UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-QSB

              [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended June 30, 2005
                                       or
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ____________ to ________________
                       Commission file number: 333-121543


                                OPTIONABLE, INC.

        (Exact name of small business issuer as specified in its charter)

              Delaware                             52-2219407
 -----------------------------------         --------------------
(State or other jurisdiction of               (I.R.S. Employer
incorporation or organization)                Identification No.)

555 Pleasantville Road, South Building, Suite 110 Briarcliff Manor, NY  10150
--------------------------------------------------------------------------------
         (Address of principal executive offices)                     (Zip Code)

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

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

The total number of shares of the issuer's common stock, $.001 par value,
outstanding at July 25, 2005 was 51,406,431.

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

<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

To the extent that the information presented in this Quarterly Report on Form
10-QSB for the quarter ended June 30, 2005 discusses financial projections,
information or expectations about our products or markets, or otherwise makes
statements about future events, such statements are forward-looking. We are
making these forward-looking statements in reliance on the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Although we
believe that the expectations reflected in these forward-looking statements are
based on reasonable assumptions, there are a number of risks and uncertainties
that could cause actual results to differ materially from such forward-looking
statements. These risks and uncertainties are described, among other places in
this Quarterly Report, in "Management's Discussion and Analysis or Plan of
Operation."

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



















                                       2

<PAGE>

                                OPTIONABLE, INC.


                         QUARTERLY REPORT ON FORM 10-QSB


                                TABLE OF CONTENTS


                                                                           Page
                                                                          ------
PART I -- FINANCIAL INFORMATION
Item 1.   Financial Statements
          Balance Sheet (unaudited) as of June 30, 2005....................  4
          Statements of Operations (unaudited) for the three-month and
          six-month periods ended June 30, 2005 and 2004...................  5
          Statements of Cash Flows (unaudited) for the six-month
          periods ended June 30, 2005 and 2004.............................  6
          Notes to Financial Statements (unaudited)........................ 7-16
Item 2.   Management's Discussion and Analysis or Plan of Operation........17-30
Item 3.   Controls and Procedures.......................................... 31

PART II -- OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds........ 32
Item 6. Exhibits........................................................... 32

Signatures











                                       3

<PAGE>

                                OPTIONABLE, INC.
                                  BALANCE SHEET
                                  June 30, 2005
                                   (Unaudited)

                                     ASSETS
Current Assets:

Cash                                                     $              880,882
Accounts receivable, net of provision for
doubtful accounts of $43,535                                            464,874
Due from related party                                                  283,453
Incentives receivable                                                   107,333
                                                         -----------------------
     Total current assets                                             1,736,542


  Property and equipment, net of accumulated
  depreciation of $407,332                                               37,763

  Other assets                                                           43,943
                                                         -----------------------

     Total assets                                        $            1,818,248
                                                         =======================

                      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:

  Accounts payable and accrued expenses                  $               91,498
  Accrued compensation                                                  382,315
                                                         -----------------------
    Total current liabilities                                           473,813

Due to chairman of the board, net of unamortized
discount of $3,644,201                                                1,907,914

Due to chief executive officer, net of unamortized
discount of $494,297                                                    268,203

Due to related party, net of unamortized discount
of $494,297                                                             118,203
                                                         -----------------------
     Total liabilities                                                2,768,133

Stockholders' Deficit:
  Preferred Stock; $.0001 par value, 5,000,000
  shares authorized, none issued and outstanding
  at June 30, 2005                                                            -
  Common stock; $.0001 par value, 100,000,000 shares
  authorized, 51,406,431 issued and outstanding at
  June 30, 2005                                                           5,141
  Additional paid-in capital                                          7,790,471
  Accumulated deficit                                                (8,745,497)
                                                         -----------------------

     Total stockholders' deficit                                       (949,885)
                                                         -----------------------

     Total liabilities and stockholders' deficit         $            1,818,248
                                                         =======================




                  See Notes to Unaudited Financial Statements.
                                        4

<PAGE>

                                OPTIONABLE, INC.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                For the Three-Month Periods Ended       For the Six-Month Periods Ended
                                                              June 30,                               June 30,
                                            ------------------------------------------------------------------------------
                                                       2005               2004                2005               2004
                                            -------------------- ------------------ ------------------- ------------------
                                                 (Unaudited)            (Unaudited)         (Unaudited)       (Unaudited)
<S>                                         <C>                  <C>                <C>                 <C>
Brokerage fees                              $           739,265  $         324,386  $        1,318,153  $         544,933

Brokerage fees-related party                            402,590            245,815             789,345            245,815

Incentives                                              136,129             75,439             329,288             75,439
                                            -------------------- ------------------ ------------------- ------------------
Net revenues
                                                      1,277,984            645,640           2,436,786            866,187


Cost of revenues                                        507,851            331,968             922,395            760,235

Cost of revenues-related party                          288,482            146,591             480,710            146,591
                                            -------------------- ------------------ ------------------- ------------------

                                                        796,333            478,559           1,403,105            906,826


Gross profit                                            481,651            167,081           1,033,681           (40,639)

