As filed with the Securities and Exchange Commission on December 22, 2004
Registration No. 333-_____

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

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

Delaware 7371 52-2219407
------------------------------- -------------------------- ----------------
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)

555 Pleasantville Road
South Building, Suite 110
Briarcliff Manor, New York 10510
(914) 773-1100

(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)

Edward J. O'Connor
Optionable, Inc.
555 Pleasantville Road
South Building, Suite 110
Briarcliff Manor, New York 10510
(914) 773-1100

(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)

copy to:
Adam S. Gottbetter, Esq.
Kenneth S. Goodwin, Esq.
Gottbetter & Partners, LLP
488 Madison Avenue
New York, New York 10022-5718
(212) 400-6900

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. |X|

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]

CALCULATION OF REGISTRATION FEE

- --------------------------------------------------------------------------------------------------------------------

Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to Amount to be Offering Price Per Aggregate Offering Registration
be Registered Registered Share Price Fee
====================================================================================================================

Common Stock,
par value $.0001 31,431,026 shares(1) $0.20 (2) $6,286,205(2) $799.00(2)
- --------------------------------------------------------------------------------------------------------------------

- ----------
(1) Includes 1,300,000 shares underlying outstanding common stock warrants and
options to purchase common stock.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 of the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

Subject to Completion, dated December 22, 2004

Prospectus

OPTIONABLE, INC.

31,431,026 shares of Common Stock

All of the shares of common stock of Optionable, Inc. covered by this
prospectus are being offered and sold from time to time by certain of our
stockholders and warrant holders referred to as Selling Stockholders. All of
these shares are being registered for resale only. We will not receive any of
the proceeds from the sale of the shares by the Selling Stockholders, but will
receive proceeds from the exercise of the warrants held by some of the Selling
Stockholders upon exercise. These shares covered by this prospectus will be
offered for sale by the Selling Stockholders from time to time.

The shares being registered include 30,131,026 shares, and 1,300,000
shares underlying outstanding common stock purchase warrants. Before exercise of
the warrants, the Selling Stockholders have no voting or other ownership rights
in the shares underlying those warrants.

The Selling Stockholders may be deemed underwriters within the meaning
of the Securities Act of 1933 in connection with sales of our common stock
included in this prospectus.

No public market currently exists for our common stock. We intend to
apply to list our common stock for trading on the over-the-counter bulletin
board operated by the National Association of Securities Dealers, Inc. (OTCBB).

INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK
FACTORS BEGINNING ON PAGE 6.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The information in this prospectus is not complete and may be changed.
The Selling Stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.

THE DATE OF THIS PROSPECTUS IS ___, 2005

TABLE OF CONTENTS

PAGE

Prospectus Summary .........................................................5
Risk Factors ...............................................................6
Use of Proceeds.............................................................17
Selling Stockholders .......................................................18
Capitalization..............................................................21
Plan of Distribution .......................................................21
Management's Discussion and Analysis or Plan Of Operations..................23
Description of Business ....................................................28
Directors, Executive Officers, Promoters and Control Persons................33
Executive Compensation......................................................34
Security Ownership of Certain Beneficial Owners and Management .............36
Certain Relationships and Related Party Transactions .......................38
Description of Securities...................................................39
Market for Common Equity....................................................41
Legal Proceedings...........................................................42
Legal Matters...............................................................42
Experts.....................................................................42
Where You Can Find Additional Information ..................................42
Financial Statements .......................................................F-1

DEALER PROSPECTUS DELIVERY OBLIGATION

Until _________, 2005 (90 days from the date of this prospectus), all
dealers that effect transactions in these securities, whether or not
participants in this offering, may be required to deliver a prospectus.

PROSPECTUS SUMMARY

This summary is not complete and does not contain all of the
information that should be considered before investing in our common stock.
Investors should read the entire prospectus carefully, including the more
detailed information regarding our business, the risks of purchasing our common
stock discussed under Risk Factors, and our financial statements and the
accompanying notes.

All references to our shares in this prospectus reflect the 1000-for-1
forward stock split we made on March 30, 2000, the 25-for-1 forward stock split
we made on May 30, 2000, the 20-for-1 forward stock split we made on July 21,
2000, and the 1.27-for-1 forward stock split we made on June 10, 2004.

Business

We were formed as a Delaware corporation on February 4, 2000, with the
goal of creating advanced solutions to the inherent inefficiencies of the
traditional open-outcry and over the counter ("OTC") trading environments. We
are developing OPEX, a comprehensive electronic energy options and swaps trading
platform, to provide enhancements to the existing OTC market used by
professional derivatives traders. Derivatives are an effective tool in
minimizing risk for producers and end-users as well as an investment vehicle for
speculators and investors who provide liquidity to the derivatives market.
Although there are existing electronic derivatives trading solutions, they have
usually added options trading as an afterthought, which can result in poor
execution and limited participation. We designed our system from the ground up
to accommodate the trading strategies currently used on the traditional OTC,
commodity and equity exchanges. We intend to launch OPEX during 2005. We also
believe that our customers may want to continue to receive brokerage and trading
services through means other than electronically. In March 2001, we combined OTC
voice brokerage with electronic order matching and acquired the OTC trading
division of Orion Energy Services LLC. The combination of our technology with
Orion's brokerage experience will position us to be a full service
trade-matching and brokerage solution.

We are involved in the following businesses:

o OTC commodity derivatives brokerage,

o commodity derivatives services on the floor of the New York
Mercantile Exchange (the "NYMEX") (also known as "Floor" brokerage),

o software development and deployment of electronic brokerage and
trading platform, and

o trading and brokerage support services.

Presently, OTC brokerage is facilitated by brokering trades between our
clients via telephone and electronic messaging, often referred to as voice
brokerage. By building a relationship with their customers, our brokers learn
about their customers' interests and are able to insure that traders can focus
on the opportunities their customers will want to exploit. Optionable intends to
combine traditional voice brokerage with electronic trading by offering a hybrid
combination of voice and electronic transactions; customers will be able to move
between voice and electronic trading with no loss in liquidity. They will be
able to transact in the same markets, regardless of whether or not they entered
orders electronically or through a broker. Optionable aims to provide a bridge
between OTC options and electronic trading.

Our principal executive offices are located at 555 Pleasantville Road,
South Building, Suite 110, Briarcliff Manor, New York 10510. Our telephone
number at this location is (914) 773-1100.

This Offering

By means of this prospectus, the Selling Stockholders are offering up
to 30,131,026 shares of our common stock which they own, and 1,300,000 shares of
common stock which they may at a later date acquire upon exercise of warrants.
We will not receive any proceeds from the sale of the common stock offered by
the Selling Stockholders, but we did receive consideration from the Selling
Stockholders at the time they purchased the shares from the company. We will
receive proceeds from the exercise price of the warrants if they are exercised
by the Selling Stockholders. We intend to use any proceeds from the exercise of
the warrants for working capital and general corporate purposes.

Forward-Looking Statements

Information included or incorporated by reference in this prospectus
may contain forward-looking statements. This information may involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking
statements. Forward-looking statements, which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words "may," "should," "expect," "anticipate," "estimate," "believe,"
"intend" or "project" or the negative of these words or other variations on
these words or comparable terminology.

This prospectus contains forward-looking statements, including
statements regarding, among other things, (a) our projected sales and
profitability, (b) our growth strategies, (c) anticipated trends in our
industry, (d) our future financing plans, (e) our anticipated needs for working
capital, and (f) our products and services. These statements may be found under
"Management's Discussion and Analysis or Plan of Operations" and "Description of
Business," as well as in this prospectus generally. Actual events or results may
differ materially from those discussed in forward-looking statements as a result
of various factors, including, without limitation, the risks outlined under
"Risk Factors" and matters described in this prospectus generally. In light of
these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this prospectus will in fact occur.

RISK FACTORS

Risks Related To Our Business

We must obtain growth in our revenues in order to realize the benefits of our
business plan.

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, we must gain market acceptance
of the OPEX system with our existing customers as well as other professional
options traders. Our plans to market our services to new and existing customers
are critical to our growth. No assurance can be given that we will achieve
acceptable market growth. Should we fail to achieve acceptable market growth,
the financial prospects of the Company would be materially and negatively
affected.

Our business plan calls for OPEX to be a major contributor to our success. OPEX
is still in the developmental stage, might never be launched, or might not be
successful when it is launched.

While we are presently engaged primarily in brokerage (see "Description
of Business"), our business plan calls for OPEX to be a major contributor to our
success. The OPEX system, however, is still in the developmental stage and is
open to all of the difficulties and setbacks usually encountered in developing
new software and, as a result, we might not be able to fully develop OPEX and
have to delay the launch of OPEX for an indefinite period of time. Our failure
to fully develop and launch OPEX would have a material negative effect on our
financial prospects.

History of losses and limited operating history making it difficult for you to
evaluate our business and your investment.

We have not yet fully launched our products and services. We have not
generated revenues from OPEX since inception. We therefore still have a very
limited operating history upon which you may evaluate our operations and future
prospects, as well as limited insights into emerging trends that may affect our
business. Additionally, the income potential of our business and from our
markets is unproven. Because of the emerging nature of the industry, our
executives have limited experience in it. As a young company operating in an
emerging market, we face risks and uncertainties relating to our ability to
implement our business plan successfully.

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;

o market acceptance of new and existing services offered by us, our
competitors and potential competitors; and

o governmental regulations affecting the use of the Internet,
including regulations concerning intellectual property rights and
security features.

Our limited operating history and unproven business model further
contribute to the difficulty of making meaningful quarterly comparisons. Our
current and future levels of expenditures are based primarily on our growth
plans and estimates of expected future revenues. Such expenditures are primarily
fixed in the short term and our sales cycle can be lengthy. Accordingly, we may
not be able to adjust spending or generate new revenue sources timely to
compensate for any shortfall in revenues. If our operating results fall below
the expectation of investors, our stock price will likely decline significantly.

Because we may continue to incur net losses, we may not be able to implement our
business strategy and the price of our stock may decline.

We have incurred net losses quarterly from inception through September
30, 2004, and we may continue to incur net losses for the foreseeable future.
Accordingly, our ability to operate our business and implement our business
strategy may be hampered by negative cash flows in the future, and the value of
our stock may decline as a result. Our capital requirements may vary materially
from those currently planned if, for example, we incur unforeseen capital
expenditures, unforeseen operating expenses or make investments to maintain our
competitive position. If this is the case, we may have to delay or abandon some
or all of our development plans or otherwise forego market opportunities. We
will need to generate significant additional revenues to be profitable in the
future and we may not generate sufficient revenues to be profitable on either a
quarterly or annual basis in the future. To address the risks and uncertainties
facing our business strategy, we may, among other things:

o achieve broad customer adoption and acceptance of our products and
services;

o raise additional capital in the future;

o integrate, leverage and expand our sales force;

o scale our current operations;

o address intellectual property rights issues that effect our
business;

o develop and maintain strategic relationships to enhance the
development and marketing of our existing and new products and
services; and

o respond to competitive developments in the option trading industry.

We might not be successful in achieving any or all of these business
objectives in a cost-effective manner, if at all, and the failure to achieve
these could have a serious adverse impact on our business, results of operations
and financial position. Each of these objectives may require significant
additional expenditures on our part. Even if we ultimately do achieve
profitability, we may not be able to sustain or increase profitability and we
may not be able to sustain or increase profitability on a quarterly or annual
basis.

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

The pricing model of our products and 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 duration of the
agreement, 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 intellectual property,
and we may be found to infringe on proprietary rights of others, which could
harm our business.

Our intellectual property is critical to our planned OPEX business, and
we seek to protect our intellectual property through copyrights, trademarks,
patents, trade secrets, confidentiality provisions in our customer, supplier,
potential investors, and strategic relationship agreements, nondisclosure
agreements with third parties, and invention assignment agreements with our
employees and contractors. We cannot assure you that measures we take to protect
our intellectual property will be successful or that third parties will not
develop alternative solutions that do not infringe upon our intellectual
property.

In addition, 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.
Further, we plan to offer our OPEX system to customers worldwide including
customers in foreign countries that may offer less protection for our
intellectual property than the United States. Our failure to protect against
misappropriation of our intellectual property, or claims that we are infringing
the intellectual property 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. We
cannot be certain that we will be successful in developing new relationships or
that our partners will view these relationships 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;

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.

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 Exhange ("ICE") and the
New York Mercantile Exchange (NYMEX) which accounted for 16% of our revenues for
the nine month period ended September 30, 2004. 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 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 it 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
$635,000 during the nine month period ended September 30, 2004. We depend on our
relationship with Capital Energy Services (CES) to maintain or increase the
profitability of such operations. To maintain these 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. 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.

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, EDF Man and
ICAP.

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 including the Intercontinental Exchange, the New York Mercantile
Exchange, Cantor Fitzgerald, 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 expect significant revenue growth based on the availability of OTC
Clearing, but we are dependent on outside clearinghouses such as the London
Clearinghouse and the New York Mercantile Exchange to provide these 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 us and our prospects.

We may not attain positive cash flow.

While growth is expected to come from positive cash-flow derived from
revenues from operations, including commissions, we can give no assurance that
we can or will ever achieve a positive cash flow. Failure to achieve a positive
cash flow would have a material negative effect on us.

Reliance on customers and relationships.

Much of the our success will depend on our brokers' relationships with
customers. There can be no assurance that these relationships will be maintained
(whether the relationships are between us and the broker or the broker and the
customer) and, should they not be maintained, it would have a material negative
effect on us.

Reliance on natural gas options.

While our plan is to leverage success of energy options and expand into
other markets, the success of this plan is subject to market forces outside of
our control. At present, more than 90% of our revenues are 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.

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. 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.
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.

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

Risks Related To Our Financial Condition

We may need additional financing which may not be available and, if available,
might only be available on unfavorable terms.

We have incurred an accumulated deficit of approximately $9.2 million
since inception and had negative cash flows from operations of approximately
$600,000 and $1.6 million, for the nine months ended September 30, 2004 and
2003, respectively. Our ability to continue as a going concern is dependent upon
our ability to generate profitable operations in the future by increasing our
revenues and reducing certain expenses from our historical levels, to secure the
necessary financing to meet our obligations, and repay our liabilities arising
from normal business operations when they become due. We cannot currently assure
you that we will be able to operate profitably.

