The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear in this annual report.

RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2008 COMPARED TO YEAR ENDED
DECEMBER 31, 2007

                                          Results of Operations

                                                                            Increase/         Increase/
                                            For the year ended              (Decrease)       (Decrease)
                                               December 31,                 in $ 2008         in % 2008
                                          2008              2007             vs 2007           vs 2007

Brokerage fees                        $          -     $    8,786,850     $   (8,786,850 )        -100.0 %
Brokerage fees-related parties                   -     $    1,148,885         (1,148,885 )        -100.0 %
Incentives                                       -     $    3,285,058         (3,285,058 )        -100.0 %
Net revenues                                     -         13,220,793        (13,220,793 )        -100.0 %

Cost of revenues                                 -          7,798,438         (7,798,438 )        -100.0 %
Cost of revenues-related parties                 -             30,013            (30,013 )        -100.0 %
                                                 -          7,828,451         (7,828,451 )        -100.0 %

Gross profit                                     -          5,392,342         (5,392,342 )        -100.0 %

Operating expenses:
Selling, general and administrative      2,111,379          8,624,175         (6,512,796 )         -75.5 %
Impairment-considerable receivable
from stockholder                                 -        145,771,878       (145,771,878 )            NM
Impairment-intangible asset                      -          1,085,610         (1,085,610 )            NM
Research and development                   659,211          1,094,188           (434,977 )         -39.8 %
Total operating expenses                 2,770,590        156,575,851       (153,805,261 )            NM

Operating income                        (2,770,590 )     (151,183,509 )      148,412,919              NM

Other income (expense):
Interest income                            255,118            388,757           (133,639 )         -34.4 %
Other expense                                    -            (15,250 )           15,250              NM
Interest expense-related parties          (383,894 )         (340,707 )           43,187            12.7 %
                                          (128,776 )           32,800            161,576              NM

Net income before income tax            (2,899,366 )     (151,150,709 )      148,251,343              NM

Income tax benefit                         468,566            415,548             53,018            12.8 %

Net income                            $ (2,430,800 )   $ (150,735,161 )   $  148,304,361              NM

NM: Not meaningful

Revenues

Revenues during 2007 consisted primarily of fees earned from natural gas derivatives transactions and related incentive arrangements.

The decrease in brokerage fees during 2008 when compared to 2007 is primarily due to a decrease in the brokerage fees resulting from decreased volume of transactions of natural gas derivatives traded on the OTC market on behalf of existing clients during the current year periods. We have not generated any revenues since the third quarter of 2007.

The decrease in brokerage fees-related party during 2008 when compared to 2007 is primarily due to the fact that our agreement with Capital Energy Services, Inc., a related party, was effective during one month (i.e. January 2007). This agreement was terminated January 31, 2007.

As a result of the factors discussed above, we do not anticipate that we will generate revenues that we traditionally generated from OPEX, voice-brokerage and our floor operations for the remainder of 2009. We currently have no revenue source and expect to generate revenues only if we are able to implement our revised strategy.

Cost of revenues

During 2007, cost of revenues consists primarily of compensation of personnel directly associated with handling the natural gas derivative transactions on behalf of our clients as well as expenses associated with our floor brokerage operations. The decrease in cost of revenues in 2008 when compared to 2007 is primarily attributable to the termination of employment of substantially all our brokers during 2007, which reduced our compensation expenses (including salary, commissions, and share-based payment) associated with the employment of such brokers.

We do not expect that our cost of revenues for the remainder of 2009 will increase, unless we implement our revised strategy which could change our business model.

