UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
      DC 20549





FORM
      10-Q





x
            Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934.





For
      the quarterly period ended September 30,
2009.





or





o
            Transition
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934.





For the
      transition period from ___________ to ___________





Commission
      File Number: 000-51837





OPTIONABLE,
      INC.
              (Exact
      Name of Registrant as Specified in Its
Charter)





Delaware
            
            52-2219407(State or Other Jurisdiction of
      Incorporation or
            
            (IRS Employer Identification
      No.)Organization)1230
      Avenue of the Americas, Seventh Floor, New York, NY
            
            10020(Address of Principal Executive
      Offices)
            
            (Zip
  Code)





(914)
      773-1100





(Registrant’s
      Telephone Number Including Area
Code)




Indicate
by check mark whether the registrant (1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 o




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes o  No o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.




Large Accelerated Filer o
            
            Accelerated Filer oNon-accelerated Filer o
            
            Smaller reporting company x







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




The
number of outstanding shares of the registrant’s Common Stock as of November 13,
2009 is 48,328,328.




1




OPTIONABLE, INC.
              INDEX





PART I:
      FINANCIAL INFORMATIONITEM 1:
            
            FINANCIAL STATEMENTS
      (Unaudited)Consolidated Balance
      Sheets
            3Consolidated Statements of
      Operations
            4Consolidated Statements of Cash
      Flows
            5Notes to the Consolidated
      Financial Statements
            6ITEM 2:
            
            MANAGEMENT’S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
            22ITEM 3:
            
            QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISK
            27ITEM 4:
            
            CONTROLS AND
      PROCEDURES
            27PART II: OTHER
      INFORMATIONITEM 1
            
            LEGAL
      PROCEEDINGS
            28ITEM 1A:
            
            RISK
    FACTORS
            29ITEM 2
            
            UNREGISTERED SALES OF EQUITY
      SECURITIES AND USE OF PROCEEDS
            29ITEM 3
            
            DEFAULTS UPON SENIOR
      SECURITIES
            29ITEM 4
            
            SUBMISSION OF MATTERS TO A VOTE
      OF SECURITY HOLDERS
            29ITEM 5
            
            OTHER
      INFORMATION
            29ITEM 6:
            
            EXHIBITS
            29SIGNATURES
            30








2


OPTIONABLE,
      INC.CONSOLIDATED
      BALANCE SHEETS  September
      30, 2009
                
                
                December
      31, 2008ASSETS
                
                (Unaudited)
                
                
                (1)Current
      Assets:Cash
      and cash equivalents
                
                $
                3,958,302
                
                
                $
                8,974,282Recoverable
      Income Taxes
                
                
                985,525
                
                
                
                958,294Notes
      Receivable, net of allowance for doubtful accounts of $80,000 at September
      30, 2009
                
                
                -
                
                
                
                -Prepaid
      Expenses
                
                
                1,167,868
                
                
                
                1,269,827Total
      current assets
                
                
                6,111,695
                
                
                
                11,202,403Total
      assets
                
                $
                6,111,695
                
                
                $
                11,202,403LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses
                
                $
                756,949
                
                
                $
                420,590Due
      to stockholder
                
                
                -
                
                
                
                97,907Income
      Tax Payable
                
                
                -
                
                
                
                83,555Total
      current liabilities
                
                
                756,949
                
                
                
                602,052Due
      to stockholder, net of unamortized discount of $2,618,270 at December 31,
      2008
                
                
                -
                
                
                
                2,426,240Due
      to director, net of unamortized discount of $316,961 and
      $355,126at
      September 30, 2009 and December 31, 2008, respectively
                
                
                191,736
                
                
                
                153,571Total
      liabilities
                
                
                948,685
                
                
                
                3,181,863Stockholders'
      Equity:Preferred
      Stock; $.0001 par value, 5,000,000 shares authorized, none
      issuedand
      outstanding
                
                
                -
                
                
                
                -Common
      stock; $.0001 par value, 100,000,000 shares authorized,52,428,203
      issued and  48,328,328 and 52,423,403 outstanding  at
      September 30, 2009
                
                
                5,242
                
                
                
                5,242and
      December 31, 2008, respectivelyAdditional
      paid-in capital
                
                
                162,783,753
                
                
                
                162,766,096Treasury
      stock at cost, 4,099,875 and 4,800 shares at September 30,
      2009and
      December 31, 2008, respectively
                
                
                (47,552
                )
                
                
                (2,506
                )Accumulated
      deficit
                
                
                (157,578,433
                )
                
                
                (154,748,292
                )Total
      stockholders’ equity
                
                
                5,163,010
                
                
                
                8,020,540Total
      liabilities and stockholders’ equity
                
                $
                6,111,695
                
                
                $
                11,202,403
  (1)
      Derived from audited financial statements
 See Notes
to Unaudited Financial Statements.
 3
 OPTIONABLE,
      INC.CONSOLIDATED
      STATEMENTS OF OPERATIONS  For
      the three-month period ended
                
                
                For
      the nine-month period endedSeptember
      30,
                
                
                September
      30,2009
                
                
                2008
                
                
                2009
                
                
                2008(Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)
                
                
                (Unaudited)Operating
      expenses:Selling,
      general and administrative
                
                $
                527,785
                
                
                $
                226,646
                
                
                $
                2,803,433
                
                
                $
                1,831,230Research
      and development
                
                
                -
                
                
                
