**Table of Contents**

| ****x**** | **QUARTERLY REPORT PURSUANT TO SECTION 13        OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-----------|----------------------------------------------------------------------------------------------------|
| ****o**** | **TRANSITION REPORT PURSUANT TO SECTION        13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-----------|-----------------------------------------------------------------------------------------------------|
| **Illinois**             | **75-2375969**                       |
|--------------------------|--------------------------------------|
| (State of incorporation) | (I.R.S. employer identification no.) |

| **Large accelerated filer o**                            |   |   | **Accelerated filer o**         |   |
|----------------------------------------------------------|--------|--------|---------------------------------|--------|
|                                                     |   |   |                            |   |
| **Non-accelerated filer o**                              |   |   | **Smaller reporting company x** |   |
| **(Do not check if a smaller reporting        company)** |   |   |

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| **PART I**   | **FINANCIAL INFORMATION**                                                                                                                        | **Page No.** |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------|--------------|
|         |                                                                                                                                             |         |
| **Item 1.**  | **Unaudited Condensed      Consolidated Financial Statements:**                                                                                  | ** **   |
| ****         | ** **                                                                                                                                       | ** **   |
| ****         | **Condensed Consolidated      Balance Sheets at March 31, 2010 (unaudited) and December 31, 2009**                                               | **3**        |
| ****         | ** **                                                                                                                                       | ** **   |
| ****         | **Unaudited Condensed      Consolidated Statements of Loss for Three Months Ended March 31, 2010 and      2009**                                 | **4**        |
| ****         | ** **                                                                                                                                       | ** **   |
| ****         | **Unaudited Condensed      Consolidated Statements of Cash Flows for Three Months Ended March 31, 2010      and 2009**                           | **5**        |
| ****         | ** **                                                                                                                                       | ** **   |
| ****         | **Notes to Unaudited      Condensed Consolidated Financial Statements**                                                                          | **6**        |
| ****         |                                                                                                                                             | ** **   |
| **Item 2.**  | **Management's Discussion      and Analysis of Financial Condition and Results of Operations**                                                   | **15**       |
|         |                                                                                                                                             |         |
| **Item 3.**  | **Quantitative and Qualitative      Disclosures about Market Risk**                                                                              | **22**       |
|         |                                                                                                                                             |         |
| **Item 4T.** | **Controls and Procedures**                                                                                                                      | **22**       |
| ** **   | ** **                                                                                                                                       |         |
| **PART II**  | **OTHER INFORMATION**                                                                                                                            | ** **   |
|         |                                                                                                                                             |         |
| **Item 1.**  | **Legal Proceedings**                                                                                                                            | **23**       |
|         |                                                                                                                                             | ** **   |
| **Item 1A.** | **Risk Factors**                                                                                                                                 | **23**       |
|         |                                                                                                                                             | ** **   |
| **Item 2.**  | **Unregistered Sales      of Equity Securities and Use of Proceeds**                                                                             | **23**       |
|         |                                                                                                                                             | ** **   |
| **Item 3.**  | **Defaults      in Senior Securities**                                                                                                           | **24**       |
|         |                                                                                                                                             | ** **   |
| **Item 4.**  | **Reserved**                                                                                                                                     | **24**       |
|         |                                                                                                                                             | ** **   |
| **Item 5.**  | **Other Information**                                                                                                                            | **24**       |
|         |                                                                                                                                             | ** **   |
| **Item 6.**  | **Exhibits**                                                                                                                                     | **24**       |
|         |                                                                                                                                             | ** **   |
|         | **Signatures**                                                                                                                                   | **25**       |
|         | **Exhibit      10.1 Amendment to License Agreement, between Townsend Analytics, Ltd. and      Terra Nova Financial, LLC dated February 5, 2010** | **26**       |
|         | **Exhibit      31.1 Certification of Chief Executive Officer**                                                                                   | **27**       |
|         | **Exhibit      31.2 Certification of Chief Financial Officer**                                                                                   | **28**       |
|         | **Exhibit      32.1 Certification of Chief Executive Officer and Chief Financial Officer**                                                       | **29**       |

