As filed with the Securities and Exchange Commission on May 3, 2005

Registration No. 333-121543

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3
TO

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. |_|

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 May 3, 2005

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 have our
common stock quoted on the over-the-counter bulletin board operated by the
National Association of Securities Dealers, Inc. (OTCBB). The Selling
Stockholders will sell their shares from time to time at $0.20 per share until
our shares are quoted on the OTCBB and thereafter at prevailing or privately
negotiated prices. There is no assurance that our common stock will be included
on the OTCBB.

INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK. SEE RISK FACTORS
BEGINNING ON PAGE 4.

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

PROSPECTUS SUMMARY ...........................................................3
RISK FACTORS .................................................................4
USE OF PROCEEDS .............................................................11
SELLING STOCKHOLDERS ........................................................12
CAPITALIZATION ..............................................................14
PLAN OF DISTRIBUTION ........................................................15
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS ..................17
DESCRIPTION OF BUSINESS .....................................................21
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS ................25
EXECUTIVE COMPENSATION ......................................................26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ..............27
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS ........................29
DESCRIPTION OF SECURITIES ...................................................31
MARKET FOR COMMON EQUITY ....................................................32
LEGAL PROCEEDINGS ...........................................................34
LEGAL MATTERS ...............................................................34
EXPERTS .....................................................................34
WHERE YOU CAN FIND ADDITIONAL INFORMATION ...................................34

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 the first half of 2005. We also
believe that our customers will 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 provide the following services:

o OTC commodity derivatives brokerage, which is to facilitate the trade of
energy derivatives, such as Natural Gas options and swaps between
counterparties. These derivatives are financially settled, and lock in a
price for the underlying derivative at a specified price or price range
within a specified period of time. Since they are financially settled, no
underlying product is delivered; instead, the transaction is settled
financially between the counterparties or the exchange;

o commodity derivatives services on the floor of the New York Mercantile
Exchange (the "NYMEX") (also known as "Floor" or "Open Outcry" brokerage),
which is to facilitate the trade of energy futures and options between
counterparties and was launched in April 2004. Such services are provided
through an affiliate, Capital Energy Services LLC ("CES");

o software development and deployment of electronic brokerage platform,
which is to automate the trading of energy derivatives between
counterparties .

Generally, the nature and mechanics of our business is to inquire of our clients
needs in the trade of energy options, swaps, and futures. Once we understand
their needs: in the case of NYMEX futures or options, the trade is presented on
the NYMEX through CES; and in the case of OTC swaps and options, we inquire of
other clients whether they are interested in participating in such transaction.
Once the counterparties agree on a certain trade, we match the counterparties
and consummate the trade by (i) in the case of a bilateral OTC trade, by
confirming the details of the executed trade with both counterparties or (ii) in
the case of a cleared trade, by submitting such trade to an exchange.

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. 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. They 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.

We generate revenues by charging commission fees based on the transactions we
broker on behalf of our clients. We also receive incentives from the
Intercontinental Exchange ("ICE") and the New York Mercantile Exchange
("NYMEX"). 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. Furthermore, we generate revenues from CES floor
brokerage operations, which are commission fees based on transactions they
broker on behalf of their clients. In return for such floor brokerage revenues
from CES, we assume all associated expenses incurred by CES, including brokerage
commissions paid by CES to its employees. We anticipate that revenues generated
from OPEX services will be earned similarly to the method by which we generate
revenues when providing voice-brokerage services.

We are not registered as a securities broker-dealer.

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. Our website is www.optionable.com.

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.

Our officers and directors beneficially own approximately 46.7% of our issued
and outstanding common stock.

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

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

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

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

We have a history of operating losses that are likely to continue in the future.
While we had net income of $483,773 for the year ended December 31, 2004, we had
a net loss of $3,252,301 for the year ended December 31, 2003. Our accumulated
deficit was approximately $9.0 million as at December 31, 2004. Our auditors
have included an explanatory paragraph in their Report included in our audited
financial statements for the years ended December 31, 2004 and 2003 to the
effect that our significant losses from operations raise substantial doubt about
our ability to continue as a going concern. Because these losses were sustained
in the businesses in which we are now engaged, and we currently intend to enter
into a new line of business through the launch of our OPEX offering, you may
find it difficult to evaluate our business and its prospects.

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

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

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

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

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

We have incurred net losses quarterly from inception, although we had a small
net profit for the three months ended December 31, 2004. We may continue to
incur net losses for the foreseeable future, and we can not assure you that we
will be successful in reaching or maintaining positive cash flow and profitable
operations. Accordingly, our ability to operate our current business and
implement OPEX may be hampered by negative cash flows and liquidity problems in
the future, and the value of our stock may decline as a result. In the past, we
suspended the development and implementation of OPEX for a year, in part because
of our negative cash flow.

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

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

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

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

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

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

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

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

In March 2004, we settled claims from a software developer who had been engaged
in the development of our OPEX system for $250,000. We also agreed to indemnify
this vendor up to approximately $460,000 plus 9% interest from March 1, 2004 in
the event we breach any warranty or representation of financial information
provided to such vendor. Although we do not believe we have breached any
warranty or representation of our financial information, a judicial
determination that we have so breached would have a significant adverse
financial impact on us.

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

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

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

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

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

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

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

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

o acquire and license leading technologies;

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 Exchange ("ICE") and the New
York Mercantile Exchange (NYMEX) which accounted for 17% of our 2004 revenue.
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 $1.0
million during 2004. We depend on our relationship with Capital Energy Services
(CES) to maintain or increase the profitability of such operations. Edward J.
O'Connor, our President and a director, is a 50% shareholder of CES. Kevin P.
Cassidy, our Chief Executive Officer until March 31, 2004 and a current
stockholder, is the Managing Director of CES. To maintain these floor brokerage
operations, CES may need to provide certain financial guarantees to NYMEX or
other exchanges. CES may not have the resources to provide such financial
guarantees and we may not be able to assist CES financially. Additionally, CES
may be prevented from trading based on certain government regulations. If CES
loses its ability to trade on NYMEX or other exchanges, we cannot maintain our
floor brokerage operations. If we are unable to maintain our floor brokerage
operations, our revenues will decrease and it would adversely impact our
financial condition.

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

We rely heavily on the services of our technical staff and on the services of
consultants. 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.
In the OTC natural gas market, our competitors include Amerex Natural Gas Ltd.,
Choice Energy LP, G.A. Options, MAN Financial, Inc. and Tullet Natsource, Inc.
In the NYMEX natural gas market, our competitors include Clarion Trading, SCS
Trading Corp., NOVA Trading and ICAP Energy. When we implement our OPEX system,
we anticipate that its potential competitors will include the New York
Mercantile Exchange, Intercontinental Exchange, eSpeed and the Chicago
Mercantile Exchange.

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

Dependence on outside clearinghouses for increased revenue.

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

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 while maintaining our status as an "exempt commercial market", the
success of this plan is subject to market forces outside of our control. At
present, more than 90% of our revenues 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.
To the extent we have fewer financial resources available to us than our
competitors we may not be able to attract and retain a sufficient number of
qualified personnel. The loss of the services of any of our management or other
key employees and our inability to attract and retain other necessary personnel
could have a material adverse effect on our financial condition, operating
results, and cash flows.

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.

We could become subject to increased governmental and organizational regulation.

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

RISKS RELATED TO OUR FINANCIAL CONDITION

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

We have a significant amount of debt. As of December 31, 2004, we had
approximately $2.8 million of debt, a substantial portion of which is due to our
Chairman, Mark Nordlicht.

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

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

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

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

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

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

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

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

We may incur substantial additional indebtedness in the future. Our incurrence
of additional indebtedness would intensify the risks described above.

