Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q may constitute "forward-looking" statements as defined in Section 27A of the Securities Act of 1933 (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), the Private Securities Litigation Reform Act of 1995 (the "PSLRA") or in releases made by the Securities and Exchange Commission ("SEC"), all as may be amended from time to time. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of Terra Nova Financial Group, Inc. and its subsidiaries, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements that are not historical fact are forward-looking statements. Forward-looking statements can be identified by, among other things, the use of forward-looking language, such as the words "plan," "believe," "expect," "anticipate," "intend," "estimate," "project," "may," "will," "would," "could," "should," "seeks," or "scheduled to," or other similar words, or the negative of these terms or other variations of these terms or comparable language, or by discussion of strategy or intentions. These cautionary statements are being made pursuant to the Securities Act, the Exchange Act and the PSLRA with the intention of obtaining the benefits of the "safe harbor" provisions of such laws. The Company cautions investors that any forward-looking statements made by the Company are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements with respect to the Company, include, but are not limited to, risks and uncertainties that are described in Item 1A - "Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2008, and in other securities filings by the Company with the SEC.

Although the Company believes that its plans, intentions and expectations reflected in or suggested by such forward-looking statements are reasonable, actual results could differ materially from a projection or assumption in any forward-looking statements.

The Company's future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made only as of the date hereof and the Company does not have or undertake any obligation to update or revise any forward-looking statements whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

Variability of Quarterly Results

The operating results for any quarter are not necessarily indicative of results for any future period or for the full year. Quarterly revenues and operating results have varied in the past and are likely to vary in the future. Such fluctuations may result in volatility in the price of the Company's common stock. For information regarding the risks related to the variability of quarterly results, see Risk Factors in Item 1A of the Annual Report on Form 10-K of the Company for the year ended December 31, 2008.

Overview

Terra Nova Financial Group, Inc. ("Parent", and collectively with its wholly-owned subsidiaries, the "Company," "firm," "we," "us," or "our") is a holding company of businesses providing a range of products and services to the professional trading community. The Company has three primary subsidiaries:
Terra Nova Financial, LLC ("Terra Nova"), Tradient Technologies, Inc. ("Tradient") and SC QuantNova Research SRL ("QuantNova"). Terra Nova, Tradient and QuantNova are wholly-owned subsidiaries of the Parent, a public company trading on the OTC Bulletin Board under the symbol TNFG.

Professional traders, hedge funds and money managers come to Terra Nova, a broker-dealer registered with the Securities and Exchange Commission and a member of Financial Industry Regulatory Authority, for what we believe to be value in execution, clearing and prime brokerage services. The firm offers highly active traders what we believe are effective solutions for direct access trading in domestic and global markets across many product classes including equities, options, ETFs, commodity futures and options, fixed income securities and mutual funds. Clients can make unbiased executions on an agency-only basis through Terra Nova's 24-hour trading desk staffed with licensed brokers or through any of a range of powerful trading platforms suited to different trading styles. The firm also provides customizable, turn-key clearing solutions for broker-dealers and introducing brokers; and prime brokerage services well suited for small and mid-sized hedge funds. Terra Nova is located in Chicago, Illinois. During the first quarter of 2009, primary sources of revenue for Terra Nova include 91% from commissions and fees, 6% from net interest income and 3% from software fees.

Tradient is the Company's financial technology development business, providing proprietary applications for electronic trade execution, order routing and clearing. Tradient platforms for real-time market data and direct access trading are intended to be designed for efficiency, consistency and value. Tradient platforms include its flagship product Tradient Pro, a fully customizable Level II trading platform; Tradient Plus, an easy-to-use, customizable trading platform offering essential equity and options trading features economically; and Tradient Web, a browser-based trading system with streaming Level I data. Tradient is located in Chicago, Illinois. Primary sources of revenue for Tradient include software licensing and routing fees.

QuantNova provides consulting, software development, electronic data processing, software architecture and engineering for Tradient trading platforms and backoffice clearing software. QuantNova is based in Bucharest, Romania and as of March 31, 2009 had seven full-time employees and one contract employee.

Plan of Operation

2009 Initiatives

In 2009, the Company's goals are to increase revenue growth through strategic initiatives involving marketing and sales operations, technology innovation and cost control, such as:

Pursue targeted segments:

• Attract the most sophisticated traders by providing access to algorithmic trading, "black box" and non-click trading strategies;
• Attract international active trading clients to the U.S. markets;

• 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.