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**Table of Contents**

| **TERRA NOVA FINANCIAL GROUP, INC.            AND SUBSIDIARIES             CONDENSED CONSOLIDATED BALANCE SHEETS            (UNAUDITED)**                                                                       |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                 | **March 31,            2010** |   | December 31,            2009 |
| **ASSETS**                                                                                                                                                                                                      |
| Cash and cash equivalents                                                                                                                                                                                       | **$** | **2,601,259** |   |   | $ | 1,857,671 |   |
| Cash segregated in compliance          with federal regulations                                                                                                                                                 |   | **133,607,871** |   |   |   | 136,042,376 |   |
| Receivables from brokers, dealers and clearing organizations                                                                                                                                                    |   | **30,678,861** |   |   |   | 23,001,389 |   |
| Receivables from brokerage          customers                                                                                                                                                                   |   | **9,361,352** |   |   |   | 12,022,905 |   |
| Property and equipment, net of accumulated depreciation          and amortization                                                                                                                               |   | **980,456** |   |   |   | 1,045,707 |   |
| Capitalized software          development costs, net of accumulated amortization                                                                                                                                |   | **173,803** |   |   |   | 246,835 |   |
| Intangible assets, net of accumulated amortization                                                                                                                                                              |   | **2,398,826** |   |   |   | 2,741,364 |   |
| Income tax receivable                                                                                                                                                                                           |   | **738,285** |   |   |   | 738,285 |   |
| Deferred income taxes, net                                                                                                                                                                                      |   | **1,499,761** |   |   |   | 1,499,761 |   |
| Other assets                                                                                                                                                                                                    |   | **749,572** |   |   |   | 657,361 |   |
|          Total          assets                                                                                                                                     | **$** | **182,790,046** |   |   | $ | 179,853,654 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| **LIABILITIES AND SHAREHOLDERS'            EQUITY**                                                                                                                                                             |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| Payables to brokerage customers                                                                                                                                                                                 | **$** | **164,393,571** |   |   | $ | 159,825,033 |   |
| Payables to brokers, dealers and          clearing organizations                                                                                                                                                |   | **447,962** |   |   |   | 490,911 |   |
| Accounts payable and accrued expenses                                                                                                                                                                           |   | **1,317,918** |   |   |   | 1,355,905 |   |
|          Total          liabilities                                                                                                                                |   | **166,159,451** |   |   |   | 161,671,849 |   |
|                                                                                                                                                                                                            |   |  |   |   |   |  |   |
| **Commitments and contingencies**                                                                                                                                                                               |   |  |   |   |   |  |   |
|                                                                                                                                                                                                            |   |  |   |   |   |  |   |
| **Shareholders' equity**                                                                                                                                                                                        |   |  |   |   |   |  |   |
| Preferred stock; $10 par value; 5,000,000          shares authorized; none issued                                                                                                                               |   | **-** |   |   |   | - |   |
| Common stock; $0.01 par value; 150,000,000          shares authorized; 25,482,942 shares               issued and 25,054,508 shares outstanding at March          31, 2010 and December 31, 2009 |   | **254,829** |   |   |   | 254,829 |   |
| Treasury stock, common, at cost; 428,434          shares at March 31, 2010 and December 31, 2009                                                                                                                |   | **(272,056** | **)** |   |   | (272,056 | ) |
| Additional paid-in capital                                                                                                                                                                                      |   | **52,150,456** |   |   |   | 52,132,836 |   |
| Accumulated deficit                                                                                                                                                                                             |   | **(35,502,634** | **)** |   |   | (33,933,804 | ) |
|          Total          shareholders' equity                                                                                                                       |   | **16,630,595** |   |   |   | 18,181,805 |   |
|          Total          liabilities and shareholders' equity                                                                                                       | **$** | **182,790,046** |   |   | $ | 179,853,654 |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |
|                                                                                                                                                                                                            |   |   |   |   |   |   |   |
| See accompanying notes to unaudited            condensed consolidated financial statements.                                                                                                                     |