                98,660
                
                
                
                -
                
                
                
                559,105Total
      operating expenses
                
                
                527,785
                
                
                
                325,306
                
                
                
                2,803,433
                
                
                
                2,390,335Operating
      loss
                
                
                (527,785
                )
                
                
                (325,306
                )
                
                
                (2,803,433
                )
                
                
                (2,390,335
                )Other
      income (expense):Interest
      income
                
                
                3,944
                
                
                
                42,070
                
                
                
                38,635
                
                
                
                198,758Interest
      expense to related parties
                
                
                (13,103
                )
                
                
                (97,362
                )
                
                
                (141,879
                )
                
                
                (283,581
                )Total
      other expenses
                
                
                (9,159
                )
                
                
                (55,292
                )
                
                
                (103,244
                )
                
                
                (84,823
                )Loss
      before income tax
                
                
                (536,944
                )
                
                
                (380,598
                )
                
                
                (2,906,677
                )
                
                
                (2,475,158
                )Income
      tax benefit
                
                
                338,341
                
                
                
                72,165
                
                
                
                76,537
                
                
                
                881,579Net
      loss
                
                $
                (198,603
                )
                
                $
                (308,433
                )
                
                $
                (2,830,140
                )
                
                $
                (1,593,579
                )Basic
      earnings per common share
                
                $
                (0.00
                )
                
                $
                (0.01
                )
                
                $
                (0.06
                )
                
                $
                (0.03
                )Diluted
      earnings per common share
                
                $
                (0.00
                )
                
                $
                (0.01
                )
                
                $
                (0.06
                )
                
                $
                (0.03
                )Basic
      and diluted weighted average commonshares
      outstanding
                
                
                48,328,328
                
                
                
                52,023,047
                
                
                
                49,183,344
                
                
                
                52,023,047
 See Notes
to Unaudited Financial Statements.
 4
 OPTIONABLE,
      INC.CONSOLIDATED
      STATEMENTS OF CASH FLOWS  For
      the nine-month periods endedSeptember
      30,2009
                
                
                2008(Unaudited)
                
                
                (Unaudited)Cash
      flows from operating activities:Net
      loss
                
                $
                (2,830,140
                )
                
                $
                (1,593,579
                )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
                
                
                -
                
                
                
                161,806Amortization
      of debt discount
                
                
                141,879
                
                
                
                283,581Provision
      for doubtful accounts
                
                
                80,000
                
                
                
                (625
                )Fair
      value of warrants and options
                
                
                17,657
                
                
                
                17,055Changes
      in operating assets and liabilities:Accounts
      receivable
                
                
                -
                
                
                
                625Incentives
      receivable from stockholder
                
                
                -
                
                
                
                (15,487
                )Due
      to shareholder
                
                
                (97,907
                )
                
                
                -Other
      current assets
                
                
                101,959
                
                
                
                16,879Other
      receivable
                
                
                -
                
                
                
                (262,742
                )Other
      assets
                
                
                -
                
                
                
                19,900Accounts
      payable and accrued expenses
                
                
                336,358
                
                
                
                (25,552
                )Income
      tax payable
                
                
                (139,941
                )
                
                
                -Recoverable
      income taxes
                
                
                29,155
                
                
                
                783,908Net
      cash used in operating activities
                
                
                (2,360,980
                )
                
                
                (614,231
                )Cash
      flows used in investing activities:Purchases
      of notes receivable
                
                
                (80,000
                )
                
                
                -Net
      cash used in investing activity
                
                
                (80,000
                )
                
                
                -Cash
      flows from financing activities:Repurchase
      of shares of common stock
                
                
                (45,046
                )
                
                
                -Principal
      repayment of due to stockholder
                
                
                (2,529,954
                )
                
                
                -Net
      cash used in financing activities
                
                
                (2,575,000
                )
                
                
                -Net
      decrease in cash
                
                
                (5,015,980
                )
                
                
                (614,231
                )Cash,
      beginning of period
                
                
                8,974,282
                
                
                
                9,919,727Cash,
      end of period
                
                $
                3,958,302
                
                
                $
                9,305,496Supplemental
      disclosures of cash flow information:Cash
      paid for taxes
                
                $
                -
                
                
                $
                -Cash
      paid for interest
                
                $
                -
                
                
                $
                -Disposition
      of property and equipment in connection withcancellation
      of lease
                
                $
                -
                
                
                $
                24,425
 See Notes
to Unaudited Financial Statements.





5




OPTIONABLE, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
1-Organization, Description of Business and Going Concern




Optionable, Inc. (“the “Company”) was formed in Delaware in
February 2000. Between April 2001 and July 2007, a substantial portion of the
Company’s revenues were generated from providing energy derivative brokerage
services to brokerage firms, financial institutions, energy traders, and hedge
funds worldwide.





The
Company has not generated any revenues since the third quarter of 2007 as a
result of the suspension of the business relationship by its largest customer
and the succession of events since then. In addition, the matters discussed in
Note 7 and Item 1 of Part II of this Report "Legal Proceedings" have had a
significant adverse impact on its business and future results of operations and
financial condition.