Broaden product offering:

• Enhance the Tradient platforms and API;
• Broaden the set of platforms from which to choose;
• Refine complex options strategy offerings across all trading platforms;
• Grow international trading activity; and
• Enhance prime brokerage capital introduction program.

Increase emphasis on sales and marketing:

• Enhance the lead pipeline through increased web-based marketing and advertising programs targeted at highly active traders;
• Increase the sales team personnel; and
• Enable the sales team with increased tools and support.

Reduce costs to increase working capital:

• 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.

Terra Nova, the Company's broker-dealer subsidiary, while reliant upon the Tradient platforms, continues to improve its ability to operate as a technology neutral clearing agent for different front-end trading platforms. Our control over the back office processes allows the firm to accommodate business opportunities which revolve around non-traditional front-end trading platforms. We offer three proprietary trading platforms, Tradient Pro, Tradient Plus, and Tradient Web, along with RealTick, a real-time, Level II cross-asset trading platform developed by Townsend Analytics. Another platform offered is Sterling Trader Pro, developed by Sterling Financial, a customizable direct access trading platform. We also accommodate alternative routing solutions including algorithmic trading with financial information eXchange ("FIX") protocol and application programming interface ("API") capability.

The Company currently intends to continue to focus on improving its capital structure, technology and business processes. The Company expects to continue to increase its systems and backoffice clearing capacity for anticipated growth in the number of transactions and executions that it processes in the future. The firm plans to invest resources in back office technology to lower operating costs.

The Company anticipates that it will continue to increase the number of transactions and executions that it processes, but this growth may be offset by compression in the commission pricing environment. In an effort to mitigate any impact from lower pricing we intend to continue to invest resources in our back office technology to lower the man-hours required to manage our systems and processing costs.

A slow down in the Company's business which began towards the end of 2008 has continued into the first quarter of 2009 and is reflected in lower commission and fee revenue for the first quarter of 2009 primarily as a result of lower volumes of stock, options and futures transactions. The Company reduced its workforce in January 2009 based on these continuing adverse economic conditions and intends to continue to review our headcount throughout 2009. We also expect to experience a reduction in net interest income resulting from low federal funds rates, our base rate to determine client debit and credit rates and earnings on our reserve deposits. Terra Nova relies on net interest income as a significant revenue source, thus the decrease in rates impacts our profitability. We are attempting to incorporate cost saving measures to offset declining revenue.

Critical Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which require the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements, and revenues and expenses during the periods reported. Actual results could differ from those estimates. The following are believed to be the critical accounting policies, which could have the most significant effect on reported results and require the most difficult, subjective or complex judgments by management.

Goodwill

Goodwill is reviewed for impairment annually or more frequently if impairment indicators arise. The first step of this process is to identify potential goodwill impairment by comparing the fair value of the reporting unit to its carrying value. The Company estimates fair value using a combination of the market price of the Company's common equity and discounted cash flows. If the carrying value is less than fair value the Company would complete step two in the impairment review process which measures the amount of goodwill impairment. Management tests the reasonableness of the inputs and outcomes of the discounted future cash flow analysis and the evaluation of the market price of its common equity against other available comparable market data. The entire amount of goodwill was created from the Terra Nova, MW School and MW Securities acquisition in May 2006 and has been assigned to Terra Nova within the Brokerage Services Segment. The Company performed its annual impairment test of goodwill as of December 31, 2008 and determined that there was no impairment as of that date.

During 2008, the financial services industry and securities markets were materially and adversely affected by significant declines in the values of nearly all asset classes and by a serious lack of liquidity in the credit markets. Our stock price, as with many other stock prices in the broader financial services sector declined significantly during this period of time. During the fourth quarter of 2008, our market capitalization fell below tangible book value. The Company believes that it is reasonable to consider market capitalization as an indicator of fair value over a reasonable period of time when we test our goodwill for impairment. If the current economic market conditions persist and if there is a prolonged period of weakness in the business environment and financial markets our Company may be adversely affected which could result in an impairment of goodwill in the future.

