UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                      For the year ended December 31, 2006

                                       or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ____________ to ________________

                        Commission file number: 000-51837

                                Optionable, Inc.
                        ---------------------------------
                 (Name of Small Business Issuer in Its Charter)

                 Delaware                            52-2219407
           -------------------                 --------------------
       (State or Other Jurisdiction of         (I.R.S. Employer
        Incorporation or Organization)          Identification No.)


            465 Columbus Avenue, suite 280, Valhalla, New York 10510
 ------------------------------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                  (914)773-1100
                        ---------------------------------
                (Issuer's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Exchange Act:
           None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.0001 par value

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act).     Yes  [ ] No  [X]

Issuer's revenues for its most recent fiscal year: $16,069,511

The aggregate market value of the issuer's common stock, $0.001 par value, held
by non-affiliates as of March 12, 2007, was approximately $193,322,745.


The total number of shares of the issuer's common stock, $.0001 par value,
outstanding on March 12, 2007, was 52,177,714.

Transitional Small Business Disclosure Format:  Yes |_| No |X|

<PAGE>


                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


Certain statements in this Annual Report constitute forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). These include statements about anticipated
financial performance, future revenues or earnings, business prospects,
projected ventures, new products, anticipated market performance and similar
matters. The words "budgeted," "anticipate," "project," "estimate," "expect,"
"may," "believe," "potential" and similar statements are intended to be among
the statements that are forward-looking statements.  Because such statements
reflect the reality of risk and uncertainty that is inherent in our business,
actual results may differ materially from those expressed or implied by such
forward-looking statements.  Some of these risks and uncertainties are related
to our current business situation and include, but are not limited to our lack
of sufficient revenues to cover operating expenses, our history of operating
losses, our need for additional financing for working capital purposes, the
uncertainty about our ability to continue as a going concern and dependence on
our current management team.  Readers are cautioned not to place undue reliance
on these forward-looking statements, which are made as of the date this report
was filed with the Securities and Exchange Commission.

Readers are advised that we undertake no obligation to release publicly any
revisions to the forward-looking statements to reflect events or circumstances
after the date hereof or to reflect unanticipated events or development. To the
extent that the information presented in this Annual Report on Form 10-KSB for
the year ended December 31, 2006 discusses financial projections, information or
expectations about our products or markets, or otherwise makes statements about
future events, such statements are forward-looking. We are making these
forward-looking statements in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995.  Although we believe that the
expectations reflected in these forward-looking statements are based on
reasonable assumptions, there are a number of risks and uncertainties that could
cause actual results to differ materially from such forward-looking statements.
These risks and uncertainties are described, among other places in this Annual
Report, in "Management's Discussion and Analysis of Financial Condition or Plan
of Operation."



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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS


We were formed in Delaware in February 2000.  Our goal is to be the leader of
commodity derivative brokerage services provider to brokerage firms, financial
institutions, energy traders, and hedge funds worldwide.  We specialize in
providing our services for the brokerage of energy derivatives.  A substantially
portion of all energy derivatives we have brokered in the past were natural gas
derivatives.  We are providing below a summary of elements describing and
impacting our industry to enhance your understanding of our business.


INDUSTRY

The markets for energy commodities trading include trading in both physical
commodities contracts and derivative instruments -- instruments that derive
their value from an underlying energy commodity or index -- across a wide
variety of commodities, including
crude oil, natural gas, electricity or power, coal, chemicals, weather and
emissions. Derivative instruments provide a means to manage exposure to price
risk, asset portfolio allocation, speculation or arbitrage. Contracts for
physical commodities allow counterparties to contract for the delivery of the
underlying physical asset.

Most of the following discussion will specifically address the natural gas
derivatives market.  However, we believe that most of the elements of this
discussion apply to other energy derivative markets as well.

Natural-gas derivatives

Natural gas derivatives are characterized by its underlying commodity
(natural gas), the term of the contract, and the settlement, which can require
physical delivery or financial settlement.  The natural gas derivatives with the
most liquidity are those with shorter settlement or expiration dates (less than
three months).  Derivatives with longer settlement or expiration dates are also
larger in dollar volume and are not as liquid, requiring more extensive
resources to find potential counterparties.  Accordingly, these derivatives tend
to generate higher brokerage transaction fees.

Natural gas is an actively traded commodity.  Natural gas derivatives are
primarily traded based upon the location to which they are delivered ("hub").
The Henry Hub, located in Louisiana, is the most widely-used pricing point for
natural gas derivatives in the United States.

Market Participants

Financial institutions, including bank brokerage houses and hedge funds as well
as eligible individual traders use natural gas derivatives market to weigh their
risk and rewards in: 1) a balanced portfolio asset allocation without investing
in the physical asset, and 2) speculate on the price movement of natural gas
prices or the related derivatives.  Natural gas producers, natural gas
distributors and large natural gas consumers will use natural gas derivatives
market to manage their exposure to future price movements for certain quantity,
time and delivery location, and sometimes, with an expectation that the
derivatives would ultimately provide a financial gain.

Types of Natural Gas Derivatives Markets

There are two types of natural gas derivative markets -- the futures market and
the over-the-counter ("OTC") market.

Futures Market

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Most of the transactions on the natural gas futures market are made through an
exchange, such as New York Mercantile Exchange ("NYMEX") and Intercontinental
Exchange ("ICE").

The trading of natural gas futures is conducted either on an electronic platform
or on an open-outcry trading floor. Prices are established publicly either on a
screen or on the floor by participants posting bids, or buying indications, and
offers, or indications to sell. While the electronic platform provides more
transparency to our clients, the open-outcry trading floor provides a better
environment for exchange of ideas and solutions to address our clients' needs.

Futures and options are two derivatives available to trade on a futures market.
Futures consist of a contract to buy or sell a certain quantity of natural gas,
for example, during a specified month and are settled through either physical
delivery or cash settlement.  Options consist of a right, but not an obligation,
to buy or sell a futures contract at a certain price.

OTC Market

Over-the-counter, or OTC, is a term used to describe trading activity that does
not take place on a regulated exchange.

Several derivatives are available for trade on the OTC market, such as forwards
and swaps, differentials and spreads and options.

Forwards are negotiated agreements between counterparties to deliver a specified
quantity of natural gas, on a specified date, and at a specified location.

Swaps are contracts between the holders of two different assets with differing
risk and performance profiles in which the risk or performance characteristics
are exchanged. Swaps may be settled against the future price of a single
commodity or against an index of commodity prices.

Spreads are the simultaneous purchase and sale of forward contracts for
different months, different commodities or different grades of the same
commodity.

Basis options are contracts that allow counterparties to swap the physical or
financial delivery of natural gas commodity between two different delivery
points.

Options traded on the OTC market, unlike those traded on the futures market, are
contracts that convey to the buyer the right, but not the obligation, to require
the seller to make or take delivery of a stated quantity of natural gas at a
specified price. Options may also be settled in cash, based on the difference
between the market price of, for example, natural gas and the price of the
commodity specified in the option.

Besides the types of derivatives traded on those markets, there are several
inherent differences between them.  For example, the futures market is primarily
conducted through an open-outcry market, such as NYMEX, which imposes physical
limitations on the number of participants who can trade at the same time.
Accordingly, membership on such exchanges becomes a commodity of its own and may
require significant resources.  The types of derivatives traded on the OTC
market are not standardized such as those used on the futures market. Therefore,
when one counterparty wants to enter into OTC derivatives transactions, the use
of a broker facilitates the search for another counterparty.  The OTC-based
transactions tend to generate higher brokerage fees due to extensive involvement
of a broker.

However, there is a significant similarity between these natural gas derivatives
markets in that they lack transparency for the participants, unlike the equity
market.  Counterparties to a natural gas derivative transaction are unaware of
all offers available on either market at any given time under current
conditions, unless it is executed on an electronic platform with sufficient
liquidity.

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Trends

We believe that several factors will impact the natural gas and other energy
derivatives market in the future:

o        Natural gas options as asset class:  new market participants, such as
         hedge funds, and institutional investors, such as pension plans, are
         taking a greater interest in the returns afforded by natural gas
         derivatives and the asset diversification opportunities it provides.

o        Lesser credit risk using the OTC market:  since 2002, natural gas
         derivatives feature cleared OTC contracts. Cleared OTC contracts allow
         participants to limit counterparty credit risk and lower the amount
         of capital required to trade.

o        Larger number of new entrants: both factors have increased the number
         of market participants in the natural gas derivatives market which
         improves its liquidity.  While some recent large entrants, such as
         Amaranth, have already exited the markets, an even larger amount of new
         entrants in the last few years have contributed to an increase in
         volume of energy contracts traded.

o        Need for higher transparency in the natural gas derivatives market:
         the natural gas derivatives market lacks transparency when compared to
         other markets, such as the equity market. The participants, who are
         enjoying such transparency in other markets, are requesting the same
         level of transparency in the natural gas derivatives market without
         obtaining it with the currently available solutions offered by brokers
         or exchanges.

o        While industry participants have refined their risk management
         processes in the last few years, the vast majority of the of holders of
         OTC energy derivatives continue to use theoretical approaches to value
         their portfolio. Without a real-time mark-to-market approach, such
         holders may continue to overstate or understate the true value of their
         energy derivatives portfolio.

Current Solutions to Energy Derivatives Market

The current solutions offered to energy derivatives market vary widely.

Some brokerage firms offer only services for the futures market or the OTC
markets, but not both.  This restricts the choice of market participants who
combine futures and swaps, for example, in their hedging or investment strategy
which are not traded on the same markets.  If dealing with brokers who only
offer services on one of the markets, the market participants are forced to use
more than one broker, which creates further lack of market transparency,
inefficiencies in the use of resources as well as ineffectiveness in timely
trading.

Other brokerage firms offer services on both markets, but most do not have the
intent or the resources to address the current lack of transparency and
liquidity in the energy derivatives market by using an electronic platform, for
example.

While exchanges are used primarily for the futures market, they are also used
for clearing OTC trades.  However, none of the larger exchanges provide
sufficient support for derivatives trading on the OTC market, such as options,
which reduces the liquidity of such market.  Additionally, exchanges do not
offer brokerage services which facilitate the search for counterparties.

Some brokerage firms do not provide real-time valuation services to their
clients for OTC energy derivatives, which prevents such clients from determining
whether their portfolio is properly valued and decreases the likelihood that
they maximize their investment strategy.

Other Elements of the Natural Gas Derivatives Market

The energy derivatives market is also impacted by the following elements:

Trading volumes are driven primarily by the degree of volatility in the energy
derivatives market.

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However, if the volatility of the price of natural gas or oil and their related
derivatives is too high, some of the market participants will wait that it
declines before entering into transactions, which reduces trading volumes.

Worldwide geopolitical conditions impact the perceived or real supply or demand
of a particular energy commodity.

Unexpected weather conditions, such as hurricanes in the Gulf Coast or milder or
colder weather in the Northeast United States, impact the perceived or real
supply or demand of a particular energy commodity.  While hurricanes have
recently become more expected, their unpredictable strength and trajectory
increase the volatility of energy commodities market.

The delivery of energy commodities is generally seasonal.  In parallel, the
trading volume of the energy derivatives market, which historically has been
higher during the winter and the summer, has been recently skewed by the larger
number of entrants in the market as well worldwide geopolitical events and
unexpected weather conditions.

Our Solutions

We understand that the participants in the energy derivatives market have
various investment needs, some of which may be as simple as trading speculative
futures, but most need a brokerage firm to provide the access to a larger amount
of counterparties with the highest transparency possible.  We provide the
following services to our clients:

o        OTC energy derivatives brokerage.  Once we receive an order to trade an
         OTC market derivative from a client, we find through our network the
         appropriate counterparty for such trade. We also offer our services for
         lesser used derivatives such as "swaptions", which terms slightly vary
         from an option for swaps;

o        Energy futures derivatives services on the floor of the NYMEX, which
         was launched in April 2004. Such services were provided through an
         affiliate, Capital Energy Services LLC ("CES") in 2006 and are now
         provided through one of our subsidiaries, OPEX International, Inc.,
         since February 2007;

o        We have completed the initial phase of OPEX, which is an electronic
         brokerage platform automating the energy derivatives between
         counterparties. We believe that OPEX significantly improves the
         liquidity and transparency of natural gas and other energy derivatives
         market by increasing number of participants in a market in which they
         receive real-time market data. Since our launch of OPEX in 2006, an
         increasing number of OTC derivatives have been traded directly by our
         clients on such platform.  For the month of February 2007, trades
         executed directly on OPEX by our clients constituted 17% of our volume
         of OTC cleared contracts; and,

o        We also complement our fee-based services with derivatives valuation
         and mark to market services called OPEX Analytics.  At the request of
         several of our existing clients, and based on our experience and
         knowledge of the markets as well as wide network of counterparties, we
         can periodically assist our clients in valuing their positions in the
         natural gas derivatives market.  We believe that the demand for this
         service from market participants will increase possibly creating new
         revenue opportunities from 1) subscription fees as well as
         2) additional brokerage fees related to price discoveries resulting
         from the mark to market services.

Those solutions can be applied to the trading of other energy derivatives as
well.  Additionally, the combination of those services provide for larger choice
of investment opportunities for participants in the energy derivatives market,
including natural gas.

Generally, the nature and mechanics of our business is to inquire of our clients
their needs in the trade of energy options, swaps, and futures. Once we
understand their needs: in the case of NYMEX futures or options, the trade is

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presented on the NYMEX through OPEX International, Inc.; and in the case of OTC
swaps and options, we inquire of other clients whether they are interested in
participating in such transaction or they can access such information through
our electronic platform, OPEX. Once the counterparties agree on a certain trade,
they either execute it directly on OPEX or we match the counterparties and
consummate the trade by (i) in the case of a bilateral OTC trade, confirming the
details of the executed trade with both counterparties or (ii) in the case of a
cleared trade, submitting such trade to an exchange.

Presently, OTC brokerage is facilitated by brokering trades between our clients
via telephone and electronic messaging, often referred to as voice brokerage.
By building a relationship with our existing and potential clients, our brokers
learn about their interests and opportunities they are seeking. We complement
our traditional voice brokerage with electronic trading by offering a
hybrid combination of voice and electronic transactions; clients move between
voice and electronic trading with no loss in liquidity. Our clients are able to
transact in the same markets, regardless of whether or not they entered orders
electronically or through a broker.

Central to OPEX is the trade-matching engine, which is designed to facilitate
real-time trading of derivative products irrespective of a particular market.
Based on our experience in trading and brokering OTC swaps and options, we
devoted significant attention to the user experience and user-interface
ergonomics. In designing the system, we were cognizant of the way traders
currently execute their trades and how they could comfortably transition to an
electronic trading platform. The outcome is a graphical user interface that is
both simple and intuitive to use.

OPEX's trading platform (for which there are pending patents) was designed with
the aid of professional options traders to facilitate strategies that are
currently executed on the OTC, commodity and equity exchanges. The user can
customize the system to execute various options trading strategies.

Strategy

We intend to employ the following key strategies to achieve our goal of being a
leading facilitator of energy derivatives:

o        Increase revenues from existing and new clients by offering OPEX, which
         could automate some of the transactions now handled by voice brokerage
         and provide more pertinent market information to our clients, improving
         the liquidity and transparency of the energy derivatives market;
o        Expand the number of clients who actively trade in the energy
         derivatives market, or "market-makers" and facilitate our search of
         counterparties for more complex derivatives traded on the OTC market.
         We could, for example, enter into order flow agreements with certain
         market makers which would support certain dedicated markets in
         consideration of warrants in our common stock;
o        Significantly expand our depth in product offerings of other energy
         derivatives products.  In 2006, we offered several new OTC energy-based
         derivatives contracts to our client base;
o        Develop new strategic relationships, such as marketing and technical
         relationships with exchanges and other brokers within the energy
         derivatives community, which will allow us to brand and market each
         other's solutions to our industry participants as well as integrate our
         technology with theirs.  In January 2007, we signed a binding term
         sheet with NYMEX Holdings, Inc., the parent company of NYMEX, in which
         both parties have agreed to deepen their cooperation of their
         marketing and technology relationships.  With brokers, we could license
         our technology for a share of the brokerage fees;
o        Acquire small brokerage firms in other energy or commodity markets
         which would accelerate our time to market products in such segments;and
o        Acquire small technology concerns accelerating the development and
         enhancement of features and functionalities of OPEX.

HOW WE GENERATE REVENUES

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We generate revenues by charging commissions fees based on the OTC market
transactions we submit for trading on behalf of our clients or that they execute
directly on OPEX. Our fees for brokerage services and the use of OPEX are the
same.  For options and swaps are up to $5.00 per contract (natural gas-10,000
million British thermal units (mmBtu);crude oil-1,000 barrels) of natural gas or
crude oil. Our fees are earned on the date of the trade. Our monthly average fee
per OTC natural gas contract varied between $0.90 $1.36 during 2006.

We also receive incentives from NYMEX. The incentives are earned based on a
percentage of the total revenues received by the exchange attributable to our
volume of OTC market transactions submitted to the respective exchanges. Under
this incentive program offered by NYMEX, 25% of the revenues from NYMEX
ClearPort are allocated to an intermediary incentive pool. At the end of each
month, the qualifying intermediaries, including us, receive their pro-rata share
based on the volume for which they were responsible. There is no minimum volume
requirement in order to participate.

Furthermore, through CES in 2006 and through OPEX International, Inc. since
February 2007, we generate revenues from the futures market, which are
commission fees based on transactions they broker on behalf of their clients.
Prior to January 2007, in return for such revenues from CES, we assume all
expenses associated with the futures market incurred by CES, including brokerage
commissions paid by CES to its employees. The transactions facilitated by CES
consist mostly of options and futures contracts on natural gas, which fees
ranged between $1.00 and $1.50 per 10,000 mmBtu of natural gas, per contract.
Effective February 2007, OPEX International, Inc., will earn all revenues and
assume all expenses associated with the futures market.

HOW WE MARKET OUR SERVICES

We market our brokerage services through our broker-employees. We market our
services by providing information on specific transactions or market conditions
to our existing and prospective clients. For example, we provide a daily report
of most notable trades and an analysis of the forward six-month volatility of
natural gas and crude oil derivatives to over 200 trading desks. Our
broker-employees conduct their sales activities from our office facilities in
Valhalla, New York and on the floor of the NYMEX. We market our OPEX system
primarily by providing demonstrations, training, sales events, advertising, and
sales collateral to our existing and potential clients. We will also market OPEX
using an arcade on the NYMEX trading floor.

HOW WE OPERATE

Our OTC brokerage operations are conducted from our Valhalla, New York, office
and our floor operations are conducted from the floor of the NYMEX. We have 10
brokers who interact heavily with our existing and potential clients. Generally,
the nature and mechanics of our business is to inquire of our clients needs in
the trading of energy derivatives. Once we understand their needs: in the case
of futures market derivatives, the trade is presented on the NYMEX through CES
and now OPEX International, Inc.; and in the case of OTC market derivatives, we
inquire of other clients whether they are interested in participating in such
transaction and facilitate the negotiation and conclusion of an agreement
between counterparties or they keep apprised of market conditions using OPEX.
Once the counterparties agree on a certain trade, they either trade it directly
on OPEX or we match the counterparties and consummate the trade by (i) in the
case of a bilateral OTC trade, confirming the details of the executed trade with
both counterparties or (ii) in the case of a cleared OTC trade, submitting such
trade to an exchange.