The
Company is a defendant to three legal proceedings, one from the Commodities and
Futures Trade Commission (“CFTC”), another from its largest shareholder, Chicago
Mercantile Exchange/ New York Mercantile Exchange (“NYMEX”), and a third one
from its former largest customer, Bank of Montreal (“BMO”).  Also
named in such lawsuits, among others, are: one of the Company’s current board
members and former president, as well as the Company’s former chief executive
officer.  The Company’s former chairman is a defendant in the latter
two proceedings.  Additionally, the Company’s former chief executive
officer and former president are defendants in a claim made by the Securities
and Exchange Commission.  Furthermore, the US Department of Justice
has indicted the Company’s former chief executive officer.




Going
Concern




The
Company is unable to determine whether it will have sufficient funds to meet its
obligations for at least the next twelve months. The combination of its
anticipated legal costs to defend against current legal proceedings, the
potential amounts the Company would have to pay if there are negative outcomes
in one or more of such legal proceedings and the Company’s obligations under its
indemnification obligations  could exceed the Company’s resources. The
legal proceedings also negatively impact the Company’s ability to enter into
strategic transactions with other companies.  The Company’s future
depends on its ability to satisfactorily resolve the aforementioned legal issues
and there is no assurance it will be able to do so. If the Company fails for any
reason, it would not be able to continue as a going concern and could
potentially be forced to seek relief through a filing under the US Bankruptcy
Code.






6




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)






Principles
of consolidation




The
accompanying consolidated financial statements include the results of operations
of Opex International, Inc. and Hydra Commodity Services, Inc. for the three and
nine-month periods ended September 30, 2009 and 2008. All material intercompany
accounts and transactions between the Company and its subsidiaries have been
eliminated in consolidation.




Basis
of Presentation




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 three and nine-month periods ended
September 30, 2009 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2009.











7




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)






Note
2- Summary of Significant Accounting Policies




Cash
and Cash Equivalents




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




Concentration
of Credit Risks




The
Company is subject to concentrations of credit risk primarily from cash and cash
equivalents.




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 between January 2007 and October 2008 and $250,000 for interest-bearing
accounts and an unlimited amount for noninterest-bearing accounts after October
2008. During the three and nine-month periods ended September 30, 2009 and 2008,
the Company has reached bank balances exceeding the FDIC insurance limit. While
the Company periodically evaluates the credit quality of the financial
institutions in which it holds deposits, it cannot completely alleviate the risk
associated with the sudden failure of such financial
institutions.  The Company’s cash and cash equivalents held at
financial institutions exceeding the FDIC insurance limit amounted to $ 2.0
million and $7.3 million at September 30, 2009 and December 31, 2008,
respectively.




Fair
Value of Financial Instruments





Effective
January 1, 2008, the Company adopted Financial Accounting Statement Board
(“FASB”) Accounting Standard Codification (“ASC”) 820, “Fair Value Measurements
and Disclosures” , for assets and liabilities measured at fair value on a
recurring basis. ASC 820 establishes a common definition for fair value to be
applied to existing generally accepted accounting principles that require the
use of fair value measurements, establishes a framework for measuring fair value
and expands disclosure about such fair value measurements.


8


OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)






Note
2- Summary of Significant Accounting Policies-continued





ASC 820
defines fair value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at
the measurement date. Additionally, ASC 820 requires the use of valuation
techniques that maximize the use of observable inputs and minimize the use of
unobservable inputs. These inputs are prioritized below:





Level 1:
            Observable
      inputs such as quoted market prices in active markets for identical assets
      or liabilitiesLevel 2:
            Observable
      market-based inputs or unobservable inputs that are corroborated by market
      dataLevel 3:
            Unobservable
      inputs for which there is little or no market data, which require the use
      of the reporting entity’s own
assumptions.




The
Company did not have any Level 2 or Level 3 assets or liabilities as of
September 30, 2009 and December 31, 2008, with the exception of its due to
shareholder and due to director.  The carrying amount of the due to
director at September 30, 2009 and December 31, 2008 and due to shareholder at
December 31, 2008, approximate their respective fair value based on the rate at
which the Company was able to settle its due to shareholder in February
2009.





Cash and
cash equivalents include money market securities that are considered to be
highly liquid and easily tradable as of September 30, 2009 and December 31,
2008, respectively. These securities are valued using inputs observable in
active markets for identical securities and are therefore classified as
Level 1 within our fair value hierarchy.





In
addition, ASC 825-10-25, “Fair Value Option,” was effective for January 1,
2008. ASC 825-10-25 expands opportunities to use fair value measurements in
financial reporting and permits entities to choose to measure many financial
instruments and certain other items at fair value. The Company did not elect the
fair value options for any of its qualifying financial
instruments.







9


OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)






Note
2- Summary of Significant Accounting Policies-continued




Income
Taxes




Income
taxes are accounted for in accordance with ASC 740 “ Income Taxes”. ASC 740
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, ASC 740 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.  Penalties and interest on underpayment of taxes are
reflected in the Company’s effective tax rate.




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 and share-based payments. 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 shares 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 1,233,000 and 983,000 at
September 30, 2009 and 2008, respectively. The outstanding warrants amounted to
100,000 and 18,526,000 at September 30, 2009 and 2008, respectively. The
options and warrants outstanding at September 30, 2009 and 2008, respectively,
have been excluded from the computation of diluted earnings per share due to
their antidilutive effect.