Capitalization of Software Development Costs

In accordance with SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed," ("SFAS 86") internally generated software development costs associated with new products and significant enhancements to existing software products are expensed as incurred until technological feasibility has been established. Software development costs that qualify for capitalization include the salaries and benefits of the software engineers assigned to the products, internal and external quality assurance testing costs, overhead allocations primarily associated with rent and facilities costs and the costs of outsourced development activities. Software development costs not qualifying for capitalization are recorded as product development expenses. Capitalized software development costs, including purchased software, if any, are amortized using the straight-line method over the estimated useful life of the software. At each balance sheet date the Company evaluates the estimated net realizable value of each software product and when required, records write-downs of net carrying value to net realizable value of any products for which the net carrying value is in excess of net realizable value. The net realizable value is the estimated future gross revenue of each product reduced by the estimated future costs of completing and disposing of that product, including the costs of completing in process development and client support.

The Company records development costs for internally used software in accordance with AICPA Statement of Position 98-1 ("SOP 98-1") "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use." Internally used software includes software that is acquired, internally developed or modified to meet the Company's internal needs and the Company has no substantive plans to market the software externally. Application development and modifications resulting in additional functionality are capitalized. Costs associated with preliminary project stage where business requirements are defined, internal and external training costs and ongoing maintenance are expensed as incurred. Capitalization of appropriate costs occurs when the preliminary project stage is complete and management authorizes and commits to the completion of the project. Capitalization ceases when the project is ready for its intended use. As part of the acquisition of Terra Nova, the Company obtained significant software systems and processes which encompass their proprietary back office clearing system. The acquired software was valued at $1,500,000, and assigned a useful life of 10 years based on the significance, functionality, and longevity expected. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software.

Intangibles

The Company acquired $6,578,000 of intangible assets as part of the acquisition of Terra Nova on May 17, 2006. The acquired intangible assets comprised the values prescribed to the acquired customer list and trade name of $4,749,000 and $1,829,000, respectively. The useful life of these intangibles was initially determined to be ten years. During the first quarter of 2008 the estimated life of the customer list declined from ten years to five years based on a determination that the turnover rate of the original clients from May 2006 was higher than was originally estimated. The customer list continues during the first quarter of 2009 to have an estimated life of five years.

Share-Based Compensation

The Company accounts for share-based compensation under Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R"). SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the consolidated statements of income based on their grant date fair values over their requisite service period less estimated forfeitures.

Long-Lived Assets Including Definite Lived Intangible Assets

Long-lived assets including definite lived intangible assets are reviewed on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is generally measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by that asset. If it is determined that the carrying amount of an asset may not be recoverable, an impairment loss is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Fair value is the estimated value at which the asset could be bought or sold in a transaction between willing parties.

Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense or benefit is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities.

Revenue Recognition

Revenues primarily consist of commission and fees, interest income and software related licensing fees. Commission revenue and related expenses on securities transactions are recorded on a settlement date basis. Other revenue consists of account and transaction fees and is recorded on a settlement date basis as security transactions occur. Software fees are charges for the use of the Company's software execution platform. Revenues from software fees are recognized on a monthly basis as services are provided to clients. Interest income is primarily generated by interest charges to clients on margin balances and revenue from clients cash held and invested by Terra Nova as a clearing firm offset by interest paid to clients on their credit balances. Interest income and interest expense on brokerage accounts is recorded on an accrual basis as earned or incurred.

Results of Operations

The following table below represents net revenues and total expenses from the consolidated statements of operations for the three months ended March 31, 2009 and March 31, 2008 including a presentation of percentage of net revenues. The financial information below is derived from the consolidated financial statements and related notes in the Quarterly Report on Form 10-Q.

                                                  Three Months Ended March 31,
                                                       % Net                          % Net
                                        2009          Revenues         2008          Revenues
                                     (Unaudited)                    (Unaudited)
      Commissions and fees         $   6,720,234        90.8%     $   8,237,980        82.8%

      Interest income                    420,276         5.7%         2,070,884        20.8%
      Interest expense on                    284         0.0%           608,743         6.1%
      brokerage accounts
      Net interest income                419,992         5.7%         1,462,141        14.7%

      Software fees, net                 257,518         3.5%           159,003         1.6%
      Other revenue                          461         0.0%            84,781         0.9%
      Net revenues                     7,398,205       100.0%         9,943,905       100.0%

      Commissions and clearing         2,534,779        34.3%         2,608,227        26.2%
      Compensation and benefits        2,365,888        32.0%         3,022,051        30.4%
      Software and market data           903,770        12.2%         1,654,011        16.6%
      Advertising and                    137,230         1.9%           181,989         1.8%
      promotional
      Professional fees                  686,921         9.3%           796,851         8.0%
      Communications and                 239,190         3.2%           256,571         2.6%
      information technology
      Depreciation and                   563,267         7.6%           557,563         5.6%
      amortization
      Other general and                  506,969         6.9%           466,515         4.7%
      administrative expenses
      Total expenses                   7,938,014       107.3%         9,543,778        96.0%

