U.
S. SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549




FORM
10-K




(Mark
One)




x ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934




For the
fiscal year ended December 31, 2008




o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934




For the
transition period from ___________ to _____________




Commission
File Number 000-32131




QUEST
MINERALS & MINING CORP.


(Name of
small business issuer as specified in its charter)




Utah
            87-0429950(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer
              Identification
      No.)18B
      East 5th
      Street
              Paterson,
      NJ  07524
              (Address of
      principal executive offices, including zip code)


Registrant’s
telephone number, including area code:  (973) 684-0075


Securities
registered pursuant to Section 12(b) of the Act: None


Securities
registered pursuant to Section 12(g) of the Act:  Common Stock, $.001 par
value


___________________






Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. oYes
No x




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act: oYes
No x




Indicate
by check mark whether the registrant(1) has filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 day. xYes o No




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulations S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy ir information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. o




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 if the Exchange Act.




Large accelerated
      filter o
            Accelerated
      filter oNon-accelerated
      filter   o (Do not check if
      a smaller reporting company)
            Smaller
      reporting company x




Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.  Yes  X  No




As ofMarch 31, 2009, 863,364,471shares of our common stock were issued
and outstanding.




Documents Incorporated by
Reference:      None.









EXPLANATORY
NOTE





This
annual report on Form 10-K does not contain all of the information required to
be disclosed under the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.  In particular, this annual
report does not contain the financial statements required by Article 8 of
Regulation S-X; management’s discussion and analysis required by Item 303 of
Regulation S-K; disclosure controls and procedures required by Item 307 of
Regulation S-K; internal control over financial reporting required by Item 308
of Regulation S-K; executive compensation required by Item 402 of Regulation S-K
and paragraph (e)(4) and (e)(5) of Item 407 of Regulation S-K, principal
accounting fees and services required by Item 9(e) of Schedule 14A and
certifications required under Rule 13a-14 of the Securities Exchange Act of
1934, as amended, and Section 1350 of the Sarbanes-Oxley Act of 2002.  The
company intends to file an amendment to this annual report on Form 10-K to
provide the missing information once it becomes available.





PART
I




Quest
Minerals & Mining Corp., including all its subsidiaries, are collectively
referred to herein as “Quest Minerals,” “Quest,” “the Company,” “us,” or
“we.”





Item
1.   DESCRIPTION OF BUSINESS




General





Quest
Minerals & Mining Corp. acquires and operates energy and mineral related
properties in the southeastern part of the United States.  Quest
focuses its efforts on properties that produce quality compliance blend
coal.





Quest is
a holding company for Quest Minerals & Mining, Ltd., a Nevada corporation,
or Quest (Nevada), which in turn is a holding company for Quest Energy, Ltd., a
Kentucky corporation, or Quest Energy, and of Gwenco, Inc., a Kentucky
corporation, or Gwenco.





Gwenco
leases over 700 acres of coal mines, with approximately 12,999,000 tons of coal
in place in six seams.  In 2004, Gwenco had reopened Gwenco’s two
former drift mines at Pond Creek and Lower Cedar Grove, and had begun production
at the Pond Creek seam.  This seam of high qualitycompliance coal is located at Slater’s Branch, South Williamson,
Kentucky.





Fiscal
2008 and First Quarter 2009 Developments





Logan & Kanawha Purchase
Order.  In April 2008, our wholly owned subsidiary, Gwenco,
Inc., received a purchase order for up to $8 million of coal through December
2008 from Logan & Kanawha Co., LLC, a West Virginia company.  We
recognized approximately $746,000 in gross revenues for delivery of coal under
this purchase order in fiscal 2008.  However, due to economic
conditions, this purchase order was not renewed in 2009.





Rehabilitation and Reopening of Pond
Creek Mine.  In January 2007, Gwenco received a permit from the
Kentucky Department of Natural Resources to conduct coal mining at its Pond
Creed mine.  In February 2007, Gwenco’s engineering firm, Alchemy
Engineering of Prestonburg, Kentucky, completed one and five year mine plan and
maps required by the Kentucky Department of Mines and Minerals in connection
with the permit to conduct coal mining at Pond Creek.  Gwenco had
retained General Mining, LLC of Wallins, Kentucky to rehabilitate the Pond Creek
mine in February 2007 and further retained General Mining to conduct mining
operations at Pond Creek in March 2007.  The company completed its
initial rehabilitation of the Pond Creek mine, recommenced mining operations,
and began shipping commercial coal for sale in May 2007.  The company
completed all rehabilitation the week of July 30, 2007.  In January
2008, we retained White Star Mining to conduct all mining and rehabilitation
operations at Pond Creek.  White Star retained all necessary permits
to being mining operations in February 2008 and completed all necessary
additional rehabilitation thereafter. We resumed mining operations in July
2008.










March 2008
Financing.  On March 11, 2008, we signed a 15% per annum
promissory note with a third party lender for $75,000 due on March 10,
2009.  The note is convertible at the option of the holder at a
conversion price of 50% of the average of the three lowest per share market
values during the ten (10) trading days immediately preceding a conversion
date.  The holder may not convert any outstanding principal amount of
this note or accrued and unpaid interest thereon to the extent such conversion
would result in the holder beneficially owning in excess of 4.999% of the then
issued and outstanding common shares of the Company.





Gwenco, Inc. Chapter 11
Reorganization.On March 2, 2007,
Quest’s wholly owned subsidiary, Gwenco, Inc., filed a voluntary petition for
reorganization under Chapter 11 of .the U.S. Bankruptcy Code with the United
States Bankruptcy Court for the Eastern District of
Kentucky.  Management felt this was a necessary step to further the
company’s financial restructuring initiative and to protect Gwenco’s assets from
claims, debts, judgments, foreclosures, and forfeitures of those creditors and
stakeholders with whom both Quest and Gwenco were unable to negotiate
restructured agreements.  The company is currently overseeing Gwenco’s
operations as a debtor in possession, subject to court approval of matters
outside the ordinary course of business.  Gwenco is currently seeking
court approval for debtor in possession financing from holders of Gwenco’s
existing debt obligations in order to fund operating expenses.  The
company intends to continue its mining operations at Pond Creek mine at Slater’s
Branch while this matter is completed.  Under Chapter 11, claims
against Gwenco in existence prior to the filing of the petitions for
reorganization relief under the federal bankruptcy laws are stayed while Gwenco
is in bankruptcy.On August 3,
2007, the Bankruptcy Court approved Gwenco's request for debtor-in-possession
financing in an amount of up to $2,000,000.  Gwenco has submitted a
preliminary plan of reorganization to the court and the creditors for approval,
and the court had set August 19, 2008 for the hearing on confirmation of the
plan of reorganization. At the company's request, the court has continued the
confirmation hearing to June 2009 to allow the company to continue negotiating
the terms of the plan of reorganization with the creditors. Although there can
be no assurance that an amended plan of reorganization will be confirmed, the
company believes it will successfully negotiate a plan of reorganization with
its creditors and that the plan of reorganization will be confirmed at the
December hearing. If the bankruptcy court rejects Gwenco's petition for
bankruptcy under Chapter 11, we would be have a material impact as would lose
all of its working assets and have only unpaid liabilities. Accordingly, the
court could convert Gwenco's petition to Chapter 7 and liquidate all of Gwenco's
assets. In addition, we might be forced to file for protection under Chapter 11
as we are the primary guarantor on a number of Gwenco's contracts.





August 2008 Financing. On
August 14, 2008, the Company entered into a Securities Purchase and Royalty
Agreement with an unrelated third party pursuant to which the Company issued an
8% $400,000 convertible promissory note and a three year royalty on future coal
sales. The note is due on July 23, 2010 and is convertible into shares of our
common stock at a conversion price of sixty percent (60%) of the average of the
five (5) lowest per share market value during the ten (10) trading days
immediately preceding a conversion date. The proceeds will be used for working
capital and general corporate purposes. The holder may not convert any
outstanding principal amount of this note or accrued and unpaid interest thereon
to the extent such conversion would result in the holder beneficially owning in
excess of 4.999% of the then issued and outstanding common shares of the
Company. The royalty is based on sliding scale coal sale prices received by the
Company, not to exceed $0.75 per ton.





Industry
Overview




Coal is
the second most widely used form of energy in the United States, accounting for
nearly one-fourth of the nation’s total energy consumption, according to the BP
Statistical Review of World Energy (“BP”), June 2007.  In 2006, coal
was the fuel source of 50% of the electricity generated nationwide, as reported
by the Energy Information Administration (“EIA”), a statistical agency of the
United States Department of Energy.




The
United States is the second largest coal producer in the world, exceeded only by
China.  Other leading coal producers include India, Australia, South
Africa, Russia and Indonesia.  The United States has the largest coal
reserves in the world, with proved reserves totaling 247 billion
tons.  Russia ranks second in proved coal reserves with 157 billion
tons, followed by China with 115 billion tons, according to BP.





United
States coal reserves are more plentiful than oil or natural gas with 234 years
of supply at current consumption rates.  Proved United States reserves
of oil amount to 12 years of supply at current production rates and proved
United States reserves of natural gas amount to 11 years of supply at current
levels of consumption, as reported by the BP study.




3




United
States coal production has more than doubled over the last 40
years.  In 2006, total United States coal production, as estimated by
the EIA, was 1.2 billion tons.




Coal is
used in the United States by utilities to generate electricity, by steel
companies to make steel products, and by a variety of industrial users to
produce heat and to power foundries, cement plants, paper mills, chemical plants
and other manufacturing and processing facilities.  Significant
quantities of coal are also exported from both East and Gulf Coast
terminals.  The breakdown of 2006 United States coal consumption, as
estimated by the EIA, is as follows:




End
      Use
            
            % of TotalElectrical
      Power
            
            
            93
            %Other
      Industrial
            
            
            5
            %Coke
            
            
            2
            %Residential
      and Commercial
            
            <1
            %Total
            
            
            100
            %




Coal has
long been favored as an electricity generating fuel because of its basic
economic advantage.  The largest cost component in electricity
generation is fuel.  This fuel cost is typically lower for coal than
competing fuels such as oil and natural gas on a Btu-comparable
basis.  Platts, which provides global commodity news and information,
estimated the average total production costs of electricity, using coal and
competing generation alternatives in 2006 as follows:




Electricity
      Generation Source
            
            Cost per million
              Kilowatt
      HoursOil
            
            $
            14.69Natural
      Gal
            
            $
            7.97Coal
            
            $
            2.19Nuclear
            
            $
            1.84




There
are factors other than fuel cost that influence each utility’s choice of
electricity generation mode, including facility construction cost, access to
fuel transportation infrastructure, environmental restrictions, and other
factors.  The breakdown of United States electricity generation by
fuel source in 2006, as estimated by EIA, is as follows:




Electricity
      Generation Source
            
            %
      of Total
              Electricity GenerationCoal
            
            
            50
            %Nuclear
            
            
            20
            %Natural
      Gas
            
            
            19
            %Hydroelectric
            
            
            7
            %Oil
      and other (solar, wind, etc.)
            
            
            4
            %Total
            
            
            100
            %




Demand
for electricity has historically been driven by United States economic growth,
but it can fluctuate from year to year depending on weather
patterns.  In 2006, electricity consumption in the United States
increased 0.2%, but the average growth rate in the past decade was approximately
1.5% per year, according to EIA estimates.  Because coal-fired
generation is used in most cases to meet base load requirements, coal
consumption has generally grown at the pace of electricity demand
growth.




4




According
to the World Coal Institute (“WCI”), in 2006, the United States ranked seventh
among worldwide exporters of coal.  Australia was the largest
exporter, with other major exporters including Indonesia, China, South Africa,
Russia, Columbia and Canada.  According to EVA, United States exports
increased by 19% from 2006 to 2007.  The usage breakdown for 2007
was that United States exports of 59 million tons were 45% for electricity
generation and 55% for steel production.  In 2007, the United States
coal exports were shipped to more than 30 countries.  The largest
purchaser of United States exported utility coal in 2007 continued to be Canada,
which took 14.6 million tons, or 55%, of total utility coal
exports.  This was down 4% compared to the 15.2 million tons exported
to Canada in 2006.  Overall steam coal exports increased 22% in 2007
compared to 2006.  The largest purchasers of United States exported
metallurgical coal were Brazil, which imported approximately 6.5 million tons,
or 20%, and Canada, which imported 3.7 million tons, or 12%.  In
total, metallurgical coal exports increased 16% in 2007 compared to
2006.




