UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB
                 [x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2007
                                       or
                 [ ] TRANSITION REPORT UNDER 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.

        (Exact name of small business issuer as specified 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, NY 10595
               ----------------------------------------------------
                    (Address of principal executive offices )

                                 (914) 773-1100
                ------------------------------------------------
                (Issuer's telephone number, including area code)


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 [ ]


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


The total  number of shares of the  issuer's  common  stock,  $.0001  par value,
outstanding at August 7, 2007 was 52,263,403.


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

<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

To the extent that the information presented in this Quarterly Report on Form
10-QSB for the quarter ended June 30, 2007 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 Quarterly Report, in "Management's Discussion and Analysis or Plan of
Operation".

In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.




























                                       2
<PAGE>

                                OPTIONABLE, INC.
                           CONSOLIDATED BALANCE SHEET
                                  June 30, 2007
                                   (Unaudited)

                                     ASSETS
Current Assets:
Cash and cash equivalents                                  $       12,134,325
Accounts receivable, net of provision for
 doubtful accounts of $25,627                                         354,506
Accounts receivable from related parties                                1,125
Prepaid income taxes                                                1,585,318
Other current assets                                                  128,202
                                                           -------------------
     Total current assets                                          14,203,476

  Property and equipment, net of accumulated
   depreciation of $512,687                                           243,256
  Other assets                                                        170,950
  Trading rights                                                      600,250
                                                           -------------------
     Total assets                                          $       15,217,932
                                                           ===================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable and accrued expenses                    $          343,150
  Accrued compensation                                                677,976
                                                           -------------------
    Total current liabilities                                       1,021,126

Due to stockholder, net of unamortized discount
 of $3,110,789                                                      1,933,721
Due to executive officer, net of unamortized
 discount of $421,928                                                  86,769
                                                           -------------------
     Total liabilities                                              3,041,616
                                                           -------------------
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, 52,428,203 issued and  52,423,403
    outstanding                                                         5,242
  Additional paid-in capital                                      162,734,149
  Treasury stock at cost, 4,800 shares                                 (2,506)
  Accumulated deficit                                            (150,560,569)
                                                           -------------------

     Total stockholders' equity                                    12,176,316
                                                           -------------------

     Total liabilities and stockholders' equity            $       15,217,932
                                                           ===================




            See Notes to Unaudited Consolidated Financial Statements.
                                      3

<PAGE>

                                OPTIONABLE, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                           For the three-month period ended   For the six-month period ended
                                                                       June 30,                           June 30,
                                                          ---------------------------------   -------------------------------
                                                               2007              2006              2007             2006
                                                          ---------------   ---------------   --------------     ------------
                                                           (Unaudited)        (Unaudited)       (Unaudited)        (Unaudited)
Revenues:
<S>                                                       <C>               <C>               <C>                <C>
Brokerage fees                                            $    2,609,149    $    1,433,624    $   8,720,065      $ 2,761,847
Brokerage fees-related parties                                   250,333           605,027        1,151,798        1,202,041
Incentives-stockholder                                         1,198,091           438,013        3,285,058          746,772
                                                          ---------------   ---------------   --------------     ------------
Net revenues                                                   4,057,573         2,476,664       13,156,921        4,710,660

Cost of revenues                                               4,851,690         1,070,759        7,826,299        1,701,806
Cost of revenues-related parties                                       -           118,251           30,013          334,972
                                                          ---------------   ---------------   --------------     ------------
                                                               4,851,690         1,189,010        7,856,312        2,036,778

Gross profit                                                    (794,117)        1,287,654        5,300,609        2,673,882

Operating expenses:
  Selling, general and administrative                          5,452,283           226,692        6,209,134          437,269
  Impairment-consideration receivable from stockholder       145,771,879                 -      145,771,879                -
  Impairment-intangible asset                                  1,085,610                 -        1,085,610                -
  Research and development                                       299,917            77,169          523,922          145,799
                                                          ---------------   ---------------   --------------     ------------

     Total operating expenses                                152,609,689           303,861      153,590,545          583,068
                                                          ---------------   ---------------   --------------     ------------

     Operating income                                       (153,403,806)          983,793     (148,289,936)       2,090,814
                                                          ---------------   ---------------   --------------     ------------

Other income (expense):
Interest income                                                   98,853            17,875          197,314           27,097
Other income                                                           -                 -            5,100                -
Other expense                                                    (15,000)                -          (15,000)               -
Interest expense to related parties                              (83,884)         (333,121)        (165,280)        (624,455)
                                                          ---------------   ---------------   --------------     ------------
                                                                     (31)         (315,246)          22,134         (597,358)
                                                          ---------------   ---------------   --------------     ------------

Income before income tax                                    (153,403,837)          668,547     (148,267,802)       1,493,456

Income tax benefit ( expense)                                  1,322,538                 -         (710,436)               -
                                                          ---------------   ---------------   --------------     ------------

Net income                                                $ (152,081,299)   $      668,547    $(148,978,238)     $ 1,493,456
                                                          ===============   ===============   ==============     ============

Basic earnings per common share                                  $ (2.90)           $ 0.01          $ (2.85)          $ 0.03
                                                          ===============   ===============   ==============     ============

Diluted earnings per common share                                $ (2.90)           $ 0.01          $ (2.85)          $ 0.03
                                                          ===============   ===============   ==============     ============

Basic weighted average common
shares outstanding                                            52,399,667        51,407,165       52,214,944       51,406,798
                                                          ===============   ===============   ==============     ============

Diluted weighted average common shares outstanding            52,399,667        52,465,725       52,214,944       52,588,678
                                                          ===============   ===============   ==============     ============

</TABLE>

            See Notes to Unaudited Consolidated Financial Statements.
                                      4

<PAGE>

                                OPTIONABLE, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                      For the six-month period ended
                                                                                  June 30,
                                                                    -----------------------------------
                                                                         2007               2006
                                                                    ----------------   ----------------
                                                                      (Unaudited)        (Unaudited)

Cash flows from operating activities:
<S>                                                                  <C>                   <C>
Net (loss) income                                                    $ (148,978,238)       $ 1,493,456
Adjustments to reconcile net income to net cash provided by
 operating activities:
  Depreciation                                                               55,483             14,422
  Amortization of debt discount                                             165,280            624,455
  Amortization of intangible asset                                           70,390                  -
  Amortization of consideration receivable from stockholder               3,312,997                  -
  Provision for doubtful accounts                                           636,881            (27,859)
  Fair value of warrants and options                                      4,022,194             83,170
  Fair value of shares issued to chief executive officer                    181,987             49,533
  Loss on sale of trading right                                              15,000                  -
  Impairment-consideration receivable from stockholder                  145,771,879                  -
  Impairment- intangible asset                                            1,085,610                  -
Changes in operating assets and liabilities:
  Accounts receivable                                                     1,750,365           (377,880)
  Accounts receivable-related parties                                       181,213                  -
  Due from related party                                                    488,273            (70,513)
  Incentives receivable from stockholder                                    666,912           (197,116)
  Other current assets                                                      (65,090)            (7,828)
  Accounts payable and accrued expenses                                     150,157            (42,274)
  Prepaid income taxes                                                   (3,039,564)                 -
  Accrued compensation                                                   (1,213,909)           207,467
                                                                    ----------------   ----------------

Net cash provided by operating activities                                 5,257,820          1,749,033
                                                                    ----------------   ----------------

Cash flows used in investing activities:
  Acquisition of intangible asset                                          (400,000)                 -
  Acquisition of trading rights                                          (1,180,250)                 -
  Proceeds from disposition of trading right                                565,000                  -
  Purchases of property and equipment                                      (241,238)           (17,643)
                                                                    ----------------   ----------------

Net cash used in investing activity                                      (1,256,488)           (17,643)
                                                                    ----------------   ----------------

Cash flows from financing activities:

  Principal repayments of due to former chief executive officer                   -           (558,697)
  Principal repayments of due to executive officer                                -           (200,000)
  Principal repayments of due to former chairman of the board                     -           (400,000)
  Proceeds from exercise of options                                          34,600                  -
  proceeds from exercise of warrants                                        185,000                  -
                                                                    ----------------   ----------------

Net cash used in financing activities                                       219,600         (1,158,697)
                                                                    ----------------   ----------------

 Net increase in cash                                                     4,220,932            572,693

Cash, beginning of year                                                   7,913,393          1,811,453
                                                                    ----------------   ----------------

Cash, end of year                                                   $    12,134,325    $     2,384,146
                                                                    ================   ================

Supplemental disclosures of cash flow information:
     Cash paid for taxes                                            $     3,750,000    $             -
                                                                    ================   ================

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

Noncash investing and financing activities:

Fair value of warrants issued in conncetion with the acquisition
 of intangible asset                                                $       756,000    $             -
                                                                    ================   ================

</TABLE>


            See Notes to Unaudited Consolidated Financial Statements.
                                        5

<PAGE>

                        OPTIONABLE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 1-Organization, Description of Business and Basis of Presentation

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 offers its
services through traditional voice-brokerage, an automated electronic trading
platform, and on the floor of a US exchange.

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and the footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, considered necessary for a fair
presentation have been included. Operating results for the six months ended June
30, 2007 are not necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 2007.

The accompanying consolidated financial statements include the results of
operations of Opex International, Inc. and Hydra Commodity Services, Inc. for
the six-month period ended June 30, 2007. All material inter-company accounts
and transactions between the Company and its subsidiaries have been eliminated
in consolidation.

Recent Developments

Several recent developments including:

1) the apparent loss of its most significant customer;
2) a decline in business from other brokerage customers which management
believes is related to customer concerns over the events, and unfavorable
publicity related thereto, which led to the loss of its most significant
customer; and
3) the mutually agreed departures of a number of its brokerage personnelamong
other things have adversely impacted the Company's ability to continue to
operate as a brokerage services provider through traditional voice-brokerage and
on the floor of a US exchange.

In response, the Company is revising its strategy to:

1)       emphasize the marketing of its automated electronic trading platform to
         end-users through indirect channels, such as through other third-party
         brokers and other exchanges; and
2)       continue enhancing its automated trading platform for use by end-users
         in additional derivative markets (i.e., other than those in the energy
         derivatives markets.)

The Company anticipates that, under its revised strategy, any revenue-generating
agreements could take the form of licensing or royalty-based agreements. The
Company's revised strategy is still in its early stages of development and no
such agreements have yet been reached.



