optionable_10k-123109.htm

See Notes to Consolidated Financial Statements.

F-5

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1-Organization, Description of Business and Going Concern

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

The Company has not generated any revenues since the third quarter of 2007 as a result of the suspension of the business relationship by its largest customer and the succession of events since then. In addition, the matters discussed in Note 11 and Item 3 of Part II of this Annual Report "Legal Proceedings" have had a significant adverse impact on its business and future results of operations and financial condition.

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

Going Concern

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

F-6

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Principles of consolidation

The accompanying consolidated financial statements include the results of operations of Opex International, Inc. and Hydra Commodity Services, Inc. during 2009 and 2008. All material intercompany accounts and transactions between the Company and its subsidiaries have been eliminated in consolidation.

Cash and Cash Equivalents

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

Concentration of Credit Risks

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

The Company's cash and cash equivalents accounts are held at financial institutions and are insured by the Federal Deposit Insurance Corporation ("FDIC") up to $100,000 between January 2007 and October 2008 and $250,000 for interest-bearing accounts and an unlimited amount for noninterest-bearing accounts after October 2008. During 2009 and 2008, the Company has reached bank balances exceeding the FDIC insurance limit. While the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits, it cannot reasonably alleviate the risk associated with the sudden failure of such financial institutions. The Company’s cash and cash equivalents held at financial institutions exceeding the FDIC insurance limit amount to $ 937,000 and $7.3 million at December 31, 2009 and 2008, res pectively.

F-7

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2- Summary of Significant Accounting Policies

Fair Value of Financial Instruments

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

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

	Level 1:	Observable inputs such as quoted market prices in active markets for identical assets or liabilities

	Level 2:	Observable market-based inputs or unobservable inputs that are corroborated by market data

	Level 3:	Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

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

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

F-8

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Income Taxes

Income taxes are accounted for in accordance with "Accounting for Income Taxes", which requires the recognition of deferred tax assets and liabilities to reflect the future tax consequences of events that have been recognized in the Company's financial statements or tax returns. Measurement of the deferred items is based on enacted tax laws. In the event the future consequences of differences between financial reporting bases and tax bases of the Company's assets and liabilities result in a deferred tax asset, ASC 740 requires an evaluation of the probability of being able to realize the future benefits indicated by such assets. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some or all deferred tax assets will not be realized. Penalties and interest on underpaymen t of taxes are reflected in the Company’s effective tax rate.

Use of Estimates

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

Basic and Diluted Earnings per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common shares and dilutive common share equivalents outstanding during the period. Dilutive common share equivalents consist of shares issuable upon the exercise of stock options and warrants (calculated using the modified-treasury stock method). The outstanding options amounted to 1,233,000 and 983,000,000 at December 31, 2009 and 2008, respectively. The outstanding warrants amounted to 100,000 at December 31, 2009 and 2008. The options and warrants outstanding at December 31, 2009 and 2008, respectively, have been excluded from the computation of diluted earnings per share due to their antidilutive effect.

F-9

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2- Summary of Significant Accounting Policies-Continued

Stock Compensation

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

Contingencies

The outcomes of legal proceedings and claims brought against the Company are subject to significant uncertainty. FASB ASC 450-20-25-2 “Contingencies- Loss Contingencies-Recognition”, requires that an estimated loss from a loss contingency such as a legal proceeding or claim should be accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a contingency is required if there is at least a reasonable possibility that a loss has been incurred.

In determining whether a loss should be accrued the Company evaluates, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. While the Company believes that it will continue to incur losses from such legal proceedings, it is unable to make a reasonable estimate of the amount of loss.

Recent Accounting Pronouncements

On June 5, 2003, the United States Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), as amended by SEC Release No. 33-9072 on October 13, 2009. Commencing with its annual report for the year ending December 31, 2010, the Company will be required to include a report of management on its internal control over financial reporting. The internal control report must include a statement of:

F-10

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

		Management’s responsibility for establishing and maintaining adequate internal control over its financial reporting;
		Management’s assessment of the effectiveness of its internal control over financial reporting as of year- end; and
		The framework used by management to evaluate the effectiveness of the Company’s internal control over financial reporting.