We also leverage our employees located at NYMEX, who typically handle futures
transactions, to find counterparties for OTC transactions.

We rely heavily on communication technology to interact with our clients,
whether by phone, e-mail, and/or instant messaging. We also rely on Internet
based communications for the operation of OPEX.

We keep abreast of conditions in the energy trading market by receiving
information using a combination of technology, such as analytics software as
well as market data services, relevant business news from different wire
services and traditional broadcast as well as leveraging the presence of our
employees on the NYMEX floor.

BUSINESS ALLIANCES

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In April 2004, we entered into a Master Services Agreement with CES.
Edward J. O'Connor, our President, is a shareholder of CES. Kevin P. Cassidy,
our Chief Executive Officer is also a shareholder of and managing director of
CES. We provided CES with marketing and brokerage support services for the NYMEX
business. We agreed to pay CES (a) a minimum fixed annual fee of $50,000
payable in 24 bi-monthly installments of $2,083, for the duration of the
contract and (b) a deferred payment of $1,525,000. During April 2005, CES
assigned its rights to the Company's liability of $1,525,000 equally to Edward
O'Connor and Kevin Cassidy.

CES made monthly payments to us equal to (a) the gross receipts of the floor
business, which consists of commission fees on natural gas future transactions
less (b) brokerage expenses less the amount of the bimonthly fees paid. If gross
receipts in any month are less than brokerage expenses less the amount of the
bimonthly fees paid, we paid the difference to CES.  This agreement was
terminated on January 31, 2007.

On January 22, 2007, we, Mark Nordlicht, our Chairman of the Board,
Kevin Cassidy, our Vice Chairman and Chief Executive Officer, and
Edward O'Connor, our President (collectively, the "Founding Stockholders"), and
NYMEX Holdings, Inc. (the "Investor") entered into a binding term sheet (the
"Term Sheet") pursuant to which Messrs. Nordlicht, Cassidy and O'Connor have
agreed to sell 7,000,000, 1,491,448 and 1,800,000 shares, respectively, of our
common stock, par value $0.0001 per share (the "Common Stock"), to the Investor.
This aggregate of 10,291,448 shares (the "Purchased Shares") represents nineteen
percent (19%) of the currently outstanding shares of Common Stock on a fully
diluted basis (without giving effect to the warrant discussed below). The
purchase price to be paid by the Investor for the Purchased Shares is $2.69 per
share. Pursuant to the Term Sheet, we agreed to issue the warrant described
below to the Investor, in consideration of the Investor's agreement to engage in
certain joint marketing and cobranding activities and to provide hosting of our
servers and assistance in joint technology development. In addition, the
Investor and us agreed to certain arrangements with respect to OTC products
which the Company clears through the clearing system.

The warrant to be issued by us (the "Warrant") will permit the Investor to
purchase a number of shares of Common Stock sufficient to increase the
Investor's ownership of the Company's Common Stock to an amount not to exceed
40% of our then outstanding Common Stock on a fully diluted basis, based on the
assumption that the Investor has retained ownership of the Purchased Shares. The
Warrant will be exercisable from time to time for a period of 18 months from the
closing date of the transactions contemplated by the Term Sheet at an exercise
price per share equal to $4.30 (the "Exercise Price"). The Warrant will not
contain a cashless exercise feature. The Exercise Price will be subject to
certain customary adjustments to protect against dilution.

The transactions contemplated by the Term Sheet will be evidenced by definitive
agreements (the "Definitive Agreements") which will contain representations,
warranties, covenants, indemnities and conditions precedent customary and
appropriate for this type of transaction including, but not limited to,
representations, warranties, covenants and indemnities from each of the Founding
Stockholders, the Company and the Investors.


The closing of the transactions contemplated by the Term Sheet is subject to
certain conditions precedent set forth in the Term Sheet, including,

(i) the Investor being satisfied, in its sole and reasonable discretion, with
its legal, accounting, regulatory, business and other due diligence
investigation of the Company, which will be completed prior to the execution of
the Definitive Agreements,

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(ii) the execution and delivery of mutually acceptable Definitive Agreements
within sixty (60) days of the date of the execution of the Term Sheet, (iii) the
delivery of mutually acceptable employment agreements with our key management
and executives, other than Mr.Cassidy, which will include customary
non-competition and non-solicitation provisions, and the delivery of a mutually
acceptable non-competition agreement with Mr. O'Connor and (iv) Mr. Nordlicht's
agreement to waive any obligation on our part to make any prepayment of
principal or to begin paying interest upon amounts due to Mr. Nordlicht under
the Loan Agreement between him and us, dated March 22, 2004, as a result of any
exercise by the Investor of the Warrant.

If the Investor does not inform us within 3 weeks of being provided substantial
access to due diligence that it is satisfied with its due diligence review and
that it intends to proceed with the transaction, we and the Founding
Stockholders will be entitled, in their sole discretion, to terminate the
transaction by written notice to the Investor.

Effective upon closing of the transactions contemplated by the Term Sheet and
for so long as the Investor owns at least 5,145,724 shares of Common Stock, the
Investor will be entitled to designate one (1) person (reasonably acceptable to
the Company) that we are required to nominate as a member of our board of
directors (the "Investor Director"), and each of the Founding Stockholders shall
be required to vote their shares in favor of the election of the Investor's
designation. For so long as the Investor owns at least 5,145,724 shares of
Common Stock, the Investor will be required to vote its shares in favor of each
individual nominated for election as a member of our board of directors by our
nominating committee. For so long as the Investor owns at least 5,145,724 shares
of Common Stock and subject to certain permitted threshold amounts, the consent
of the Investor Director (which may not be unreasonably withheld) will be
required before we may take certain actions including (i) issuances of shares of
a class of stock ranking senior to the Common Stock, (ii) acquisitions of
businesses or assets, (iii) entry into related party transactions, (iv) the
payment of dividends on, or the optional redemption of, capital stock or the
issuance of debt and (v) entry into any business which is not similar, ancillary
or related to any of the businesses in which we are currently engaged.

For so long as the Investor owns at least 5,145,724 shares of Common Stock: (i)
each of the Founding Stockholders and the Investor will have a right of first
refusal to purchase or subscribe for their pro rata percentage of shares in
certain subsequent sales by the us of Common Stock and/or certain other
securities convertible into or exchangeable for Common Stock, (ii) each of the
Founding Stockholders and the Investor will have certain rights of first refusal
with respect to proposed sales of Common Stock by the others and (iii) before
they may accept any offer by an independent third party to acquire fifty percent
(50%) or more of the total voting power of our Common Stock or voting stock, the
Founding Stockholders and we will be required to provide notice of such offer to
the Investor and permit the Investor a period of 10 days to make its own offer.

In connection with the Purchased Shares, we will enter into a registration
rights agreement with the Investor which, among other things, will provide the
Investor, subject to standard exceptions, with (i) unlimited "piggyback" rights
subject to standard underwriter lock-up and cutback provisions and (ii) the
right to two demand registrations for underwritten offerings or take downs
off of a shelf registration statement, provided that (A) a minimum of $5,000,000
of Common Stock are offered in such a demand registration or take down and (B)
we shall not be obligated to effectuate more than one underwritten offering
pursuant to a demand registration by the Investor in any six-month period. In
addition, if are eligible to register its securities on Form S-3 (or any
successor form then in effect), the Investor will be entitled to unlimited
registrations on Form S-3 (or any successor form then in effect), including
shelf registrations, provided that (x) a minimum of $5,000,000 of Common Stock
are offered in such an S-3 registration and (y) we will not be obligated to
effect more than two S-3 registrations in any twelve month period. An S-3
registration will not count as a demand registration, unless such registration
is for an underwritten offering.

The Investor will enter into a standstill agreement with us pursuant to which
the Investor, with certain limited exceptions, will agree not to purchase any
additional shares of the our Common Stock until the one year anniversary of the
closing date of the transactions contemplated by the Term Sheet.

The closing of the transactions contemplated by the Term Sheet is expected to
occur as soon as reasonably practicable after the date of execution of the Term
Sheet. The provisions of the Term Sheet are subject to, among other things,
satisfactory completion of due diligence by the Investor. There can be no
assurance that the transactions contemplated by the Term Sheet will close.

CLIENT CONCENTRATION

                                       10

<PAGE>

One of our clients, Bank of Montreal, accounted for 24% and 18% of our revenues
during 2006 and 2005, respectively.

COMPETITION

The energy derivatives market has many competitors involved in the brokering of
natural gas options. Capital investment for entry into the market is low.
Accordingly, a number of small brokerage firms flourish along side of larger
more established brokerage firms such as Cantor Fitzgerald, L.P., MAN Group
PLC and ICAP PLC.

There are several other well-financed companies who do or may compete with us.
In the OTC natural gas derivatives market, our competitors include Choice
Energy LP, ICAP PLC, GFI Group, Inc., G.A. Options, MAN Financial, Inc. FIMAT
Internationale Banque, S.A., TFS, Inc., Tullet Natsource, Inc. In the futures
natural gas derivatives market, our competitors include Clarion Trading, SCS
Trading Corp., and ICAP PLC. OPEX competes with offerings from ICE. To date, we
do not believe any one company has achieved a dominant position.

As the emerging market for electronic energy derivatives develops, more
competitors are likely to emerge.

We believe that the principal competitive factors in our market include:

o        Access to a large number of financially-sound participants;
o        Timeliness in finding willing counterparties;
o        Client service and support;
o        service functionality, quality and performance of the electronic
         trading system;
o        ease of use, reliability and security of electronic trading system;
o        establishing a significant sales force;
o        ability to introduce new products to the market in a timely manner; and
o        pricing.

We currently differentiate from the competition by offering electronic and
traditional access to energy derivatives on both the futures market and the OTC
market.  We also differentiate by offering derivatives products, such as
swaptions which are not commonly offered by other brokerage firms.  Furthermore,
we have a number of blue-chip clients which actively and regularly trade in this
market which facilitates our search of counterparties and allows us to trade
quickly on behalf of our clients.

EMPLOYEES

We currently have 18 full-time employees. We also have a consultant who serves
as the Chief Technology Officer, and a consultant who serves as our Chief
Financial Officer as well as five other software engineers who are consultants.
The number of employees that we intend to hire is dependent on our clients'
needs and the infrastructure required to support such needs. We believe that our
relationship with our employees and consultants is good.

PATENTS, TRADEMARKS AND LICENSES

We have four patents pending at this time, most importantly those related to a
system and method for real-time trading over a computer network and a system and
method for trading selectable market transactions over a network

We have registered a trademark for "Optionable" and use OPEX as a service mark.

                                       11

<PAGE>

Although we have several patents pending which relate to our electronic trading
system, we do not solely depend on those patents to protect our intellectual
property. Furthermore, the benefit that would be afforded by those patents has
not been relied upon in our business plan, although we do feel that the patents
would benefit our position in the marketplace. We have taken various steps to
protect our intellectual property including non-disclosure agreements,
confidentiality agreements and other general precautions taken to keep the
information confidential.

RESEARCH AND DEVELOPMENT

We incurred approximately $474,000 and $450,000 in expenses on research and
development during 2006 and 2005. Most of the key members of our research and
development team have been working on OPEX since 2004.

GOVERNMENT REGULATION

The OTC brokerage business is not officially regulated. However, we have given
notice to the Commodity Futures Trading Commission ("CFTC") of our intention to
operate the OPEX electronic trading platform as an Exempt Commercial Market.
Exempt Commercial Markets are subject to certain information access rules
established by the CFTC.

The futures derivatives market in which our affiliate, CES, operated, and now
our subsidiary, OPEX International, Inc. is regulated by the CFTC and National
Futures Association.

ITEM 2. DESCRIPTION OF PROPERTY

Our headquarters are located in Valhalla, New York since January 2007. The
offices consist of approximately 5,500 square feet. We moved from a smaller
office located in Briarcliff Manor, NY.

The lease in Briarcliff Manor expired in January 2007. The annual base rent was
$66,817 payable in monthly installments of $5,568. We also pay our proportionate
share of any increase in real estate taxes or common area maintenance charges.

Our new 10-year lease provides for payments of  a monthly base rent of $9,953,
increasing gradually to up to $11,684.  The first 6 months of occupancy are
free.

We believe our space is adequate for our current and foreseeable future
operations.

  ITEM 3.         LEGAL PROCEEDINGS

None


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


None.

                                       12

<PAGE>

                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
                  SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES


Our common stock is quoted on the Over-the-Counter Bulletin Board operated by
the National Association of Securities Dealers, Inc. Our shares are listed under
the symbol "OPBL."


The following table sets forth, for the fiscal quarters indicated, the high and
low closing prices per share of our common stock as reported on the
Over-the-Counter Bulletin Board. The quotations reflect inter dealer prices,
without retail mark-up, mark-down or commissions and may not represent actual
transactions.

     Year Ended December 31, 2006                     High        Low

         First Quarter                                $0.90       $1.50

         Second Quarter                               0.50        0.90

         Third Quarter                                0.50        0.75

         Fourth Quarter                               0.60        2.84

     Year Ended December 31, 2005

         First Quarter                                 N/A         N/A

         Second Quarter                                N/A         N/A

         Third Quarter                                1.25        1.00

         Fourth Quarter                               1.40        0.85





At March 12, 2007, the closing price for our common stock was $6.36.


At March 12, 2007, there were 52,182,514 shares of our common stock issued and
52,177,714 shares of our common stock outstanding. There are approximately 14
stockholders of record at March 12, 2007. During the last two fiscal years, no
cash dividends have been declared on our common stock and management does not
anticipate that dividends will be paid in the foreseeable future.

                                       13
<PAGE>


Equity Compensation Plan Information

<TABLE>
<CAPTION>

Optionable, Inc.   2004 Stock Option Plan and warrants issued for services


<S>                       <C>                         <C>                      <C>
                Number of securities           Weighted-average         Number of securities
                to be issued upon exercise     exercise price of        remaining available for
                of outstanding options,        outstanding options,     future issuance under
                warrants, and rights           warrants, and rights     equity compensation
                                                                        plans (excluding
                                                                        securities reflected in
                                                                        column (a))


                           (a)                         (b)                      (c)


Equity compensation
plans approved by
security holders           941,000                      $0.26                   6,559,000


Equity compensation
plans not approved by
security holders           1,550,000                    0.68                    -



Total                      2,491,000                    $0.52                   6,559,000
</TABLE>




ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
                  PLAN OF OPERATION OVERVIEW AND PLAN OF OPERATIONS


We launched our electronic trading system, OPEX, in 2006. We believe that a
majority of our futures and OTC related revenues will continue to be generated
through voice-brokerage for the foreseeable future. We expect that in 2007,
revenues generated through OPEX will constitute a small but growing portion of
our revenues.  We expect that our research and development expenses to enhance
features and functionalities of OPEX will exceed $500,000 during 2007.

We expect that our cost of revenues will continue to grow at substantially the
same rate as our revenues during 2007, unless we make an acquisition which could
change our business model.  However, we believe that we may not be able to
continue to grow the revenues at the same sequential rate as we did in the last
quarter of 2006.

Pursuant to our binding term sheet with NYMEX- as discussed in
item 1 - Description of Business-Business Alliances, we are issuing
approximately 19,100,000 warrants to NYMEX. A significant portion of the fair
value of the warrants will be expensed during 2007.

We intend to hire brokers with a specialized knowledge of energy derivative
markets or acquire small brokerage firms operating in energy derivative segments
other than natural gas.

This discussion and analysis of our financial condition should be read in
connection with our financial statements and accompanying notes thereto for the
fiscal year ended December 31, 2005, including without limitation the
information set forth under the heading "Critical Accounting Policies and
Estimates".



                                       14
<PAGE>

<TABLE>
<CAPTION>
                              Results of Operations
                                   (Unaudited)


                                                     For the year ended                         Increase/            Increase/
                                                        December 31,                           (Decrease)           (Decrease)
                                       ------------------------------------------------         in $ 2006            in % 2006
                                               2006                      2005                    vs 2005              vs 2005
                                       ---------------------    -----------------------    --------------------    --------------
<S>                                    <C>                      <C>                        <C>                     <C>

Brokerage fees                          $       8,987,727         $       2,979,641          $     6,008,086               201.6%
Brokerage fees-related parties                  3,994,131                 2,087,215                1,906,916                91.4%
Incentives                                      3,087,653                   738,558                2,349,095               318.1%
                                       ---------------------    -----------------------    --------------------    --------------
Net revenues                                   16,069,511                 5,805,414               10,264,097               176.8%

                                       -                        -
Cost of revenues                                5,312,269                 2,264,110                3,048,159               134.6%

Cost of revenues-related parties                  909,291                   856,763                   52,528                 6.1%
                                       ---------------------    -----------------------    --------------------    --------------
                                                6,221,560                 3,120,873                3,100,687                99.4%

Gross profit                                    9,847,951                 2,684,541                7,163,410               266.8%

Operating expenses:
  Selling, general and administrative           1,030,979                   695,718                  335,261                48.2%

  Research and development                        473,645                   450,488                   23,157                 5.1%
                                       ---------------------    -----------------------    --------------------    --------------
     Total operating expenses                   1,504,624                 1,146,206                  358,418                31.3%

     Operating income                           8,343,327                 1,538,335                6,804,992               442.4%

  Other income (expense):

  Interest income                                 102,040                    21,548                   80,492               373.5%
  Interest expense-related parties              (780,137)                 (300,319)                  479,818               159.8%
                                       ---------------------    -----------------------    --------------------    --------------
                                                (678,097)                 (278,771)                  399,326                   NM

Net income before income tax                    7,665,230                 1,259,564                6,405,666               508.6%


Income tax                                    (1,459,052)       -                                  1,459,052                   NM
                                       ---------------------    -----------------------    --------------------    --------------

Net income                              $       6,206,178         $       1,259,564          $     4,946,614               392.7%
                                       =====================    =======================    ====================    ==============


NM:  Not meaningful
</TABLE>

                                       15
<PAGE>

RESULTS OF OPERATIONS

Revenues

Revenues consist primarily of fees earned from natural gas derivatives
transactions and related incentives arrangements. The increase in brokerage fees
and brokerage fees related party during 2006 when compared to 2005 is primarily
due to an increase in the brokerage fees resulting from an increased volume of
transactions of OTC natural gas derivatives contracts, and to a lesser extent,
natural gas derivatives traded on the futures market traded on behalf of
existing and new clients.   The increase in incentives revenues in 2006 when
compared to 2005 is primarily due to a higher volume of energy contracts cleared
on behalf of our clients through NYMEX' clearing system. The increase in
revenues resulted from a combination of general increase in volume of natural
gas options contract traded on the market as well as an increased share of the
market.