10


OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)






Note
2- Summary of Significant Accounting Policies-continued




Stock
Compensation




Under ASC
718-  Compensation-Stock Compensation, companies are required to
measure the
costs  of  share-based  compensation  arrangements  based  on  the
grant-date  fair value and recognize the costs in the
financial  statements over the period during which employees are
required to provide services. Share-based compensation arrangements include
stock options, restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. In March 2005, the SEC
issued SAB 107. SAB 107 expresses views of the staff regarding the interaction
between ASC 718 and certain SEC rules and regulations and provides the staff's
views regarding the valuation of share-based payment arrangements for public
companies. 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.




Contingencies




The
outcomes of legal proceedings and claims brought against the Company are subject
to significant uncertainty. FASB ASC 450-20-25-2 “Contingencies- Loss
Contingencies-Recognition”,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 the Company evaluates, among other
factors, the degree of probability of an unfavorable outcome and the ability to
make a reasonable estimate of the amount of loss. While the Company believes
that it will continue to incur losses from such legal proceedings, it is unable
to make a reasonable estimate of the amount of loss.




Recent
Accounting Pronouncements




During
2009, FASB has issued a number of updates to its accounting standards
codification, none of which are expected to significantly impact the Company’s
presentation or accounting treatment for a particular event or
transactions.







11




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
3- Prepaid expenses




Prepaid
expenses primarily consists of retainers paid to certain law firms which
represent the Company and certain former directors and officers and a current
director in connection with legal proceedings which are described in Note 7-
Litigation and contingencies.




Note
4- Notes receivable




The
Company purchased five notes receivable aggregating $80,000 from its former
chief technology officer and an affiliate.  The notes can be either
redeemed in cash or in kind for services performed, at the Company’s
option.  The notes can be redeemed in cash by January 2010 or within a
year from issuance if redeemed in-kind.




The
Company has not received payment on the first four notes, has extended their
maturity to January 2010 and believes that it is unlikely that it will collect
on the remaining notes and hasprovided for anallowance for doubtful accounts on all the notes at
September 30, 2009.







12




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
5-Due to Related Parties




The terms
and amounts of due to related parties at September 30, 2009 and December 31,
2008 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:




September
      30,
            
            December
      31,2009
            
            2008$
            -
            
            
            $
            5,044,510Discount,
      using initial implied rate of 12%
            
            
            -
            
            
            
            (2,618,270
            )$
            -
            
            
            $
            2,426,240










13




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
5-Due to Related Parties-continued




Due to
Director and former President, 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  Director 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:




September
      30,
            
            December
      31,2009
            
            2008$
            508,697
            
            
            $
            508,697Discount,
      using initial implied rate of 12%
            
            
            (316,961
            )
            
            
            (355,126
            )$
            191,736
            
            
            $
            153,571




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 Director amounting to approximately 25% of its cash
flows from operating cash flows less capital expenditures.  During
April 2006, the Company modified the terms of its due to related parties to
allow the Company to make principal repayments at its discretion.




The
amortization of the discount on the due to related parties amounted to
approximately $142,000 and $284,000 during the nine-month periods ended
September 30, 2009 and 2008, respectively.




During
the nine-month period ended September 30, 2009, the Company satisfied its
obligations under the due to Stockholder and former Chairman of the Board by
paying him $2,575,000, including the repurchase of 4,095,075 shares of the
Company’s common stock, valued at approximately $45,000 based on the closing
price of the Company’s stock on the date of repurchase.







14




OPTIONABLE, INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
5-Due to Related Parties-continued




At
December 31, 2008, the Company owed approximately $98,000 to a Stockholder for
certain legal fees incurred and paid by such Stockholder for matters discussed
in Note 7 of the financial statements.  As of September 30, 2009, the
Company satisfied its obligation to the Stockholder.




Note
6- Stockholders' Equity




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. The options outstanding vest over periods
of up to twenty-four months.




The
amortization of share-based payment was recorded in selling, general, and
administrative expenses during such periods.




The
Company granted 500,000 options during the nine-month period ended September 30,
2009.




The fair
value of the options granted during the nine-month period ended September 30,
2009 is based on the Black Scholes Model using the following
assumptions:




Exercise
      price:
            $0.016-0.025




Market
      price at date of grant:
            $0.016-0.025




Volatility:
            104.5%




Expected
      dividend rate:
            0%




Expected
      terms:
            3.3
      years




Risk-free
      interest rate:
            1.22-1.44%







15




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
6- Stockholders' Equity-continued




The
following activity occurred under our plan:




Nine-month periods ended September
      30,2009
              
              2008Weighted-average
      grant-date fair value of options granted
              
              $0.015
              
              N/AFair
      value of options recognized as expense:
              
              $17,657
              
              $17,055




The total
compensation cost related to nonvested options not yet recognized amounted to
approximately $5,000 at September 30, 2009 and the Company expects that it will
be recognized over the following weighted-average period of 16
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, if any, 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 three months
after their employment termination or one year after their death or permanent
and total disability. The 2004 Plan provides for adjustments upon changes in
capitalization.




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.







16




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
7- Litigation and Contingencies




Regulatory
Matters




Commodity
Futures Trading Commission v. Cassidy et al.