Operating expenses:

  Selling, general and administrative                   113,059            147,942             329,057            414,348

  Research and development                              129,367                  -             256,389                  -
                                            -------------------- ------------------ ------------------- ------------------


     Total operating expenses                           242,426            147,942             585,446            414,348
                                            -------------------- ------------------ ------------------- ------------------


     Operating income (loss)                            239,225             19,139             448,235          (454,987)
                                            -------------------- ------------------ ------------------- ------------------

  Other expense:

  Interest expense to related parties                   (73,936)           (65,616)           (145,658)          (139,216)
                                            -------------------- ------------------ ------------------- ------------------

                                                        (73,936)           (65,616)           (145,658)          (139,216)
                                            -------------------- ------------------ ------------------- ------------------

Net income (loss)                           $           165,289  $         (46,477) $          302,577  $        (594,203)
                                            ==================== ================== =================== ==================

Basic net income (loss) per common share    $              0.00  $           (0.00) $             0.01  $           (0.01)
                                            ==================== ================== =================== ==================

Diluted net income (loss) per common share  $              0.00  $           (0.00) $             0.01  $           (0.01)
                                            ==================== ================== =================== ==================

Basic and diluted weighted average common

shares outstanding                                   51,406,431         45,096,430          51,406,431         45,096,430
                                            ==================== ================== =================== ==================


Diluted weighted average common shares
outstanding                                          51,406,431         45,096,430          51,406,431         45,096,430
                                            ==================== ================== =================== ==================

</TABLE>

                  See Notes to Unaudited Financial Statements.
                                        5

<PAGE>

                                OPTIONABLE, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                           For the Six-Month Periods Ended
                                                                                       June 30
                                                                        ---------------------------------------
                                                                               2005               2004
                                                                        -----------------    ------------------
                                                                             (Unaudited)          (Unaudited)
Cash flows from operating activities:
<S>                                                                     <C>                  <C>
Net income (loss)                                                       $        302,577     $        (594,203)
Adjustments to reconcile net income (loss) to net cash provided by
 (used in) operating activities:

  Depreciation                                                                    14,155                25,562

  Amortization of debt discount                                                  145,658                65,614

  Forfeiture of officers' compensation                                                 -               375,000

  Provision for doubtful accounts                                                (46,439)              (34,975)

  Fair value of warrants issued to consultant                                      6,060                     -
Changes in operating assets and liabilities:

  Accounts receivable                                                           (221,851)              (95,430)

  Due from related party                                                          10,122               (67,614)

  Incentives receivable                                                           24,343               (75,020)

  Other assets                                                                   (30,987)                  637

  Accounts payable and accrued expenses                                          (39,188)             (260,074)

  Accrued compensation                                                            34,597               250,372

  Accrued interest on notes payable to related parties                                 -                73,602
                                                                        -----------------    ------------------

Net cash provided by (used in) operating activities                              199,047              (336,529)
                                                                        -----------------    ------------------

Cash flows from investing activity:

  Purchases of property and equipment                                             (5,653)                    -
                                                                        -----------------    ------------------

Net cash used in investing activity                                               (5,653)                    -
                                                                        -----------------    ------------------

Cash flows from financing activities:

  Proceeds from line of credit payable to chairman of the board                        -                50,000

  Principal repayments on due to related party                                  (150,000)                    -

  Principal repayment of due to chairman of the board                            (69,638)                    -

  Proceeds from issuance of notes payable to chairman of the board                     -               300,000
                                                                        -----------------    ------------------

Net cash (used in) provided by financing activities                             (219,638)              350,000
                                                                        -----------------    ------------------


 Net (decrease) increase in cash                                                 (26,244)               13,471

Cash, beginning of period                                                        907,126                63,041
                                                                        -----------------    ------------------
Cash, end of period                                                     $        880,882     $          76,512
                                                                        =================    ==================

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

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

Supplemental disclosures for non-cash financing activity:
Increase in due to related party and corresponding increase
in additional paid-in capital                                           $                    $         462,067
                                                                        =================    ==================

Increase in discount on due to chairman of the board and corresponding
increase in additional paid-in capital                                  $                    $       3,918,391
                                                                        =================    ==================
</TABLE>


                  See Notes to Unaudited Financial Statements.
                                        6

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004
                                   (Unaudited)

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

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

The accompanying unaudited 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 of
recurring accruals, considered for a fair presentation have been included.
Operating results for the three months and six months ended June 30, 2005 are
not necessarily indicative of the results that may be expected for the fiscal
year ending December 31, 2005.

Note 2- Summary of Significant Accounting Policies

Cash and Cash Equivalents

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

Concentration of Credit Risks

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

The Company minimizes its credit risks associated with cash and cash equivalents
by periodically evaluating the credit quality of its primary financial
institutions.

The Company's accounts receivable are due from energy trading firms, financial
institutions, and hedge funds, located primarily in the United States.
Collateral is generally not required. Four of the Company's customers accounted
for 24%, 12%, 11% and 10% of its accounts receivable, net of doubtful accounts
at June 30, 2005. No other customers accounted for more than 10% of its accounts
receivable at June 30, 2005.