Depending
on the relative strength of the United States dollar versus currencies in other
coal producing regions of the world, United States producers may export more or
less coal into foreign countries as they compete on price with other foreign
coal producing sources.  Likewise, the domestic coal market may be
impacted due to the relative strength of the United States dollar to other
currencies, as foreign sources could be cost-advantaged based on a coal
producing region’s relative currency position.  During 2007, the
United States dollar weakened, making imported coal less competitive with United
States produced coal, and positively impacting the competitiveness of United
States exports in some overseas markets.




From 2003
to February 2008, the global marketplace for coal experienced swings in the
demand/supply balance.  In periods of supply shortfall, as occurred
from 2003 to early 2006 and again in late 2007 through February 2008, the prices
for coal reached record highs in the United States.  Increased
worldwide demand has been primarily driven by higher prices for oil and natural
gas and economic expansion, particularly in China, India, and elsewhere in
Asia.  At the same time, infrastructure and regulatory limitations in
China contributed to a tightening of worldwide coal supply, affecting global
prices of coal.  The growth in China and India caused an increase in
worldwide demand for raw materials and a disruption of expected coal exports
from China to Japan, Korea, and other countries.




Metallurgical
grade coal is distinguished by special quality characteristics that include high
carbon content, volatile matter, low expansion pressure, low sulfur content, and
various other chemical attributes.  High vol met coal is also high in
heat content (as measured in Btus), and therefore is desirable to utilities as
fuel for electricity generation.  Consequently, high vol met coal
producers have the ongoing opportunity to select the market that provides
maximum revenue and profitability.  The premium price offered by steel
makers for the metallurgical quality attributes is typically higher than the
price offered by utility coal buyers that value only the heat
content.  The primary concentration of United States metallurgical
coal reserves is located in the Central Appalachian region.  EVA
estimates that the Central Appalachian region supplied 89% of domestic
metallurgical coal and 73% of United States exported metallurgical coal during
2006.





For
utility coal buyers, the primary goal is to maximize heat content, with other
specifications like ash content, sulfur content, and size varying considerably
among different customers.  Low sulfur coals, such as those produced
in the western United States and in Central Appalachia, generally demand a
higher price due to restrictions on sulfur emissions imposed by the Clean Air
Act of 1963 (“Clean Air Act”) and the volatility in SO2 allowance
prices that occurred in recent years when the demand for all specifications of
coal increased.  SO2 allowances
permit utilities to emit a higher level of SO2 than
otherwise required under the Clean Air Act regulations.  The demand
and premium price for low sulfur coal is expected to diminish as more utilities
install scrubbers at their coal-fired plants.  Coal shipped for North
American consumption is typically sold at the mine loading facility with
transportation costs being borne by the purchaser.  Offshore export
shipments are normally sold at the ship-loading terminal, with the purchaser
paying the ocean freight.  According to the National Mining
Association (“NMA”), approximately two-thirds of United States coal production
in recent years was shipped via railroads.  Final delivery to
consumers often involves more than one transportation mode.  A
significant portion of United States production is delivered to customers via
barges on the inland waterway system and ships loaded at Great Lakes
ports.




5





Market
Opportunity





In the past, coal price declines lead
to widespread mine shutdowns.  Beginning in the fourth quarter of
2003, coal prices began a steady increase.  Traditionally, coal price
increases have been caused by harsh North American weather or labor
stoppages.  Current upward pricing trends have no specific driver
outside of general price increases in all energy sources, which appear to be
driven by geo-political concerns and the current non-renewable characteristics
of fossil fuels.  Equivalent current natural gas prices imply that
coal should currently be trading at U.S. $175 per ton.  Nymex July
2004 coal deliveries were trading just above $80 per ton as of the beginning of
March 2004.  As coal prices strengthen, Quest believes that it could
become highly lucrative to re-open the best of these recently closed
mines.





Gwenco
Mines





Gwenco holds approximately 30 coal
leases, covering an estimated 700 acres, with a projected 12,999,000 tons of
coal in place in six seams with possible additional reserves on adjacent
leases.  From 1997 to 2001, Gwenco operated two deep mines in the
Lower Cedar Grove and Pond Creek seams -- until a downturn in coal prices made
continued operations unfeasible,and the mines were shut
down.  As discussed above, Gwenco has recently re-opened the Pond
Creek mine is starting to mine the Pond Creek seam.





The primary reserves are in the Pond
Creek, Lower Cedar Grove, andTaylorseams.Both the Pond Creek and Lowers Cedars
Grove seams are permitted and bonded and have been mined to a limited
extent.  The coal in the Pond Creek seam is low-sulfur, compliance
coal, running at an average of 12,000 to 12,500 BTUs when mined
clean.  The coal in the Lower Cedar Grove seam has a shale parting and
must be washed to be commercial.  When cleaned it is a high BTU coal
with certain metallurgical coal qualities.





Mining
Techniques





There are
several basis techniques for mining drift or adit mines.  Quest has
used, and intends to use, a continuous miner on the Pond Creek seam at its
Gwenco facility.   Quest has used, and intends to use, a Joy
14-10AA continuous miner at the Gwenco mines.  In this technique, the
miner has a cutting head that tears the coal from it natural deposit and
transfers the coal to a gather head and then to shuttle cars that can carry from
3 to 10 tons depending on the size.  This method can create higher
volume mining than the conventional method, but may mine the coal with a higher
content of ash.





Expansion
Strategy





Quest
seeks to acquire new mines and contracting to produce and market additional coal
in its geographic focus area.  Quest intends to acquire and operate
high quality coal properties with established field personnel, primarily in the
eastern Kentucky coalfields, with additional properties in southwestern West
Virginia and western Virginia.  This region has an excellent
infrastructure of workers, truckers, rail sidings on the CSX and N&W rail
lines and low cost access to the Big Sandy barge docks near Ashland, KY, for
effective coal distribution.  Quest intends to use its local knowledge
to pursue high returns on investment from re-opening profitable properties in
this region.  It intends to grow by additional accretive acquisitions,
contract mining, and internal development of owned properties.





Quest is also seeking to diversify its
operations into other sectors of the energy industry, including the oil and gas
sector.  Quest’scoal miners collectively have over 50years ofmining experience.  Quest may also engage key
industry experts to assist in the analysis and funding of these
properties.  Quest management believes that a successful
diversification into the oil and gas field would provide Quest with an
opportunity to improve its results of operations while hedging on coal
production and prices.





Customers





Quest
currently has one customer, which has delivered a purchase order purchase order
for up to $8 million of coal through December 2008.  To the extent
that Quest produces coal in excess of this order, it intends to sell its
remaining coal to other purchasers or on the spot market to coal
brokers.  Quest may seek to enter into long-term contracts (exceeding
one year in duration) with customers if economic circumstances indicate that
such arrangements would maximize profitability.  These arrangements
would allow customers to secure a supply for their future needs and provide
Quest with greater predictability of sales volume and sales prices.




6





Competition





The coal
industry in the United States is highly competitive.  Quest competes
with many large producers and other small coal producers.  Quest also
competes with other producers primarily on the basis of price, coal quality,
transportation cost and reliability of supply.  Continued demand for
coal is also dependent on factors outside of Quest’s control, including demand
for electricity, environmental and governmental regulations, weather,
technological developments, and the availability and cost of alternative fuel
sources.





The price
at which Quest’s production can be sold is dependent upon a variety of factors,
many of which are beyond Quest’s control.  Quest sells coal on the
spot-market and seeks to sell coal under long-term
contracts.  Generally, the relative competitiveness of coal vis-a-vis
other fuels or other coals is evaluated on a delivered cost per heating value
unit basis.  In addition to competition from other fuels, coal
quality, the marginal cost of producing coal in various regions of the country
and transportation costs are major determinants of the price for which Quest’s
production can be sold.  Factors that directly influence production
cost include geological characteristics (including seam thickness), overburden
ratios, depth of underground reserves, transportation costs and labor
availability and cost.  Underground mining has higher labor (including
reserves for future costs associated with labor benefits and health care) and
capital (including modern mining equipment and construction of extensive
ventilation systems) costs than those of surface mining.  In recent
years, increased development of large surface mining operations, particularly in
the western United States, and more efficient mining equipment and techniques,
have contributed to excess coal production capacity in the United
States.  Competition resulting from excess capacity has encouraged
producers to reduce prices and to pass productivity gains through to
customers.  Demand for Quest’s low sulfur coal and the prices that
Quest will be able to obtain for it will also be affected by the price and
availability of high sulfur coal, which can be marketed in tandem with emissions
allowances.





Transportation
costs are another fundamental factor affecting coal industry
competition.  Coordination of the many eastern loadouts, the large
number of small shipments, terrain and labor issues all combine to make
shipments originating in the eastern United States inherently more expensive on
a per-mile basis than shipments originating in the western United
States.  Historically, coal transportation rates from the western coal
producing areas into Central Appalachian markets limited the use of western coal
in those markets.  More recently, however, lower rail rates from the
western coal producing areas to markets served by eastern producers have created
major competitive challenges for eastern producers.  Barge
transportation is the lowest cost method of transporting coal long distances in
the eastern United States, and the large numbers of eastern producers with river
access keep coal prices competitive.  Quest believes that many
utilities with plants located on the Ohio River system are well positioned for
deregulation as competition for river shipments should remain high for Central
Appalachian coal.  Quest also believes that with close proximity to
competitively-priced Central Appalachian coal, utilities with plants located on
the Ohio River system will become price setters in a deregulated
environment.





Although
undergoing significant consolidation, the coal industry in the United States
remains highly fragmented.  It is possible that Quest’s costs will not
permit it to compete effectively with other producers seeking to provide coal to
a customer; however, it is Quest’s goal to maintain low production costs, offer
a variety of products and have develop access to multiple transportation systems
that will enable it to compete effectively with other producers.





Environmental,
Safety and Health Laws and Regulations




The coal
mining industry is subject to regulation by federal, state and local authorities
on matters such as the discharge of materials into the environment, employee
health and safety, permitting and other licensing requirements, reclamation and
restoration of mining properties after mining is completed, management of
materials generated by mining operations, surface subsidence from underground
mining, water pollution, water appropriation and legislatively mandated benefits
for current and retired coal miners, air quality standards, protection of
wetlands, endangered plant and wildlife protection, limitations on land use, and
storage of petroleum products and substances that are regarded as hazardous
under applicable laws.  The possibility exists that new legislation or
regulations may be adopted that could have a significant impact on our mining
operations or on our customers’ ability to use coal.




7





Numerous
governmental permits and approvals are required for mining
operations.  Regulations provide that a mining permit or modification
can be delayed, refused, or revoked if an officer, director, or a stockholder
with a 10% or greater interest in the entity is affiliated with or is in a
position to control another entity that has outstanding permit
violations.  Thus, past or ongoing violations of federal and state
mining laws by individuals or companies no longer affiliated with us could
provide a basis to revoke existing permits and to deny the issuance of addition
permits.  We are required to prepare and present to federal, state, or
local authorities data and/or analysis pertaining to the effect or impact that
any proposed exploration for or production of coal may have upon the
environment, public and employee health and safety.  All requirements
imposed by such authorities may be costly and time-consuming and may delay
commencement or continuation of exploration or production
operations.  Accordingly, the permits we need for our mining and gas
operations may not be issued, or, if issued, may not be issued in a timely
fashion.  Permits we need may involve requirements that may be changed
or interpreted in a manner that restricts our ability to conduct our mining
operations or to do so profitably.  Future legislation and
administrative regulations may increasingly emphasize the protection of the
environment, health and safety and, as a consequence, our activities may be more
closely regulated.  Such legislation and regulations, as well as
future interpretations of existing laws, may require substantial increases in
equipment and operating costs, delays, interruptions or a termination of
operations, the extent of which cannot be predicted.




While it
is not possible to quantify the expenditures we incur to maintain compliance
with all applicable federal and state laws, those costs have been and are
expected to continue to be significant.  We post surety performance
bonds or letters of credit pursuant to federal and state mining laws and
regulations for the estimated costs of reclamation and mine closing, often
including the cost of treating mine water discharge when
necessary.  Compliance with these laws has substantially increased the
cost of coal mining for all domestic coal producers.  We endeavor to
conduct our mining operations in compliance with all applicable federal, state,
and local laws and regulations.  However, even with our substantial
efforts to comply with extensive and comprehensive regulatory requirements,
violations during mining operations could occur from time to time.