We have provided for our capital needs during 2004 by issuing equity
securities generating gross proceeds of $1.0 million for the nine-month period
ended September 30, 2004, and $252,000 for the period subsequent to September
30, 2004. We do not anticipate issuing equity or debt securities in the
foreseeable future. Additionally, we have increased our revenues and operating
income by approximately $1.9 million and $2.0 million to $2.4 million and
$282,000, respectively, during the nine month period ended September 30, 2004,
when compared to the prior year nine-month period. We plan to increase our
revenues by expanding our customer base and introducing our automated electronic
trading system. There is no guarantee that we will be successful in expanding
our customer base or that we will successfully introduce our electronic trading
system in the next twelve months. These matters, among others, raise substantial
doubt about our ability to continue as a going concern.

Risks Related To This Offering

Sales of shares of our common stock eligible for future sale could depress the
market for our common stock.

We presently have issued and outstanding 51,406,431 shares of our
common stock, options to purchase 780,250 shares of our common stock at an
average exercise price of $0.20 per share, and warrants to purchase 1,600,000
shares of our common stock at an exercise price of $0.20 per share. The
registration of the 1,300,000 shares underlying warrants represents 2.5 % of the
number of shares outstanding. Public market place sales of large amounts of our
common stock, or the potential for those sales even if they do not actually
occur, may have the effect of depressing the market price of our common stock.
In addition, if our future financing needs require us to issue additional shares
of common stock or securities convertible into common stock, the supply of
common stock available for resale could be increased which could stimulate
trading activity and cause the market price of our common stock to drop, even if
our business is doing well.

Short selling common stock by Selling Stockholders may drive down the market
price of our common stock.

Any Selling Stockholder who holds warrants may, subject to applicable
law, sell shares of our common stock in the public market before exercising the
warrant. The stock is usually offered at or below the market price since warrant
holders receive stock at a discount to market. Once the sale is completed, the
warrant holders exercise warrants for a like amount of shares. If the stock sale
lowered the market price, upon exercise, the holder would receive a greater
number of shares than he or she would have absent the short sale. This pattern
could result in a reduction in the market price of our common stock.

There has been no prior public market for our common stock and a public market
for our common stock may not develop. Unless a public market develops, you may
have difficulty selling your shares of our common stock.

Prior to this offering, there has been no public market for our common
stock. Failure to develop or maintain an active trading market could negatively
affect the value of our shares and even make it impossible for you to sell your
shares or recover any part of your investment in our common stock. Even if a
market for our common stock does develop, the market price of our common stock
may be highly volatile. In addition to the uncertainties relating to our future
operating performance and the profitability of our operations, factors such as
variations in our interim financial results, or various, as yet unpredictable
factors, many of which are beyond our control, may have a negative effect on the
market price of our common stock.

Market transactions in our common stock are subject to the "Penny Stock
Rules" of the Securities and Exchange Act of 1934, which are discussed in more
detail below. These rules could make it difficult to trade our common stock
because compliance with them can delay or preclude certain trading transactions.
This could have an adverse effect on the ability of an investor to sell any
shares of our common stock.

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.

As discussed above, 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 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 at least 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
46.7% of our outstanding common stock. Accordingly, if they act together with a
relatively small number of stockholders owning more than 3.4% 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 [see "Principal Stockholders" and "Certain Transactions"].

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 (see "Principal Stockholders" in this
prospectus), 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
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.

Our board of directors may issue additional shares of our common stock without
the consent of any of our shareholders. Substantial future issuances of our
common stock could result in dilution of your voting power and of earnings per
share, which would have the result of decreasing the value of your shares.

Our Certificate of Incorporation authorizes the issuance of 100,000,000
shares of common stock. Presently, there are 48,593,569 shares of our authorized
common shares remaining unissued. Our board of directors has the power to issue
any or all of the remaining 48,593,569 common shares for general corporate
purposes, without stockholder approval. Additionally, our recently adopted 2004
Stock Plan provides for the issuance of up to 7,500,000 shares of common stock.
Furthermore, we have warrants outstanding convertible into up to 1,600,000
shares of common stock. While we presently have no commitments, contracts or
intentions to issue any additional common shares, other than those issuable
pursuant to the 2004 Stock Plan or upon exercise of outstanding warrants, any
such future stock issuances may result in a reduction of the book value of the
outstanding common shares. If we issue any additional common shares, such
issuance will reduce the proportionate ownership and voting power of each other
common shareholder.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares under this
prospectus, but we did receive consideration from the Selling Stockholders at
the time they purchased their shares. We may receive proceeds from the exercise
of the warrants if they are exercised by the Selling Stockholders. Assuming the
exercise of all of the Selling Stockholders' warrants, we would receive gross
proceeds of approximately $260,000. The weighted average exercise price of the
warrants is $0.20 per share. We intend to use any proceeds from the exercise of
the warrants and options for working capital and general corporate purposes.

SELLING STOCKHOLDERS

The following table provides certain information with respect to the
beneficial ownership of our common stock known by us as of December 22, 2004 by
each Selling Stockholder. The percentages in the table have been calculated on
the basis of treating as outstanding for a particular person, all shares of our
common stock outstanding on December 22, 2004 and all shares of our common stock
issuable to the holder in the event of exercise of outstanding options or
warrants owned by that person at December 22, 2004 which are exercisable within
60 days of December 22, 2004. Except as otherwise indicated, the persons listed
below have sole voting and investment power with respect to all shares of our
common stock owned by them, except to the extent such power may be shared with a
spouse. Certain of the Selling Stockholders have material relationships with us.

Shares of Common Stock Percentage Ownership
Beneficially Owned --------------------
-------------------------------- Number of Shares Before After
Name of Beneficial Owner Before Offering After Offering Being Sold Offering Offering
- ------------------------------------- ---------------- -------------- ---------------- --------- --------

Mark Nordlicht (1) 16,440,150 14,580,064 1,860, 086 31.79% 28.36%

Steel Style Sales, Inc. 4,451,350 -0- 4,451,350 8.66% -0-%

East Holdings LLC 4,318,000 -0- 4,318,000 8.40% -0-%

Ridgecrest Capital Corp. (2) 3,904,158 3,462,430 441,728 7.55% 6.74%

Jules Nordlicht (3) 2,190,750 -0- 2,190,750 4.26% -0-%

The ML Investment Trust 2,159,000 -0- 2,159,000 4.20% -0-%

Avon Road Associates 2,159,000 -0- 2,159,000 4.20% -0-%

TVI Investments
Limited Liability Company 2,159,000 -0- 2,159,000 4.20% -0-%

Pierpont Capital Corp., Inc. (4) 1,905,000 -0- 1,905,000 3.71% -0-%

Yechiel Abraham Zucker (5) 1,746,250 1,548,674 197,576 3.40% 3.01%

Heather C. Frantz 1,236,250 -0- 1,236,250 2.40% -0-%

Kathleen O'Connor (6) 901,929 799,882 102,047 1.75% 1.55%

Erin O'Connor (7) 901,929 799,882 102,047 1.75% 1.55%

AYD Equity Group, Ltd. (8) 95,250 84,473- 10,777 * *

Kerry Cassidy 113,665 -0- 113,665 * -0-%

Timothy Higgins 31,750 -0- 31,750 * -0-%

Lauren Defino 31,750 -0- 31,750 * -0-%

Howard Feder 125,000 -0- 125,000 * . -0-%

Regalian Properties (Provincial) Limited 500,000 -0- 500,000 * -0-%

Mr. G. Mechlowitz 250,000 -0- 250,000 * -0-%

Howard Moher 250,000 -0- 250,000 * -0-%

Daniel A. Lopian 250,000 -0- 250,000 * -0-%

Magpie Investments Ltd. 125,000 -0- 125,000 * -0-%

Sheila Frantz 250,000 -0- 250,000 * -0-%

Eli Lerner 250,000 -0- 250,000 * -0-%

Shekel Hakodesh 500,000 -0- 500,000 * -0-%

Jonah Jay Lobell 250,000 -0- 250,000 * -0-%

Colbart Birnet L.P. 500,000 -0- 500,000 * -0-%

William T. O'Donnell, Jr. 500,000 -0- 500,000 * -0-%

Jeffrey G. Sullivan 500,000 -0- 500,000 * -0-%

Kenmore Associates LLC c/o Meridian
Capital 500,000 -0- 500,000 * -0-%

Daniel J. Saks 125,000 -0- 125,000 * -0-%

Robert L. Haig 375,000 -0- 375,000 * -0-%

Chesed Congregations of America 250,000 -0- 250,000 * -0-%

Karen Hoffman 10,000 -0- 10,000 * -0-%

Kevin DeAndrea 125,000 -0- 125,000 * -0-%

Megan M. Foley 500,000 -0- 500,000 * -0-%

Jackson Steinem, Inc.(9) 50,000 -0- 50,000 * -0-%

Rory Maton 317,500 -0- 317,500 * -0-%

Rebecca Lang 158,750 -0- 158,750 * -0-%

- ----------
* Less than one percent (1%).

(1) Mark Nordlicht is the Chairman of our Board of Directors.

(2) Edward O'Connor is a director of the Company, our CEO, President and
Treasurer and is the Managing Director of Ridgecrest Capital Corp.

(3) Jules Nordlicht is Mark Nordlicht's father.

(4) Kevin P. Cassidy, our former Chief Executive Officer, is a stockholder of
Pierpont Capital Corp., Inc.

(5) Yechiel Abraham Zucker is the Company's Executive Vice President and
Secretary.

(6) Kathleen O'Connor is Edward O'Connor's daughter.

(7) Erin O'Connor is Edward O'Connor's daughter.

(8) Yecheil Abraham Zucker, the Company's Executive Vice President and
Secretary, is the owner of AYD Equity Group, Ltd.

(9) The beneficial owner of Jackson Steinem, Inc. is Adam S. Gottbetter of
Gottbetter & Partners, LLP, our legal counsel.

CAPITALIZATION

The following table sets forth our capitalization as of September 30,
2004.

Long-term portion of due to stockholder $ 1,808,153
Long-term portion of due to related party 490,494
-----------
Long-term debt 2,298,647

Preferred Stock; $.0001 par value, 5,000,000 shares authorized, none issued
and outstanding at September 30, 2004 --
Common stock; $.0001 par value, 100,000,000 shares authorized,
51,356,431 issued and outstanding at September 30, 2004 5,136
Additional paid-in capital 7,781,636
Subscription receivable (252,000)
Accumulated deficit (9,217,390)
-----------

Total stockholders' deficit (1,682,618)
-----------

Total capitalization $ 616,029
===========

PLAN OF DISTRIBUTION

General

The Selling Stockholders are offering the common shares for their
accounts and not for our account. We will not receive any proceeds from the sale
of the common stock offered by the Selling Stockholders, but we did receive
consideration from the Selling Stockholders at the time they purchased the
shares from us. We will receive proceeds from the exercise price of the warrants
if they are exercised by the Selling Stockholders. We intend to use any proceeds
from the exercise of the warrants for working capital and general corporate
purposes.

The Selling Stockholders may be deemed statutory underwriters within
the meaning of the Securities Act of 1933 in connection with such sales of
common shares and may be deemed to be acting as underwriters in their resales of
the common shares under this prospectus. We will pay the costs of registering
the shares under this prospectus, including legal, accounting, and related fees.
The Selling Stockholders will pay any underwriting discounts and brokerage
commissions associated with these sales. Unless otherwise permitted, the
commission or discount which may be received by any member of the National
Association of Securities Dealers, Inc. in connection with these sales will not
be greater than 8%.

To enable the Selling Stockholders to resell the common shares owned by
them and covered by this prospectus, we intend to maintain that registration for
a period of twelve months.

Shares of common stock offered through this prospectus may be sold from
time to time by the Selling Stockholders or by their respective pledgees,
donees, transferees or other successors in interest. We will supplement this
prospectus to disclose the names of any pledges, donees, transferees, or other
successors in interest that intend to offer common stock through this
prospectus.

The Selling Stockholders will act independently of us in making
decisions with respect to the form, timing, manner and size of each sale.

The common shares may be sold in one or more of the following manners:
a block trade in which the broker or dealer so engaged will attempt to sell the
shares as agent, but may position and resell a portion of the block as principal
to facilitate the transaction; purchases by a broker or dealer for its account
under this prospectus; privately negotiated transactions or ordinary brokerage
transactions and transactions in which the broker solicits purchases; any
combination of these methods; or any other method permitted by applicable law.

Any common shares covered by this prospectus that qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
prospectus. We will not receive any of the proceeds from the sale of these
common shares, although we have paid the expenses of preparing this prospectus
and the related registration statement of which it is a part.

The Selling Stockholders are subject to the applicable provisions of
the Exchange Act, and the rules and regulations thereunder which may restrict
certain activities of, and limit the timing of purchases and sales of securities
by, Selling Stockholders and other persons participating in a distribution of
securities. We can give no assurance that the Selling Stockholders will sell any
or all of the shares of common stock offered by them under this prospectus.

Registration of Selling Stockholders' Common Stock

This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. We intend to use our best efforts to keep
the registration statement effective for twelve months. In connection with any
such registration, we will have no obligation to assist or cooperate with the
Selling Stockholders in the offering or disposing of such shares; to indemnify
or hold harmless the holders of any such shares, other than the Selling
Stockholders or any underwriter designated by such holders; or to obtain a
commitment from an underwriter relative to the sale of any such shares.

We will assume no obligation or responsibility whatsoever to determine
a method of disposition for such shares or to otherwise include such shares
within the confines of any registered offering other than the registration
statement of which this prospectus is a part.

We will use our best efforts to file one or more post-effective
amendments to the registration statement of which this prospectus is a part to
describe any material information with respect to the plan of distribution not
previously disclosed in this prospectus or any material change to such
information in this prospectus. This may include, to the extent required under
the Securities Act of 1933, that a supplemental prospectus be filed, disclosing:
the name of any broker-dealers; the number of common shares involved; the price
at which the common shares are to be sold; the commissions paid or discounts or
concessions allowed to broker-dealers, where applicable; that broker-dealers did
not conduct any investigation to verify the information set out or incorporated
by reference in this prospectus, as supplemented; and any other facts material
to the transaction.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

OVERVIEW

We are in the process of completing the development of our electronic
trading system, OPEX. We had temporarily discontinued such efforts in 2003 and
have resumed them in late 2004. We intend to complete the development and market
the OPEX system in 2005.