Furthermore, it is required to file the auditor’s attestation report separately on the Company’s internal control over financial reporting on whether it believes that the Company has maintained, in all material respects, effective internal control over financial reporting.

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

Note 3- Prepaid expenses

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

Note 4- Notes receivable

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

The Company has not received payment on the first four notes, has extended their maturity to January 2010 and believes that it is unlikely that it will collect on the remaining notes and has provided for an allowance for doubtful accounts on all the notes at December 31, 2009.

Note 5-Due to Related Parties

The terms and amounts of due to related parties at December 31, 2009 and 2008, respectively, are as follows:

F-11

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Due to Stockholder and former Chairman of the Board, non-interest bearing, unsecured, payable by March 12, 2014, if the Company obtains additional equity or debt financing of at least $1,000,000 following the private placement which closed in September 2004 ("Capital Raise"), the Company will repay its former Chairman of the Board up to 39.33% of the Capital Raise, up to $2,810,877, with the remaining balance and accrued interest of 4.68% from the date of the Capital Raise due on March 12, 2014:

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

	December 31, 2009			December 31, 2008


		$	-		$	5,044,510
Discount, using initial implied rate of 12%			-			(2,618,270	)
		$	-		$	2,426,240

F-12

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5-Due to Related Parties-continued

Due to Director and former President, non-interest bearing, unsecured, payable by March 12, 2014, if the Company obtains additional equity or debt financing of at least $1,000,000 following a Capital Raise, the Company will repay its Director up to 5.3% of the Capital Raise, up to $381,250, with the remaining balance and accrued interest of 4.68% from the date of the Capital Raise due on March 12, 2014:

	December 31, 2009				December 31, 2008


		$	508,697			$	508,697
Discount, using initial implied rate of 12%			(303,461	)			(355,126	)
		$	205,236			$	153,571

During April 2005, the Company modified the terms of its due to related parties. The modified terms provide that, in the event of a Capital Raise, among other things, the annual interest rate accrued after such event is reduced from 12% to 4.68%. Additionally, the modified terms provide that the Company may make principal repayments towards the due to a stockholder and former Chairman of the Board and the due to Director amounting to approximately 25% of its cash flows from operating cash flows less capital expenditures. During April 2006, the Company modified the terms of its due to related parties to allow the Company to make principal repayments at its discretion.

The amortization of the discount on the due to related parties amounted to approximately $155,000 and $384,000 during 2009 and 2008, respectively.

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

F-13

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10- Stockholders' Equity

Stock Compensation Plan

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

During 2009 and 2008, the Company recorded share-based payment expenses amounting to approximately $19,000 and $23,000, respectively, in connection with all options outstanding at the respective measurement dates. The amortization of share-based payment was recorded in selling, general, and administrative expenses during 2009 and 2008.

The fair value of the options is based on the Black Scholes Model using the following assumptions :


	2009

Exercise price:	$0.016-$0.025
Market price at date of grant:	$0.016-$0.025
Volatility:	104.5%
Expected dividend rate:	0%
Expected terms:	3.3 years
Risk-free interest rate:	1.22-1.44%

F-14

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10- Stockholders' Equity-continued

A summary of the activity during 2009 and 2008 of the Company’s stock option plan is presented below:

			Weighted			Aggregate
			Average			Intrinsic
	Options		Exercise Price			Value

Outstanding at January 1, 2008		1,363,000	$	0.36

Granted		-		-
Exercised		-		-
Expired or cancelled		(380,000)		-
Outstanding at December 31, 2008		983,000		0.46

Granted		500,000		.021
Exercised		-		-
Expired or cancelled		(250,000)		.09
Outstanding at December 31, 2009		1,233,000	$	0.36	$	4,250

Exercisable and vested at December 31, 2009		1,033,000	$	0.43	$	2,550

F-15

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10- Stockholders' Equity-continued

The weighted-average remaining contractual term of the options are as follows:

Options outstanding at December 31, 2009:

Weighted-average remaining contractual term	Number of options	Weighted-average exercise price
Earlier of termination for cause or death	283,000	$1.31
4.69 years	950,000	0.08

Options exercisable and vested at December 31, 2009:

Weighted-average remaining contractual term	Number of options	Weighted-average exercise price
Earlier of termination for cause or death	283,000	$1.31
3.66 years	750,000	0.109

The following activity occurred under our plan:

	2009		2008
Weighted-average grant-date fair value of options granted	$	0.015		N/A
Aggregate intrinsic value of options exercised		N/A		N/A
Fair value of options recognized as expense:	$	19,000	$	23,000

The total compensation cost related to nonvested options not yet recognized amounted to approximately $4,000 at December 31, 2009 and the Company expects that it will be recognized over the following weighted-average period of 15 months.