The Company's incentives receivable are due from two United States exchanges
providing the Company with incentives to submit customer trades to their
respective platform. The incentives receivable are not collateralized.

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

                                       7

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004

Note 2- Summary of Significant Accounting Policies-Continued

Customer Concentration

One of the Company's customers accounted for approximately 14% and 13% of its
revenues during the six-month periods ended June 30, 2005 and 2004,
respectively. The Company minimizes its customer concentration risks by
diversifying its existing customer base.

Product Concentration

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

Fair Value of Financial Instruments

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

Software Development Costs

Costs incurred in the research and development of software products are expensed
as incurred until technological feasibility has been established. After
technological feasibility is established, any additional costs are capitalized
in accordance with Statement of Accounting Financial Standards ("SFAS") No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed. Costs of maintenance and customer support will be charged to expense
when related revenue is recognized or when those costs are incurred, whichever
occurs first. The Company believes that the current process for developing
software is essentially completed concurrently with the establishment of
technological feasibility; accordingly, no software development costs have been
capitalized at June 30, 2005.

                                       8

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004


Note 2- Summary of Significant Accounting Policies-Continued

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 the
entire deferred tax asset will not be realized.

Use of Estimates

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

Basic and Diluted Earnings per Share

Basic earnings per share are calculated by dividing income available to
stockholders by the weighted-average number of common shares outstanding during
each period. Diluted earnings per share are computed using the weighted average
number of common and dilutive common share equivalents outstanding during the
period. Dilutive common share equivalents consist of shares issuable upon the
exercise of stock options and warrants (calculated using the modified-treasury
stock method). The outstanding options, amounting to 830,250 and 1,104,900 at
June 30, 2005 and 2004, respectively, are excluded from the loss per share
computation for the respective periods due to their antidilutive effect.

The share amounts included in the financial statements, including the basic and
diluted loss per share have been retroactively restated to reflect the stock
splits discussed below.

                                       9

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004

Note 2- Summary of Significant Accounting Policies-Continued

Stock Splits

The Company's board of directors has declared the following stock split of
common stock:


June 10, 2004                             1.27 for 1

The basic and diluted earnings per share have been adjusted retroactively to
give effect to the aforementioned stock spilt.

Revenue Recognition

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

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

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

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

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

                                       10

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004

Note 2- Summary of Significant Accounting Policies-Continued

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

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

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

Stock-Based Compensation

The Company accounts for stock options issued to employees in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related interpretations. As
such, compensation cost is measured on the date of grant as the excess of the
current market price of the underlying

                                       11

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004

Note 2- Summary of Significant Accounting Policies-Continued

stock over the exercise price. Such compensation amounts, if any, are amortized
over the respective vesting periods of the option grant. The Company adopted the
disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation"
and SFAS 148, "Accounting for Stock-Based Compensation -Transition and
Disclosure", which permits entities to provide pro forma net income (loss) and
pro forma earnings (loss) per share disclosures for employee stock option grants
as if the fair-valued based method defined in SFAS No. 123 had been applied. The
Company accounts for stock options and stock issued to non-employees for goods
or services in accordance with the fair value method of SFAS 123.

Segment reporting

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

Recent Pronouncements

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 123 "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees". The provisions of this Statement will be effective
for the Company beginning in the first quarter of 2006. The Company is currently
evaluating the impact this new Standard will have on its financial position,
results of operations or cash flows.

Note 3-Due from Related Party

In April 2004, the Company agreed to pay certain fixed and variable fees and
support services to a related party entity partly owned by its chief executive
officer and by a stockholder and former officer in exchange for a share of
revenues of the floor brokerage services of the related party.

The Company's share of revenues and expenses of the floor brokerage services
amounted to approximately $790,000 and $480,000, respectively during the
six-month period ended June 30, 2005. The Company has received $230,000 from the
related party in connection with such floor brokerage services during the same
period and the related party owes approximately $280,000 at June 30, 2005.

                                       12

<PAGE>



                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004

Note 3-Due from Related Party-continued

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

Note 4-Due to Related Parties

The terms and amounts of due to related parties at June 30, 2005 are as follows:

Due to Chairman of the Board, non-interest bearing,
unsecured, payable by March 12, 2014, if the Company obtains
additional equity or debt financing of at least $1,000,000
following the private placement which closed in September
2004 ("Capital Raise"), the Company will repay its Chairman
of the Board up to 25% of the Capital Raise, up to
$2,810,877, with the remaining balance and accrued interest
of 4.68% from the date of the Capital Raise due on March 22,
2014:                                                               $ 5,552,115
Discount, using initial implied rate of 12%:                         (3,644,201)
                                                                    ------------
                                                                    $ 1,907,914
                                                                    ============
Due to Chief Executive Officer, non-interest bearing,
unsecured, payable by March 12, 2014, if the Company obtains
additional equity or debt financing of at least $1,000,000
following a Capital Raise, the Company will repay its Chief
Executive Officer up to 12.5% of the Capital Raise, up to
$381,250, with the remaining balance and accrued interest of
4.68% from the date of the Capital Raise due on March 22,
2014:                                                               $   762,500
Discount, using initial implied rate of 12%:                           (494,297)
                                                                    ------------
                                                                    $   268,203
                                                                    ============