During 2003, our revenues significantly declined due to a lower volume
of transactions handled on behalf of our customers. However, our revenues during
the nine-month ended September 30, 2004 increased resulting from higher volume
of transactions handled on behalf of our customers, as well as from revenues
earned from our floor brokerage operations launched in April 2004 and incentives
earned pursuant to agreements with two U.S. exchanges.

During 2004, we settled a dispute with a software development firm
which required significant legal fees and settlement costs recorded in 2003.

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.

This discussion and analysis of our financial condition should be read
in connection with our financial statements and accompanying notes thereto in
this registration statement on Form SB-2 for the fiscal year ended December 31,
2003 and for the nine-month period ended September 30, 2004, including without
limitation the information set forth under the heading "Critical Accounting
Policies and Estimates".

RESULTS OF OPERATIONS FOR FISCAL YEAR ENDED DECEMBER 31, 2003 AND 2002

Fiscal year ended Increase/ Increase/
December 31, (Decrease) (Decrease)
---------------------------- 2003 vs 2002 2003 vs 2002
2003 2002 $ %
----------- ----------- ----------- -----------

Revenues $ 682,690 $ 1,959,117 $(1,276,427) (65.2%)
----------- ------------------------------------------

Cost of revenues 838,660 1,226,500 (387,840) (31.6%)
----------- ------------------------------------------
Gross profit (loss) (155,970) 732,617 (888,587) NM

Operating expenses:

Selling, general and administrative expenses 2,304,632 1,188,299 1,116,333 93.9%

Research and development 552,708 762,726 (210,018) (27.5%)
----------- ------------------------------------------
Total operating expenses 2,857,340 1,951,025 906,315 46.5%

Operating income (loss) (3,013,310) (1,218,408) (1,794,902) 147.3%
Other income (expense):

Interest expense to related parties (238,991) (172,487) 66,504 38.6%
----------- ------------------------------------------

(238,991) (172,487) 66,504 38.6%

Net income (loss) $(3,252,301) $(1,390,895) $(1,861,406) 133.8%
=========== ===========================================

- ----------
NM: Not meaningful

Revenues

Revenues consist of fees earned from energy derivatives transactions.
The decrease in revenues of approximately $1.3 million during 2003 when compared
to 2002 is primarily due to a decrease in the volume of transactions handled by
us on behalf of our customers.

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. The decrease in cost of revenues of approximately $390,000
during 2003 when compared to 2002 is primarily attributable to a decrease in
bonuses paid by the Company to our brokers resulting from the decrease in
revenues in 2003.

Selling, general, and administrative expenses

Research and development

Research and development expenses consist primarily of compensation of
personnel and consultant associated with the development of our automated
electronic trading system. The decrease in research and development expenses of
approximately $210,000 during 2003 when compared to 2002 is primarily due to the
temporary discontinuation of the software development efforts during 2003.

Interest expense to related parties

Interest expense to related parties consists of interest charges
associated with amounts due to related parties. The increase in interest expense
to related parties of approximately $70,000 during 2003 when compared to 2002 is
primarily due to an increase in 2003 of approximately $1.9 million in amounts
due to related parties.

RESULTS OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2004 AND
2003

Nine-month period ended Increase/ Increase/
September 30, (Decrease) (Decrease)
-------------------------- 2004 vs 2003 2004 vs 2003
2004 2003 $ %
----------- ----------- ----------- ------------

Revenues $ 2,359,475 $ 503,671 $ 1,855,804 368.5%

Cost of revenues 1,119,813 660,044 459,769 69.7%
----------- -----------------------------------------
Gross profit (loss) 1,239,662 (156,373) 1,396,035 NM

Operating expenses:

Selling, general and administrative expenses 937,378 1,113,975 (176,597) (15.8%)

Research and development 19,493 479,493 (460,000) (95.9%)
----------- -----------------------------------------
Total operating expenses 956,817 1,593,468 (636,597) (39.9%)

Operating income (loss) 282,791 (1,749,841) 2,032,632 NM
Other income (expense):

Gain on extinguishment of debt 238,282 -- 238,282 NM

Interest expense to related parties (206,617) (105,908) 100,709 95.1%
----------- -----------------------------------------
31,665 (105,908) 137,573 NM

Net income (loss) $ 314,456 $(1,855,749) $ 2,170,205 NM
=========== ========================================

- ----------
NM: Not meaningful

Revenues

Revenues consist of fees earned from energy derivatives transactions.
The increase in revenues of approximately $1.9 million during the nine-month
period ended September 30, 2004, when compared to the same period in 2003, is
primarily due to an increase in the volume of transactions handled by us on
behalf of our customers, as well as increase in revenues from our floor
brokerage operations launched in April 2004, and from incentives earned pursuant
to agreements with two exchanges. This increase in revenues was partially offset
by lower average commissions per volume of transactions handled by us on behalf
of our customers. We expect that our revenues from floor brokerage operations
will be higher during 2005 than during 2004 since we will then have a full year
of floor brokerage operations when compared to nine months of such operations in
2004.

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 $460,000 during
the nine-month period ended September 30, 2004, when compared to the same period
in 2003, is primarily attributable to an increase in costs associated with our
floor brokerage operations and increased bonuses to our brokers resulting from
the increase in revenues during 2004. We expect that our cost of revenues
associated with floor brokerage operations will be higher during 2005 than
during 2004 since we will then have a full year of floor brokerage operations
when compared to 9 months of such operations in 2004.

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 $180,000 during the nine-month period ended September
30, 2004, when compared to the same period in 2003, is primarily attributable to
decrease in legal fess incurred in connection with our contract with the
software development firm hired to develop our electronic trading system which
were settled in early 2004. We expect that our selling, general and
administrative expenses will increase during 2004 from the levels reached in
2003 due to increased expenses associated with the cost of this registration
statement. We also expect that our selling, general, and administrative expenses
will be higher during 2005 than during 2004 due to incremental expenses
associated with being a publicly-traded company.

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 decrease in research and development expenses of
approximately $480,000 during the nine-month period ended September 30, 2004,
when compared to the same period in 2003, is primarily due to the temporary
discontinuation of our software development efforts during 2003. We have
recently resumed the development of our electronic trading system. We expect
that research and development during 2004, while lower than levels reached
during 2003, will increase as a result of our resumption of research and
development efforts. We also expect that our research and development expenses
will be higher during 2005 than during 2004 for the same reason.

Gain on extinguishments of debt

Gain on extinguishments of debt consists of gain resulting from the
settlement of professional fees due to our former legal counsel. The settlement,
generating gains of approximately $240,000, occurred in May 2004.

Interest expense to related parties

Interest expense to related parties consist of interest charges
associated with amounts due to related parties. The increase in interest expense
to related parties of approximately $100,000 during the nine-month period ended
September 30, 2004, when compared to the same period in 2003 is primarily due to
an increase in the imputed rate on the due to related parties from less than 5%
to 12% during the nine-month ended September 30, 2004, as well as the increase
in amounts due to Capital Energy Services, a related party which occurred in
April 2004. We did not owe any amounts to Capital Energy Services in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Historically, we have funded our operations primarily from proceeds of
notes payable to one of our stockholders.

During 2003, we funded our operating loss by issuing notes payable to
one of our stockholders and an affiliated company of this stockholder amounting
to $1,880,000 which accrued interest of $240,000 and by increasing our accounts
payable by approximately $850,000.

During 2002, we funded our operating loss by issuing notes payable to
one of our stockholders amounting to approximately $1.1 million which accrued
interest on these notes of approximately $170,000.

During the nine-month period ended September 30, 2004, we generated
proceeds of $1.0 million from the issuance of common stock. Such proceeds,
together with the proceeds of an additional $350,000 received from the
stockholder, were used to repay a note payable to a related party of $500,000,
to fund an increase in accounts and other receivables of approximately $960,000
and to pay $250,000 to a consultant and $425,000 to our former legal counsel.
Furthermore, two of our officers at the time forfeited certain compensation
amounting to $375,000.

During the nine-months ended September 30, 2003, we funded our
operating loss by issuing notes payable to one of our stockholders and an
affiliated company of this stockholder amounting to $1.45 million, by increasing
our accounts payable and the interest payable on these notes by approximately
$115,000.

Going Concern

We have incurred an accumulated deficit of approximately $9.2 million
since inception. Our ability to continue as a going concern is dependent upon
our ability to generate profitable operations in the future by increasing our
revenues and reducing certain expenses from our historical levels and to secure
the necessary financing to meet its obligations and repay our liabilities
arising from normal business operations when they become due. The outcome of
these cannot be predicted with any certainty or precision at this time.

We have provided for our capital needs during 2004 by issuing equity
securities generating gross proceeds of $1.0 million for the nine-month period
ended September 30, 2004 and $252,000 for the period subsequent to September 30,
2004. Management does not anticipate issuing equity or debt securities in the
foreseeable future. Additionally, we have increased our revenues and operating
income by approximately $1.9 million and $2.0 million to $2.4 million and
$282,000, respectively, during the nine month period ended September 30, 2004,
when compared to the prior year period. Management plans to increase our
revenues by expanding our customer base and introducing our automated electronic
trading system. We cannot assure you that we will expand our customer base or
that we will successfully introduce our electronic trading system in the next
twelve months. These matters, among others, raise substantial doubt about our
ability to continue as a going concern.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A summary of significant accounting policies is included in Note 3 to
the audited financial statements included in this prospectus for the year ended
December 31, 2003. 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 that month. Our revenues derive from a predetermined
fixed fee for 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.

We also receive incentives from United States exchanges 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 estimates monthly of such incentives based on the
volumes of transactions submitted to the respective exchanges, the exchanges'
published revenues by type of transactions, and in the case of one exchange, the
minimum volume of transactions we are required to submit to be entitled to such
incentives.

DESCRIPTION OF BUSINESS

General

We were formed as a Delaware corporation on February 4, 2000, with the
goal of creating OPEX, a comprehensive electronic options trading platform
designed to provide enhancements to the existing Over-the-Counter ("OTC")
market. OPEX, when developed and operational, will be a real time electronic
trade matching and brokerage system specifically for options and swaps trading
by professional derivatives traders. The system is designed to accommodate
trading strategies currently used on the traditional OTC, commodity and equity
exchanges. Our focus is on the OTC market for financially settled energy
options.

In March 2001, we expanded our service offering by combining OTC voice
brokerage with electronic order matching and acquired the OTC trading division
of Orion Energy Services LLC. The combination of our technology with Orion's
brokerage experience will allow us to provide full service trade-matching and
brokerage solutions to our customers.

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

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

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

The OPEX trader workstation is designed to be user friendly and enable
traders to organize their transactions while simultaneously keeping track of
relevant market information. The OPEX workstation will offer the following
features and functionalities:

Request for Quotes (RFQ) - Traders broadcast in real time to all system users'
requests for updated bids or offers on any future or option type traded on the
system.

Market Activity - Users have equal access to market information by displaying
all bids, offers and executed submitted on the system.

Potential Orders - Traders create a series of potential orders that can be
submitted as market conditions change.

Working Orders - Traders monitor all their unfilled or partially executed orders
that have been submitted to OPEX.

Filled Orders - Traders view all their executed trades for a given trading
session.

The OPEX electronic order matching and brokerage system is designed to
eliminate inefficiencies of the traditional trading environments by offering the
following advantages:

Price Transparency - OPEX is designed to enable each trader to view, in real
time, all available bids and offers in the marketplace as well as the number of
corresponding contracts for each bid and offer.

Anonymity - The OPEX trading platform will preserve the anonymity of it's users
by only disclosing the price and size information of all trades.

Customized Expiration Dates - Traders are often limited by standard expiration
dates set by exchanges. We will allow users to create options and futures
trading strategies with customized expiration dates.

Customized Strike Prices - Rather than being constrained by listed strike
prices, we anticipate including a feature allowing traders to create strike
prices tailored to their market expectations.

Credit Screening - Users create a select list of approved counterparties. The
trading system will ensure that only approved counterparties can execute trades
with each other. OPEX's users can update their counterparty lists at any time.

Virtual Back Office - OPEX will automatically generate a digital audit trail
once a trade is consummated. Previous trades going back years will be stored in
the OPEX system.

We intend to offer these features when OPEX is launched. Because OPEX
is in development, these features could be changed or eliminated, and additional
features may be added.

We presently intend to launch OPEX in the spring of 2005.

Business Partners

In April 2004, we entered into a Master Services Agreement with Capital
Energy Services LLC ("CES"). This agreement enabled us to enter into the
brokerage business on the floor of the New York Mercantile Exchange. We provide
CES with support services for the business. We agreed to pay CES (a) a minimum
fixed annual fee of $50,000 payable in 24 bi-monthly installments of $2,083, for
the duration of the contract and (b) a deferred payment of $1,525,000. The
deferred payment is payable on the first to occur of the tenth anniversary of
the agreement or our closing a financing (excluding our recent private
placement) of at least $1,000,000, in which event we shall pay up to 10.67% of
the financing, in an amount not to exceed $762,500, and the balance in a
promissory note bearing interest at 12% per annum which shall become due and
payable on the tenth anniversary of the agreement. CES will make monthly
payments to us equal to (a) the gross receipts of the floor business less (b)
brokerage expenses less the amount of the bimonthly fees paid. If gross receipts
in any month are less than brokerage expenses less the amount of the bimonthly
fees paid, we shall pay CES the difference. Edward J. O'Connor, our President
and a director, is a shareholder of CES. Kevin P. Cassidy, our Chief Executive
Officer until March 31, 2004 is the Managing Director of CES.

On April 1, 2004, we entered into a Consulting Agreement with Kevin P.
Cassidy (the "Consultant") whereby the Consultant was engaged by us for a period
of five years as an OTC broker, marketing manager, and management consultant for
$215,000 per year total compensation. Mr. Cassidy is also a Managing Director of
CES. Furthermore, we issued warrants to purchase 1,200,000 shares of our common
stock to Pierpont Capital Corp., an entity owned by Mr. Cassidy. The warrants
are exercisable at a price of $0.20 per share and expire in June 2007. The
warrants are exercisable in six traunches of up to 200,000 warrants if certain
trading milestones are met during three six-month periods following the issuance
of such warrants.

