

|                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                            |
|--------------------------------------------------------------------------------------------------------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.    Organization andBusiness        Operations |  | TerraNova Acquisition Corporation (the ‘‘Company’’)was incorporated in Delaware on July  21,  2004 as a blankcheck company whose objective is to acquire an operating business. TheCompany’s initial stockholders purchased 1,200,000 shares ofcommon stock, $.0001 par value, for $25,000 on July  21,2004. |
|                                                                                                              |  |                                                                                                                                                                                                                                                                                                                                            |

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | The registration statement for the Company’sinitial public offering (‘‘Offering’’) wasdeclared effective April  18,  2005. The Company consummatedthe offering on April  22,  2005 and received net proceeds ofapproximately $25,594,000. Such amount was net of registration costsincurred through that date (including $23,500 that had been incurred asat December  31,  2004). On April  26,  2005 theunderwriters exercised their over-allotment option and the Companyreceived net proceeds of approximately $3,962,400. The Company’smanagement has broad discretion with respect to the specificapplication of the net proceeds of this Offering, althoughsubstantially all of the net proceeds of this Offering are intended tobe generally applied toward consummating a business combination with anoperating business (‘‘Business Combination’’).Furthermore, there is no assurance that the Company will be able tosuccessfully effect a Business Combination. As at December31,  2005 an amount of $29,305,705 (which includes accruedinterest of $220,969) is being held in an interest-bearing trustaccount (‘‘Trust Account’’) until the earlierof (i) the consummation of a Business Combination or (ii) liquidationof the Company. Under the agreement governing the Trust Account, fundswill only be invested in United States government securities (TreasuryBills) with a maturity of 180 days or less. The remaining net proceeds(not held in the Trust Account) may be used to pay for business, legaland accounting due diligence on prospective acquisitions and continuinggeneral and administrative expenses. |
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

|  |  |                                                                                                                                                                                                                                                                                                                                                                                 |
|--|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | The Company, aftersigning a definitive agreement for the acquisition of a targetbusiness, will submit such transaction for stockholder approval. In theevent that stockholders owning 20% or more of the shares sold inthe Offering vote against the Business Combination and exercise theirconversion rights described below, the Business Combination will not beconsummated. |
|  |  |                                                                                                                                                                                                                                                                                                                                                                                 |

F-8

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Terra Nova Acquisition Corporation(Acorporation in the development stage)

Notes to FinancialStatements

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | All of the Company’sstockholders prior to the Offering, including all of the officers anddirectors of the Company (‘‘InitialStockholders’’), have agreed to vote their 1,200,000founding shares of common stock in accordance with the vote of themajority in interest of all other stockholders of the Company(‘‘Public Stockholders’’) with respect to anyBusiness Combination. After consummation of a Business Combination,these voting safeguards will no longer be applicable. |
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | Withrespect to a Business Combination which is approved and consummated,any Public Stockholder who voted against the Business Combination maydemand that the Company convert his shares. The per share conversionprice will equal the amount in the Trust Account, calculated as of twobusiness days prior to the consummation of the proposed BusinessCombination, divided by the number of shares of common stock held byPublic Stockholders at the consummation of the Offering. Accordingly,Public Stockholders holding 19.99% of the aggregate number ofshares owned by all Public Stockholders may seek conversion of theirshares in the event of a Business Combination. Such Public Stockholdersare entitled to receive their per share interest in the Trust Accountcomputed without regard to the shares held by Initial Stockholders. Inthis respect $5,858,210 (which includes accretion of Trust Fund) hasbeen classified as common stock subject to possible conversion atDecember  31,  2005. |
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | The Company’s Amendedand Restated Certificate of Incorporation provides for mandatoryliquidation of the Company in the event that the Company does notconsummate a Business Combination within 18 months from the date of theconsummation of the Offering (such date would be October22,  2006), or 24 months from the consummation of the Offering ifcertain extension criteria have been satisfied. In the event ofliquidation, it is likely that the per share value of the residualassets remaining available for distribution (including Trust Accountassets) will be less than the initial public offering price per sharein the Offering due to costs related to the Offering (assuming no valueis attributed to the Warrants contained in the Units sold in theOffering (See Note 2)). |
|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

F-9

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Terra Nova Acquisition Corporation(Acorporation in the development stage)