                                       13

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004


Note 4-Due to Related Parties-continued

Due to a related party, the Company's former Chief Executive
Officer and stockholder, 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 former Chief
Executive Officer up to 12.5% of the Capital Raise, up to
$381,250, with the remaining balance and accrued interest of
4.68% from the date of the Capital Raise due on March 22,
2014:                                                               $   612,500
Discount, using initial implied rate of 12%:                           (494,297)
                                                                    ------------
                                                                    $   118,203
                                                                    ============

The amortization of the discount on the due to related parties amounted to
approximately $146,000 and $66,000 during the six-month periods ended June 30,
2005 and 2004, respectively, and has been recorded as interest expense to
related parties in the accompanying statements of operations.

Interest expense, other than the amortization of discount, in connection with
the various amounts due to Chairman of the board and note payable to a related
party, an entity in which the Company's Chairman of the board is also the
managing director amounted to approximately $0 and $75,000 during the six-month
periods ended June 30, 2005 and 2004, respectively.

During April 2005, the Company modified the terms of its due to related parties.
The modified terms provide that, in the event of a Capital Raise, among other
things, the interest rate accrued after such event is reduced from 12% to 4.68%.
Additionally, the modified terms provide that the Company may make principal
repayments towards the due to Chairman of the board, the due to its Chief
executive officer, and the due to related party amounting to approximately 25%
of its cash flows from operating cash flows less capital expenditures. In
connection with the modified terms, the Company made a principal repayment of
$69,638 on the due to its Chairman of the board, which was offset against an
accounts receivable of one of the Company's clients, which is an unrelated
party. Additionally, the Company made a principal repayment of $150,000 on the
due to related party.


Note 5- Other Related Party Transactions

The Company has recognized revenues of approximately $70,000 and $0 during the
six-month periods ended June 30, 2005 and 2004, respectively, from three related
parties, entities in which its Chairman of the Board is also the managing
director. Such related parties owe the Company approximately $15,000 at June 30,
2005.

                                       14

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004


Note 6- Stockholders' Deficit

Stock Compensation Plan

During  November  2004,  the Company  adopted its 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.  If any  options  granted
under the 2004 Plan expire or terminate  without having been exercised or ceased
to be exercisable, such options will be available again under the 2004 Plan. All
employees of the Company and its subsidiaries are eligible to receive  incentive
stock options and nonstatutory stock options. Non-employee directors and outside
consultants who provided  bona-fide services not in connection with the offer or
sale of  securities  in a capital  raising  transaction  are eligible to receive
nonstatutory  stock  options.  Incentive  stock options may not be granted below
their  fair  market  value at the  time of grant  or,  if to an  individual  who
beneficially  owns more than 10% of the total combined voting power of all stock
classes of the Company or a  subsidiary,  the option  price may not be less than
110% of the fair value of the common stock at the time of grant.  The expiration
date of an incentive stock option may not be longer than ten years from the date
of grant.  Option holders, or their  representatives,  may exercise their vested
options up to three months after their employment  termination or one year after
their  death or  permanent  and total  disability.  The 2004 Plan  provides  for
adjustments upon changes in capitalization.

The following pro forma information regarding stock-based compensation has been
determined as if the Company had accounted for its employee stock options under
the fair value method pursuant to SFAS 123. For purposes of the pro forma
calculations, the fair value of each option granted in 2005 and 2004 was
estimated at the date of grant using the Black-Scholes model with the following
assumptions used: risk-free interest rate: 4.04% and 2.78%, respectively;
dividend yield: none; volatility: none; expected lives: 3 years. The Company has
granted 50,000 options during the six-month period ended June 30, 2005.










                                       15

<PAGE>

                                OPTIONABLE, INC.
                          NOTES TO FINANCIAL STATEMENTS
                             June 30, 2005 and 2004


Note 6- Stockholders' Deficit-continued

No stock-based employee compensation cost is reflected in net income, as all
options granted under the Company's plans had an exercise price equal to or
above market value of the underlying common stock on the date of grant. Had
compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for grants under those
plans consistent with the method of SFAS No. 123, the Company's cash flows would
have remained unchanged; however net income and earnings per share would have
been reduced to the pro forma amounts indicated below:

                                                                  June 30,
                                                              2005       2004
                                                           ---------  ----------
Net income (loss) as reported:                             $302,577   $(594,203)
Deduct: Total stock-base employee compensation expense
        determined under fair value based method for all
        awards, net of related tax effects                   (2,070)          -
                                                           ---------  ----------
Net income (loss) pro forma                                $300,507   $(594,203)
                                                           =========  ==========