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**Table of Contents**

| **TERRA NOVA FINANCIAL GROUP, INC.          AND SUBSIDIARIES           CONDENSED CONSOLIDATED STATEMENTS OF LOSS           (UNAUDITED)** |
|------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                     |   |   |   |   |   |   |   |
|                                                                                                                                     |   | **Three Months Ended March 31,** |   |
|                                                                                                                                          |   | **2010** |   |   |   | 2009 |   |
| **REVENUES**                                                                                                                             |   |   |   |   |   |   |   |
| Commissions and fees                                                                                                                     | **$** | **3,748,750** |   |   | $ | 6,676,420 |   |
|                                                                                                                                     |   | **** |   |   |   |  |   |
| Interest income                                                                                                                          |   | **225,902** |   |   |   | 420,276 |   |
| Interest expense on brokerage accounts                                                                                                   |   | **-** |   |   |   | 284 |   |
|          Net        interest income                                                         |   | **225,902** |   |   |   | 419,992 |   |
|                                                                                                                                     |   | **** |   |   |   |  |   |
| Other revenues                                                                                                                           |   | **172,245** |   |   |   | 44,275 |   |
|                                                                                                                                     |   | **** |   |   |   |  |   |
|          Net        revenues                                                                |   | **4,146,897** |   |   |   | 7,140,687 |   |
|                                                                                                                                     |   | **** |   |   |   |  |   |
| **EXPENSES**                                                                                                                             |   | **** |   |   |   |  |   |
| Commissions and clearing                                                                                                                 |   | **1,383,127** |   |   |   | 2,693,278 |   |
| Compensation and benefits                                                                                                                |   | **1,794,620** |   |   |   | 2,034,785 |   |
| Software and market data                                                                                                                 |   | **527,713** |   |   |   | 946,718 |   |
| Advertising and promotional                                                                                                              |   | **20,156** |   |   |   | 87,013 |   |
| Professional fees                                                                                                                        |   | **527,957** |   |   |   | 686,579 |   |
| Communications and information        technology                                                                                         |   | **295,979** |   |   |   | 196,622 |   |
| Depreciation and amortization                                                                                                            |   | **529,078** |   |   |   | 489,150 |   |
| Other general and administrative expenses                                                                                                |   | **617,311** |   |   |   | 468,385 |   |
|                                                                                                                                     |   | **** |   |   |   |   |   |
|          Total        expenses                                                              |   | **5,695,941** |   |   |   | 7,602,530 |   |
|                                                                                                                                     |   | **** |   |   |   |   |   |
| Loss from continuing operations before        income taxes                                                                               |   | **(1,549,044** | **)** |   |   | (461,843 | ) |
|                                                                                                                                     |   | **** |   |   |   |   |   |
| Income tax benefit                                                                                                                       |   | **-** |   |   |   | (180,000 | ) |
|                                                                                                                                     |   | **** |   |   |   |   |   |
| Net loss from continuing operations                                                                                                      |   | **(1,549,044** | **)** |   |   | (281,843 | ) |
|                                                                                                                                     |   | **** |   |   |   |  |   |
| Discontinued operations                                                                                                                  |   | ** ** |   |   |   |   |   |
|          Loss        from discontinued operations of Tradient                               |   | **(19,786** | **)** |   |   | (77,966 | ) |
|          Income        tax benefit                                                          |   | **-** |   |   |   | (30,000 | ) |
|          Loss        from discontinued operations                                           |   | **(19,786** | **)** |   |   | (47,966 | ) |
|                                                                                                                                     |   |   |   |   |   |   |   |
| Net loss                                                                                                                                 | **$** | **(1,568,830** | **)** |   | $ | (329,809 | ) |
|                                                                                                                                     |   |   |   |   |   |   |   |
| Net loss per common share:                                                                                                               |   |   |   |   |   |   |   |
| Basic and diluted                                                                                                                        | **** | ** ** | **** |   |   |  |   |
|          Continuing        operations                                                       | **$** | **(0.06** | **)** |   | $ | (0.01 | ) |
|          Discontinued        operations                                                     |   | **(0.00** | **)** |   |   | (0.00 | ) |
|                                                                                                                                     | **$** | **(0.06** | **)** |   | $ | (0.01 | ) |
|                                                                                                                                     |   |   |   |   |   |   |   |
| Weighted average common shares outstanding:                                                                                              |   |   |   |   |   |   |   |
| Basic                                                                                                                                    |   | **25,054,508** |   |   |   | 25,482,942 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |
| Diluted                                                                                                                                  |   | **25,054,508** |   |   |   | 25,482,942 |   |
|                                                                                                                                     |   |   |   |   |   |   |   |
| See accompanying notes to unaudited          condensed consolidated financial statements.                                                |