F-16

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10- Stockholders' Equity-continued

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

The Company's policy is to issue shares pursuant to the exercise of stock options from its available authorized but unissued shares of common stock. It does not issue shares pursuant to the exercise of stock options from its treasury shares.

Note 11- Litigation and Contingencies

Regulatory Matters

Commodity Futures Trading Commission v. Cassidy et al.

On November 18, 2008, the Commodity Futures Trading Commission (“CFTC”) filed a complaint in the United States District Court for the Southern District of New York, against the Company; former employees of the Company, including its former Chief Executive Officer, Kevin Cassidy, and its former President (currently a Director), Edward O’Connor; and two former employees of BMO, David Lee and Robert Moore. The CFTC claims that the Company is liable for violations of Section 4c(b) of the Commodity Exchange Act (“CEA”) and CFTC Regulations 33.10(a),(b) and (c). The CFTC seeks a permanent injunction restraining and enjoining the Company and other defendants from directly or indirectly violating these provisions. The CFTC further seeks an order directing the Com pany and other defendants to pay civil monetary penalties, in an undetermined amount. The Company is unable to predict the outcome of this matter

F-17

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11- Litigation and Contingencies-continued

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

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

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

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

Claims from former employee

On December 9, 2009, Scott Connor, a co-defendant in the BMO action, filed cross-claims against the Company. Connor claims rights to indemnity and contribution from the Company for any liability he may have to BMO. He also lays claims of breach of contract, quantum meruit, and unjust enrichment, on the basis of an allegation that the Company failed to pay him the full amount of salary and commissions that was due to him for 2007. The court has postponed the Company's response to Connor’s cross-claims until it has resolved the motions to dismiss filed by the Company and by the other defendants in the BMO action.

F-18

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11- Litigation and Contingencies-continued

Claim from the Company’s former Chief Executive Officer

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

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

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

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

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

F-19

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12-Income Taxes

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

		2009		2008
Current:
Federal	$	24,6741	$	876,661
State		-		(126,849)

Total current		24,674		749,812

Deferred:
Federal		-		(221,245)
State		-		(60,111)
		-		(281,356)

Total benefit (provision) for income taxes	$	24,674	$	468,566

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

	2009			2008
ed Federal statutory taxes		( 35.0	%)		(35.0	)%
Stat State income taxes, net of federal tax benefit		( 5.7	)		(5.7	)
Cha Change in valuation allowance		(8.0			18.9
Permanent differences (taxable gain on extinguishment of due to Stockholder in 2009)		48.8			5.6
		(0.01	)%		(16.2	)%

The tax effects of principal temporary differences between the carrying amount of assets and their tax bases are summarized below.

Management believes it is more likely than not that it will be able to offset certain deductions associated with these deferred tax assets to its prior or future years’ taxable income:

F-20

OPTIONABLE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of the deferred tax assets are as follows:

	December 31,			December 31,
	2009			2008

Allowance for bad debt	$	179,465		$	260,865
Accrued expenses		-			48,840
State income tax carryforward		10,000			225,949
Intangible assets, net of amortization		132,593			143,807
		322,058			679,461
Valuation Allowance		(322,058	)		(679,461	)
Tot Total deferred tax assets- current	$	-		$	-

The recoverable income tax amounting to approximately $900,000 is recoverable from applications for carryback refund from the Company’s 2006 federal tax returns.

The Company has net operating losses of approximately $2.6 million for both federal and state tax purposes.

The valuation allowance of deferred tax assets increased by approximately $350,000 during 2009and 2008, respectively.

Note 13 – Subsequent Events

In accordance with ASC 855, “Subsequent Events” the Company evaluated subsequent events after the balance sheet date of December 31, 2009 through April 15, 2010, which is the date the financial statements were issued.