Earnings (loss) per share:
Basic                                                         $0.01      ($0.01)
                                                           =========  ==========
Diluted                                                       $0.01      ($0.01)
                                                           =========  ==========















                                       16

<PAGE>

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

OVERVIEW

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

In recent years, the energy industry changed drastically. Long a volatile
industry, high profile bankruptcies, such as Enron, sparked a flight of capital
and a lack of confidence in the financial position of energy related market
participants, which forced energy companies to depart the energy trading
markets. We believe that the flow of investment out of energy trading markets
was mostly felt during 2003. During 2004 and 2005, we have observed a higher
level of participants within the investment banking and hedge fund community
committing capital to energy trading, which has increased the level of volume
within the energy trading markets. Such higher level of participants has also
increased our revenues, net income, and cash flow from operating activities
which has improved our financial condition. We also believe that we will need to
continue to increase our research and development expenditures in the
foreseeable future which would be financed by our cash flows from operations.

We are in the process of completing the development of our electronic trading
system, OPEX. We had temporarily discontinued such efforts in 2003 and resumed
them in late 2004. We intend to complete the development and initial launch of
the OPEX system in the third quarter of 2005. We believe the costs associated
with finalizing the development of the first operating version of OPEX and the
marketing costs associated with the initial launch will be at least $500,000 and
$100,000, respectively and will be financed by our cash flows from operations.
We believe that we will continue to generate cash flows from operations in the
foreseeable future sufficient to permit us to absorb the costs to complete the
development of OPEX as well as the costs related to its initial launch. The
additional work necessary to finalize the development of the first operating
version of OPEX consists primarily of ensuring that all transactions entered in
OPEX are properly processed as well as certain feature enhancements.

Since inception, substantially all of our operations were funded by Mark
Nordlicht, our Chairman of the Board and a stockholder. Additionally, during the
fourth quarter of 2004, we successfully closed an equity financing generating
gross proceeds of approximately $1.25 million.

PLAN OF OPERATIONS

We believe that a majority of our revenues will continue to be generated through
voice-brokerage for the foreseeable future. Once OPEX is launched in 2005, we
expect that revenues generated through OPEX will constitute a small but growing
portion of our revenues. We are unable to determine whether our revenues will
continue to grow in 2005 at the same rate as they have grown in 2004 when
compared to 2003.


We expect that our selling, general, and administrative expenses will be higher
during 2005 than during 2004 due to incremental expenses such as legal fees,
accounting fees, investor relations expenses, and other costs associated with
being a publicly-traded company as well as the aforementioned initial costs of
launching OPEX. We believe that we can fund such additional expenses from cash
flows from operations.

                                       17

<PAGE>

This discussion and analysis of our financial condition should be read in
connection with our financial statements and accompanying notes thereto in our
registration statement on Form SB-2 for the fiscal year ended December 31, 2004,
including without limitation the information set forth under the heading
"Critical Accounting Policies and Estimates".

RESULTS OF OPERATIONS
                              Results of Operations


<TABLE>
<CAPTION>

                                              For the Six-Month Periods Ended               Increase/          Increase/
                                                         March 31,                         (Decrease)         (Decrease)
                                       -----------------------------------------------      in $ 2005          in % 2005
                                                2005                   2004                  vs 2004            vs 2004
                                       ---------------------- ---------------------- ------------------- -------------------
<S>                                    <C>                    <C>                    <C>                              <C>
Brokerage fees                         $      1,318,153       $          544,933     $          773,220               141.9%
Brokerage fees-related party                     789,345                 245,815                543,530               221.1%
Incentives                                       329,288                  75,439                253,849               336.5%
                                       ---------------------- ---------------------- -------------------
Net revenues                                   2,436,786                 866,187              1,570,599               181.3%

Cost of revenues                                 922,395                 760,235                162,160                21.3%
Cost of revenues-related party                   480,710                 146,591                334,119               227.9%
                                       ---------------------- ---------------------- -------------------
                                               1,403,105                 906,826                496,279                54.7%

Gross profit (loss)                            1,033,681                 (40,639)             1,074,320                  NM

Operating expenses:
  Selling, general and administrative            329,057                 414,348                (85,291)              -20.6%

  Research and development                       256,389                       -                256,389                  NM
                                       ---------------------- ---------------------- -------------------
     Total operating expenses                    585,446                 414,348                171,098                41.3%

     Operating income (loss)                     448,235                (454,987)               903,222                  NM

  Other income (expense):
  Interest expense-related parties              (145,658)               (139,216)                 6,442                -4.6%
                                       ---------------------- ---------------------- -------------------
                                                (145,658)               (139,216)                 6,442                -4.6%
                                       ---------------------- ---------------------- -------------------

Net income (loss)                      $         302,577      $         (594,203)    $          896,780                  NM
                                       ====================== ====================== ===================

</TABLE>

NM:  Not meaningful

Revenues

Revenues consist of fees earned from energy derivatives transactions. The
increase in revenues of approximately $1.6 million during the six-months ended
June 30, 2005, when compared to the prior period, is primarily due to an
increase in the volume of transactions handled by us on behalf of our customers.
Additionally, the increase in revenues during the six-months ended June 30, 2005
is also due to an increase in revenues from our floor brokerage operations
launched in April 2004, of which six months were reported during the six-month
period ended June 30, 2005 while only three months were reported during the
three-month period ended June 30, 2004. Furthermore, the increase in incentives
earned pursuant to agreements with two exchanges was due to a higher volume of
transactions handled by us on such exchanges, slightly offset by a decrease of
the incentive rate offered by NYMEX.