Customer Concentration

Two of our customers accounted for approximately 17% and 10%,
respectively, of our revenues during the year ended December 31, 2003. These
same customers accounted for 11% and 11%, respectively, of our revenues during
the year ended December 31, 2002. One customer accounted for approximately 10%
of our revenues for the nine month period ended September 30, 2004.

Competition

We have many competitors in the market of brokering 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, EDF Man and ICAP. To date, no one
company has achieved a dominant position.

With the advent of OTC cleared options, we and 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.

We currently use the traditional OTC broker approach whereby customer
contact is initiated over the phone and on the Internet instant messenging
systems, as do the majority of our competitors. Instead of continuing to compete
using the same methodology similar to our competition in our niche market, we
think the OPEX platform will let customers interact directly with other customer
markets, bypassing the traditional brokerage intermediary, with faster and more
accurate execution. We believe that this platform will allow us to compete more
favorably.

There are several other well-financed companies who do or may compete
with us including the Intercontinental Exchange, the New York Mercantile
Exchange, Cantor Fitzgerald, and the Chicago Mercantile Exchange.

Employees

We currently have ten full-time employees: two executives, two brokers,
three in operations, and three in floor operations and marketing. The Company
also has one full-time consultant who serves as a broker and management
consultant, two full-time consultants who serve in research and development, one
part-time consultant who serves as the Chief Technology Officer, and a part-time
consultant who serves as our Chief Financial Officer. The number of employees
that the Company intends to hire is dependent on our customers' needs and the
infrastructure required to support such needs.

Patents, Trademarks and Licenses

On March 1, 2001, we were assigned rights to a patent pending for a
system and method for real-time trading over a computer network from Mark A.
Nordlicht, Yechiel Abraham Zucker, Howard A. Feder and David Boim. This patent
is pending as of the date of this prospectus. Mr. Nordlicht is our Chairman and
Mr. Zucker is our Executive Vice President.

On August 10, 2001, we were assigned rights to a patent pending for a
system and method for trading selectable market transactions over a network from
Mark A. Nordlicht. This patent is pending as of the date of this prospectus.

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

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

Research and Development

We incurred approximately $550,000, $760,000, and $20,000 in expenses
on research and development during fiscal 2003, 2002, and the nine month period
ending September 30, 2004. We have recently resumed our research and development
efforts to complete the OPEX system and intend to enhance its features and
functionalities. We are unable to determine the amount of research and
development we will incur in the foreseeable future to develop and enhance our
OPEX system.

Government Regulation

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

Through our relationship with CES, we receive revenue and incur
expenses from the brokerage of commodities on the NYMEX. Additionally, we
directly employ personnel to support the brokerage activities of CES. Activities
on the NYMEX are regulated by the CFTC and the National Futures Association.

Description Of Property

We lease our executive offices located at 555 Pleasantville Road, South
Building, Suite 110, Briarcliff Manor, NY 10510. The offices consist of
approximately 2,930 square feet.

The lease commenced on October 30, 2001, and is for a term of five
years. The annual rent is $66,817 payable in monthly installments of $5,568
each. We also pay our proportionate share of any increase in real estate taxes
or common area maintenance charges.

We also lease storage space on a month to month basis in Briarcliff
Manor at a cost of $330 per month.

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

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

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

The following table sets forth certain information, as of December 15,
2004, with respect to our directors and executive officers.

Date of Election
or Appointment
Name Positions Held Age as Director
- ---- ------------- ----------- ---------------

Mark Nordlicht Chairman 35 February 2000
Edward J. O'Connor CEO, President, Treasurer, and Director 51 March 2001
Albert Helmig Director 52 September 2004
Yechiel Abraham Zucker Executive Vice President and Secretary 30 n.a.
Marc-Andre Boisseau Chief Financial Officer 40 n.a.

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

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

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

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

Yechiel Abraham Zucker: Mr. Zucker has served as our Executive Vice President
and Secretary since April 2004. Prior to that, he served as our Senior Vice
President from 2000 through March 2004. Mr. Zucker's responsibilities include
operations and product development. Mr. Zucker also served as Executive Vice
President of iDerive, Inc. from February 2000 to January 2001. Prior to that, he
served as an analyst at West End Capital, a private investment fund, from 1999
through January 2000. Mr. Zucker graduated from Yeshiva University in 1997 with
a B.A. degree.

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

EXECUTIVE COMPENSATION

The following table sets forth information concerning the total
compensation paid or accrued by us during the three fiscal years ended December
31, 2003, 2002, and 2001 to (i) all individuals that served as our chief
executive officer or acted in a similar capacity for us at any time during the
fiscal year ended December 31, 2003 and (ii) all individuals that served as
executive officers of ours at any time during the fiscal year ended December 31,
2003 that received annual compensation during the fiscal year ended December 31,
2003, in excess of $100,000.

Summary Compensation Table

Annual Compensation Long-Term Compensation
Awards Payouts
Other Annual Restricted Securities All Other
Fiscal Salary Bonus Compensation Stock Underlying LTIP Compensation
Name and Principal Position Year ($) ($) ($) Awards ($) Options (#)Payouts ($)

Edward J. O'Connor, 2003 $442,308 $-0- $-0- $-0- -0- $-0- $-0-
President, Director (1) 2002 $519,231 $-0- $-0- $-0- -0- $-0- $-0-
2001 $399,684 $-0- $-0- $-0- -0- $-0- $-0-

Kevin Cassidy, CEO (1) 2003 $442,308 $-0- $-0- $-0- -0- $-0- $-0-
2002 $519,231 $-0- $-0- $-0- -0- $-0- $-0-
2001 $399,684 $-0- $-0- $-0- -0- $-0- $-0-

- ----------
(1) Mr. Cassidy served as our Chief Executive Officer from March 2001 until
his resignation in March 2004, at which point Mr. O'Connor became our
Chief Executive Officer.

Board of Directors

Our directors do not receive cash compensation for their services as
directors but are reimbursed for their reasonable expenses for attending board
and board committee meetings. Mr. Helmig, however, was granted options to
purchase a maximum of 250,000 shares of our common stock in connection with his
election to our board of directors, as discussed below.

Stock Option Grants

There were no individual grants of stock options to any Executive
Officers during the fiscal year ended December 31, 2003, and no options were
outstanding at year end.

During December 2004 the board of directors granted 780,250 stock
options under our 2004 Stock Option Plan. All of the options are exercisable at
$.20 per share.

Yechiel Abraham Zucker, our Executive Vice President and Secretary, was
granted 175,000 of these options, all of which are intended to be non-statutory
stock options. Mr. Zucker's options vest one-third on June 3, 2005, an
additional one-third on December 3, 2005, and the balance on June 3, 2006.

Albert Heming, a member of our board of directors, was granted 250,000
of these options, all of which are intended to be non-statutory stock options.
Mr. Heming's options vested 20% upon his joining the Board, and an additional
40% will vest on September 24, 2005, with the balance of the options vesting on
September 24, 2006.

The options granted to Messrs. Zucker and Heming immediately vest in
their entirety if after the grant date someone obtains ownership of, or the
power to vote, a majority of our issued and outstanding common stock.

2004 Stock Option Plan

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

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

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

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

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

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

The terms of the agreement, as amended, provide that we will employ Mr.
O'Connor for a term of five years with the duties of Chief Executive Officer
with an annual salary of $200,000 per year.

On March 1, 2001, we entered into an employment agreement with Kevin P.
Cassidy to be Chief Executive Officer. Mr. Cassidy's employment agreement was
terminated, and Mr. Cassidy ceased to be Chief Executive Officer as of March 31,
2004, pursuant to a Termination of Employment Agreement.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth information regarding the beneficial
ownership of our common stock as of December 22, 2004. The information in this
table provides the ownership information for:

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

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

Name and Address Number of Shares Percentage
Title of Class Of Beneficial Owner Beneficially Owned Outstanding(1)
-------------- ------------------- ------------------ --------------

Common Stock, par value Mark Nordlicht 16,440,150 (1) 31.98%
$.0001 per share 555 Pleasantville Road
South Building, Suite 110
Briarcliff Manor, NY 10510

Common Stock, par value Edward J. O'Connor 5,708,016 (2) 11.03%
$.0001 per share 555 Pleasantville Road
South Building, Suite 110
Briarcliff Manor, NY 10510

Yechiel Abraham Zucker 1,841,500 (3) 3.56%
Common Stock, par value 555 Pleasantville Road
$.0001 per share South Building, Suite 110
Briarcliff Manor, NY 10510

Common Stock, par value Albert Helmig 50,000 (4) 0.00%
$.0001 per share 15 Deer Run Circle
Chatham, NJ 07928

Common Stock, par value Kevin P. Cassidy 2,018,665 (5) 3.90%
$.0001 per share 555 Pleasantville Rd., Ste 110
Briarcliff Manor, NY 10510

Common Stock, par value Steel Styles Sales, Inc. 4,451,350 8.61%
$.0001 per share 401 South Water Street
Newburgh, NY

Common Stock, par value East Holdings LLC 4,318,000 8.40%
$.0001 per share 4 Gel Court
Monsey, NY 10952

Common Stock, par value Marc-Andre Boisseau -0- 0.00%
$.0001 per share 555 Pleasantville Rd., Ste. 110
Briarcliff Manor, NY 10510

All directors and officers 26,058,331 45.04%
as a group (1)(2)(3)(4)(5)
(5 persons)

- ----------
(1) Excludes 2,190,750 shares owned by Jules Nordlicht, Mr. Nordlicht's
father, with respect to which Mr. Nordlicht disclaims beneficial
ownership.

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

(3) Includes 95,250 shares owned by AYD Equity Group, Ltd., a corporation
wholly owned by Mr. Zucker.

(4) Includes 50,000 shares issuable pursuant to the exercise of stock options
exercisable within 60 days.

(5) Includes 1,905,000 shares owned by Pierpont Capital Corp., Inc. of which
Mr. Cassidy is a stockholder and 113,665 shares owned by Kerry Cassidy,
who is Mr. Cassidy's daughter.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On February 3, 2003, we entered into a Prepaid Commission Agreement
with Mr. Nordlicht (the "Prepaid Commission Agreement") whereby Mr. Nordlicht
agreed to pay us non-refundable prepaid commission payments of not less than
$1,200,000. In consideration thereof, we agreed to extend a 20% discount on all
commissions charged by us to Mr. Nordlicht. The agreement terminates when the
prepaid commission balance is brought to $0. We are no longer obligated to grant
the discount upon the first to occur of 24 months passing since the last prepaid
commission is received by us or there is a change in control of the Company.
Amounts paid to us under the Prepaid Commission Agreement were consolidated into
the Loan Agreement dated March 22, 2004, described below.

On June 5, 2003, we entered into a Revolving Credit Facility Agreement
(the "Agreement") with Platinum Value Arbitrage Fund LP ("Platinum") whereby
Platinum agreed to make loans to us, on a revolving basis, in the aggregate
principal amount of up to $500,000. $75,000 of the loan amount was provided to
us in advance of the Agreement. Mr. Nordlicht, our chairman, is the Managing
Partner of Platinum. In connection with that Agreement, we issued a $500,000
Revolving Promissory Note to Platinum dated June 5, 2003. The Agreement was
confirmed on March 8, 2004, and all amounts owed thereunder ($570,000) were paid
in full on September 9, 2004.

On June 9, 2003 we entered into a Prepaid Commission Agreement with
Platinum whereby Platinum agreed to pay us non-refundable prepaid commission
payments totaling $500,000 no later than December 31, 2003. In consideration of
that Agreement, we agreed to extend a 20% discount on all commissions charged by
us to Platinum. The agreement terminates when the prepaid commission balance is
brought to $0. We are no longer obligated to grant the discount upon the first
to occur of 24 months passing since the last prepaid commission is received by
broker or there is a change in control of the Company. Mr. Nordlicht, our
chairman is the Managing Partner of Platinum. This agreement was cancelled on
March 8, 2004.

On February 13, 2004, we entered into a Loan Agreement with Mr.
Nordlicht, whereby Mr. Nordlicht loaned us $250,000 for the purpose of funding a
settlement agreement with Random Walk Computing, Inc. (see "Legal Proceedings").
In connection with that Agreement, we issued a $250,000 promissory note to Mr.
Nordlicht, dated February 13, 2004. On October 27, 2004, this loan was repaid
out of the proceeds of a private placement of our securities which closed in
October 2004.

On March 8, 2004, we entered into a Loan Agreement with Mr. Nordlicht
whereby Mr. Nordlicht loaned us $50,000 for the purpose of retaining securities
counsel. In connection with that Agreement, we issued a $50,000 promissory note
to Mr. Nordlicht, dated March 8, 2004. This loan shall be repaid out of the
proceeds of the private placement of our securities mentioned in the immediately
prior paragraph and has been extended to December 31, 2004.

On March 22, 2004, we entered into a Loan Agreement with Mark Nordlicht
pursuant to which we consolidated (a) $3,722,561.48 of principal and $519,191.70
in accrued and unpaid interest of loans previously made to us by Mr. Nordlicht
pursuant to the Credit Facility (identified in the next paragraph) and (b)
$1,380,000 that Mr. Nordlicht previously paid to us pursuant to the Prepaid
Commission Agreement, into a single loan of $5,621,753.18. In connection with
that Agreement, we issued a $5,621,753.18 promissory note to Mr. Nordlicht,
dated March 22, 2004. This promissory note will be due and payable on the first
to occur of: (i) March 22, 2014, at which time we will pay Mr. Nordlicht
$5,621,753.18 or (ii) if through our first financing or sale of our stock in a
private placement excluding our private placement which closed in the fourth
quarter of 2004, we raise at least $1,000,000 (the "Capital Raise"); in equity
or debt; then within 30 days after the closing of the Capital Raise, we will pay
off the principal of the note in an amount equal to at least 39.33% of the
Capital Raise, provided however, that such amount will not exceed $2,810,877,
and any remaining unpaid principal balance will begin to accrue interest at the
rate of 12% annually; and the outstanding principal amount and accrued interest
will be due and payable on March 22, 2014.