Cost of revenues

Cost of revenues and cost of revenues-related party consists primarily of
compensation of personnel directly associated with handling the OTC and floor
natural gas derivative transactions on behalf of our clients. The increase in
cost of revenues and cost of revenues-related party during 2006 when compared to
2005 is primarily attributable to increased commissions paid to our brokers
resulting from higher brokerage fees we earned.

Selling, general, and administrative expenses

Selling, general, and administrative expenses consists primarily of compensation
of personnel supporting our operations as well as professional fees, such as
legal fees, incurred to handle certain matters which occur during the course of
operations. The increase in selling, general, and administrative expenses during
2006 when compared to 2005 is primarily attributable to an increase in expenses
associated with being a public company, such as investor relations expenses and
professional fees.

Research and development

Research and development expenses consist primarily of compensation of personnel
and consultants associated with the development of our automated electronic
trading system. Our research and development expenses have remained at the same
levels during 2006 and 2005.

Interest income

Interest income consists of interest earned on interest-bearing accounts we hold
at various financial institutions.  The increase in interest income during 2006
when compared to 2005 is primarily due to higher balances held in such accounts
during 2006, resulting from higher cash provided from operating activities.

Interest expense to related parties

Interest expense to related parties consists of interest charges associated with
amounts due to related parties, Mark Nordlicht, our Chairman, Kevin Cassidy, our
Chief Executive Officer, and Edward O'Connor, our President. The increase in
interest expense to related parties is primarily due to the accelerated
amortization of debt discount associated with the amount due to Kevin Cassidy.
We have accelerated the amortization discount on this debt since we are
reimbursing the debt at a faster rate than initially contemplated.

Income Tax

                                       16
<PAGE>

Income tax expense consists of federal and state current and deferred income tax
based on our net income.  The increase in income tax expense during 2006 when
compared to 2005 is primarily due to our use of all prior year net operating
loss carryforwards during 2006.


LIQUIDITY AND CAPITAL RESOURCES

For the last three fiscal years, we have generated cash flows from our operating
activities.  Our cash balance as of December 31, 2006 amounts to approximately
$7.9 million.

During 2006, we generated cash from operating activities of approximately
$7.3 million, primarily resulting from:
o        net income of approximately $6.2 million, adjusted for non-cash
         interest expense of approximately $780,000 and fair value of warrants,
         options and shares issued during the period aggregating approximately
         $247,000; and
o        an increase in accounts receivable, incentive receivable, due from
         related party, accrued compensation and income tax payable of
         approximately $1.9 million, $1.2 million, $185,000, $1.5 million, and
         $1.5 million respectively, resulting from an increase in related
         revenues and corresponding expenses.

We used our cash generated from operating activities to make principal
repayments of approximately $559,000, $200,000 and $400,000 on amounts due to
Kevin Cassidy, our Chief Executive Officer, Edward O'Connor, our President and
former Chief Executive Officer, and Mark Nordlicht, our Chairman of the Board,
respectively.

During 2005, we generated cash of approximately $1.4 million from operating
activities, primarily resulting from:
o        net income of approximately $1.3 million, adjusted for non-cash
         interest expense and the fair value of warrants issued to Kevin
         Cassidy, our Chief Executive Officer of approximately $300,000 and
         $160,000, respectively;
o        an increase in accounts receivable of approximately $130,000, resulting
         from an increase in related revenues;
o        an increase of $150,000 in other receivable, resulting from our funding
         of security deposits held for the benefit of the NYMEX and a clearing
         house, to facilitate the trading of futures transactions we submit on
         behalf of our clients;

During 2005, we used our cash generated from operating activities to make
principal repayments of approximately $200,000, $50,000 and $180,000 on amounts
due to Kevin Cassidy, our Chief Executive Officer, Edward O'Connor, our
President and former Chief Executive Officer, and to Mark Nordlicht, our
Chairman of the Board, respectively.


We believe that our office facilities and equipment will be sufficient to meet
our needs for the foreseeable future. Accordingly, we anticipate that our
capital expenditures over the next twelve months will not be significant and
should not exceed $300,000.

We believe that our cash available and estimated cash flows from operations in
2007 will be sufficient to meet our obligations when they become due.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of significant accounting policies is included in Note 3 of the
accompanying audited financial statements for the year ended December 31, 2006.
Management believes that the application of these policies on a consistent basis
enables us to provide useful and reliable financial information about our
operating results and financial condition. Our financial statements and
accompanying notes are prepared in accordance with U.S. GAAP. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. Critical accounting policies for us include revenue recognition.

                                       17
<PAGE>

REVENUE RECOGNITION

Revenue is recognized when earned. Our revenue recognition policies are in
compliance with the Securities and Exchange Commission's Staff Accounting
Bulletin ("SAB") No. 104 "Revenue Recognition". The application of SAB No. 104
requires us to apply our judgment, including whether our clients receive
services over a period of time.

We generally invoice our clients monthly, for all transactions which have been
executed during such month. Revenues are recognized on the day of trade-trade
date basis. Our revenues derive from a certain predetermined fixed fee of the
transactions we execute on behalf of our clients. The fee is based on the volume
of financial instruments traded. We base our fees on oral and written contracts
and confirm the fees in writing upon the execution of each transaction.

We also receive incentives from NYMEX and ICE for the volume of OTC transactions
we submit to their clearing platforms on behalf of our clients. The incentives
are based on a percentage of the total revenues received by the exchange
attributable to our volume of transactions submitted to the respective
exchanges. We also apply our judgment when making estimates monthly of such
incentives based on the volumes of transactions submitted to the respective
exchanges and the exchanges' published revenues by type of transaction.

We, pursuant to SAB 104, realize the incentive revenues realized or realizable
when all of the following criteria are met:

1) Persuasive evidence of an arrangement exists. We have a written separate
agreement with one of the exchanges. The other exchange has publicly published
the initial terms of its incentive program in 2003 which it modified in 2005 and
is offered to all intermediaries in the select transactions;

2) Delivery has occurred or services have been rendered. Under arrangements with
both exchanges, the incentives are earned on the day we submit transactions to
the respective exchanges based on the revenues generated from such transactions
and are no longer subject to minimum volume of transactions to the respective
exchanges. We account for all transactions submitted to each exchange on a daily
basis. Accordingly, we are able to determine when the incentives are earned
based on the date we submit transactions to the exchanges. We have no other
obligations to the exchanges to earn the incentives;

3) "Seller's" price to the buyer is fixed or determinable. Based on the
incentive program terms of each exchange, their published prices for the type of
transactions we submit to them, and our transactions records, we are able to
determine an estimate for the revenues each exchange earns in connection with
the transactions it submits, and accordingly, the amount, if any of the
incentives we earn in connection with such transactions; and

4) Collectibility is reasonably assured. Both exchanges have paid us timely
during 2005 for incentives earned in the prior quarter. We have no knowledge
that they do not intend to pay these incentives, if earned, in the future.
Furthermore, we intend to enforce the payment of any incentives receivable under
the incentive programs. Certain risk factors which may impact our business,
results of operations and financial condition Our binding term sheet with NYMEX
provides that we issue approximately 19,100,000 warrants to them and we will
have to expense a significant portion of the fair value of the warrants during
2007 in addition to an increase in our weighted average common share equivalent
for earnings per share purposes

Pursuant to our binding term sheet with NYMEX, we will issue approximately
19,100,000 warrants to them and we will have to expense a significant portion of
the fair value of the warrants during 2007, which will result in a significant
decrease in our net income and possibly, generate a loss.  Furthermore, this
will increase in our weighted average common share equivalent for earnings per
share purposes if we have net income.

We may not be successful in implementing with NYMEX the marketing and technology
cooperation programs as contemplated by the binding term sheet

Our relationship with NYMEX is relatively new and we may not be successful in
implementing with NYMEX the marketing and technology cooperation programs as
contemplated by the binding term sheet.

                                       18
<PAGE>

For example, the binding term sheet provides for the hosting of OPEX by NYMEX.
NYMEX may not be able to properly handle the hosting of OPEX to the satisfaction
of our clients for a number of reasons-  lack of familiarity with the software,
lack of interest of a technology not owned by NYMEX, incompatibility of OPEX
with the existing NYMEX infrastructure.  Should NYMEX not host OPEX to the
satisfaction of our clients, it would impact OPEX's market acceptance and have
material negative impact on our results, operations, and financial condition.

Most, if not all cooperation programs will depend on our relationship standing
with NYMEX and whether the parties perceive that both can contribute to the each
other's success.  We cannot guarantee that we will continue to have a good
relationship with NYMEX and, accordingly, we cannot guarantee that we will be
able to implement all cooperation programs successfully.  If we are unable to
implement one or more of the cooperation programs successfully, it will have a
material negative impact on our results, operations, and financial condition.

Our business plan partly relies on market acceptance of our OPEX system to
increase our revenues.

While we are presently engaged primarily in voice brokerage, our business plan
calls for OPEX to be a major contributor to our success. We must continue to
grow our revenues through our existing services and by gaining market acceptance
of OPEX.  While the initial results of OPEX are promising, it has not reached
full market acceptance yet and it make take a few years before it does.  If OPEX
does not gain market acceptance, it may have a material negative effect on our
financial prospects.

Our quarterly financial results will continue to fluctuate making it difficult
to forecast our operating results.

Our quarterly operating results have fluctuated in the past and we expect our
revenues and operating results may vary significantly from quarter to quarter
due to a number of factors, many of which are beyond our control, including the
following:  geopolitical events, weather, perceived supply and demand
imbalances, and the number of trading days in each quarter

We have incurred losses through fiscal 2004 and we may incur losses in the
future, which may cause us to curtail our current operations and our development
of OPEX.

We have incurred losses through fiscal 2004 and have since become profitable. We
may again operate at a loss in the future and we cannot assure you that we will
be successful in maintaining positive cash flow and profitable operations.
Accordingly, our ability to operate our current business and implement OPEX may
be hampered by negative cash flows and liquidity problems in the future, and the
value of our stock may decline as a result. For example, in the past,
we suspended the development and implementation of OPEX for a year, in part
because of our negative cash flow.

Our pricing model for OPEX services is unproven and may be less than
anticipated, which may harm our gross margins.

The pricing model of our OPEX services may be lower than expected as a result of
competitive pricing pressures, promotional programs and clients who negotiate
price reductions in exchange for longer term purchase commitments or otherwise.
Our pricing model depends on the specific requirements of the order, purchase
volumes, the sales and service support and other contractual agreements. We
expect to experience pricing pressure and anticipate that the average selling
prices and gross margins for our products may decrease over product life cycles.
We may not be successful in developing and introducing on a timely basis new
products with enhanced features and services that can be sold at higher gross
margins.

The terms of the employment agreement with our Chief Executive Officer may erode
our profitability and dilute the price our shareholders could receive in the
event another company acquires us.

                                       19


<PAGE>
We believe that the employment arrangement with our Chief Executive Officer,
Kevin Cassidy, may decrease our profitability and cash flows from operating
activities if our revenues decrease or if we are unable to increase our revenues
in an amount sufficient to cover the additional cash and stock-based
compensation we will pay to Kevin Cassidy. Kevin Cassidy's fixed compensation
will gradually increase from the $215,000 we paid him as a consultant to
$350,000 by 2009.  Also, Kevin Cassidy's compensation agreement provides that
beginning with the first month of the quarter in which the amount payable to
Kevin Cassidy is fully paid, he will be paid additional cash and stock-based
compensation amounting to 5% and 2%, respectively, of our gross revenues.
Furthermore, we will issue options to Kevin Cassidy equal to 20% of the number
of shares of common stock issuable under warrants which become exercisable
pursuant to any Order Flow Agreements (Order Flow Agreements are the agreements
under which we issue warrants to a firm based on the volume of orders the firm
placed with us). Finally, we will issue to Kevin Cassidy 5,000 options each time
a firm registers with and executes its first 10,000 lots on our OPEX platform.
The total number of such options will be limited to 2,500,000.   The variable
compensation expense pursuant to Kevin Cassidy's employment contract amounted to
approximately $970,000 during 2006.

In the event we are acquired by another company, we would have to pay to Kevin
Cassidy up to approximately $650,000, which could reduce the amount our
shareholders would have otherwise received as part of this potential
acquisition.

We may face difficulties in transitioning our clients from voice brokerage to
electronic trading or a combination of both.

By launching OPEX, we intend to retain existing clients and attract new clients
to our services. Our experience in marketing and supporting electronic trading
services is limited. We may need to supplement our existing staff with marketing
and support personnel with more extensive experience in these areas, which would
increase our operating expenses and cost of revenues. Additionally, management
will need to expend significant time and resources to ensure a smooth transition
from voice brokerage to electronic trading or a combination of both, which could
distract management from maintaining or expanding our operations.

Existing clients may resist the transition to electronic trading. New and
existing clients may be unsatisfied with the support we provide for electronic
trading and may prefer continuing with voice brokerage or discontinue our
relationship based on actual or perceived problems they experienced in using our
services. The loss of new or existing clients could decrease the market
acceptance of our products, harm our reputation and reduce our revenues from
existing clients. This could have a negative effect on our business, operations,
and financial condition.

We may face increased credit risks when expanding our client base and from
volatile fluctuations in prices of natural gas and related derivatives.

One of our clients accounted for 24% of our revenues during 2006. On OTC
transactions, we bill our services to both counterparties. Accordingly, if this
client would not have entered into a portion or all of the OTC transactions
in which they were involved, our 2006 revenues could have been lower if we.
wouldn't have been able to find a suitable counterparty to replace them in such
transactions.  To mitigate our reliance on this client, we are attempting to
expand our client base and our product offerings in other energy derivative
products in which they would not be a market maker. In attempting to diversify
and expand our client base, some of our new clients, such as hedge funds and
individual traders, may have higher credit risks than certain of our existing
clients, which are financial institutions.  The financial positions of these new
clients may impact our ability to collect our fees generated from the
transactions we submit on their behalf.  Additionally, volatile fluctuations in
prices of natural gas and related derivatives may adversely impact the financial
position of certain of our clients which may not have the resources to pay us
for past services or may reduce the volume of transactions we would handle on
their behalf in the future.  This could have a negative effect on our business,
operations, and financial condition.

                                       20
<PAGE>

We cannot be certain that we will be able to protect our proprietary information
and intellectual property, which we rely on to maintain our competitive
position.

We rely on our proprietary information and intellectual property to maintain our
competitive position. We may not be able to protect a significant portion of our
proprietary information, such as our client lists, since we do not have
confidentiality agreements with some of our employees. Accordingly, we may not
be able to effectively prevent disclosure of our proprietary information and we
may not have an adequate remedy in the event of unauthorized disclosure of such
information. We cannot assure you that measures we take to protect our
proprietary information and intellectual property will be successful or that
third parties will not develop alternative solutions that do not infringe upon
our intellectual property.

We also have patent applications pending, which are intended to protect certain
of our proprietary technology relating to our planned OPEX business. We have
been cautious in seeking to obtain patent protection for our products, since
patents often provide only narrow protection that may not prevent competitors
from developing products that function in a manner similar to those covered by
our patents. In addition, some of the foreign countries in which we plan to sell
our OPEX system do not provide the same level of protection to intellectual
property as the laws of the United States.

Potential liability for infringement claims might deter clients from using our
OPEX system.

We could be subject to intellectual property infringement claims by others.
Potential clients may be deterred from using our OPEX system for fear of
infringement claims. If, as a result, potential clients forego using our OPEX
system, demand for our services and applications could be reduced which would
harm our business. Claims against us, and any resulting litigation, should it
occur in regard to any of our services and applications, could subject us to
significant liability for damages including treble damages for willful
infringement. In addition, even if we prevail, litigation could be
time-consuming and expensive to defend and could result in the diversion of our
time and attention. Any claims from third parties may also result in limitations
on our ability to use the intellectual property subject to these claims. Claims
that we are infringing the intellectual property rights of third parties could
have a negative effect on our business, revenues, financial condition and
results of operations.

We may rely on strategic relationships to promote our OPEX system and for access
to licensed technology; if we fail to develop, maintain or enhance these
relationships, our ability to serve our clients and develop new features and
functionalities could be harmed.

Due to the evolving nature of our industry, we may need to develop relationships
to adapt to changing technologies and standards and to work with newly emerging
companies with whom we do not have pre-existing relationships. For example, it
may be important to our clients that OPEX integrates seamlessly with the
technology used by exchanges. While we have a technology-sharing relationship
with NYMEX, we do not have one with other exchanges to ensure such seamless
meshing of our respective technologies as they now exist or as they may be
enhanced in the future. We cannot be certain that we will be successful in
maintaining or developing new relationships, technological or otherwise, or that
such relationships will view them as significant to their own business or that
they will continue their commitment to us in the future. If we are unable to
maintain or enhance these relationships, we may have difficulty strengthening
our technology development and increasing the adoption of our OPEX system.

If we fail to enhance our OPEX system by introducing new features and
functionalities in a timely manner to meet changing client requirements and
emerging industry trends or standards, our ability to grow our business will
suffer.
                                       21
<PAGE>

The market for electronic trading systems is characterized by rapidly changing
technologies and short product life cycles. These market characteristics are
heightened by the emerging nature of the Internet and the continuing trend of
companies from many industries to offer Internet-based applications and
services. The widespread adoption of the Internet, networking, electronic option
trading, or telecommunications technologies or other technological changes could
require us to incur substantial expenditures to modify or adapt our operating
practices or infrastructure. Our future success will depend in large part upon
our ability to:

o        identify and respond to emerging technological trends in the market;

o        enhance our products by adding innovative features that differentiate
         services and applications from those of our competitors;

o        acquire and license leading technologies;

o        bring new services and applications to market and scale our business on
         a timely basis at competitive prices; and

o        respond effectively to new technological changes or new product
         announcements by others.

We will not be competitive unless we introduce new features and functionalities
to our OPEX system that meet evolving industry standards and client needs. In
the future, we may not be able to address effectively the compatibility and
interoperability issues that arise as a result of technological changes and
evolving industry standards. The technical innovations required for us to remain
competitive are inherently complex, require long development schedules and are
dependent in some cases on sole source suppliers. We will be required to
continue to invest in research and development in order to attempt to maintain
and enhance our existing technologies and products, but we may not have the
funds available to do so. Even if we have sufficient funds, these investments
may not serve the needs of clients or be compatible with changing technological
requirements or standards. Most development expenses must be incurred before the
technical feasibility or commercial viability of new or enhanced services and
applications can be ascertained. Revenue from future services and applications
or enhancements to services and applications may not be sufficient to recover
the associated development costs.

The technology underlying our OPEX system is complex and may contain unknown
defects that could harm our reputation, result in product liability or decrease
market acceptance of our services and applications.

The technologies underlying financial services and applications are complex and
include software that is internally developed. Software products using these
technologies may contain errors or defects, particularly when first introduced
or when new versions or enhancements are released. We may not discover software
defects that affect our current or new services and applications or enhancements
until after they are sold. Furthermore, because our services and applications
are designed to work in conjunction with various platforms and applications, we
are susceptible to errors or defects in third-party applications that can result
in a lower quality product for our clients. Because our clients depend on us for
digital media management, any interruptions could:

o        damage our reputation;

o        cause our clients to initiate product liability suits against us;

o        increase our product development resources;

o        cause us to lose revenues; and

o        delay market acceptance of our products.