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**Table of Contents**

| **TERRA NOVA FINANCIAL GROUP, INC.            AND SUBSIDIARIES            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS            (UNAUDITED)** |
|----------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                               |   |   |   |   |   |   |   |
|                                                                                                                                               |   | **Three Months Ended March 31,** |   |
|                                                                                                                                                    |   | **2010** |   |   |   | 2009 |   |
| **Cash flows from operating activities**                                                                                                           |   |   |   |   |   |   |   |
| Net loss                                                                                                                                           | **$** | **(1,568,830** | **)** |   | $ | (329,809 | ) |
| Adjustments to reconcile net loss to net          cash provided by (used in) operating activities:                                                 |   |  |   |   |   |   |   |
|        Share-based          compensation                                                                        |   | **17,620** |   |   |   | 30,165 |   |
|        Depreciation          and amortization                                                                   |   | **529,078** |   |   |   | 563,267 |   |
|        Deferred          income taxes                                                                           |   | **-** |   |   |   | (210,000 | ) |
|        Gain          on extinguishment of liabilities                                                           |   | **-** |   |   |   | (60,626 | ) |
| Changes in operating assets and liabilities:                                                                                                       |   |  |   |   |   |  |   |
|        Decrease          in cash segregated in compliance with federal regulations                              |   | **2,434,505** |   |   |   | 4,767,430 |   |
|        Increase          in receivables from brokers, dealers and clearing organizations                        |   | **(7,677,472** | **)** |   |   | (1,044,549 | ) |
|        Decrease          (increase) in receivables from brokerage customers                                     |   | **2,661,553** |   |   |   | (765,485 | ) |
|        Decrease          in income tax receivable                                                               |   | **-** |   |   |   | 730,000 |   |
|        Decrease          (increase) in other assets                                                             |   | **(92,211** | **)** |   |   | 184,083 |   |
|        Decrease          in payables to brokers, dealers and clearing organizations                             |   | **(42,949** | **)** |   |   | (243,469 | ) |
|        Increase          (decrease) in payables to brokerage customers                                          |   | **4,568,538** |   |   |   | (5,382,158 | ) |
|        Increase          in accounts payable and accrued expenses                                               |   | **(37,988** | **)** |   |   | 203,378 |   |
|                                                                                                                                               |   |  |   |   |   |  |   |
| Net cash provided by          (used in) operating activities                                                                                       |   | **791,844** |   |   |   | (1,557,773 | ) |
|                                                                                                                                               |   |  |   |   |   |  |   |
| **Cash flows from investing          activities**                                                                                                  |   |  |   |   |   |  |   |
|        Purchases          of property and equipment                                                             |   | **(48,257** | **)** |   |   | (87,701 | ) |
|                                                                                                                                               |   |  |   |   |   |  |   |
| Net decrease in cash and cash equivalents                                                                                                          |   | **743,588** |   |   |   | (1,645,474 | ) |
| Cash and cash equivalents at beginning          of quarter                                                                                         |   | **1,857,671** |   |   |   | 7,889,553 |   |
| Cash and cash equivalents at end of quarter                                                                                                        | **$** | **2,601,259** |   |   | $ | 6,244,079 |   |
|                                                                                                                                               |   |   |   |   |   |   |   |
| Supplemental cash flow information:                                                                                                                |   |   |   |   |   |   |   |
| Cash paid for interest                                                                                                                             | **$** | **-** |   |   | $ | 284 |   |
|                                                                                                                                               |   |   |   |   |   |   |   |
| Cash paid for income taxes                                                                                                                         | **$** | ****-**** | ** ** |   | $ | 696,322 |   |
|                                                                                                                                               |   |   |   |   |   |   |   |
|                                                                                                                                               |   |   |   |   |   |   |   |
| See accompanying notes to unaudited            condensed consolidated financial statements.                                                        |

