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 March 31,
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)95 Croton
      Avenue, Suite 32, Ossining, NY
                  
                  10562(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 May 10, 2009
is 48,328,328.
  1
  OPTIONABLE, INC.
                INDEX
 
 PART I:
      FINANCIAL INFORMATIONITEM
    1:
                    
                    FINANCIAL STATEMENTS
      (Unaudited)
                    3Consolidated 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
      OF OPERATIONS
                    21ITEM 3:
                    
                    QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISK
                    25ITEM
    4:
                    
                    CONTROLS AND
      PROCEDURES
                    25PART II: OTHER
      INFORMATIONITEM
    1
                    
                    LEGAL
      PROCEEDINGS
                    25ITEM 1A:
                    
                    RISK
      FACTORS
                    27ITEM
    2
                    
                    UNREGISTERED SALES OF EQUITY
      SECURITIES AND USE OF PROCEEDS
                    27ITEM
    3
                    
                    DEFAULTS UPON SENIOR
      SECURITIES
                    27ITEM
    4
                    
                    SUBMISSION OF MATTERS TO A VOTE
      OF SECURITY HOLDERS
                    27ITEM
    5
                    
                    OTHER
      INFORMATION
                    28ITEM
    6:
                    
                    EXHIBITS
                    28SIGNATURES
                    
                    
                    29
 
 
 2
 OPTIONABLE,
      INC.CONSOLIDATED
      BALANCE SHEETS
  March
      31,
                          
                          
                          December
      31,2009
                          
                          
                          2008ASSETS(Unaudited)
                          
                          
                          (Audited)Current
      Assets:Cash
      and cash equivalents
                          
                          $
                          5,315,122
                          
                          
                          $
                          8,974,282Recoverable
      income taxes
                          
                          
                          908,988
                          
                          
                          
                          958,294Notes
      receivable
                          
                          
                          60,000
                          
                          
                          
                          -Prepaid
      expenses
                          
                          
                          1,253,550
                          
                          
                          
                          1,269,827Total
      current assets
                          
                          
                          7,537,660
                          
                          
                          
                          11,202,403Total
      assets
                          
                          $
                          7,537,660
                          
                          
                          $
                          11,202,403LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts
      payable and accrued expenses
                          
                          $
                          541,130
                          
                          
                          $
                          420,590Due
      to stockholder
                          
                          
                          -
                          
                          
                          
                          97,907Income
      tax payable
                          
                          
                          478,622
                          
                          
                          
                          83,555Total
      current liabilities
                          
                          
                          1,019,752
                          
                          
                          
                          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 $342,782 and
      $355,126at
      March 31, 2009 and December 31, 2008, respectively
                          
                          
                          165,915
                          
                          
                          
                          153,571Total
      liabilities
                          
                          
                          1,185,667
                          
                          
                          
                          3,181,863Stockholders'
      Equity:Preferred
      Stock; $.0001 par value, 5,000,000 shares authorized, none
      issuedand
      outstanding at March 31, 2009 and December 31,2008
                          
                          
                          -
                          
                          
                          
                          -Common
      stock; $.0001 par value, 100,000,000 shares authorized,52,428,203
      issued at March 31, 2009 and December 31, 2008and
      48,328,328 and 52,423,403 outstanding at March 31, 2009 and December 31,
      2008, respectively
                          
                          
                          5,242
                          
                          
                          
                          5,242Additional
      paid-in capital
                          
                          
                          162,772,406
                          
                          
                          
                          162,766,096Treasury
      stock at cost, 4,099,875 and 4,800 shares at March 31, 2009 and December
      31, 2008, respectively
                          
                          
                          (47,552
                          )
                          
                          
                          (2,506
                          )Accumulated
      deficit
                          
                          
                          (156,378,103
                          )
                          
                          
                          (154,748,292
                          )Total
      stockholders’ equity
                          
                          
                          6,351,993
                          
                          
                          
                          8,020,540Total
      liabilities and stockholders’ equity
                          
                          $
                          7,537,660
                          
                          
                          $
                          11,202,403
  See
      Notes to Unaudited Financial
Statements.
 3
 OPTIONABLE,
      INC.CONSOLIDATED
      STATEMENTS OF
OPERATIONS
  For
      the three-month period endedMarch
      312009
                                        