                                       6
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 1-Organization, Description of Business and Basis of Presentation-continued


The Company believes that that revenues from its brokerage services will be
minimal under its existing structure. While the Company is not discontinuing its
brokerage services, it will most likely need to acquire the operations of a
brokerage firm or firms, and hire their personnel, if it is to expand its
current operations. There is no assurance that the Company will be able to
identify potential acquisitions, negotiate acquisitions on terms acceptable to
the Company, or at all, or obtain the necessary financing for any potential
acquisitions. The Company is not currently engaged in any acquisition
discussions.

The Company believes that it has sufficient funds to meet its obligations, based
on its internal projections, for at least the next twelve months. However, the
Company cannot guarantee that it will do so. If there are unforeseen expenses or
financial obligations which occur during that period, the Company may not be
able to generate enough revenues to meet such obligations. Additionally, if the
Company acquires a brokerage firm or a technology company which could be
instrumental in the Company's long-term growth, this could hamper the Company's
ability to continue as going concern, both from a short-term or a long-term
perspective, and the Company would have to resort to financing, through either
debt or equity placements, for the funding of either such acquisitions or
unforeseen expenses or financial obligations. There can be no assurance that any
such financing would be available on acceptable terms, or at all.

Note 2- Summary of Significant Accounting Policies

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of
six 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 the six months ended June 30, 2007, 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. Two of the Company's customers accounted
for 32% and18% of its accounts receivable net of doubtful accounts,
respectively, at June 30, 2007. No other customer accounted for more than 10% of
its accounts receivable at June 30, 2007.

The Company's incentives receivable are due from a United States exchange
providing the Company with incentives to submit customer trades to the
exchange's clearing platform. The incentives receivable are not collateralized.


                                       7
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-continued

Customer Concentration

One of the Company's customers accounted for approximately 24% and 22% of its
revenues during the six-month periods ended June 30, 2007 and 2006,
respectively. During May 2007, this customer announced that it was suspending
its relationship with the Company and that customer has not used the Company's
services in connection with any additional transactions since that time.

Product Concentration

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

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivable, accounts
receivable-related party, incentives receivable from a stockholder, accounts
payable and accrued expenses, and accrued compensation, approximate their fair
value due to their short-term maturities. The carrying amount of due to former
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 Financial Accounting 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 at June 30, 2007.

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.



                                       8
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-Continued

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.

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 668,000 and 791,000 at June
30, 2007 and 2006, respectively. The outstanding warrants amounted to 19,000,000
and 1,650,000 at June 30, 2007 and 2006, respectively. The outstanding warrants
at June 30, 2007 include 18,100,000 warrants sold to NYMEX Holdings, Inc. (the
"Investor") in April 2007 but for which the Company has not received the agreed
consideration. The options and warrants outstanding at June 30, 2007 have been
excluded from the computation of diluted earnings per share due to their
antidilutive effect.

The following sets forth the computation of basic and diluted earnings per share
for the six-month periods ended June 30:

                                                 2007                2006
Numerator:
Net (loss) income                            $(148,978,238)       $1,493,456
                                             ==============       ===========
Denominator:
Denominator for basic earnings per share-
Weighted average shares outstanding             52,214,944        51,406,798
Effect of dilutive employee stock options                -           142,380
Effect of dilutive warrants                              -         1,039,500
                                             --------------       -----------
Denominator for diluted earnings per share-
Weighted average shares outstanding             52,214,944        52,588,678
                                             ==============       ===========
Basic (loss) earnings per share                     $(2.85)            $0.03
                                             ==============       ===========
Diluted earnings per share                          $(2.85)            $0.03
                                             ==============       ===========


                                       9
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

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 exchange.
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 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
the exchange, the incentives are earned on the day the Company submits
transactions to the exchange based on the revenues generated from such
transactions and are no longer subject to a minimum volume of transactions being
submitted to the exchange. The Company accounts for all transactions submitted
to the exchange on a daily basis. Accordingly, the Company is able to determine
when the incentives are earned based on thedate it submits transactions to the
exchange. The Company has no other obligations to the exchange to earn the
incentives;



                                       10
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-Continued



3) "Seller's" price to the buyer is fixed or determinable. Based on the
incentive program terms of the exchange, their published prices for the type of
transactions the Company submits to it, and the Company's transactions records,
the Company is able to estimate the revenues the 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, the exchange has paid the
Company timely on incentives earned. The Company has no knowledge that the
exchange does 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 program.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recovered. In such circumstances, the Company will estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. Future cash flows are the future cash inflows expected to be
generated by an asset less the future outflows expected to be necessary to
obtain those inflows. If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying amount of the asset, the
Company will recognize an impairment loss to adjust to the fair value of the
asset.

Share-Based Payments

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



                                       11
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-Continued

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

The Company accounts for share-based payments awarded to the Investor pursuant
to SFAS No. 123R and EITF No.96-16, "Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services". Share-based payments awarded to the Investor, including
those awarded by another holder of an economic interest in the Company as
compensation for services to the Company, are share-based payments transactions.
The Company measures the fair value of the equity instruments to the Investor
using the stock price and other measurement assumptions as of the earlier of
either of the following: 1) the date at which a commitment for performance, as
defined, by the counterparty to earn the equity instruments is reached, or 2)
the date at which the counterparty's performance is complete. The fair value of
the equity instruments amounts to the carrying value of the consideration
receivable from the Investor and is recognized over the agreed-upon terms of the
consideration, which is at most 10 years. The Company evaluates the carrying
value of the consideration receivable from the Investor at each measurement
date.


                                       12
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-Continued


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 "Fair Value
Measurements". This Statement defines fair value, establishes a framework for
measuring fair value in accordance with 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 FASB 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.

In February 2007, the FASB issued FASB Statement No. 159 "The Fair Value Option
for Financial Assets and Financial Liabilities--Including an amendment of FASB
Statement No. 115". This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This statement is expected to expand the use of fair value
measurement, which is consistent with the FASB's long-term measurement
objectives for accounting for financial instruments. This statement applies to
all entities, including not-for-profit organizations. Most of the provisions of
this statement apply only to entities that elect the fair value option. However,
the amendment to FASB Statement No. 115, Accounting for Certain Investments in
Debt and Equity Securities, applies to all entities with available-for-sale and
trading securities. Some requirements apply differently to entities that do not
report net income. The following are eligible items for the measurement option
established by this Statement:

Recognized financial assets and financial liabilities except:

        o An investment in a subsidiary that the entity is required to
          consolidate

        o An interest in a variable interest entity that the entity is
          required to consolidate


                                       13
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-Continued

        o Employers' and plans' obligations (or assets representing net
          overfunded positions) for pension benefits, other postretirement
          benefits (including health care and life insurance benefits),
          postemployment benefits, employee stock option and stock purchase
          plans, and other forms of deferred compensation arrangements, as
          defined in FASB Statements No. 35, "Accounting and Reporting by
          Defined Benefit Pension Plans", No. 87, "Employers' Accounting for
          Pensions", No. 106, "Employers' Accounting for Postretirement Benefits
          Other Than Pensions", No. 112, "Employers' Accounting for
          Postemployment Benefits", No. 123 (revised December 2004),
          "Share-Based Payment", No. 43, "Accounting for Compensated Absences",
          No. 146, "Accounting for Costs Associated with Exit or Disposal
          Activities", and No. 158, "Employers' Accounting for Defined Benefit
          Pension and Other Postretirement Plans", and APB Opinion No. 12,
          "Omnibus Opinion--1967"

        o Financial assets and financial liabilities recognized under leases
          as defined in FASB Statement No. 13, "Accounting for Leases" (This
          exception does not apply to a guarantee of a third-party lease
          obligation or a contingent obligation arising from a cancelled lease.)

        o Deposit liabilities, withdrawable on demand, of banks, savings and
          loan associations, credit unions, and other similar depository
          institutions1

        o Financial instruments that are, in whole or in part, classified by
          the issuer as a component of shareholder's equity (including
          "temporary equity"). An example is a convertible debt security with a
          noncontingent beneficial conversion feature

        o Firm commitments that would otherwise not be recognized at inception
          and that involve only financial instruments o Nonfinancial insurance
          contracts and warranties that the insurer can settle by paying a third
          party to provide those goods or services

        o Host financial instruments resulting from separation of an embedded
          nonfinancial derivative instrument from a nonfinancial hybrid
          instrument.

The fair value option established by this statement permits all entities to
choose to measure eligible items at fair value at specified election dates. A
business entity shall report unrealized gains and losses on items for which the
fair value option has been elected in earnings (or another performance indicator
if the business entity does not report earnings) at each subsequent reporting
date. A not-for-profit organization shall report unrealized gains and losses in
its statement of activities or similar statement.

The fair value option:

        o May be applied instrument by instrument, with a few exceptions, such
          as investments otherwise accounted for by the equity method

        o Is irrevocable (unless a new election date occurs)

        o Is applied only to entire instruments and not to portions of
          instruments.



                                       14
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 2- Summary of Significant Accounting Policies-Continued

This statement is effective as of the beginning of an entity's first fiscal year
that begins after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, "Fair
Value Measurements". No entity is permitted to apply this Statement
retrospectively to fiscal years preceding the effective date unless the entity
chooses early adoption.


Note 3-Due from Related Party

In April 2004, under the Master Services Agreement, as amended on April 12,
2005, with a related party, Capital Energy Services, Inc., the Company agreed to
pay certain fixed and variable fees and support services to such related party
entity, partly owned by its former 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 Company has agreed to pay a fixed fee in the amount of
$50,000 per year. This agreement was terminated on January 31, 2007.


The Company's share of revenues of the floor brokerage services amounted to
approximately $901,000 and $597,000 during the six-month periods ended June 30,
2007 and 2006, respectively. The Company's share of expenses of the floor
brokerage services amounted to approximately $15,000 and $216,000 during the
six-month periods ended June 30, 2007 and 2006, respectively. The Company has
received approximately $1,508,000 from the related party in connection with such
floor brokerage services during the six-month period ended June 30, 2007.
Additionally, in April 2007, the Company reimbursed the related party
approximately $165,000 for commissions to a broker that such related party paid
on the Company's behalf.


                                       15
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 3-Due from Related Party-continued

The Company recognized 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 former Chairman of the Board leases to the Company a
seat on the exchange through which Capital Energy maintains its floor
operations. The Company assumed the cost of the lease in April 2006 and renewed
it in December 2006 through June 2007. The Company terminated this agreement
effective April 1, 2007. The lease provided for monthly payments of $5,000
through June 30, 2007. The amount paid pursuant to the lease amounted to $15,000
during the six-month period ended June 30, 2007.


Note 4-Trading rights

During March 2007, the Company acquired two trading rights for an aggregate
amount of approximately $1.2 million, allowing it to operate on the floor of a
US exchange. The trading rights do not have a finite life. During June 2007, the
Company sold one of its trading rights for $565,000, generating a loss of
$15,000 which is included in other expenses.