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**Table of Contents**

| • | U.S. Securities and Exchange Commission ("SEC")      as a broker-dealer             |
|--------|-------------------------------------------------------------------------------------|
| • | Financial Industry Regulatory Authority, Inc.      ("FINRA") as a broker-dealer     |
| • | National Futures Association ("NFA") as a futures      commission merchant          |
| • | Commodity Futures Trading Commission ("CFTC")      as a futures commission merchant |

| • | The Depository Trust & Clearing Corporation      ("DTCC") |
|--------|-----------------------------------------------------------|
| • | National Securities Clearing Corporation                  |
| • | The Options Clearing Corporation ("OCC")                  |

| • | ISE Stock Exchange      |
|--------|-------------------------|
| • | National Stock Exchange |
| • | NYSE Arca Equities      |
| • | NYSE Amex Equities      |
| • | NYSE Euronext           |
| • | NASDAQ Stock Market     |
| • | NASDAQ OMX BX           |
| • | BATS Exchange, Inc.     |

| • | Boston Options Exchange           |
|--------|-----------------------------------|
| • | NYSE Arca Options                 |
| • | NYSE Amex Options                 |
| • | NASDAQ OMX PHLX                   |
| • | International Securities Exchange |

| • | Securities Investor Protection Corporation |
|--------|--------------------------------------------|

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**Table of Contents**

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**Table of Contents**

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**Tableof Contents**

|   |                                               |           |
|--------|----------------------------------------------------|----------------|
|   |                                                    | March 31, 2010 |   | March 31, 2009 |   |
|   | Weighted average      shares outstanding - Basic   | 25,054,508     |   |   | 25,482,942 |   |   |
|   | Weighted average shares outstanding      - Diluted | 25,054,508     |   |   | 25,482,942 |   |   |
|   |                                               |           |

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**Table of Contents**

|   |                                                                                   |   | Three Months Ended March 31, |   |   |
|--------|----------------------------------------------------------------------------------------|--------|------------------------------|--------|--------|
|   |                                                                                        |   | 2010                         |   |   |   | 2009  |   |   |
|   | Net revenues                                                                           | $      | 108,842                      |   |   | $ | 568,355 |   |   |
|   | Total expenses                                                                         |   | 128,628                      |   |   |   | 646,321 |   |   |
|   | Income tax benefit                                                                     |   | -                            |   |   |   | (30,000 | ) |   |
|   |         Loss      from discontinued operations | $      | (19,786                      | )      |   | $ | (47,966 | ) |   |
|   |                                                                                   |   |                         |   |   |   |   |   |   |

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**Table of Contents**

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**Table of Contents**

|   |                      |   |
|--------|---------------------------|--------|
|   |                      |   |   |   |   | Minimum Net Capital Requirement |   | Excess Net Capital |   |
|   |                      |   | Net Capital |   | SEC |   | CFTC |   | SEC |   | CFTC |   |
|   | Terra Nova Financial, LLC |   | $ | 9,945,063 |   | $ | 1,500,000 |   | $ | 1,000,000 |   | $ | 8,445,063 |   | $ | 8,945,063 |   |
|   |                      |   |

|   |                                          |   |
|--------|-----------------------------------------------|--------|
|   | Employee      Stock Option and Warrant Plans  |   | Authorized |   | Outstanding |   | Available |   |
|   | 2005 Long-Term Incentive      Plan ("LTIP")   |   | 4,254,487 |   | 749,024 |   | 3,505,463 |   |
|   | 2006      Warrant Incentive Plan ("2006 WIP") |   | 3,500,000 |   | 3,027,500 |   | 472,500 |   |
|   | Balance at March 31, 2010                     |   | 7,754,487 |   | 3,776,524 |   | 3,977,963 |   |
|   |                                          |   |

|                                  |   |
|---------------------------------------|--------|
| Employee      Stock Options           |   | Employee         Stock Options        Outstanding |   |   |   | Weighted         Average         Exercise Price |   | Weighted         Average         Remaining         Contract         Term (in years) |   |   | Aggregate         Intrinsic Value |   |
| Balance at December 31, 2009          |   | 992,774 |   |   | $ | 1.25 |   | 3.64 |   |   | - |   |
| Granted                               |   | - |   |   |   | - |   | - |   |   | - |   |
| Exercised                             |   | - |   |   |   | - |   | - |   |   | - |   |
| Cancelled                             |   | (243,750 | ) |   |   | 1.12 |   | 0.95 |   |   | - |   |
| Balance at March 31, 2010             |   | 749,024 |   |   | $ | 1.29 |   | 3.34 |   | $ | - |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Options exercisable at March 31, 2010 |   | 354,024 |   |   | $ | 1.74 |   | 2.44 |   | $ | - |   |
|                                  |   |