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 $9.0 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, to secure the
necessary financing to meet our obligations, and repay our liabilities arising
from normal business operations when they become due. Substantially all of our
debt financing has been provided to us in the past by our Chairman, Mark
Nordlicht. Mr. Nordlicht has not committed himself to providing any additional
financing in the future, should we require it. We cannot assure you that
financing from other sources, whether from external sources or related parties,
will be available if needed or on favorable terms. In addition, 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 $1,252,000 for the year ended December 31, 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 $2.8 million and $3.5 million to $3.5 million and $484,000,
respectively, during 2004, when compared to the prior year. 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 for working capital, general corporate purposes and continued
development of our OPEX product.

SELLING STOCKHOLDERS

The following table provides certain information with respect to the beneficial
ownership of our common stock known by us as of March 15, 2005 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 March 15, 2005, or 51,406,431shares, together with securities
exercisable or convertible into shares of our common stock owned by that person
at March 15, 2005 which are exercisable or convertible within 60 days of March
15, 2005. 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.

With respect to two selling stockholders (Colbart Birnet L.P. and Rory Maton),
each of which is an affiliate of a broker-dealers, such selling stockholders
have informed us that they purchased the shares of our common stock offered by
this prospectus in the ordinary course of business, and that at the time of
purchase of those shares, they did not have any agreements, understandings or
arrangements with any persons, directly or indirectly, to distribute the shares
of our common stock offered hereby.

Percentage
Shares of Common Stock Beneficially Owned Ownership
------------------------------------------------- ------------------------
Number of
Before Shares After Before After
Name of Beneficial Owner Offering Being Sold Offering Offering (1) Offering
- ------------------------------------------- -------- ---------- -------- ------------ --------

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

Steel Style Sales, Inc.(2) 4,451,350 4,451,350 0 8.66 0

East Holdings LLC(3) 4,318,000 4,318,000 0 8.40 0

Ridgecrest Capital Corp.(4) 3,904,158 441,728 3,462,430 7.55 6.74

Jules Nordlicht(5) 2,190,750 2,190,750 0 4.26 0

The ML Investment Trust(6) 2,159,000 2,159,000 0 4.20 0

Avon Road Associates(7) 2,159,000 2,159,000 0 4.20 0

TVI Investments Limited Liability Company(8) 2,159,000 2,159,000 0 4.20 0

Pierpont Capital Corp., Inc.(9) 3,105,000 3,105,000 0 3.89 0

Yechiel Abraham Zucker(10) 1,746,250 197,576 1,548,674 3.40 3.01

Sheila Frantz 250,000 250,000 0 * 0

Kathleen O'Connor(11) 901,929 102,047 799,882 1.75 1.55

Erin O'Connor(12) 901,929 102,047 799,882 1.75 1.55

AYD Equity Group, Ltd.(13) 95,250 10,777 84,473 * *

Kerry Cassidy(14) 113,665 113,665 0 * 0

Timothy Higgins(15) 31,750 31,750 0 * 0

Lauren Defino(16) 31,750 31,750 0 * 0

Howard Feder(17) 125,000 125,000 0 * 0

Regalian Properties (Provincial) Limited(18) 500,000 500,000 0 * 0

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

Howard Moher 250,000 250,000 0 * 0

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

Magpie Investments Ltd.(19) 125,000 125,000 0 * 0

Percentage
Shares of Common Stock Beneficially Owned Ownership
------------------------------------------------ ------------------------
Number of
Before Shares After Before After
Name of Beneficial Owner Offering Being Sold Offering Offering (1) Offering
- ------------------------------------------- -------- ---------- -------- ------------ --------

Heather C. Frantz(20) 1,236,250 1,236,250 0 2.40 0

Eli Lerner 250,000 250,000 0 * 0

Shekel Hakodesh(21) 500,000 500,000 0 * 0

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

Colbart Birnet L.P.(22) 500,000 500,000 0 * 0

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

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

Kenmore Associates LLC(23) 500,000 500,000 0 * 0

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

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

Chesed Congregations of America(24) 250,000 250,000 0 * 0

Karen Hoffman 10,000 10,000 0 * 0

Kevin DeAndrea(25) 125,000 125,000 0 * 0

Megan M. Foley(26) 500,000 500,000 0 * 0

Jackson Steinem, Inc.(27) 50,000 50,000 0 * 0

Rory Maton 317,500 317,500 0 * 0

Rebecca Lang 158,750 158,750 0 * 0

Joel Shandelman(28) 100,000 100,000 0 * 0

* Less than one percent (1%).

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

(2) The beneficial owners of Steel Style Sales, Inc. are Brian M Plotkin and
Steven M. Plotkin.

(3) The beneficial owner of East Holdings, LLC is Harry Adler.

(4) Edward O'Connor is a director of the Company, our CEO, President and
Treasurer and is the beneficial owner and Vice President of Ridgecrest Capital
Corp.

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

(6) The beneficial owner of The ML Investment Trust is Michael Landau.

(7) The beneficial owner of Avon Road Associates is Moshe Wagh.

(8) The beneficial owner of TVI Investments Limited Liability Company is Drew D.
Markson.

(9) Kevin P. Cassidy, our former Chief Executive Officer, is a stockholder of
Pierpont Capital Corp., Inc. Includes 1,200,000 shares to be issued to Pierpont
Capital Corp. upon the exercise of common stock purchase warrants exercisable at
$0.20 per share. Only 100,000 of these warrants were exercisable at December 22,
2004 or within 60 days thereafter. Although all shares underlying these warrants
are being registered hereby, only 100,000 shares are deemed to be beneficially
owned by the holder.

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

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

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

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

(14) Kerry Cassidy is the daughter of Kevin Cassidy.

(15) Timothy Higgins is the nephew of Kevin Cassidy

(16) Lauren Defino is the niece of Kevin Cassidy.

(17) Howard Feder is a former employee of ours.

(18) The beneficial owners of Regalian Properties (Provincial) Limited are
Jonathan L. Goldstone, Ervin Landau and Diana Darlington.

(19) The beneficial owner of Magpie Investments LTD. is Gary Leibler.

(20) Heather C. Frantz is the sister-in-law of Kevin Cassidy and the daughter of
Sheila Frantz.

(21) Shekel Hakodesh is a charitable corporation.

(22) The beneficial owners of Colbart Birnet L.P. are Ezra Birnbaum, Eli Levitan
and Menachem Lifshitz.

(23) The beneficial owners of Kenmore Associates LLC are Ralph Herzka, Aaron
Birnbaum, Jeff Weinberg and Avi Weinstock.

(24) Chesed Congregations of America is a charitable corporation.

(25) Kevin DeAndrea is an employee of Capital Energy Services. Edward J.
O'Connor, our President and a director, is a 50% shareholder of CES.

(26) Megan M. Foley is the sister of Kevin Cassidy.

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

(28) Includes 100,000 shares to be issued to Joel Shandelman upon the exercise
of common stock purchase warrants exercisable at $0.20 per share. Mr. Shandelman
is a former employee of ours.

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2004

Long-term portion of due to chairman of the board $ 1,862,943
Long-term portion of due to related party 505,357
-----------
Long-term debt 2,368,300

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,
51,406,431 issued and outstanding at December 31, 2004 5,141
Additional paid-in capital 7,784,411
Accumulated deficit (9,048,073)
-----------

Total stockholders' deficit (1,258,521)
-----------

Total capitalization $ 1,109,779
===========

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, general corporate
purposes and continued development of our OPEX product.

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.