                                       18

<PAGE>

Cost of revenues

Cost of revenues consists primarily of compensation of personnel directly
associated with handling the energy derivative transactions on behalf of our
customers as well as expenses associated with our floor brokerage operations.
The increase in cost of revenues of approximately $500,000 during the six-month
period ended June 30, 2005 when compared to the prior year period is primarily
attributable to an increase in costs associated with having six months of
operations of our floor brokerage operations during the six-month period ended
June 30, 2005 when compared to three months of operations for the six-month
period ended June 30, 2004. Additionally, we incurred increased bonuses to our
brokers resulting from the increase in revenues during the six-month period
ended June 30, 2005.

Selling, general, and administrative expenses

Selling, general, and administrative expenses consists primarily of compensation
of personnel supporting our operations as well as professional fees, such as
legal fees, incurred to handle certain matters which occur during the course of
operations. The decrease in selling, general, and administrative expenses of
approximately $90,000 during the six-month period ended June 30, 2005, when
compared to the prior period, is primarily attributable to decrease in legal
fees incurred in connection with a dispute related to our contract with the
software development firm hired to develop our electronic trading system which
was settled in early 2004.

Research and development

Research and development expenses consist primarily of compensation of personnel
and consultants associated with the development of our automated electronic
trading system. The increase in research and development expenses of
approximately $260,000 during the six-month period ended June 30, 2005 when
compared to the prior period, is primarily due to the resumption of our research
and development efforts in late 2004 while we had temporarily discontinued such
efforts during 2003.


Interest expense to related parties

Interest expense to related parties consists of interest charges associated with
amounts due to related parties. Interest expense to related parties has remained
consistent during the six-month period ended June 30, 2005 when compared to the
prior year period.


                                       19

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have funded our operations primarily from proceeds of notes
payable to Mark Nordlicht, our Chairman and one of our principal stockholders.

During the six-month period ended June 30, 2005, we generated cash of
approximately $200,000 from operating activities, primarily resulting from net
income of $300,000, adjusted for a non-cash interest expense of approximately
$150,000 and an increase in accounts receivable of approximately $220,000,
resulting from an increase in related revenues. We used our cash generated from
operating activities to make principal repayments of $150,000 and approximately
$70,000 to amounts due to Kevin Cassidy, a key consultant and our former chief
executive officer and due to Mark Nordlicht, our chairman of the Board.

During the six-month period ended June 30, 2004, our cash used in operating
activities was funded by proceeds of $350,000 generated from the issuance of a
line of credit and a note payable to Mark Nordlicht . Furthermore, two of our
officers at the time, Edward O'Connor, our chief executive officer and Kevin
Cassidy, our former chief executive officer, forfeited certain compensation
amounting to $375,000, which is accounted for as an increase in additional
paid-in capital. The following changes in operating assets and liabilities
occurred in the six-month period ended June 30, 2004: our accounts payable
decreased by approximately $260,000 and our accrued compensation increased by
approximately $250,000.




CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of significant accounting policies is included in Note 3 to the
audited financial statements for the year ended December 31, 2004 included in
the prospectus contained in our registration statement on Form SB-2. Management
believes that the application of these policies on a consistent basis enables us
to provide useful and reliable financial information about our operating results
and financial condition. Our financial statements and accompanying notes are
prepared in accordance with U.S. GAAP. Preparing financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, and expenses. These estimates and assumptions are
affected by management's application of accounting policies. Critical accounting
policies for us include revenue recognition.

REVENUE RECOGNITION

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

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

                                       20

<PAGE>

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

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

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

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

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

4) Collectibility is reasonably assured. Both exchanges have paid us during the
second quarter of 2005 for incentives earned prior to March 31, 2005. We have no
knowledge that they do not intend to pay these incentives, if earned, in the
future. Furthermore, we intend to enforce the payment of any incentives
receivable under the incentive programs.

Certain Risk Factors Which May Impact Our Business, Results of Operations and
Financial Condition

Our business plan relies on market acceptance of our OPEX system, which is still
under development, to increase our revenues.

While we are presently engaged primarily in voice brokerage, our business plan
calls for OPEX to be a major contributor to our success. We must continue to
grow our revenues through our existing services and by gaining market acceptance
of our OPEX system when it is launched. When our OPEX system is fully developed
and operational, which we anticipate will occur during the third quarter of
2005, we must gain market acceptance of the OPEX system with our existing
customers as well as other professional options traders to achieve acceptable
revenue growth. However, OPEX is still in the developmental stage, and it might
never be launched, or might not be successful when it is launched. Our failure
to fully develop and launch OPEX would have a material negative effect on our
financial prospects.