Note 5-Agreement with NYMEX Holding, Inc.

On April 10, 2007, the Company and its former Chairman of the Board, its former
Vice Chairman and Chief Executive Officer, and its President, (the "Founding
Stockholders") and the Investor entered into a definitive stock and warrant
purchase agreement (the "Stock and Warrant Purchase Agreement") and consummated
the transactions contemplated thereby.


                                       16
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 5-Agreement with NYMEX Holding, Inc.-continued

Pursuant to the terms of the Stock and Warrant Purchase Agreement, the Investor
purchased an aggregate of 10,758,886 shares of the Company's common stock from
the Founding Stockholders (the "Purchased Shares") representing 19% of the then
outstanding shares of common stock on a fully diluted basis (without giving
effect to the Warrant, as defined and discussed below). Additionally, pursuant
to the Stock and Warrant Purchase Agreement, the Company physically issued to
the Investor a Warrant, as defined and described below, in consideration of the
Investor's agreement (the "Consideration"):

1.       to develop with the Company a marketing plan, which plan was to detail
         proposed expenditures by the Investor and joint activities;
2.       subject to regulatory requirements, to provide space for up to twenty
         of the Company's brokers on the Investor's trading floor; and
3.       to host the Company's OPEX electronic trade matching and brokerage
         system ("OPEX") in the Investor's data center and provide the Company
         with computer and networking hardware, software, bandwidth and
         ancillary infrastructure and services reasonably necessary to
         interconnect OPEX with the Investor's clearing system market gateway to
         trading and clearing services.
4.       Additionally, the Company agreed to exclusively clear all OTC products
         through the Investor's clearing system for a period of ten years
         (provided that the Investor continues to offer clearance for a
         particular product through the Investor's clearing system) in
         consideration for additional fees to be paid by the Investor to the
         Company.

The terms of the warrant issued by the Company (the "Warrant"), as contemplated
in the Stock and Warrant Purchase Agreement, 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 and any shares
of common stock previously issued to the Investor upon a partial exercise of the
Warrant. The Warrant could be exercisable at any time and from time to time
prior to October 10, 2008 at an exercise price per share equal to $4.30 (the
"Exercise Price"). The Warrant does not contain a cashless exercise feature. The
Exercise Price is subject to certain customary adjustments to protect against
dilution.

Following the occurrence of the events which are the subject of the matters
discussed in Note 10 "Litigation," the Investor has declined to discuss with the
Company the joint marketing and technology initiatives discussed, above.
Additionally, the Investor indicated in a Schedule 13D it filed with the SEC on
July 6, 2007, with respect to its holdings of equity securities of the Company,
that it was now re-considering its potential joint marketing and technology
initiatives with the Company. As a result, the Investor and the Company have not
developed the contemplated joint marketing and technology initiatives.

The Company is considering the effect of the failure of the Investor to provide
the Consideration for the Warrant upon the Company's obligations under the
Warrant.


                                       17
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 5-Agreement with NYMEX Holding, Inc.-continued

The sale of the Purchased Shares from the Founding Stockholders in an agreement
in which the Company would benefit from the Consideration constitutes a
share-based payment transaction. As such, the Company established that the fair
value of the Purchased Shares is more reliably measureable than the
Consideration from the Investor.

The fair value of the Consideration attributable to the Purchased Shares
represents the difference between the market value of the Purchased Shares at
the date of the Stock and Warrant Purchase Agreement, as quoted on the
Over-the-Counter Bulletin Board, and the disposition proceeds of the Purchased
Shares. The fair value of the Consideration at April 10, 2007 amounted to
$49,490,876 and was initially recorded as capital contribution from the Founding
Stockholders.

The fair value of the Consideration attributable to the Warrant amounted to
$99,594,000. The fair value of the Warrant is based on the Black Scholes Model
using the following assumptions: exercise price: $4.30; market value: $7.29;
term: 1.5 years; risk-free interest rate: 4.89%; expected volatility: 128%;
expected dividend rate: 0%.

The Company recognized an amortization expense of approximately $3.3 million in
connection with the Consideration during the six-month period ended June 30,
2007.

However, at June 30, 2007, based upon the statements made by the Investor, the
Company is unable to assert that it will receive any of the benefits initially
contemplated by the Stock and Warrant Purchase Agreement. Accordingly, the
Company has recorded a charge to its statement of operations amounting to
approximately $145.8 million, for the six-month period ended June 30, 2007.

The Company has also provided for a provision for doubtful accounts for the
incentives receivable from the Investor of approximately $640,000 at June 30,
2007.

Note 6- Intangible Asset

During March 2007, the Company acquired the customer list of HQ Trading, an
energy derivatives brokerage firm and assumed its continued operations. The
Company acquired such assets to expand its customer base and provide a critical
mass entry in the crude oil options market. The principal terms of the agreement
provided, among other things, the following:

        o $400,000 payable to the owners of HQ Trading upon execution of a
          final agreement;

        o $400,000 payable to the owners of HQ Trading in September 2008;

        o $400,000 payable to the owners of HQ Trading in March 2010;

        o 900,000 warrants with an exercise price of $5 per share and expiring
          in March 2012, of which 300,000 are exercisable immediately and
          600,000 become exercisable in March 2008 if the continued operations
          of HQ Trading generate revenues exceeding $1.2 million for the
          12-month period following the final agreement.

                                       18
<PAGE>







                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 6- Intangible Asset-continued

The aggregate value assigned to the consideration amounted to $1,156,000 and is
as follows:

        o The cash consideration amounts to $400,000.

        o The fair value of the 300,000 warrants exercisable at the date of
          the agreement amounts to $756,000, based on the Black Scholes Model,
          using the following assumptions: exercise price of $5, market value of
          $5, risk-free interest rate of 4.54%, expected volatility of 52%,
          expected dividend rate: 0%, term: 5 years

The expected volatility was based on the average historical volatility of
comparable publicly-traded companies considering the Company's period of
observable historical data is shorter than the term of the warrants.

The fair value of the consideration was assigned to customer relationships and
was amortized over a period of three years. The Company recognized approximately
$70,000 as amortization expense during the six-month period ended June 30, 2007
which is included as selling, general and administrative expenses in the
accompanying consolidated statement of income.

During May 2007, following the occurrence of the events which are the subject of
the matters discussed in Note 10, "Litigation", the former owners of HQ Trading
agreed to unwind the acquisition. As part of the unwinding, the former owners of
HQ Trading released the Company from its obligations related to the two payments
of $400,000 payable in September 2008 and March 2010, and agreed to the
cancellation of the 900,000 warrants. The former owners of HQ Trading retained
the $400,000 which was paid upon execution of the final agreement. Both parties
retained the right to use the HQ customer list.

Accordingly, the Company will not be recognizing the fair value of the remaining
600,000 warrants and the two payments of $400,000 each which would have been
payable in September 2008 and March 2010.

At June 30, 2007, the Company believes that, following the separation agreement
with the former owners of HQ Trading effective May 2007, the carrying value of
the client list acquired in March 2007 has been impaired. The Company is
currently unable to assert that it will derive any benefit from this client list
in the foreseeable future. Accordingly, its has recorded a charge to its
statement of operations amounting to the carrying value at June 30, 2007, which
amounted to approximately $1.1 million.


                                       19
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 7-Due to Related Parties

The terms and amounts of due to related parties at June 30, 2007 are as follows:

Due to Stockholder and former 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 former 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 12, 2014:          $5,044,510
Discount, using initial implied rate of 12%:              (3,110,789)
                                                          -----------
                                                          $1,933,721
                                                          ===========

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 12, 2014:                                   $  508,697
Discount, using initial implied rate of 12%:                (421,928)
                                                          -----------
                                                          $   86,769
                                                          ===========

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 annual 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 a stockholder and former 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.


                                       20
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 7-Due to Related Parties-continued

As a condition to the Investor's obligation to consummate the transactions
contemplated by the Stock and Warrant Purchase Agreement, the Company's former
Chairman of the Board executed an agreement, dated April 10, 2007 (the
"Waiver"), waiving any obligation on the part of the Company to make any
prepayment of principal, or to begin paying interest upon amounts due to the
Company's former Chairman of the Board, 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.

The Company satisfied its due to its former Chief Executive Officer during
fiscal 2006. The due to former 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 $165,000 and $624,000 during the six-month periods ended June 30,
2007 and 2006, respectively.

During the six-month period ended June 30, 2006, the Company made principal
repayments amounting to approximately $1.2 million towards its due to related
parties.

Note 8- Other Related Party Transactions

The Company provides administrative services to a related party, an entity owned
by the Company's former Chief Executive Officer and an Executive Officer. The
Company charged approximately $8,000 and $8,000 during the six-month periods
ended June 30, 2007 and 2006, respectively. The related party owed the Company
approximately $3,000 at June 30, 2007. This agreement was terminated by both
parties effective June 30, 2007.

The Company has recognized revenues of approximately $250,000 and $4,000 during
the six-month periods ended June 30, 2007 and 2006, respectively, from two
related parties, entities in which one of its stockholders and former Chairman
of the Board is also the managing director. Such related parties owed the
Company approximately $1,000 at June 30, 2007.



                                       21
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 9- Stockholders' Equity

During the six-month periods ended June 30, 2007 and 2006, the Company issued
30,689 and 66,064 shares of common stock, respectively, to its former Chief
Executive Officer. The fair value of the shares issued during the six-month
periods ended June 30, 2007 and 2006 amounted to approximately $182,000 and
$50,000, respectively, 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 between the Company and its former Chief Executive Officer.


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 2,393,000 options
outstanding at June 30, 2007. The outstanding options are exercisable at a
weighted average price per share of $4.04 per share. The Company granted
1,590,000 options during the six-month period ended June 30, 2007. The options
outstanding vest over periods of up to three years.

During the six-month periods ended June 30, 2007 and June 30, 2006, the Company
recorded share-based payment expenses amounting to approximately $3.4 million
and $2,000, respectively, in connection with all options outstanding at the
respective measurement dates. The amortization of share-based payment were
recorded in cost of revenues.


                                       22
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 9- Stockholders' Equity-continued

The share-based payment is based on the fair value of the outstanding options
amortized over the requisite period of service for optionholders, 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-$7.17
Market price at date of grant :             $0.20-$7.17
Volatility :                                none-57%
Expected dividend rate :                    0%
Risk-free interest rate :                   2.78%-4.81%

The weighted-average grant-date fair value of options granted during the
six-month period ended June 30, 2007 amounted to $2.44.

The total compensation cost related to nonvested awards not yet recognized
amounted to approximately $30,000 at June 30, 2007 and the Company expects that
it will be recognized over the following weighted-average period of 24 months.