On April 15, 2004, we entered into a revolving Credit Facility
Agreement (the "Credit Facility") with Mr. Nordlicht, pursuant to which Mr.
Nordlicht agreed to lend up to $100,000 to us from time to time as required. In
connection with the Credit Facility we issued a $50,000 promissory note to Mr.
Nordlicht, dated April 15, 2004.

We are parties to a Master Services Agreement with CES pursuant to
which we have entered into the brokerage business on the floor of the New York
Mercantile Exchange (see "Description of Business - Business Partners" for more
information about this agreement). Edward J. O'Connor, our president and a
director, is a stockholder of CES. Kevin P. Cassidy our Chief Executive Officer
until March 31, 2004, is the Managing Director of CES. We have also entered into
a Consulting Agreement with Mr. Cassidy (see "Description of Business - Business
Partners" for more information about this agreement).

Effective April 1, 2004, we entered into an agreement providing for the
reimbursement of certain administrative expenses for services provided to Sleepy
Hollow Coffee Roasters, Inc., a company owned by Edward J. O'Connor, our
president and a director, and by Kevin P. Cassidy. Mr. Cassidy is a consultant
to us and a stockholder. We charged an administrative fee of $1,500 for the
nine-month period ended September 30, 2004. We currently charge an
administrative fee of $1,400 per month.

DESCRIPTION OF SECURITIES

We are authorized to issue 100,000,000 shares of common stock, par
value $.0001 per share, and 5,000,000 shares of preferred stock, par value
$.0001 per share. All of the shares of common stock are of one class.

Common Stock

Currently, there are 51,406,431 shares of common stock outstanding held
by 40 stockholders. In addition, there are 1,600,000 shares of common stock
reserved for issuance upon the exercise of outstanding warrants and 780,250
shares of common stock reserved for issuance upon the exercise of outstanding
options. The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders, including the election of

directors. There is no right to cumulate votes in the election of directors. The
holders of common stock are entitled to any dividends that may be declared by
the Board of Directors out of funds legally available for payment of dividends
subject to the prior rights of holders of preferred stock and any contractual
restrictions we have against the payment of dividends on common stock. In the
event of our liquidation or dissolution, holders of common stock are entitled to
share ratably in all assets remaining after payment of liabilities and the
liquidation preferences of any outstanding shares of preferred stock.

Holders of common stock have no preemptive rights and have no right to
convert their common stock into any other securities.

Preferred Stock

We are authorized to issue 5,000,000 shares of $.0001 par value
preferred stock in one or more series with such designations, voting powers, if
any, preferences and relative, participating, optional or other special rights,
and such qualifications, limitations and restrictions, as are determined by
resolution of our Board of Directors. The issuance of preferred stock may have
the effect of delaying, deferring or preventing a change in control of our
company without further action by stockholders and could adversely affect the
rights and powers, including voting rights, of the holders of common stock. In
certain circumstances, the issuance of preferred stock could depress the market
price of the common stock. There are no shares of preferred stock outstanding.

Limitation on Liability

Under our Certificate of Incorporation, our directors are not liable
for monetary damages for breach of fiduciary duty, except in connection with:

o a breach of the director's duty of loyalty to us or our
stockholders;

o acts or omissions not in good faith or which involve intentional
misconduct, fraud or a knowing violation of law;

o a transaction from which our director received an improper benefit;
or

o an act or omission for which the liability of a director is
expressly provided under Delaware law.

In addition, our bylaws provides that we must indemnify our officers and
directors to the fullest extent permitted by Delaware law for all expenses
incurred in the settlement of any actions against such persons in connection
with their having served as officers or directors.

Insofar as the limitation of, or indemnification for, liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers, or
persons controlling us pursuant to the foregoing, or otherwise, we have been
advised that, in the opinion of the Securities and Exchange Commission, such
limitation or indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable.

Dividends

We do not intend to pay dividends on our capital stock in the
foreseeable future.

Reports to Stockholders

We intend to furnish our stockholders with annual reports containing
audited financial statements as soon as practical after the end of each fiscal
year. Our fiscal year ends December 31.

Transfer Agent

We have appointed Continental Stock Transfer & Trust Company, 17
Battery Place, 8th Floor, New York, New York 10004 as transfer agent for our
common stock.

MARKET FOR COMMON EQUITY

There is no public trading market on which our common stock is traded.
We have engaged a broker/dealer to file a Form 211 with the National Association
of Securities Dealers ("NASD") in order to allow the quotation of our common
stock on the Over-the-Counter Bulletin Board (OTCBB). There is no assurance that
our common stock will be included on the OTCBB.

We can offer no assurance that an active public market in our shares
will develop.

Shares Eligible For Future Sale

We have 51,406,431 shares of common stock issued and outstanding, of
which 30,431,026 shares, together with 1,300,000 shares underlying outstanding
warrants, are being registered hereby and will be freely tradable shares by
persons other than our affiliates, as defined under Rule 144 under the
Securities Act, upon the effective date of the registration statement of which
this prospectus is a part. Commencing 90 days from the effective date, an
additional ______ of our issued and outstanding shares will be eligible for sale
under Rule 144.

In general, under Rule 144, as currently in effect, a person, or
persons whose shares are aggregated, who owns shares that were purchased from
us, or any affiliate, at least one year previously, including a person who may
be deemed our affiliate, is entitled to sell within any three month period, a
number of shares that does not exceed the greater of:

o 1% of the then outstanding shares of our common stock; or

o the average weekly trading volume of our common stock during the four
calendar weeks preceding the date on which notice of the sale is filed
with the Securities and Exchange Commission.

Sales under Rule 144 are also subject to manner of sale provisions,
notice requirements and the availability of current public information about us.
Any person who is not deemed to have been our affiliate at any time during the
90 days preceding a sale, and who owns shares within the definition of
"restricted securities" under Rule 144 under the Securities Act that were
purchased from us, or any affiliate, at least two years previously, is entitled
to sell such shares under Rule 144(k) without regard to the volume limitations,
manner of sale provisions, public information requirements or notice
requirements.

Future sales of restricted common stock under Rule 144 or otherwise or
of the shares which we are registering under this prospectus could negatively
impact the market price of our common stock. We are unable to estimate the
number of shares that may be sold in the future by our existing stockholders or
the effect, if any, that sales of shares by such stockholders will have on the
market price of our common stock prevailing from time to time. Sales of
substantial amounts of our common stock by existing stockholders could adversely
affect prevailing market prices.

LEGAL PROCEEDINGS

No legal proceedings are pending to which we or any of our property is
subject, nor to our knowledge are any such legal proceedings threatened.

In March 2004, we settled claims from a vendor for $250,000. We also
agreed to indemnify that vendor for up to approximately $460,000 plus 9%
interest from March 1, 2004, if we breach our warranty or representation of
financial information provided to the vendor. We provided for this settlement by
recording $250,000 in accounts payable and accrued expenses on the accompanying
balance sheet and a corresponding increase in our research and development
expenses in our accompanying 2003 statement of operations.

LEGAL MATTERS

Our counsel, Gottbetter & Partners, LLP, New York, New York, will pass
on the validity of the issuance of the shares to be sold by the selling
stockholders. The partners of Gottbetter & Partners, LLP, own 50,000 shares of
our common stock through Jackson Steinem, Inc., all of which are included for
sale in this prospectus.

EXPERTS

Our financial statements as of December 31, 2002 and December 31, 2003
have been included in this prospectus and in the registration statement in
reliance upon the report of Sherb & Co., LLP, independent registered certified
public accountants, appearing elsewhere in this prospectus, and upon the
authority of that firm as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have not previously been required to comply with the reporting
requirements of the Securities Exchange Act. However, once this registration
statement becomes effective we will be required to file quarterly and annual
reports and other information with the Securities and Exchange Commission.

We have filed with the SEC a registration statement on Form SB-2 to
register the securities offered by this prospectus. This prospectus is part of
that registration statement, and, as permitted by the SEC's rules, does not
contain all of the information in the registration statement. For additional
information about us and the securities offered under this prospectus, you may
refer to the registration statement and to the exhibits and schedules filed as a
part of the registration statement. You can review the registration statement
and its exhibits at the public reference facility maintained by the SEC at
Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. The registration statement is also available electronically on
the World Wide Web at http://www.sec.gov.

Financial Statements

Report of Independent Registered Public Accounting Firm...............................................F-2

Balance Sheet, December 31, 2003......................................................................F-3

Statement of Operations for the years ended December 31, 2003 and December 31, 2002...................F-4

Statement of Stockholders' Deficit for the period from January 1, 2002
to December 31, 2003..................................................................................F-5

Statement of Cash Flows for the years ended December 31, 2003 and December 31, 2002...................F-6

Notes to Financial Statements, December 31, 2003 and December 31, 2002................................F-7

Balance Sheet, September 30, 2004 (unaudited)........................................................F-17

Statements of Operations for the nine month period ended September 30, 2004 and 2003 (unaudited).....F-18

Statement of Cash Flows for the nine month period ended September 30, 2004 and 2003 (unaudited)......F-19

Notes to Financial Statements, September 30, 2004 and 2003 (unaudited)............................F-20-33

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying balance sheet of Optionable, Inc. as of
December 31, 2003 and the related statements of operations, stockholders'
deficit and cash flows for the years ended December 31, 2003 and 2002. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Optionable, Inc. as of December
31, 2003 and the results of their operations and their cash flows for the years
ended December 31, 2003 and 2002, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has incurred significant
losses and has a working capital deficiency as more fully described in Note 2.
These issues among others raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

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

New York, New York
September 1, 2004

F-2

OPTIONABLE, INC.
BALANCE SHEET
December 31, 2003

ASSETS

Current Assets:
Cash $ 63,041
Accounts receivable, net of provision for doubtful accounts of $47,092 102,837
-----------

Total current assets 165,878

Property and equipment, net of accumulated depreciation of $341,256 69,707
Other assets 1,607
-----------

Total assets $ 237,192
===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses $ 947,465
Note payable and related accrued interest to a related party 544,694
-----------
Total current liabilities 1,492,159

Notes payable and related accrued interest to a related party 5,573,431
-----------

Total liabilities 7,065,590

Stockholders' Deficit:
Preferred Stock; $.0001 par value, 5,000,000 shares authorized, none issued
and outstanding --
Common stock; $.0001 par value, 100,000,000 shares authorized,
45,096,430 issued and outstanding 4,510
Additional paid-in capital 2,698,938
Accumulated deficit (9,531,846)
-----------

Total stockholders' deficit (6,828,398)
-----------

Total liabilities and stockholders' deficit $ 237,192
===========

See Notes to Financial Statements.

F-3

OPTIONABLE, INC.
STATEMENTS OF OPERATIONS

For the year ended
December 31,
----------------------------
2003 2002
------------ ------------
Revenues $ 682,690 $ 1,959,117

Cost of revenues 838,660 1,226,500
------------ ------------

Gross profit (loss) (155,970) 732,617

Operating expenses:
Selling, general and administrative 2,304,632 1,188,299
Research and development 552,708 762,726
------------ ------------

Total operating expenses 2,857,340 1,951,025
------------ ------------

Operating loss (3,013,310) (1,218,408)
------------ ------------

Interest expense to related parties 238,991 172,487
------------ ------------

Net loss $ (3,252,301) $ (1,390,895)
============ ============

Basic net loss per common share $ (0.07) $ (0.03)
============ ============

Basic weighted average common
shares outstanding 45,096,430 45,096,430
============ ============

See Notes to Financial Statements.

F-4

OPTIONABLE, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM JANUARY 1, 2002 TO DECEMBER 31, 2003

Shares of Additional Total
Common Common Paid-in Accumulated Stockholders'
Stock Stock Capital Deficit Deficit
---------------- ------------ -------------- -------------- -----------------

Balance at January 1, 2002 45,096,430 $ 4,510 $2,698,938 $ (4,888,650) $ (2,185,202)

Net loss (1,390,895) (1,390,895)
---------------- ------------ -------------- -------------- -----------------
Balance at December 31, 2002 45,096,430 4,510 2,698,938 (6,279,545) (3,576,097)

Net loss (3,252,301) (3,252,301)
---------------- ------------ -------------- -------------- -----------------
Balance at December 31, 2003 45,096,430 $ 4,510 $2,698,938 $ (9,531,846) $ (6,828,398)
================ ============ ============== ============== =================

See Notes to Financial Statements.

F-5

OPTIONABLE, INC.
STATEMENTS OF CASH FLOWS

For the year ended
December 31,
--------------------------
2003 2002
----------- -----------

Cash flows from operating activities:
Net loss $(3,252,301) $(1,390,895)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 95,844 112,916
Provision for doubtful accounts 15,657 5,725
Changes in operating assets and liabilities
Accounts receivable 31,327 138,080
Accounts payable and accrued expenses 848,280 (36,599)
Accrued interest on notes payable to related parties 238,991 172,488
----------- -----------

Net cash used in operating activities (2,022,202) (998,285)
----------- -----------

Cash flows from investing activity:
Purchases of property and equipment (15,113) (102,908)
----------- -----------

Net cash used in investing activity (15,113) (102,908)
----------- -----------

Cash flows from financing activity:
Proceeds from issuance of notes payable to related parties 1,880,000 1,122,561
----------- -----------

Net cash provided by financing activity 1,880,000 1,122,561
----------- -----------

Net (decrease) increase in cash (157,315) 21,368

Cash, beginning of year 220,356 198,988
----------- -----------

Cash, end of year $ 63,041 $ 220,356
=========== ===========

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

See Notes to Financial Statements.

F-6

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 1-Organization and Description of Business

Optionable, Inc. (the "Company") was formed in Delaware in February 2000 and is
a trading service 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.

Note 2- Going Concern

These financial statements have been prepared on a going concern basis. The
Company has incurred an accumulated deficit of approximately $9.5 million since
inception and had negative cash flows from operations of approximately $2.0
million and $1.0 million during 2003 and 2002, respectively. The Company's
ability to continue as a going concern is dependent upon its ability to generate
profitable operations in the future by increasing its revenues and reducing its
expenses from historical levels and to secure the necessary financing to meet
its obligations and repay its liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be predicted
with any certainty at this time.