                                       21

<PAGE>

Our history of operating losses in our current business and our plan to enter a
new line of business may make it difficult for you to evaluate our business and
your investment.

We have had a history of operating losses through 2004 and we may have operating
losses in the future. Our accumulated deficit was approximately $8.7 million at
June 30, 2005. Our auditors have included an explanatory paragraph in their
Report included in our audited financial statements for the years ended December
31, 2004 and 2003, which are contained in the prospectus included in our
registration statement on Form SB-2, to the effect that our significant losses
from operations raise substantial doubt about our ability to continue as a going
concern. Because these losses were sustained in the businesses in which we are
now engaged, and we currently intend to enter into a new line of business
through the launch of our OPEX offering, you may find it difficult to evaluate
our business and its prospects.

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

Our quarterly operating results have fluctuated in the past and we expect our
revenues and operating results may vary significantly from quarter to quarter
due to a number of factors, many of which are beyond our control, including:

o variability in demand and usage for our product and services. For example, to
the extent that market demand for OTC energy products and derivatives is
reduced, our revenues will decrease accordingly; and

o governmental regulations affecting the use of the Internet in general, and
electronic messaging in connection with financial transactions in particular. We
rely on electronic messaging in conducting our business. Any future regulations
which prohibit electronic messaging in effecting financial transactions, or
which otherwise impose additional requirements on the form, content or retention
of electronic messaging, could significantly increase our cost of doing
business.

We have historically lost money and our losses may continue in the future, which
may cause us to curtail our current operations and our development and
implementation of OPEX.

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

                                       22

<PAGE>

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

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

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

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

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

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

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

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

                                       23

<PAGE>

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

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

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

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

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

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

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

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

o acquire and license leading technologies;

                                       24

<PAGE>

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

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

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

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

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

o damage our reputation;

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

o increase our product development resources;

o cause us to lose revenues; and

o delay market acceptance of our products.

                                       25

<PAGE>

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

We receive incentives from the Intercontinental Exchange ("ICE") and the New
York Mercantile Exchange ("NYMEX") which accounted for 14% of our revenues for
the six-month period ended June 30, 2005. The incentives are earned based on a
percentage of the total revenues received by the exchange attributable to our
volume of transactions submitted to the respective exchanges. The incentives are
earned based on a written agreement with ICE expiring by June 2006 or earlier if
our separate brokerage agreement with ICE is terminated. The incentives earned
from NYMEX are based on a program offered to all brokers, traders, and energy
traders initially launched in 2003. NYMEX has amended the terms of its incentive
program by decreasing the incentive rate by 50%. NYMEX may amend the terms of
the incentives or cancel this program at any time. ICE also may request that we
amend the terms of our agreement. We may agree to some or all of any requested
changes. Accordingly, we cannot guarantee that we will continue to receive the
level of such incentives in the future, if at all. If we do not receive these
incentives, our revenues will decrease.

We depend on our relationship with Capital Energy Services to maintain our floor
brokerage operations.

Our income from floor brokerage operations amounted to approximately $800,000
during the six-month period ended June 30, 2005. We depend on our relationship
with CES to maintain or increase the profitability of such operations. Edward J.
O'Connor, our Chief Executive Officer and a director, is a 50% shareholder of
CES. Kevin P. Cassidy, our Chief Executive Officer until March 31, 2004 and a
current stockholder, is the Managing Director of CES. To maintain these floor
brokerage operations, CES may need to provide certain financial guarantees to
NYMEX or other exchanges. CES may not have the resources to provide such
financial guarantees and we may not be able to assist CES financially.
Additionally, CES may be prevented from trading based on certain government
regulations. If CES loses its ability to trade on NYMEX or other exchanges, we
cannot maintain our floor brokerage operations. If we are unable to maintain our
floor brokerage operations, our revenues will decrease and it would adversely
impact our financial condition.

We rely heavily on the services of our technical staff and consultants.

We rely heavily on the services of our technical staff and on the services of
consultants. Most of our technical employees are not presently employed on a
full time basis. The loss of the services of technical employees and consultants
would have a negative material effect on us.

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

As the emerging market for electronic energy options develops, more competitors
are likely to emerge. We believe that the principal competitive factors in our
market include:

o service functionality, quality and performance of the electronic trading
system;

o ease of use, reliability and security of electronic trading system;

o establishing a significant base of customers and sales force;

o ability to introduce new features and functionalities to the market in a
timely manner;

o customer service and support; and

o pricing.

                                       26

<PAGE>

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

With the advent of OTC cleared options, several other OTC brokers have been able
to capitalize on this opportunity by using the newly available clearing
mechanisms to match previously unmatchable counterparties. With lesser credit
concerns, it allows more liquidity in the energy options market.