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 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 the fair market value of the Company's common
stock 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 six 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.

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.


                                       23
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 9- Stockholders' Equity-continued

Warrants

During February 2006, the Company issued 1,200,000 warrants to a company
wholly-owned by its former 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 Company recognized
expenses of $120,000 and $81,000 during the six-month periods ended June 30,
2007 and 2006, respectively, in connection with all warrants which became
exercisable during the respective periods.

The fair value of the warrants is based on their fair value at the time of
grant. The fair value of the warrants is based on the Black Scholes Model using
the following assumptions:

Exercise price :                            $0.95
Market price at date of grant:              $0.95
Volatility:                                 57%
Expected dividend rate:                     0%
Risk-free interest rate:                    5.13%

During March 2007, the Company issued warrants to the owners of HQ Trading, in
connection with the Company's purchase of the HQ Trading customer relationships.
The terms of the warrants are as follows:

900,000 warrants with an exercise price of $5 per share and expiring in March
2012, of which 300,000 are exercisable immediately and 600,000 warrants become
exercisable in March 2008 if the continued operations of HQ Trading generate
revenues exceeding $1.2 million for the 12-month period following the final
agreement.

All of these warrants were cancelled in May 2007 in connection with the
unwinding of the HQ Trading transaction.


                                       24
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 9- Stockholders' Equity-continued

Investor Rights and Registration Rights Agreements

In connection with the consummation of the transactions contemplated by the
Stock and Warrant Purchase Agreement, the Company, the Investor and the Founding
Stockholders also entered into an Investor Rights Agreement, also dated April
10, 2007 (the "Investor Rights Agreement"), pursuant to which, for so long as
the Investor owns at least 5,379,443 shares of common stock:

(a) the Investor is 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");

(b) each of the Founding Stockholders are required to vote their shares in favor
of the election of the Investor's designee as a director of the Company;

(c) the Investor is 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;

(d) subject to certain permitted threshold amounts, the consent of the Investor
Director (which may not be unreasonably withheld) is required before the Company
may take certain actions, including (1) issuances of shares of a class of stock
ranking senior to the common stock, (2) acquisitions of businesses or assets,
(3) entry into related party transactions, (4) the declaration or payment of
dividends or distributions on or with respect to, or the optional redemption of,
capital stock or the issuance of debt and (5) entry into any business which is
not similar, ancillary or related to any of the businesses in which the Company
is currently engaged;

(e) each of the Founding Stockholders and the Investor have certain rights 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;

(f) each of the Founding Stockholders and the Investor have certain rights of
first refusal with respect to proposed sales of common stock by the others; and


                                       25
<PAGE>
                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 9- Stockholders' Equity-continued

(g) before they may accept any offer by an independent third party to acquire
fifty percent (50%) or more of the total voting power of the common stock or
voting stock of the Company, the Founding Stockholders and the Company are
required to provide notice of such offer to the Investor and permit the Investor
a period of 10 days to make its own offer.

The Investor Rights Agreement additionally requires the Investor to refrain from
purchasing any additional shares of the Company's common stock, with certain
limited exceptions, until April 10, 2008.

The Company and the Investor also entered into a registration rights agreement,
dated April 10, 2007 (the "Registration Rights Agreement"), pursuant to which,
among other things, the Company has provided the Investor, subject to standard
exceptions, with (a) unlimited "piggyback" rights subject to standard
underwriter lock-up and cutback provisions and (b) the right to two demand
registrations for underwritten offerings or take downs off of a shelf
registration statement, provided that (i) a minimum of $5,000,000 of Common
Stock is offered in such demand registration or take down and (ii) the Company
will 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 (a) a minimum of $5,000,000 of Common Stock
is offered in the S-3 registration and (b) 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 or an underwritten take down off of an existing,
effective shelf registration statement.

On May 14, 2007, the Investor Director resigned and the Investor has stated that
it has no current plans to fill the vacancy created by the Investor Director's
resignation.

Note 10- Litigation

On May 11, 2007, two lawsuits, captioned Alexander Fleiss v. Optionable Inc.,
Mark Nordlicht, Kevin Cassidy, Edward J. O'Connor, Albert Helmig and Marc-Andre
Boisseau, 07 CV 3753 (LAK) ("Fleiss") and Robert Rastocky v. Optionable, Inc.,
Kevin Cassidy and Edward O'Connor, 07 CV 3755 (LAK), were filed in the United
States District Court for the Southern District of New York. Subsequently, five
additional lawsuits were filed in the United States District Court for the
Southern District of New York as follows: one on May 16, 2007, Jagdish Patel v.
Optionable Inc., Kevin Cassidy, and Edward J. O'Connor, 07 CV 3845 (LAK)
("Patel"); two on May 17, 2007, Peters v. Optionable, Inc., Mark Nordlicht,
Kevin P. Cassidy, Edward J. O'Connor, Albert Helmig, and Marc-Andre Boisseau, 07
CV 3877 (LAK) ("Peters"); and Manowitz v. Optionable Inc., Kevin Cassidy, Edward
J. O'Conner, and Mark Nordlicht, 07 CV 3884 (UA) ("Manowitz"); one on May 24,
2007, Glaubach v. Optionable Inc., Kevin Cassidy, Mark Nordlicht, Edward J.
O'Connor, Albert Helmig, and Marc-Andre Boisseau; 07 CV 4085 (LAK) ("Glaubach");
and one on June 22, 2007, Bock v. Optionable Inc., Kevin Cassidy, Mark
Nordlicht, Edward J. O'Connor, Albert Helmig, and Marc-Andre Boisseau, 07 CV
5948 (LAK)


                                       26
<PAGE>



                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 10- Litigation-continued

("Bock"). Each of the lawsuits names the Company as a defendant and some of the
lawsuits name as defendants all or certain of the directors and officers of the
Company during the time period referenced. The directors and officers of the
Company named as defendants include Mark Nordlicht, the former Chairman of the
Board of Directors of the Company; Kevin Cassidy, the former Chief Executive
Officer and Vice-Chairman of the Board of Directors of the Company; Edward J.
O'Connor, the President of the Company and a member of the Board of Directors;
Albert Helmig, a member of the Board of Directors during the relevant time
period and now our Executive Chairman of the Board; and Marc-Andre Boisseau, the
Chief Financial Officer of the Company. By Order dated May 24, 2007, Rastocky
was voluntarily dismissed.

The lawsuits seek unspecified damages arising from alleged violations of the
federal securities laws, including the Securities Exchange Act of 1934, 15
U.S.C. ss. 78a et seq., (the "Exchange Act"), the Securities Act of 1933, 15
U.S.C. ss. 77a et seq., and Rule 10b-5 under the Exchange Act, 17 C.F.R. ss.
240.10b-5. The lawsuits allege that, during various class periods ranging from
May 6, 2005 to May 14, 2007, defendants failed to disclose certain information
in public filings and statements, sold artificially inflated stock and engaged
in improper deals, had an improper relationship with Bank of Montreal ("BMO")
and understated the Company's reliance on its relationship with BMO. Plaintiffs
allege that while the Company's stock was trading at artificially inflated
prices, certain defendants, including Mark Nordlicht, Kevin Cassidy and Edward
O'Connor, sold roughly 10,758,886 shares of common stock of the Company, for
aggregate proceeds of approximately $28,941,403.

The lawsuits further allege that on April 27, 2007, BMO announced that it had
lost millions of dollars on trades executed through the Company. Plaintiffs
allege that the market price of the Company's common stock price dropped further
in response to this disclosure. According to complaints, the market price of the
Company's common stock continued to decline as investors learned that: BMO was
suspending its business with the Company; NYMEX Holdings, Inc. had resigned its
representation on the Company's Board of Directors; Kevin Cassidy had resigned
as Vice Chairman and Chief Executive Officer of the Company; and Kevin Cassidy
had been convicted in 1997 of credit card fraud and in 1993 of income tax
evasion. Plaintiffs claim that defendants' alleged misrepresentations, omissions
and fraudulent conduct deceived the market, artificially inflated the price of
the Company's common stock, and allegedly caused plaintiffs to suffer an
unspecified amount of damages.

By Orders dated June 20, 2007 and July 3, 2007, Fleiss, Patel, Peters, Manowitz
and Glaubach were consolidated under In re Optionable Securities Litigation, 07
CV 3753 (LAK). It is likely that Bock will also be consolidated. On July 10,
2007, several plaintiffs, including some not previously identified, filed
motions seeking to become lead plaintiff and to have their lawyers approved as
lead counsel in the consolidated action. After lead plaintiff is appointed and
lead counsel is approved, it is anticipated plaintiffs will file a consolidated,
amended class action complaint.

The actual costs that will be incurred in connection with these actions cannot
be quantified at this time and will depend upon many unknown factors.



                                       27
<PAGE>

                                OPTIONABLE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 2007 and 2006
                                   (Unaudited)

Note 10- Litigation-continued

While the Company intends to vigorously defend these actions, the possibility of
adverse outcomes exists. It is impossible to determine the likelihood of any
particular outcome. These matters are subject to inherent uncertainties and
management's view of these matters may change in the future.

Other Matters

Since May 2007, the Company has received requests for documents and information
from the United States Commodity Futures Trading Commission, the United States
Securities and Exchange Commission, the United States Department of Justice and
a grand jury subpoena from the New York County District Attorney's office. Since
that time, the Company has complied, and continues to comply, with these several
requests for documents and information.


















                                       28
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW OF RECENT DEVELOPMENTS

On April 10, 2007, we, Mark Nordlicht, our former Chairman of the Board, Kevin
Cassidy, our former Vice Chairman and Chief Executive Officer, Edward O'Connor,
our President, (together with Mr. Nordlicht and Mr. Cassidy, the "Founding
Stockholders"), and NYMEX Holdings, Inc. (the "Investor") entered into a
definitive stock and warrant purchase agreement (the "Stock and Warrant Purchase
Agreement").

Pursuant to the terms of the Stock and Warrant Purchase Agreement, Mr.
Nordlicht, Mr. Cassidy and Mr. O'Connor sold to the Investor, 7,000,000,
1,905,000 and 1,853,886 shares, respectively, of common stock of the Company.
This aggregate of 10,758,886 shares of common stock (the "Purchased Shares")
represented 19% of the then outstanding shares of common stock on a fully
diluted basis (without giving effect to the Warrant, as defined and discussed
below). The purchase price paid by the Investor for the Purchased Shares was
$2.69 per share. Additionally, pursuant to the Stock and Warrant Purchase
Agreement, we physically issued to the Investor the Warrant, as defined and
described below, in consideration of the Investor's agreement (i) to develop
with us a marketing plan, which plan will detail proposed expenditures by the
Investor and joint activities; (ii) subject to regulatory requirements, to
provide space for up to twenty of the our brokers on the Investor's trading
floor; and (iii) to host our electronic trading platform, OPEX, in the
Investor's data center and provide us with computer and networking hardware,
software, bandwidth and ancillary infrastructure and services reasonably
necessary to interconnect OPEX with the Investor's clearing system market
gateway to trading and clearing services. Additionally, we agreed to exclusively
clear all OTC products through the Investor's clearing system for a period of
ten years (provided that the Investor continues to offer clearance for a
particular product through its clearing system) in consideration for additional
fees to be paid by the Investor to us.