On
November 18, 2008, the Commodity Futures Trading Commission (“CFTC”) filed a
complaint in the United States District Court for the Southern District of New
York, against the Company; former employees of the Company, including its former
Chief Executive Officer, Kevin Cassidy, and its former President (currently a
Director), Edward O’Connor; and two former employees of BMO, David Lee and
Robert Moore.  The CFTC claims that the Company is liable for
violations of Section 4c(b) of the Commodity Exchange Act (“CEA”) and CFTC
Regulations 33.10(a),(b) and (c).  The CFTC seeks a permanent
injunction restraining and enjoining the Company and other defendants from
directly or indirectly violating these provisions.  The CFTC further
seeks an order directing the Company and other defendants to pay civil monetary
penalties, in an undetermined amount.  On March 20, 2009, the Company
and certain other of the defendants filed motions to dismiss the CFTC
complaint.  The court heard arguments on the motions on October 22, 2009,
but it has not announced a decision.  The Company is unable to predict
the outcome of this matter.












17




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
7- Litigation and Contingencies-continued




CMEG
NYMEX Inc. v. Optionable, Inc. et. al.





On April
10, 2009, NYMEX filed a complaint against the Company, several past and present
officers and directors ( one of whom is a current director), and other
defendants in the United States District Court for the Southern District of New
York.  The complaint claims that defendants are liable for securities
and common-law fraud, negligent misrepresentation, and breach of warranty in
connection with an April 2007 transaction in which several
individual  who were officers and directors of the Company at the time
sold shares in it to NYMEX and the Company issued NYMEX warrants for the
purchase of additional shares.  The complaint seeks rescission,
compensatory damages of at least $28.5 million, and punitive damages of $28.5
million.  On June 15, 2009, the Company filed a motion to dismiss the
complaint.  NYMEX responded to that motion on September 18, 2009, and
the motion is still pending.  The court will hear arguments on
November 24, 2009.  The Company is unable to predict the outcome of
this matter.




Bank
of Montreal v. Optionable, Inc. et al.




On August
28, 2009, the Bank of Montreal (“BMO”) filed a complaint against Optionable and
other defendants in the United States District Court for the Southern District
of New York.  The other defendants include  former employees
Scott Connor and Ryan Woodgate, former chief executive officer Kevin Cassidy,
former chairman Mark Nordlicht, and former president Edward O’Connor, (and
currently a Director) of the Company, as well as MF Global Inc. and two of its
current or former employees.  The complaint claims that the Company is
liable for fraud, negligent misrepresentation, breach of fiduciary duty, and
breach of contract.  It demands compensatory and punitive damages in
an undetermined amount, and it demands indemnification from the Company for
certain of BMO’s trading losses and attorneys’ fees.  The Company’s
response to the complaint is due on November 30, 2009.  The Company is
unable to predict the outcome of this litigation.







18




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
7- Litigation and Contingencies-continued




Claim
from the Company’s former Chief Executive Officer




On
October 15, 2007, and as subsequently reiterated, the Company received a letter
from the Company's former Chief Executive Officer in which he states, among
other things, that the Company is in breach of certain obligations pursuant to
an Amended and Restated Employment Agreement, dated April 10, 2007, and the
Company should:




1)   continue
to pay him his base  salary,  amounting  to
$25,000 per month for fiscal 2007, $325,000 for fiscal 2008, and $350,000 for
fiscal 2009;




2)   continue
to pay  him
a  cash  consideration  equal  to 5% of
the Company's revenues and a stock  consideration  equal to
2% of the
Company's   revenues.   The   aggregate   value  of  the   unpaid
consideration   based  on  the  Company's  revenues  amounted  to
approximately $289,000 at September 30, 2007; and




3)   continue
to provide to him health, welfare, and pension plan benefits as well as the
payment of an annual premium for his life insurance through October
2009.









19




OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
7- Litigation and Contingencies-continued




While the
Company intends to vigorously defend these matters, there exists the possibility
of adverse outcomes that the Company cannot determine. These matters are subject
to inherent uncertainties and management's view of these matters may change in
the future.




Note
8-Income Taxes




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




September
      30,
              2009
            
            
            September
      30,
              2008Current
      and deferred:Federal
            $
            (76,537
            )
            
            $
            881,579State
            
            (-
            )
            
            
            (-
            )Total
      benefit (provision) for income taxes
            $
            (76,537
            )
            
            $
            881,579




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




Nine-month period ended September
      30,2009
            
            
            2008Federal
      statutory taxes
            
            
            (35.0
            %)
            
            
            
            (35.0
            )%State
      income taxes, net of federal tax benefit
            
            
            (5.7
            )
            
            
            
            (5.7
            )Utilization
      of state net operating loss
            
            
            5.7
            
            
            
            
            -Permanent
      differences (taxable gain on extinguishment of due to Stockholder in
      2009)
            
            
            32.3
            
            
            
            
            5.1(2.7
            )%
            
            
            
            (35.6
            )%







20


OPTIONABLE,
INC.


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)




Note
8-Income Taxes-continued




The
recoverable income tax amounting to approximately $1.0 million is recoverable
primarily from applications for carryback refund from the Company’s 2006 federal
tax returns.




The
Company has net operating losses of approximately $2.7 million for both federal
and state tax purposes.