We will pay all the expenses incident to the registration, offering and sale of
the shares of common stock to the public hereunder other than commissions, fees
and discounts of underwriters, brokers, dealers and agents. If any of these
other expenses exists, we expect the selling stockholders to pay these expenses.
We estimate that the expenses of the offering to be borne by us will be
approximately $105,800. The offering expenses consist of: an SEC registration
fee of $799, printing expenses of $5,000 accounting fees of $10,000, legal fees
of $75,000 and miscellaneous expenses of $10,000.

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

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

We are in the process of completing the development of our electronic trading
system, OPEX. We had temporarily discontinued such efforts in 2003 and resumed
them in late 2004. We intend to complete the development and initial launch of
the OPEX system in the first half of 2005. We believe the costs associated with
finalizing the development of the first operating version of OPEX and the
marketing costs associated with the initial launch will be at least $500,000 and
$100,000 respectively and will be financed by our cash flows from operations.
While we used $600,000 in our operating activities for the nine-month period
ended September 30, 2004, we have generated in excess of $700,000 in cash from
our operating activities for the three-month period ended December 31, 2004. We
believe that we will continue to generate cash flows from operations in the
foreseeable future sufficient to permit us to absorb the costs to complete the
development of OPEX as well as the costs related to its initial launch. The
additional work necessary to finalize the development of the first operating
version of OPEX consists primarily of ensuring that all transactions entered in
OPEX are properly processed and certain feature enhancements.

During 2003, our revenues significantly declined due to a lower volume of
transactions handled on behalf of our customers, consistent with the
aforementioned market conditions. However, our revenues during 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.

PLAN OF OPERATIONS

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

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

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, 2004,
including without limitation the information set forth under the heading
"Critical Accounting Policies and Estimates".

RESULTS OF OPERATIONS FOR FISCAL YEARS ENDED DECEMBER 31, 2004 AND 2003

For the year ended Increase/ Increase/
December 31 (Decrease) (Decrease)
------------------------------ in $ 2004 in % 2004
2004 2003 vs 2003 vs 2003
----------- ----------- ----------- -----------

Brokerage fees $ 1,885,489 $ 682,690 $ 1,202,799 176.2%
Brokerage fees-related party 1,011,014 -- 1,011,014 NM
Incentives 597,734 -- 597,734 NM
----------- ----------- -----------
Net revenues 3,494,237 682,690 2,811,547 411.8%

Cost of revenues 1,094,992 838,660 256,332 30.6%
Cost of revenues-related party 466,610 -- 466,610 NM
----------- ----------- ----------- -----------
1,561,602 838,660 722,942 86.2%

Gross profit 1,932,635 (155,970) 2,088,605 NM

Operating expenses:
Selling, general and administrative 1,294,153 2,304,632 (1,010,479) -43.8%
Research and development 116,520 552,708 (436,188) -78.9%
----------- ----------- -----------

Total operating expenses 1,410,673 2,857,340 (1,446,667) -50.6%

Operating income (loss) 521,962 (3,013,310) 3,535,272 NM

Other income (expense):
Gain on extinguishment of debt 238,282 -- 238,282 NM
Interest expense to related parties (276,471) (238,991) 37,480 -15.7%
----------- ----------- -----------
(38,189) (238,991) 200,802 NM

Net income (loss) $ 483,773 $(3,252,301) $ 3,736,074 NM
=========== =========== ===========

NM: Not meaningful

REVENUES

Revenues consist of fees earned from energy derivatives transactions. The
increase in revenues of approximately $2.8 million during 2004, when compared to
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 instead of 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 $720,000 during 2004 when
compared to 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 instead of nine 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 $1.0 million during 2004, when compared to 2003, is primarily
attributable to decrease in legal fees incurred in connection with a dispute
related to our contract with the software development firm hired to develop our
electronic trading system which were settled in early 2004. 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 $440,000 during 2004, when compared to 2003, is primarily due to
the temporary discontinuation of our software development efforts during 2003
and we have recently resumed the development of our electronic trading system
during the second-half of 2004. We also expect that our research and development
expenses will be higher during 2005 than during 2004 resulting from our recent
resumption of our research and development efforts.

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 consists of interest charges associated with
amounts due to related parties. The increase in interest expense to related
parties of approximately $38,000 during 2004, when compared to the same period
in 2003 is primarily due to an increase in the imputed rate on the due to Mark
Nordlicht, our Chairman of the Board, from less than 5% during 2003 and the
first quarter of 2004 to 12% during the last nine months of 2004, as well as the
increase in amounts due to Capital Energy Services, a related party, which
occurred in April 2004. The imputed rate during 2003 of less than 5% represented
the actual interest rate accrued under such borrowing. Upon modification of
terms of the amounts due to Mark Nordlicht and under the agreement with CES,
these arrangements provide that such amounts due to mature in April 2014, do not
currently bear interest and will only bear interest if we obtain any new equity
or debt financing in excess of $1.0 million ("Capital Raise"). In the event of a
Capital Raise, the amounts due to Mark Nordlicht and CES will accrue at an
interest rate of 12%. Considering that the amounts due to Mark Nordlicht and CES
constitute long-term debt, we have recorded discounts of approximately $3.9
million and $1.0 million on the amounts due to Mark Nordlicht and CES,
respectively. In absence of any other metrics, we have used an imputed rate of
12%, consistent with the rate we would pay in the event of a Capital Raise, to
discount such amounts due. We did not owe any amounts to Capital Energy Services
in 2003.

Stock-based compensation

We had 780,250 stock options outstanding at December 31, 2004, of which 261,833
options were vested and 518,417 were unvested. All outstanding options were
granted on December 3, 2004. The exercise price of such options amounts to $0.20
per share. The fair value of the common stock underlying such options amounted
to $0.20 at the date of grant, which wass also the offering price of such shares
in our September-December 2004 private offering. Accordingly, no intrinsic value
was attributed to the options granted during 2004. The fair value of the common
stock is based on the value attributed to shares of common stock issued pursuant
to our $1,252,000 private placement to third-party investors, which closed
contemporaneously with the grant of options.

In determining the fair value of the options granted in 2004, we considered the
following significant factors, assumptions and methodologies:

o The shares issued pursuant to the private placement has the same rights
than those underlying the options;

o Our shares of common stock were not publicly-traded at the time of the
grant of options;

o Contemporaneously to the grant of options, we closed a $1,252,000 private
placement to third-party investors priced at the same value as the
options.

Based on the above, we believe that there are no significant factors
contributing to a difference between the fair value of the options at the date
of each grant and the estimated offering price.

We have based our conclusions using the market approach as a valuation
technique. Under the market approach, fair value is based on values indicated by
observable prices and other information derived from actual transactions
involving identical, similar, or otherwise comparable financial instruments. In
this case, the terms and the timing of the $1,252,000 private placement formed
the basis of our conclusion. We have excluded from our analysis the income
approach, under which the fair value is estimated by converting future amounts
(cash flows or earnings) into a single discounted present value, due to higher
uncertainties to determine such future amounts. We have also excluded from our
analysis the cost approach, under which the fair value is estimated based on the
amount currently required to replace an asset's service capacity, due to its
inapplicability to financial instruments such as our shares of common stock. We
have not obtain a contemporaneous valuation by an unrelated valuation specialist
because we believe that the cost of such the valuation would have outweigh its
benefits considering that the conclusion of such specialist would not have
differed significantly from our conclusion.