The warrant issued by us (the "Warrant") permits 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 and any shares
of common stock previously issued to the Investor upon a partial exercise of the
Warrant. The Warrant is exercisable at any time and from time to time prior to
October 10, 2008 at an exercise price per share equal to $4.30 (the "Exercise
Price"). The Warrant does not contain a cashless exercise feature. The Exercise
Price is subject to certain customary adjustments to protect against dilution.

In connection with the consummation of the transactions contemplated by the
Stock and Warrant Purchase Agreement , the Company, the Investor and the
Founding Stockholders also entered into an Investor Rights Agreement, also dated
April 10, 2007 (the "Investor Rights Agreement"), pursuant to which, for so long
as the Investor owns at least 5,379,443 shares of common stock:

                                       29
<PAGE>

(a) the Investor is entitled to designate one person (reasonably acceptable to
the Company) that we are required to nominate as a member of the our board of
directors (the "Investor Director");

(b) each of the Founding Stockholders are required to vote their shares in favor
of the election of the Investor's designee as one our directors;

(c) the Investor is 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;

(d) subject to certain permitted threshold amounts, the consent of the Investor
Director (which may not be unreasonably withheld) is required before we may take
certain actions, including (1) issuances of shares of a class of stock ranking
senior to the common stock, (2) acquisitions of businesses or assets, (3) entry
into related party transactions, (4) the declaration or payment of dividends or
distributions on or with respect to, or the optionable redemption of, capital
stock or the issuance of debt and (5) entry into any business which is not
similar, ancillary or related to any of the businesses in which we are currently
engaged;

(e) each of the Founding Stockholders and the Investor have certain rights of
first refusal to purchase or subscribe for their pro rata percentage of shares
in certain subsequent sales by us of common stock and/or certain other
securities convertible into or exchangeable for common stock;

(f) each of the Founding Stockholders and the Investor have certain rights of
first refusal with respect to proposed sales of our common stock by the others;
and

(g) 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, the
Founding Stockholders and we are required to provide notice of such offer to the
Investor and permit the Investor a period of 10 days to make its own offer.

The Investor Rights Agreement additionally requires the Investor to refrain from
purchasing any additional shares of our common stock, with certain limited
exceptions, until April 10, 2008.

The Company and the Investor also entered into a registration rights agreement,
dated April 10, 2007 (the "Registration Rights Agreement"), pursuant to which,
among other things, we have provided the Investor, subject to standard
exceptions, with (a) unlimited "piggyback" rights subject to standard
underwriter lock-up and cutback provisions and (b) the right to two demand
registrations for underwritten offerings or take downs off of a shelf
registration statement, provided that (i) a minimum of $5,000,000 of our common
stock is offered in such demand registration or take down and (ii) we will 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 we
are eligible to register our 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 (a) a minimum of $5,000,000 of common stock is offered in the S-3
registration and (b) 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
or an underwritten take down off of an existing, effective shelf registration
statement.

As a condition to the Investor's obligation to consummate the transactions
contemplated by the Stock and Warrant Purchase Agreement, Mr. Nordlicht executed
an agreement, dated April 10, 2007 (the "Waiver"), waiving any obligation on the
part of the Company to make any prepayment of principal, or to begin paying
interest upon amounts due to Mr. Nordlicht, under the Loan Agreement between him
and the Company, dated March 2004, as a result of any exercise by the Investor
of the Warrant. Also as a condition to the Investor's obligation to consummate
the transactions contemplated by the Stock and Warrant Purchase Agreement, Mr.
Cassidy and the Company entered into an Amended and Restated Employment
Agreement and Mr. O'Connor entered into a Non-Competition Agreement, dated April
10, 2007, with the Company, pursuant to which Mr. O'Connor agreed not to
disclose or use the Company's confidential information and, for a period of nine
months following the termination of Mr. O'Connor's employment, not to compete
with the Company or solicit certain customers of the Company.

                                       30
<PAGE>

Pursuant to our final agreements with the Investor in April 2007, we physically
issued to the Investor warrants which will permit the Investor to purchase a
number of shares of common stock sufficient to increase its ownership 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 and any shares of common stock previously issued to the
Investor upon a partial exercise of the Warrant. The Warrant will be exercisable
from time to time for a period of 18 months from the closing date of the final
agreement at an exercise price per share equal to $4.30 (the "Exercise Price").
The Exercise Price will be subject to certain customary adjustments to protect
against dilution.

The number of warrants issued to NYMEX may increase or decrease from time to
time until October 2008, depending on whether we issue additional shares,
options, and warrants, repurchase treasury shares, or certain outstanding
options and warrants expire or become unexercisable. Because the number of
shares will vary from time to time, the fair value of the warrants issued
pursuant to our agreement and the related amortization may also vary from time
to time, until October 2008.

Following the occurrence of the events which are subject of the matters
discussed in Item 1 of Part II of this Report "Legal Proceedings," the Investor
has declined to discuss with us the joint marketing and technology initiatives
discussed, above. Additionally, the Investor indicated in a Schedule 13D it
filed with the SEC on July 6, 2007, with respect to its holdings of equity
securities of the Company, that it was now re-considering its potential joint
marketing and technology initiatives with the Company. As a result, the Investor
and the Company have not developed the contemplated joint marketing and
technology initiatives.

The Company is considering the effect of the failure of the Investor to provide
the consideration for the Warrant upon the Company's obligations under the
Warrant.

On May 1, 2007, Mark Nordlicht resigned as a member of the Company's Board and
Albert Helmig was designated as Chairman of the Board.

On May 8, 2007, BMO Financial Group ("BMO") issued a statement indicating that
BMO was suspending its business relationships with us, as well as all
derivatives trading through us, pending the results of an ongoing external
review of certain commodity trading losses incurred by BMO. BMO has accounted
for a significant portion of the Company's revenues. Since that time, BMO has
not resumed its business relationships with us.

On May 11, 2007, Albert Helmig was designated as our Executive Chairman of the
Board.

On May 12, 2007, Mr. Kevin Cassidy resigned as our Chief Executive Officer and
as a director.

On May 14, 2007, Benjamin Chesir, the Investor Director resigned as one of our
directors. The Investor has issued a statement that they do not have current
plans to fill the vacancy created by Mr. Chesir's resignation.

The statement issued by BMO, the related suspension, of their business
relationship with us, the matters discussed in Item 1 of Part II of this Report
"Legal Proceedings" together with the combined succession of events since then
have had a significant adverse impact on our business, including current and,
likely, future results of operations and financial condition. Consequently, we
are formulating a revised strategy.


                                       31
<PAGE>

We launched our electronic trading system, OPEX, in 2006 and we have continued
to enhance its features and functionalities during the first half of 2007. Users
of OPEX can now execute on the platform mostly energy-related derivative trades.
A significant portion of the contracts executable on OPEX are those offered by
NYMEX, a US exchange. However, we believe that OPEX features and functionalities
can be ported to other derivatives as well, such as credit default swaps,
interest-related derivatives, metals and other commodities. We are currently
working on an OPEX enhancement to complete an interface which could permit
execution of transactions with the Chicago Mercantile Exchange. However, we
believe that OPEX, with appropriate enhancements, may be able to execute
transactions offered by other exchanges as well.

The Company is revising its strategy to:

1.            emphasize the marketing of OPEX to end-users through indirect
              channels, such as through other third-party brokers and other
              exchanges; and,
2.            continue enhancing OPEX for use by end-users in additional
              derivative markets (i.e., other than solely the energy derivatives
              markets).

The Company anticipates that, under its revised strategy, any revenue-generating
agreements could take the form of licensing or royalty-based agreements. Our
revised strategy is still in the early stages of development and no such
agreements have yet been reached.

The Company believes that revenues from its brokerage services will be minimal
under its existing structure. While the Company is not discontinuing its
brokerage services, it will most likely need to acquire the operations of a
brokerage firm or firms, and hire their personnel, to expand its current
operations. There is no assurance that the Company will be able to identify
potential acquisitions, negotiate acquisitions on terms acceptable to the
Company, or at all, or to obtain the necessary financing for any potential
acquisitions. The Company is not currently engaged in any acquisition
discussions.

The Company believes it has enough funds to meet its obligations, based on its
internal projections, for at least the next twelve months. However, the Company
cannot guarantee that it will do so. If there are unforeseen expenses or
financial obligations which occur during that period, the Company may not be
able to generate enough revenues to meet such obligations. Additionally, if the
Company acquires a brokerage firm or a technology company which could be
instrumental in the Company's long-term growth, this could hamper the Company's
ability to continue as going concern, both from a short-term or a long-term
perspective, and the Company would have to resort to financing, through either
debt or equity placements, for the funding of either such acquisitions or
unforeseen expenses or financial obligations. There can be no assurance that any
such financing would be available on acceptable terms, or at all.

As a result of the factors discussed above, we believe that our revenues for the
remainder of 2007 will decrease when compared to fiscal 2006. We believe that
revenues we traditionally generated from OPEX, voice-brokerage and our floor
operations will be minimal for the remainder of 2007 unless we are able to hire
more brokers or we acquire a brokerage firm or firms.

We expect that our research and development expenses to enhance features and
functionalities of OPEX will exceed $1 million during 2007.

We expect that our cost of revenues for the remainder of 2007 will also
decrease, commensurate with an expected decrease in revenues, unless we make an
acquisition which could change our business model.


                                       32
<PAGE>

We acquired the intangible assets of HQ Trading in March 2007. This transaction
resulted in our recording intangible assets of approximately $1.1 million which
was written-off upon the unwinding of the transaction in May 2007.

The sale of the Purchased Shares by the Founding Stockholders in an agreement in
which the Company would benefit from the Consideration constitutes a
shared-based payment transaction. As such, the Company established that the fair
value of the Purchased Shares is more reliably measureable than the
Consideration from the Investor.