Mine
Safety and Health




Stringent
health and safety standards have been in effect since Congress enacted the
Federal Coal Mine Health and Safety Act of 1969.  The Federal Coal
Mine Safety and Health Act of 1977 significantly expanded the enforcement of
safety and health standards and imposed safety and health standards on all
aspects of mining operations.  A further expansion occurred in June
2006 with the enactment of the Mine Improvement and New Emergency Response Act
of 2006 (“MINER Act”).





The MINER
Act and related Mine Safety and Health Administration (“MSHA”) regulatory action
require, among other things, improved emergency response capability, increased
availability of emergency breathable air, enhanced communication and tracking
systems, more available mine rescue teams, increased mine seal strength and
monitoring of sealed areas in underground mines, as well as larger penalties by
MSHA for noncompliance by mine operators.  Coal producing states,
including West Virginia and Kentucky, passed similar legislation.  The
bituminous coal mining industry was actively engaged throughout 2007 in
activities to achieve compliance with these new requirements.  These
compliance efforts will continue into 2008.





On
February 8, 2008, MSHA published a final rule that revises existing standards
for mine rescue teams for underground coal mines.  This final rule
implements Section 4 of the MINER Act to improve overall mine rescue capability,
mine emergency response time, and mine rescue team effectiveness.  It
also calls for increased quantity and quality of mine rescue team
training.  Additional substantive legislation is also possible in 2008
with the passage by the United States House of Representatives in January 2008
of the Supplementary Mine Improvement and New Emergency Response Act, (“S-MINER
Act”).  The House legislation augments portions of the MINER Act and
proposes changes to retreat mining practices, study of substance abuse issues,
and the use of coal dust monitors to reduce miner respirable dust
exposure.





Kentucky,
the state in which we currently operate, has state programs for mine safety and
health regulation and enforcement.  Collectively, federal and state
safety and health regulation in the coal mining industry is perhaps the most
comprehensive and pervasive system for protection of employee health and safety
affecting any segment of industry in the United States.  While
regulation has a significant effect on our operating costs, our United States
competitors are subject to the same degree of regulation.




8





Our goal
is sustainable excellence in our safety and health performance.  We
are committed to doing our best, and then learning to do even
better.  We recognize each employee’s and consultant’s contributions
to our collective safety and health efforts and reward outstanding
performance.  We measure our success in this area primarily through
the use of occupational injury and illness frequency rates.  We
believe that a superior safety and health regime is inherently tied to achieving
productivity and financial goals, with overarching benefits for our
shareholders, the community, and the environment.




Black Lung.  Under
federal black lung benefits legislation, each coal mine operator is required to
make payments of black lung benefits or contributions to: (i) current and former
coal miners totally disabled from black lung disease; and (ii) certain survivors
of a miner who dies from black lung disease.  The Black Lung
Disability Trust Fund, to which we must make certain tax payments based on
tonnage sold, provides for the payment of medical expenses to claimants whose
last mine employment was before January 1, 1970 and to claimants employed after
such date, where no responsible coal mine operator has been identified for
claims or where the responsible coal mine operator has defaulted on the payment
of such benefits.  In addition to federal acts, we are also liable
under various state statutes for black lung claims.  Federal benefits
are offset by any state benefits paid.




Environmental
Laws





Surface Mining Control and
Reclamation Act.  The Surface Mining Control and Reclamation
Act, (“SMCRA”), which is administered by the Office of Surface Mining
Reclamation and Enforcement (“OSM”), establishes mining, environmental
protection and reclamation standards for all aspects of surface mining as well
as many aspects of deep mining.  The SMCRA and similar state statutes
require, among other things, the restoration of mined property in accordance
with specified standards and an approved reclamation plan.  In
addition, the Abandoned Mine Land Fund, which is part of the SMCRA, imposes a
fee on all current mining operations, the proceeds of which are used to restore
mines closed before 1977.  The maximum tax is $0.315 per ton on
surface-mined coal and $0.135 per ton on deep-mined coal.  A mine
operator must submit a bond or otherwise secure the performance of its
reclamation obligations.  Mine operators must receive permits and
permit renewals for surface mining operations from the OSM or, where state
regulatory agencies have adopted federally approved state programs under the
act, the appropriate state regulatory authority.  We accrue for
reclamation and mine-closing liabilities in accordance with Statement of
Financial Accounting Standard (“SFAS”) No. 143, “Accounting for Asset Retirement
Obligations” (“SFAS 143”).




Clean Water
Act.  Section 301 of the Clean Water Act prohibits the
discharge of a pollutant from a point source into navigable waters of the United
States except in accordance with a permit issued under either Section 402 or
Section 404 of the Clean Water Act.  Navigable waters are broadly
defined to include streams, even those that are not navigable in fact, and may
include wetlands.  All mining operations in Appalachia generate excess
material, which must be placed in fills in adjacent valleys and
hollows.  Likewise, coal refuse disposal areas and coal processing
slurry impoundments are located in valleys and hollows.  Almost all of
these areas contain intermittent or perennial streams, which are considered
navigable waters under the Clean Water Act.  An operator must secure a
Clean Water Act permit before filling such streams.  For approximately
the past twenty-five years, operators have secured Section 404 fill permits that
authorize the filling of navigable waters with material from various forms of
coal mining.  Operators have also obtained permits under Section 404
for the construction of slurry impoundments although the use of these
impoundments, including discharges from them, requires permits under Section
402.  Section 402 discharge permits are generally not suitable for
authorizing the construction of fills in navigable waters.




Clean Air
Act.  Coal contains impurities, including sulfur, mercury,
chlorine, nitrogen oxide, and other elements or compounds, many of which are
released into the air when coal is burned.  The Clean Air Act and
corresponding state laws extensively regulate emissions into the air of
particulate matter and other substances, including sulfur dioxide, nitrogen
oxide and mercury.  Although these regulations apply directly to
impose certain requirements for the permitting and operation of our mining
facilities, by far their greatest impact on us and the coal industry generally
is the effect of emission limitations on utilities and other
customers.  Owners of coal-fired power plants and industrial boilers
have been required to expend considerable resources in an effort to comply with
these air pollution standards.  The United States Environmental
Protection Agency (“EPA”) has imposed or attempted to impose tighter emission
restrictions in a number of areas, some of which are currently subject to
litigation.  The general effect of such tighter restrictions could be
to reduce demand for coal.  This in turn may result in decreased
production and a corresponding decrease in revenue and profits.




9





National Ambient Air Quality
Standards.  In 1997, EPA adopted a new National Ambient Air
Quality Standard (“NAAQS”) for very fine particulate matter and a more stringent
NAAQS for ozone.  Ozone is produced by a combination of two precursor
pollutants: volatile organic compounds and nitrogen oxide, a by-product of coal
combustion.  States were required to submit to EPA revisions to their
State Implementation Plans (“SIPs”) that demonstrate the manner in which the
states will attain the fine particulate NAAQS by December 18,
2007.  The ozone NAAQS has been the subject of litigation and, during
the course of this litigation, EPA has proposed revisions to the
ozone NAAQS that are more stringent than the standards being
litigated.  EPA intends to begin the promulgation process for the new, more
stringent ozone NAAQS in the spring of 2008.  Revised SIPs could
require electric power generators to further reduce nitrogen oxide and sulfur
dioxide emissions.  In addition to the SIP process, the Clean Air Act
permits states to assert claims against sources in other “upwind” states
alleging that emission sources including coal fired power plants in the upwind
states are preventing the “downwind” states from attaining a NAAQS.  All
these actions could result in additional controls being required on coal fired
power plants and we are unable to predict the effect on coal
production.




Acid Rain Control
Provisions.  The acid rain control provisions promulgated as
part of the Clean Air Act Amendments of 1990 in Title IV of the Clean Air Act
(“Acid Rain program”) required reductions of sulfur dioxide emissions from power
plants.  The Acid Rain program is now a mature program and we believe
that any market impacts of the required controls have likely been factored into
the price of coal in the national coal market.




Regional Haze
Program.  EPA promulgated a regional haze program designed to
protect and to improve visibility at and around so-called Class I Areas, which
are generally National Parks, National Wilderness Areas, and International
Parks.  This program may restrict the construction of new coal-fired
power plants whose operation may impair visibility at and around the Class I
Areas.  Moreover, the program requires certain existing coal-fired
power plants to install additional control measures designed to limit
haze-causing emissions, such as sulfur dioxide, nitrogen oxide and particulate
matter. States were required to submit Regional Haze SIPs to EPA by December 17,
2007.  Many states did not meet the December 17, 2007, deadline, and
we are unable to predict the impact on the coal market of the failure to submit
Regional Haze SIPs by the deadline.




New Source Review
Program.  Under the Clean Air Act, new and modified sources of
air pollution must meet certain new source standards (“New Source Review
Program”).  In the late 1990s, the EPA filed lawsuits against many
coal-fired plants in the eastern United States alleging that the owners
performed non-routine maintenance, causing increased emissions that should have
triggered the application of these new source standards.  Some of
these lawsuits have been settled, with the owners agreeing to install additional
pollution control devices in their coal-fired plants.  The remaining
litigation and the uncertainty around the New Source Review Program rules could
adversely impact utilities’ demand for coal in general or coal with certain
specifications, including the coal produced by us.




Multi-Pollutant
Strategies.  In March 2005, EPA issued two closely related
rules designed to significantly reduce levels of sulfur dioxide, nitrogen oxide
and mercury: the Clean Air Interstate Rule and the Clean Air Mercury
Rule.  The Clean Air Interstate Rule sets a cap-and-trade program in
28 states and the District of Columbia to establish emissions limits for sulfur
dioxide and nitrogen oxide, by allowing utilities to buy and sell credits to
assist in achieving compliance with the NAAQS for 8-hour ozone and fine
particulates.  The Clean Air Mercury Rule as promulgated will cut
mercury emissions nearly 70% by 2018 through a cap-and-trade
program.  Both rules were challenged in numerous
lawsuits.  Portions of each of these rules are still in litigation,
and on February 8, 2008, the United States Court of Appeals for the District of
Columbia Circuit vacated the entire mercury rule and remanded it to EPA for
reconsideration.  Immediately following the decision, EPA announced
that it has not decided how to respond.  Regardless of the outcome of
litigation on either rule, a form of each of the rules will likely be
promulgated and ultimately directly affect coal producers, suppliers, and
utilities in the eastern and western regions of the United States, by requiring
revisions to the SIPs in many eastern states.  Any such controls may
have an impact on the demand for our coal and possibly give the users of western
sub-bituminous coal a significant competitive advantage over eastern bituminous
coal users.





Comprehensive Environmental
Response, Compensation and Liability Act.  The Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA”), and similar
state laws affect coal mining operations by, among other things, imposing
cleanup requirements for threatened or actual releases of hazardous substances
that may endanger public health or welfare or the environment.  Under
CERCLA and similar state laws, joint and several liability may be imposed on
waste generators, site owners, and lessees and others regardless of fault or the
legality of the original disposal activity.  Although the EPA excludes
most wastes generated by coal mining and processing operations from the
hazardous waste laws, such wastes can, in certain circumstances, constitute
hazardous substances for the purposes of CERCLA.  In addition, the
disposal, release, or spilling of some products used by coal companies in
operations, such as chemicals, could implicate the liability provisions of the
statute.  Under the EPA’s Toxic Release Inventory process, companies
are required annually to report the use, manufacture, or processing of listed
toxic materials that exceed defined thresholds, including chemicals used in
equipment maintenance, reclamation, water treatment, and ash received for mine
placement from power generation customers.  Our current and former
coal mining operations may incur expenditures associated with the investigation
and remediation of facilities and environmental conditions under
CERCLA.




10





Operations - Permitting;
Compliance.  Quest has obtained all the permits required for
its current operations under the SMCRA, the Clean Water Act, the Clean Air Act,
and corresponding state laws.  Quest currently is, and intends to
ramin in compliance in all material respects with such permits and intends to
routinely correct in a timely fashion violations of which it receives notice in
the normal course of operations.  The expiration dates of the permits
are largely immaterial as the law provides for a right of successive
renewal.  The cost of obtaining surface mining, clean water, and air
permits can vary widely depending on the scientific and technical demonstrations
that must be made to obtain the permits.  However, the cost of
obtaining a permit is rarely more than $500,000 and of obtaining a renewal is
rarely more than $5,000.  It is impossible to predict the full impact
of future judicial, legislative, or regulatory developments on Quest’s
operations because the standards to be met, as well as the technology and length
of time available to meet those standards, continue to develop and
change.