                                        
                                        2008(Unaudited)
                                        
                                        
                                        (Unaudited)Operating
      expenses:Selling,
      general and administrative
                                        
                                        $
                                        1,062,815
                                        
                                        
                                        $
                                        1,021,735Research
      and development
                                        
                                        
                                        -
                                        
                                        
                                        
                                        245,045Total
      operating expenses
                                        
                                        
                                        1,062,815
                                        
                                        
                                        
                                        1,266,780Operating
      loss
                                        
                                        
                                        (1,062,815
                                        )
                                        
                                        
                                        (1,266,780
                                        )Other
      income (expense):Interest
      income
                                        
                                        
                                        27,685
                                        
                                        
                                        
                                        88,593Interest
      expense to related parties
                                        
                                        
                                        (116,058
                                        )
                                        
                                        
                                        (91,719
                                        )Total
      other expenses
                                        
                                        
                                        (88,373
                                        )
                                        
                                        
                                        (3,126
                                        )Loss
      before income tax
                                        
                                        
                                        (1,151,188
                                        )
                                        
                                        
                                        (1,269,906
                                        )Income
      tax benefit (expense)
                                        
                                        
                                        (478,622
                                        )
                                        
                                        
                                        495,771(478,622
                                        )
                                        
                                        
                                        495,771Net
      loss
                                        
                                        $
                                        (1,629,810
                                        )
                                        
                                        $
                                        (774,135
                                        )Basic
      loss per common share
                                        
                                        $
                                        (0.03
                                        )
                                        
                                        $
                                        (0.01
                                        )Diluted
      loss per common share
                                        
                                        $
                                        (0.03
                                        )
                                        
                                        $
                                        (0.01
                                        )Basic
      weighted average commonshares
      outstanding
                                        
                                        
                                        50,921,876
                                        
                                        
                                        
                                        52,423,403Diluted
      weighted average common shares outstanding
                                        
                                        
                                        50,921,876
                                        
                                        
                                        
                                        52,423,403
  See
      Notes to Unaudited Financial
Statements.
 4
 OPTIONABLE,
      INC.CONSOLIDATED
      STATEMENTS OF CASH
FLOWS
  For
      the three-month period endedMarch
      31,2009
                                      
                                      
                                      2008(Unaudited)
                                      
                                      
                                      (Unaudited)Cash
      flows from operating activities:Net
      loss
                                      
                                      $
                                      (1,629,810
                                      )
                                      
                                      $
                                      (774,135
                                      )Adjustments
      to reconcile net loss to net cash (used in) provided byoperating
      activities:Depreciation
                                      
                                      
                                      -
                                      
                                      
                                      
                                      24,089Amortization
      of debt discount
                                      
                                      
                                      116,058
                                      
                                      
                                      
                                      91,719Provision
      for doubtful accounts
                                      
                                      
                                      -
                                      
                                      
                                      
                                      (625
                                      )Fair
      value of warrants and options
                                      
                                      
                                      6,310
                                      
                                      
                                      
                                      5,685Changes
      in operating assets and liabilities:Accounts
      receivable
                                      
                                      
                                      -
                                      
                                      
                                      
                                      625Other
      current assets
                                      
                                      
                                      16,277
                                      
                                      
                                      
                                      (49,460
                                      )Accounts
      payable and accrued expenses
                                      
                                      
                                      120,539
                                      
                                      
                                      
                                      13,600Due
      to stockholder
                                      
                                      
                                      (97,907
                                      )
                                      
                                      
                                      -Income
      tax payable
                                      
                                      
                                      395,067
                                      
                                      
                                      
                                      -Recoverable
      income taxes
                                      
                                      
                                      49,306
                                      
                                      
                                      
                                      1,154,229Net
      cash (used in) provided by operating activities
                                      
                                      
                                      (1,024,160
                                      )
                                      
                                      
                                      465,727Cash
      flows used in investing activities:Purchase
      of notes receivable
                                      
                                      
                                      (60,000
                                      )
                                      
                                      
                                      -Net
      cash used in investing activities
                                      
                                      
                                      (60,000
                                      )
                                      