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**Table of Contents**

|   |                                   |   |
|--------|----------------------------------------|--------|
|   | Employee Warrants                      |   | Employee         Warrants        Outstanding |   |   | Weighted         Average        Exercise Price |   | Weighted         Average         Remaining         Contract Term        (in years) |   |   | Aggregate        Intrinsic Value |   |
|   | Balance at December 31, 2009           |   | 3,027,500 |   |   | $ | 2.56 |   |   | 1.55 |   |   |   | - |   |   |
|   | Granted                                |   | - |   |   |   | - |   |   | - |   |   |   | - |   |   |
|   | Exercised                              |   | - |   |   |   | - |   |   | - |   |   |   | - |   |   |
|   | Cancelled                              |   | - |   |   |   | - |   |   | - |   |   |   | - |   |   |
|   | Balance at March 31, 2010              |   | 3,027,500 |   |   | $ | 2.56 |   |   | 1.30 |   |   | $ | - |   |   |
|   | Warrants exercisable at March 31, 2010 |   | 3,027,500 |   |   | $ | 2.56 |   |   | 1.30 |   |   | $ | - |   |   |
|   |                                   |   |

|                                                 |
|------------------------------------------------------|
|                                                      |   |   | March 31, 2010 |   | December 31, 2009 |
|                                                      | Estimated         Useful         Life in Years |   |   | Property and        equipment |   |   |   | Capitalized        software         development        costs |   |   |   | Property and        equipment |   |   |   | Capitalized         software        development         costs |   |
| Capitalized software development                     | 3-5 |   | $ | - |   |   | $ | 332,282 |   |   | $ | - |   |   | $ | 428,332 |   |
| Computer and hardware                                | 3-5 |   |   | 878,917 |   |   |   | - |   |   |   | 1,013,879 |   |   |   | - |   |
| Furniture, fixtures and equipment                    | 3-7 |   |   | 279,521 |   |   |   | - |   |   |   | 352,141 |   |   |   | - |   |
| Leasehold improvements                               | 5-10 |   |   | 119,588 |   |   |   | - |   |   |   | 119,589 |   |   |   | - |   |
|                                                 |   |   |   | 1,278,026 |   |   |   | 332,282 |   |   |   | 1,485,609 |   |   |   | 428,332 |   |
|                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |  |   |
| Accumulated depreciation            and amortization |   |   |   | (297,570 | ) |   |   | (158,479 | ) |   |   | (439,902 | ) |   |   | (181,497 | ) |
| Net balance                                          |   |   | $ | 980,456 |   |   | $ | 173,803 |   |   | $ | 1,045,707 |   |   | $ | 246,835 |   |
|                                                 |

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**Table of Contents**

|   |                             |   |
|--------|----------------------------------|--------|
|   |                                  |   | March 31, 2010 |   | December 31, 2009 |   |
|   | Customer list      (5 year life) | $      | 4,749,000 |   |   | $ | 4,749,000 |   |   |
|   | Trade name (10 year life)        |   |   | 1,829,000 |   |   |   | 1,829,000 |   |   |
|   |                             |   |   | 6,578,000 |   |   |   | 6,578,000 |   |   |
|   |                             |   |   |   |   |   |   |   |   |   |
|   | Accumulated amortization         |   |   | (4,179,174 | ) |   |   | (3,836,636 | ) |   |
|   | Net balance                      |   | $ | 2,398,826 |   |   | $ | 2,741,364 |   |   |
|   |                             |   |

|   |                                                      |   |
|--------|-----------------------------------------------------------|--------|
|   | Financial instruments owned, at fair value:               |   | March 31, 2010 |   | December 31, 2009 |   |
|   | Money market funds      held in cash and cash equivalents | $      | - |   |   | $ | 2,337,655 |   |   |
|   | U.S. Treasury securities held as clearing deposits        |   |   | 18,996,950 |   |   |   | 12,998,592 |   |   |
|   | Total                                                     |   | $ | 18,996,950 |   |   | $ | 15,336,247 |   |   |
|   |                                                      |   |

| • | Level 1- Quoted prices (unadjusted) in active      markets for identical assets or liabilities that the Company has the ability      to access.                                                                                                                                                                                                                                                                                                                                                                      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Level 2- Inputs other than quoted prices included      in Level 1 that are observable for the asset or liability, either directly      or indirectly. Such inputs include quoted prices in markets that are not      active, quoted prices for similar assets and liabilities in active markets,      inputs other than quoted prices that are observable for the asset or liability      and inputs that are derived principally from or corroborated by observable      market data by correlation or other means. |
| • | Level 3 - Unobservable inputs for the asset      or liability, where there is little, if any, observable market activity      or data for the asset or liability.                                                                                                                                                                                                                                                                                                                                                    |