The
imposition of more stringent requirements under environmental laws or
regulations, new developments or changes regarding site cleanup costs or the
allocation of such costs among potentially responsible parties, or a
determination that Quest is potentially responsible for the release of hazardous
substances at sites other than those currently identified, could result in
additional expenditures or the provision of additional accruals in expectation
of such expenditures.





Coal
Reserves





Quest
estimates that, as of December 31, 2008, it has total recoverable reserves of
approximately twelve million tons consisting of both proven and probable
reserves.  “Reserves” are defined by Securities and Exchange
Commission Industry Guide 7 as that part of a mineral deposit, which could be
economically and legally extracted or produced at the time of the reserve
determination.  “Recoverable” reserves mean coal that is economically
recoverable using existing equipment and methods under federal and state laws
currently in effect.  Approximately three million tons of Quest’s
reserves are classified as proven reserves.  “Proven (Measured)
Reserves” are defined by Securities and Exchange Commission Industry Guide 7 as
reserves for which (a) quantity is computed from dimensions revealed in
outcrops, trenches, workings or drill holes; grade and/or quality are computed
from the results of detailed sampling and (b) the sites for inspection, sampling
and measurement are spaced so closely and the geologic character is so well
defined that size, shape, depth and mineral content of reserves are
well-established.  None of Quest’s reserves are classified as probable
reserves.  “Probable reserves” are defined by Securities and Exchange
Commission Industry Guide 7 as reserves for which quantity and grade and/or
quality are computed from information similar to that used for proven (measured)
reserves, but the sites for inspection, sampling, and measurement are farther
apart or are otherwise less adequately spaced.  The degree of
assurance, although lower than that for proven (measured) reserves, is high
enough to assume continuity between points of observation.





Information
about Quest’s reserves consists of estimates based on engineering, economic, and
geological data assembled and analyzed by its contracted engineers, geologists,
and finance associates.  Reserve estimates are updated as deemed
necessary by management using geologic data taken from drill holes, adjacent
mine workings, outcrop prospect openings and other sources.  Coal
tonnages are categorized according to coal quality, seam thickness, mineability,
and location relative to existing mines and infrastructure.  In
accordance with applicable industry standards, proven reserves are those for
which reliable data points are spaced no more than 2,700 feet
apart.  Probable reserves are those for which reliable data points are
spaced 2,700 feet to 7,900 feet apart.  Further scrutiny is applied
using geological criteria and other factors related to profitable extraction of
the coal.  These criteria include seam height, roof and floor
conditions, yield and marketability.





As with
most coal-producing companies in Central Appalachia, all of Quest’s coal
reserves are controlled pursuant to leases from third party
landowners.  These leases convey mining rights to the coal producer in
exchange for a per ton or percentage of gross sales price royalty payment to the
lessor.  The royalties for coal reserves from Quest’s producing
properties was approximately $55,000 for the year ended December 31, 2007 and
$55,000 for the year ended December 31, 2006.




Employees





Quest
currently employs one person, our President, Eugene Chiaramonte,
Jr.  All other personnel who provide services for Quest, whether in
administration or in mining operations, either work on an independent contractor
basis or work for White Star Mining under a contract mining
arrangement.  None of Quest’s employees are represented by a labor
union, and Quest has not entered into a collective bargaining agreement with any
union.  Quest has not experienced any work stoppages and believes that
it has good relations with its employees.




11




Item
1A.  RISK FACTORS AND CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION





An
investment in Quest common stock involves a high degree of risk.  You
should carefully consider the following risk factors and the other information
in this report before investing in Quest common stock.  Quest’s
business and results of operations could be seriously harmed by any of the
following risks.  The trading price of Quest’s common stock could
decline due to any of these risks, and you may lose part or all of your
investment.





We may become subject to an SEC
enforcement action.On October 31, 2008, we received a Wells
notice (the "Notice") from the staff of the Salt Lake Regional Office of the
Securities and Exchange Commission (the "Commission") stating that they are
recommending an enforcement action be filed against us based on our financial
statements and other information contained in reports filed by us with the
Commission by us for our 2004 year and thereafter. The Notice states that the
Commission anticipates alleging that we have violated Sections
10(b),  3(a) and 13(b)(2) of the Securities Exchange Act of 1934, as
amended and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. We contend that we
have not committed any wrongdoing or the violations referred to in the
Notice.  We cannot predict whether the Commission will follow the
recommendations of the staff and file suit against us.  If any
enforcement proceeding is instituted by the Commission, we will defend the
action.  We cannot predict the outcome or timing of this
matter.





Our wholly owned subsidiary, Gwenco,
Inc., has filed for bankruptcy protection. On March 2, 2007,
our wholly owned subsidiary, Gwenco, Inc., filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code with the United
States Bankruptcy Court for the Eastern District of Kentucky.  We are
currently overseeing Gwenco’s operations as a debtor in possession, subject to
court approval of matters outside the ordinary course of business.  We
are currently seeking court approval for debtor in possession financing from
holders of Gwenco’s existing debt obligations in order to fund operating
expenses.  We intend to continue our mining operations at Pond Creek
Mine at Slater’s Branch while this matter is completed.  Under Chapter
11, claims against us in existence prior to the filing of the petitions for
reorganization relief under the federal bankruptcy laws are stayed while we are
in bankruptcy.  On August 3, 2007, the Bankruptcy Court approved
Gwenco's request for debtor-in-possession financing in an amount of up to
$2,000,000.  In February 2008, Gwenco submitted a preliminary plan of
reorganization to the court for approval.  The court currently has set
a June 2009 date for a hearing on confirmation on the plan or
reorganization.  If we are unable to procure sufficient debtor in
possession financing and/or if we are unable to negotiate an acceptable plan of
reorganization with Gwenco’s creditors, we may be forced to file for protection
under Chapter 7 of the U.S Bankruptcy Code and liquidate all or Gwenco’s assets,
in which case, Quest would cease to have an operating business.





We have only recently recommenced
mining operations, and it is possible that we may need to stop mining again if
we have insufficient working capital.Due to lack of working
capital, Quest was forced to cease mining operations at the Pond Creek mine at
Slater’s Branch, Kentucky in June 2005.  In January 2007, Gwenco
received a permit from the Kentucky Department of Natural Resources to conduct
coal mining at its Pond Creed mine.  In February 2007, Gwenco’s
engineering firm, Alchemy Engineering of Prestonburg, Kentucky, completed a one
and five year mine plan and maps required by the Kentucky Department of Mines
and Minerals in connection with the permit to conduct coal mining at Pond
Creek.  Gwenco had retained General Mining, LLC of Wallins, Kentucky
to rehabilitate the Pond Creek mine in February 2007 and further retained
General Mining to conduct mining operations at Pond Creek in March
2007.  The company completed its initial rehabilitation of the Pond
Creek mine, recommenced mining operations, and began shipping commercial coal
for sale in May 2007.  In January 2008, Quest retained White Star
Mining to conduct all mining operations at Pond Creek.  White Star
retained all necessary permits to being mining operations in February 2008, and
Quest resumed mining operations in July 2008.  However, it is possible
that Quest may not be able to maintain sufficient working capital to continue
mining operations and that we may need to cease operations again in the
future.





Pending and threatened litigation
could result in Quest losing its primary operating
assets.  Currently, Quest is a party to various pending
lawsuits and judgments, including judgments in favor of Interstellar Holdings
and Duke Energy Merchants.  The judgment creditors have sought to foreclose on our
assets, including our leasehold interests in the mines.  These
foreclosure actions were stayed by the bankruptcy proceedings.  While
one judgment creditor has agreed to forbear on further collections, enforcement,
and foreclosure with respect to this indebtedness, such investor may withdraw
such forbearance if we do not comply with our covenants with the
creditor.It is possible that, in connection with a
foreclosure action, the leasehold interests or other assets of Quest could be
sold to one or more of the judgment or other creditors or to a third
party.  In the event that the leasehold interests or the other assets
are put up for sale, Quest intends to bid on them, but it is possible that it
may not be able to purchase the leasehold interests or the other assets, either
because it does not have the assets with which to make a competitive bid or
because it is simply outbid by one of its creditors or a third
party.  In the event that either the bank or a third party purchases
the leasehold interests or the other assets, Quest would no longer have any
operating business.




12





We have issued
a substantial number of securities convertible into shares of our common stock
which will result in substantial dilution to the ownership interests of our
existing stockholders. As of
December 31, 2008, approximately 2,874,051,620 shares of our common stock were
required for issuance upon exercise or conversion of the following securities:
(i) 2,827,473,620 shares representing shares of common stock issuable upon
conversion in full of our outstanding convertible promissory notes (without
regard to any limitations on conversion);
(ii) 46,578,000 shares of common stock issuable upon conversion of our Series A
Preferred. The exercise or conversion of these securities will result in a
significant increase in the number of outstanding shares and substantially
dilute the ownership interests of our existing shareholders. In addition, any
decrease in our stock price will result in additional shares of common stock
required for issuance upon exercise or conversion of the securities set forth
above.





The issuance of shares upon
conversion of our convertible securities may cause immediate and substantial
dilution to our existing stockholders.The
issuance of shares upon conversion of our outstanding convertible notes or
Series A Preferred Stock may result in substantial dilution to the interests of
other stockholders since the selling stockholders may ultimately convert and
sell the full amount issuable on conversion.  Although the selling
stockholders may not convert their convertible notes if such conversion would
cause them to own more than 4.99% of our outstanding common stock, this
restriction does not prevent the selling stockholders from converting some of
their holdings and then converting the rest of their holdings. In this way, the
selling stockholders could sell more than this limit while never holding more
than this limit. There only upper limit on the number of shares that may be
issued is the number of shares of common stock authorized for issuance under our
articles of incorporation. The issuance of shares upon conversion of the
convertible notes will have the effect of further diluting the proportionate
equity interest and voting power of holders of our common stock.





The issuance of shares of common
stock to consultants may substantial dilution to our existing
stockholders.We have established, and my establish in the
future additional, stock incentive plans under which we may issue various types
of awards, including common stock awards.  We currently pay certain
consultants and may continue to pay consultants in the future with stock awards
under these plans.  The issuance of stock awards to consultants will
have the effect of notes will have the effect of further diluting the
proportionate equity interest and voting power of holders of our common
stock





Quest’s former President and Chief
Executive Officer has been convicted by a federal jury, which may negatively
effect the public’s perception of Quest and its
operations.In May, 2006, a federal grand jury indicted Mr.
Runyon, Ms. Holbrook, James Daniel Stollings, and Quest’sformerPresident and Chief Executive Officer,
William R. Wheeleron
charges of bank fraud.Mr. Wheeler resigned as an officer or
director of Quest onMay
31, 2006.  In
connection with the indictments, Mr. Runyon and Ms. Holbrook each pled
guilty.  In December 2006, a federal jury convicted Mr.
Stollings and Mr. Wheeler of bank fraud.  Mr. Wheeler has appealed the
conviction.  Quest denies any wrongdoing in connection with these
matters.Although Quest does not
believe that this conviction will affect the business plans of Quest, it is
possible that Mr. Wheeler, Quest, or one or more of Quest’s subsidiaries may be
the subject of civil or administrative actions based on the allegations set
forth in the indictment.  As a result, Quest may incur civil or
administrative liability based on these allegations.  Further, it is
possible that the public perception of Quest may be negatively affected by these
allegations, which in turn may cause a drop in the market price of Quest’s
common stock.





Quest will need to continue to
finance its operations through additional bank borrowings or other capital
financings, and if it is unable to obtain additional capital, it may not be able
to continue as a going concern.Quest had a working capital
deficit as of December 31, 2008.  As of the date of this annual
report, Quest does not believe that it will be able to fund its operations,
working capital requirements, and debt service requirements over the fiscal year
2008 through cash flows generated from operations.  Quest will need to
continue to finance its operations through additional borrowings or other
capital financings.  Quest’s collateral may not be sufficient to
borrow additional amounts at such time.  Quest may also seek equity
financing in the form of a private placement or a public
offering.  Such additional financing may not be available to Quest,
when and if needed, on acceptable terms or at all.  If Quest is unable
to obtain additional financing in sufficient amounts or on acceptable terms, its
operating results and prospects could be further adversely
affected.