LIQUIDITY AND CAPITAL RESOURCES

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

During 2004, we generated proceeds of $1,252,000 from the issuance of common
stock. These shares were sold to sophisticated investors by means of an offering
memorandum in a private transaction which was exempt from registration pursuant
to Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D under
the Act. The proceeds from this stock issuance, together with the proceeds of an
additional $350,000 received from Mr. Nordlicht, were used to repay a note
payable to Platinum Partners, L.P., an affiliated company of Mr. Nordlicht, of
$500,000 and to pay $250,000 to a software development consultant and $425,000
to our former legal counsel. The $300,000 and $50,000 received from the issuance
of a note payable and a line of credit payable to Mark Nordlicht, respectively,
were repaid in 2004. The following changes in operating assets and liabilities
occurred in 2004: accounts receivable, due from CES, a related party, and
incentive receivables increased by approximately $129,000, $294,000 and
$132,000, respectively, primarily as a result of an increase in related
revenues. Furthermore, two of our officers at the time, Edward O'Connor and
Kevin Cassidy, forfeited certain compensation amounting to $375,000, which is
accounted for as an increase in additional paid-in capital.

During 2003, we funded our operating loss by issuing notes payable to Mr.
Nordlicht and Platinum Partners, L.P., an affiliated company of Mr. Nordlicht,
amounting to $1,880,000 which accrued interest of $240,000 and by increasing our
accounts payable by approximately $850,000.

We do not currently have any material commitments for capital expenditures. We
have commitments to pay CES minimum annual fixed fees of $50,000 and $1,525,000
on April 1, 2014. We also have commitments to pay Mark Nordlicht $5,621,753 on
April 1, 2014. In the event of a Capital Raise, we will pay up to 39.33% and
10.6% of the amount raised, up to $2,810,877 and $762,500, to Mark Nordlicht and
CES, respectively. During April 2005, CES assigned its rights to the Company's
liability of $1,525,000 equally to Edward O'Connor and Kevin Cassidy, co-owners
of CES. Subsequently, during April 2005, the Company entered into modifications
of the terms of the amounts due from it to Mark Nordlicht, Edward O'Connor and
Kevin Cassidy. The modified terms provide that, among other things, in the event
of a Capital Raise, the interest rate accrued after such event is reduced from
12% to 4.68%. Additionally, the Company may make principal repayments towards
such liabilities amounting to approximately 25% of its quarterly cash flows from
operating activities less capital expenditures. Furthermore, the Company made a
principal repayment of $150,000 on the amount due to Kevin Cassidy and $69,638
on the amount due to Mark Nordlicht. The principal repayment of $69,638 on the
amount due to Mark Nordlicht was offset against an accounts receivable from one
of our clients (which client is unaffiliated with Mr. Nordlicht).

We believe that our office facilities and equipment will be sufficient to meet
our needs for the foreseeable future.

GOING CONCERN

We have provided for our capital needs during 2004 by issuing equity securities
generating gross proceeds of $1.252 million. Management does not anticipate
issuing equity or debt securities in the foreseeable future. Additionally, we
have increased our revenues and operating income by approximately $2.8 million
and $3.6 million to $3.5 million and $484,000, respectively, during 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, 2004. Management believes that the application of these policies on
a consistent basis enables us to provide useful and reliable financial
information about our operating results and financial condition. Our financial
statements and accompanying notes are prepared in accordance with U.S. GAAP.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. Critical accounting policies for us include
revenue recognition,

REVENUE RECOGNITION

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

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

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

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

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

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

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

4) Collectibility is reasonably assured. Both exchanges have paid us during the
fourth quarter of 2004 for incentives earned prior to September 30, 2004. We
have no knowledge that they do not intend to pay these incentives, if earned, in
the future. Furthermore, we intend to enforce the payment of any incentives
receivable under the incentive programs.

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.

We provide the following services:

o software development and deployment of electronic brokerage platform,
which is to automate the trading of energy derivatives between
counterparties.

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 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 first half of 2005.

Strategy

We intend to employ the following key strategies to achieve our goal of being a
leading facilitator of energy derivatives:

o Increase revenues from existing and new customers by offering OPEX, which
could automate some of the transactions now handled by voice brokerage and
provide more pertinent market information to our customers, improving the
liquidity of the natural gas options and swaps market,

o Expand our product offerings to include other energy derivatives products
such as Crude Oil options and swaps.

o An efficient use of OPEX by its users will allow us to devote more
resources to interactions and related business development with potential
customers,

o Develop new strategic relationships, such as marketing and technical
relationships with exchanges, which will allow us to market their new
solutions to our clients as well as integrate our technology with theirs

HOW WE GENERATE REVENUES

We generate revenues by charging commissions fees based on the transactions we
submit for trading on behalf of our clients. Our fees for brokerage services for
options and swaps are up to $5.00 per 10,000 million British thermal units
(mmBtu) of natural gas per contract. Our fees are earned on the date of the
trade. We anticipate that, initially, our fees in connection with the use of
OPEX for options and swaps will also be up to $5.00 per 10,000 mmBtu of natural
gas per contract.

We also receive incentives from ICE and NYMEX. 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. For example,
under the incentive program offered by NYMEX, 50% of the revenues from NYMEX
ClearPort is allocated to an intermediary incentive pool. At the end of each
month, the qualifying intermediaries, including us, receive their pro-rata share
based on the volume for which they were responsible. There is no minimum volume
requirement in order to participate. Under the incentive program offered by ICE,
we receive 50% of the revenues earned by ICE from the transactions we have
submitted to them. There is no longer a minimum volume requirement in order to
participate.

Furthermore, we generate revenues from CES floor brokerage operations, which are
commission fees based on transactions they broker on behalf of their clients. In
return for such floor brokerage revenues from CES, we assume all associated
expenses incurred by CES, including brokerage commissions paid by CES to its
employees.. The transactions facilitated by CES consist mostly of options and
futures contracts on natural gas, which fees ranged between $1.00 and $1.50 per
10,000 mmBtu of natural gas, per contract.

HOW WE MARKET OUR SERVICES

We market our brokerage services through our broker-employees and through
consultants, such as Kevin Cassidy. We market our services by providing
information on specific transactions or market conditions to our existing and
prospective clients. All of our broker-employees and consultants conduct their
sales activities from our office facilities in Briarcliff Manor, New York and on
the floor of the New York Mercantile Exchange. We will market our OPEX system
primarily by providing demonstrations, training, sales events, and sales
collateral to our existing and potential customers.

HOW WE OPERATE

Our OTC brokerage operations are conducted from our Briarcliff Manor, New York,
office and our floor operations are conducted from the floor of the New York
Mercantile Exchange. We have five employees and one consultant, Kevin Cassidy,
at the Briarcliff Manor location, and three employees at the NYMEX location who
interact heavily with our existing and potential clients. Generally, the nature
and mechanics of our business is to inquire of our clients needs in the trade of
energy options, swaps, and futures. Once we understand their needs: in the case
of NYMEX futures or options, the trade is presented on the NYMEX through CES;
and in the case of OTC swaps and options, we inquire of other clients whether
they are interested in participating in such transaction. Once the
counterparties agree on a certain trade, we match the counterparties and
consummate the trade by (i) in the case of a bilateral OTC trade, by confirming
the details of the executed trade with both counterparties or (ii) in the case
of a cleared trade, by submitting such trade to an exchange.

We rely heavily on communication technology to interact with our clients,
whether by phone, e-mail, and/or instant messaging. We anticipate that, in the
future, we will further rely on Internet based communications for the operation
of OPEX.

We keep abreast of conditions in the natural gas trading market by receiving
information using a combination of technology, such as trading software,
relevant business news from different wiring services and traditional broadcast
as well as leveraging the presence of OPEX employees on the floor of the NYMEX.