21





ITEM 2: MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS




Overview




Optionable,
Inc. (“the “Company”) was formed in Delaware in February 2000. Between April
2001 and July 2007, a substantial portion of our revenues were generated from
providing energy derivative brokerage services to brokerage firms, financial
institutions, energy traders, and hedge funds worldwide. A substantial portion
of all energy derivatives we brokered in the past were natural gas
derivatives.




A
significant portion of our revenues through the third quarter of 2007 was
derived from our business relationship with BMO Financial Group ("BMO"). We have
not generated any revenues since the third quarter of 2007 as a result of the
suspension of the business relationship with us by BMO together with the
combined succession of events since then. In addition, the matters discussed in
Item 1 of Part II of this Report "Legal Proceedings" have had a significant
adverse impact on our business, including current and, likely, future results of
operations and financial condition. Our management continues to seek out
possible business transactions and new business relationships.




The
Company is a defendant to three legal proceedings, one from the Commodities and
Futures Trade Commission (“CFTC”), another from its largest shareholder, NYMEX,
and a third one from its former largest customer, BMO.  Also named in
such lawsuits, among others, are: one of the Company’s current board members and
former president, as well as the Company’s former chief executive
officer.  The Company’s former chairman is a defendant in the latter
two proceedings.  Additionally, the Company’s former chief executive
officer and former president ( who is a current board member) are defendants in
a claim made by the Securities and Exchange Commission.  Furthermore,
the US Department of Justice has indicted the Company’s former chief executive
officer.




Going
Concern




The
Company is unable to determine whether it will have sufficient funds to meet its
obligations for at least the next twelve months. The combination of its
anticipated legal costs to defend against current legal proceedings, the
potential amounts the Company would have to pay if there are negative outcomes
in one or more of such legal proceedings and the Company’s obligations under its
indemnification obligations  could exceed the Company’s resources. The
legal proceedings also negatively impact the Company’s ability to enter into
strategic transactions with other companies.  The Company’s future
depends on its ability to satisfactorily resolve the aforementioned legal issues
and there is no assurance it will be able to do so. If the Company fails for any
reason, it would not be able to continue as a going concern and could
potentially be forced to seek relief through a filing under the US Bankruptcy
Code.




22


Three
and Nine-Month Periods Ended September 30, 2009 and 2008




Results
      of Operations(Unaudited)  For
      the three-month
                
                
                Increase/
                
                
                Increase/
                
                
                For
      the nine-month
                
                
                Increase/
                
                
                Increase/period
      ended
                
                
                (Decrease)
                
                
                (Decrease)
                
                
                period
      ended
                
                
                (Decrease)
                
                
                (Decrease)September
      30,
                
                
                in
      $ 2009
                
                
                in
      % 2009
                
                
                September
      30,
                
                
                in
      $ 2009
                
                
                in
      % 20092009
                
                
                2008
                
                
                vs
      2008
                
                
                vs
      2008
                
                
                2009
                
                
                2008
                
                
                vs
      2008
                
                
                vs
      2008Operating
      expenses:Selling,
      general and administrative
                
                
                527,785
                
                
                
                226,646
                
                
                
                301,139
                
                
                
                132.9
                %
                
                
                2,803,433
                
                
                
                1,831,230
                
                
                
                972,203
                
                
                
                53.1
                %Research
      and development
                
                
                -
                
                
                
                98,660
                
                
                
                (98,660
                )
                
                
                -100.0
                %
                
                
                -
                
                
                
                559,105
                
                
                
                (559,105
                )
                
                
                -100.0
                %Total
      operating expenses
                
                
                527,785
                
                
                
                325,306
                
                
                
                202,479
                
                
                
                62.2
                %
                
                
                2,803,433
                
                
                
                2,390,335
                
                
                
                413,098
                
                
                
                17.3
                %Operating
      loss
                
                
                (527,785
                )
                
                
                (325,306
                )
                
                
                202,479
                
                
                62.2
                %
                
                
                (2,803,433
                )
                
                
                (2,390,335
                )
                
                
                413,098
                
                
                
                17.3
                %Other
      income (expense):Interest
      income
                
                
                3,944
                
                
                
                42,070
                
                
                
                (38,126
                )
                
                
                -90.6
                %
                
                
                38,635
                
                
                
                198,758
                
                
                
                (160,123
                )
                
                
                -80.6
                %Interest
      expense-related parties
                
                
                (13,103
                )
                
                
                (97,362
                )
                
                
                (84,259
                )
                
                
                -86.5
                %
                
                
                (141,879
                )
                
                
                (283,581
                )
                
                
                (141,702
                )
                
                
                -50.0
                %(9,159
                )
                
                
                (55,292
                )
                
                
                (46,133
                )
                
                88.4
                %
                
                
                (103,244
                )
                
                
                (84,823
                )
                
                
                18,421
                
                
                
                21.7
                %Net
      loss before income tax
                
                
                (536,944
                )
                
                
                (380,598
                )
                
                
                (156,346
                )
                
                41.1
                %
                
                
                (2,906,677
                )
                
                
                (2,475,158
                )
                
                
                431,519
                
                
                
                17.4
                %Income
      tax benefit
                
                
                338,341
                
                
                
                72,165
                
                
                
                266,176
                
                
                NM
                
                
                
                76,537
                
                
                
                881,579
                
                
                
                (805,042
                )
                
                (91.3
                )%Net
      loss
                
                $
                (198,603
                )
                
                $
                (308,433
                )
                
                $
                (109,830
                )
                