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|                                               |
|----------------------------------------------------|
|                                                    |   |   | Quoted Prices        in Active        Markets for         Identical         Assets |   |   |   | Significant         Other         Observable        Inputs |   |   |   | Significant         Unobservable        Inputs |   |   |   |   |   |
| Financial      instruments owned, at fair value:   |   |   | Level 1 |   |   |   | Level 2 |   |   |   | Level 3 |   |   |   | Fair Value |   |
| U.S. Treasury securities held as clearing deposits |   |   | 18,996,950 |   |   |   | - |   |   |   | - |   |   |   | 18,996,950 |   |
|                                               |

|   |                                     |           |
|--------|------------------------------------------|----------------|
|   |                                     | March 31, 2010 |   | December 31, 2009 |   |
|   |                                          |           | Receivables |   |   | Payables |   |   | Receivables |   |   | Payables |   |
|   | Cash held for securities      borrowed   | $              | 9,365,025 |   | $ | - |   | $ | 7,988,525 |   | $ | - |   |
|   | Clearing deposits & receivables/payables |           | 21,313,836 |   |   | 447,962 |   |   | 15,012,625 |   |   | 490,911 |   |
|   | Total                                    | $              | 30,678,861 |   | $ | 447,962 |   | $ | 23,001,150 |   | $ | 490,911 |   |
|   |                                     |           |

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| • | Pursue high-growth segment by capturing sponsored      access and high frequency traders;                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------|
| • | Attract displaced institutional trading professionals      who may turn to independent trading or trade group participation; and |
| • | Capture new prime brokerage clients by attracting      underserved small to mid-sized hedge funds.                               |

| • | We have recently hired a Managing Director      of Sales position recently vacated;                                      |
|--------|--------------------------------------------------------------------------------------------------------------------------|
| • | Enhance the lead pipeline through targeted      partnerships with leading programs focused on highly active traders; and |
| • | Enable the sales team with additional tools      and support.                                                            |

| • | Optimize order-flow costs;                                                                             |
|--------|--------------------------------------------------------------------------------------------------------|
| • | Continue to align costs of routing with third-party      platforms; and                                |
| • | Continue to reduce cost structure by optimizing      a variety of management and IT systems processes. |