BUSINESS ALLIANCES

In April 2004, we entered into a Master Services Agreement with Capital Energy
Services LLC ("CES"). This agreement enabled us to realize the benefits of
brokerage services offered on the floor of the New York Mercantile Exchange (the
"NYMEX"). Only NYMEX members may offer brokerage services on the floor of NYMEX.
For a corporation to become a member of NYMEX, it must either 1) purchase two
seats on NYMEX, or 2) be beneficially owned by an individual who has purchased
or leased a seat on NYMEX. We are not beneficially owned by an individual, so
the second method of obtaining membership was not available to us. With regard
to the first method, the current market value of a seat on NYMEX is
approximately $1.8 million, so membership would have cost us approximately $3.6
million. Accordingly, by entering into this agreement with CES, we were able to
more efficiently use our resources instead of making the large investment of
purchasing seats on the NYMEX. Additionally, we could leverage their experience
in floor brokerage as well as selling our services to their customer base. We
provide CES with their marketing and brokerage support services for the NYMEX
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, which consists of commission fees on natural gas future
transactions 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.

During April 2005, CES assigned its rights to the Company's liability of
$1,525,000 equally to Edward O'Connor and Kevin Cassidy, co-owners of CES.
Subsequently, during April 2005, the Company entered into a modification of the
terms of the amounts due from it to Edward O'Connor and Kevin Cassidy. The
modified terms provide that, among other things, in the event of a Capital
Raise, the interest rate accrued after such event is reduced from 12% to 4.68%.
Additionally, the Company may make principal repayments towards such
liabilities, including amounts due to Mark Nordlicht, our Chairman of the Board,
amounting to approximately 25% of its quarterly cash flows from operating
activities less capital expenditures. Furthermore, the Company made a principal
repayment of $150,000 on the amount due to Kevin Cassidy.

CUSTOMER CONCENTRATION

One of our customers, Bank of Montreal, accounted for approximately 10% of our
revenues during 2004. Two of our customers, Bank of Montreal and Coral Energy
Holding, L.P., accounted for approximately 17% and 10%, respectively, of our
revenues during 2003.

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, we do not believe any 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 messaging 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 $116,000 and $550,000 in expenses on research and
development during 2004 and 2003. 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 subject to certain information access rules
established 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 has one committee, the Finance Committee.

The following table sets forth certain information, as of February 28, 2005,
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(1) Director 52 September 2004
Yechiel Abraham Zucker Executive Vice President and Secretary 30 n.a.
Marc-Andre Boisseau Chief Financial Officer 40 n.a.

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

1) Mr. Helmig is the sole member of the Finance Committee

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 (from May 1997
to December 1999) and Vice President Controller (from January 1, 1998 to
December 1999) 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.

Finance Committee

Effective April 8, 2005, the Board of Directors created a Finance Committee,
consisting of Albert Helmig. The Finance Committee was created to negotiate
amendments to the terms of (i) our March 22, 2004 loan agreement with Mark
Nordlicht and (ii) our Master Services Agreement with CES.

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, 2004,
2003, 2002 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, 2004 and (ii) all individuals that served as executive officers of
ours at any time during the fiscal year ended December 31, 2004 that received
annual compensation during the fiscal year ended December 31, 2004, 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, 2004 $150,000 $-0- $-0- $-0- -0- $-0- $-0-
President, Director (1) 2003 $442,308 $-0- $-0- $-0- -0- $-0- $-0-
2002 $519,231 $-0- $-0- $-0- -0- $-0- $-0-

Kevin Cassidy, CEO (1) 2004 $ -0- $-0- $-0- $-0- -0- $-0- $-0-
2003 $442,308 $-0- $-0- $-0- -0- $-0- $-0-
2002 $519,231 $-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, 2004, and 780,250 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. If we terminate Mr. O'Connor's employment
without "cause" or if Mr. O'Connor terminates his employment with "good reason"
(as both terms are defined in Mr. O'Connor's employment agreement), we are
required to pay him a lump sum equal to nine months' base salary. Following
termination of employment for any reason, other than expiration of the term of
employment, Mr. O'Connor has agreed not to engage in an electronic OTC business
in competition with us for a 90 day period, provided we pay him bi-monthly
installments of $8,333.33 and provide full health benefits during the 90 day
period.

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 February 28, 2005. 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. The
original intent of the Prepaid Commission Agreement was to grant the additional
20% commission discounts to Mark Nordlicht for services performed using OPEX.
OPEX was not launched in the timeframe originally planned. Accordingly, the
Prepaid Commission Agreement has never materialized. In the interest of pursuing
a fruitful relationship with Mark Nordlicht, we agreed to consolidate amounts
due under the Prepaid Commission Agreement with other amounts due to Mark
Nordlicht. 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 promissory note, which was
unsecured, bore interest at the rate of 20% per year and was payable by
September 30, 2004. 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. The promissory note we issued to Mr.
Nordlicht in connection with this loan was unsecured and did not bear interest.
The loan was repayable on the earlier of February 13, 2014 or the 15th day after
we received a cash investment of at least $250,000. 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 promissory note was unsecured and did not
bear interest. The loan was repayable on the earlier of March 9, 2014 or the
15th day after we received a cash investment of at least $300,000. This loan was
repaid out of the proceeds of the private placement of our securities mentioned
above.

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 entered into on March 1, 2001 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 the Loan
Agreement, we issued a $5,621,753.18 promissory note to Mr. Nordlicht, dated
March 22, 2004. This promissory note, which is unsecured, 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, without interest to Mr.
Nordlicht, dated April 15, 2004. The note, which was unsecured, was due on
August 1, 2004, which was subsequently extended to December 31, 2004. The note
was repaid in December 2004.

We are parties to a Master Services Agreement with CES pursuant to which we
provide brokerage services on the floor of the New York Mercantile Exchange (see
"Description of Business - Business Alliances" for more information about this
agreement). Edward J. O'Connor, our president and a director, is a 50%
stockholder of CES. Kevin P. Cassidy our Chief Executive Officer until March 31,
2004, is the Managing Director of CES. Pursuant to this arrangement, we will pay
to CES a minimum annual fixed fee of $50,000 and assume all expenses directly
incurred by CES's associated floor brokerage services. Additionally, we will pay
to CES $1,525,000 on April 1, 2014. However, upon a Capital Raise, we will pay
up to 10.67% of the amount raised during the Capital Raise, up to $762,500, to
CES, with the remaining principal and accrued interest of 12% from the date of
the Capital Raise payable on April 1, 2014. Our share of revenues and expenses
of the floor brokerage services amounted to approximately $1.0 million and
$467,000, respectively during 2004. We have received $250,000 from CES in
connection with such floor brokerage services during 2004 and CES owes us
approximately $294,000 as of December 31, 2004.

The Company has recognized revenues of approximately $36,000 and $29,000 during
2004 from Platinum Partners, L.P. and Fenmore Holdings, respectively, entities
in which Mark Nordlicht, our Chairman of the Board is also the managing
director. Both related entities owed to us approximately $7,000 as of December
31, 2004.

During April 2004, Edward O'Connor, our Chief Executive Officer and Kevin P.
Cassidy, our former Chief Executive Officer forfeited aggregate compensation of
$375,000.

Effective April 1, 2004, we entered into an agreement providing for the
reimbursement of certain administrative expenses for services provided to a
coffee bean roaster, 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. We provide such services to
Sleepy Hollow to ensure that Edward O'Connor and Kevin Cassidy can focus as much
time and efforts as possible on our operations.

On April 1, 2004, we entered into a Consulting Agreement with Kevin P. Cassidy
whereby Mr. Cassidy 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. We also reimburse Mr. Cassidy for his health insurance and a
$1,000,000 life insurance policy during the term of the Consulting Agreement.
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, and were intended to
induce Mr. Cassidy to introduce additional customers to us. We did not receive
any cash consideration for the issuance of these warrants.