Notes to FinancialStatements

|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|------------------------------------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.    Offering |  | The Company sold5,520,000 units (‘‘Units’’) in the Offering,which includes the 720,000 Units subject to the underwriters’over-allotment. Each Unit consists of one share of the Company’scommon stock, $.0001 par value, and two Redeemable Common StockPurchase Warrants (‘‘Warrants’’). Each Warrantentitles the holder to purchase from the Company one share of commonstock at an exercise price of $5.00 commencing the later of thecompletion of a Business Combination or one year from the effectivedate of the Offering and expiring four years from the effective date ofthe Offering. The Warrants will be redeemable, upon prior writtenconsent of EarlyBirdCapital, Inc., at a price of $.01 per Warrant upon30 days’ notice after the Warrants become exercisable, only inthe event that the last sale price of the common stock is at least$8.50 per share for any 20 trading days within a 30 trading day periodending on the third day prior to the date on which notice of redemptionis given. In connection with this Offering, the Company issued anoption, for $100, to the representative of the underwriters to purchase240,000 Units at an exercise price of $9.90 per Unit. In addition, thewarrants underlying such Units are exercisable at $6.65 pershare. |
|                                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

|                                                    |  |                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.    Note Payable,Stockholder |  | In November  2004, the Company issueda $70,000 unsecured promissory note to an Initial Stockholder. InMarch  2005, the Company issued an additional $20,000 unsecuredpromissory note to an Initial Stockholder. These notes were noninterest-bearing and were paid in full from the net proceeds of theOffering. |
|                                                    |  |                                                                                                                                                                                                                                                                                                                  |

|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------------------------------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 4.    Commitment |  | TheCompany presently occupies office space provided by an affiliate of anInitial Stockholder. Such affiliate has agreed that, until theacquisition of a target business by the Company, it will make suchoffice space, as well as certain office and secretarial services,available to the Company, as may be required by the Company from timeto time. The Company has agreed to pay such affiliate $7,500 per monthfor such services commencing on April  18,  2005, theeffective date of the Offering. An amount of $63,750 is included ingeneral and administrative for the year ended December  31,2005 for such services. |
|                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

|                                          |  |                                                                                                                                                                                                       |
|------------------------------------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 5.    PreferredStock |  | The Company is authorized to issue 1,000,000shares of preferred stock with such designations, voting and otherrights and preferences as may be determined from time to time by theBoard of Directors. |
|                                          |  |                                                                                                                                                                                                       |

F-10

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Terra Nova Acquisition Corporation(Acorporation in the development stage)

Notes to FinancialStatements

|                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|---------------------------------------|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 6.    CommonStock |  | On March  3,  2005, the Company'sBoard of Directors authorized a stock dividend of 0.6 shares of commonstock for each outstanding share of common stock. In addition, onMarch  3,  2005 the Company's Board of Directorsapproved an amendment to the Company's Amended and RestatedCertificate of Incorporation to increase the number of authorizedshares of common stock to 30,000,000. All references in theaccompanying financial statements to the number of shares of commonstock have been retroactively restated to reflect thesetransactions. |
|                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|  |  |                                                                                                                                                                      |
|--|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  |  | At December  31,  2005, 11,760,000shares of common stock were reserved for issuance upon exercise ofredeemable warrants and underwriters’ unit purchaseoption. |
|  |  |                                                                                                                                                                      |

|                                                                                                     |  |                                               |
|-----------------------------------------------------------------------------------------------------|--|-----------------------------------------------|
| 7.    Provision for Income        Taxes |  | Provision forcurrent income taxes consistsof: |
|                                                                                                     |  |                                               |

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                           |  | Federal |  | State |  | TotalCurrent |
| Year endedDecember31, 2005                     |  | $ | 128,129 |   |  | $ | 30,556 |   |  | $ | 158,685 |   |
| July21,  2004 (inception)to December  31, 2004 |  | $ | — |   |  | $ | — |   |  | $ | — |   |
|                                                |

F-11

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15 or 15(d) of theSecurities Exchange Act of 1934, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized on the 23rd day of March, 2006.

|                                   |  |                                                   |  |  |  |  |
|-----------------------------------|--|---------------------------------------------------|--|--|--|--|
| TERRA NOVA ACQUISITIONCORPORATION |
| By:                               |  | /s/ Vahan Kololian                                |
|                              |  | Vahan KololianChairman andChief Executive Officer |
|                                   |

In accordance withthe Securities Exchange Act of 1934, this report has been signed belowby the following persons on behalf of the registrant and in thecapacities and on the dates indicated.

|                   |  |                                                                                  |  |                  |
|-------------------|--|----------------------------------------------------------------------------------|--|------------------|
| Name              |  | Title                                                                            |  | Date             |
|                   |
| /s/ VahanKololian |  | Chairman of theBoard andChief Executive Officer(Principal ExecutiveOfficer)      |  | March  23,  2006 |
|                   |
| Vahan Kololian    |
|                   |
| /s/ Lee W. Chung  |  | Chief Financial Officer and Director (Principal Accounting andFinancial Officer) |  | March  23,2006   |
|                   |
| Lee W. Chung      |
|                   |
| /s/ Jesse Gill    |  | Vice President and Director                                                      |  | March  23,  2006 |
|                   |
| JesseGill         |
|                   |
| /s/ BrendanCalder |  | Director                                                                         |  | March  23,  2006 |
|                   |
| Brendan Calder    |
|                   |
| /s/ RomanFedus    |  | Director                                                                         |  | March  23,  2006 |
|                   |
| Roman Fedus       |
|                   |
| /s/ RandyBenson   |  | Director                                                                         |  | March  23,  2006 |
|                   |
| Randy Benson      |
|                   |

F-12

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