Management plans to provide for its capital needs during 2004 by issuing equity
securities. Additionally, management plans to increase its revenues by expanding
its customer base and by reducing its research and development expenses from
historical levels. There is no guarantee that management will be able to secure
such financing in 2004 and that it will expand its customer base or that such
financing and additional revenues from an expanded customer base will be
sufficient to meet its obligations and repay its liabilities arising from normal
business operations when they come due. These matters, among others, raise
substantial doubt about the ability of the Company to continue as a going
concern. These financial statements do not include any adjustments to the
amounts and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern.

Note 3- Summary of Significant Accounting Policies

Cash Equivalents

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

F-7

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 3- Summary of Significant Accounting Policies-Continued

Concentration of Credit Risks

The Company is subject to concentrations of credit risk primarily from cash and
cash equivalents and accounts receivable. 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. Two of the Company's customers accounted
for approximately 18% and 10%, respectively, of its accounts receivable at
December 31, 2003. No other customers accounted for more than 10% of its
accounts receivable at December 31, 2003.

Customer Concentration
Two of the Company's customers accounted for approximately 17% and 10%,
respectively, of its revenues during 2003 and two of the Company's customers
accounted for 11% and 11%, respectively, of its revenues during 2002. 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 financially
settled energy derivatives transaction fees.

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivables, accounts
payable and accrued expenses approximate their fair value due to their
short-term maturities. The carrying amount of notes payable and related accrued
interest approximate their fair value based on comparable interest rates the
company would obtain should it secure similar financing instruments with third
parties.

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. The Company believes that the current process for developing software
is essentially completed concurrently

F-8

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 3- Summary of Significant Accounting Policies-Continued

with the establishment of technological feasibility; accordingly, no software
development costs have been capitalized as of December 31, 2003.

Website Development Costs

The Company capitalizes website development costs in accordance with Emerging
Issues Task Force ("EITF") Issue No. 00-02, Accounting for Website Development
Costs. Website development costs are amortized on a straight-line basis over one
year.

Property and Equipment

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

Property and equipment consist of the following as of December 31, 2003:

Computer equipment and software $ 362,543
Office furniture and equipment 48,420
---------
410,963
Accumulated depreciation (341,256)
---------
$ 69,707
=========

Depreciation expense amounted to approximately $96,000 and $113,000 during 2003
and 2002, respectively.

Income Taxes

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

F-9

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 3- Summary of Significant Accounting Policies-Continued

Use of Estimates

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

Basic and Diluted Loss Per Share

Basic and diluted loss per share is based on the weighted average number of
common shares and common share equivalents outstanding. The outstanding options
are excluded from the loss per share computation 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.

Stock Splits

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

March 30, 2000 1,000 for 1

May 30, 2000 25 for 1

July 21, 2000 20 for 1

June 10, 2004 1.27 for 1

F-10

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 3- Summary of Significant Accounting Policies-Continued

Revenue Recognition

Revenue is recognized when earned. The Company's revenue recognition policies
are in compliance with the Securities and Exchange Commission's 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. The Company's revenues derive from a
certain predetermined fixed fee of the transactions it settles 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.

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 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.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at December 31, 2003 consist primarily of
legal fees payable to the Company's former general counsel of approximately
$615,000, a provision for settlement of obligations of $250,000 (see Note 8-
Legal Proceedings and Subsequent Events), accrued compensation of $22,000 and
other accrued trade payables of approximately $60,000.

F-11

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 3- Summary of Significant Accounting Policies-Continued

Recent Pronouncements

Management does not believe that recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying financial statements.

Note 4- Notes Payable to Related Parties

The Company issued two notes payable to its Chairman of the Board, who is also a
shareholder, in December 2000 and March 2001. Such notes payable amounted to
$3,722,561 at December 31, 2003. The notes payable bore interest at prime and
rates ranged from 3.43% to 4.58% during 2003 and 2002, which were also the
effective interest rates at December 31, 2003. The notes payable were unsecured.
Accrued interest under these notes amounted to approximately $470,000 at
December 31, 2003 and is included in the notes payable to related parties and
related accrued interest in the accompanying balance sheet. Furthermore, in
February 2003, the Chairman of the Board had also advanced $1,380,000 to the
Company under a prepaid commission agreement which provided for, among other
things, a 20% discount on all commission charged by the Company to its Chairman
of the Board. In March 2004, the Company consolidated all amounts due to its
Chairman of the Board under a Loan Agreement. The Loan Agreement provides that
the Company does not have to grant the aforementioned 20% discount on
commissions charged to its Chairman. It also provides that the note payable
issued under the Loan Agreement bears no interest and is payable on March 22,
2014. However, 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 to its Chairman of the Board up to
39.33% of the Capital Raise, up to $2,810,877, with the remaining balance and
accrued interest of 12 % from the date of the Capital Raise due on March 22,
2014. This note payable is unsecured.

The notes payable and related accrued interest to our Chairman of the Board is
as follows:

Notes payable: $3,722,561

Accrued interest on notes payable: 470,870

Prepaid Commission: 1,380,000
----------
$5,573,431
==========

In June 2003, the Company issued a $500,000 note payable to a related party, an
entity in which its Chairman of the Board is also the managing director. The
note payable bears interest at 20% and is payable by September 30, 2004. Such
note payable is unsecured. Accrued interest under this note amounted to
approximately $45,000 at December 31, 2003

F-12

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 4- Notes Payable to Related Parties-continued

and is included in the notes payable to related parties and related accrued
interest in the accompanying balance sheet. The Company has not paid principal
or interest under such note during 2003.

Interest expense amounted to approximately $ 239,000 and $172,000 during 2003
and 2002, respectively.

Note 5- Shareholders' Deficit

Stock Compensation Plan

The Company has terminated its Long-Term Incentive Plan in June 2004. Management
intends to adopt a new stock-based compensation plan in the near future.

The Company had granted 78,740 options under its Long-Term-Incentive Plan in
February 2003, which were outstanding and exercisable at December 31, 2003. The
exercise price per share of the options were $0.09. The remaining contractual
life of the options at December 31, 2003 was 9.17 years. The Company uses the
intrinsic value to account for its employee stock-based compensation
arrangements. No intrinsic value was attributed to the grant of options made in
2003. These options were cancelled in June 2004.

The following proforma 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 FAS 123. For purposes of the proforma
calculations, the fair value of each options was estimated at the date of grant
using the Black-Scholes model with the following assumptions used: risk-free
interest rate: 2.11%; dividend yield: none; volatility: none; expected lives: 3
years. No fair value was attributed to options granted during 2003. Accordingly,
no adjustment was made to the net loss as reported for proforma disclosure
purposes.

Common and Preferred Stock

The Company has issued 45,096,430 shares of common stock since inception.

Preferred Stock
The Company's Board of directors has authorized the issuance of up to 5,000,000
shares of preferred stock in one or more series and may determine the rights,
preferences, privileges and restrictions of these shares, including dividend,
conversion, voting rights, and terms of redemption and liquidation preferences
of such shares. No preferred shares have been issued as of December 31, 2003.

F-13

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 6- Commitments

The Company leases its executive offices under a 5-year leasing arrangement
providing a monthly base rent of $5,568. The minimum annual payments under such
commitment for the next five years are as follows:

Year Minimum Annual Payments
---- -----------------------
2004 $66,817
2005 66,817
2006 55,680
2007 --
2008 --

The Company's rental expense amounted to approximately $67,000 and $67,000
during 2003 and 2002, respectively.

Note 7-Income Taxes

Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the net deferred taxes, at December 31, are as follows:

2003 2002
----------- -----------
Deferred tax assets:
Net operating loss carryforward $ 3,273,328 $ 2,627,922
Less valuation allowance (3,273,328) (2,627,922)
----------- -----------
Total net deferred tax assets: $ -- $ --
=========== ===========

SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets
reported, if any, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Management has determined that a valuation allowance of $ 3,273,328 at December
31, 2003 is necessary to reduce the deferred tax assets to the amount that will
more likely than not realized. The change in the valuation allowance for 2003
and 2002 was approximately $650,000 and $480,000, respectively.

The Company has incurred net operating losses since inception. At December 31,
2003, the Company had a net operating loss carryforward amounting to
approximately $8.6 million for U.S. tax purposes that expire in various amounts
from 2020 through 2023.

F-14

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 7-Income Taxes-continued

The Company may have had a change of ownership as defined by the Internal
Revenue Code Section 382. As a result, a substantial annual limitation may be
imposed upon the future utilization of its net operating loss carryforwards. At
this point, the Company has not completed a change in ownership study and the
exact impact of such limitations are unknown.

The federal statutory tax rate reconciled to the effective tax rate for 2003 and
2002, respectively, is as follows:
2003 2002
-------- --------
Tax at U.S Statutory Rate: 35.0% 35.0%
State tax rate, net of federal benefits 5.7 5.7
Change in valuation allowance (40.7) (40.7)
-------- --------
Effective tax rate 0.0% 0.0%
======== ========

Note 8-Legal Proceedings and Subsequent Events

Legal Proceedings

In March 2004, the Company has settled claims from a vendor for $250,000. The
Company has also agreed to indemnify such vendor up to approximately $460,000
plus 9% interest from March 1, 2004 in the event the Company breaches its
warranty or representation of financial information provided to such vendor. The
Company has provided for this settlement by recording $250,000 in accounts
payable and accrued expenses on the accompanying balance sheet and a
corresponding increase in its research and development expenses in its
accompanying 2003 statement of operations.

In May 2004, the Company has settled outstanding professional fees of
approximately $663,000 due to its former counsel, of which approximately $62,000
were incurred in 2004. The Company has agreed to pay $425,000 in settlement of
such claims. Additionally, as part of the settlement, a partner of the Company's
former legal counsel's firm has acquired 375,000 shares of the Company's common
stock for $75,000 in September 2004. At December 31, 2003, the Company had
recognized approximately $601,000 of such outstanding professional fees in
accounts payable and accrued expenses on the accompanying balance sheet.

Other Subsequent Events

In September 2004, the Company issued 5,000,000 shares of its common stock for
gross proceeds of $1,000,000 in connection with a private placement. The Company
provided

F-15

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2003 and 2002

Note 8-Legal Proceedings and Subsequent Events-continued

registration rights to the holders of the shares issued in connection with such
private placement.

In March 2004, the Company consolidated the amounts due to its Chairman of the
Board (see Note 4-Notes payable to related parties).

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 in exchange for a share of revenues of the floor brokerage services of
the related party. The Company will pay such related party a minimum annual
fixed fee of $50,000 and assume all expenses directly incurred by the related
party associated floor brokerage services. Additionally, the Company will pay
such related party $1,525,000 on April 1, 2014. However, upon a Capital Raise,
the Company will pay up to 10.67% of the amount raised during the Capital Raise,
up to $762,500, to the related party, with the remaining principal and accrued
interest of 12 % from the date of the Capital Raise payable on April 1, 2014.

In April 2004, the Company secured a $100,000 credit facility with its Chairman
of the Board. The Company has drawn $50,000 under such credit facility.

The Company's board of directors has declared a stock split of 1.27 to 1,
effective June 10, 2004.

In June 2004, the Company cancelled the grant of 78,740 options made to a former
employee and replaced it with the issuance of 100,000 warrants. The warrants are
convertible in 100,000 shares of common stock at an exercise price of $0.20 per
share and expire in July 2010.

F-16

OPTIONABLE, INC.
BALANCE SHEET
September 30, 2004

(Unaudited)
ASSETS

Current Assets:
Cash $ 299,684
Accounts receivable, net of provision for doubtful accounts of $47,304 416,921
Due from related parties 275,198
Incentives receivable 374,299
-----------
Total current assets 1,366,102

Property and equipment, net of accumulated depreciation of $378,921 32,639
Other assets 2,639
-----------

Total assets $ 1,401,380
===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses $ 435,351
Due to stockholder 350,000
-----------
Total current liabilities 785,351

Due to stockholder, net of unamortized discount of $3,813,600 1,808,153
Due to related party, net of unamortized discount of $1,034,506 490,494
-----------
Total liabilities 3,083,998

Stockholders' Deficit:
Preferred Stock; $.0001 par value, 5,000,000 shares authorized, none issued
and outstanding at September 30, 2004 --
Common stock; $.0001 par value, 100,000,000 shares authorized,
51,356,431 issued and outstanding at September 30, 2004 5,136
Additional paid-in capital 7,781,636
Subscription receivable (252,000)
Accumulated deficit (9,217,390)
-----------

Total stockholders' deficit (1,682,618)
-----------

Total liabilities and stockholders' deficit $ 1,401,380
===========

See Notes to Financial Statements.

F-17

OPTIONABLE, INC.
STATEMENTS OF OPERATIONS

For the nine-month period ended
September 30,
----------------------------
2004 2003
------------ ------------
(Unaudited) (Unaudited)

Brokerage fees $ 1,984,758 $ 503,671
Incentives 374,717 --
------------ ------------
Net revenues 2,359,475 503,671

Cost of revenues 1,119,813 660,044
------------ ------------

Gross profit (loss) 1,239,662 (156,373)

Operating expenses:
Selling, general and administrative 937,378 1,113,975
Research and development 19,493 479,493
------------ ------------

Total operating expenses 956,871 1,593,468
------------ ------------

Operating income (loss) 282,791 (1,749,841)
------------ ------------

Other income (expense):
Gain on extinguishment of debt 238,282 --
Interest expense to related parties (206,617) (105,908)
------------ ------------
31,665 (105,908)

Net income (loss) $ 314,456 $ (1,855,749)
============ ============

Basic and diluted net income (loss) per common share $ 0.01 $ (0.04)
============ ============

Basic and diluted weighted average common
shares outstanding 45,729,397 45,096,430
============ ============

See Notes to Financial Statements.