F-20

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

	Large accelerated filer	o	Accelerated filer	o
	Non-accelerated filer	o	Smaller reporting company	x

		Page
PART I
Item 1.	Description of Business	2
Item 1A.	Risk Factors	3
Item 1B	Unresolved Staff Comments	7
Item 2.	Properties	7
Item 3.	Legal Proceedings	7
Item 4.	[Removed and Reserved]	8

PART II
Item 5.	Market for Common Equity and Related Stockholder Matters	8
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis or Plan of Operation	10
Item 7A.	Quantitative and Qualitative Disclosures about Market Risks	14
Item 8.	Financial Statements and Supplementary Data	14
Item 9.	Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	14
Item 9A(T).	Controls and Procedures	14
Item 9B.	Other Information	15

PART III
Item 10.	Directors, Executive Officers, Promoters and Control Persons;
	Compliance With Section 16(a) of the Exchange Act	15
Item 11.	Executive Compensation	18
Item 12.	Security Ownership of Certain Beneficial Owners and Management
	and Related Stockholder Matters	20
Item 13.	Certain Relationship and Related Transactions	21
Item 14.	Principal Accountant Fees and Services	22
Item 15.	Exhibits	23

SIGNATURES		27

	Fiscal 2009				Fiscal 2008
Quarter Ended	High		Low		High (2)		Low (2)
March 31	$	0.03	$	0.01	$	0.10	$	0.05
June 30	$	0.04	$	0.01	$	0.07	$	0.04
September 30	$	0.03	$	0.01	$	0.07	$	0.03
December 31	$	0 .04	$	0.02	$	0.07	$	0.01


Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders		1,233,000	$	0.36		6,094,000

Equity compensation plans not approved by security holders		-0-		N/A		-0-

Total		1,233,000	$	0.42		6,094,000

Results of Operations

							Increase/			Increase/
	For the year ended						(Decrease)			(Decrease)
	December 31,						in $ 2009			in % 2009
	2009			2008			vs 2008			vs 2008


Operating expenses:
Selling, general and administrative		2,359,622			2,111,379			248,243			11.8	%
Research and development		-			659,211			(659,211	)		-100.0	%
Total operating expenses		2,359,622			2,770,590			(410,968	)		-14.8	%

Operating loss		(2,359,622	)		(2,770,590	)		410,968			-14.8	%

Other income (expense):
Interest income		42,224			255,118			(212,894	)		-83.4	%
Other expense		-			-					NM
Interest expense-related parties		(155,379	)		(383,894	)		(228,515	)		-59.5	%
		(113,155	)		(128,776	)		(15,621	)		-12.1	%

Net loss before income tax		(2,472,777	)		(2,899,366	)		426,589			-14.7	%

Income tax benefit		24,674			468,566			(443,892	)		-94.7	%

Net loss	$	(2,448,103	)	$	(2,430,800	)	$	17,303			0.7	%

NM: Not meaningful

Name	Age	Position	Date of Election Or Appointment as a Director
Thomas Burchill	68	Chief Executive Officer, President, and Director	November 2007
Marc-Andre Boisseau	45	Director	March 2009
Edward O’Connor	56	Director	March 2001
Andrew Samaan	43	Director	January 2009

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in pension value and Non-Qualified Deferred Compensation	All Other Compensation ($)	Total ($)
Edward O’Connor	2009	16,667	0	0	0	0	0	16,824	33,491
President and Director (1)	2008	200,000	0	0	0	0	0	16,703	216,703
Thomas Burchill, Chief Executive Officer,	2009	192,470	0	0	250,000	0	0	0	192,470
President, and Director (2)	2008	100,000	0	0	0	0	0	0	0
Marc-Andre Boisseau	2009	138,500	0	0	0	0	0	0	138,500
Chief Financial Officer and Director	2008	121,306	0	0	0	0	0	0	121,306

Name (a)	Fees Earned or Paid in Cash ($) (b)	Stock Awards ($) (c)	Option Awards ($) (d)		Non-Equity Incentive Plan Compensation ($) (e)	Change in Pension Value and Nonqualified Deferred Compensation Earnings (f)	All Other Compensation ($) (g)	Total ($) (h)
Andrew Samaan	42,708		$5,000	250,000				42,708
Edward O’Connor	25,000							25,000
Marc-Andre Boisseau	30,003							30,003