                                      
                                      -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) increase in cash
                                      
                                      
                                      (3,659,160
                                      )
                                      
                                      
                                      465,727Cash,
      beginning of period
                                      
                                      
                                      8,974,282
                                      
                                      
                                      
                                      9,919,727Cash,
      end of period
                                      
                                      $
                                      5,315,122
                                      
                                      
                                      $
                                      10,385,454Supplemental
      disclosures of cash flow information:Cash
      paid for income taxes
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -Cash
      paid for interest
                                      
                                      $
                                      -
                                      
                                      
                                      $
                                      -
  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 its
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 brokered in the past
were natural gas derivatives.
  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 its business, including current and,
likely, future results of operations and financial condition. The Company’s
management continues to seek out possible business transactions and new business
relationships.
 
 The
Company is considering merging with businesses outside of the financial service
industry.  The Company is also considering whether or not to satisfy
existing obligations with current creditors and distribute its remaining assets
to its stockholders.
  While the
Company believes that it is likely that it will sell its technology, it is
currently unable to determine whether it will continue to have any significant
continuing involvement in the development or operations of OPEX.
 
 
 
 6
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
   Going
Concern
  The
Company believes 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, such as those that could
result from matters discussed in Note 11, the Company may not be able to meet
such obligations. Additionally, if the Company enters into a transaction with a
brokerage or trading 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 a going concern, both from a short-term and a long-term perspective,
and the Company may 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, especially in light of the
pending litigation against the Company and the current economic
conditions.
  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-month periods ended March 31, 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-month period ended March 31,
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-month periods ended March 31, 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 reasonably 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 $4.6 million and $7.3 million at March 31, 2009 and December
31, 2008, respectively.
  Fair
Value of Financial Instruments
  The
carrying value of cash and cash equivalents, recoverable income taxes and
accounts payable and accrued expenses approximate their fair value due to their
short-term maturities. The carrying amount of due to director approximates its
fair value based on the Company's incremental borrowing rate.
  
 8
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
   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.  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 1,483,000 and 983,000 at March 31, 2009 and
December 31, 2008, respectively. The outstanding warrants amounted to 100,000 at
March 31, 2009 and December 31, 2008. The options and warrants outstanding at
March 31, 2009 and March 31, 2008, respectively, have been excluded from the
computation of diluted earnings per share due to their antidilutive
effect.
   9
 OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  
  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
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 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 123(R). 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. 123(R) 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.
  Note
3- Prepaid expenses
  Prepaid
expenses primarily consists of retainers paid to certain law firms which
represent the Company and certain former and current directors and officers in
connection with legal proceedings which are described in Note 7- Litigation and
contingencies.
  
 10
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  Note
4- Notes receivable
  The
Company purchased three notes receivable aggregating $60,000 from its former
chief technical 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 within six-month of
issuance or within a year from issuance if redeemed in-kind.
  Note
5-Due to Related Parties
  The terms
and amounts of due to related parties at March 31, 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:
  March
      31,
                        
                        December
      31,2009
                        
                        2008$
                        -
                        
                        
                        $
                        5,044,510Discount,
      using initial implied rate of 12%
                        
                        
                        -
                        
                        
                        
                        (2,618,270
                        )$
                        -
                        
                        
                        $
                        2,426,240
 
  11
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  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:
  March
      31,
                      
                      December
      31,2009
                      
                      2008$
                      508,697
                      
                      
                      $
                      508,697Discount,
      using initial implied rate of 12%
                      
                      
                      (342,782
                      )
                      
                      
                      (355,126
                      )$
                      165,915
                      
                      
                      $
                      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 $116,000 and $92,000 during the three-month period ended March 31,
2009 and 2008, respectively.
  During
the three-month period ended March 31, 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.
  12
 OPTIONABLE, INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  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 11 of the financial statements.  As of March 31, 2009, the
Company has paid the amount 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
Company recorded share-based payment expenses amounting to approximately $6,000
and $6,000 during the three-month periods ended March 31, 2009 and 2008,
respectively, in connection with all options outstanding at the respective
measurement dates. 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 three-month period ended March 31,
2009.
  The fair
value of the options granted during the three-month period ended March 31, 2009
is based on the Black Scholes Model using the following
assumptions:
  Exercise
      price :
                                $0.016-0.025Market
      price at date of grant :
                                $0.016-0.025Volatility
      :
                                104.5%Expected
      dividend rate :
                                0%Expected
      terms:
                                3.3
      yearsRisk-free
      interest rate
      :
                                1.22-1.44%
   13
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  The
following activity occurred under our plan:
  Three-month periods ended March
      31,2009
                                