During April 2005, CES assigned its rights to the Company's liability of
$1,525,000 equally to Edward O'Connor and Kevin Cassidy, co-owners of CES.
Subsequently, during April 2005, the Company entered into modifications of the
terms of the amounts due from it to Mark Nordlicht, Edward O'Connor and Kevin
Cassidy. The modified terms provide that, among other things, in the event of a
Capital Raise, the interest rate accrued after such event is reduced from 12% to
4.68%. Additionally, the Company may make principal repayments towards such
liabilities amounting to approximately 25% of its quarterly cash flows from
operating activities less capital expenditures. Furthermore, the Company made a
principal repayment of $150,000 on the amount due to Kevin Cassidy and $69,638
on the amount due to Mark Nordlicht. The principal repayment of $69,638 on the
amount due to Mark Nordlicht was offset against an accounts receivable from one
of our clients (which client is unaffiliated with Mr. Nordlicht).

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.

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.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth certain information concerning all equity
compensation plans previously approved by stockholders and all previous equity
compensation plans not previously approved by stockholders, as of the most
recently completed fiscal year. In November and December 2004, our board of
directors and stockholders, respectively, approved the 2004 Stock Option Plan.
Under the Plan, options to purchase up to 7,500,000 shares of our common stock
may be granted to our employees, officers, directors, and eligible consultants
of our company. The Plan provides that the option price be the fair market value
of the stock at the date of grant as determined by the Board of Directors.
Options granted become exercisable and expire as determined by the Board of
Directors. For a more detailed discussion, please see "Executive Compensation -
2004 Stock Option Plan" elsewhere in this prospectus and note 7 of note to
financial statements, December 31, 2004 and 2003

EQUITY COMPENSATION PLAN INFORMATION AS AT DECEMBER 31, 2004
- --------------------------------------------------------------------------------------------------------------
Number of Securities
Remaining Available for
Number of Securities to Weighted-Average Issuance under Equity
be Issued upon Exercise Exercise Price of Compensation Plans
of Outstanding Options, Outstanding Options, (excluding securities reflected
Warrants and Rights Warrants and Rights in column (a))
Plan Category (a) (b) (c)
- --------------------------------------------------------------------------------------------------------------

Equity Compensation 780,250 $0.20 6,719,750
Plans approved by
security holders
- --------------------------------------------------------------------------------------------------------------
Equity Compensation 1,300,000 $0.20 N/A
Plans not approved by
security holders
- --------------------------------------------------------------------------------------------------------------
TOTAL 780,250 $0.20 6,719,750
- --------------------------------------------------------------------------------------------------------------

In June 2004 we 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.

In June and July 2004, we issued warrants to a consultant who is one of our
stockholders and our former chief executive officer. 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. 100,000 warrants were
exercisable as of December 31, 2004.

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.

In May 2004, we settled outstanding professional fees of approximately $663,000
due to our former counsel, of which approximately $62,000 were incurred in 2004.
We 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 our former
legal counsel's firm has acquired 375,000 shares of our common stock for $75,000
in September 2004.

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, 2003 and December 31, 2004 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, 2004.............................................F-3

Statement of Operations for the years ended December 31, 2004 and
December 31, 2003............................................................F-4

Statement of Stockholders' Deficit for the period from January 1, 2003
to December 31, 2004.........................................................F-5

Statement of Cash Flows for the years ended December 31, 2004
and December 31, 2003........................................................F-6

Notes to Financial Statements, December 31, 2004 and December 31, 2003.......F-7

F-1

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, 2004 and the related statements of operations, stockholders'
deficit and cash flows for the years ended December 31, 2004 and 2003. 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, 2004 and the results of their operations and their cash flows for the years
ended December 31, 2004 and 2003, 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
April 4, 2005,
Except for Note 11,
Which is April 12, 2005

F-2

OPTIONABLE, INC.
BALANCE SHEET
December 31, 2004

ASSETS
Current Assets:

Cash $ 907,126
Accounts receivable, net of provision for doubtful accounts of $89,974 196,584
Due from related party 293,575
Incentives receivable 131,676
-----------
Total current assets 1,528,961

Property and equipment, net of accumulated depreciation of $393,177 46,265
Other assets 12,956
-----------

Total assets $ 1,588,182
===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
Accounts payable and accrued expenses $ 130,686
Accrued commissions 347,717
-----------
Total current liabilities 478,403

Due to chairman of the board, net of unamortized discount of $3,758,810 1,862,943
Due to related party, net of unamortized discount of $1,019,644 505,357
-----------
Total liabilities 2,846,703

Stockholders' Deficit:
Preferred Stock; $.0001 par value, 5,000,000 shares authorized, none issued
and outstanding at December 31, 2004 --
Common stock; $.0001 par value, 100,000,000 shares authorized,
51,406,431 issued and outstanding at December 31, 2004 5,141
Additional paid-in capital 7,784,411
Accumulated deficit (9,048,073)
-----------

Total stockholders' deficit (1,258,521)
-----------

Total liabilities and stockholders' deficit $ 1,588,182
===========

See Notes to Financial Statements.

F-3

OPTIONABLE, INC.
STATEMENTS OF OPERATIONS

For the year ended
December 31
-------------------------------
2004 2003
------------ ------------

Brokerage fees $ 1,885,489 $ 682,690
Brokerage fees-related party 1,011,014 --
Incentives 597,734 --
------------ ------------
Net revenues 3,494,237 682,690

Cost of revenues 1,094,992 838,660
Cost of revenues-related party 466,610 --
------------ ------------
1,561,602 838,660

Gross profit 1,932,635 (155,970)

Operating expenses:
Selling, general and administrative 1,294,153 2,304,632
Research and development 116,520 552,708
------------ ------------

Total operating expenses 1,410,673 2,857,340
------------ ------------

Operating income (loss) 521,962 (3,013,310)
------------ ------------

Other income (expense):
Gain on extinguishment of debt 238,282 --
Interest expense to related parties (276,471) (238,991)
------------ ------------
(38,189) (238,991)
------------ ------------

Net income (loss) $ 483,773 $ (3,252,301)
============ ============

Basic net income (loss) per common share $ 0.01 $ (0.07)
============ ============

Diluted net income (loss) per common share $ 0.01 $ (0.07)
============ ============

Basic and diluted weighted average common
shares outstanding 47,170,951 45,096,430
============ ============

Diluted weighted average common shares outstanding 47,170,951 45,096,430
============ ============

See Notes to Financial Statements.

F-4

OPTIONABLE, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD FROM JANUARY 1, 2003 TO DECEMBER 31, 2004

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

Balance at January 1, 2003 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)

Issuance of common stock 6,310,001 631 1,251,369 -- 1,252,000
Distribution -- -- (462,067) -- (462,067)
Fair value of unamortized discount on due to
chairman of the board -- -- 3,918,391 -- 3,918,391
Fair value of warrants issued to consultant -- -- 2,780 -- 2,780
Forfeiture of officers' compensation -- -- 375,000 -- 375,000
Net loss -- -- -- 483,773 483,773
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2004 51,406,431 $ 5,141 $ 7,784,411 $(9,048,073) $(1,258,521)
=========== =========== =========== =========== ===========

SEE NOTES TO FINANCIAL STATEMENTS.