A significant portion of our revenues is from incentives from a U.S. exchange.
We may not receive those incentives in the future.

                                       22
<PAGE>

We receive incentives from NYMEX which accounted for 19% of our revenues during
2006. The incentives are earned based on a percentage of the total revenues
received by the exchange attributable to our volume of transactions submitted to
the respective exchanges. The incentives earned from NYMEX are based on a
program offered to all brokers, traders, and energy traders initially launched
in 2003. NYMEX has amended the terms of its initial incentive program by
decreasing the incentive rate by 50%. NYMEX may amend the terms of the
incentives or cancel this program at any time. While we are attempting to secure
the long-term continuation of this program with NYMEX, we may not be successful
in our attempts. We may agree to some or all of any requested changes.
Accordingly, we cannot guarantee that we will continue to receive the level of
such incentives in the future, if at all. If we do not receive these incentives,
our revenues will decrease.

We rely heavily on the services of our overseas technical staff and consultants
which may delay or jeopardize the development and enhancement of OPEX

We rely heavily on the services of our technical staff and consultants. Our
technical employees are not presently employed on a full time basis. With the
exception of our chief technology officer and a senior developer, all our
technical staff, including our software engineers and our software quality
assurance team, is located overseas.  If we are unable to maintain our
relationship with these individuals and if we have to replace them with
individuals with similar capabilities, this could delay or jeopardize the
development and the enhancement of OPEX.

We face intense and increasing competition in the electronic energy derivatives
market. If we do not compete effectively or if we experience reduced market
share from increased competition, our business will be harmed.

There are several other well-financed companies who do or may compete with us.
In the OTC natural gas derivatives market, our competitors include  ICAP PLC,
Choice Energy LP, G.A. Options, MAN Financial, Inc. and Tullet Natsource, Inc.
In the futures natural gas derivatives market, our competitors include Clarion
Trading, SCS Trading Corp., and ICAP PLC. Some of the features of OPEX compete
with some of ICE's offerings.

Substantially all of our competitors have more capital, longer operating
histories, greater brand recognition, larger client bases and significantly
greater financial, technical and marketing resources than we do. These
competitors may also engage in more extensive development of their technologies,
adopt more aggressive pricing policies and establish more comprehensive
marketing and advertising campaigns than we can. Our competitors may develop
products and service offerings that we do not offer or that are more
sophisticated or more cost effective than our own. For these and other reasons,
our competitors' products and services may achieve greater acceptance in the
marketplace than our own, limiting our ability to gain market share and client
loyalty and to generate sufficient revenues to achieve a profitable level of
operations. Our failure to adequately address any of the above factors could
harm our business and operating results.

Dependence on outside clearinghouse for increased revenue.

We are dependent on outside clearinghouses such as NYMEX to provide our clients
with OTC Clearing services. We can give no assurance that NYMEX will continue to
offer this service to trades brokered by us and should NYMEX cease to offer this
service, it would have a material negative effect on us and our prospects.

Reliance on natural gas derivatives.

While our plan is to leverage success of energy options and expand into other
markets while maintaining our status as an "exempt commercial market", the
success of this plan is subject to market forces outside of our control.
At present, substantially all of our revenues are derived from trading in
natural gas derivatives. If there should be a significant slowdown in the
natural gas derivatives market, it would have a significant negative impact on
us.

The continued operations of our business are dependent on the performance and
continued service of our executive officers and key employees, and our ability
to attract and retain skilled personnel.

                                       23
<PAGE>

Our performance and future operating results are substantially dependent on the
continued service and performance of Kevin Cassidy, our Chief Executive Officer,
Edward J. Connor, our President, and Mark Nordlicht, our Chairman. To the extent
that the services of those persons become unavailable, our business and
prospects would be adversely affected. Should we be required to do so, we do not
know whether we would be able to employ equally qualified persons to replace any
of these persons. Moreover, we do not currently maintain "key man" insurance on
any of our executive officers or other key employees and do not intend to obtain
this type of insurance in the near future. Additionally, we do not have written
agreements with most of our staff and, other than traditional compensation
packages and stock options we contemplate granting to our staff, we do not have
other means to ensure the retention of their services. If we are successful in
implementing and developing our business, we will require additional managerial,
administrative and support personnel. Competition for highly qualified personnel
is intense, and we can make no assurances that we can retain our key employees
or that we will be able to attract or retain qualified personnel in the future.
To the extent we have fewer financial resources available to us than our
competitors we may not be able to attract and retain a sufficient number of
qualified personnel. The loss of the services of any of our management or other
key employees and our inability to attract and retain other necessary personnel
could have a material adverse effect on our financial condition, operating
results, and cash flows.

Certain employees' efforts currently account for a significant amount of our
revenues. Should the services of these individuals, including and particularly
Kevin Cassidy, no longer be available to us, and suitable replacements not be
hired or retained, we would experience adverse effects of varying degrees.

We could become subject to increased governmental and organizational regulation.

OPEX qualifies as an "exempt commercial market" under the rules of the CFTC.
Although an ECM may be required to provide certain trade volume and pricing
information to the CFTC, an ECM is not required to register with the CFTC.
However, if we were to no longer qualify for the exemption from registration,
either because of changes in law or the scope of our business, our businesses
would become subject to extensive regulation at both the federal and state
levels. In addition, self-regulatory organizations, such as NYMEX and the
National Futures Association, require compliance with their extensive rules and
regulations. Among other things, these regulatory authorities impose
restrictions on sales methods, trading practices, use and safekeeping of client
funds and securities, record keeping and the conduct of principals and
employees. The extensive regulatory framework applicable to the commodities
brokerage industry, the purpose of which is to protect clients and the integrity
of the commodities markets, would impose significant compliance burdens and
attendant costs on us. The regulatory bodies that administer these rules do not
attempt to protect the interests of our stockholders as such, but rather the
public and markets generally. Failure to comply with any of the laws, rules or
regulations of any independent, state or federal regulatory authority to which
we become subject could result in a fine, injunction, suspension or expulsion
from the industry, which could materially and adversely impact us. Furthermore,
amendments to existing state or federal statutes, rules and regulations or the
adoption of new statutes, rules and regulations could require us to alter our
methods of operation at costs which could be substantial.

The Penny Stock Rules apply to our common stock. This may make it more difficult
for holders of our common stock to resell their shares.

At the present time, our common stock is not listed for trading on any stock
exchange.

The Securities Enforcement and Penny Stock Reform Act of 1990 requires special
disclosure relating to the market for penny stocks in connection with trades in
any stock defined as a "penny stock." Commission regulations generally define a
penny stock to be an equity security that has a market price of less that $5.00
per share and is not listed on Nasdaq or a major stock exchange. These
regulations subject all broker-dealer transactions involving such securities to
the special "Penny Stock Rules" set forth in Rule 15g-9 of the Securities
Exchange Act of 1934. While our price per share has been recently more than $5
per share, it may decrease below $5 in the future. Accordingly, any
broker-dealer sales of our shares will be subject to the Penny Stock Rules.
These Rules affect the ability of broker-dealers to sell our securities and also
may affect the ability of purchasers of our common stock to sell their shares in
the secondary market.

The Penny Stock Rules also impose special sales practice requirements on
broker-dealers who sell securities to persons other than their established
clients or "accredited investors." Among other things, the Penny Stock Rules
require that a broker-dealer make a special suitability determination respecting
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. In addition, the Penny Stock Rules require that a
broker-dealer deliver, prior to any transaction, a disclosure schedule prepared
in accordance with the requirements of the Commission relating to the penny
stock market. Finally, monthly statements have to be sent to any holder of such
penny stocks disclosing recent price information for the penny stock held in
the account and information on the limited market in penny stocks. Accordingly,
for so long as the Penny Stock Rules are applicable to our common stock, it may
be difficult to trade such stock because compliance with such Rules can delay or
preclude certain trading transactions. This could have an adverse effect on the
liquidity and price of our common stock.

Management substantially controls us and their interests may be different from
yours and may be in conflict with yours.

                                       24

<PAGE>

The interests of our management could conflict with the interests of our
stockholders. Our officers and directors beneficially own approximately 50% of
our outstanding common stock. Accordingly, if they exercise all their options
and warrants, they will have the power to approve corporate transactions and
control the election of all of our directors and other issues for which the
approval of our stockholders is required. This concentration of ownership may
also delay, deter or prevent a change in control of us and may make some
transactions more difficult or impossible to complete without the support of
these stockholders. As a result, you may have no effective voice in our
management.

Our majority stockholders will be able to take stockholder actions without
giving prior notice to any of you. You may, therefore, be unable to take
preemptive measures that you believe are necessary to protect your investment in
the company.

The majority stockholders are able to take stockholder actions in conformance
with Section 228 of the Delaware General Corporation Law and our Certificate of
Incorporation, which permits them to take any action which is required to, or
may, be taken at an annual or special meeting of the stockholders, without prior
notice and without a vote of our stockholders. Instead of a vote, stockholder
actions can be authorized by the written consents to such actions, signed by the
holders of the number of shares which would have been required to be voted in
favor of such action at a duly called stockholders meeting. We would not be
required to give prior notice to all stockholders of actions taken pursuant to
the written consents of the majority stockholders and our obligations are
limited to giving notice at least 20 calendar days prior to the earliest date on
which the corporate action so authorized may be taken.

ITEM 7.  FINANCIAL STATEMENTS


Response to this item is submitted as a separate section of this report
immediately following the signature page.


ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE


None

                                       25

<PAGE>


ITEM 8A.          CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer (collectively, the
"Certifying Officers") are responsible for establishing
and maintaining disclosure controls and procedures which include controls and
procedures that are designed to ensure that information required to be disclosed
in the reports which we file with or submit to the SEC is recorded, processed,
summarized and reported within the time periods specified by the SEC.  The
Certifying Officers have evaluated these controls and procedures and they have
concluded (based upon their evaluation of these controls and procedures as of
the end of the period covered by this report) that our disclosure controls and
procedures are effective to: i) ensure that information required to be disclosed
by us in this report is accumulated and communicated to management, including
our principal executive officers as appropriate, to allow timely decisions
regarding required disclosure; and ii) ensure that information required to be
disclosed in the reports which we file or submit with the SEC is recorded,
processed, summarized and reported within the time periods specified by the SEC.

The Certifying Officers have indicated that there were no changes in our
internal controls which occurred during our last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting, and there were no corrective actions with
regard to significant deficiencies and material weaknesses.

Our management, including the Certifying Officers, does not expect that our
disclosure controls or our internal controls will prevent all error and all
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls is also based in
part upon certain assumptions about the likelihood of future events, and there
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions.  Because of these inherent limitations in
a cost-effective control system, misstatements due to error or fraud may occur
and not be detected.

ITEM 8B.          OTHER INFORMATION.


None.

                                       26


<PAGE>

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT


Directors serve until the next annual meeting of the stockholders and until
their successors are elected or appointed and qualified, or until their prior
resignation or removal. Officers serve for such terms as determined by our board
of directors. Each officer holds office until such officer's successor is
elected or appointed and qualified or until such officer's earlier resignation
or removal. Our board currently does not have any committees.

The following table sets forth certain information, as of March 12, 2007, with
respect to our directors and executive officers.



                                                             Date of Election
                                                               or Appointment
Name                   Positions Held              Age          as Director
----                   -------------            ----------   ---------------
Mark Nordlicht         Chairman                     37        February 2000
Kevin Cassidy          Chief Executive Officer
                       and Vice Chairman            47        October 2005
Edward J. O'Connor     President, Treasurer,
                       and Director                 53        March 2001
Albert Helmig          Director                     55        September 2004
Marc-Andre Boisseau    Chief Financial Officer      42        n.a.




The following is a brief account of the business experience of each of our
directors and executive officers during the past five years or more.

Mark Nordlicht: Mr. Nordlicht is a founder of the Company and has served as our
Chairman of the Board of Directors since 2000. Mr. Nordlicht has also been the
Managing Partner of the General Partner of Platinum Partners Value Arbitrage
Fund, a market-neutral hedge fund, since January 2003. Mr. Nordlicht also served
as Managing Partner of West End Capital from 1998 through 2002. In his various
positions, Mr. Nordlicht has been responsible for the oversight of all of our
operations. Mr. Nordlicht earned a BA degree from Yeshiva University in 1989.

Kevin Cassidy:  Mr. Cassidy has served as our Chief Executive Officer since
October 2005 and from March 2001 to March 2004. From April 2004 through
September 2005, Mr. Cassidy provided consulting services to us.  Since December
1996, Mr. Cassidy has served as Managing Director of Capital Energy Services,
LLC (formerly Orion Energy Services, LLC), an energy options brokerage firm on
the NYMEX.  Mr. Cassidy's primary responsibilities include business development,
sales and marketing, and oversight of our brokerage operations.

Edward J. O'Connor: Mr. O'Connor has served as our President and as a director
since March 2001 and as our CEO between March 2004 and October 2005. Since
December 1996, Mr. O'Connor has served as Managing Director of Capital Energy
Services, LLC (formerly Orion Energy Services, LLC), an energy options brokerage
business on the NYMEX. Mr. O'Connor's primary responsibilities include
negotiating and entering into contracts for our business and accounting for our
funds. Mr. O'Connor graduated from Georgetown University in 1977 with a BS
degree in Business Administration.

                                       27

<PAGE>


Albert Helmig. Mr. Helmig was elected as a director in September 2004. Since
2000, Mr. Helmig has been a principal of Gray House Consulting, a consulting
firm to the energy industry. From 1991 through 2000, Mr. Helmig held the
following positions with the New York Mercantile Exchange (NYMEX): Chairman or
Vice Chairman of over 20 committees, 1991-2000; Member of Board of Directors,
1991-2000; Member of Executive Committee, 1993-2000; and Vice Chairman,
1998-2000. Mr. Helmig is also on the Board of Directors of the International
Precious Metals Institute, a member of the International Advisory Committee
Board, Energy Intelligence Group, a member of the National Committee on US/China
Relations, and a member of the National Futures Association. Mr. Helmig earned a
B.S. degree in Finance and Economics from Philadelphia University.

Marc-Andre Boisseau. Mr. Boisseau has served as our Chief Financial Officer
since December 2004. Since January 2002, he has served as an advisor to small
and medium publicly traded and private companies on financial, tax and
accounting matters. Between January 2000 and December 2001, he served as
Vice-President Finance of DataCore Software, Inc., a privately held software
developer. Prior to that, he served as Chief Accounting Officer (from May 1997
to December 1999) and Vice President Controller (from January 1, 1998 to
December 1999) of Citrix Systems, Inc. a publicly traded software developer. Mr.
Boisseau is a certified public accountant. Mr. Boisseau graduated with a BA
degree in Business Administration in 1987 from the University of Montreal.


                              DIRECTOR COMPENSATION


Messrs. Cassidy, O'Connor, Nordlicht, and Helmig are the members of our Board of
Directors. We have not established standard compensation arrangements for our
directors and the compensation payable to each individual for their service on
our Board is determined from time to time by our Board of Directors based upon
the amount of time expended by each of the directors on our behalf and the
nature of their beneficial ownership. None of our board members have received
compensation during 2006 and 2005 for their services as director.



           DIRECTOR INDEPENDENCE, COMMITTEES OF THE BOARD OF DIRECTORS


One of our members of our Board of Directors, Albert Helmig, is "independent"
within the meaning of Marketplace Rule 4200 of the National Association of
Securities Dealers, Inc. Our Board of Directors has established a Finance
Committee, which oversees the determination and the appropriateness of
prepayments on amounts due to Mark Nordlicht, Edward O'Connor, and Kevin
Cassidy, if any. Otherwise, we have not established any other committees,
including an Audit Committee, a Compensation Committee, a Nominating Committee,
or any committee performing a similar function. The functions of those
committees are being undertaken by the entire board as a whole. Because we only
have one independent director, our Board of Directors believes that the
establishment of such committees of the Board would not provide any benefits to
our company and could be considered more form than substance.

We do not have an audit committee or a compensation committee.  We intend to
form such committees once we have selected directors who shall meet the
independence requirements and audit committee financial expert requirements
under applicable Securities and Exchange Commission rules and regulations.  We
are developing the criteria we will use in identifying, attracting, and
retaining such directors.  We are unable to determine when and if we will
complete the recruiting of new directors during fiscal year 2007.


                                       28


<PAGE>

                             EXECUTIVE COMPENSATION


The following table summarizes all compensation recorded by us in each of the
last two completed fiscal years for our principal executive officer, each other
executive officer serving as such whose annual compensation exceeded $100,000
and up to two additional individuals for whom disclosure would have been made in
this table but for the fact that the individual was not serving as an executive
officer of our company at December 31, 2006. The value attributable to any
option awards is computed in accordance with FAS 123R.

<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE



                                                                           Non-Equity       Nonqualified         All
                                                                            Incentive        Deferred          Other
                                                         Stock   Option       Plan           Compensation    Compensation    Total
                               Fiscal   Salary    Bonus  Awards  Awards   Compensation       Earnings             (3)
Name and Principal Position     Year      ($)      ($)    ($)      ($)         ($)              ($)               ($)         ($)
                               ------   ------    -----  ------  ------   ------------      -------------    ------------    -----
<S>                             <C>       <C>      <C>    <C>      <C>         <C>             <C>                <C>          <C>
Edward J. O'Connor,             2006    200,000    -0-    -0-      -0-         -0-           -0-14,905           214,905
President, Director (1)         2005    200,000    -0-    -0-      -0-         -0-           -0-14,238           214,238

Kevin Cassidy, CEO (1)(2)       2006    275,000    -0-   273,616  240,000     691,541        -0-18,285         1,480,157
                                2005     58,333    -0-    -0-      -0-         -0-              -0-               14,238     72,571


Thomas Schnell (4)              2006    100,000    -0-    -0-      -0-        596,584           14,905           711,489
Noah Rottblatt (4)              2006     48,000    -0-    -0-      -0-        509,300            8,895           566,195


(1)      Mr. Cassidy served as our Chief Executive Officer from March 2001 to March 2004 and from October 2005 to present. Mr.
         O'Connor served as our Chief Executive Officer from April 2004 to October 2005.
(2)      Mr. Cassidy's compensation includes 268,083 shares of common stock valued at $273,616 and 1,200,000 warrants issued to
         Pierpont Capital, Inc., exercisable at $0.95 and for which we recognized $240,000 in compensation expenses during 2006
         pursuant to FAS 123 (R ).  Additionally, the Company pays, on behalf of Mr. Cassidy, a life insurance and health insurance
         premium, which amounted to $3,380 and $14,905 during 2006.
(3)      The other compensation of Mesrrs. O'Connor, Schnell, and Rothblatt represent the health insurance premium paid by the
         Company on their behalf.
(4)      Mesrrs. Schnell and Rottblatt are brokers and are not executive officers of the Company.
</TABLE>

BOARD OF DIRECTORS

Our directors do not receive cash compensation for their services as directors
but are reimbursed for their reasonable expenses for attending board and board
committee meetings. Mr. Helmig, however, was granted options to purchase a
maximum of 250,000 shares of our common stock in connection with his election to
our board of directors in 2004. These options vest as follows:  20% in September
2004, and 40% every year thereafter as long as Mr. Helmig remains one of our
director.