F-18

OPTIONABLE, INC.
STATEMENTS OF CASH FLOWS

For the nine-month period ended
September 30,
------------------------------
2004 2003
-------------- --------------
(Unaudited) (Unaudited)

Cash flows from operating activities: Net income (loss) $ 314,456 $(1,855,749)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation 37,665 84,857
Amortization of debt discount 133,216 -
Forfeiture of officers' compensation 375,000 -
Gain on extinguishment of debt (238,282) -
Provision for doubtful accounts 212 5,725
Changes in operating assets and liabilities
Accounts receivable (314,296) 14,932
Due from related party (275,198) -
Incentives receivable (374,299) -
Other assets (1,032) (130)
Accounts payable and accrued expenses (273,829) 5,883
Accrued interest on notes payable to related parties 3,627 114,033
-------------- --------------

Net cash used in operating activities (612,760) (1,630,449)
-------------- --------------

Cash flows from investing activity:
Purchases of property and equipment (597) (9,765)
-------------- --------------

Net cash used in investing activity (597) (9,765)
-------------- --------------

Cash flows from financing activities:

Proceeds from issuance of common stock 1,000,000 -
Principal repayments of notes payable to related party (500,000) -
Due to shareholder 300,000 -
Proceeds from issuance of notes payable to related parties 50,000 1,450,000
-------------- --------------

Net cash provided by financing activities 850,000 1,450,000
-------------- --------------

Increase (decrease) in cash 236,643 (190,214)

Cash, beginning of period 63,041 220,356
-------------- --------------

Cash, end of period $ 299,684 $ 30,142
============== ==============

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

Cash paid for interest $ 69,972 $ -
============== ==============

Supplemental disclosures for non-cash financing activities:

Issuance of common stock and corresponding increase
in stock subscriptions receivable $ 252,000 $ -
============== ==============

See Notes to Financial Statements.

F-19

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

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

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 United States generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and the footnotes required by 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 nine months
ended September 30, 2004 are not necessarily indicative of the results that may
be expected for the fiscal year ending December 31, 2004.

F-20

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 2-Going Concern

These unaudited financial statements have been prepared on a going concern
basis. However, the Company has incurred an accumulated deficit of approximately
$9.2 million since inception and had negative cash flows from operations of
approximately $600,000 and $1.6 million, for the nine months ended September 30,
2004 and 2003, respectively. The Company's ability to continue as a going
concern is dependent upon its ability to generate profitable operations in the
future by increasing its revenues and reducing certain expenses from its
historical levels and to secure the necessary financing to meet its obligations
and repay its liabilities arising from normal business operations when they
become due. The outcome of these cannot be predicted with any certainty at this
time.

Management has provided for its capital needs during 2004 by issuing equity
securities generating gross proceeds of $1.0 million for the nine-month period
ended September 30, 2004. Management does not anticipate issuing equity or debt
securities in the foreseeable future. Additionally, management has increased its
revenues and operating income by approximately $1.9 million and $2.0 million to
$2.4 million and $282,000, respectively, during the nine month period ended
September 30, 2004 when compared to the prior year nine-month period of 2003.
Management plans to increase its revenues by expanding its customer base and
introducing its automated electronic trading system. There is no guarantee that
management will expand its customer base or that it will successfully introduce
its electronic trading system in the next twelve months. These matters, among
others, raise substantial doubt about the ability of the Company to continue as
a going concern. These financial statements do not include any adjustments to
the amounts and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern.

Note 3- 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.

F-21

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 3- Summary of Significant Accounting Policies-Continued

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. Three of the Company's customers accounted
for approximately 17%, 13% and 11%, respectively, of its accounts receivable at
September 30, 2004. No other customers accounted for more than 10% of its
accounts receivable at September 30, 2004.

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, who is also a shareholder, and by a former officer of the
Company, who is also a shareholder. The due from related party is not
collateralized.

Customer Concentration

Three of the Company's customers accounted for approximately 10%, 2%, and 5%,
respectively of its revenues during the nine-month period ended September 30,
2004 and 18%, 11%, and 10%, respectively, of its revenues during the nine-month
period ended September 30, 2003. 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.

F-22

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 3- Summary of Significant Accounting Policies-Continued

Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, accounts receivables, incentive
receivables, due from related party, accounts payable and accrued expenses
approximate their fair value due to their short-term maturities. The carrying
amount of notes payable to related party and due to related party approximate
their fair value based on comparable interest rates the Company would obtain
should it secure similar financing instruments with third parties.

Software Development Costs

Property and Equipment

Property and equipment consist of the following as of September 30, 2004:

Computer equipment and software $ 363,140
Office furniture and equipment 48,420
---------
411,560
Accumulated depreciation (378,921)
---------
$ 32,639
=========

Depreciation expense amounted to approximately $38,000 and $85,000 during the
nine-month periods ended September 30, 2004 and 2003, respectively.

F-23

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 3- Summary of Significant Accounting Policies-Continued

Income Taxes

Use of Estimates

Basic and Diluted Earnings per Share

Basic earnings per share are calculated by dividing income available to
shareholders 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 are excluded from the loss per share
computation for the nine-period ended September 30, 2003 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.

F-24

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 3- Summary of Significant Accounting Policies-Continued

Stock Splits

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

March 30, 2000 1,000 for 1

May 30, 2000 25 for 1

July 21, 2000 20 for 1

June 10, 2004 1.27 for 1

Revenue Recognition

The Company generally invoices its customers monthly, for all transactions which
have been executed during such month. 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
transactions submitted to the respective exchanges, the exchanges' published
revenues by type of transactions, and in the case of one exchange, the minimum
volume of transactions the Company is required to submit to be entitled to such
incentives. The Company has a written agreement with one of the exchanges.

Stock-Based Compensation

F-25

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 3- 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. We 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.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at September 30, 2004 consist primarily of
accrued compensation of approximately $349,000 and other accrued trade payables
of approximately $86,000.

Recent Pronouncements

Management does not believe that recently issued, but not yet effective
accounting pronouncements if currently adopted would have a material effect on
the accompanying financial statements.

Note 4-Due to Stockholder

The Company issued two notes payable to its Chairman of the Board, who is also a
stockholder, in December 2000 and March 2001. Such notes payable amounted to
$3,722,561 at December 31, 2003. The notes payable bore interest at prime and
rates ranged from 3.43% to 4.58% during 2004 and 2003. The notes payable were
unsecured. Furthermore, in February 2003, the Chairman of the Board had also
advanced $1,380,000 to the Company under a prepaid commission agreement which
provided for, among other things, a 20% discount on all commission charged by
the Company to its Chairman of the Board. In March 2004, the Company
consolidated all amounts due to its Chairman of the Board under a Loan
Agreement. The Loan Agreement provides that the Company does not have to grant
the aforementioned 20% discount on commissions charged to its Chairman. It also
provides that the note payable issued under the Loan Agreement bears no interest
and is payable on March 22, 2014. However, 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 to its
Chairman of the Board up to 39.33% of the Capital Raise, up to $2,810,877, with
the remaining balance and accrued interest of 12% from the date of the Capital
Raise due on March 22, 2014. This note payable is unsecured. After
restructuring, the Company owes approximately $5.6 million to the

F-26

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 4-Due to Stockholder-Continued

stockholder. The Company has recorded a discount on the due to shareholder of
approximately $3.9 million and a corresponding increase in additional paid-in
capital. The due to shareholder was discounted using the implied rate of 12%
over ten years. The amortization of such discount amounted to $105,000 during
the nine-month period ended September 30, 2004 and has been recorded as interest
expense to related parties in the accompanying statement of operations. The
remaining undiscounted amortization of discount on the due to stockholder
amounts to approximately $3.8 million as of September 30, 2004.

The amount due to stockholder at September 30, 2004 is as follows:

Due to stockholder before unamortized discount: $ 5,621,753

Original discount on due to stockholder: (3,918,391)

Amortization of discount 104,791
-----------
$ 1,808,153
===========

In June 2003, the Company issued a $500,000 note payable to a related party, an
entity in which its Chairman of the Board is also the managing director. The
note payable bears interest at 20% and is payable by September 30, 2004. Such
note payable was unsecured. The Company repaid the principal and related accrued
interest amounting to approximately $70,000 during the nine-month period ended
September 2004.

Interest expense, other than the amortization of discount, in connection with
the due to stockholder amounted to approximately $102,000 and $106,000 during
the nine-month period ended September 30, 2004 and 2003, respectively.

In February and March 2004, the Company's Chairman of the Board advanced the
Company $250,000 and $50,000, respectively, to finance the settlement amount
related to obligations with a former contractor and with the payment of certain
legal fees incurred in connection with the retention of their corporate counsel.
Such advances are non-interest bearing and are due on or before December 31,
2004. The Company repaid the advances of $250,000 and $50,000 in October 2004
and December 2004, respectively.

In April 2004, the Company secured a $100,000 credit facility with its Chairman
of the Board. The Company has drawn $50,000 under such credit facility. The
credit facility is non-interest bearing and is due on or before December 31,
2004. The Company repaid the credit facility of $50,000 in December 2004.

F-27

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 5-Other Related Party Transactions

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 will
pay such related party a minimum annual fixed fee of $50,000 and assume all
expenses directly incurred by the related party associated floor brokerage
services. Additionally, the Company will pay such related party $1,525,000 on
April 1, 2014. However, upon a Capital Raise, the Company will pay up to 10.67%
of the amount raised during the Capital Raise, up to $762,500, to the related
party, with the remaining principal and accrued interest of 12% from the date of
the Capital Raise payable on April 1, 2014. The Company has recorded a discount
on this due to related party of approximately $1.0 million in April 2004 and a
corresponding decrease in additional paid in capital. The payable to the related
party was discounted using the implied rate of 12% over ten years. The
amortization of such discount amounted to approximately $28,000 during the
nine-month period ended September 30, 2004 and has been recorded as interest
expense to related parties in the accompanying statement of operations. The
remaining undiscounted amortization of discount on the due to related party
amounts to approximately $1.0 million as of September 30, 2004.

The Company's share of revenues and expenses of the floor brokerage services
amounted to approximately $635,000 and $300,000, respectively during the
nine-month period ended September 30, 2004. The Company has received $60,000
from the related party in connection with such floor brokerage services during
the nine-month period ended September 30, 2004 and the related party owes
approximately $273,000 as of September 30, 2004.

The Company has recognized revenues of approximately $50,000 during the
nine-month period ended September 30, 2004 from two related parties, entities in
which its Chairman of the Board is also the managing director. Such related
parties owe to the Company approximately $12,000 as of September 30, 2004.

During April 2004, both the Chief Executive Officer and a shareholder and former
officer of the Company forfeited compensation of $375,000 resulting in a
correspondence increase in additional paid-in capital.

Effective April 1, 2004, the Company entered into an agreement providing for the
reimbursement of certain administrative expenses for services provided to a
related party, an entity owned by its chief executive officer and by a
shareholder and former officer. The Company charged an administrative fee of
$1,500 for the nine-month period ended September 30, 2004, all of which is
outstanding at September 30, 2004.

F-28

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 6-Other Transactions

The Company has recognized revenues of approximately $150,000 during the
nine-month period ended September 30, 2004 from two unrelated customers. These
customers used the services of the Company at the request of its Chairman of the
Board, who is also unrelated to the customers. Such customers owe to the Company
approximately $93,000 as of September 30, 2004.

Note 7- Stockholders' Deficit

Stock Compensation Plan

The Company has terminated its Long-Term Incentive Plan in June 2004.

The Company had granted 1,104,900 options under its Long-Term-Incentive Plan in
February 2003, which were outstanding and exercisable at December 31, 2003. The
exercise price per share of the options was $0.09. The remaining contractual
life of the options at December 31, 2003 was 9.17 years. The Company uses the
intrinsic value to account for its employee stock-based compensation
arrangements. No intrinsic value was attributed to the grant of options made in
2003. In June 2004, the Company cancelled the grant of 1,104,900 options made to
a former employee and replaced it with the issuance of 100,000 warrants. The
warrants are convertible in 100,000 shares of common stock at an exercise price
of $0.20 per share and expire in July 2010.

The following proforma 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 FAS 123. For purposes of the proforma
calculations, the fair value of each option was estimated at the date of grant
using the Black-Scholes model with the following assumptions used: risk-free
interest rate: 2.11%; dividend yield: none; volatility: none; expected lives: 3
years. No options were granted during the nine-month period ended September 30,
2004 and no value was attributed to the options granted during the period ended
September 30, 2003. Accordingly, no adjustment was made to the net loss as
reported for proforma disclosure purposes.

During November 2004, the Company adopted the 2004 Stock Option Plan ("2004
Plan"). The 2004 Plan allows for the grant of both incentive stock options and
nonstatutory stock options. The 2004 Plan may be administered, interpreted and
constructed by the Board of Directors or a compensation committee. The maximum
number of shares of common stock which may be issued pursuant to options granted
under the 2004 Plan may not exceed 7,500,000 shares. During December 2004, the
Company granted 780,250 options

F-29

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 7- Stockholders' Deficit-Continued

to its employees and directors under the 2004 Plan. All of the options are
exercisable at $0.20 per share.

If any options granted under the 2004 Plan expires or terminates 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.

Warrants

In June 2004, the Company issued warrants to a customer. The warrants are
exercisable up to 300,000 shares of common stock at an exercise price of $0.20
per share and expire in June 2007. The warrants are exercisable in three
tranches of up to 100,000 warrants, if certain trading milestones are met during
three six-month periods following the issuance of such warrants. The Company
intends to cancel such warrants. None of the warrants are exercisable as of
September 30, 2004. No value was attributed to such warrants as of September 30,
2004.

In June and July 2004, the Company issued warrants to one of its shareholders.
The warrants are exercisable up to 1,200,000 shares of common stock at an
exercise price of $0.20 per share and expire in June 2007. The warrants are
exercisable in six tranches of up to 200,000 warrants if certain trading
milestones are met during three six-month periods following the issuance of such
warrants. None of the warrants are exercisable as of September 30, 2004. No
value was attributed to such warrants as of September 30, 2004.

F-30

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 7- Stockholders' Deficit-Continued

Common and Preferred Stock

Common Stock

In September 2004, the Company issued 5,000,000 shares of its common stock for
gross proceeds of $1,000,000 in connection with a private placement.
Additionally, the Company has issued 1,260,000 shares of its common stock which
has been subscribed as of September 30, 2004. The Company provided registration
rights to the holders of the shares issued in connection with such private
placement.

Preferred Stock

The Company's Board of directors has authorized the issuance of up to 5,000,000
shares of preferred stock in one or more series and may determine the rights,
preferences, privileges and restrictions of these shares, including dividend,
conversion, voting rights, and terms of redemption and liquidation preferences
of such shares. No preferred shares have been issued as of September 30, 2004.