The fair value of the Consideration attributable to the Purchased Shares
represents the difference between the market value of the Purchased Shares at
the date of the Stock and Warrant Purchase Agreement, as quoted on the
Over-the-Counter Bulletin Board, and the disposition proceeds of the Purchased
Shares. The fair value of the Consideration at April 10, 2007 amounted to
$49,490,876 and was initially recorded as capital contribution from the Founding
Stockholders.

The fair value of the Consideration attributable to the Warrant amounted to
$99,594,000.

However, at June 30, 2007, based upon the statements made by the Investor, the
Company is unable to assert that it will receive any of the benefits initially
contemplated by the Stock and Warrant Purchase Agreement. Accordingly, the
Company has recorded a charge to its statement of operations amounting to
approximately $145.8 million, for the six-month period ended June 30, 2007.

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, 2006, including without limitation the
information set forth under the heading "Critical Accounting Policies and
Estimates".


RESULTS OF OPERATIONS

                            Results of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                           For the six-month period ended     Increase/        Increase/
                                                           June 30,                          (Decrease)        (Decrease)
                                                         -------------------------------      in $ 2007        in % 2007
                                                             2007              2006            vs 2006          vs 2006
                                                         --------------    -------------    --------------    -------------

<S>                                                      <C>               <C>              <C>                     <C>
Brokerage fees                                           $   8,720,065     $  2,761,847     $   5,958,218           215.7%
Brokerage fees-related parties                               1,151,798        1,202,041           (50,243)           -4.2%
Incentives                                                   3,285,058          746,772         2,538,286           339.9%
                                                         --------------    -------------    --------------    -------------
Net revenues                                                13,156,921        4,710,660         8,446,261           179.3%
                                                                     -                -
Cost of revenues                                             7,826,299        1,701,806         6,124,493           359.9%
Cost of revenues-related parties                                30,013          334,972          (304,959)          -91.0%
                                                         --------------    -------------    --------------    -------------
                                                             7,856,312        2,036,778         5,819,534           285.7%

Gross profit                                                 5,300,609        2,673,882         2,626,727            98.2%

Operating expenses:
  Selling, general and administrative                        6,209,134          437,269         5,771,865          NM
 Impairment-considerable receivable from stockholder       145,771,879                -       145,771,879          NM
  Impairment-intangible asset                                1,085,610                -         1,085,610          NM
  Research and development                                     523,922          145,799           378,123           259.3%
                                                         --------------    -------------    --------------    -------------
     Total operating expenses                              153,590,545          583,068       153,007,477          NM

     Operating income                                     (148,289,936)       2,090,814      (150,380,750)         NM

  Other income (expense):
  Interest income                                              197,314           27,097           170,217          NM
  Other income                                                   5,100                -             5,100          NM
  Other expense                                                (15,000)               -
  Interest expense-related parties                            (165,280)        (624,455)         (459,175)          -73.5%
                                                         --------------    -------------    --------------    -------------
                                                                22,134         (597,358)         (619,492)         NM

Net income before income tax                              (148,267,802)       1,493,456      (149,761,258)         NM

Income tax benefit ( expense)                                 (710,436)               -           710,436          NM
                                                         --------------    -------------    --------------    -------------

Net income                                               $(148,978,238)    $  1,493,456     $(150,471,694)         NM
                                                         ==============    =============    ==============    =============


NM:  Not meaningful

</TABLE>




Revenues consist primarily of fees earned from natural gas derivatives
transactions and related incentive arrangements.

The increase in brokerage fees during the six-month period ended June 30, 2007
when compared to the prior year period is primarily due to an increase in the
brokerage fees resulting from increased volume of transactions of natural gas
derivatives traded on the OTC market on behalf of existing clients.

The increase in brokerage fees-related party during the six-month period ended
June 30, 2007 when compared to the prior year period is primarily due to an
increase in fees resulting from increased volume of transactions of natural gas
derivatives traded on the futures market on behalf of existing clients.

The increase in incentives earned pursuant to agreement with a US exchange, the
Investor, was due to a higher volume of cleared OTC transactions handled by us
on such exchange.

These increases related primarily to transactions which occurred prior to the
events described above and in Item 1 of Part II of this Report. The volume of
transactions following those events has declined significantly.


                                       33
<PAGE>

Cost of revenues

Cost of revenues consists primarily of compensation of personnel directly
associated with handling the natural gas derivative transactions on behalf of
our clients as well as expenses associated with our floor brokerage operations.
The increase in cost of revenues during the six-month period ended June 30, 2007
when compared to the prior year period is primarily attributable to the
following:

o        increased commissions earned by our non-executive brokers ( which
         increased approximately $1.3 million from approximately $920,000 to
         approximately $2.2 million). The increased commissions are primarily
         due to higher revenues generated by such non-executive brokers;
o        increased incentive compensation to our former Chief Executive Officer
         of $464,000, based on his employment agreement, a portion of which
         became effective April 1, 2006. The cash consideration increased by
         approximately $331,000 and the remainder of the increase, approximately
         $133,000, amounted to the increased fair value of shares issued
         pursuant to such employment agreement. The incentive compensation is
         based on the revenues we generate;
o        the fair value of options and warrants we issued to brokers and
         expensed during the six-month period ended June 30, 2007 amounted to
         approximately $4.0 million, compared to approximately $83,000 during
         the six-month period ended June 30, 2006. The increase in amortization
         of the fair value of options results from the issuance of a 1,590,000
         options during the six-month period ended June 30, 2007, which were
         later cancelled pursuant to the termination of the employment of
         certain grantees, while the Company did not issue any options to its
         brokers during the six-month period June 30, 2006.

Selling, general, and administrative expenses

Selling, general, and administrative expenses consists primarily of legal fees,
incurred in connection with the Company's attention to certain allegations made
recently and to our responses to and compliance with requests for documents and
information received from the United States Commodity Futures Trading Commission
(the "CFTC"), the United States Securities and Exchange Commission (the "SEC"),
the United States Department of Justice (the "DOJ") and a grand jury subpoena
received from the New York County District Attorney's office (the "District
Attorney's Office"), or to handle certain matters which occur during the course
of our operations, and compensation of personnel supporting our operations. The
increase in selling, general, and administrative expenses during the six-month
period ended June 30, 2007, when compared to the prior period is primarily due
to the following:

o        one-time amortization of the Consideration receivable from the Investor
         of approximately $3.3 million o increased legal fees of approximately
         $1.2 million, primarily incurred in connection with our our attention
         to certain allegations made recently, our responses to, and compliance
         with the governmental requests described above, and in connection with
         the NYMEX transaction;

o        one-time provision of approximately $640,000 in connection with our
         estimated incentives receivable from the Investor as of June 30, 2007;

o        increased investor relation fees in connection with increased efforts
         to position our company before the investors community.

     We did not incur such expenses during the six months ended June 30, 2006;


                                       34
<PAGE>

As a result of the matters discussed above and in Item 1 of Part II of this
Report, we believe that our legal fees for the remainder of the year will
increase on an annualized basis from the level such expenses reached during
fiscal 2006.

Research and development

Research and development expenses consist primarily of compensation of personnel
and consultants associated with the development and testing of our automated
electronic trading system. The increase in research and development expenses
during the six-month period ended June 30, 2007 when compared to the prior year
period is primarily due to the following:

o         increased compensation and related benefits for additional software
          engineers and quality and assurance personnel we hired to enhance our
          electronic platform, OPEX.


Impairment- Consideration receivable from Investor and Impairment- Intangible
Asset

The impairment- consideration receivable from Investor and impairment-
intangible asset consists of one-time losses attributable to the lack of
perceived likely benefits from 1) the consideration the Investor had agreed to
provide to the Company pursuant to the Stock and Warrant Purchase Agreement and
2) the constructive rescission of the HQ Trading acquisition. The Stock and
Warrant Purchase Agreement and the HQ Trading acquisition both took place during
the six-month period ended June 30, 2007 and no similar expenses occurred during
the six-month period ended June 30, 2006.

Interest income

Interest income consists primarily of interest earned on interest-bearing cash
and cash equivalents. The increase in interest income during the six-month
period ended June 30, 2007 when compared to the prior year period is primarily
due to an increase in our cash and cash equivalents' interest bearing balances.

Interest expense to related parties

Interest expense to related parties consists of interest charges associated with
amounts due to related parties, Mark Nordlicht, our former Chairman, Kevin
Cassidy, our former Chief Executive Officer, and Edward O'Connor, our President.
The decrease in interest expense to related parties during the six-month period
ended June 30, 2007 when compared to the prior year period is primarily due to
the accelerated amortization of debt discount associated with the amount due to
Kevin Cassidy during the six-month period ended June 30, 2006. We have
accelerated the amortization discount on this debt since we reimbursed the debt
at a faster rate than initially contemplated during the six-month period ended
June 30, 2006. The debt to Kevin Cassidy was fully repaid in 2006. We did not
make any debt repayment during the six-month period ended June 30, 2007 which
would have triggered an acceleration of the amortized discount on the debt.

Income tax

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 the six-month
period ended June 30, 2007 when compared to the comparable prior year period is
primarily due to our utilization of net operating loss carryforwards during the
six-month period ended June 30, 2006, which were completely used by the end of
fiscal 2006.


                                       35
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

For the last three fiscal years, we have generated cash flows from our operating
activities. Our cash balance as of June 30, 2007 amounts to approximately $12.1
million.

During the six-month period ended June 30, 2007, we generated cash from
operating activities of approximately $5.3 million, primarily resulting from:

o         net loss of approximately $149.0 million, adjusted for the impairment
          of the consideration receivable from the Investor and, the
          amortization of the consideration receivable from the Investor,
          and the fair value of warrants, options and shares issued during the
          period aggregating approximately $145.8 million, $3.3 million, and
          $4.2 million, respectively; and
o         a decrease in accounts receivable and accounts receivable-related
          party of approximately $1.9 million, a decrease in incentive
          receivables from Investor of approximately $667,000 and a decrease in
          accrued compensation $1.2 million due to a recent decline in revenues
          and associated expenses during the second half of the second quarter
          of 2007;
o         an increase in prepaid tax assets of $3.0 million resulting from the
          payment of estimated income taxes offset by a reduction of the
          anticipated income tax.

During the six-month period ended June 30, 2007, we used our cash generated from
operating activities to acquire the customer relationship of HQ Trading, a crude
oil broker, for $400,000, acquired trading rights on the NYMEX floor for $1.2
million, and incurred capital expenditures aggregating approximately $241,000.
We also disposed of a trading right for $565,000.

During the six-month period ended June 30, 2007, we generated gross proceeds
from the exercise of certain warrants and options aggregating approximately
$220,000.