13





Quest has substantial indebtedness
outstanding, and its operations are significantly
leveraged.   In order to finance its operations, Quest has
incurred substantial indebtedness.  Quest is not in compliance with
its debt covenants under its loan agreements, and it has defaulted on
substantially all of its loan obligations, which has resulted in lawsuits,
judgments, and foreclosure proceedings against Quest and its
assets.  Quest has no cash flows from operations, and without
additional financing or cash flows from operations, it cannot service its debt
obligations.  Quest’s subsidiary, Gwenco, Inc., has already filed for
protection under Chapter 11 of the U.S. Bankruptcy Code.  Quest is
currently negotiating with its creditors to reorganize and restructure its debt
obligations, both within the Chapter 11 reorganization at the Gwenco level and
outside the Chapter reorganization at other corporate levels, but if it is
unable to do so, there is a significant chance that Quest or its other
subsidiaries may be forced to seek protection under the U.S. Bankruptcy code, or
that its creditors could foreclose on its remaining assets, in which case it
would cease to continue as a going concern.





Quest may be unable to continue as a
going concern, in which case its securities will have little or no
value.  Quest’s independent auditor has noted in its report
concerning Quest’s financial statements as of December 31, 2008 that it has
incurred recurring losses from operations and has a working capital deficiency,
which raises substantial doubt about its ability to continue as a going
concern.  As shown in the consolidated financial statements included
in this report, Quest has incurred recurring losses from operations in 2008 and
2007, and has an accumulated deficit and a working capital deficit as of
December 31, 2008. These conditions raise substantial doubt as to Quest’s
ability to continue as a going concern.  It is possible that Quest
will not achieve operating profits in the future.





The level of Quest’s indebtedness
could adversely affect its ability to grow and compete and prevent it from
fulfilling its obligations under its contracts and agreements.Quest has
significant debt, lease, and royalty obligations.  Its ability to
satisfy debt service, lease, and royalty obligations and to effect any
refinancing of its indebtedness will depend upon future operating performance,
which will be affected by prevailing economic conditions in the markets that it
serves as well as financial, business and other factors, many of which are
beyond its control.  Quest may be unable to generate sufficient cash
flow from operations and future borrowings, or other financings may be
unavailable in an amount sufficient to enable it to fund its debt service,
lease, and royalty payment obligations or its other liquidity
needs.




Quest’s
relative amount of debt could have material consequences to its business,
including, but not limited to, the following: (i) making it more difficult to
satisfy debt covenants and debt service, lease payment, and other obligations;
(ii) increasing its vulnerability to general adverse economic and industry
conditions; (iii) limiting its ability to obtain additional financing to fund
future acquisitions, working capital, capital expenditures, or other general
corporate requirements; (iv) reducing the availability of cash flows from
operations to fund acquisitions, working capital, capital expenditures, or other
general corporate purposes; (v) limiting its flexibility in planning for, or
reacting to, changes in its business and the industry in which it competes; or
(vi) placing it at a competitive disadvantage when compared to competitors with
less relative amounts of debt.





If transportation for Quest’s coal
becomes unavailable or uneconomic for its customers, Quest’s ability to sell
coal could suffer.Transportation costs represent a
significant portion of the total cost of coal and, as a result, the cost of
transportation is a critical factor in a customer’s purchasing
decision.  Increases in transportation costs could make coal a less
competitive source of energy or could make some of Quest’s operations less
competitive than other sources of coal.  Coal producers depend upon
rail, barge, trucking, overland conveyor, and other systems to deliver coal to
markets.  While U.S. coal customers typically arrange and pay for
transportation of coal from the mine to the point of use, disruption of these
transportation services because of weather-related problems, strikes, lock-outs
or other events could temporarily impair Quest’s ability to supply coal to its
customers and thus could adversely affect Quest’s results of
operations.  For example, the high volume of coal shipped from one
region of mines could create temporary congestion on the rail systems servicing
that region.




14





Risks inherent to mining could
increase the cost of operating Quest’s business.Quest’s
mining operations are subject to conditions beyond its control that can delay
coal deliveries or increase the cost of mining at particular mines for varying
lengths of time.  These conditions include weather and natural
disasters, unexpected maintenance problems, key equipment failures, variations
in coal seam thickness, variations in the amount of rock and soil overlying the
coal deposit, variations in rock, and other natural materials and variations in
geologic conditions.  In addition, the United States and over 160
other nations are signatories to the 1992 Framework Convention on Climate
Change, which is intended to limit emissions of greenhouse gases, such as carbon
dioxide.  In December 1997, in Kyoto, Japan, the signatories to the
convention established a binding set of emission targets for developed
nations.  Although the specific emission targets vary from country to
country, the United States would be required to reduce emissions to 93% of 1990
levels over a five-year budget period from 2008 through
2012.  Although the United States has not ratified the emission
targets and no comprehensive regulations focusing on U.S. greenhouse gas
emissions are in place, these restrictions, whether through ratification of the
emission targets or other efforts to stabilize or reduce greenhouse gas
emissions, could adversely impact the price of and demand for
coal.  According to the Energy Information Administration’s Emissions
of Greenhouse Gases in the United States 2002, coal accounts for 30% of
greenhouse gas emissions in the United States, and efforts to control greenhouse
gas emissions could result in reduced use of coal if electricity generators
switch to sources of fuel with lower carbon dioxide
emissions.  Further developments in connection with regulations or
other limits on carbon dioxide emissions could have a material adverse effect on
Quest’s financial condition or results of operations.





Quest’s future success depends upon
its ability to continue acquiring and developing coal reserves that are
economically recoverable.Quest’s recoverable reserves decline
as it produces coal.  Quest has not yet applied for the permits
required or developed the mines necessary to use all of its
reserves.  Furthermore, Quest may not be able to mine all of its
reserves as profitably as it does at its current operations.  Quest’s
future success depends upon its conducting successful exploration and
development activities or acquiring properties containing economically
recoverable reserves.  Quest’s planned mine development projects and
acquisition activities may not result in significant additional reserves, and it
may not have continuing success developing additional mines.  Most of
Quest’s mining operations are conducted on properties owned or leased by
Quest.  Because title to most of its leased properties and mineral
rights are not thoroughly verified until a permit to mine the property is
obtained, Quest’s right to mine some of its reserves may be materially adversely
affected if defects in title or boundaries exist.  In addition, in
order to develop its reserves, Quest must receive various governmental
permits.  Quest cannot predict whether it will continue to receive the
permits necessary for it to operate profitably in the future.  Quest
may not be able to negotiate new leases from the government or from private
parties or obtain mining contracts for properties containing additional reserves
or maintain its leasehold interest in properties on which mining operations are
not commenced during the term of the lease.  From time to time, Quest
has experienced litigation with lessors of our coal properties and with royalty
holders.





If the coal industry experiences
overcapacity in the future, our profitability could be impaired.During
the mid-1970s and early 1980s, a growing coal market and increased demand for
coal attracted new investors to the coal industry, spurred the development of
new mines, and resulted in added production capacity throughout the industry,
all of which led to increased competition and lower coal
prices.  Similarly, an increase in future coal prices could encourage
the development of expanded capacity by new or existing coal
producers.  Any overcapacity could reduce coal prices in the
future.





Quest’s ability to operate
effectively could be impaired if it loses key personnel.Quest
manages its business with a number of key personnel, the loss of a number of
whom could have a material adverse effect on Quest.  In addition, as
its business develops and expands, Quest believes that its future success will
depend greatly on its continued ability to attract and retain highly skilled and
qualified personnel.  It is possible that key personnel will not
continue to be employed by Quest and that we will be not able to attract and
retain qualified personnel in the future. Quest does not have “key person” life
insurance to cover its executive officers. Failure to retain or attract key
personnel could have a material adverse effect on Quest.





Coal markets are highly competitive
and affected by factors beyond Quest’s control.Quest
competes with coal producers in various regions of the U.S. for domestic sales
and with both domestic and overseas producers for sales to international
markets.  Continued domestic demand for Quest’s coal and the prices
that it will be able to obtain primarily will depend upon coal consumption
patterns of the domestic electric utility industry and the domestic steel
industry.  Consumption by the domestic utility industry is affected by
the demand for electricity, environmental and other governmental regulations,
technological developments and the price of competing coal and alternative fuel
supplies including nuclear, natural gas, oil and renewable energy sources,
including hydroelectric power.  Consumption by the domestic steel
industry is primarily affected by the demand for U.S. steel.  Quest’s
sales of metallurgical coal are dependent on the continued financial viability
of domestic steel companies and their ability to compete with steel producers
abroad.  The cost of ocean transportation and the valuation of the
U.S. dollar in relation to foreign currencies significantly impact the relative
attractiveness of Quest’s coal as it competes on price with other foreign coal
producing sources.




15




Coal prices are affected by a number
of factors and may vary dramatically by region.  The two
principal components of the price of coal are the price of coal at the mine,
which is influenced by mine operating costs and coal quality, and the cost of
transporting coal from the mine to the point of use.  The cost of
mining the coal is influenced by geologic characteristics such as seam
thickness, overburden ratios and depth of underground reserves. Underground
mining is generally more expensive than surface mining as a result of high
capital costs, including costs for modern mining equipment and construction of
extensive ventilation systems and higher labor costs due to lower
productivity.  Quest currently engages in three principal coal mining
techniques: underground room and pillar mining, underground longwall mining and
highwall mining.  Because underground longwall mining, surface mining,
and highwall mining are high-productivity, low-cost mining methods, Quest seeks
to increase production from its use of these methods to the extent permissible
and cost effective.





Quest depends on continued demand
from its customers.Reduced demand from Quest’s largest
customers could have an adverse impact on its ability to achieve its projected
revenue.  When Quest’s contracts with its current customers reach
expiration, it is possible that that the customers will not extend or enter into
new long-term contracts or, in the absence of long-term contracts, that they
will not continue to purchase the same amount of coal as they have in the past
or on terms, including pricing terms, as favorable as under existing
agreements.




Quest faces numerous uncertainties in
estimating its economically recoverable coal reserves, and inaccuracies in its
estimates could result in lower than expected revenues, higher than expected
costs and decreased profitability.There are numerous
uncertainties inherent in estimating quantities and values of economically
recoverable coal reserves, including many factors beyond Quest’s
control.  As a result, estimates of economically recoverable coal
reserves are by their nature uncertain.  Information about Quest’s
reserves consists of estimates based on engineering, economic, and geological
data assembled and analyzed by Quest’s staff.  Some of the factors and
assumptions that impact economically recoverable reserve estimates include the
following:





·
            geological
      conditions;





·
            historical
      production from the area compared with production from other producing
      areas;





·
            the
      assumed effects on regulations and taxes by governmental
      agencies;





·
            assumptions
      governing future prices; and





·
            future
      operating costs.





Each of these factors may in fact vary
considerably from the assumptions used in estimating reserves.  For
these reasons, estimates of the economically recoverable quantities of coal
attributable to a particular group of properties may vary
substantially.  As a result, Quest’s estimates may not accurately
reflect its actual reserves. Actual production, revenues, and expenditures with
respect to its reserves will likely vary from estimates, and these variances may
be material.




Union represented labor creates an
increased risk of work stoppages and higher labor costs.As of
December 31, 2008, none of Quest’s workforce was represented by a
union.  However, in the event that Quest is required to hire union
labor, there may be an increased risk of strikes and other related work actions,
in addition to higher labor costs associated with union labor.  Quest
has experienced some union organizing campaigns at some of its open shop
facilities within the past five years.  If some or all of Quest’s
current open shop operations were to become union represented, Quest could be
subject to additional risk of work stoppages and higher labor
costs.  Increased labor costs or work stoppages could adversely affect
the stability of production and reduce its net income.




Severe weather may affect Quest’s
ability to mine and deliver coal.Severe weather,
including flooding and excessive ice or snowfall, when it occurs, can adversely
affect Quest’s ability to produce, load, and transport coal.