Note 8- Commitments

Year Minimum Annual Payments
---- -----------------------
2004 $16,704
2005 66,817
2006 55,680
2007 --
2008 --

The Company's rental expense amounted to approximately $50,000 and $50,000
during the nine-month period ended September 30, 2004 and 2003, respectively.

F-31

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 9-Income Taxes

2004 2003
----------- -----------
Deferred tax assets:
Net operating loss carryforward $ 2,610,550 $ 2,627,922
Less valuation allowance (2,610,550) (2,627,922)
----------- -----------
Total net deferred tax assets: $ -- $ --
=========== ===========

SFAS No. 109 requires a valuation allowance to reduce the deferred tax assets
reported, if any, based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Management has determined that a valuation allowance of $ 2,610,550 at September
30, 2004 is necessary to reduce the deferred tax assets to the amount that will
more likely than not be realized. The change in the valuation allowance for the
nine-month period ended September 30, 2004 and 2003 was approximately $17,000
and $480,000, respectively.

The Company has incurred net operating losses since inception, with the
exception of its nine-month period ended September 30, 2004. At September 30,
2004, the Company had a net operating loss carryforward amounting to
approximately $8.0 million for U.S. tax purposes that expire in various amounts
from 2020 through 2023. The Company may have had a change of ownership as
defined by the Internal Revenue Code Section 382. As a result, a substantial
annual limitation may be imposed upon the future utilization of its net
operating loss carryforwards. At this point, the Company has not completed a
change in ownership study and the exact impact of such limitations is unknown.

The federal statutory tax rate reconciled to the effective tax rate for the
nine-month period ended September 30, 2004 and 2003, respectively, is as
follows:
2004 2003
-------- --------
Tax at U.S Statutory Rate: 35.0% 35.0%
State tax rate, net of federal benefits 5.7 5.7
Change in valuation allowance (40.7) (40.7)
-------- --------
Effective tax rate 0.0% 0.0%
======== ========

F-32

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 and 2003
(Unaudited)

Note 10-Legal Proceedings

In March 2004, the Company settled claims from a vendor for $250,000. The
Company has also agreed to indemnify such vendor up to approximately $460,000
plus 9% interest from March 1, 2004 in the event the Company breaches its
warranty or representation of financial information provided to such vendor. The
Company had provided for this settlement by recording $250,000 in accounts
payable and accrued expenses as of December 31, 2003. The Company believes it
has not breached its warranty or representations of its financial information.
Accordingly, the Company does not provide for additional provision related to
this matter.

In May 2004, the Company settled outstanding professional fees of approximately
$663,000 due to its former counsel, of which approximately $62,000 were incurred
in 2004. The Company has agreed to pay $425,000 in settlement of such claims,
which was paid in September 2004. Additionally, as part of the settlement, a
partner of the Company's former legal counsel's firm has acquired 375,000 shares
of the Company's common stock for $75,000 in September 2004. This settlement
generated a gain on settlement of obligations of approximately $238,000 which is
included in other income for the nine-month period ended September 30, 2004.

Note 11-Subsequent Events

During October 2004, the Company issued 50,000 shares of its common stock to a
consultant in connection with a private placement. The shares were valued at
$0.20 per share.

During December 2004, the Company granted 780,250 stock options to its employees
and directors under the 2004 Stock Option Plan. All of the options are
exercisable at $0.20 per share.

F-33

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

Article Seventh of our Certificate of Incorporation, and Article VII of
our By-laws, respectively, provide for the indemnification of our directors and
officers to the fullest extent permitted by the Delaware General Corporation Law
("DGCL".

Section 145 of the DGCL permits a corporation, under specified
circumstances, to indemnify its directors, officers, employees or agents against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by them in connection with any
action, suit or proceeding brought by third parties by reason of the fact that
they were or are directors, officers, employees or agents of the corporation, if
such directors, officers, employees or agents acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reason to believe their conduct was unlawful. In a derivative action, i.e., one
by or in the right of the corporation, indemnification may be made only for
expenses actually and reasonably incurred by directors, officers, employees or
agents in connection with the defense or settlement of any action or suit, and
only with respect to a matter as to which they shall have acted in good faith
and in a manner they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors, officers, employees or
agents are fairly and reasonably entitled to indemnity for such expenses despite
such adjudication of liability.

The Company's Certificate of Incorporation contains a provision which
eliminates, to the fullest extent permitted by the DGCL, director liability for
monetary damages for breaches of the fiduciary duty of care or any other duty as
a director.

Item 25. Other Expenses of Issuance and Distribution.

II-1

Item Amount Payable by the Company

SEC Registration Fee $ 799
Printing and Engraving $
Legal Fees $ 50,000
Directors' and Officers' Liability Insurance
Accounting Fees $ 10,000
Miscellaneous Expenses $ 10,000
----------
Total $

Item 26. Recent Sales of Unregistered Securities.

In June 2004, the Company cancelled the grant of 1,104,900 options
made to a former employee and replaced it with the issuance of 100,000 warrants.
The warrants are convertible in 100,000 shares of common stock at an exercise
price of $0.20 per share and expire in July 2010. This issuance was exempt from
registration pursuant to the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended.

In June 2004, the Company issued warrants to a customer. The warrants
are exercisable up to 300,000 shares of common stock at an exercise price of
$0.20 per share and expire in June 2007. The warrants are exercisable in three
traunches of up to 100,000 warrants, if certain trading milestones are made
during three six-month periods following the issuance of such warrants. This
issuance was exempt from registration pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.

In June and July 2004, the Company issued warrants to one of its
stockholders. The warrants are exercisable up to 1,200,000 shares of common
stock at an exercise price of $0.20 per share and expire in June 2007. The
warrants are exercisable in six traunches of up to 200,000 warrants if certain
trading milestones are met during three six-month periods following the issuance
of such warrants. None of the warrants are exercisable as of September 30, 2004.
This issuance was exempt from registration pursuant to the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended.

As of September 2004, the Company sold 5,000,000 shares of its common
stock in a private placement at a purchase price of $.20 per share for gross
proceeds to the Company of $1,000,000. Additionally, the Company has issued
1,260,000 shares of its common stock which has been subscribed as of September
30, 2004 pursuant to the private placement. The private placement was exempt
from the registration requirements of the Securities Act of 1933 by virtue of
Section 4(2) under that Act and Rule 506 of Regulation D promulgated by the
Securities and Exchange Commission. The common stock was placed with accredited
investors, as such term is defined in Regulation D.

II-2

On October 28, 2004, the Company issued 50,000 shares of its common
stock to Jackson Steinem, Inc., the beneficial owner of which is Adam S.
Gottbetter of Gottbetter & Partners, LLP, counsel to the Company. The shares
were issued in consideration of non-legal services rendered and were valued at
$.20 per share.

During December 2004 the Company granted 780,250 stock options to its
employees and directors under the 2004 Stock Option Plan. All of the options are
exercisable at $.20 per share. 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 27. Exhibits.

Exhibit No. Description

3(i)(a) Certificate of Incorporation of Optionable, Inc.,
dated February 4, 2000.

3(i)(b) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated March 30,
2000.

3(i)(c) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated May 31, 2000.

3(i)(d) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated July 21,
2000.

3(i)(e) Corrected Certificate of Amendment to the
Certificate of Incorporation of Optionable, Inc.,
dated January 31, 2003.

3(i)(f) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated June 9, 2004.

3(ii) Amended and Restated By-laws of Optionable, Inc.

*5 Opinion of Gottbetter & Partners, LLP

10(i) Lease Agreement between 24 South Third Avenue Corp.
and 60 3rd Ave. Corp., as Lessor, and Optionable,
Inc., as Lessee, dated October 3, 2001.

10(ii) Master Services Agreement with Capital Energy
Services LLC, dated April 1, 2004 including the
Consulting Agreement as a part thereof and Addendum,
dated October 7, 2004

*10(iii) Options Order Flow Agreement, dated July 1, 2004,
between the Company and Intercontinental Exchange,
Inc.

10(iv)(a) Employment Agreement, as amended, between the Company
and Edward J. O'Connor.

10(iv)(b) Employment Agreement between the Company and Kevin P.
Cassidy.

10(iv)(b)(I) Termination of Employment Agreement between the Company
and Kevin P. Cassidy.

II-3

Exhibit No. Description

10(v)(a) Optionable, Inc. 2004 Stock Option Plan.

10(v)(b) Nonstatutory Stock Option Agreement, dated as of
December 3, 2004, between the Company and Yechiel
Abraham Zucker.

10(v)(c) Nonstatutory Stock Option Agreement, dated as of
December 3, 2004, between the Company and Albert
Helmig.

10(vi) Prepaid Commission Agreement, dated February 3, 2003,
between the Company and Mark Nordlicht.

10(vii)(a) Revolving Credit Facility Agreement, dated June 5,
2003, between the Company and Platinum Value Arbitrage
Fund LP.

10(vii)(b) $500,000 Revolving Promissory Note from the
Company to Platinum Value Arbitrage Fund LP dated June
5, 2003.

10(viii) Prepaid Commission Agreement, dated June 9, 2003,
between the Company and Platinum Partners Value
Arbitrage Fund LLP.

10(ix)(a) Loan Agreement, dated February 13, 2004, between
the Company and Mark Nordlicht.

10(ix)(b) $250,000 Promissory Note, dated February 13, 2004,
from the Company to Mark Nordlicht.

10(ix)(c) $250,000 Promissory Note Extension Agreement,
dated September 9, 2004.

10(x)(a) Loan Agreement, dated March 8, 2004, between the
Company and Mark Nordlicht.

10(x)(b) $50,000 Promissory Note, dated March 8, 2004, from
the Company to Mark Nordlicht.

10(x)(c) $50,000 Promissory Note Extension Agreement, dated
September 9, 2004.

10(xi)(a) Loan Agreement, dated March 22, 2004, between the
Company and Mark Nordlicht.

10(xi)(b) $5,621,753.18 Promissory Note, dated March 22,
2004, from the Company to Mark Nordlicht

10(xii)(a) Revolving Credit Facility Agreement, dated April
15, 2004, between the Company and Mark Nordlicht.

10(xii)(b) $50,000 Promissory Note, dated April 15, 2004,
from the Company to Mark Nordlicht.

II-4

Exhibit No. Description

*23(i) Consent of Gottbetter & Partners, LLP (included in its
opinion filed herewith as Exhibit 5).

23(ii) Consent of Sherb & Co., LLP

24 Powers of Attorney(included on signature page)

* To be filed by amendment.

Item 28. Undertakings.

The Registrant undertakes to:

(1) File, during any period in which it offers or sales securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in the volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424 (b) if, in
the aggregate, the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and

(iii) Include any additional or changed material information
to the plan of distribution.

(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at then end of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933, may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the

II-5

payment by the small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
small business issuer will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

II-6

SIGNATURES

In accordance with the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements of
filing on Form SB-2 and authorized this registration statement to be signed on
its behalf by the undersigned, in the City of Briarcliff Manor, State of New
York on December 22, 2004.

By: /s/ Edward J. O'Connor
------------------------------------------
Edward J. O'Connor, Chief Executive Officer

Each person whose signature appears below hereby authorizes Edward J. O'Connor
and Mark Nordlicht, and each of them, with full power of substitution and full
power to act without the others, his true and lawful attorney-in-fact and agent
in his name, place and stead, to execute in the name and on behalf of each such
person, individually and as a director of Optionable, Inc., a Delaware
corporation (the "Company"), and to file, the Registration Statement of the
Company on Form SB-2 (the "Registration Statement"), and any and all amendments
to the Registration Statement, including any and all post-effective amendments.

In accordance with the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated:

Signature and Title

/s/ Edward J. O'Connor
- -----------------------------------------------
Edward J. O'Connor, December 22, 2004
President, Chief Executive Officer and Director
(principal executive officer)

/s/ Marc-Andre Boisseau
- -----------------------------------------------
Marc-Andre Boisseau December 22, 2004
Chief Financial Officer (principal financial
and accounting officer)

/s/ Mark Nordlicht
- -----------------------------------------------
Mark Nordlicht, Director December 22, 2004

/s/ Albert Helmig
- ----------------------------------------------
Albert Helmig, Director December 22, 2004

II-7

OPTIONABLE, INC.
EXHIBIT INDEX

Exhibit No. Description

3(i)(a) Certificate of Incorporation of Optionable, Inc.,
dated February 4, 2000.

3(i)(b) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated March 30,
2000.

3(i)(c) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated May 31, 2000.

3(i)(d) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated July 21,
2000.

3(i)(e) Corrected Certificate of Amendment to the
Certificate of Incorporation of Optionable, Inc.,
dated January 31, 2003.

3(i)(f) Certificate of Amendment to the Certificate of
Incorporation of Optionable, Inc., dated June 9, 2004.

3(ii) Amended and Restated By-laws of Optionable, Inc.

*5 Opinion of Gottbetter & Partners, LLP

10(i) Lease Agreement between 24 South Third Avenue Corp.
and 60 3rd Ave. Corp., as Lessor, and Optionable,
Inc., as Lessee, dated October 3, 2001.

10(ii) Master Services Agreement with Capital Energy
Services LLC, dated April 1, 2004 including the
Consulting Agreement as a part thereof and Addendum,
dated October 7, 2004.

*10(iii) Options Order Flow Agreement, dated July 1, 2004,
between the Company and Intercontinental Exchange,
Inc.

10(iv)(a) Employment Agreement, as amended, between the Company
and Edward J. O'Connor.

10(iv)(b) Employment Agreement between the Company and
Kevin P. Cassidy.

10(iv)(b)(I) Termination of Employment Agreement between the Company
and Kevin P. Cassidy.

10(v)(a) Optionable, Inc. 2004 Stock Option Plan.

10(v)(b) Nonstatutory Stock Option Agreement, dated as of
December 3, 2004, between the Company and Yechiel
Abraham Zucker.

10(v)(c) Nonstatutory Stock Option Agreement, dated as of
December 3, 2004, between the Company and Albert
Helmig.

10(vi) Prepaid Commission Agreement, dated February 3, 2003,
between the Company and Mark Nordlicht.

10(vii)(a) Revolving Credit Facility Agreement, dated June
5, 2003, between the Company and Platinum Value
Arbitrage Fund LP.