                                
                                2008Weighted-average
      grant-date fair value of options granted
                                
                                $
                                0.015
                                
                                
                                
                                N/AFair
      value of options recognized as expense:
                                
                                $
                                6,310
                                
                                
                                $
                                5,685
  The total
compensation cost related to nonvested options not yet recognized amounted to
approximately $16,000 at March 31, 2009 and the Company expects that it
will be recognized over the following weighted-average period of
8 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.
  
 14
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  Note
7- Litigation and Contingencies
  Regulatory
Matters
  On
November 18, 2008, a complaint was filed in the United States District Court for
the Southern District of New York by the Commodity Futures Trading Commission
(the “CFTC”) against the Company, current and former employees of the Company,
including its former Chief Executive Officer and its former President and a
Director, Edward O’Connor, David Lee, a former Bank of Montreal (“BMO”) trader
(“Lee”), and Robert Moore, a former executive managing director of BMO’s
Commodity Derivatives Group.
  The
complaint alleges, among other things, that Lee, through the assistance of
Moore, and employees of the Company, engaged in a scheme to mis-mark Lee’s
natural gas options positions between at least May 2003 to May 2007, and
mis-value other natural gas option positions from October 2006 until May 2007.
The complaint further alleges that based upon the scheme, in April 2007, BMO
announced anticipated losses of approximately C$350 million and C$450
million.
  The CFTC
alleges, among other things, violations of, Section 4c(b) of the Commodity
Exchange Act, as amended (the “Act”) and Commission Regulations 33.10(a),(b) and
(c). The CFTC seeks an order of permanent injunction restraining and enjoining,
among others, the Company from directly or indirectly violating Section 6c(b) of
the Act and Commission Regulations 33.10(a), (b) and (c). The CFTC further seeks
an order directing, among others, the Company to pay civil monetary penalties in
an amount not to exceed $120,000 or triple the monetary gain for each violation
of the Act during the time period between October 23, 2000 and October 22, 2004
and $130,000 or triple the monetary gain for each violation of the Act on or
after October 23, 2004.
  On March
20, 2009, the Company and certain other of the defendants filed motions to
dismiss the CFTC complaint.  On April 3, 2009, the CFTC filed briefs
in opposition to the motions to dismiss.  On April 15, 2009, the
Company and certain other of the defendants filed reply briefs.
  The
Company also understands that on November 18, 2008, a complaint was filed in the
United States District Court for the Southern District of New York by the
Securities and Exchange Commission (“SEC”) against Lee, Scott Connor, the
Company’s former President and a Director, Edward O’Connor and its former Chief
Executive Officer. The Company was not named in the SEC complaint. Like the
action brought by the CFTC, the complaint is based upon allegations that the
defendants engaged in a scheme to overvalue Lee’s commodity derivates trading
portfolio at BMO.
  15
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  The SEC
alleges causes of action against the Company’s former President and a Director,
Edward O’Connor, for violations of Sections 10(b), 13(a), 13(b)(2), 13(b)(5),
Rules 13b2-2 and 13a-14 of the Securities and Exchange Act of 1934 (the
“Exchange Act”), and Section 17(a) the Securities Act of 1933 (the “Securities
Act”). The complaint seeks a permanent injunction against, among others, Mr.
O’Connor and an order to pay civil penalties and disgorgement. The complaint
also seeks an order prohibiting, among others, Mr. O’Connor from acting as an
officer or director of a public company.
  Shareholder
Class Action Lawsuit
  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 (CLB) (“Rastocky”), 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. Rastocky was voluntarily dismissed.
The other lawsuits were consolidated under In re Optionable Securities
Litigation, 07 CV 3753 (LAK).  The class action named as defendants
the Company and some of the Company’s past and present directors and officers,
including 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 former President
of the Company and a current member of the Board of Directors; Albert Helmig, a
former member of the Board of Directors; and Marc-Andre Boisseau, the Chief
Financial Officer of the Company.
  The class
action sought 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"), and Rule 10b-5 under the Exchange Act, 17
C.F.R. ss. 240.10b -5.The complaint alleged, among other things, that during the
class period of January 22, 2007 to May 14, 2007, defendants failed to disclose
certain information in public filings and statements, made materially false and
misleading statements and misrepresentations in public filings and statements,
sold artificially inflated stock and engaged in improper deals, had an improper
relationship with and “schemed” with its customer Bank of Montreal ("BMO"), and
understated
   16
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
   the
Company's reliance on its relationship with BMO. The Complaint alleged that
while the Company's stock was trading at artificially inflated prices, certain
defendants sold shares of common stock of the Company.
  On
September 15, 2008, Judge Kaplan granted the defendants’ motions to dismiss the
complaint and denied the plaintiffs’ request for leave to amend, without
prejudice to a motion for leave to amend supported by a proposed amended
complaint. Plaintiffs’ subsequently filed a motion for a partial lifting of the
PSLRA discovery stay, which Defendants opposed. On October 20, 2008, the Court
denied Plaintiff’s motion in all respects, and a final Judgment of dismissal was
entered on October 23, 2008.
  On
January 13, 2009, the plaintiff filed a motion pursuant to Rule 60(b) for relief
from the October 23, 2008 Final Judgment and seeking to file an amended
complaint
  CMEG
NYMEX Inc. v. Optionable, Inc. et. al
  On April
10, 2009,  CMEG NYMEX Inc. filed suit against the Company, several
past and present officers and directors, and other defendants in the United
States District Court for the Southern District of New York
(09-3677).  The complaint alleges that defendants committed securities
and common law fraud, and breach of warranties and other wrongdoing, in
connection with an April 2007 transaction in which the officers and directors
sold $28.9 million of their Optionable stock to NYMEX, and the Company issued
warrants to NYMEX for the  purchase of additional
stock.  The plaintiff seeks rescission and restitution and/or
damages.
  The
Company and the other defendants have not yet responded to the
complaint.  Their responses are due on or before June 15,
2009.
  