16




Shortages of skilled labor in the
Central Appalachian coal industry may pose a risk to achieving high labor
productivity and competitive costs.Coal mining continues to
be a labor intensive industry.  In 2001, the coal industry experienced
a shortage of trained coal miners in the Central Appalachian region causing many
companies to hire mine workers with less experience. While Quest did not
experience a comparable labor shortage in 2003, if another such shortage of
skilled labor were to arise, Quest’s productivity could decrease and our costs
could increase.  Such a lack of skilled miners could have an adverse
impact on Quest’s labor productivity and costs and its ability to expand
production in the event there is an increase in the demand for
coal.




If the coal industry experiences
overcapacity in the future, Quest’s profitability could be
impaired.Historically, a growing coal market and increased
demand for coal attract new investors to the coal industry, spur the development
of new mines and result in added production capacity throughout the industry,
all of which can lead to increased competition and lower coal
prices.  Similarly, an increase in future coal prices could encourage
the development of expanded capacity by new or existing coal
producers.  Any overcapacity could reduce coal prices and therefore
reduce Quest’s revenues.




Terrorist attacks and threats,
escalation of military activity in response to such attacks, or acts of war may
negatively affect Quest’s cash flows, results of operations, or financial
condition.Terrorist attacks and
threats, escalation of military activity in response to such attacks or acts of
war may negatively affect Quest’s cash flows, results of operations, or
financial condition.  Quest’s business is affected by general economic
conditions, fluctuations in consumer confidence and spending, and market
liquidity, which can decline as a result of numerous factors outside of its
control, such as terrorist attacks and acts of war.  Future terrorist
attacks against U.S. targets, rumors or threats of war, actual conflicts
involving the U.S. or its allies, or military or trade disruptions affecting
Quest’s customers may materially adversely affect its operations.  As
a result, there could be delays or losses in transportation and deliveries of
coal to Quest’s customers, decreased sales of its coal, and extension of time
for payment of accounts receivable from its customers.  Strategic
targets such as energy-related assets may be at greater risk of future terrorist
attacks than other targets in the U.S.  In addition, disruption or
significant increases in energy prices could result in government-imposed price
controls.  It is possible that any, or a combination, of these
occurrences could have a material impact on Quest’s cash flows, results of
operations, or financial condition.




Quest may not be able to identify
quality strategic acquisition candidates, and if it does make strategic
acquisitions, it may not be able to successfully integrate their
operations.  Quest intends to acquire companies in the coal
mining industry that offer complementary products and services to its current
business operations.  For each acquisition, Quest will be required to
assimilate the operations, products, and personnel of the acquired business and
train, retain, and motivate its key personnel.  Quest may be unable to
maintain uniform standards, controls, procedures, and policies if it fails in
these efforts.  Similarly, acquisitions may subject Quest to
liabilities and risks that are not known or identifiable at the time of the
acquisition or may cause disruptions in its operations and divert management’s
attention from day-to-day operations, which could impair Quest’s relationships
with its current employees, customers, and strategic partners.  Quest
may have to incur debt or issue equity securities to pay for any future
acquisitions.  The issuance of equity securities could be
substantially dilutive to Quest’s stockholders.  In addition, Quest’s
profitability may suffer because of acquisition related costs.  Quest
currently has no agreements or commitments concerning any such additional
acquisitions, and it may not be able to identify any companies that satisfy its
acquisition criteria.





The government extensively regulates
Quest’s mining operations, which imposes significant costs on Quest, and future
regulations could increase those costs or limit Quest’s ability to produce
coal.Federal, state, and local authorities regulate the coal
mining industry with respect to matters such as employee health and safety,
permitting and licensing requirements, air quality standards, water pollution,
plant and wildlife protection, reclamation and restoration of mining properties
after mining is completed, the discharge of materials into the environment,
surface subsidence from underground mining, and the effects that mining has on
groundwater quality and availability.  In addition, significant
legislation mandating specified benefits for retired coal miners affects Quest’s
industry.  Numerous governmental permits and approvals are required
for mining operations.  Quest is required to prepare and present to
federal, state, or local authorities data pertaining to the effect or impact
that any proposed exploration for or production of coal may have upon the
environment.  The costs, liabilities, and requirements associated with
these regulations may be costly and time-consuming and may delay commencement or
continuation of exploration or production.  The possibility exists
that new legislation and/or regulations and orders may be adopted that may
materially adversely affect Quest’s mining operations, its cost structure,
and/or its customers’ ability to use coal.  New legislation or
administrative regulations (or judicial interpretations of existing laws and
regulations), including proposals related to the protection of the environment
that would further regulate and tax the coal industry, may also require Quest or
its customers to change operations significantly or incur increased
costs.  The majority of Quest’s coal supply agreements contain
provisions that allow a purchaser to terminate its contract if legislation is
passed that either restricts the use or type of coal permissible at the
purchaser’s plant or results in specified increases in the cost of coal or its
use.  These factors and legislation, if enacted, could have a material
adverse effect on Quest’s financial condition and results of
operations.




17





There is a limited active trading
market for Quest shares.  Quest common stock is traded on the
OTC Bulletin Board under the symbol “QMLM.OB.”  Trading activity in
Quest common stock has fluctuated widely and at times has been
limited.  Quest considers its common stock to be “thinly traded” and
any last reported sale prices may not be a true market-based valuation of the
common stock.  A consistently active trading market for Quest’s stock
may not develop at any time in the future.  Stockholders may
experience difficulty selling their shares if they choose to do so because of
the illiquid market and limited public float for Quest stock.





Quest’s common stock is considered to
be a “penny stock” and, as such, the market for Quest common stock may be
further limited by certain SEC rules applicable to penny
stocks.As long as the price of Quest’s common stock
remains below $5.00 per share or Quest has net tangible assets of $2,000,000 or
less, Quest’s common shares are likely to be subject to certain “penny stock”
rules promulgated by the SEC.  Those rules impose certain sales
practice requirements on brokers who sell penny stock to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000).  For transactions covered by the penny stock rules, the
broker must make a special suitability determination for the purchaser and
receive the purchaser’s written consent to the transaction prior to the
sale.  Furthermore, the penny stock rules generally require, among
other things, that brokers engaged in secondary trading of penny stocks provide
customers with written disclosure documents, monthly statements of the market
value of penny stocks, disclosure of the bid and asked prices and disclosure of
the compensation to the brokerage firm and disclosure of the sales person
working for the brokerage firm.  These rules and regulations make it
more difficult for brokers to sell Quest common shares and limit the liquidity
of Quest’s securities.





Quest has no immediate plans to pay
dividends.Quest has not paid any cash dividends to date and
does not expect to pay dividends for the foreseeable future.





Our sole officer and
directorcontrolsour voting rights,
and as long as he does,hewillbe able to control
the outcome of stockholder voting.Quest’s sole officer and director is the
owner of all of the outstanding shares of Quest’s Series C Preferred Stock,
pursuant to which he holds approximately67% of the outstanding voting rights for
Quest’s capital stock.  As long as hecontrolsour voting rights, our other
stockholderswillgenerally be unable to
affect or change the management or the direction of our company without the
support of our officers and directors.  As a result, some investors
may be unwilling to purchase our common stock.  If the demand for our
common stock is reduced because our officers and directors have significant
influence over our company, the price of our common stock could be materially
depressed.  Our sole officer and director will be able to exert
significant influence over the outcome of all corporate actions requiring
stockholder approval, including the election of directors, amendments to our
certificate of incorporation and approval of significant corporate
transactions.





Quest’s articles of incorporation
authorizes Quest’s board of directors to designate and issue preferred stock
with rights, preferences and privileges that may be adverse to the rights of the
holders of Quest’s common stock.Quest’sboard of directors has
the authority to issue up to an additional 21,140,000 shares of preferred stock
and to determine the price, rights, preferences, and privileges of those shares
without any further vote or action by Quest’s stockholders.  To date,
Quest has issued 2,000,000 shares of Series A preferred stock, 1,600,000 shares
of Series B preferred stock and 260,000 shares of Series C preferred
stock.  Any preferred stock issued by Quest’s board of directors may,
and in certain cases, do contain rights and preferences adverse to the voting
power and other rights of the holders of common stock.




18





Cautionary
Statement Concerning


Forward-Looking
Information





This
annual report and the documents to which Quest refers you and incorporate into
this annual report by reference contain forward-looking
statements.  In addition, from time to time, Quest, or its
representatives, may make forward-looking statements orally or in
writing.  These are statements that relate to future periods and
include statements regarding Quest’s future strategic, operational and financial
plans, potential acquisitions, anticipated or projected revenues, expenses and
operational growth, markets and potential customers for Quest’s products and
services, plans related to sales strategies and efforts, the anticipated
benefits of Quest’s relationships with strategic partners, growth of its
competition, its ability to compete, the adequacy of its current facilities and
its ability to obtain additional space, use of future earnings, and the feature,
benefits and performance of its current and future products and
services.





You can identify forward-looking
statements by those that are not historical in nature, particularly those that
use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” “seek” or “continue” or the negative of these or similar
terms.  In evaluating these forward-looking statements, you should
consider various factors.  These factors may cause Quest’s actual
results to differ materially from any forward-looking
statement.  Quest cautions you not to place undue reliance on these
forward-looking statements.





Quest
bases these forward-looking statements on its expectations and projections about
future events, which it derives from the information currently available to
it.  Such forward-looking statements relate to future events or future
performance.  Forward-looking statements are only
predictions.  The forward-looking events discussed in this annual
report, the documents to which Quest refers you and other statements made from
time to time by Quest or its representatives, may not occur, and actual events
and results may differ materially and are subject to risks, uncertainties and
assumptions about Quest.  For these statements, Quest claims the
protection of the “bespeaks caution” doctrine.  The forward-looking
statements speak only as of the date hereof, and Quest expressly disclaims any
obligation to publicly release the results of any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this filing.




Item 1B.   UNRESOLVED STAFF
COMMENTS




We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide the information required under this item.




19




Item
2.   PROPERTIES




PROPERTIES




Quest’s
executive offices are located in Paterson, New Jersey and consist of
approximately 1,000 square feet of leased space.  Quest leases this
space at the rate of $500 per month from a related party
corporation.





Gwenco
leases over 700 acres of coal mines in Pike County, Kentucky, with approximately
12,999,000 tons of coal in place in six seams.  Gwenco is required to
make annual minimum lease payments of approximately $55,000 per
year.





All of
Quest’s current facilities are adequate for its current
operations.  Quest anticipates that additional facilities will be
leased or purchased as needed and that sufficient facilities for its needs are
readily available.





Item
3.   LEGAL PROCEEDINGS





Litigation





Potential SEC
Action.On October 31, 2008, we received a Wells notice (the
"Notice") from the staff of the Salt Lake Regional Office of the Securities and
Exchange Commission (the "Commission") stating that they are recommending an
enforcement action be filed against us based on our financial statements and
other information contained in reports filed by us with the Commission by us for
our 2004 year and thereafter. The Notice states that the Commission anticipates
alleging that we have violated Sections 10(b),  3(a) and 13(b)(2) of
the Securities Exchange Act of 1934, as amended and Rules 10b-5, 12b-20, 13a-1
and 13a-13 thereunder. We contend that we have not committed any wrongdoing or
the violations referred to in the Notice.  We cannot predict whether
the Commission will follow the recommendations of the staff and file suit
against us.  If any enforcement proceeding is instituted by the
Commission, we will defend the action.  We cannot predict the outcome
or timing of this matter.