STOCK OPTION GRANTS

There were no individual grants of stock options to any Executive Officers
during the fiscal year ended December 31, 2006

STOCK OPTIONS EXERCISED IN 2006 AND RELATED PERIOD-ENDED STOCK OPTION VALUES

 No stock options were exercised during fiscal 2006

                                       29
<PAGE>

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END


The following table provides information concerning unexercised options, stock
that has not vested and equity incentive plan awards for each named executive
officer outstanding as of December 31, 2006:

<TABLE>
<CAPTION>

                                       OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

                            OPTION AWARDS                                         STOCK AWARDS
                   ------------------------------                         ----------------------------
<S>     <C>    <C>           <C>             <C>           <C>     <C>          <C>      <C>         <C>     <C>


                                                                                                  Equity
                                                                                                  Incentive
                                                                                       Equity     Plan
                                                                                       Incentive  Awards:
                                                                   Number      Market  Plan       Market
                                                                   of          Value   Awards:    or
                                           Equity                  Shares      of      Number     Payout
                                           Incentive               or          Shares  of         Value of
                                           Plan                    Units       or      Unearned   Unearned
               Number of    Number of      Awards:                 of          Units   Shares,    Shares,
               Securities   Securities     Number of               Stock       of      Units or   Units or
               Underlying   Underlying     Securities              That        Stock   Other      Other
               Unexercised  Unexercised    Underlying              Have        That    Rights     Rights
               Options      Options        Unexercised   Option    Not         Have    that       That
               /warrants    /warrants      Unearned      Exercise              Not     Have Not   Have       Not
Name           (#)          (#)            Options       Price     Expiration  Vested  Vested     Vested     Vested
               Exercisable  Unexercisable  (#)           ($)       Date        (#)     ($)        (#)        (#)
(a)            (b)          (c)            (d)           (e)       (f)         (g)     (h)        (i)        (j)
-------------  -----------  -------------  -----------   --------  ----------  ------  ------   ---------  ---------
Kevin Cassidy  450,000                                   0.20      6/30/07
               600,000      400,000                      0.95      2/23/09
Thomas Schnell 100,000                                   0.20      (1)

(1) Upon termination for cause or death
</TABLE>


2004 STOCK OPTION PLAN

We adopted our 2004 Stock Option Plan in November 2004. The plan provides for
the grant of options intended to qualify as "incentive stock options" and
options that are not intended to so qualify or "nonstatutory stock options." The
total number of shares of common stock reserved for issuance under the plan is
7,500,000, subject to adjustment in the event of a stock split, stock dividend,
recapitalization or similar capital change.

The plan is presently administered by our board of directors, which selects the
eligible persons to whom options shall be granted, determines the number of
common shares subject to each option, the exercise price therefor and the
periods during which options are exercisable, interprets the provisions of the
plan and, subject to certain limitations, may amend the plan. Each option
granted under the plan is evidenced by a written agreement between us and the
optionee.

                                       30
<PAGE>

Options may be granted to our employees (including officers) and directors and
certain of our consultants and advisors.

The exercise price for incentive stock options granted under the plan may not be
less than the fair market value of the common stock on the date the option is
granted, except for options granted to 10% stockholders which must have an
exercise price of not less than 110% of the fair market value of the common
stock on the date the option is granted. The exercise price for nonstatutory
stock options is determined by the board of directors. Incentive stock options
granted under the plan have a maximum term of ten years, except for 10%
stockholders who are subject to a maximum term of five years. The term of
nonstatutory stock options is determined by the board of directors. Options
granted under the plan are not transferable, except by will and the laws of
descent and distribution.

Employment Contracts, Termination of Employment, and Change-in-Control
Arrangements

On March 1, 2001, we entered into an employment agreement with Edward O'Connor,
our President and CEO and a member of the board of directors. The agreement was
amended on April 1, 2004.

The terms of the agreement, as amended, provide that we will employ Mr. O'Connor
for a term of five years with the duties of Chief Executive Officer with an
annual salary of $200,000 per year. If we terminate Mr. O'Connor's employment
without "cause" or if Mr. O'Connor terminates his employment with "good reason"
(as both terms are defined in Mr. O'Connor's employment agreement), we are
required to pay him a lump sum equal to nine months' base salary. Following
termination of employment for any reason, other than expiration of the term of
employment, Mr. O'Connor has agreed not to engage in an electronic OTC business
in competition with us for a 90 day period, provided we pay him bi-monthly
installments of $8,333.33 and provide full health benefits during the 90 day
period. When Kevin Cassidy became our Chief Executive Officer in October 2005,
as discussed below, we continued to employ Mr.O'Connor as our President with the
same compensation package as when he was our Chief Executive Officer.

Effective October 30, 2005, we named Kevin P. Cassidy our Chief Executive
Officer and appointed him as a director.  Simultaneously, we entered into an
employment agreement with him (the "Agreement"). The initial term of the
Agreement is for 50 months, subject to renewal or earlier termination.


Mr. Cassidy's salary ("Fixed Compensation") will be as follows: $20,833 upon
entering into the Agreement, $46,875 from October 30, 2005 to December 31, 2005,
$275,000 from January 1 to December 31, 2006, $300,000 from January 1, 2007 to
December 31, 2007, $325,000 from January 1 to December 31, 2008, $350,000 from
January 1, 2009 to December 31, 2009.


In addition, beginning with the first month of the quarter in which the amount
payable to Mr. Cassidy, pursuant to the Addendum to Master Service Agreement,
dated April 12, 2005, is fully paid, Mr. Cassidy will be paid (i) cash
compensation amounting to five percent (5%) of Gross Revenues of the Company,
and (ii) stock compensation amounting to two percent (2%) of the Gross Revenues
of the Company. Gross Revenue is defined as the total gross revenue related to
any and all aspects of the brokerage business, including incentive received from
exchanges, based on generally accepted accounting principles. The shares of our
common stock will be granted at fair value at the date of grant.

We will issue options to Mr. Cassidy equal to twenty percent (20%) of the number
of shares of common stock issuable under warrants which become exercisable
pursuant to any Order Flow Agreements (Order Flow Agreements are the agreements
for the Company to issue warrants to a firm based on the volume of orders the
firm placed with the Company). Those options will be fully vested Non-Statutory
Stock Options granted under the Company's 2004 Stock Option Plan at fair value
at the date of grant. Also, we will issue to Mr. Cassidy 5,000 options each time
a firm registers with and executes its first 10,000 lots on the Company's OPEX
platform. The total number of such options will be limited to 2,500,000. Such
options will be fully vested Non-Statutory Options granted under the plan at
fair value at the date of grant.

                                       31
<PAGE>

Mr. Cassidy will be entitled to paid annual vacation, personal leave and
holidays in accordance with our policies, and will be entitled to participate in
health, welfare, and pension plans and any other employee benefit plan of the
Company. In addition, we will advance to or reimburse Mr. Cassidy for the annual
or monthly premium of his life insurance policy of one million dollars
($1,000,000) where the beneficiary is Mr. Cassidy's estate (immediate family).

Upon our sale or merger or other business combination of us and another company
or companies, Mr. Cassidy will be entitled to a lump sum payment of 50% of the
unpaid Fixed Compensation should he desire not to be employed with the new or
successor entity.

We have a consulting agreement with Mr. Boisseau, who serves as our Chief
Financial Officer.  The oral agreement provides that we compensate him at $145
per hour, and effective, March 6 2007, $152 per hour.  This agreement may be
terminated at will by both parties.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics to provide guiding
principles to all of our employees. Our Code of Business Conduct and Ethics does
not cover every issue that may arise, but it sets out basic principles to guide
our employees and provides that all of our employees must conduct themselves
accordingly and seek to avoid even the appearance of improper behavior. Any
employee which violates our Code of Business Conduct and Ethics will be subject
to disciplinary action, up to an including termination of his or her employment.
Generally, our Code of Business Conduct and Ethics provides guidelines
regarding:

o        compliance with laws, rules and regulations,

o        conflicts of interest,

o        insider trading,

o        corporate opportunities,

o        competition and fair dealing,

o        discrimination and harassment,

o        health and safety,

o        record keeping,

o        confidentiality,

o        protection and proper use of company assets,

o        payments to government personnel,

o        waivers of the Code of Business Conduct and Ethics,

o        reporting any illegal or unethical behavior, and

o        compliance procedures.


In addition, we have also adopted a Code of Ethics for our Chief Executive
Officer and Senior Financial Officers. In addition to our Code of Business
Conduct and Ethics, our CEO and senior financial officers are also subject to
specific policies regarding:

o        disclosures made in our filings with the SEC,

o        deficiencies in internal controls or fraud involving management or
         other employees who have a significant role in our
         financial reporting, disclosure or internal controls,

o        conflicts of interests, and

o        knowledge of material violations of securities or other laws, rules or
         regulations to which we are subject.

                                       32
<PAGE>

CERTAIN LEGAL PROCEEDINGS


To the knowledge of the Company, there are no material proceedings to which any
director, executive officer or beneficial owner of more than 5% of any class of
voting securities of the Company.


SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

We are required to identify each person who was an officer, director or
beneficial owner of more than 10% of our registered equity securities during our
most recent fiscal year and who failed to file on a timely basis reports
required by Section 16(a) of the Securities Exchange Act of 1934.

To our knowledge, based solely on review of these filings and written
representations from the certain reporting persons, we believe that during the
fiscal year ended December 31, 2006, our officers, directors and significant
stockholders have timely filed the appropriate form under Section 16(a) of the
Exchange Act, except Albert Helmig, one of our directors, amended its form 3 in
December 2006 to reflect 100,000 additional options which vested in September
2006 and were not vested in March 2006, date of the initial filing of his
Form 3.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

The following table sets forth information regarding the beneficial ownership of
our common stock as of March 12, 2007. The information in this table provides
the ownership information for:

o each person known by us to be the beneficial owner of more than 5% of our
  common stock;
o each of our directors;
o each of our executive officers; and
o our executive officers, directors and director nominees as a group.

The percentages in the table have been calculated on the basis of treating as
outstanding for a particular person, all shares of our common stock outstanding
on that date and all shares of our common stock issuable to that holder in the
event of exercise of outstanding options, warrants, rights or conversion
privileges owned by that person at that date which are exercisable within 60
days of that date. Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of our common stock
owned by them, except to the extent that power may be shared with a spouse.

                                       33


<PAGE>

<TABLE>
<CAPTION>

                                     Name and Address            Number of Shares        Percentage
     Title of Class                Of Beneficial Owner          Beneficially Owned        of class(1)
     --------------                -------------------          ------------------     --------------
<S>            <C>                            <C>                    <C>                       <C>
Common Stock, par value       Mark Nordlicht                        15,190,150             27.8%
$.0001 per share              555 Pleasantville Road
                              South Building, Suite 110
                              Briarcliff Manor, NY 10510

Common Stock, par value       Edward J. O'Connor                    5,708,016 (1)          10.4%
$.0001 per share              555 Pleasantville Road
                              South Building, Suite 110
                              Briarcliff Manor, NY 10510

Common Stock, par value       Albert Helmig                           250,000 (2)        less than 0.5%
$.0001 per share              15 Deer Run Circle
                              Chatham, NJ 07928

Common Stock, par value       Kevin P. Cassidy                      3,233,083 (3)           5.9%
$.0001 per share              555 Pleasantville Rd., Ste 110
                              Briarcliff Manor, NY 10510

Common Stock, par value       Marc-Andre Boisseau                          -0-              0.0%
$.0001 per share              555 Pleasantville Rd., Ste. 110
                              Briarcliff Manor, NY 10510

All directors and officers                                          24,381,249             44.1%
as a group(4 persons)                                                (1)(2)(3)
</TABLE>


(1) Includes 3,904,158 shares owned by Ridgecrest Capital Corp., Inc., a
corporation wholly owned by Mr. O'Connor, 901,929 shares owned by Mr. O'Connor's
daughter Kathleen O'Connor and 901,929 shares owned by Mr. O'Connor's daughter
Erin O'Connor.


(2) Includes 250,000 shares issuable pursuant to the exercise of stock options
exercisable within 60 days.


(3) Includes 2,305,000 shares owned by Pierpont Capital Corp., Inc.("Pierpont"),
as well as 50,000 warrants, exercisable at a price of $0.20 per share, and
600,000 warrants exercisable at a price of $0.95 per share, issued to Pierpont,
of which Mr. Cassidy is a stockholder, 10,000 options exercisable at a price of
$7.17 per share and 113,665 shares owned by Kerry Cassidy, who is Mr. Cassidy's
daughter.


ITEM 12.       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
               AND DIRECTOR INDEPENDENCE


During April 2005, we modified the terms of agreement under which we initially
owed $5,762,753, $765,000 and $765,000 to Mark Nordlicht, our Chairman of the
Board, Kevin Cassidy, our Chief Executive Officer, and Edward O'Connor, our
President, respectively. The modified terms provide that, among other things, in
the event of a Capital Raise-defined as we raising more than $1,000,000
additional equity or debt financing, the interest rate accrued after such event
is reduced from 12% to 4.68%.  Additionally, the modified terms provide that we
may make principal repayments towards the due to Chairman of the Board, the due
to its Chief Executive Officer, and the due to related party amounting to
approximately 25% of its cash flows from operating cash flows less capital
expenditures. During 2006, we modified the terms of the agreements to allow
prepayments at our discretion.

                                       34

<PAGE>

In connection with the modified terms, the Company made principal repayments of
$400,000 and $177,243 on the due to Mark Nordlicht during 2006, and 2005,
respectively, of which $69,638 was offset in 2005 against an accounts receivable
of one of our clients, which is not affiliated with Mr. Nordlicht. Additionally,
we made principal repayment of $558,697 and $203,803 on the due to Kevin Cassidy
during 2006 and 2005, respectively, and $200,000 and $53,803 on due to Edward
O'Connor, during 2006 and 2005, respectively.

We were party to a Master Services Agreement with CES pursuant to which we
provide brokerage services on the floor of the New York Mercantile Exchange (see
"Description of Business - Business Alliances" for more information about this
agreement). Edward J. O'Connor, our president and a director, is a 50%
stockholder of CES. Kevin P. Cassidy our Chief Executive Officer until March 31,
2004, is the Managing Director of CES. Pursuant to this arrangement, we were
paying to CES a minimum annual fixed fee of $50,000 and assume all expenses
directly incurred by CES's associated floor brokerage services. Additionally, we
owed to CES $1,525,000  payable on April 1, 2014. However, upon a Capital Raise,
we will pay up to 10.67% of the amount raised during the Capital Raise, up to
$762,500, to CES, with the remaining principal and accrued interest of 12% from
the date of the Capital Raise payable on April 1, 2014.

During April 2005, CES assigned its rights to the Company's liability of
$1,525,000 equally to Edward O'Connor and Kevin Cassidy, co-owners of CES.
Subsequently, during April 2005, the Company entered into modifications of the
terms of the amounts due from it to Mark Nordlicht, Edward O'Connor and Kevin
Cassidy. The modified terms provide that, among other things, in the event of a
Capital Raise, the interest rate accrued after such event is reduced from 12% to
4.68%. Additionally, the Company may make principal repayments towards such
liabilities amounting to approximately 25% of its quarterly cash flows from
operating activities less capital expenditures.

Pursuant to this arrangement, our share of revenues and expenses of the floor
brokerage services amounted to approximately $3.6 million and $741,000,
respectively, during 2006, and $2.0 million and $860,000, respectively, during
2005. We have received $2.6 million and $1.0 million from CES in connection with
such floor brokerage services during 2006 and 2005, and CES owes us
approximately $488,000 as of December 31, 2006.  This agreement was terminated
in January 2007 and our floor operations are now assumed by a subsidiary, OPEX
International, Inc.

The Company has recognized revenues from brokerage commissions of approximately
$4,000, $206,000 and $63,000 during 2006 and $75,000, $9,000 and $21,000, during
2005, from Northern Lights Energy LLC, Platinum Partners, L.P. and Fenmore
Holdings LLC, respectively, entities in which Mark Nordlicht is also the
managing partner or a stockholder. The aggregate amount owed to us from such
entities amounted to approximately $182,000 as of December 31, 2006.

Pursuant to an agreement providing for the reimbursement of certain
administrative expenses for services provided to a coffee bean
roaster, Sleepy Hollow Coffee Roasters, Inc. ("Sleepy Hollow"), a company owned
by Edward J. O'Connor and by Kevin P. Cassidy, we charged an administrative fee
of $17,000 and $17,000 to Sleepy Hollow during 2006 and 2005, respectively. We
provide such services to Sleepy Hollow to ensure that Edward O'Connor and Kevin
Cassidy can focus as much time and efforts as possible on our operations.

Please see "Item 9.  Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act" for information
regarding directors independence required by this item.

Please see "Item 1. Description of Business-Business Alliances" for a
description of our term sheet with NYMEX Holdings, Inc., pursuant to which
Messrs. Nordlicht, Cassidy, and O'Connor may sell a portion of their common
stock to NYMEX Holdings, Inc.

                                       35

<PAGE>

ITEM 13. EXHIBITS


         The following exhibits are filed as part of, or are incorporated by
reference into, this report:


Exhibit No.       Description
-----------       -----------

3(i)(a)           Certificate of Incorporation of Optionable, Inc., dated
                  February 4, 2000 (incorporated by reference to Exhibit 3(i)(a)
                  to the Registrant's Registration Statement on Form SB-2,
                  filed  December 22, 2004, file no. 333-121543 (the "SB-2").

3(i)(b)           Certificate of Amendment to the Certificate of Incorporation
                  of Optionable, Inc., dated March 30, 2000 (incorporated by
                  reference to Exhibit 3(i)(b) to the SB-2).

3(i)(c)           Certificate of Amendment to the Certificate of Incorporation
                  of Optionable, Inc., dated May 31, 2000 (incorporated by
                  reference to Exhibit 3(i)(c) to the SB-2).

3(i)(d)           Certificate of Amendment to the Certificate of Incorporation
                  of Optionable, Inc., dated July 21, 2000 (incorporated by
                  reference to Exhibit 3(i)(d) to the SB-2).

3(i)(e)           Corrected Certificate of Amendment to the Certificate of
                  Incorporation of Optionable, Inc., dated January 31, 2003
                  (incorporated by reference to Exhibit 3(i)(e) to the SB-2).

3(i)(f)           Certificate of Amendment to the Certificate of Incorporation
                  of Optionable, Inc., dated June 9, 2004 (incorporated by
                  reference to Exhibit 3(i)(f) to the SB-2).