Title of Class	Name and address of Beneficial Owner	Number of Shares Beneficially Owned		Percent of Total*
Common Stock	Edward O’Connor (1) 1230 Avenue of the Americas, 7th floor, New York, NY, 10020		3,854,130		8.0%

Common Stock	Marc-Andre Boisseau 1230 Avenue of the Americas, 7th floor, New York, NY, 10020		0		0.0%

Common Stock	Thomas Burchill (2) 1230 Avenue of the Americas, 7th floor, New York, NY, 10020		400,000		0.8%

Common Stock	Andrew Samaan (2) 1230 Avenue of the Americas, 7th floor, New York, NY, 10020		150,000		0.3%

Common Stock	Mark Nordlicht 159 Wykagil Terrace, New Rochelle, NY 10804		4,095,075		8.4%

Common Stock	Nymex Holdings, Inc. One, North End Avenue World Financial Center New York, NY 10282		10,758,886		20.52%

Common Stock	All Executive Officers and Directors as a Group (4 persons )		4,404,130		9.0%

	2009		2008

Audit Fees (1)	$	67,500	$	75,000
Audit-Related Fees	$	-	$	-
Tax Fees	$	-	$	-
All Other Fees	$	-	$	-

Total	$	67,500	$	75,000

Exhibit No.		Description

3.1		Certificate of Incorporation of Optionable, Inc., dated February 4, 2000 (incorporated by reference to Exhibit 3(i)(a)to the Registrant's Registration Statement on Form SB-2, filed December 22, 2004, file no. 333-121543 (the "SB-2").

3.2		Certificate of Amendment to the Certificate of Incorporation of Optionable, Inc., dated March 30, 2000 (incorporated by reference to Exhibit 3(i)(b) to the SB-2)

3.3		Certificate of Amendment to the Certificate of Incorporation of Optionable, Inc., dated May 31, 2000 (incorporated by reference to Exhibit 3(i)(c) to the SB-2).

3.4		Certificate of Amendment to the Certificate of Incorporation of Optionable, Inc., dated July 21, 2000 (incorporated by reference to Exhibit 3(i)(d) to the SB-2).

3.5		Corrected Certificate of Amendment to the Certificate of Incorporation of Optionable, Inc., dated January 31, 2003 (incorporated by reference to Exhibit 3(i)(e) to the SB-2).

3.6		Certificate of Amendment to the Certificate of Incorporation of Optionable, Inc., dated June 9, 2004 (incorporated by reference to Exhibit 3(i)(f) to the SB-2).

3.7		Amended and Restated By-laws of Optionable, Inc. (incorporated by reference to Exhibit 3(ii) to the SB-2)

10.1		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 (incorporated by reference to Exhibit 10(ii)(a) to the SB-2)

10.2		Addendum to Master Services Agreement (incorporated by reference to Exhibit 10(ii)(b) to the SB-2)

10.3		Amendment to Master Services Agreement (incorporated reference to the Registrant's Current Report on Form 8-K, dated as of April 10, 2006)

10.4		Termination Agreement (of Master Service Agreement; incorporated by reference to the Registrant's Current Report of Form 8-K, dated as of January 31, 2007)

10.5		Options Order Flow Agreement, dated July 1, 2004, between the Company and Intercontinental Exchange, Inc. (incorporated by reference to Exhibit 10(iii)(a) to the SB-2)

10.6		Superseding Option Order Flow Agreement, dated as of March 2, 2005 (incorporated by reference to Exhibit 10(iii)(b) to the SB-2)

10.7		Employment Agreement, as amended, between the Company and Edward J. O'Connor (incorporated by reference to Exhibit 10(iv) (a) to the SB-2)

10.8		Optionable, Inc. 2004 Stock Option Plan (incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement on Form S-8, file number 333-129853, as filed on November 21, 2005 (the "S-8")

10.9		Form of Incentive Stock Option Agreement(incorporated by reference to Exhibit 4.2 to the S-8)

10.10		Nonstatutory Stock Option Agreement(incorporated by reference to Exhibit 4.3 to the S-8)

10.11		Prepaid Commission Agreement, dated February 3, 2003, between the Company and Mark Nordlicht (incorporated by reference to Exhibit 10(vi) to the SB-2).