                -
                
                
                $
                (2,830,140
                )
                
                $
                (1,593,579
                )
                
                $
                1,236,561
                
                
                
                77.6
                %NM:  Not
      meaningful






23


Selling,
general, and administrative expenses




Selling,
general, and administrative expenses consists primarily of legal fees, incurred
in connection with the Company’s attention to matters described in Part II, Item
1- Legal Proceedings 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 three-month and nine-month periods ended September 30, 2009, when
compared to the prior year period is primarily due to the
following:




·
            Higher
      legal fees incurred in connection with an increased number of litigations
      handled during 2009 as well as legal fees incurred in connection with our
      annual meeting of stockholders in March 2009 and the satisfaction of our
      obligations to Mark Nordlicht, a stockholder and our former Chairman of
      the Board, which occurred in February
2009.




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 2009 will continue to constitute a large
share of our selling, general, and administrative expenses.




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 decrease in research and development expenses
during the three-month and nine-month periods ended September 30, 2009 when
compared to the prior year periods is primarily due to the
following:




·
            We
      suspended our OPEX development efforts in November
  2008.




Interest income




Interest
income consists primarily of interest earned on interest-bearing cash and cash
equivalents. The decrease in interest income during the three-month and
nine-month periods ended September 30, 2009 when compared to the prior year
period is primarily due to a decrease in interest rate we earned as well as a
lower weighted average interest-bearing cash balance.




Interest
expense to related parties




Interest
expense to related parties consists of interest charges associated with amounts
due to related parties, including Mark Nordlicht, our former Chairman of the
Board and Edward O’Connor, our former President and current Director. The
decrease in interest expense to related parties during the three-month and
nine-month periods ended September 30, 2009 is primarily due to a loss on
extinguishment of debt to Mark Nordlicht of approximately $35,000 which was
recognized as interest expense during February 2009.  No such loss
occurred during the comparable prior year period.




24




Income
tax




Income
tax benefit/expense consists of federal and state current and deferred income
tax or benefit based on our net income. The decrease in income tax benefit
during the three and nine- month periods ended September 30, 2009 when compared
to the income tax benefits expense we incurred during the comparable prior year
periods is primarily due to a tax gain of $2.5 million we incurred on the
satisfaction of the due to Mark Nordlicht, offset by taxable losses resulting
from our expenses.




LIQUIDITY
AND CAPITAL RESOURCES




Our cash
balance as of September 30, 2009 amounts to approximately $4.0
million.




During
the nine-month period ended September 30, 2009, we used cash from operating
activities of approximately $2.4 million, primarily resulting from:




·
            net
      loss of approximately $2.8 million, adjusted for the amortization of debt
      discount of approximately $140,000 and an increase in allowance for bad
      debt of $80,000; and




·
            a
      decrease in income tax payable of approximately $140,000 resulting from
      the current pre-tax loss offset  by a taxable gain of $2.5
      million resulting from the satisfaction of our obligations to Mark
      Nordlicht, a stockholder and our former Chairman of the
    Board;




During
the nine-month period ended September 30, 2009, we used cash in investing
activities, resulting from purchases of five notes receivable aggregating
$80,000;




During
the nine-month period ended September 30, 2009, we satisfied our obligations of
approximately $5.0 million to Mark Nordlicht, and repurchased 4,095,075 shares
of our common stock for a consideration aggregating $2,575,000.




During
the nine-month period ended September 30, 2008, we used cash from operating
activities of approximately $301,000, primarily resulting from:




·
            net
      loss of approximately $1.6 million, adjusted for the amortization of debt
      discount and depreciation of approximately $284,000 and $162,000,
      respectively;


·
            a
      decrease  in prepaid income taxes assets resulting from the
      reimbursement during the nine-month period ended September 30, 2008 of the
      2007 federal  estimated tax payments /income tax payable offset
      by the current year tax benefits resulting from operating losses;
      and


·
            an increase in other receivable
      of approximately $260,000 representing insurance proceeds receivable from
      our insurance carrier for legal fees incurred in connection with certain
      legal matters disclosed in  Item 1 of Part II of this
      report.





25




CRITICAL
ACCOUNTING POLICIES AND ESTIMATES




A summary
of significant accounting policies is included in Note 2 of unaudited financial
statements included in this Quarterly Report. 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 the following:




Contingencies




The
outcomes of legal proceedings and claims brought against us are subject to
significant uncertainty. FASB ASC 450-20-25-2 “Contingencies- Loss
Contingencies-Recognition”,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.




Recent
Accounting Pronouncements




During
2009, FASB has issued a number of updates to its accounting standards
codification, none of which are expected to significantly impact the Company’s
presentation or accounting treatment for a particular event or
transactions.






26




ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




n/a




ITEM
4. CONTROLS AND PROCEDURES




Evaluation of Disclosure Controls and Procedures




As of
September 30, 2009, our Chief Executive Officer and President and our Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a-15(b) promulgated under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, our
Chief Executive Officer and President and our Chief Financial Officer concluded
that, as of September 30, 2009, our disclosure controls and procedures were
effective in ensuring that material information required to be disclosed in the
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission’s rules and forms, including ensuring that such material
information is accumulated and communicated to our Chief Executive Officer and
President and our Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.