During the six-month period ended June 30, 2006, we generated cash from
operating activities of approximately $1.7 million, primarily resulting from: o
net income of approximately $1.5 million, adjusted for non-cash interest expense
of approximately $625,000; and o an increase in accounts receivable of
approximately $378,000 resulting from an increase in related revenues.

We used our cash generated from operating activities to make principal
repayments of approximately $300,000, $100,000 and $200,000 on amounts due to
Kevin Cassidy, our former Chief Executive Officer, Edward O'Connor, our
President, and Mark Nordlicht, our former Chairman of the Board, respectively.

On May 30, 2006, our Board of Directors authorized us to repurchase such number
of shares of our 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 $2,506 since
the commencement of the share repurchase program. We did not repurchase any
shares during the six month period ended June 30, 2007.

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
audited financial statements included in our Annual Report on Form 10-KSB for
the year ended December 31, 2006. There have been no changes in our critical
accounting policies since the date of such audited financial statements.
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.


                                       36
<PAGE>

Revenue recognition

Revenue is recognized when earned. Our revenue recognition policies are in
compliance with the SEC'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 the New York Mercantile Exchange 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 an exchange which has publicly published the initial terms of its
incentive program in 2003 which it modified in 2005 and is which is offered to
all intermediaries in the select transactions;

2) Delivery has occurred or services have been rendered. Under arrangements with
the exchange, 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 exchange. 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 exchange. We have no other obligations to
the exchange 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. Historically, the exchange has paid us
timelyfor incentives earned in the prior quarter. We had 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.

Accounts and incentive receivable and related allowance for doubtful accounts.

Accounts receivable and incentive receivable are reported at net realizable
value. We have established an allowance for doubtful accounts based upon factors
pertaining to the credit risk of specific customers, historical trends, and
other information. Delinquent accounts are written-off when it is determined
that the amounts are uncollectible.

                                       37
<PAGE>

Share-based payment

We account for share-based payments in accordance with SFAS No. 123(R),
Share-Based Payment. Under the fair value recognition provisions of this
statement, share-based compensation cost is measured at the grant date based on
the value of the award and is recognized as expense over the vesting period.
Determining the fair value of share-based awards at the grant date requires
judgment, including estimating expected volatility. In addition, judgment is
also required in estimating the amount of share-based awards that are expected
to be forfeited. If actual results differ significantly from these estimates,
stock-based compensation expense and our results of operations could be
materially impacted.

Impairment of intangible assets

   SFAS No. 142, Goodwill and Other Intangible Assets, requires that goodwill be
tested for impairment on an annual basis and between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair
value of an intangible asset below its carrying value. These events or
circumstances could include a significant change in the relationship with the
contracting party, business climate, legal factors, operating performance
indicators, or competition. Application of the intangible asset impairment test
requires judgment, including the determination of the fair value of each
intangible asset. The fair value of each intangible asset is estimated based on
the consideration given by us to acquire the intangible asset(s). This requires
significant judgment including the estimation of expected volatility if the
Company issued common share equivalent as consideration. Changes in our
estimates of undiscounted cash flows related to each intangible asset could
materially affect the determination of the impairment for each intangible asset.

Contingencies

The outcomes of legal proceedings and claims brought against us are subject to
significant uncertainty. SFAS No. 5, Accounting for Contingencies, requires that
an estimated loss from a loss contingency such as a legal proceeding or claim
should be accrued by a charge to income if it is probable that an asset has been
impaired or a liability has been incurred and the amount of the loss can be
reasonably estimated. Disclosure of a contingency is required if there is at
least a reasonable possibility that a loss has been incurred. In determining
whether a loss should be accrued we evaluate, among other factors, the degree of
probability of an unfavorable outcome and the ability to make a reasonable
estimate of the amount of loss. Changes in these factors could materially impact
our financial position or our results of operations.

RISK FACTORS

The following risk factors update, and should be read in conjunction with, the
risk factors discussed in Part II, Item 6 "Management's Discussion and Analysis
of Financial Condition or Plan of Operation Overview and Plan of Operations" of
our Annual Report on Form 10-KSB for the year ended December 31, 2006.

As a result of the apparent loss of our most significant customer, a decline in
business from other brokerage customers and the mutually agreed departures of
floor brokerage personnel, we are attempting to revise our strategy. There can
be no assurance that these efforts will be successful.

Several recent developments, including (i) the apparent loss of our most
significant customer, (ii) a decline in business from other brokerage customers
and (iii) the mutually agreed departures of our floor brokerage personnel, among
other things, have adversely affected our ability to operate as a brokerage
services provider through traditional voice-brokerage and on the floor of NYMEX.
In response, we are attempting to revise our strategy to emphasize the marketing
of OPEX to end-users through indirect channels, such as through third-party
brokers and other exchanges, and the development and enhancement of OPEX for use
by end-users in additional markets (i.e., other then solely the energy
derivatives markets). With our reduced brokerage personnel, we will most likely
need to acquire the operations of a brokerage firm, or firms, if we are to
expand our current level of brokerage operations.

Historically, we engaged primarily in voice-brokerage and had only recently
introduced our OPEX platform. Although the initial results of OPEX were
promising, it had not yet reached full market acceptance in the energy
derivatives market. Our revised strategy will rely on continued and expanded
market acceptance of OPEX in the energy derivatives market and in additional
markets. There is no assurance that we will be able to effectively market OPEX
to end-users through indirect channels. There is also no assurance that we will
be able to develop the enhancements to OPEX necessary to make it suitable for
use by end-users in additional markets or, even if we do develop the necessary
enhancements, that end-users in those additional markets will accept OPEX.

There is no assurance that we will be able to identify potential acquisitions,
negotiate acquisitions on terms acceptable to us, or at all, or obtain the
necessary financing for any potential acquisitions that we may identify. If we
do make acquisitions or enter into joint ventures as part of our revised
strategy, such transactions will involve significant risks and challenges,
including risks that we may experience difficulty in the integration of the new
businesses, technologies and employees with our own, that the new businesses may
divert management's attention from other pressing matters and that we may not
realize a satisfactory return on any investment we may make in them.

                                       38

<PAGE>

Our revised strategy is still in the early stages of development and there is no
assurance that it will be successful.

Our pricing model for OPEX services, under our revised strategy, is unproven and
revenues may prove to be less than anticipated, which may harm our gross
margins. The pricing model of our OPEX services will most likely change under
our revised strategy and 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, negotiated
licensing or royalty-based agreements, or otherwise. Our actual pricing model
for OPEX under our revised strategy will depend on the specific requirements of
the end-user or the third-party which will market OPEX, customer purchase
volumes, contracted 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.
Our relationship with NYMEX has been adversely affected by recent developments
and we may not realize the benefits that we had expected from the Stock and
Warrant Purchase Agreement. In addition, the incentive revenues that we receive
from NYMEX may decline.

We had expected to derive substantial benefits from the consideration which
NYMEX agreed to provide to us under the Stock and Warrant Purchase Agreement,
including the development of joint marketing plans and technology initiatives
and space for our brokers on NYMEX's trading floor. Following the occurrence of
certain of the events discussed above and discussed in Part II, Item 1 "Legal
Proceedings" of this Report, NYMEX has declined to discuss with us the joint
marketing and technology initiatives provided for in the Stock and Warrant
Purchase Agreement. Additionally, NYMEX has indicated in a Schedule 13D it filed
with the SEC with respect to its holdings of our equity securities that it is
now re-considering its potential joint marketing and technology initiatives with
us. As a result, the contemplated joint marketing and technology initiatives
have not been developed.

If NYMEX continues to decline to discuss the joint marketing and technology
initiatives with us, we will not realize the benefits that we had expected to
obtain under the Stock and Warrant Purchase Agreement which would have a
materially adverse effect on our business. In addition, we receive significant
incentive revenues from NYMEX. If the deterioration in our relationship with
NYMEX were to lead to a refusal by NYMEX to continue those incentives, it would
have a materially adverse effect on our business.

Under the Investor Rights Agreement, the consent of a director designated by
NYMEX may be required before we may take certain actions, including acquisitions
of businesses or assets. The failure of the NYMEX designee to consent to certain
actions could affect our ability to develop and implement our revised strategy.

Under the Investor Rights Agreement, the consent of a director designated by
NYMEX may be required before we may take certain actions, including acquisitions
of businesses or assets. Although NYMEX's designee on our Board of Directors has
resigned and NYMEX has stated that it has no current plans to fill the vacancy
created by the resignation, if NYMEX were to elect to designate a director
pursuant to the Investor Rights Agreement, the failure of that designee to
consent to certain actions, such as a proposed acquisition of a brokerage firm
among others, could adversely impact our ability to develop and implement our
revised strategy.

A number of our executive officers and key employees have recently departed. Our
success in the future will be dependent upon our ability to attract and retain
skilled replacements.

Mark Nordlicht, our former Chairman of the Board, Kevin Cassidy, our former Vice
Chairman of the Board and Chief Executive Officer, and a number of our brokerage
personnel have recently departed. Although Albert Helmig, a member of our Board
of Directors has accepted the position of Executive Chairman of the Board, we
have not yet replaced the other personnel who have resigned. Certain of the
departed employees, including and particularly Kevin Cassidy, have accounted, in
the past, for a significant amount of our revenues. If we are unable to find
suitable replacements for the departed employees our business will be materially
adversely affected.

We are the subject of several legal proceedings brought by shareholders alleging
violations of federal securities laws by us and certain of our former and
current directors and officers. We are unable to predict the outcome of these
proceedings and can give no assurance that the outcome of these proceedings will
not have a material adverse effect on us or that other proceedings will not be
initiated.

                                       39
<PAGE>

Since May 2007, we have been served as a defendant in a number of shareholder
derivative actions by shareholders naming us and several of our current and
former officers and directors as defendants. These actions allege, among other
things, violations of the Securities and Exchange Act of 1934, the Securities
Act of 1933 and Rule 10b-5, relating to alleged misstatements and omissions in
public filings by the Company and other allegedly fraudulent conduct, which the
plaintiffs claim deceived the market, inflated the price of the Company's common
stock and caused plaintiffs to suffer unspecified damages.

We are unable to predict the outcome of any of these proceedings at this time
and can give no assurance that the outcome of these proceedings will not have a
material adverse effect on us or that there will not be other proceedings
arising from these matters.

The members of our management team and other employees have been and will be
required to devote a significant amount of time to matters relating to
litigation and responding to governmental inquiries.