  17
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  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;
  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.
  Possible
seizure of a bank account
  In
November 2008, the Assistant United States Attorney sought to seize one of the
Company’s bank accounts by a warrantless seizure.  The bank account
balance at March 31, 2009 amounts to approximately $530,000.  In
December 2008, the financial institution sent a notice asking that the funds
held in this bank account be transferred to a different financial institution
but has since frozen the funds.  The warrantless seizure lapsed in
January 2009.  While the warrantless seizure lapsed, the Company
believes that it is possible that the Assistant United States Attorney may try
to seize such funds by other means.
  
 18
  OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  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:
  March
      31, 2009
                                        
                                        December
      31, 2008Current
      and deferred:Federal
                                        $
                                        (478,622)
                                        
                                        $
                                        426,891State
                                        
                                        (-)
                                        
                                        
                                        68,880Total
      benefit (provision) for income taxes
                                        $
                                        (478,622)
                                        
                                        $
                                        495,771
  A
reconciliation of the Company’s effective tax rate to the statutory federal rate
is as follows:
  Three-month period ended March
      31,2009
                      
                      
                      2008Federal
      statutory taxes
                      
                      
                      (35.0
                      %)
                      
                      
                      (35.0
                      )%State
      income taxes, net of federal tax benefit
                      
                      
                      (5.7
                      )
                      
                      
                      (5.7
                      )Utilization
      of slate net operating loss
                      
                      
                      5.7
                      
                      
                      
                      -Permanent
      differences (taxable gain on extinguishment of due to Stockholder in
      2009)
                      
                      
                      76.5
                      
                      
                      
                      1.741.5
                      %
                      
                      
                      (39.0
                      )
      %
   19
 OPTIONABLE,
INC.
  NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
  (Unaudited)
  The
recoverable income tax amounting to approximately $430,000 is recoverable from
applications for carryback refund from the Company’s 2006 federal tax
returns.
  The
Company has net operating losses of approximately $1.2 million for both federal
and state tax purposes.
   