Selling, general, and administrative expenses

Selling, general, and administrative expenses consists primarily of legal fees, incurred in connection with the Company's attention to certain allegations made recently and to our responses to and compliance with requests for documents and information received from the United States Commodity Futures Trading Commission (the "CFTC"), the United States Securities and Exchange Commission (the "SEC"), the United States Department of Justice (the "DOJ") and a grand jury subpoena received from the New York County District Attorney's office (the "District Attorney's Office"), or to handle certain matters which occur during the course of our operations, and compensation of personnel supporting our operations. It also includes the amortization of the consideration receivable from the Investor and allowance for bad debt. The decrease in selling, general, and administrative expenses during 2008 when compared to 2007 is primarily due to the following:

· one-time amortization of the Consideration receivable from the Investor of approximately $3.3 million which was recorded during the second quarter of 2007;

· decreased legal fees of approximately $1.4 million. The decrease in legal fees is primarily due to higher legal fees incurred during 2007 in connection with our attention to certain allegations, our responses to, and compliance with the governmental requests described above, and in connection with the NYMEX transaction, further decreased by the recording of insurance proceeds authorized by our insurance carrier during 2008 which approximated $639,000. The insurance proceeds consist of the reimbursement of certain legal fees we incurred in connection with legal proceedings disclosed in Item 3 of Part I of this Report. We did not have as many governmental requests during 2008 and we did not received insurance proceeds from our insurance carrier during 2007;

· one-time provision in June 2007 of approximately $640,000 in connection with our estimated incentives receivable from the Investor ;

· decreased compensation to our directors during 2008 when compared to 2007. This decrease is primarily due to a decreased rate paid to our directors during 2008;

· decreased investor relation fees in connection with decreased efforts to position our company before the investors community;

· decreased marketing expenses incurred in connection with the decreased marketing efforts to position our company before the traders community;

As a result of the matters discussed above and in Item 3 of Part I1 of this Report, we believe that our legal fees for 2009 will continue to constitute a large share of our selling, general, and administrative expenses. We believe that our legal fees may increase in 2009 when compared to 2008.

Research and development

Research and development expenses consist primarily of compensation of personnel and consultants associated with the development and testing of our automated electronic trading system. The decrease in research and development expenses during 2008 when compared to the prior year period is primarily due to the following:

· decreased number of software engineers used in the development of OPEX during 2008 offset by increased compensation rate for existing software engineers and quality and assurance personnel working on electronic platform, OPEX.

We expect that our research and development expenses will decrease during 2009. Effective November 4, 2008, the Company suspended the development of OPEX, but the Company intends to maintain it. The Company is unable to determine if and when it will resume the enhancement of features and functionalities of OPEX.

Impairment- Consideration receivable from Investor and Impairment- Intangible Asset

The impairment- consideration receivable from the Investor and impairment- intangible asset consists of one-time losses attributable to the lack of perceived likely benefits from 1) the consideration the Investor had agreed to provide to the Company pursuant to the Stock and Warrant Purchase Agreement and
2) the constructive rescission of the HQ Trading acquisition. The Stock and Warrant Purchase Agreement and the HQ Trading acquisition both took place during 2007 and no similar expenses occurred 2008.

Interest income

Interest income consists primarily of interest earned on interest-bearing cash and cash equivalents. The decrease in interest income during 2008 when compared to 2007 is primarily due to a decrease in interest rate we earned on our cash and cash equivalents' interest bearing balances.

Interest expense to related parties

Interest expense to related parties consists of interest charges associated with amounts due to related parties, Mark Nordlicht, our former Chairman, and Edward O'Connor, a Director. The increase in interest expense to related parties during 2008 is primarily due to the increase in basis on which the interest is imputed, using the effective interest method.

Income tax

Income tax benefit consists of federal and state current and deferred income tax or benefit based on our net income. The increase in income tax benefit during the 2008 when compared to 2007 is primarily due to larger taxable losses we incurred during 2008 compared to 2007.

LIQUIDITY AND CAPITAL RESOURCES

Our cash balance as of December 31, 2008 amounts to approximately $9.0 million.