3(ii)             Amended and Restated By-laws of Optionable, Inc. (incorporated
                  by reference to Exhibit 3(ii) to the SB-2)

10(i)             Lease Agreement between 24 South Third Avenue Corp. and 60 3rd
                  Ave. Corp., as Lessor, and Optionable, Inc., as Lessee, dated
                  October 3, 2001 (incorporated by reference to Exhibit 10(i) to
                  the SB-2).

10(ii)(a)         Master Services Agreement with Capital Energy Services LLC,
                  dated April 1, 2004 including the Consulting Agreement as a
                  part thereof and Addendum, dated October 7, 2004 (incorporated
                  by reference to Exhibit 10(ii)(a) to the SB-2)

10(ii)(b)         Addendum to Master Services Agreement (incorporated by
                  reference to Exhibit 10(ii)(b) to the SB-2)

10(ii)(c)         Amendment to Master Services Agreement (incorporated by
                  reference to the Registrant's Current Report on Form 8-K,
                  dated as of April 10, 2006)

10(ii)(d)         Termination Agreement (of Master Service Agreement;
                  incorporated by reference to the Registrant's Current
                  Report of Form 8-K, dated as of January 31, 2007)

10(iii)(a)        Options Order Flow Agreement, dated July 1, 2004, between the
                  Company and Intercontinental Exchange,Inc. (incorporated by
                  reference to Exhibit 10(iii)(a) to the SB-2)

10(iii)(b)        Superseding Option Order Flow Agreement, dated as of March 2,
                  2005 (incorporated by reference to Exhibit 10(iii)(b) to the
                  SB-2)

10(iv)(a)        Employment Agreement, as amended, between the Company and
                 Edward J. O'Connor (incorporated by reference to Exhibit 10(iv)
                 (a) to the SB-2)

10(iv)(b)        Employment Agreement between the Company and Kevin P. Cassidy
                 (incorporated by reference to Exhibit 10(iv)(b) to the SB-2)

                                       36

<PAGE>

10(iv)(b)(I)     Termination of Employment Agreement between the Company and
                 Kevin P. Cassidy (incorporated by reference to
                 Exhibit 10(iv)(b)(I) to the SB-2)

10(iv)(b)(II)    Employment Agreement between the Company and Kevin P. Cassidy
                 (incorporated by reference to the Registrant's Current Report
                 on Form 8-K, dated as of October 30, 2005)

                                       37

<PAGE>

Exhibit No.      Description
-----------      -----------

10(v)(a)         Optionable, Inc. 2004 Stock Option Plan (incorporated by
                 reference to Exhibit 4.1 to the Registrant's Registration
                 Statement on Form S-8, file number 333-129853, as filed on
                 November 21, 2005 (the "S-8")

10(v)(b)         Form of Incentive Stock Option Agreement(incorporated by
                 reference to Exhibit 4.2 to the S-8)

10(v)(C)         Nonstatutory Stock Option Agreement(incorporated by reference
                 to Exhibit 4.3 to the S-8)

10(vi)           Prepaid Commission Agreement, dated February 3, 2003, between
                 the Company and Mark Nordlicht (incorporated by reference to
                 Exhibit 10(vi) to the SB-2).

10(vii)(a)       Revolving Credit Facility Agreement, dated June 5, 2003,
                 between the Company and Platinum Value Arbitrage Fund LP
                 (incorporated by reference to Exhibit  10(vii)(a) to the SB-2)

10(vii)(b)       $500,000 Revolving Promissory Note from the Company to Platinum
                 Value Arbitrage Fund LP dated June 5, 2003 (incorporated by
                 reference to Exhibit 10(vii)(b) to the SB-2)

*10(viii)        Prepaid Commission Agreement, dated June 9, 2003, between the
                 Company and Platinum Partners Value Arbitrage Fund LLP
                 (incorporated by reference to Exhibit 10(viii) to the SB-2)

10(ix)(a)        Loan Agreement, dated February 13, 2004, between the Company
                 and Mark Nordlicht (incorporated by reference to
                 Exhibit 10(ix)(a) to the SB-2)

*10(ix)(b)       $250,000 Promissory Note, dated February 13, 2004, from the
                 Company to Mark Nordlicht (incorporated by reference to Exhibit
                 10(ix)(b) to the SB-2)

10(ix)(c)        $250,000 Promissory Note Extension Agreement, dated September
                 9, 2004 (incorporated by reference to Exhibit 10(ix)(c) to the
                 SB-2)

10(x)(a)         Loan Agreement, dated March 8, 2004, between the Company and
                 Mark Nordlicht (incorporated by reference to Exhibit 10(x)(a)
                 to the SB-2)

10(x)(b)         $50,000 Promissory Note, dated March 8, 2004, from the Company
                 to Mark Nordlicht (incorporated by reference to
                 Exhibit 10(x)(b) to the SB-2)


10(x)(c)         $50,000 Promissory Note Extension Agreement, dated September
                 9, 2004 (incorporated by reference to Exhibit 10(x)(c) to the
                 SB-2)

10(xi)(a)        Loan Agreement, dated March 22, 2004, between the Company and
                 Mark Nordlicht (incorporated by reference to Exhibit 10(xi)(a)
                 to the SB-2)

10(xi)(b)        $5,621,753.18 Promissory Note, dated March 22, 2004, from the
                 Company to Mark Nordlicht (incorporated by reference to Exhibit
                 10(xi)(b) to the SB-2)

10(xi)(c)        Addendum to Loan Agreement, dated March 22, 2004 (incorporated
                 by reference to Exhibit 10(xi)(c) to the SB-2)

10(xi)(d)        Addendum to Promissory Note, dated March 22, 2004 (incorporated
                 by reference to Exhibit 10(xi)(d) to the SB-2)

10(xii)(a)       Revolving Credit Facility Agreement, dated April 15, 2004,
                 between the Company and Mark Nordlicht (incorporated by
                 reference to Exhibit 10(xii)(a) to the SB-2)

                                       38

<PAGE>

10(xii)(b)       $50,000 Promissory Note, dated April 15, 2004, from the Company
                 to Mark Nordlicht (incorporated by reference to
                 Exhibit 10(xii)(b) to the SB-2)

10(xiii)         Warrant Agreement for the Purchase of Common Stock
                 (incorporated by reference to the Registrant's Quarterly Report
                 on Form 10-QSB for the quarterly period ended March 31, 2006)

10(xiv)          Service and Repurchase Agreement (incorporated by reference to
                 the Registrant's Current Report on Form 8-K, dated as of
                 January 31, 2007


14               Code of Business Conduct and Ethics (filed herewith)


                                       39

<PAGE>

Exhibit No.      Description
-----------      -----------

21               Subsidiaries of the Company.

31.1             Rule 13a-14(a)/15d-14(a) Certification of the Principal
                 Executive Officer of Optionable, Inc. (filed herewith)

31.2             Rule 13a-14(a)/15d-14(a) Certification of the Principal
                 Financial Officer of Optionable, Inc.  (filed herwith)

32.1             Section 1350 Certification of the Principal Executive Officer
                 of Optionable, Inc  The information contained in this Exhibit
                 shall not be deemed filed with the Securities and Exchange
                 Commission nor incorporated by reference in any registration
                 statement filed by the registrant under the Securities Act of
                 1933, as amended.(filed herewith)

32.2             Section 1350 Certification of the Principal Financial Officer
                 of Optionable, Inc  The information contained in this Exhibit
                 shall not be deemed filed with the Securities and Exchange
                 Commission nor incorporated by reference in any registration
                 statement filed by the registrant under the Securities Act of
                 1933, as amended. (filed herewith)

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES


The firm Sherb & Co., LLP, independent  registered  accounting firm, has audited
our financial  statements  for the years ended  December 31, 2006 and 2005.  The
Board  of  Directors  has  appointed  Sherb & Co.  to  serve  as our  registered
accounting  firm  for the  2006  year-end  audit  and to  review  our  quarterly
financial reports for filing with the Securities and Exchange  Commission during
fiscal year 2007.


The following table shows the fees paid or accrued by us for the audit and other
services provided by Sherb & Co. for fiscal year 2006 and 2005.

                                                             2006           2005
                                                     ____________    ___________
Audit Fees(1)                                        $    67,000     $    66,500
Audit-Related Fees                                   $        --     $        --
Tax Fees                                             $        --     $        --
All Other Fees (2)                                   $     2,880     $       645
                                                     ____________    ___________
Total                                                $    69,880     $    67,145
                                                     ============    ===========
__________________

     (1) Audit fees represent fees for professional services provided in
         connection with the audit of our annual financial statements and review
         of our quarterly financial statements and audit services provided in
         connection with other statutory or regulatory filings.

     (2) All Other Fees represent edgarization services related to the certain
         statutory and regulatory filings.


         Pre-Approval of Non-Audit Services

The Company does not currently have an audit committee in place and thus,
management must obtain the specific prior approval of the Board of Directors for
each engagement of the independent auditor to perform any non-audit services
that exceed any pre-approved amounts determined by the Board of Directors.


                                       40

<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on the []th day of March 23, 2007.

                                               OPTIONABLE, INC.

                                               By: /s/   Kevin Cassidy
                                                            Name:  Kevin Cassidy
                                               Title:  Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in
the capacities and on the dates indicated.

Signature                  Title                               Date

/s/ Mark Nordlicht         Chairman of the Board               March 23, 2007
Mark Nordlicht


/s/ Kevin Cassidy          Chief Executive Officer and         March 23, 2007
Kevin Cassidy              Director


/s/   Edward O'Connor      President and Director              March 23, 2007
Edward O'Connor


/s/ Albert Helmig          Director                            March 23, 2007
Albert Helmig


/s/ Marc-Andre Boisseau    Chief Financial Officer             March 23, 2007
Marc-Andre Boisseau


                                       41

<PAGE>


                              OPTIONABLE, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm.....................F-1

Balance Sheet...............................................................F-2

Statements of Operations....................................................F-3

Statement of Stockholders' Equity (Deficit).................................F-4

Statements of Cash Flows....................................................F-5

Notes to Financial Statements.......................................F-6 to F-26

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
Optionable, Inc.
Briarcliff Manor, New York

We have  audited  the  accompanying  balance  sheet of  Optionable,  Inc.  as of
December 31, 2006 and the related statements of operations, stockholders' equity
and cash flows for the years ended December 31, 2006 and 2005.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements  are free of material  misstatement.  The Company is not  required to
have,  nor were we engaged to perform,  an audit of its  internal  control  over
financial  reporting  as  a  basis  for  designing  audit  procedures  that  are
appropriate  in the  circumstances,  but not for the  purpose of  expressing  an
opinion on the  effectiveness  of the Company's  internal control over financial
reporting.  Accordingly we express no such opinion. An audit includes examining,
on a  test  basis,  evidence  supporting  the  amounts  and  disclosures  in the
financial statements. An audit also includes assessing the accounting principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.


In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Optionable, Inc. as of December
31, 2005 and the results of their  operations and their cash flows for the years
ended  December 31, 2006 and 2005,  in  conformity  with  accounting  principles
generally accepted in the United States of America.


                                                /s/ Sherb & Co., LLP
                                                    ----------------------------
                                                    Sherb & Co., LLP
                                                    Certified Public Accountants

New York, New York
January 22, 2007

                                       F-1

<PAGE>

                                OPTIONABLE, INC.
                                  BALANCE SHEET
                                December 31, 2006


                                     ASSETS
Current Assets:
Cash and cash equivalents                                 $           7,913,393
Accounts receivable, net
of provision for doubtful accounts of $29,693                         2,100,805
Accounts receivable from related parties                                182,338
Due from related party                                                  488,273
Incentives receivable                                                 1,307,859
Other current assets                                                     64,162
                                                          ----------------------

      Total current assets                                            12,056,830

Property and equipment, net
of accumulated depreciation of $457,204                                   57,501
Other assets                                                              19,900
Other receivable                                                         150,000
                                                          ----------------------

     Total assets                                         $           12,284,231
                                                          ======================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued expenses                     $              192,993
Accrued compensation                                                   1,891,885
Income tax payable                                                     1,454,246
                                                          ----------------------
    Total current liabilities
                                                                       3,539,124


Due to chairman of the board,
net of unamortized discount of $3,256,311                              1,788,199

Due to executive officer,
net of unamortized discount of $441,686                                   67,011
                                                          ----------------------

 Total liabilities                                                     5,394,334

Stockholders' Equity:
Preferred Stock; $.0001 par value,
5,000,000 shares authorized, none issued
and outstanding                                                            -
Common stock; $.0001 par value, 100,000,000
shares authorized,
51,674,514 issued and  51,669,714 outstanding                             5,167
Additional paid-in capital                                            8,469,567
Treasury stock at cost, 4,800 shares                                     (2,506)

Accumulated deficit                                                  (1,582,331)
                                                          ----------------------

     Total stockholders' equity                                        6,889,897
                                                          ----------------------

     Total liabilities and stockholders' equity           $           12,284,231
                                                          ======================




                       See Notes to Financial Statements.
                                       F-2


<PAGE>
                                OPTIONABLE, INC.
                            STATEMENTS OF OPERATIONS


                                                  For the year ended
                                                     December 31,
                                        ----------------------------------------
                                                 2006                  2005
                                        ------------------    ------------------

Revenues:
 Brokerage fees                              $   8,987,727         $   2,979,641
 Brokerage fees-related parties                  3,994,131             2,087,215
 Incentives                                      3,087,653               738,558
                                        ------------------    ------------------
Net revenues
                                                16,069,511             5,805,414

Cost of revenues                                 5,312,269             2,264,110
Cost of revenues-related parties                   909,291               856,763
                                        ------------------    ------------------

                                                 6,221,560             3,120,873

Gross profit                                     9,847,951             2,684,541

Operating expenses:

  Selling, general and administrative            1,030,979               695,718
  Research and development                         473,645               450,488
                                        ------------------    ------------------


     Total operating expenses                    1,504,624             1,146,206
                                        ------------------    ------------------


     Operating income                            8,343,327             1,538,335
                                        ------------------    ------------------

Other income (expense):

Interest income                                    102,040                21,548
Interest expense to related parties               (780,137)            (300,319)
                                        ------------------    ------------------

                                                  (678,097)            (278,771)
                                        ------------------    ------------------


Income before income tax                         7,665,230             1,259,564


Income tax                                     (1,459,052)                     -
                                        ------------------    ------------------

Net income                                   $   6,206,178         $   1,259,564
                                        ==================    ==================

Basic earnings per common share                $      0.12           $      0.02
                                        ==================    ==================

Diluted earnings per common share              $      0.12           $      0.02
                                        ==================    ==================

Basic weighted average common

shares outstanding                              51,478,354            51,406,431
                                        ==================    ==================


Diluted weighted average common
shares outstanding                              52,559,445            51,524,732
                                        ==================    ==================

                       See Notes to Financial Statements.
                                       F-3


<PAGE>

<TABLE>
<CAPTION>
                                OPTIONABLE, INC.
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                   From January 1, 2005 to December 31, 2006


                                  Common Stock                              Treasury
                            -----------------------      Additional           Stock,       Accumulated
                              Shares           $       Paid-in Capital       at Cost         Deficit            Total
                            -----------      ------    ---------------      ---------      ------------     -------------

Opening balance,
<S>      <C>                <C>              <C>       <C>                   <C>           <C>               <C>
 January 1, 2005            51,406,431       $5,141      $7,784,411          $-            $(9,048,073)      $(1,258,521)

Fair value of warrants
 issued to related party    -                -              162,060           -            -                     162,060
Net income                  -                -                 -              -              1,259,564         1,259,564
                            -----------      ------    ---------------       --------      ------------     -------------
Balance at
 December 31, 2005          51,406,431        5,141       7,946,471           -             (7,788,509)          163,103

Fair value of warrants
 issued to related party    -                -              240,000           -            -                     240,000
Fair value of options       -                -                6,506           -            -                       6,506
Fair value of shares
 issued for compensation
  to chief executive officer   268,083           26         276,590           -            -                     276,616
Repurchase of shares            (4,800)      -                 -              (2,506)      -                      (2,506)
Net income                  -                -                 -              -              6,206,178         6,206,178
                            -----------      ------    ---------------       --------      ------------     -------------
Ending balance,
December 31, 2006           51,669,714       $5,167      $8,469,567          $(2,506)      $(1,582,331)       $6,889,897
                            ===========      ======    ===============       ========      ============     =============

</TABLE>











                       See Notes to Financial Statements
                                       F-4


<PAGE>

                                OPTIONABLE, INC.
                            STATEMENTS OF CASH FLOWS

                                                    For the year ended
                                                        December 31,
                                        ----------------------------------------
                                                2006                   2005
                                        -------------------    -----------------


Cash flows from operating activities:
   Net income                             $   6,206,178           $   1,259,564
Adjustments to reconcile net income to
 net cash provided by operating activities:
  Depreciation                                   31,508                  32,519
  Amortization of debt discount                 780,137                 300,320
  Provision for doubtful accounts              (37,727)                (22,554)
  Fair value of warrants and options            246,506                 162,060
  Fair value of shares issued to
      chief executive officer                   276,616                       -
Changes in operating assets and
 liabilities:
  Accounts receivable                       (1,751,941)                (98,854)
  Accounts receivable-related parties         (141,143)                (34,340)
  Due from related party                      (184,701)                 (9,997)
  Incentives receivable                     (1,153,076)                (23,107)
  Other receivable                                    -               (150,000)
  Other current assets                         (15,073)                (36,133)
  Other assets                                 (19,900)                       -
  Accounts payable and accrued expenses         138,007                (25,701)
  Income tax payable                          1,454,246                       -
  Accrued compensation                        1,481,330                  12,838
                                          --------------    --------------------


Net cash provided by operating activities     7,310,967               1,366,615
                                          --------------    --------------------

Cash flows used in investing activity:
 Purchases of property and equipment          (47,824)                (27,439)
                                          --------------    --------------------


Net cash used in investing activity            (47,824)                (27,439)
                                          --------------    --------------------

Cash flows from financing activities:


Principal repayments of due to
 chief executive officer                      (558,697)               (203,803)
Principal repayments of due to
 executive officer                            (200,000)                (53,803)
Principal repaymentS of due to
 chairman of the board                        (400,000)               (177,243)
 Repurchase of shares of common stock           (2,506)                      -
                                          --------------    --------------------


Net cash used in financing activities       (1,161,203)               (434,849)
                                          --------------    --------------------


Net increase in cash                          6,101,940                 904,327

Cash, beginning of year                       1,811,453                 907,126
                                          --------------    --------------------

Cash, end of year                         $   7,913,393           $   1,811,453
                                          ==============    ====================

Supplemental disclosures of
 cash flow information:
     Cash paid for taxes                    $     4,806              $        -
                                          ==============    ====================

     Cash paid for interest                  $        -              $        -
                                          ==============    ====================









                       See Notes to Financial Statements.
                                       F-5


<PAGE>


                                OPTIONABLE, INC.
                         NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 1-Organization and Description of Business

Optionable, Inc. (the "Company") was formed in Delaware in February 2000 and is
a trading and brokerage services provider to brokerage firms, financial
institutions, energy traders, and hedge funds nationwide. The Company's
operations are located in the New York metropolitan area. The Company developed
an automated electronic trading system during 2006.