  20
  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.
  We
launched our electronic trading system, OPEX, in 2006 and we enhanced its
features and functionalities during 2007 and 2008. Users of OPEX can 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. Additionally, we believe that OPEX,
with appropriate enhancements, may be able to execute transactions offered by
other exchanges as well. Effective November 4, 2008, the Company has suspended
the development of OPEX. However, we intend to maintain OPEX and explore its
possible sale or licensing.
  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. Accordingly, we
have refined our business strategy by seeking the following
options:
  (1)     to
get advice from investment bankers as to whether we could or should sell our
technology;
  (2)     to
license our technology to joint ventures with other brokerage or software
development firms; and
  (3)     to
merge with another company in a business outside the financial services
industry.
  We are
also considering whether we should satisfy our existing obligations with current
creditors and distribute our remaining assets to our stockholders.
  While we
have been in discussions for strategic transactions with certain companies from
time to time, none of these discussions have materialized into a definitive
agreement with any of these parties.  We cannot guarantee that we will
be able to enter into a strategic transaction with a third party in the
foreseeable future.
  While we
believe that it is likely that we will sell our technology, we are currently
unable to determine whether we will continue to have any significant continuing
involvement in the development or operations of OPEX .
  21
 GOING
CONCERN
  The
Company believes 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 such as those related to
matters disclosed in Part II, Item 1- Legal Proceedings, the Company may not be
able to meet such obligations. Additionally, if the Company acquires a brokerage
or trading 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 a going concern, both from a short-term and 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, especially in light of the
pending litigation against the Company and recent economic
conditions.
  Three
month period ended March 31, 2009 and March 31, 2008
 Results
      of Operations(Unaudited)
  Increase/
                                  
                                  
                                  Increase/For
      the period ended
                                  
                                  
                                  (Decrease)
                                  
                                  
                                  (Decrease)March
      31,
                                  
                                  
                                  in
      $ 2009
                                  
                                  
                                  in
      % 20092009
                                  
                                  
                                  2008
                                  
                                  
                                  vs
      2008
                                  
                                  
                                  vs
      2008Operating
      expenses:Selling,
      general and administrative
                                  
                                  
                                  1,062,815
                                  
                                  
                                  
                                  1,021,735
                                  
                                  
                                  
                                  41,080
                                  
                                  
                                  
                                  4.0%Research
      and development
                                  
                                  
                                  -
                                  
                                  
                                  
                                  245,045
                                  
                                  
                                  
                                  (245,045
                                  )
                                  
                                  
                                  -100.0%Total
      operating expenses
                                  
                                  
                                  1,062,815
                                  
                                  
                                  
                                  1,266,780
                                  
                                  
                                  
                                  (203,965
                                  )
                                  
                                  (16.0%
                                  )Operating
      loss
                                  
                                  
                                  (1,062,815
                                  )
                                  
                                  
                                  (1,266,780
                                  )
                                  
                                  
                                  (203,965
                                  )
                                  
                                  (16.0%
                                  )Other
      income (expense):Interest
      income
                                  
                                  
                                  27,685
                                  
                                  
                                  
                                  88,593
                                  
                                  
                                  
                                  (60,908
                                  )
                                  
                                  
                                  -68.8%Interest
      expense-related parties
                                  
                                  
                                  (116,058
                                  )
                                  
                                  
                                  (91,719
                                  )
                                  
                                  
                                  24,339
                                  
                                  
                                  
                                  26.5%(88,373
                                  )
                                  
                                  
                                  (3,126
                                  )
                                  
                                  
                                  85,247
                                  
                                  
                                  NMNet
      loss before income tax
                                  
                                  
                                  (1,151,188
                                  )
                                  
                                  
                                  (1,269,906
                                  )
                                  
                                  
                                  (118,718
                                  )
                                  
                                  9.3%Income
      tax (provision) benefit
                                  
                                  
                                  (478,622
                                  )
                                  
                                  
                                  495,771
                                  
                                  
                                  
                                  (974,393
                                  )
                                  
                                  
                                  NMNet
      loss
                                  
                                  $
                                  (1,629,810
                                  )
                                  
                                  $
                                  (774,135
                                  )
                                  