Gwenco, Inc. Chapter 11
Reorganization.On March 2, 2007, our
wholly owned subsidiary, Gwenco, Inc., filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code with the United
States Bankruptcy Court for the Eastern District of
Kentucky.  Management felt this was a necessary step to further our
financial restructuring initiative and to protect Gwenco’s assets from claims,
debts, judgments, foreclosures, and forfeitures of those creditors and
stakeholders with whom both Quest and Gwenco were unable to negotiate
restructured agreements.  We are currently overseeing Gwenco’s
operations as a debtor in possession, subject to court approval of matters
outside the ordinary course of business.  We are currently seeking
court approval for debtor in possession financing from holders of Gwenco’s
existing debt obligations in order to fund operating expenses.  We
intend to continue our mining operations at Pond Creek Mine at Slater’s Branch
while this matter is completed. Under Chapter 11, claims against Gwenco in
existence prior to the filing of the petitions for reorganization relief under
the federal bankruptcy laws are stayed while Gwenco is in
bankruptcy.  On August 3, 2007, the Bankruptcy Court approved Gwenco’s
request for debtor-in-possession financing in an amount of up to
$2,000,000.  Gwenco has submitted a preliminary plan of reorganization
to the court and the creditors for approval, and the court had set August 19,
2008 for the hearing on confirmation of the plan of reorganization. At the
company's request, the court has continued the confirmation hearing to June 2009
to allow the company to continue negotiating the terms of the plan of
reorganization with the creditors. Although there can be no assurance that an
amended plan of reorganization will be confirmed, the company believes it will
successfully negotiate a plan of reorganization with its creditors and that the
plan of reorganization will be confirmed at the December hearing. If the
bankruptcy court rejects Gwenco's petition for bankruptcy under Chapter 11, we
would be have a material impact as would lose all of its working assets and have
only unpaid liabilities. Accordingly, the court could convert Gwenco's petition
to Chapter 7 and liquidate all of Gwenco's assets. In addition, we might be
forced to file for protection under Chapter 11 as we are the primary guarantor
on a number of Gwenco's contracts.





In or
about May, 2004, National City Bank of Kentucky commenced an action in Boyd
County Court, Kentucky against Quest’s indirect wholly-owned subsidiary, Gwenco,
Inc., and Albert Anderson for breach of various promissory notes issued by
Gwenco.  Duke Energy Merchants and First Sentry Bank were joined in
the action.  National City Bank and Duke Energy are collectively
seeking approximately $1,100,000 in principal as well as interests, fees, and
costs.  National City Bank and Duke Energy have been granted summary
judgment in this action and both obtained judgment.




20





In March,
2006, National City Bank commenced an action commenced an action in Pike County
Court, Kentucky against Quest, Gwenco, and Quest Energy, seeking to be adjudged
a lien on certain real and personal property of Gwenco pursuant to the
aforementioned judgment and that said real and personal property be sold to
satisfy the aforesaid lien, and that the liens of National City Bank attach to
the proceeds of the sale.  In July, 2006, National City Bank of
Kentucky sold its right, title, and interest in and to the various judgments,
judgment liens, security interests, and lines of credit to a third party
investor.  The third party investor has agreed to forbear on further
collection, enforcement, and foreclosure with respect to this indebtedness, in exchange for which
Gwenco agreed to grant the investor a royalty on gross profits of
Gwenco.  This foreclosure action was stayed against Gwenco as a result
of Gwenco’s Chapter 11 filing.





On or
about August 25, 2004, Valley Personnel Services, Inc. commenced an action in
the Circuit Court of Mingo County, West Virginia against Quest’s indirect
wholly-owned subsidiaries, D&D Contracting, Inc. and Quest Energy, Ltd. for
damages in the amount of approximately $150,000, plus pre and post judgment
interest as provided by law, costs, and fees.  This action was stayed
against Gwenco as a result of Gwenco’s Chapter 11 filing.





The
Federal Insurance Company, the insurer for Community Trust Bank, commenced an
action in Pike County Court, Kentucky against Quest Energy for subrogation of
monies it has paid to the bank and repayment of deductibles by Community Trust
as a part of an alleged criminal scheme and conspiracy by Mr. Runyon, Ms.
Holbrook, Mr. Stollings, and Mr. Wheeler.  The insurer alleged that
former employees or associates of Quest Energy, including Mr. Runyon and Mr.
Wheeler, were primarily involved in the alleged scheme, that Quest Energy is
accordingly responsible for the actions of these former employees and
associates, and that Quest Energy obtained a substantial material benefit as a
result of this alleged scheme.  Quest Energy has denied these
allegations, that it had any involvement with or responsibility for any of the
actions alleged by the insurer, and it further denies that it has benefited from
any such alleged scheme.  Further, Quest Energy filed a counterclaim
against the Federal Insurance Company and Community Trust contending that the
negligent actions and inactions by Community Trust caused severe damage and loss
to Quest Energy and Quest.  The court granted Community Trust’s motion
to dismiss the counterclaim.





Mountain
Edge Personnel has commenced an action in the Circuit Court of Mingo County,
West Virginia against Quest’s now-dissolved indirect wholly-owned subsidiary, J.
Taylor Mining, for damages in the amount of approximately
$115,000, plus pre and post judgment interest as provided by law, costs, and
fees.   This matter was settled in November 2008 for payment of
approximately $25,000.





An action
has been commenced in the Circuit Court of Pike County, Kentucky against Quest
and its indirect, wholly-owned subsidiaries, Gwenco, Inc., Quest Energy, Ltd.,
and J. Taylor Mining, for unspecified damages resulting from personal injuries
suffered while working for Mountain Edge Personnel, an employee leasing agency
who leased employees to Quest’s subsidiaries.  Quest Energy is actively defending the
action.  This action was originally stayed against Gwenco as a result
of Gwenco’s Chapter 11 filing.However, in March, 2008,
the plaintiff obtained relief from stay and as a result the lawsuit has reopened
against Gwenco.





BHP, Inc. commenced an
action in the Circuit Court of Pike County, Kentucky against Quest’s indirect,
wholly-owned subsidiary, Quest Energy, Ltd., for damages resulting an alleged
failure to pay for certain equipment leases in theamount of
approximately $225,000, plus pre and post judgment interest as provided by law,
costs, and fees.  July
10, 2006,Quest Energyentered into a settlement
arrangement withBHPfor the bill of sale on two pieces of
equipment, of whichQuest
Energyhad retained
possession while in default of prior lease payments.  On October 10,
2006, the Pike County CircuitCourt entered an order enforcing this
settlement agreement, and on December 19, 2006,BHPwas awarded summary judgment in the
amount of $35,000 plus 8% accrued interest from August 9,
2006.BHP, Inc.
has since repossessed the equipment.





Christopher
Younger and Sharon Preece commenced an action in the Circuit Court of Pike
County against Quest’s indirect, wholly-owned subsidiary, Gwenco, Inc., for
damages resulting from an alleged failure to pay past royalties and other
amounts allegedly due.  The plaintiffs have obtained a default
judgment in this action in the amount of approximately $600,000, from which
Gwenco has taken appeal.  The plaintiffs then amended their complaint,
seeking to be adjudged a lien on certain real and personal property of Gwenco
pursuant to the aforementioned judgment and that said real and personal property
be sold to satisfy the aforesaid lien, and that the liens of the plaintiffs
attach to the proceeds of the sale.  This foreclosure action
was stayed against Gwenco as a result of Gwenco’s Chapter 11
filing.  In 2007, Gwenco settled the claim Sharon Preece for
$150,000.  The settlement was approved by the bankruptcy court.




21





Item
4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.





None.


PART
II




Item
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




Quest’s common stock is traded on the
OTC Bulletin Board under the symbol “QMLM.”  The following table shows
the high and low bid prices for Quest’s common stock for each quarter since
January 1, 2006 as reported by the OTC Bulletin Board.  All share
prices have been adjusted to provide for the 1-4 reverse split effected in
August 2007, the 1-10 reverse split effected in December 2007, 1- 10 reverse
stock split effected on November 4, 2008.  Quest considers its stock
to be “thinly traded” and any reported sale prices may not be a true
market-based valuation of its stock.  Some of the bid quotations from
the OTC Bulletin Board set forth below may reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.





2008 (OTC Bulletin Board)
              
              High Bid
              
              
              Low BidFirst
      quarter
              
              $
              0.11
              
              
              $
              0.039Second
      quarter
              
              
              0.75
              
              
              
              0.008Third
      quarter
              
              
              0.48
              
              
              
              0.015Fourth
      quarter
              
              
              0.057
              
              
              
              0.008
 
 2007 (OTC Bulletin Board)
              
              High Bid
              
              
              Low BidFirst
      quarter
              
              $
              96.00
              
              
              $
              11.20Second
      quarter
              
              
              29.6
              
              
              
              18.80Third
      quarter
              
              
              20.80
              
              
              
              5.10Fourth
      quarter
              
              
              45.00
              
              
              
              0.10


As of
March 31, 2009, there were approximately 520 record holders of Quest’s common
stock.





Quest has
not paid any cash dividends since its inception and does not contemplate paying
dividends in the foreseeable future.  It is anticipated that earnings,
if any, will be retained for the operation of its business.





Shares
eligible for future sale could depress the price of Quest’s common stock, thus
lowering the value of your investment.  Sales of substantial amounts
of Quest’s common stock, or the perception that such sales could occur, could
adversely affect prevailing market prices for shares of Quest’s common
stock.





Quest’s
revenues and operating results may fluctuate significantly from quarter to
quarter, which can lead to significant volatility in the price and volume of its
stock.  In addition, stock markets have experienced extreme price and
volume volatility in recent years.  This volatility has had a
substantial effect on the market prices of securities of many smaller public
companies for reasons unrelated or disproportionate to the operating performance
of the specific companies.  These broad market fluctuations may
adversely affect the market price of Quest’s common stock.





Recent
Sales of Unregistered Securities





None.




Item
6.     SELECTED FINANCIAL DATA




We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide the information required under this item.




22




Item
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS





We will
file an amendment to this annual report to provide management’s discussion and
analysis as required by Item 303 of Regulation S-K.




23





Item
8.  FINANCIAL STATEMENTS





We will
file an amendment to this annual report to provide the financial statements as
required by Article 8 of Regulation S-X.




24





Item
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.





Previous
independent registered public accounting firm





On
February 13, 2009, we dismissed Kempisty & Company as our independent
accountants, and we have engaged RBSM, LLP as our independent registered public
accounting firm.





The
reports of Kempisty & Company on our financial statements for the fiscal
years ended December 31, 2006 and 2007 did not contain an adverse opinion or a
disclaimer of opinion, nor were such reports qualified or modified as to
uncertainty, audit scope or accounting principles, except that the accountant's
reports of Kempisty & Company on our financial statements as of and for the
fiscal years ended December 31, 2006 and 2007 stated that (a) we are a defendant
in several lawsuits, one of our significant subsidiaries is in bankruptcy, and
that an adverse ruling could result in the loss of our operating assets, and
(b)we have incurred operating losses since inception, require additional capital
to continue operations, we could lose all of our operating assets through
current and/or pending litigation, and that conditions raise substantial doubt
about our Company's ability to continue as a going concern.





The
decision to change accountants from Kempisty & Company to RBSM, LLP was
approved by our board of directors.





During
our fiscal years ended December 31, 2006 and 2007 and the subsequent interim
period through February 13, 2009, the date of the dismissal of Kempisty &
Company, we did not have any disagreement with Kempisty & Company on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.





During
that time, there were no "reportable events" as set forth in Item 304(a)(1) of
Regulation S-K adopted by the Securities and Exchange Commission, except that
the accountant's reports of Kempisty & Company on our financial statements
as of and for the fiscal years ended December 31, 2006 and 2007 stated that (a)
we are a defendant in several lawsuits, one of our significant subsidiaries is
in bankruptcy, and that an adverse ruling could result in the loss of our
operating assets, and (b) we have incurred operating losses since inception,
require additional capital to continue operations, we could lose all of our
operating assets through current and/or pending litigation, and that conditions
raise substantial doubt about our Company's ability to continue as a going
concern.





We have
provided Kempisty & Company with a copy of this report prior to its filing
with the Commission. Kempisty & Company has provided a letter to us, dated
February 23, 2009 and addressed to the Commission, which is attached hereto as
Exhibit 16.1 and is hereby incorporated herein by reference.





New
independent registered public accounting firm





On
February 13, 2009 (the "Engagement Date"), the Company engaged RBSM LLP ("RBSM
") as its independent registered public accounting firm for the Company's fiscal
year ended December 31, 2008. The decision to engage RBSM as the Company's
independent registered public accounting firm was approved by the Company's
Board of Directors.





During
the two most recent fiscal years and through the February 13, 2009, the Company
has not consulted with RBSM regarding either:





1.           the
application of accounting principles to any specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, and neither a written report was provided to
the Company nor oral advice was provided that RBSM concluded was an important
factor considered by the Company in reaching a decision as to the accounting,
auditing or financial reporting issue; or





2.           any
matter that was either the subject of a disagreement (as defined in paragraph
(a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto)
or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of
Regulation S-K).




25







Item
9A. CONTROLS AND PROCEDURES.




We will file an amendment to this
annual report to provide controls and procedures as required by Items 307 of
Regulation S-K and 308 of Regulation S-K.