Note 2- Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.

Concentration of Credit Risks

The Company is subject to concentrations of credit risk primarily from cash and
cash equivalents, accounts receivable, incentives receivable, and due from
related party.

The Company's cash and cash equivalents accounts are held at financial
institutions and are insured by the Federal Deposit Insurance Corporation
("FDIC") up to $100,000. During 2006, the Company has reached bank balances
exceeding the FDIC insurance limit. To reduce its risk associated with the
failure of such financial institutions, the Company periodically evaluates the
credit quality of the financial institutions in which it holds deposits.

The Company's accounts receivable are due from energy trading firms, financial
institutions, and hedge funds, located primarily in the United States.
Collateral is generally not required. One of the Company's customers accounted
for 37% of its accounts receivable net of doubtful accounts, respectively, at
December 31, 2006. No other customers accounted for more than 10% of its
accounts receivable at December 31, 2006.

The Company's incentives receivable are due from a United States exchange
providing the Company with incentives to submit customer trades to their
respective platform. The incentives receivable are not collateralized. The
Company has entered into a binding term sheet with such exchange in January
2007- see Note 10-Subsequent Event.








                                       F-6


<PAGE>


                                OPTIONABLE, INC.
                         NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

The due from related party is due from an affiliate owned by the Company's chief
executive officer and by an executive officer of the Company, who are both
stockholders of the Company. The due from related party is not collateralized.

Customer Concentration

One of the Company's customers accounted for approximately 24% and 18%,
respectively of its revenues during 2006 and 2005, respectively. The Company
minimizes its customer concentration risks by diversifying its existing customer
base.

Product Concentration

All of the Company's revenues are derived from fees earned from energy
derivatives transaction fees and related incentives provided by exchanges.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivables,
incentives receivable, due from related party, other receivable, accounts
payable and accrued expenses approximate their fair value due to their
short-term maturities. The carrying amount of due to Chairman of the board and
due to an executive officer approximate their fair value based on the Company's
incremental borrowing rate.

Software Development Costs
Costs incurred in the research and development of software products are expensed
as incurred until technological feasibility has been established. After
technological feasibility is established, any additional costs are capitalized
in accordance with Statement of Accounting Financial Standards ("SFAS") No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed. Costs of maintenance and customer support will be charged to expense
when related revenue is recognized or when those costs are incurred, whichever
occurs first. The Company believes that the current process for developing
software is essentially completed concurrently with the establishment of
technological feasibility; accordingly, no software development costs have been
capitalized as of December 31, 2006.

                                       F-7


<PAGE>


                                OPTIONABLE, INC.
                         NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

Property and Equipment

Property and equipment are recorded at cost and are depreciated on a
straight-line basis over their estimated useful lives of three to five years.
Maintenance and repairs are charged to expense as incurred. Significant renewals
and betterments are capitalized.

Property and equipment consist of the following as of December 31, 2006:

Computer equipment and software                                $445,159
Office furniture and equipment                                   69,546
                                                               ---------
                                                                514,705
Accumulated depreciation                                       (457,204)
                                                               ---------
                                                               $ 57,501
                                                               =========

Depreciation expense amounted to approximately $32,000 and $33,000 during 2006
and 2005, respectively.


Income Taxes

Income taxes are accounted for in accordance with SFAS No. 109, Accounting for
Income Taxes. SFAS No. 109 requires the recognition of deferred tax assets and
liabilities to reflect the future tax consequences of events that have been
recognized in the Company's financial statements or tax returns. Measurement of
the deferred items is based on enacted tax laws. In the event the future
consequences of differences between financial reporting bases and tax bases of
the Company's assets and liabilities result in a deferred tax asset, SFAS No.
109 requires an evaluation of the probability of being able to realize the
future benefits indicated by such assets. A valuation allowance related to a
deferred tax asset is recorded when it is more likely than not that some or all
deferred tax assets will not be realized.

Use of Estimates

The preparation of financial statements in accordance with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Significant estimates made by management include, but are not
limited to, the realization of receivables. Actual results will differ from
these estimates.




                                       F-8


<PAGE>


                                OPTIONABLE, INC.
                         NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

Basic and Diluted Earnings per Share

Basic earnings per share are calculated by dividing income available to
stockholders by the weighted-average number of common shares outstanding during
each period. Diluted earnings per share are computed using the weighted average
number of common and dilutive common share equivalents outstanding during the
period. Dilutive common share equivalents consist of shares issuable upon the
exercise of stock options and warrants (calculated using the modified-treasury
stock method). The outstanding options amounted to 941,000 and 791,000 at
December 31, 2006 and 2005, respectively. The outstanding warrants amounted to
1,550,000 and 550,000 at December 31, 2006 and 2005, respectively.

The following sets forth the computation of basic and diluted earnings per share
for the year ended December 31:

                                                2006            2005
                                              --------        --------

Numerator:
Net income                                   $6,206,178      $1,259,564
                                             ==========      ==========

Denominator:
Denominator for basic earnings per share-
Weighted average shares outstanding          51,478,354      51,406,431
Effect of dilutive employee stock options       643,337          71,525
Effect of dilutive warrants                     437,755          46,776
                                             ----------      ----------
Denominator for diluted earnings per
share- Weighted average shares outstanding   52,559,445      51,524,732
                                             ==========      ==========



Basic earnings per share                        $0.12           $0.02
                                                =====           =====
Diluted earnings per share                      $0.12           $0.02
                                                =====           =====

Anti-dilutive weighted-average shares             -               -
                                                =====           =====


                                      F-9


<PAGE>


                                OPTIONABLE, INC.
                         NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

Revenue Recognition

Revenue is recognized when earned. The Company's revenue recognition policies
are in compliance with the Securities and Exchange Commission's ("SEC") Staff
Accounting Bulletin ("SAB") No. 104 "Revenue Recognition".

The Company generally invoices its customers monthly, for all transactions which
have been executed during such month. Revenues are recognized on the day of
trade-trade date basis. The Company's revenues derive from a certain
predetermined fixed fee of the transactions it executes on behalf of its
customers. The fee is based on the volume of financial instruments traded. The
Company bases its fees on oral and written contracts and confirms the fees in
writing upon the execution of each transaction.

The Company also receives incentives from United States exchanges for the volume
of transactions conducted by the Company using their platform. The incentives
are based on a percentage of the total revenues received by the exchange
attributable to the Company's volume of transactions submitted to the respective
exchanges. The Company estimates monthly such incentives based on the volumes of
daily transactions submitted to the respective exchanges using the day of
trade-trade date basis, and the exchanges' published revenues by type of
transactions. The Company, pursuant to SAB 104, realizes the incentive revenues
realized or realizable when all of the following criteria are met:

1) Persuasive evidence of an arrangement exists. The Company has a written
separate agreement with one of the exchanges. The other exchange has publicly
published the terms of its incentive program in 2003 which is offered to all
intermediaries in the select transactions;

2) delivery has occurred or services have been rendered. Under arrangements with
both exchanges, the incentives are earned on the day the Company submits
transactions to the respective exchanges based on the revenues generated from
such transactions and are no longer subject to minimum volume of transactions to
the respective exchanges. The Company accounts for all transactions submitted to
each exchange on a daily basis. Accordingly, the Company is able to determine
when the incentives are earned based on the









                                       F-10


<PAGE>


                                OPTIONABLE, INC.
                         NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

date it submits transactions to the exchanges. The Company has no other
obligations to the exchanges to earn the incentives;

3) "seller's" price to the buyer is fixed or determinable. Based on the
incentive program terms of each exchange, their published prices for the type of
transactions the Company submits to them, and the Company's transactions
records, the Company is able to estimate the revenues each exchange earns in
connection with the transactions it submits, and accordingly, the amount, if any
of the incentives the Company earns in connection with such transactions; and

4) collectibility is reasonably assured. Historically, both exchanges have paid
the Company timely on incentives earned. The Company has no knowledge that they
do not intend to pay these incentives, if earned, in the future. Furthermore,
the Company intends to enforce the payment of any incentives receivable under
the incentive programs.

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123(R), "Share-Based Payment," which replaces SFAS No. 123 and supersedes
APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the
compensation costs of share-based compensation arrangements based on the
grant-date fair value and recognize the costs in the financial statements over
the period during which employees are required to provide services. Share-based
compensation arrangements include stock options, restricted share plans,
performance-based awards, share appreciation rights and employee share purchase
plans. In March 2005 the SEC issued Staff Accounting Bulletin No. 107, or "SAB
107". SAB 107 expresses views of the staff regarding the interaction between
SFAS No. 123(R) and certain SEC rules and regulations and provides the staff's
views regarding the valuation of share-based payment arrangements for public
companies. SFAS No. 123(R) permits public companies to adopt its requirements
using one of two methods. On April 14, 2005, the SEC adopted a new rule amending
the compliance dates for SFAS 123R. Companies may elect to apply this statement
either prospectively, or on a modified version of retrospective application
under which financial statements for prior periods are adjusted on a basis
consistent with the pro forma disclosures required for those periods under SFAS
123. Effective January 1, 2006, the Company has fully adopted the provisions of
SFAS No. 123R and related interpretations as provided by SAB 107 prospectively.
As such, compensation cost is measured on the date of grant as its fair value.

                                       F-11


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

Such compensation amounts, if any, are amortized over the respective vesting
periods of the option grant. The Company applies this statement prospectively.

Segment reporting

The Company operates in one segment, brokerage services. The Company's chief
operating decision-maker evaluates the performance of the Company based upon
revenues and expenses by functional areas as disclosed in the Company's
statement of operations.

Recent Pronouncements

In September 2006, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007. Earlier
application is permitted provided that the reporting entity has not yet issued
financial statements for that fiscal year. Management believes this Statement
will have no impact on the financial statements of the Company once adopted.

On July 13, 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 48, ("FIN 48"), entitled, "Accounting for Uncertainty in
Income Taxes - an Interpretation of FASB Statement No. 109". Concurrently, FASB
issued a FASB staff position (FSP) relating to income taxes, (FSP) No. FAS 13-2,
"Accounting for a Change or Projected Change in the Timing of Cash Flows
Relating to Income Taxes Generated by a Leveraged Lease Transaction." FASB's
summary of FIN 48 notes that differences between tax positions recognized in the
financial statements and tax positions taken in the tax return (referred to
commonly as "book" vs. "tax") will generally result in: (a) an increase in a
liability for income taxes payable or a reduction of an income tax refund
receivable, (b) a reduction in a deferred tax asset or an increase in a deferred
tax liability, or (c) both of the above. FIN 48 requires the affirmative
evaluation that it is more likely than not, based on the technical merits of a
tax position, that an enterprise is entitled to economic benefits resulting from
positions taken in income tax returns. Further, if a tax position does not meet
the more-likely-than-not recognition threshold, the benefit of that position is
not recognized in the financial statements. Additionally, FIN 48 establishes
guidance for "derecognition" of previously recognized deferred tax items, and
sets forth disclosure requirements. The effective date of FIN 48 is for fiscal
years beginning after December 15, 2006. The Company does not believe that FIN
48, once adopted, will have a significant impact on its financial position,
operating results, or cash flows.

                                       F-12


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 2- Summary of Significant Accounting Policies-Continued

In July 2005, the FASB issued FASB Staff Position ("FSP") 150-5, "Accounting
Under SFAS 150 for Freestanding Warrants and Other Similar Instruments on
Redeemable Shares". FSP 150-5 clarifies that warrants on shares that are
redeemable or puttable immediately upon exercise and warrants on shares that are
redeemable or puttable in the future qualify as liabilities under SFAS 150,
regardless of the redemption feature or redemption price. The FSP is effective
for the first reporting period beginning after September 30, 2005, with
resulting changes to prior period statements reported as the cumulative effect
of an accounting change in accordance with the transition provisions of SFAS
150. We adopted the provisions of FSP 150-5 on July 1, 2005, which did not have
a material effect on our financial statements.


In July 2005, the FASB issued EITF 05-6, "Determining the Amortization period
for Leasehold Improvements Purchased After Lease Inception or Acquired in a
Business Combination", which addressed the amortization period for leasehold
improvements made on operating leases acquired significantly after the beginning
of the lease. The EITF is effective for leasehold improvements made in periods
beginning after June 29, 2005. We adopted the provisions of EITF 05-6 on July 1,
2005, which did not have a material impact to the Company's financial position,
results of operations and cash flows.


Note 3-Due from Related Party

In April 2004, under the Master Services Agreement, as amended in April 2005,
with a related party, the Company agreed to pay certain fixed and variable fees
and support services to such related party entity partly owned by its Chief
Executive Officer and by an Executive Officer in exchange for a share of
revenues of the floor brokerage services of the related party. The fixed fees
the Company has agreed to pay amount to $50,000 per year.

The Company's share of revenues of the floor brokerage services amounted to
approximately $3.6 million and $2.0 million during 2006 and 2005, respectively.
The Company's share of expenses of the floor brokerage services amounted to
approximately $741,000 and $857,000 during 2006 and 2005, respectively. The
Company has received approximately $2.6 million and $1.0 million from the
related party in connection with such floor brokerage services during 2006 and
2005, respectively, and the related party owed approximately $488,000 at
December 31, 2006.


                                       F-13


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005


Note 3-Due from Related Party-continued

The Company recognizes its share of revenues of the floor brokerage services
based on the commissions earned for such services which are recognized on the
day of the trade-trade date basis.

The father of the Company's Chairman of the Board leases to the Company a seat
on the exchange through which Capital Energy Services LLC ("CES") maintains its
floor operations. The Company assumed the cost of the lease in April 2006. The
lease provides for monthly payments of approximately $22,000 through December
31, 2006. The amount paid pursuant to the lease amounted to $188,000 during
2006.


Note 4-Other Receivable

The Company's other receivable consists of amounts due from a broker employed by
a related party, an entity owned by our Chief Executive Officer and by an
Executive Officer. This other receivable funded security deposits of $100,000
held at a US exchange and $50,000 held at a clearinghouse, which are required to
maintain the Company's floor operations.

Note 5-Due to Related Parties

The terms and amounts of due to related parties at December 31, 2006 are as
follows:

Due to Chairman of the Board, non-interest bearing, unsecured, payable by March
12, 2014, if the Company obtains additional equity or debt financing of at least
$1,000,000 following the private placement which closed in September 2004
("Capital Raise"), the Company will repay its Chairman of the Board up to 39.33%
of the Capital Raise, up to $2,810,877, with the remaining balance and accrued
interest of 4.68% from the date of the
Capital Raise due on March 22, 2014:                                 $5,044,510
Discount, using initial implied rate of 12%:                         (3,256,311)
                                                                     -----------
                                                                     $1,788,199
                                                                     ===========

Due to Executive Officer, non-interest bearing, unsecured, payable by March 12,
2014, if the Company obtains additional equity or debt financing of at least
$1,000,000 following a Capital Raise, the Company will repay its Executive
Officer up to 5.3% of the Capital Raise, up to $381,250, with the remaining
balance and accrued
 interest of 4.68% from the date of the Capital Raise
 due on March 22, 2014:                                                $508,697
Discount, using initial implied rate of 12%:                           (441,686)
                                                                       ---------
                                                                       $ 67,011
                                                                       =========

                                       F-14


<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 5-Due to Related Parties-continued

During April 2005, the Company modified the terms of its due to related parties.
The modified terms provide that, in the event of a Capital Raise, among other
things, the interest rate accrued after such event is reduced from 12% to 4.68%.
Additionally, the modified terms provide that the Company may make principal
repayments towards the due to Chairman of the Board and the due to its Executive
Officer amounting to approximately 25% of its cash flows from operating cash
flows less capital expenditures. During April 2006, the Company modified the
terms of its due to related parties to allow the Company to make principal
repayments at its discretion.

The Company satisfied its due to Chief Executive Officer during 2006. The due to
Chief Executive Officer had the same terms as the due to Executive Officer.

The amortization of the discount on the due to related parties amounted to
approximately $780,000 and $300,000 during 2006 and 2005, respectively.

The Company made principal repayments amounting to approximately $1.2 million
towards its due to related parties during 2006.

During 2005, in connection with the modified terms, the Company made principal
repayments of $177,243 on the due to its Chairman of the Board, of which $69,638
was offset against an accounts receivable of one of the Company's clients, which
is an unrelated party. Additionally, the Company made principal repayment of
$203,803 and $53,803 on the due to Chief Executive Officer and due to Executive
Officer, respectively.


Note 6- Other Related Party Transactions

The Company provides administrative services to a related party, an entity owned
by the Company's Chief Executive Officer and an Executive Officer. The Company
charged approximately $17,000 and $17,000 during 2006 and 2005, respectively,
for such services. The related party owed the Company approximately $6,000 at
December 31, 2006.

The Company has recognized revenues of approximately $273,000 and $106,000
during 2006 and 2005, respectively, from three related parties, entities in
which its Chairman of the Board is also the managing director or a shareholder.
Such related parties owed the Company approximately $182,000 as of December 31,
2006.






                                       F-15


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 7- Stockholders' Equity

During 2006, the Company issued, in aggregate, 268,083 shares of common stock to
its Chief Executive Officer. The shares were valued at approximately $276,000,
based on the quoted price of the Company's common stock at the date of issuance.
The shares were issued pursuant to the employment agreement with the Company's
Chief Executive Officer.

On May 30, 2006, the Company's Board of Directors authorized the repurchase of
such number of shares of its common stock that have an aggregate purchase price
not in excess of $200,000 at the rate of up to $50,000 worth of common stock
each quarter. The Company repurchased 4,800 shares at a cost aggregating
approximately $2,500 during 2006. Such repurchases have been accounted as
treasury stock in the accompanying balance sheet.

Stock Compensation Plan

During November 2004, the Company adopted the 2004 Stock Option Plan ("2004
Plan"). The 2004 Plan allows for the grant of both incentive stock options and
nonstatutory stock options. The 2004 Plan may be administered, interpreted and
constructed by the Board of Directors or a compensation committee. The maximum
number of shares of common stock which may be issued pursuant to options granted
under the 2004 Plan may not exceed 7,500,000 shares. There are 941,000 options
outstanding at December 31, 2006. The outstanding options are exercisable at a
weighted average price per share of $0.26 per share. The Company granted 150,000
options during 2006. The options outstanding vest over periods ranging between
18 months and three years. During 2006, the Company recorded a share-based
payment expense amounting to approximately $7,000 in connection with all options
outstanding

The share-based payment is based on the fair value of the outstanding options
amortized over the requisite period of service for option holders, which is
generally the vesting period of the options. The fair value of the options is
based on the Black Scholes Model using the following assumptions:

Exercise price:                     $0.20-$0.51
Market price at date of grant:      $0.20-$0.51
Volatility:                         none-57%
Expected dividend rate:             0%
Risk-free interest rate:            2.78%-4.81%

If any options granted under the 2004 Plan expire or terminate without having
been exercised or cease to be exercisable, such options will be available again
under the 2004 Plan. All employees of the Company and its subsidiaries are
eligible to receive incentive stock options and nonstatutory stock options.
Non-employee directors and outside consultants who


                                       F-16


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 7- Stockholders' Equity-continued

provided bona-fide services not in connection with the offer or sale of
securities in a capital raising transaction are eligible to receive nonstatutory
stock options. Incentive stock options may not be granted below their fair
market value at the time of grant or, if to an individual who beneficially owns
more than 10% of the total combined voting power of all stock classes of the
Company or a subsidiary, the option price may not be less than 110% of the fair
value of the common stock at the time of grant. The expiration date of an
incentive stock option may not be longer than ten years from the date of grant.
Option holders, or their representatives, may exercise their vested options up
to three months after their employment termination or one year after their death
or permanent and total disability. The 2004 Plan provides for adjustments upon
changes in capitalization.