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|   |                                                                                                     |   | **Three Months Ended March 31,** |   |   |
|--------|----------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|
|   |                                                                                                          |   | **2010**                         |   |   |   | 2009 |   |   |
|   | Commissions and fees                                                                                     | **$**  | **3,748,750**                    |   |   | $ | 6,676,420 |   |   |
|   |                                                                                                     |   | ****                             |   |   |   |  |   |   |
|   | Interest income                                                                                          |   | **225,902**                      |   |   |   | 420,276 |   |   |
|   | Interest expense on brokerage      accounts                                                              |   | **-**                            |   |   |   | 284 |   |   |
|   |          Net      interest income                           |   | **225,902**                      |   |   |   | 419,992 |   |   |
|   |                                                                                                     |   | ****                             |   |   |   |  |   |   |
|   | Other revenues                                                                                           |   | **172,245**                      |   |   |   | 44,275 |   |   |
|   |                                                                                                     |   | ****                             |   |   |   |  |   |   |
|   |          **Net      revenues**                              |   | **4,146,897**                    |   |   |   | 7,140,687 |   |   |
|   |                                                                                                     |   | ****                             |   |   |   |  |   |   |
|   | Commissions and clearing                                                                                 |   | **1,383,127**                    |   |   |   | 2,693,278 |   |   |
|   | Compensation and benefits                                                                                |   | **1,794,620**                    |   |   |   | 2,034,785 |   |   |
|   | Software and market data                                                                                 |   | **527,713**                      |   |   |   | 946,718 |   |   |
|   | Advertising and promotional                                                                              |   | **20,156**                       |   |   |   | 87,013 |   |   |
|   | Professional fees                                                                                        |   | **527,957**                      |   |   |   | 686,579 |   |   |
|   | Communications and information      technology                                                           |   | **295,979**                      |   |   |   | 196,622 |   |   |
|   | Depreciation and amortization                                                                            |   | **529,078**                      |   |   |   | 489,150 |   |   |
|   | Other general and administrative      expenses                                                           |   | **617,311**                      |   |   |   | 468,385 |   |   |
|   |                                                                                                     |   | ****                             |   |   |   |   |   |   |
|   |          **Total      expenses**                            |   | **5,695,941**                    |   |   |   | 7,602,530 |   |   |
|   |                                                                                                     |   | ****                             |   |   |   |   |   |   |
|   | Loss from continuing operations      before income taxes                                                 |   | **(1,549,044**                   | **)**  |   |   | (461,843 | ) |   |
|   |                                                                                                     |   | ****                             |   |   |   |   |   |   |
|   | Income tax benefit                                                                                       |   | **-**                            |   |   |   | (180,000 | ) |   |
|   |                                                                                                     |   | ****                             |   |   |   |   |   |   |
|   | Net loss from continuing      operations                                                                 |   | **(1,549,044**                   | **)**  |   |   | (281,843 | ) |   |
|   |                                                                                                     |   | ****                             |   |   |   |  |   |   |
|   | Discontinued operations                                                                                  |   | ** **                       |   |   |   |   |   |   |
|   |          Loss      from discontinued operations of Tradient |   | **(19,786**                      | **)**  |   |   | (77,966 | ) |   |
|   |          Income      tax benefit                            |   | **-**                            |   |   |   | (30,000 | ) |   |
|   |          Loss      from discontinued operations             |   | **(19,786**                      | **)**  |   |   | (47,966 | ) |   |
|   |                                                                                                     |   |                             |   |   |   |   |   |   |
|   | Net loss                                                                                                 | **$**  | **(1,568,830**                   | **)**  |   | $ | (329,809 | ) |   |
|   |                                                                                                     |   |                             |   |   |   |   |   |   |

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| • | Net loss from continuing operations for the      quarter ended March 31, 2010 of $1,549,044 includes the following non-cash      expenses among other non-cash items: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ° | Depreciation expense on property      and equipment of $113,508 |
|--------|--------|-----------------------------------------------------------------|
|   | ° | Amortization expense on capitalized      software of $73,032    |
|   | ° | Amortization expense on intangible      assets of $342,538      |
|   | ° | Share-based compensation of $17,620                             |

| • | Posted average revenue per employee of approximately      $69,200 based on sixty-one full-time employees as of March 31, 2010 compared      to $83,000 based on eighty-nine full-time employees as of March 31, 2009. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Net interest income was down $194,000 to $226,000      for the three months ended March 31, 2010 compared to $420,000 for the three      months ended March 31, 2009.                                                 |

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| Exhibit No.       | Description                                                                                                                                                                                                                       |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Exhibit      10.1 | Amendment      to License Agreement, between Townsend Analytics, Ltd. and Terra Nova Financial,      LLC dated February 5, 2010                                                                                                   |
| Exhibit      31.1 | Certification      of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a)                                                                                                                                        |
| Exhibit      31.2 | Certification      of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a)                                                                                                                                        |
| Exhibit      32.1 | Certification      of Chief Executive Officer and Chief Financial Officer Pursuant to Rule      13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as Adopted Pursuant      to Section 906 of the Sarbanes-Oxley Act of 2002 |
|              |                                                                                                                                                                                                                              |

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****

|   |               | Terra Nova Financial Group, Inc.       (Registrant)                                                             |
|--------|--------------------|-----------------------------------------------------------------------------------------------------------------|
|   |               |                                                                                                            |
|   | Date: May 14, 2010 | By: /s/ Bernay Box                                                                                              |
|   |               | Bernay Box                                                                                                      |
|   |               | Chief Executive Officer       (Principal Executive Officer)                                                     |
|   |               |                                                                                                            |
|   | Date: May 14, 2010 | By: /s/ Murrey Wanstrath                                                                                        |
|   |               | Murrey Wanstrath       Chief Financial Officer       (Principal Financial Officer and       Accounting Officer) |
|   |               |                                                                                                            |
|   |               |                                                                                                            |
|   |               |                                                                                                            |

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