· net loss of approximately $1.9 million, adjusted for the amortization of debt discount and depreciation of approximately $384,000;

· a decrease in prepaid income taxes assets resulting from the reimbursement during 2008 of the 2007 federal and state estimated tax payments offset by the current year tax benefits resulting from operating losses; and

· an increase in prepaid expenses of approximately $863,000 which primarily consists of the payment of additional retainers requested by law firms representing the Company, one of our directors, and our former chief executive officer in connection with certain legal matters disclosed in Item 3 of Part I of this report.

· An increase of approximately $98,000 of the due to stockholder, which consists of legal fees incurred and paid by Mark Nordlicht, a stockholder, in his defense in connection with certain legal matters disclosed in Item 3 of Part I of this report, to whom the Company provides indemnification pursuant to its by-laws.

During 2007, we generated cash from operating activities of approximately $2.4 million, primarily resulting from:

· net loss of approximately $150.7 million, adjusted for the impairment of the consideration receivable from the Investor, the amortization of the consideration receivable from the Investor, and the fair value of warrants, options and shares issued during the period aggregating approximately $145.8 million, $3.3 million, and $4.2 million, respectively; and

· a decrease in accounts receivable and accounts receivable-related party of approximately $2.3 million, a decrease in incentive receivables from Investor of approximately $667,000 and a decrease in accrued compensation of $1.9 million due to a decline in revenues and associated expenses during the second half of the second quarter of 2007;

· an increase in prepaid tax assets of $2.3 million resulting from the payment of estimated income taxes offset by a reduction of the anticipated income tax.

During 2007, we used our cash generated from operating activities to acquire the customer relationship of HQ Trading, a crude oil broker, for $400,000, acquired trading rights on the NYMEX floor for $1.2 million, and incurred capital expenditures aggregating approximately $241,000. We also disposed of a trading right for $1,165,000.

During 2007, we generated gross proceeds from the exercise of certain warrants and options aggregating approximately $220,000.

On May 30, 2006, our Board of Directors authorized us to repurchase such number of shares of our common stock that have an aggregate purchase price not in excess of $200,000 at the rate of up to $50,000 worth of common stock each quarter. The Company repurchased 4,800 shares at a cost aggregating $2,506 since the commencement of the share repurchase program. We did not repurchase any shares during 2008.

The Company has an outstanding promissory note (the "Note") issued to Mark Nordlicht, our co-founder and Chairman until May 2007. The balance on the Note is approximately $5 million, is non-interest bearing and is due in 2014. We have voluntary prepayment rights and a requirement to prepay the outstanding balance on the Note with a portion of the proceeds of any equity or debt financing exceeding $1 million. To date, the Note is neither due, in default nor subject to any prepayment obligation of the Company. Edward O'Connor, our co-founder and former President, has a substantially similar promissory note with an outstanding principal balance of approximately $500,000. On January 28, 2009, our Board of Directors established a special committee of three directors to review and respond to Mark Nordlicht's repeated requests to renegotiate the Note. While the Note is not currently payable or in default, the Company believes that it may be able to obtain a favorable resolution to a number of continuing disputes with Mr. Nordlicht regarding the satisfaction of the Note at a discount, the management and the future direction of the Company. The special committee has commenced negotiations with Mr. Nordlicht but there can be no assurance that a definitive agreement will be achieved. Members of the special committee are Thomas Burchill, Dov Rauchwerger and Andrew Samaan.

GOING CONCERN

The Company believes it has sufficient funds to meet its obligations, based on its internal projections, for at least the next twelve months. However, the Company cannot guarantee that it will do so. If there are unforeseen expenses or financial obligations which occur during that period, such as those related to matters disclosed in Part I, Item 3- Legal Proceedings, the Company may not be able to meet such obligations. Additionally, if the Company acquires a brokerage or trading firm or a technology company which could be instrumental in the Company's long-term growth, this could hamper the Company's ability to continue as a going concern, both from a short-term or a long-term perspective, and the Company would have to resort to financing, through either debt or equity placements, for the funding of either such acquisitions or unforeseen expenses or financial obligations. There can be no assurance that any such financing would be available on acceptable terms, or at all, especially in light of the pending litigation against the Company and recent economic conditions.