F-5

OPTIONABLE, INC.
STATEMENTS OF CASH FLOWS

For the year ended
December 31,
-----------------------------
2004 2003
----------- -----------

Cash flows from operating activities:
Net income (loss) $ 483,773 $(3,252,301)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 51,921 95,844
Amortization of debt discount 202,869 --
Forfeiture of officers' compensation 375,000 --
Gain on extinguishment of debt (238,282) --
Fair value of warrants issued to consultant 2,780 --
Provision for doubtful accounts 35,251 15,657
Changes in operating assets and liabilities:
Accounts receivable (128,998) 31,327
Due from related party (293,575) --
Incentives receivable (131,676) --
Other assets (11,349) --
Accounts payable and accrued expenses (556,075) 825,860
Accrued commissions 325,297 22,420
Accrued interest on notes payable to related parties 3,628 238,991
----------- -----------
Net cash provided by (used in) operating activities 120,564 (2,022,202)
----------- -----------

Cash flows from investing activity:
Purchases of property and equipment (28,479) (15,113)
----------- -----------

Net cash used in investing activity (28,479) (15,113)
----------- -----------
Cash flows from financing activities:

Proceeds from issuance of common stock 1,252,000 --
Principal repayments of notes payable to related party (500,000) --
Proceeds from issuance of note payable to chairman of the board 300,000 --
Proceeds from line of credit payable to chairman of the board 50,000 --
Principal repayments of note payable to chairman of the board (300,000) --
Principal repayments on line of credit payable to chairman of the board (50,000) --
Proceeds from issuance of notes payable to related parties -- 1,880,000
----------- -----------

Net cash provided by financing activities 752,000 1,880,000
----------- -----------

Increase (decrease) in cash 844,085 (157,315)

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

Cash, end of year $ 907,126 $ 63,041
=========== ===========

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

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

Supplemental disclosures for non-cash financing activities:

Increase in due to related party and a corresponding decrease in
additional paid-in capital $ 462,067 $ --
=========== ===========
Increase in discount on due to chairman of the board and corresponding
increase in additional paid-in capital $ 3,918,391 $ --
=========== ===========

SEE NOTES TO FINANCIAL STATEMENTS

F-6

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 1-Organization and Description of Business

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.

Note 2-Going Concern

These financial statements have been prepared on a going concern basis. The
Company has incurred an accumulated deficit of approximately $9.0 million since
inception. The Company's ability to continue as a going concern is dependent
upon its ability to continue 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 $1,252,000. Management does not
anticipate issuing equity or debt securities in the foreseeable future.
Additionally, management has increased its revenues and operating income by
approximately $2.8 million and $3.5 million to $3.5 million and $522,000,
respectively, during 2004 when compared to 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.

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. One of the Company's customers accounted
for approximately 17% of its accounts receivable, net of doubtful accounts at
December 31, 2004. No other customers accounted for more than 10% of its
accounts receivable at December 31, 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 and by a former officer of the Company, who are both
stockholders of the Company. The due from related party is not collateralized.

Customer Concentration

Two of the Company's customers accounted for approximately 10% and 4%,
respectively of its revenues during 2004 and 18% and 11% respectively, of its
revenues during 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-7

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 3- Summary of Significant Accounting Policies-Continued

Fair Value of Financial Instruments

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

Software Development Costs

Costs incurred in the research and development of software products are expensed
as incurred until technological feasibility has been established. After
technological feasibility is established, any additional costs are capitalized
in accordance with Statement of Accounting Financial Standards ("SFAS") No. 86,
Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise
Marketed. Costs of maintenance and customer support will be charged to expense
when related revenue is recognized or when those costs are incurred, whichever
occurs first. The Company believes that the current process for developing
software is essentially completed concurrently with the establishment of
technological feasibility; accordingly, no software development costs have been
capitalized as of December 31, 2004.

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, 2004:

Computer equipment and software $ 391,022

Office furniture and equipment 48,420
----------
439,442

Accumulated depreciation 393,177
----------
$ 46,265
==========

Depreciation expense amounted to approximately $52,000 and $96,000 during 2004
and 2003, respectively.

F-8

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 3- Summary of Significant Accounting Policies-Continued

Income Taxes

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

Use of Estimates

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

Basic and Diluted Earnings per Share

Basic earnings per share are calculated by dividing income available to
stockholders by the weighted-average number of common shares outstanding during
each period. Diluted earnings per share are computed using the weighted average
number of common and dilutive common share equivalents outstanding during the
period. Dilutive common share equivalents consist of shares issuable upon the
exercise of stock options and warrants (calculated using the modified-treasury
stock method). The outstanding options, amounting to 780,250 and 1,104,900 at
December 31, 2004 and 2003, respectively, are excluded from the loss per share
computation for 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-9

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 3- Summary of Significant Accounting Policies-Continued

Stock Splits

The Company's board of directors has declared the following stock split of
common stock during 2003 and 2004:

June 10, 2004 1.27 for 1

Revenue Recognition

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

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

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

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

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

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

4) collectibility is reasonably assured. Both exchanges have paid the Company
during the fourth quarter of 2004 for incentives earned prior to September 30,
2004. The Company has no knowledge that they do not intend to pay these
incentives, if earned, in the future. Furthermore, the Company intends to
enforce the payment of any incentives receivable under the incentive programs.

Stock-Based Compensation

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

F-10

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

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. 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, 2004 consist primarily of
accrued trade payables.

Segment reporting

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

Recent Pronouncements

In December 2004, the FASB issued SFAS 123 (revised 2004) "Share-Based Payment".
This Statement requires that the cost resulting from all share-based
transactions be recorded in the financial statements. The Statement establishes
fair value as the measurement objective in accounting for share-based payment
arrangements and requires all entities to apply a fair-value-based measurement
in accounting for share-based payment transactions with employees. The Statement
also establishes fair value as the measurement objective for transactions in
which an entity acquires goods or services from non-employees in share-based
payment transactions. The Statement replaces SFAS 123 "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25 "Accounting for
Stock Issued to Employees". The provisions of this Statement will be effective
for the Company beginning in 2005. The Company is currently evaluating the
impact this new Standard will have on its financial position, results of
operations or cash flows.

Note 4-Due to Chairman of the Board

In March 2004, the Company consolidated certain amounts due to its Chairman of
the board, who is also a stockholder, under a Loan Agreement of $5,621,753. The
amounts consolidated consisted of two notes payable of $3,722,561, prepaid
commissions of $1,380,000 and accrued interest of $519,192 through the date of
consolidation. The Loan Agreement also modified the terms of the amount due to
its Chairman of the board. The amount due no longer bears interest, is payable
on March 12, 2014 and the Company does not have to grant a 20% discount on
commissions charged to its Chairman. 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 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. Before and after
modification of terms, the Company owes approximately $5.6 million to its

F-11

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 4-Due to Chairman of the Board-Continued

Chairman of the board. The due to Chairman of the board does not currently bear
interest and will only bear interest if the Capital Raise occurs. Accordingly,
the Company has recorded a discount on the due to Chairman of the board of
approximately $3.9 million and a corresponding increase in additional paid-in
capital. The due to Chairman of the board was discounted using the implied rate
of 12% over ten years. The amortization of such discount amounted to $160,000
during 2004 and has been recorded as interest expense to related parties in the
accompanying statement of operations. The remaining unamortized discount on the
due to stockholder amounts to approximately $3.7 million as of December 31,
2004.

The amount due to Chairman of the board as of December 31, 2004 is as follows:

Due to Chairman of the board before unamortized discount: $ 5,621,753
Original discount on due to Chairman of the board: (3,918,391)
Amortization of discount 159,581
-----------
$ 1,862,943
===========

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 2004.

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.

Interest expense, other than the amortization of discount, in connection with
the due to Chairman of the board and note payable to a related party amounted to
approximately $74,000 and $239,000 during 2004 and 2003, respectively.

F-12

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

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's 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 distribution to the shareholders as shown as a 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 $43,000 during 2004 and has been recorded as interest
expense to related parties in the accompanying statement of operations. The
remaining unamortized discount on the due to related party amounts to
approximately $1.0 million as of December 31, 2004.