10.12		Revolving Credit Facility Agreement, dated June 5, 2003, between the Company and Platinum Value Arbitrage Fund LP(incorporated by reference to Exhibit 10(vii)(a) to the SB-2)

10.13		$500,000 Revolving Promissory Note from the Company to Platinum Value Arbitrage Fund LP dated June 5, 2003 (incorporated by reference to Exhibit 10(vii)(b) to the SB-2)

10.14		Prepaid Commission Agreement, dated June 9, 2003, between the Company and Platinum Partners Value Arbitrage Fund LLP(incorporated by reference to Exhibit 10(viii) to the SB-2)

10.15		Loan Agreement, dated February 13, 2004, between the Company and Mark Nordlicht (incorporated by reference to Exhibit 10(ix)(a) to the SB-2)

10.16		$250,000 Promissory Note, dated February 13, 2004, from the Company to Mark Nordlicht (incorporated by reference to Exhibit 10(ix)(b) to the SB-2)

10.17		$250,000 Promissory Note Extension Agreement, dated September 9, 2004 (incorporated by reference to Exhibit 10(ix)(c) to the SB-2)

10.18		Loan Agreement, dated March 8, 2004, between the Company and Mark Nordlicht (incorporated by reference to Exhibit 10(x)(a) to the SB-2)

10.19		$50,000 Promissory Note, dated March 8, 2004, from the Company to Mark Nordlicht (incorporated by reference to Exhibit 10(x)(b) to the SB-2)

10.20		$50,000 Promissory Note Extension Agreement, dated September 9, 2004 (incorporated by reference to Exhibit 10(x)(c) to the SB-2)

10.21		Loan Agreement, dated March 22, 2004, between the Company and Mark Nordlicht (incorporated by reference to Exhibit 10(xi)(a) to the SB-2)

10.22		$5,621,753.18 Promissory Note, dated March 22, 2004, from the Company to Mark Nordlicht (incorporated by reference to Exhibit 10(xi)(b) to the SB-2)

10.23		Addendum to Loan Agreement, dated March 22, 2004 (incorporated by reference to Exhibit 10(xi)(c) to the SB-2)

10.24		Addendum to Promissory Note, dated March 22, 2004 (incorporated by reference to Exhibit 10(xi)(d) to the SB-2)

10.25		Revolving Credit Facility Agreement, dated April 15, 2004, between the Company and Mark Nordlicht (incorporated by reference to Exhibit 10(xii)(a) to the SB-2)

10.26		$50,000 Promissory Note, dated April 15, 2004, from the Company to Mark Nordlicht (incorporated by reference to Exhibit 10(xii)(b) to the SB-2)

10.27		Warrant Agreement for the Purchase of Common Stock (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2006)

10.28		Service and Repurchase Agreement (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of January 31, 2007

10.29		Code of Business Conduct and Ethics (Incorporated by reference to the Registrant’s Form 10-KSB for the fiscal year ended December 31, 2007)

10.30		Acquisition Agreement, dated March 23, 2007, between the Company, Peter Holmquist, Douglas Towne, and Joseph McHugh (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of March 23, 2007.

10.31		Release, Rescission and Termination Agreement, dated May 18, 2007, by and among Optionable, Inc., Peter Holmquist, Douglas Towne, Joseph McHugh and Nicole Troiani (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of May 18, 2007.

10.32		Separation and Release Agreement, dated July 25, 2007, by and among Optionable, Inc., Opex International, Inc., Kevin DeAndrea, Noah Rothblatt, Kevin Brennan and Nicole Troiani. (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of July 25, 2007).