                                  $
                                  855,675
                                  
                                  
                                  NMNM:  Not
      meaningful
 22
  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 period ended March 31, 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
      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 of 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 period ended March 31, 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 period ended
March 31, 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
increase in interest expense to related parties during the three month period
ended March 31, 2009 is primarily due to a loss on extinguishment of debt to
Mark Nordlicht of approximately $45,000 which was recognized as interest
expenses during the three-month period ended March 31, 2009.  No such
loss occurred during the comparable prior year period.
  Income
tax
  Income
tax benefit/expense consists of federal and state current and deferred income
tax or benefit based on our net income. The increase in income tax provision
during the three month period ended March 31, 2009 when compared to the income
tax expense we incurred during the comparable prior year period is primarily due
to a tax gain we incurred on the satisfaction of the due to Mark
Nordlicht.  The tax gain amounted to approximately $2.5
million.
  LIQUIDITY
AND CAPITAL RESOURCES
  Our cash
balance as of March 31, 2009 amounts to approximately $5.3 million.
  23
 During
the three-month period ended March 31, 2009, we used cash from operating
activities of approximately $1.0 million, primarily resulting from:
  ·
                net
      loss of approximately $1.6 million, adjusted for the amortization of debt
      discount of approximately $116,000;
and
  ·
                a
      decrease in recoverable income taxes resulting from the taxable gain of
      $2.5 million resulting from the satisfaction of our obligations to Mark
      Nordlicht, offset by the current pre-tax quarter losses of $1.2
      million.
  During
the three-month period ended March 31, 2009, we used cash in investing
activities, resulting from purchases of three notes receivable aggregating
$60,000;
  During
the three-month period ended March 31, 2009, we satisfied our obligations of
approximately $5.0 million to a stockholder and our former Chairman of the
Board, Mark Nordlicht and repurchased 4,095,075 shares of our common stock hold
for a consideration aggregating $2,575,000.
  During
the three-month period ended March 31, 2008, we generated cash from operating
activities of approximately $466,000, primarily resulting from:
  ·
              net
      loss of approximately $770,000, adjusted for the amortization of debt
      discount of approximately $92,000;
and
 ·
              a
      decrease  in prepaid income taxes assets resulting from the
      reimbursement during the three-month period ended March 31, 2008 of the
      2007 federal  estimated tax payments /income tax payable of 3.6
      million resulting from the payment of estimated income
    taxes.
  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:
  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.
  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.
   24
  ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  n/a
  ITEM
4. CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
  As of
March 31, 2009, our management our 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 President and our
Chief Financial Officer concluded that, as of March 31, 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 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 March 31, 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
  Shareholder
Class Action Lawsuit
  On May
11, 2007, two purported class action lawsuits were filed against the Company and
certain past and present officers and directors in the United States District
Court for the Southern District of New York and were consolidated under In re
Optionable Securities Litigation, 07 CV 3753 (LAK).
   25
 The suit
sought 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”), and Rule 10b-5 under the Exchange Act, 17
C.F.R. ss. 240.10b-5. The complaint alleged, among other things, that during
the  period  January 22, 2007 to May 14, 2007, defendants
made materially false and misleading statements concerning the Company’s
relationship with its customer Bank of Montreal (“BMO”), and concealed a
“scheme” to assist a former trader at BMO in concealing trading losses from his
employer.  As a result, according to Plaintiff, the Company’s stock
sold at “inflated” prices.
  On
September 15, 2008, the Court granted the defendants’ motions to dismiss the
complaint.  Plaintiffs subsequently filed a motion to take discovery
they claimed would permit them to file an amended complaint.  On
October 20, 2008, the Court denied plaintiffs’ motion, and a final judgment of
dismissal was entered on October 23, 2008.
  On
January 13, 2009, plaintiffs filed a motion pursuant to Rule 60(b) for relief
from the October 23, 2008 judgment and seeking to file an amended complaint on
the basis of newly discovered evidence.  On February 12, 2009,
defendants filed an opposition to the motion.  The plaintiffs filed a
reply on March 3, 2009.   Oral argument on the motion is
scheduled for May 21, 2009.
  Commodity
Futures Trading Commission v. Cassidy et al.
 