      Income (loss) before              (539,809 )      -7.3%           400,127         4.0%
      income taxes

      Income tax benefit                 210,000         2.8%          (228,000 )      -2.3%
      (provision)

      Net income (loss)            $    (329,809 )      -4.5%     $     172,127         1.7%

Three Months Ended March 31, 2009 Compared to March 31, 2008

The stock and commodities markets continued declines in the first quarter of 2009 with the Dow Jones Industrial Average ("Dow') and Standard & Poor's 500 ("S&P 500") finishing their worst January ever. The Dow lost 8.8% in January 2009 and the S&P 500 lost 8.6%. In March, the Dow gained 7.7% which resulted in a decline of 13.3% in the first quarter of 2009.

Unlike the fourth quarter of 2008 which reflected high volatility and stock volume the volatility early in the first quarter of 2009 did not provide the Company with higher volumes of stock, options and futures transactions by our clients. Instead, the total trade tickets declined 482,000 to 1.1 million during the first quarter of 2009 from the first quarter of 2008. In addition, we experienced a decline of 351,000 futures and options contracts executed during the first quarter of 2009 of 2.9 million compared to the first quarter of 2008 of 3.3 million contracts. The Company anticipates continued abnormal stock market volatility resulting from investor uncertainty in the economy and tightened liquidity in the credit markets. Continuing tighter credit markets have hindered the ability for individuals and businesses to get capital needed to finance business operations.

The decline in the federal funds interest rates has reduced the Company's net interest income in the first quarter of 2009. We monitor the federal funds rate daily on invested client funds and adjust our client's credit and debit rates accordingly to maintain an acceptable spread. By managing the spread between debit rates earned and credit rates paid we have been able to increase our interest rate spread even though overall net interest income has declined from lower federal funds rates. We have also experienced a decline in both credit and debit client cash balances which also caused a decline in overall net interest income.

Our results for the quarter ended March 31, 2009 reflect the following important factors:

• Net loss for the quarter ended March 31, 2009 of $329,809 includes the following non-cash expenses among other non-cash items:

° Depreciation expense on property and equipment of $90,442 ° Amortization expense on capitalized software of $130,287 ° Amortization expense on intangible assets of $342,538 ° Share-based compensation of $30,165

• Decrease of 34% in number of tickets executed on third-party software trading platforms during the first quarter of 2009 compared to the same period in 2008. We also experienced a decrease in the number of tickets executed on the Tradient platform by 6% during the three months ended March 31, 2009 compared to the same period in 2008.
• Higher net software fees of $100,000 from Tradient platform subscriptions for the three months ended March 31, 2009 versus the same period last year. The number of Tradient platform users increased from 2,327 as of March 31, 2008 to 2,535 as of March 31, 2009.
• Posted average revenue per employee of approximately $83,000 based on eighty-nine full-time employees for the three months ended March 31, 2009 compared to $113,000 based on eighty-eight full-time employees for the same period in 2008. Revenue per employee was down for the three months ended March 31,2009 compared to three months ended March 31, 2008 as a result of lower overall revenue resulting from reduced average commission rates and volume and declining net interest income.

Revenues

Commissions and fees

The Company's commissions and fees revenue is dependent on the overall trading activity in the United States equity, futures and options markets. Commission revenue consists of executing NYSE and NASDAQ listed securities and OTC securities along with exchange listed options transactions, futures and futures options, ETFs, fixed income and mutual funds. Commission revenues are recorded on a settlement date basis. The fee revenue is generated from clients accessing market data through proprietary software platforms and various account maintenance fees.

The Company's commissions and fees decreased from $8.2 million in the first quarter of 2008 to $6.7 million in the first quarter of 2009-a decrease of 18.4% due primarily from lower average commission rates along with soft trading activity during the first two months in 2009.

The Company's total trade tickets declined 482,000 to 1.1 million during the first quarter ending March 31, 2009 from the same period in 2008. In addition, we experienced a decline of 351,000 futures and options contracts executed during the first quarter of 2009 of 2.9 million compared to the first quarter of 2008 of 3.3 million contracts.

Net interest income

As a self-clearing broker-dealer the Company receives interest income on client credit and debit balances through interest bearing accounts, U.S. . . .