10.33		Warrant, dated April 10, 2007, issued pursuant to that certain Stock and Warrant Purchase Agreement, dated April 10, 2007, by and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht, Kevin Cassidy through Pierpont Capital, Inc. and Edward O'Connor through Ridgecrest Capital, Inc. (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007)

10.34		Stock and Warrant Purchase Agreement, dated April 10, 2007, by and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht, Kevin Cassidy through Pierpont Capital, Inc. and Edward O'Connor through Ridgecrest Capital, Inc.(portions of this exhibit are subject to a confidential treatment request) (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007)

10.35		Investor Rights Agreement, dated April 10, 2007, by and among Optionable, Inc., NYMEX Holdings, Inc., Mark Nordlicht, Kevin Cassidy and Edward O'Connor. (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007)

10.36		Waiver, dated April 10, 2007, by and between Optionable, Inc. and Mark Nordlicht, to that certain Loan Agreement, dated March 22, 2004, by and between Optionable, Inc. and Mark Nordlicht. (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007)

10.37		Amended and Restated Employment Agreement, dated April 10, 2007, by and between Optionable, Inc. and Kevin Cassidy. (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007)

10.38		Registration Rights Agreement, dated April 10, 2007, by and between Optionable, Inc. and NYMEX Holdings, Inc. (incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2007)

10.39		Separation and Release Letter, dated November 6, 2007, by and between Optionable, Inc. and Albert Helmig (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of November 6, 2007).

10.40		Letter Agreement, dated as of November 26, 2007, by and between Optionable, Inc. and Thomas Burchill. (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of November 26, 2007).

10.41		Letter Agreement, dated as of November 26, 2007, by and between Optionable, Inc. and Dov Rauchwerger. (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of November 26, 2007).

10.42		Stock Option Agreement, dated as of November 26, 2007, by and between Optionable, Inc. and Thomas Burchill. (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of November 26, 2007).

10.43		Stock Option Agreement, dated as of November 26, 2007, by and between Optionable, Inc. and Dov Rauchwerger. (incorporated by reference to the Registrant's Current Report on Form 8-K, dated as of November 26, 2007).

10.44		Separation Agreement between Optionable, Inc. and Edward J. O’Connor dated as of January 28, 2009. (incorporated by reference to the Registrant’s Current Report on Form 8-K dated as of February 2, 2009)

10.45		Employment Agreement between Optionable, Inc. and Thomas Burchill dated as of January 28, 2009(incorporated by reference to the Registrant’s Current Report on Form 8-K dated as of February 2, 2009)

10.46		Letter Agreement dated as of January 15, 2009 with respect to compensation to Andrew Samaan (incorporated by reference to the Registrant’s Current Report on Form 8-K dated as of February 2, 2009)

10.47		Settlement and Voting Agreement between Optionable, Inc. and Mark Nordlicht dated as of February 26, 2009 (incorporated by reference to the Registrant’s Current Report on Firm 8-K dated as of February 27, 2009)

21*		Subsidiaries of the Company.

31.1*		Certification by Chief Executive Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

31.2*		Certification by Principal Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

32.1*		Certification by Chief Executive Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

32.2*		Certification by Principal Financial Officer, required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

				Optionable, Inc.


			By:	/s/ Thomas F. Burchill
				Thomas F. Burchill
				Chief Executive Officer, President
				and Director (Principal Executive Officer and Principal Financial Officer)

Signature	Title	Date

/s/Marc Andre Boisseau	Director	April 15 , 2010
Marc Andre Boisseau

/s/ Thomas F. Burchill	Chief Executive Officer, President, and Director	April 15, 2010
Thomas F. Burchill

/s/ Edward O’Connor	Director	April 15, 2010
Edward O’Connor

/s/ Andrew Samaan	Director	April 15, 2010
Andrew Samaan

OPTIONABLE, INC.
CONSOLIDATED BALANCE SHEETS

	December 31,
	2009			2008
ASSETS
Current Assets:
Cash and cash equivalents	$	4,231,534		$	8,974,282
Refundable Income Taxes		933,662			958,294
Prepaid expenses		1,194,296			1,269,827
Total current assets		6,359,492			11,202,403


Total assets	$	6,359,492		$	11,202,403

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts payable and accrued expenses	$	608,270		$	420,590
Due to stockholder		-			97,907
Income tax payable		-			83,555
		608,270			602,052

Due to stockholder, net of unamortized discount of $2,610,270 at December 31, 2008		-			2,426,240
Due to director, net of unamortized discount of $303,461 and $355,126
at December 31, 2009 and 2008, respectively		205,236			153,571
Total liabilities		813,506			3,181,863