 On
November 18, 2008, the U.S. Commodity Futures Trading Commission (“CFTC”) filed
a Complaint in the United States District Court for the Southern District of New
York against the Company, two past and present officers and directors, and two
Bank of Montreal employees.   (08 cv 9962). The complaint seeks
injunctive relief restraining defendants from future violations of CFTC
regulations, disgorgement, and civil monetary penalties under the Commodity
Exchange Act.
 
 The
complaint alleges that that the defendants violated Section 4c(b) of the CEA, 7
U.S.C. § 6c(b), and Rule 33.10 thereunder, 17 C.F.R. § 33.10.  On
March 20, 2009, the Company and certain other of the defendants filed motions to
dismiss the CFTC complaint.  On April 3, 2009, the CFTC filed briefs
in opposition to the motions to dismiss.  On April 15, 2009, the
Company and certain other of the defendants filed reply briefs.
  CMEG
NYMEX Inc. v. Optionable, Inc. et. al
  On April
10, 2009,  CMEG NYMEX Inc. filed suit against the Company, several
past and present officers and directors, and other defendants in the United
States District Court for the Southern District of New York
(09-3677).  The complaint alleges that defendants committed securities
and common law fraud, and breach of warranties and other wrongdoing, in
connection with an April 2007 transaction in which the officers and directors
sold $28.9 million of their Optionable stock to NYMEX, and the Company issued
warrants to NYMEX for the  purchase of additional
stock.  The plaintiff seeks rescission and restitution and/or
damages.
  The
Company and the other defendants have not yet responded to the
complaint.  Their responses are due on or before June 15,
2009.
  26
 Possible
seizure of a bank account
  In
November 2008, the Assistant United States Attorney sought to seize one of the
Company’s bank accounts by a warrantless seizure.  The bank account
balance at March 31, 2009 amounts to approximately $530,000.  In
December 2008, the financial institution sent a notice asking that the funds
held in this bank account be transferred to a different financial institution
but has since frozen the funds.  The warrantless seizure lapsed in
January 2009.  While the warrantless seizure lapsed, the Company
believes that it is possible that the Assistant United States Attorney may try
to seize such funds by other means.
  ITEM
1A. RISK FACTORS
  N/A
  ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  During
January 2009, we issued 250,000 options to our new Chief Executive Officer.
50,000 options of such grant vested upon the date of grant and the remainder
will vest at a rate of 50,000 options on each six-month anniversary of the grant
through January 28, 2011. The options expire on the five year anniversary of the
grant. The exercise price of such options is $0.016 per share.
  During
February 2009, we issued 250,000 options to one of our new directors. 50,000
options of such grant vested upon the date of grant and the remainder will vest
at a rate of 50,000 options on each six-month anniversary of the grant through
February 6, 2011. The options expire on the five year anniversary of the grant.
The exercise price of such options is $0.025 per share.
  All of
the aforementioned securities were issued pursuant to the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as
amended.
  ITEM
3. DEFAULTS UPON SENIOR SECURITIES
  None
  ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  At the
Company’s annual meeting of stockholders held on March 31, 2009, the Company’s
stockholders took the following actions:
  The
Company’s stockholders elected Marc-Andre Boisseau, Thomas Burchill, Edward
O’Connor, and Andrew Samaan to serve as directors until the next annual meeting
or until his successor has been duly elected and qualified or until his earlier
resignation or removal. The directors were elected by the votes cast at the 2009
annual meeting as follows:
  27
 
 FOR
                                
                                
                                WITHHELDMarc-Andre
      Boisseau
                                
                                
                                33,588,785
                                
                                
                                
                                
                                1,011,290Thomas
      F Burchill
                                
                                
                                33,579,574
                                
                                
                                
                                
                                1,020,501Edward
      O’Connor
                                
                                
                                33,583,685
                                
                                
                                
                                
                                1,016,390Andrew
      Samaan
                                
                                
                                33,601,999
                                
                                
                                
                                
                                998,076
   ITEM
5.  OTHER INFORMATION
  None for
this reporting period.  The Company’s by-laws were amended after the
Board adopted in April 2009 certain procedures for stockholders to propose
nominees to the Board.  The amended and restated by-laws were filed as
an exhibit to Form 8-K in April 2009.
  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
  
 28
  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.
   May 15,
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)
 
  29