There are several other well financed companies who do or may compete with us.
In the OTC natural gas market, our competitors include Amerex Natural Gas Ltd.,
Choice Energy LP, G.A. Options, MAN Financial, Inc. and Tullet Natsource, Inc.
In the NYMEX natural gas market, our competitors include Clarion Trading, SCS
Trading Corp., and ICAP PLC. When we implement our OPEX system, we anticipate
that its potential competitors will include the New York Mercantile Exchange,
Intercontinental Exchange, eSpeed and the Chicago Mercantile Exchange.

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

Dependence on outside clearinghouses for increased revenue.

We are dependent on outside clearinghouses such as the New York Mercantile
Exchange and, through a relationship with the Intercontinental Exchange, the
London Clearinghouse to provide us with OTC Clearing services. We can give no
assurance that these companies will continue to offer this service to trades
brokered by us and should those outside clearinghouses cease to offer this
service, it would have a material negative effect on us and our prospects.

Reliance on natural gas options.

While our plan is to leverage success of energy options and expand into other
markets while maintaining our status as an "exempt commercial market", the
success of this plan is subject to market forces outside of our control. At
present, more than 90% of our revenues is derived from trading in natural gas
options. If there should be a significant slowdown in the natural gas options
trading industry, due to weather conditions, governmental regulations or
geopolitical conditions, including war and terrorism, it would have a
significant negative impact on us.

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

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

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

We could become subject to increased governmental and organizational regulation.

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

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Our cash flows and capital resources may be insufficient to make required
payments on our substantial indebtedness and future indebtedness.

We have a significant amount of debt. At June 30, 2005, we had approximately
$2.7 million of debt, a substantial portion of which is due to our Chairman,
Mark Nordlicht.

Our substantial debt could have important consequences to you. For example, it
could:

o make it difficult for us to satisfy our debt obligations;

o make us more vulnerable to general adverse economic and industry conditions;

o limit our ability to obtain additional financing for working capital, capital
expenditures, acquisitions and other general corporate requirements;

o require us to dedicate a substantial portion of our cash flow from operations
to payments on our debt, thereby reducing the availability of our cash flow for
operations and other purposes;

o limit our flexibility in planning for, or reacting to, changes in our business
and the industry in which we operate; and

o place us at a competitive disadvantage compared to competitors that may have
proportionately less debt.

If our cash flows and capital resources are insufficient to fund our debt
service obligations, we may be forced to reduce or delay capital expenditures,
sell material assets or operations, obtain additional capital or restructure our
debt. In the event that we are required to dispose of material assets or
operations to meet our debt service and other obligations, the value realized on
such assets or operations will depend on market conditions and the availability
of buyers. Accordingly, any such sale may not, among other things, be for a
sufficient dollar amount.

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

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

The Securities Enforcement and Penny Stock Reform Act of 1990 requires special
disclosure relating to the market for penny stocks in connection with trades in
any stock defined as a "penny stock." Commission regulations generally define a
penny stock to be an equity security that has a market price of less that $5.00
per share and is not listed on Nasdaq or a major stock exchange. These
regulations subject all broker-dealer transactions involving such securities to
the special "Penny Stock Rules" set forth in Rule 15g-9 of the Securities
Exchange Act of 1934. It may be necessary for the Selling Stockholders to

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utilize the services of broker-dealers who are members of the NASD. The current
market price of our common stock is substantially less that $5 per share and
such stock can, for the foreseeable future, be expected to continue to trade in
the over-the-counter market at a per share market price of substantially less
than $5. Accordingly, any broker-dealer sales of our shares will be subject to
the Penny Stock Rules. These Rules affect the ability of broker-dealers to sell
our securities and also may affect the ability of purchasers of our common stock
to sell their shares in the secondary market.

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

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

The interests of our management could conflict with the interests of our
stockholders. Our officers and directors beneficially own approximately 46% of
our outstanding common stock. Accordingly, if they act together with a
relatively small number of stockholders owning more than 4% of the outstanding
common stock, they will have the power to approve corporate transactions and
control the election of all of our directors and other issues for which the
approval of our stockholders is required. This concentration of ownership may
also delay, deter or prevent a change in control of us and may make some
transactions more difficult or impossible to complete without the support of
these stockholders. As a result, you may have no effective voice in our
management .

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

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

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ITEM 3. CONTROLS AND PROCEDURES

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

The Certifying Officers have also indicated that there were no significant
changes in our internal controls over financial reporting or other factors that
could significantly affect such controls subsequent to the date of their
evaluation, and there were no significant deficiencies and material weaknesses.

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








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                           PART II - OTHER INFORMATION

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

During May 2005, the Company issued 50,000 options to one its employees. The
options are exercisable at a price of $0.30 per share and vest at a rate of
12.5% on November 23, 2005 and 12.5% every three-month period thereafter. The
options are cancelled upon the earliest of one year after the employee's death
or upon termination of employment for cause. These issuances was exempt from
registration pursuant to the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended.


ITEM 6. EXHIBITS
(a)      Exhibits

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

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

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

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












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                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
                                OPTIONABLE, INC.


      Date                                      By: /s/   Edward O'Connor
  -------------                                 --------------------------
  July 25, 2005                                 Edward O'Connor
                                                Chief Executive Officer




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