Stockholders' Equity:
Preferred Stock; $.0001 par value, 5,000,000 shares authorized, none issued
and outstanding at December 31, 2009 and 2008		-			-
Common stock; $.0001 par value, 100,000,000 shares authorized,
52,428,203 issued and 48,328,328 and 52,423,403 outstanding
at December 31, 2009 and 2008, respectively		5,242			5,242
Additional paid-in capital		162,784,691			162,766,096
Treasury stock at cost, 4,099,875 and 4,800 shares at December 31, 2009 and 2008, respectively		(47,552	)		(2,506	)
Accumulated deficit		(157,196,395	)		(154,748,292	)

Total stockholders’ equity		5,545,986			8,020,540

Total liabilities and stockholders’ equity	$	6,359,492		$	11,202,403

OPTIONABLE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

	For the year ended
	December 31
	2009			2008

Operating expenses:
Selling, general and administrative	$	2,359,622		$	2,111,379
Research and development		-			659,211

Total operating expenses		2,359,622			2,770,590

Operating loss		(2,359,622	)		(2,770,590	)

Other income (expense):
Interest income		42,224			255,118
Interest expense to related parties		(155,379	)		(383,894	)
		(113,155	)		(128,776	)

Loss before income tax benefit		(2,472,777	)		(2,899,366	)

Income tax benefit		24,674			468,566


Net loss	$	(2,448,103	)	$	(2,430,800	)

Basic loss per common share	$	(0.05	)	$	(0.05	)

Diluted loss per common share	$	(0.05	)	$	(0.05	)

Basic weighted average common
shares outstanding		48,967,833			52,423,403

Diluted weighted average common shares outstanding		48,967,833			52,423,403

							Treasury
	Common Stock				Additional		Stock,			Accumulated
	Shares		$		Paid-in Capital		at Cost			Deficit			Total

Balance at January 1, 2008		52,423,403	$	5,242	$	162,743,356	$	(2,506	)	$	(152,317,492	)	$	10,428,600

Fair value of options		-		-		22,740		-			-			22,740
Net loss		-		-		-		-			(2,430,800	)		(2,430,800	)
Ending balance, December 31, 2008		52,423,403		5,242		162,766,096		(2,506	)		(154,748,292	)		8,020,540

Fair value of options		-		-		18,595		-			-			18,595
Repurchase of shares								(45,046	)					(45,046	)
Net loss		-		-		-		-			(2,448,103	)		(2,448,103	)
Ending balance, December 31, 2009		52,423,403	$	5,242	$	162,784,691	$	(47,552	)	$	(157,196,395	)	$	5,545,986

OPTIONABLE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the year ended
	December 31,
	2009			2008

Cash flows from operating activities:
Net loss	$	(2,448,103	)		(2,430,800	)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation		-			161,806
Amortization of debt discount		155,379			383,894
Provision for doubtful accounts		80,000			(35,368	)
Fair value of warrants and options		18,595			22,740
Changes in operating assets and liabilities:
Accounts receivable		-			35,368
Prepaid and other assets		75,531			(862,291	)
Accounts payable and accrued expenses		187,680			(6,751	)
Due to stockholder		(97,907	)		97,907
Deferred tax assets					281,356
Income tax payable		(88,078	)		83,555
Recoverable income taxes		29,155			1,323,139

Net cash used in operating activities		(2,087,748	)		(945,445	)

Cash flows used in investing activities:
Purchases of notes receivable		(80,000	)		-

Net cash used in investing activities		(80,000	)		-

Cash flows from financing activities:

Repurchase of shares of common stock		(45,046	)		-
Principal repayment of due to stockholder		(2,529,954	)		-

Net cash used in financing activities		(2,575,000	)		-

Net decrease in cash		(4,742,748	)		(945,445	)

Cash, beginning of year		8,974,282			9,919,727

Cash, end of year	$	4,231,534		$	8,974,282

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

Cash paid for interest	$	-		$	-

Noncash investing and financing activities:

Disposition of property and equipment in connection with
cancellation of lease	$	-		$	24,425

April 15, 2010	/s/ Thomas F. Burchill
	Principal Financial Officer