A summary of significant accounting policies is included in Note 2 of the audited financial statements included in this Annual Report. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. Our financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. Critical accounting policies for us include the following:.

Revenue recognition

During 2007, revenue is recognized when earned. Our revenue recognition policies are in compliance with the SEC's Staff Accounting Bulletin ("SAB") No. 104 "Revenue Recognition". The application of SAB No. 104 requires us to apply our judgment, including whether our clients receive services over a period of time.

We generally invoiced our clients monthly, for all transactions which have been executed during such month. Revenues are recognized on the day of trade-trade date basis. Our revenues derive from a certain predetermined fixed fee of the transactions we execute on behalf of our clients. 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.

During 2007, we also receive incentives from the New York Mercantile Exchange for the volume of OTC transactions we submit to their clearing platforms on behalf of our clients. 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, realized the incentive revenues realized or realizable when all of the following criteria are met:

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

2) Delivery has occurred or services have been rendered. Under arrangements with the exchange, 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 exchange. 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 we submit transactions to the exchange. We have no other obligations to the exchange 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

Accounts and incentive receivable and related allowance for doubtful accounts.

Accounts receivable and incentive receivable are reported at net realizable value. We have established an allowance for doubtful accounts based upon factors pertaining to the credit risk of specific customers, historical trends, and other information. Delinquent accounts are written-off when it is determined that the amounts are uncollectible.

Share-based payment

We account for share-based payments in accordance with SFAS No. 123(R), Share-Based Payment. Under the fair value recognition provisions of this statement, share-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining the fair value of share-based awards at the grant date requires judgment, including estimating expected volatility. In addition, judgment is also required in estimating the amount of share-based awards that are expected to be forfeited. If actual results differ significantly from these estimates, stock-based compensation expense and our results of operations could be materially impacted.

Impairment of intangible assets

SFAS No. 142, Goodwill and Other Intangible Assets, requires that goodwill be tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of an intangible asset below its carrying value. These events or circumstances could include a significant change in the relationship with the contracting party, business climate, legal factors, operating performance indicators, or competition. Application of the intangible asset impairment test requires judgment, including the determination of the fair value of each intangible asset. The fair value of each intangible asset is estimated based on the consideration given by us to acquire the intangible asset(s). This requires significant judgment including the estimation of expected volatility if the Company issued common share equivalent as consideration. Changes in our estimates of undiscounted cash flows related to each intangible asset could materially affect the determination of the impairment for each intangible asset.

Contingencies

The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. SFAS No. 5, Accounting for Contingencies, requires that an estimated loss from a loss contingency such as a legal proceeding or claim should be accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Disclosure of a contingency is required if there is at least a reasonable possibility that a loss has been incurred. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our financial position or our results of operations.

RECENT PRONOUNCEMENTS

The FASB issued FASB Statement No. 141 (revised 2007), Business Combinations, Statement 141(R ) requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. FASB No.141 R is effective for fiscal years beginning after December 15, 2008. The Company does not believe that FAS No. 141 R will have any impact on its financial statements.

In March 2008, the FASB issued FASB No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133, which requires additional disclosures about the objectives of the derivative instruments and hedging activities, the method of accounting for such instruments under SFAS No. 133 and its related interpretations, and a tabular disclosure of the effects of such instruments and related hedged items on our financial position, financial performance, and cash flows. SFAS No. 161 is effective for the Company beginning January 1, 2009. Management believes that, for the foreseeable future, this Statement will have no impact on the financial statements of the Company once adopted.

In May 2008, FASB issued FASB Statement No. 162, The Hierarchy of Generally Accepted Accounting Principles.The new standard is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with U.S. generally accepted accounting principles (GAAP) for non-governmental entities. We are currently evaluating the effects, if any, that SFAS No. 162 may have on our financial reporting.