Pro Forma Information Under SFAS No. 123 for Periods Prior to January 1, 2006
The following table illustrates the effect on net earnings and earnings per
share if the Company had applied the fair value recognition provisions of SFAS
No. 123 to stock-based awards for 2005:


                                      Year Ended             Year Ended
                                      December 31,           December 31,
                                      2006                   2005
                                      ------------------     ----------------
Net income:
As reported                           $  6,206,178           $ 1,259,564
Add: Total stock-based employee
 compensation included in
net income as reported, net of
 related tax effects                             -                     -
Deduct: Total stock-based employee
 compensation expense
determined under fair value based
 method for all awards,
net of related tax effects               (       -      )       (  4,338  )
                                      ------------------     ----------------

Pro forma                             $  6,206,178           $ 1,255,226
                                      ==================     ================

Basic earnings per share:
As reported                           $  0.12                $ 0.02
                                      ==================     ================

Pro forma                             $  0.12                $ 0.02
                                      ==================     ================

Diluted earnings per share:
As reported                           $  0.12                $ 0.02
                                      ==================     ================

Pro forma                             $  0.12                $ 0.02
                                      ==================     ================

For purposes of the pro forma calculations, the fair value of each option was
estimated on the date of the grant using the Black-Scholes option-pricing
model, assuming no expected dividends, and the following assumptions: expected
volatility rate:  44%, risk-free interest rate:  3.7%, expected term: 4 years.

                                       F-17


<PAGE>

                               OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 7- Stockholders' Equity-continued

A summary of the activity during 2006 and 2005 of the Company's stock option
plan is presented below:


                                                           Weighted
                                                            Average
                                           Options       Exercise Price
                                           ----------------------------

Outstanding at January 1, 2005             780,250           $0.20

Granted                                    150,000            0.30
Exercised                                        -
Expired   or cancelled                    (139,250)           0.24
                                           --------          ------
Outstanding at December 31, 2005           791,000            0.21

Granted                                    150,000            0.51
Exercised                                        -               -
Expired   or cancelled                           -               -
Outstanding at December 31, 2006           941,000          $ 0.26
                                           =======          ======

Exercisable at December 31, 2006           666,000           $0.20
                                           =======          ======
Vested at December 31, 2006                666,000           $0.20
                                           =======          ======
The weighted-average grant-date fair value of options granted during 2006 and
2005 amounted to $0.20 and $0, respectively.

Certain of the Company's options, all of which were granted prior to January 1,
2006, terminate upon the earlier of the termination for cause by the Company or
the death of the employee. Accordingly, the weighted average remaining
contractual term for such options is indefinite. The weighted average remaining
contractual life is indefinite for 791,000 outstanding options at December 31,
2006, of which 666,000 are exercisable and vested.

For those options that have a definite contractual term, 150,000 were
outstanding at December 31, 2006, of which none were exercisable or vested. The
remaining weighted average contractual term for such options is 9.7 years.

The total compensation cost for options amounted to $6,506 and $0 during 2006
and 2005, respectively.

The Company's policy is to issue shares pursuant to the exercise of stock
options from its available authorized but unissued shares of common stock. It
does not issue shares pursuant to the exercise of stock options from its
treasury shares.


                                       F-18


<PAGE>

                               OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 7- Stockholders' Equity-continued

The weighted average remaining contractual life and weighted average exercise
price of options outstanding at December 31, 2006, for selected exercise price
ranges, is as follows:

Options outstanding:
<TABLE>
<CAPTION>

---------------------------- -------------------------- -------------------------- --------------------------
                                                            Weighted average
 Range of exercise prices                                 remaining contractual        Weighted average
                                 Number of options                life                  exercise price
---------------------------- -------------------------- -------------------------- --------------------------
<S>        <C>                        <C>                      <C>                          <C>
           $0.20                      691,000                  indefinite                   $ 0.20
---------------------------- -------------------------- -------------------------- --------------------------
           $0.30                      100,000                  indefinite                   $ 0.30
---------------------------- -------------------------- -------------------------- --------------------------
           $0.51                      150,000                      9.7                       $ 0.51
---------------------------- -------------------------- -------------------------- --------------------------

</TABLE>

Warrants

A summary of the activity during 2006 and 2005 of the Company's warrants is
presented below:
                                                                 Weighted
                                                                  Average
                                        Warrants               Exercise Price
                                       ----------             ----------------
Outstanding at January 1, 2005         1,000,000                   $  0.20

Granted                                     -                         0.20
Exercised                                   -                          -
Expired or cancelled                    (450,000)                     0.20
                                       ----------             ----------------
Outstanding at December 31, 2005         550,000                      0.20

Granted                                1,200,000                      0.95
Exercised                                   -                          -
Expired or cancelled                    (200,000)                     0.95
                                       ----------             ----------------
Outstanding at December 31, 2006       1,550,000                     $0.68
                                       ==========             ================
Exercisable at December 31, 2006       1,150,000                     $0.59
                                       ==========             ================
Vested at December 31, 2006            1,150,000                     $0.59
                                       ==========             ================

The weighted-average grant-date fair value of warrants granted during 2006 and
2005 amounted to $0.40 per warrant.

Certain of the Company's warrants, all of which were granted prior to January 1,
2006, terminate upon the earlier of the termination for cause by the Company or
the death of the employee. Accordingly, the weighted average remaining
contractual term for such warrants

                                       F-19


<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 7- Stockholders' Equity-continued

is indefinite. The weighted average remaining contractual life is indefinite for
100,000 warrants at December 31, 2006, all of which are exercisable and vested.

For those warrants that have a definite contractual term, 1,450,000 were
outstanding at December 31, 2006, of which 1,050,000 were exercisable or vested.
The remaining weighted average contractual term for warrants outstanding,
exercisable, vested at December 31, 2006 is 1.5 years, 1.3 years, and 1.3 years,
respectively.

The weighted average remaining contractual life and weighted average exercise
price of warrants outstanding at December 31, 2006, for selected exercise price
ranges, is as follows:

Warrants:
<TABLE>
<CAPTION>
---------------------------- -------------------------- -------------------------- --------------------------
 Range of exercise prices       Number of warrants          Weighted average           Weighted average
                                                          remaining contractual         exercise price
                                                                  life
---------------------------- -------------------------- -------------------------- --------------------------
<S>        <C>                        <C>                              <C>                  <C>
           $0.20                      550,000            Indefinite to 0.5 years            $ 0.20
---------------------------- -------------------------- -------------------------- --------------------------
           $0.95                     1,000,000                   2 years                     $0.95
---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>

During February 2006, the Company issued 1,200,000 warrants to a company
wholly-owned by its Chief Executive Officer. The exercise price of the warrants
is $0.95 per share. The warrants expire in February 2009. The warrants become
exercisable in tranches of up to 400,000 warrants beginning June 30, 2006, and
every six months thereafter, upon reaching certain trading milestones by two of
the Company's customers. The Company recognizes the fair value of the
exercisable warrants when performance has occurred. The fair value of the
warrants is based on their fair value at the time of grant. The fair value of
the options is based on the Black Scholes Model using the following assumptions:

Exercise price:                     $0.20-$0.95
Market price at date of grant:      $0.20-$0.95
Volatility:                         none-57%
Expected dividend rate:             0%
Risk-free interest rate:            4.37%-5.13%

The total compensation cost related to nonvested awards not yet recognized
amounted to approximately $160,000 at December 31, 2006 and the Company expects
that it will be recognized over the following weighted-average period of 6
months.

The Company has recognized an expense of approximately $240,000 and $162,000
during 2006 and 2005, respectively, in connection with all warrants which became
exercisable during the respective periods.

                                       F-20


<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 7- Stockholders' Equity-continued

The Company's policy is to issue shares pursuant to the exercise of warrants
from its available authorized but unissued shares of common stock. It does not
issue shares pursuant to the exercise of warrants from its treasury shares.

Note 8-Income Taxes



The Company has used all of its remaining net operating losses 2006.


      The components of the provision for income taxes are as follows:


                                                  2006           2005
                                             --------------   ---------

Current:
      Federal                                $   1,141,779    $      -
      State                                        318,273           -
                                             --------------   ---------

            Total current                        1,459,052           -
                                             --------------   ---------

            Total provision for income taxes $   1,459,052    $      -
                                             ==============   =========



      A reconciliation of the Company's effective tax rate to the statutory
federal rate is as follows:



                                                           2006       2005
                                                         -------    -------
Federal statutory taxes                                    35.0%      35.0%
State income taxes, net of federal tax benefit              5.7        5.7
Permanent differences                                       4.5        0.0
Utilization of net operating losses                       (26.2)       --
Change in valuation allowance                              --        (40.7)
                                                         -------    -------

                                                           19.0%       0.0%
                                                         =======    =======



                                       F-21


<PAGE>




                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 9- Commitments

During October 2005, the Company named a new Chief Executive Officer, elected
him a director, and entered into an employment agreement with him (the
"Agreement"). The initial term of the Agreement is for 51 months, subject to
renewal or earlier termination.

The Company's Chief Executive Officer's salary will be as follows: $20,833 upon
entering into the Agreement, $46,875 from October 30, 2005 to December 31, 2005,
$275,000 from January 1 to December 31, 2006, $300,000 from January 1, 2007 to
December 31, 2007, $325,000 from January 1 to December 31, 2008, $350,000 from
January 1, 2009 to December 31, 2009 ("Fixed Compensation").

In addition, effective April 1, 2006, the Chief Executive Officer is paid (i)
cash compensation amounting to five percent (5%) of Gross Revenues of the
Company, and (ii) stock compensation amounting to two percent (2%) of the Gross
Revenues of the Company, as defined. Gross Revenue is defined as the total gross
revenue related to any and all aspects of the brokerage business, including
incentives received from the exchanges, based on generally accepted accounting
principles. The shares of Company common stock will be granted at fair value at
the date of grant.

The Company will issue options to its Chief Executive Officer equal to 20% of
the number of shares of common stock issuable under warrants which become
exercisable pursuant to any Order Flow Agreements (Order Flow Agreements are the
agreements for the Company to issue warrants to a firm based on the volume of
orders the firm placed with the Company). Those options will be fully vested
Non-Statutory Stock Options granted under the Company's 2004 Plan at fair value
at the date of grant. Also, the Company will issue to its Chief Executive
Officer 5,000 options each time a firm registers with and executes its first
10,000 lots on the Company's OPEX platform. The total number of such options
will be limited to 2,500,000. Such options will be fully vested Non-Statutory
Options granted under the Plan at fair value at the date of grant.

Upon the sale or merger or other business combination of the Company and another
company or companies, the Company's Chief Executive Officer will be entitled to
a lump sum payment of 50% of the unpaid Fixed Compensation should he desire not
to be employed with the new or successor entity.






                                       F-22


<PAGE>




                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 9- Commitments

Effective February 1, 2007, the Company leases its executive offices under a
10-year leasing arrangement providing for a monthly base rent of $9,953,
increasing gradually to up to $11,684. The first 6 months of occupancy are free.
The minimum annual payments under such commitment for the next five years and
thereafter are as follows:



Year                                           Minimum Annual Payments
----                                           -----------------------
2007                                             $  49,765
2008                                               119,436
2009                                               124,199
2010                                               124,632
2011                                               129,395
2012 and thereafter                                691,111

The Company's rental expense amounted to approximately $74,000 and $80,000
during 2006 and 2005, respectively.


Note 10- Subsequent Events (Unaudited)

      On January 22, 2007, the Company, its Chairman of the Board, its Chief
      Executive Officer, and its President (collectively, the "Founding
      Stockholders"), and NYMEX Holdings, Inc. (the "Investor") entered into a
      binding term sheet (the "Term Sheet") pursuant to which the Founding
      Stockholders have agreed to sell 10,291,448 shares of common stock of the
      Company (the "Purchased Shares") to the Investor. The Purchases Shares
      represents 19% of the currently outstanding shares of Common Stock on a
      fully diluted basis (without giving effect to the warrant discussed
      below). Pursuant to the Term Sheet, the Company has agreed to issue the
      warrant described below to the Investor, in consideration of the
      Investor's agreement to engage in certain joint marketing and cobranding
      activities and to provide hosting of Company servers and assistance in
      joint technology development. In addition, the Investor and the Company
      agreed to certain arrangements with respect to OTC products which the
      Company clears through the clearport system.

      The warrant to be issued by the Company (the "Warrant") will permit the
      Investor to purchase a number of shares of common stock sufficient to
      increase the Investor's ownership of the Company's common stock to an
      amount not to exceed 40% of the Company's then outstanding common stock on
      a fully diluted basis, based on the assumption that the Investor has
      retained ownership of the Purchased Shares. The Warrant will be
      exercisable from time to time for a period of 18 months from the closing
      date of the transactions contemplated by the Term


                                       F-23


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 10- Subsequent Events (Unaudited) -continued

      Sheet at an exercise price per share equal to $4.30. The Warrant will not
      contain a cashless exercise feature. The exercise price will be subject to
      certain customary adjustments to protect against dilution.

      The transactions contemplated by the Term Sheet will be evidenced by
      definitive agreements (the "Definitive Agreements") which will contain
      representations, warranties, covenants, indemnities and conditions
      precedent customary and appropriate for this type of transaction
      including, but not limited to, representations, warranties, covenants and
      indemnities from each of the Founding Stockholders, the Company and the
      Investors.

      The closing of the transactions contemplated by the Term Sheet is subject
      to certain conditions precedent set forth in the Term Sheet, including,
      (i) the Investor being satisfied, in its sole and reasonable discretion,
      with its legal, accounting, regulatory, business and other due diligence
      investigation of the Company, which will be completed prior to the
      execution of the Definitive Agreements, (ii) the execution and delivery of
      mutually acceptable Definitive Agreements within 60 days of the date of
      the execution of the Term Sheet, (iii) the delivery of mutually acceptable
      employment agreements with key Company management and executives, other
      than the Company's Chief Executive Officer, which will include customary
      non-competition and non-solicitation provisions, and the delivery of a
      mutually acceptable non-competition agreement with the Company's President
      and (iv) The Company's Chairman agreement to waive any obligation on the
      part of the Company to make any prepayment of principal or to begin paying
      interest upon amounts due to him under the Loan Agreement between him and
      the Company, dated March 22, 2004, as a result of any exercise by the
      Investor of the Warrant.

      If the Investor does not inform the Company within 3 weeks of being
      provided substantial access to due diligence that it is satisfied with its
      due diligence review and that it intends to proceed with the transaction,
      the Company and the Founding Stockholders will be entitled, in their sole
      discretion, to terminate the transaction by written notice to the
      Investor.

      Effective upon closing of the transactions contemplated by the Term Sheet
      and for so long as the Investor owns at least 5,145,724 shares of common
      stock, the Investor will be entitled to designate one person (reasonably
      acceptable to the Company) that the Company is required to nominate as a
      member of the Company's board of directors (the "Investor Director"), and
      each of the Founding Stockholders shall be required to vote their shares
      in favor of the election of the Investor's designation. For so long as the
      Investor owns at least 5,145,724 shares of common stock, the Investor will
      be required to vote its shares in favor of each individual nominated for
      election as a member of the Company's board of directors by the nominating
      committee of the Company. For so long as the


                                      F-24


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 10- Subsequent Events-continued

      Investor owns at least 5,145,724 shares of common stock and subject to
      certain permitted threshold amounts, the consent of the Investor Director
      (which may not be unreasonably withheld) will be required before the
      Company may take certain actions including (i) issuances of shares of a
      class of stock ranking senior to the common stock, (ii) acquisitions of
      businesses or assets, (iii) entry into related party transactions, (iv)
      the payment of dividends on, or the optional redemption of, capital stock
      or the issuance of debt and (v) entry into any business which is not
      similar, ancillary or related to any of the businesses in which the
      Company is currently engaged.

      For so long as the Investor owns at least 5,145,724 shares of common
      stock: (i) each of the Founding Stockholders and the Investor will have a
      right of first refusal to purchase or subscribe for their pro rata
      percentage of shares in certain subsequent sales by the Company of common
      stock and/or certain other securities convertible into or exchangeable for
      common stock, (ii) each of the Founding Stockholders and the Investor will
      have certain rights of first refusal with respect to proposed sales of
      common stock by the others and (iii) before they may accept any offer by
      an independent third party to acquire 50% or more of the total voting
      power of the common stock or voting stock of the Company, the Founding
      Stockholders and the Company will be required to provide notice of such
      offer to the Investor and permit the Investor a period of 10 days to make
      its own offer.

      In connection with the Purchased Shares, the Company will enter into a
      registration rights agreement with the Investor which, among other things,
      will provide the Investor, subject to standard exceptions, with (i)
      unlimited "piggyback" rights subject to standard underwriter lock-up and
      cutback provisions and (ii) the right to two demand registrations for
      underwritten offerings or take downs off of a shelf registration
      statement, provided that (A) a minimum of $5,000,000 of Common Stock are
      offered in such a demand registration or take down and (B) the Company
      shall not be obligated to effectuate more than one underwritten offering
      pursuant to a demand registration by the Investor in any six-month period.
      In addition, if the Company is eligible to register its securities on Form
      S-3 (or any successor form then in effect), the Investor will be entitled
      to unlimited registrations on Form S-3 (or any successor form then in
      effect), including shelf registrations, provided that (x) a minimum of
      $5,000,000 of common stock are offered in such an S-3 registration and (y)
      the Company will not be obligated to effect more than two S-3
      registrations in any twelve month period. An S-3 registration will not
      count as a demand registration, unless such registration is for an
      underwritten offering.

      The Investor will enter into a standstill agreement with the Company
      pursuant to which the Investor, with certain limited exceptions, will
      agree not to purchase any additional shares of the Company's common stock
      until the one year anniversary of the closing date of the transactions
      contemplated by the Term Sheet.

                                      F-25


<PAGE>


                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2006 and 2005

Note 10- Subsequent Events-continued

      The closing of the transactions contemplated by the Term Sheet is expected
      to occur as soon as reasonably practicable after the date of execution of
      the Term Sheet. The provisions of the Term Sheet are subject to, among
      other things, satisfactory completion of due diligence by the Investor.
      There can be no assurance that the transactions contemplated by the Term
      Sheet will close.






















                                      F-26


<PAGE>