The Company's share of revenues and expenses of the floor brokerage services
amounted to approximately $1.0 million and $467,000, respectively during 2004.
The Company has received $250,000 from the related party in connection with such
floor brokerage services during 2004 and the related party owes approximately
$294,000 as of December 31, 2004.

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

The Company has recognized revenues of approximately $65,000 during 2004 from
two related parties, entities in which its Chairman of the Board is also the
managing director. Such related parties owe the Company approximately $7,000 as
of December 31, 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
corresponding 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
$5,700 during 2004 of which $2,800 is outstanding as of December 31, 2004.

F-13

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 6-Other Transactions

The Company has recognized revenues of approximately $150,000 during 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 the Company approximately $54,000 as of December 31, 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 into 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: 2.78% and 2.11% for 2004 and 2003, respectively; dividend yield:
none; volatility: none; expected lives: 3 years. No value was attributed to the
options granted during 2003. All options outstanding at December 31, 2004, which
amount to 780,250 options, were granted on December 3, 2004, with an exercise
price of $0.20 per share. The fair value of the common stock underlying such
options amounted to $0.20 at the date of grant. Accordingly, no intrinsic value
was attributed to the options granted during 2004. The fair value of the common
stock is based on the value attributed to shares of common stock issued pursuant
to its $1,252,000 private placement to third-party investors, which closed
contemporaneously with the grant of options.

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

2004 2003
----------- -----------

Net income (loss) as reported: $ 483,773 $(3,252,301)
Deduct: Total stock-base employee compensation expense
determined under fair value based method for all
awards, net of related tax effects (362) --
----------- -----------
Net income (loss) pro forma $ 483,411 $(3,252,301)
=========== ===========

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

F-14

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 7-Stockholders' Deficit-Continued

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.

The following summarizes certain information related to options outstanding and
exercisable as of December 31, 2004:

Options outstanding 780,250
Options exercisable 261,833
Exercise price of all options outstanding and exercisable $ 0.20
Remaining contractual life of all options outstanding
and exercisable 9.92 years

The following summarizes the activity within the Company's option plans between
January 1, 2003 and December 31, 2004:

Weighted-
Average
Options Exercise
Outstanding Price
Balance as of January 1, 2003: -- $ --
Grants-2003 1,104,900 0.09
Balance as of December 31, 2003 1,104,900 0.09
Cancellations-2004 (1,104,900) 0.09
Grants-2004 780,250 0.20
---------- ----------
Balance as of December 31, 2004 780,250 $ 0.20
========== ==========

Options exercisable as of December 31, 2004 261,833 $ 0.20
========== ==========

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
traunches 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 and the customer has orally agreed to
the cancellation. None of the warrants are exercisable as of December 31, 2004.
No value was attributed to such warrants upon issuance.

In June and July 2004, the Company issued warrants to one of its stockholders.
The warrants are exercisable for 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. There are 100,000 warrants exercisable as of December 31, 2004. The
value attributed to such warrants amounted to approximately $3,000 and is
included in selling, general, and administrative expenses. The fair value of
such warrants at the date they became exercisable was determined using the
Black-Scholes model with the following assumptions used: risk-free interest
rate: 2.78%; dividend yield: none; volatility: none; expected lives: 3 years.

F-15

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 7-Stockholders' Deficit-Continued

Common and Preferred Stock

Common Stock

In September and October 2004, the Company issued 6,260,001 shares of its common
stock for gross proceeds of $1,252,000 in connection with a private placement.
The Company provided registration rights to the holders of the shares issued in
connection with such private placement. Additionally, during October 2004, the
Company issued 50,000 shares of its common stock to a consultant in with
connection the 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 December 31, 2004.

Note 8-Commitments

The Company leases its executive offices under a 5-year leasing arrangement
providing for 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
---- ----------------------
2005 $66,817
2006 55,680
2007 and thereafter --

The Company's rental expense amounted to approximately $60,000 and $78,000
during 2004 and 2003, respectively.

F-16

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 9-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, as of December 31, are as follows:

2004
-----------
Deferred tax assets:
Net operating loss carryforward $ 3,620,539
Less valuation allowance (3,620,539)
-----------
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 $3,620,539 at December
31, 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 during
2004 and 2003 was a decrease and an increase of approximately $197,000 and
$1,334,000, respectively.

The Company has incurred net operating losses since inception, with the
exception of 2004. As of December 31, 2004, the Company had a net operating loss
carryforward amounting to approximately $8.9 million for U.S. tax purposes that
expire in various amounts from 2020 through 2024. 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 during 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-17

OPTIONABLE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

Note 10-Legal Proceedings

During 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. Amounts due under the settlement,
which amounted to $250,000, were paid in February 2004. 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 2004.

Note 11-Subsequent Events

During April 2005, CES assigned its rights to the Company's liability of
$1,525,000 equally to the Company's chief executive officer and to its former
chief executive officer, co-owners of CES. Subsequently, during April 2005, the
Company entered into modifications of the terms of the amounts due from it to
its Chairman of the Board, its Chief Executive Officer, and its former Chief
Executive Officer. The modified terms provide that, among other things, in the
event of a Capital Raise, the interest rate accrued after such event is reduced
from 12% to 4.68%. Additionally, the Company may make principal repayments
towards such liabilities amounting to approximately 25% of its quarterly cash
flows from operating activities less capital expenditures. Furthermore, the
Company made a principal repayment of $150,000 on the amount due to its former
Chief Executive Officer and $69,638 on the amount due to its Chairman of the
Board. The principal repayment of $69,638 on the amount due to Chairman of the
Board was offset against an account receivable from one of the Company's
clients.

F-18

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.

Item Amount Payable by the Company

SEC Registration Fee $ 799
Printing and Engraving $ 5,000
Legal Fees $ 75,000
Accounting Fees $ 10,000
Miscellaneous Expenses $ 10,000
--------
Total $100,799

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.

II-1

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. These shares were also purchased at $.20 per share,
resulting in gross proceeds to the Company of $252,000. 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. All of the purchasers, except for one
purchaser, were accredited investors, as such term is defined in Regulation D.
The one non-accredited investor was a sophisticated non-US national with prior
investment experience. All investors were provided with access to all material
information pertaining to the Company, and a private placement memorandum was
provided to investors.

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.
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.

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 (filed herewith)

*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)(a) 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(ii)(b) Addendum to Master Services Agreement

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

*10(iii)(b) Superseding Option Order Flow Agreement, dated as of March 2,
2005

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

II-2

Exhibit No. Description
- ----------- -----------
*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.

*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(xi)(c) Addendum to Loan Agreement, dated March 22, 2004.

10(xi)(d) Addendum to Promissory Note, dated March 22, 2004.

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

II-3

Exhibit No. Description
- ----------- -----------

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

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

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

*24 Powers of Attorney

* Previously filed.

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
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-4

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 May 3, 2005.

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

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, May 3, 2005
President, Chief Executive Officer and Director
(principal executive officer)

/s/ Marc-Andre Boisseau
-----------------------------------------------
Marc-Andre Boisseau May 3, 2005
Chief Financial Officer
(principal financial and accounting officer)

/s/ Mark Nordlicht
-----------------------------------------------
Mark Nordlicht, Director May 3, 2005

/s/ Albert Helmig
----------------------------------------------
Albert Helmig, Director May 3, 2005

II-5

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)I 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 (filed herewith)

*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)(a) 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(ii)(b) Addendum to Master Services Agreement

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

*10(iii)(b) Superseding Option Order Flow Agreement, dated as of March 2,
2005

*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-6

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.