Our management team and employees have devoted a significant amount of time to
matters relating to the shareholder litigation which was recently instituted
against us and to requests for documents and information received from the CFTC,
the SEC, the DOJ and the District Attorney's Office. In addition, the current
members of our Board of Directors and senior management are named as defendants
in most of the shareholder proceedings which allege, among other things, federal
securities law violations. Defending these actions and responding to the
government requests for documents and information has required, and will
continue to require, significant time and attention from members of our current
senior management team and our Board of Directors. If the amount of time that
our senior management team is able to devote to running our ongoing business
operations and developing and implementing our revised strategy is significantly
reduced as a result of these matters, it may have a material adverse effect on
our business.

We have incurred losses through fiscal 2004 and during the second quarter of
fiscal 2007 and we may incur losses in the future, which may cause us to curtail
our operations and our development of OPEX.

We incurred losses through fiscal 2004 and incurred losses again during the
second quarter of fiscal 2007. We may 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 under our revised
strategy and enhance and market 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.



ITEM 3. CONTROLS AND PROCEDURES

Our executive chairman of the board and our chief financial officer (the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for our Company. Such officers have concluded
(based upon their evaluations 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 ensure that information required to be disclosed by us in this
report is recorded, processed, summarized, and reported in a timely manner.

The Certifying Officers have also indicated that there were no significant
changes in our internal controls over financial reporting that occured during
the period covered by this report that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.


                                       40
<PAGE>

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.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On May 11, 2007, two lawsuits, captioned Alexander Fleiss v. Optionable Inc.,
Mark Nordlicht, Kevin Cassidy, Edward J. O'Connor, Albert Helmig and Marc-Andre
Boisseau, 07 CV 3753 (LAK) ("Fleiss") and Robert Rastocky v. Optionable, Inc.,
Kevin Cassidy and Edward O'Connor, 07 CV 3755 (LAK), were filed in the United
States District Court for the Southern District of New York Subsequently, five
additional lawsuits were filed in the United States District Court for the
Southern District of New York as follows: one on May 16, 2007, Jagdish Patel v.
Optionable Inc., Kevin Cassidy, and Edward J. O'Connor, 07 CV 3845 (LAK)
("Patel"); two on May 17, 2007, Peters v. Optionable, Inc., Mark Nordlicht,
Kevin P. Cassidy, Edward J. O'Connor, Albert Helmig, and Marc-Andre Boisseau, 07
CV 3877 (LAK) ("Peters"); and Manowitz v. Optionable Inc., Kevin Cassidy, Edward
J. O'Conner, and Mark Nordlicht, 07 CV 3884 (UA) ("Manowitz"); one on May 24,
2007, Glaubach v. Optionable Inc., Kevin Cassidy, Mark Nordlicht, Edward J.
O'Connor, Albert Helmig, and Marc-Andre Boisseau; 07 CV 4085 (LAK) ("Glaubach");
and one on June 22, 2007, Bock v. Optionable Inc., Kevin Cassidy, Mark
Nordlicht, Edward J. O'Connor, Albert Helmig, and Marc-Andre Boisseau, 07 CV
5948 (LAK) ("Bock"). Each of the lawsuits names the Company as a defendant and
some of the lawsuits name all or certain of the directors and officers of the
Company during the time period referenced. The directors and officers of the
Company named as defendants include Mark Nordlicht, the former Chairman of the
Board of Directors of the Company; Kevin Cassidy, the former Chief Executive
Officer and Vice-Chairman of the Board of Directors of the Company; Edward J.
O'Connor, the President of the Company and member of the Board of Directors;
Albert Helmig, a member of the Board of Directors during the relevant time
period and now our Executive Chairman of the Board; and Marc-Andre Boisseau, the
Chief Financial Officer of the Company. By Order dated May 24, 2007, Rastocky
was voluntarily dismissed.

The lawsuits seek unspecified damages arising from alleged violations of the
federal securities laws, including the Securities Exchange Act of 1934, 15
U.S.C. ss. 78a et seq., (the "Exchange Act"), the Securities Act of 1933, 15
U.S.C. ss. 77a et seq., and Rule 10b-5 under the Exchange Act, 17 C.F.R. ss.
240.10b-5. The lawsuits allege that, during various class periods ranging from
May 6, 2005 to May 14, 2007, defendants failed to disclose certain information
in public filings and statements, sold artificially inflated stock and engaged
in improper deals, had an improper relationship with Bank of Montreal ("BMO")
and understated the Company's reliance on its relationship with BMO. Plaintiffs
allege that while the Company's stock was trading at artificially inflated
prices, certain defendants, including Mark Nordlicht, Kevin Cassidy and Edward
O'Connor, sold roughly 10,758,886 shares of common stock of the Company, for
aggregate proceeds of approximately $28,941,403.

                                       41
<PAGE>

The lawsuits further allege that on April 27, 2007, BMO announced that it had
lost millions of dollars on trades executed through the Company. Plaintiffs
allege that the market price of the Company's common stock price dropped further
in response to this disclosure. According to complaints, the market price of the
Company's common stock continued to decline as investors learned: that BMO was
suspending its business with the Company; NYMEX Holdings, Inc. had resigned its
representation on the Company's Board of Directors; Kevin Cassidy had resigned
as Vice Chairman and Chief Executive Officer of the Company; and Kevin Cassidy
had been convicted in 1997 of credit card fraud and in 1993 of income tax
evasion. Plaintiffs claim that defendants' alleged misrepresentations, omissions
and fraudulent conduct deceived the market, and artificially inflated the prices
of the Company's common stock and allegedly caused plaintiffs to suffer an
unspecified amount of damages.

By Orders dated June 20, 2007 and July 3, 2007, Fleiss, Patel, Peters, Manowitz
and Glaubach were consolidated under In re Optionable Securities Litigation, 07
CV 3753 (LAK). It is likely that Bock will also be consolidated. On July 10,
2007, several plaintiffs, including some not previously identified, filed
motions seeking to become lead plaintiff and to have their lawyers approved as
lead counsel in the consolidated action. After lead plaintiff is appointed and
lead counsel is approved, it is anticipated plaintiffs will file a consolidated,
amended class action complaint.

Other Matters

Since May 2007, the Company has received requests for documents and information
from the CFTC, the SEC and the DOJ and the District Attorney's Office. Since
that time, the Company has complied, and continues to comply, with these several
requests for documents and information.



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

(a)  During April 2007, we issued 200,000 shares of our common stock, pursuant
     to the exercise of options, to two individuals, one of whom is our
     Executive Chairman, Albert Helmig. These shares were issued pursuant to the
     exemption from registration provided by Section 4(2) of the Securities Act
     of 1933, as amended.

     During May 2007, we issued 55,000 options to our former Chief Executive
     Officer, Kevin Cassidy, pursuant to his employment agreement. The exercise
     price of such options is $4.63. The options expire in May 2017. These
     shares were issued pursuant to the exemption from registration provided by
     Section 4(2) of the Securities Act of 1933, as amended.


(c) On May 30, 2006, our Board of Directors authorized us to repurchase such
number of shares of our 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 has repurchased 4,800 shares at a cost aggregating $2,506
since the commencement of the share repurchase program. We did not repurchase
any shares during the six-month period ended June 30, 2007.

We will not resume our share repurchase program until further notice.


                                       42
<PAGE>

ITEM 6. EXHIBITS

(a)      Exhibits


Exhibit
Number         Description of Document

 4.1           Warrant, dated April 10, 2007, issued pursuant to that certain
               Stock and Warrant Purchase Agreement, dated April 10, 2007, by
               and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht,
               Kevin Cassidy through Pierpont Capital, Inc. and Edward O'Connor
               hrough Ridgecrest Capital, Inc.

 10.1*         Stock and Warrant Purchase Agreement, dated April 10, 2007, by
               and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht,
               Kevin Cassidy through Pierpont Capital, Inc. and Edward O'Connor
               through Ridgecrest Capital, Inc.

 10.2          Investor Rights Agreement, dated April 10, 2007, by and among
               Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht, Kevin
               Cassidy and Edward O'Connor.

 10.3          Waiver, dated April 10, 2007, by and between Optionable, Inc. and
               Mark Nordlicht, to that certain Loan Agreement, dated March 22,
               2004, by and between Optionable, Inc. and Mark Nordlicht.

 10.4          Amended and Restated Employment Agreement, dated April 10, 2007,
               by and between Optionable, Inc. and Kevin Cassidy.

 10.5          Registration Rights Agreement, dated April 10, 2007, by and
               between Optionable, Inc. and NYMEX Holdings, Inc.

 31.1          Certification of the Chief Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

 31.2          Certification of the Chief Financial Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

 32.1          Certification of the Chief Executive Officer pursuant to U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

 32.2          Certification of the Chief Financial Officer pursuant to U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

* Confidential portions have been omitted and filed separately with the
Securities and Exchange Commission.




                                       43
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized on the 14th day of August 2007.

                                           OPTIONABLE, INC.

                                           By: /s/ Albert Helmig
                                               ---------------------------------
                                           Name:   Albert Helmig
                                           Title:  Executive Chairman of the
                                                   Board



                                           By: /s/ Marc-Andre Boisseau
                                               ---------------------------------
                                           Name:   Marc-Andre Boisseau
                                           Title:  Chief Financial Officer


                                       44
<PAGE>

                                 Exhibit Index

Exhibit
Number         Description of Document

 4.1           Warrant, dated April 10, 2007, issued pursuant to that certain
               Stock and Warrant Purchase Agreement, dated April 10, 2007, by
               and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht,
               Kevin Cassidy through Pierpont Capital, Inc. and Edward O'Connor
               hrough Ridgecrest Capital, Inc.

 10.1*         Stock and Warrant Purchase Agreement, dated April 10, 2007, by
               and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht,
               Kevin Cassidy through Pierpont Capital, Inc. and Edward O'Connor
               through Ridgecrest Capital, Inc.

 10.2          Investor Rights Agreement, dated April 10, 2007, by and among
               Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht, Kevin
               Cassidy and Edward O'Connor.

 10.3          Waiver, dated April 10, 2007, by and between Optionable, Inc. and
               Mark Nordlicht, to that certain Loan Agreement, dated March 22,
               2004, by and between Optionable, Inc. and Mark Nordlicht.

 10.4          Amended and Restated Employment Agreement, dated April 10, 2007,
               by and between Optionable, Inc. and Kevin Cassidy.

 10.5          Registration Rights Agreement, dated April 10, 2007, by and
               between Optionable, Inc. and NYMEX Holdings, Inc.

 31.1          Certification of the Chief Executive Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

 31.2          Certification of the Chief Financial Officer pursuant to Section
               302 of the Sarbanes-Oxley Act of 2002.

 32.1          Certification of the Chief Executive Officer pursuant to U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

 32.2          Certification of the Chief Financial Officer pursuant to U.S.C.
               Section 1350, as adopted pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002.

* Confidential portions have been omitted and filed separately with the
Securities and Exchange Commission.

















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