Changes
in Internal Control Over Financial Reporting




During
the quarter ended September 30, 2009, there were no changes in our internal
control over financial reporting that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




PART 2
OTHER INFORMATION




ITEM 1. Legal Proceedings




Commodity
Futures Trading Commission v. Cassidy et al.




On
November 18, 2008, the Commodity Futures Trading Commission (“CFTC”) filed a
complaint in the United States District Court for the Southern District of New
York, against the Company; former employees of the Company, including its former
Chief Executive Officer, Kevin Cassidy, and its former President (currently a
Director), Edward O’Connor; and two former employees of BMO, David Lee and
Robert Moore.  The CFTC claims that the Company is liable for
violations of Section 4c(b) of the Commodity Exchange Act (“CEA”) and CFTC
Regulations 33.10(a),(b) and (c).  The CFTC seeks a permanent
injunction restraining and enjoining the Company and other defendants from
directly or indirectly violating these provisions.  The CFTC further
seeks an order directing the Company and other defendants to pay civil monetary
penalties, in an undetermined amount.  On March 20, 2009, the Company
and certain other of the defendants filed motions to dismiss the CFTC
complaint.  The court heard arguments on the motions on October 22, 2009,
but it has not announced a decision.  The Company is unable to predict
the outcome of this matter.







27




CMEG
NYMEX Inc. v. Optionable, Inc. et. al.




On April
10, 2009, NYMEX filed a complaint against the Company, several officers and
directors ( one of whom is a current director), and other defendants in the
United States District Court for the Southern District of New
York.  The complaint claims that defendants are liable for securities
and common-law fraud, negligent misrepresentation, and breach of warranty in
connection with an April 2007 transaction in which several individuals who were
officers and directors of the Company at the time sold shares in it to NYMEX and
the Company issued NYMEX warrants for the purchase of additional
shares.  The complaint seeks rescission, compensatory damages of at
least $28.5 million, and punitive damages of $28.5 million.  On June
15, 2009, the Company filed a motion to dismiss the complaint.  NYMEX
responded to that motion on September 18, 2009, and the motion is still
pending.  The court will hear arguments on November 24,
2009.  The Company is unable to predict the outcome of this
matter.




Bank
of Montreal v. Optionable, Inc. et al.




On August
28, 2009, the Bank of Montreal (“BMO”) filed a complaint against Optionable and
other defendants in the United States District Court for the Southern District
of New York.  The other defendants include  former employees
Scott Connor and Ryan Woodgate, former chief executive officer Kevin Cassidy,
former chairman Mark Nordlicht, and former president Edward O’Connor, (and
currently a Director) of the Company, as well as MF Global Inc. and two of its
current or former employees.  The complaint claims that the Company is
liable for fraud, negligent misrepresentation, breach of fiduciary duty, and
breach of contract.  It demands compensatory and punitive damages in
an undetermined amount, and it demands indemnification from the Company for
certain of BMO’s trading losses and attorneys’ fees.  The Company’s
response to the complaint is due on November 30, 2009.  The Company is
unable to predict the outcome of this litigation.






ITEM
1A. RISK FACTORS




Other
than with respect to the risk factor provided below, there have been no material
changes to the Risk Factors described in our 2008 Annual Report on Form
10-K.




RISKS
RELATED TO OUR BUSINESS




WE
MAY NOT BE ABLE TO CONTINUE TO OPERATE AS A GOING CONCERN




The
Company is unable to determine whether it will have sufficient funds to meet its
obligations for at least the next twelve months. The combination of our
anticipated legal costs to defend against the current legal proceedings
described under the heading “Legal Proceedings” in Item 1 of Part II of this
Report, the potential settlements the Company would have to pay assuming there
are negative outcomes to such legal proceedings, and the Company’s
indemnification obligations may exceed the Company’s resources, and therefore
the Company may not be able to meet such obligations which would have a material
adverse effect on the Company’s ability to continue as a going
concern.  The Company’s future depends on its ability to
satisfactorily resolve these legal issues, although there can be no assurance
that we will be able to achieve a satisfactory resolution.  While the
Company is considering several alternatives, these legal proceedings also
negatively impact our ability to enter into strategic transactions with other
companies, and there can be no assurance that we will be able to enter into or
complete any such transaction.  If the Company fails for any reason to
satisfactorily resolve these issues, it would not be able to continue as a going
concern and the Company could potentially be forced to seek relief through a
filing under the US Bankruptcy Code.






28




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




None




ITEM
3. DEFAULTS UPON SENIOR SECURITIES




None




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




None




ITEM
5.  OTHER INFORMATION




None




ITEM 6. EXHIBITS




31.1
            Certification
      of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities Exchange Act of 1934*31.2
            Certification
      of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the
      Securities Exchange Act of 1934*32.1
            Certification
      of Principal Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) of the
      Securities Exchange Act of 1934 and 18 U.S.C. Section
  1350*32.2
            Certification
      of Principal Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) of the
      Securities Exchange Act of 1934 and 18 U.S.C. Section
  1350*





*Filed herewith







29





SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.






November
16, 2009




Optionable,
      Inc.By:
              /s/ Thomas
      BurchillThomas
      Burchill
                Chief
      Executive Officer and President
                (Principal
      Executive Officer)By:
              /s/
      Marc Andre-BoisseauMarc
      Andre-Boisseau
                Chief
      Financial Officer
                (Principal
      Financial Officer)








30