Item
9B. OTHER INFORMATION.





None.




26


PART
III




Item
10.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
CORPORATE GOVERNANCE AND COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT





Executive
Officer and Directors





Our
executive officers and directors, the positions held by them, and their ages are
as follows:




Name
            
            Age
            
            PositionEugene
      Chiaramonte, Jr.
            
            64
            
            President,
      Secretary, and sole Director




Eugene Chiaramonte, Jr. is
Quest’s President and Secretary and Quest’s sole director.  Mr.
Chiaramonte was appointed as Secretary and Vice President in February, 2004 and
President in May, 2006.  Mr. Chiaramonte also serves as the President
and sole director of our wholly owned subsidiary Gwenco, Inc. and serves as the
President and director of our subsidiary Quest Minerals and Mining Corp., a
Nevada corporation.  From 1995 to 2003, Mr. Chiaramonte was a director
and was the president and chief executive officer of the Auxer
Group.  He assumed the position of secretary and treasurer of the
Auxer Group in 1998.  Mr. Chiaramonte was a founder and served as
director and secretary of the Auxer Group’s subsidiary, CT Industries from June
1994 through 2003.  Additionally, he has served as director and
secretary of the Harvey Westbury Corp. since October 1996 and a co-founder,
director and secretary of Hardyston Distributors since April
1999.  Mr. Chiaramonte has also been a director and secretary of Auxer
Telecom Inc. since August 2000.





Information
about our Board and its Committees.





Quest
does not have either an audit committee, compensation committee, or a nominating
committee.  It is the view of the board of directors that it is
appropriate to not have any of these committees since they are not required to
maintain its listing on the OTC Bulletin Board, since it only has one director
who would serve to act as the committee in any event, and due to the additional
and unnecessary costs associated with administering the committees.





We do not
have any defined policy or procedure requirements for stockholders to submit
recommendations or nominations for directors. Our board of directors believes
that, given the early stages of our development, a specific nominating policy
would be premature and of little assistance until our business operations
develop to a more advanced level. We do not currently have any specific or
minimum criteria for the election of nominees to our board of directors and we
do not have any specific process or procedure for evaluating such nominees. Our
board of directors assesses all candidates, whether submitted by management or
stockholders, and makes recommendations for election or
appointment.





A
stockholder who wishes to communicate with our board of directors may do so by
directing a written request to our Company addressed to our Chief Executive
Officer. We intend to hold annual meetings of stockholders during the summer
season, at which meetings our directors will be up for re-election. We currently
do not have a policy regarding the attendance of board members at the annual
meeting of stockholders.





Family
Relationships




There are
no family relationships between or among any of the current directors, executive
officers or persons nominated or charged by the Company to become directors or
executive officers.




27




Involvement
in Certain Legal Proceedings





Except as
describe below, none of our directors or executive officers has, during the past
five years:





·
            been
      convicted in a criminal proceeding or been subject to a pending criminal
      proceeding (excluding traffic violations and other minor
      offences);





·
            had
      any bankruptcy petition filed by or against any business of which he was a
      general partner or executive officer, either at the time of the bankruptcy
      or within two years prior to that time; except for Eugene Chiaramonte who
      was an officer and director of our wholly owned subsidiary Gwenco, Inc.
      which filed for Chapter 11 reorganization in March
  2007;





·
            been
      subject to any order, judgment, or decree, not subsequently reversed,
      suspended or vacated, of any court of competent jurisdiction, permanently
      or temporarily enjoining, barring, suspending or otherwise limiting his
      involvement in any type of business, securities, futures, commodities or
      banking activities; or





·
            been
      found by a court of competent jurisdiction (in a civil action), the
      Securities and Exchange Commission or the Commodity Futures Trading
      Commission to have violated a federal or state securities or commodities
      law, and the judgment has not been reversed, suspended, or
      vacated.





Director
Independence




Our board
of directors has determined that currently none of it members  qualify
as "independent" as the term is used in Item 407 of Regulation S-B as
promulgated by the SEC and in the listing standards of The Nasdaq Stock Market,
Inc. - Marketplace Rule 4200.





Section
16(a) Beneficial Ownership Reporting Compliance





Section 16(a)
of the Securities Exchange Act of 1934, as amended, requires our directors,
executive officers, and stockholders holding more than 10% of our outstanding
common stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in beneficial ownership of our
common stock.  Executive officers, directors and greater-than-10%
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) reports they file.  To our knowledge, based solely
on review of the copies of such reports furnished to us for the period ended
December 31, 2008, all Section 16(a) reports required to be filed by
our executive officers, directors, and greater-than-10% stockholders were filed
on a timely basis.





Code
of Ethics





We have
adopted a code of ethics that applies to the principal executive officer and
principal financial and accounting officer.  We will provide to any
person without charge, upon request, a copy of our code of
ethics.  Requests may be directed to our principal executive offices
at 18B East 5th Street,
Paterson, New Jersey 07524.





Item
11. EXECUTIVE COMPENSATION





We will
file an amendment to this annual report to provide controls and procedures as
required by Item 402 of Regulation S-K and paragraph (e)(4) and (e)(5) of Item
407 of Regulation S-K.





Item
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table sets forth certain information regarding the beneficial
ownership of our common stock as of March 31, 2009 by the following
persons:




·
            each
      person who is known to be the beneficial owner of more than five percent
      (5%) of our issued and outstanding shares of common
  stock;




·
            each
      of our directors and executive officers;
and




·
            all
      of our directors and executive officers as a
  group.




28




Beneficial
ownership is determined in accordance with the rules and regulations of the
SEC.  The number of shares and the percentage beneficially owned by
each individual listed above include shares that are subject to options held by
that individual that are immediately exercisable or exercisable within 60 days
from March 31, 2009, and the number of shares and the percentage beneficially
owned by all officers and directors as a group includes shares subject to
options held by all officers and directors as a group that are immediately
exercisable or exercisable within 60 days from March 31, 2009.





Name And Address (1)
            
            Number
      Of Common
              Shares
      Beneficially Owned
            
            
            Percentage Owned (2)
            
            
            Percentage of Total Voting Power
      (3)Eugene
      Chiaramonte, Jr.
            
            
            265,000,000
            (4)
            
            
            23.5
            
            
            
            89.2
            %All
      directors and
              officers
      as a group (1 person)
            
            
            265,000,000
            (4)
            
            
            23.5
            
            
            
            89.2
            %





(1)
            Unless
      otherwise noted, the address is 18B East 5th
      Street, Paterson, NJ 07524.


(2)
            Based
      on 863,368,471 common shares, 15,526 shares of series A preferred stock,
      48,234 shares of series B preferred stock and 260,000 shares of series C
      preferred stock issued and
outstanding.


(3)
            Holders
      of our common stock are entitled to one vote per share, for a total of
      863,368,471 votes.  Holders of our Series A preferred stock are
      not entitled to vote.  Holders of our series B preferred stock
      are entitled to the number of votes equal to the number of whole shares of
      common stock into which the shares of series B preferred stock held by
      such holder are convertible for a total 12,500 votes.  Holders
      of our Series C preferred stock are entitled to the number of votes on
      such matters equal to the product of (a) the number of shares of the
      series C preferred stock held by such holder, (b) the number of issued and
      outstanding shares of the Company’s common stock, on a fully-diluted
      basis, as of the record date for the vote, or, if no such record date is
      established, as of the date such vote is taken or any written consent of
      stockholders is solicited, and (c) 0.000008, for a total of 7,479,865,182
      votes.


(4)
            Includes
      (A) options to purchase 5,000,000 shares of our common stock and (B)
      shares issuable upon conversion of 260,000 shares of series C preferred
      Stock.  Each share of series C preferred stock is convertible
      into that number of shares of common stock determined by dividing each
      share of series C preferred stock by 100% of the 5 day average closing
      price of our common stock for the day immediately preceding
      conversion.





Item
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE





On
January 12, 2007, we entered into an indemnity agreement with Eugene
Chiaramonte, Jr., our President, Secretary, and sole director.  Under
the indemnity agreement, we issued 260,000 shares of our Series C Preferred
Stock to Mr. Chiaramonte to indemnify him for a loss he incurred when he
delivered a personal guarantee in connection with a loan
agreement.  Under the loan agreement, Mr. Chiaramonte personally
guaranteed repayment of the loan and pledged 2,000,000 shares of our common
stock held by him as collateral for the amounts loaned under the loan
agreement.  We eventually defaulted under the loan agreement, and the
lender foreclosed on the shares which Mr. Chiaramonte had pledged.  On
the date of foreclosure, Mr. Chiaramonte’s shares had a market value of
approximately $260,000.  The board of directors has determined that
Mr. Chiaramonte delivered the guarantee and pledged the shares in the course and
scope of his employment with us, as our director, and for our
benefit.  The board of directors has further determined that Mr.
Chiaramonte’s conduct was in good faith and that he reasonably believed that his
conduct was in, or not opposed to, our best interests.




29





Our board of directors authorized the
creation of a series of preferred stock of the company to be known as Series C
Preferred Stock, par value $0.001 per share.  The conversion price at which
shares of common stock shall be deliverable upon conversion of Series C
Preferred Stock without the payment of any additional consideration by the
holder thereof is the lesser of (i) $0.32 per share or (ii) 100% of the average
of the 5 closing bid prices of the common stock immediately preceding such
conversion date.  Holders of the Series C Preferred Stock shall be
entitled to receive dividends or other distributions with the holders of our
common stock on an as converted basis when, as, and if declared by our board of
directors.  The holders of the Series C Preferred Stock shall also be
entitled to receive, upon liquidation, an amount equal to $1.00 per share of the
Series C Preferred Stock plus all declared but unpaid dividends with respect to
such shares.  The shares of Series C Preferred Stock are not
redeemable.





Pursuant
to the articles of amendment to articles of incorporation establishing the Class
C Preferred Stock, on all matters submitted to a vote of the holders of the
common stock, including, without limitation, the election of directors, a holder
of shares of the Series C Preferred Stock shall be entitled to the number of
votes on such matters equal to the product of (a) the number of shares of the
Series C Preferred Stock held by such holder, (b) the number of issued and
outstanding shares of our common stock, as of the record date for the vote, or,
if no such record date is established, as of the date such vote is taken or any
written consent of stockholders is solicited, and (c) 0.000008.





The
issuance of the Series C Preferred Stock to Mr. Chiaramonte effectively
transferred control of the company to Mr. Chiaramonte.





On June
6, 2006, Quest entered into a two-year agreement to acquire administrative
services from a third party consulting company owned by Gene Chiaramonte III,
the son of Eugene Chiaramonte, Jr., Quest’s President and
Secretary.  The agreement consisted of an initial 1,000,000 shares
common stock issued under a Stock Incentive Plan, along with a monthly payment
of $6,500.  On January 6, 2008, Quest amended this two-year agreement
acquiring administrative services from a third party consulting company owned by
the son of its acting president originally dated June 6, 2006.  The
agreement consisted of an initial 1,000,000 shares common stock issued under a
Stock Incentive Plan, along with a monthly payment of $6,500.  The
initial shares were valued at $35,000 and are being amortized over the term of
the agreement.  The amendment consisted of an increase of the monthly
payment to $9,900 due to providing additional services with regards to the
reorganization of the company’s wholly owned subsidiary, Gwenco, Inc., which is
currently under Chapter 11.





On May
31, 2006, Quest entered into a consulting agreement withWilliam R. Wheeler, Quest’s former Chief
Executive Officer.  The agreement is forone year and is renewal for
successive periods of two (2) years.  The agreementprovides for amonthly consulting fee, payable in cash
or as a stock award under a stock incentive plan.  In addition, Quest
shall pay Mr. Wheeler a one percent royalty on gross sales on all mine products
that originate from mines and/or wells introduced to Quest by Mr.
Wheeler.  With respect to theoptions to purchase up to 5,000,000
shares of Quest’s common stockgranted to Mr. Wheeler,options to purchase up to 2,000,000
shareswere deemed vested,options to purchase up to
1,000,000 shares will vest six months after the date of theconsulting agreement, and the balance of
the options were voided.





We
believe that the foregoing transactions were in our best
interests.  Consistent with the Utah Business Corporation Act, it is
our current policy that all transactions between us and our officers, directors
and their affiliates will be entered into only if such transactions are approved
by a majority of the disinterested directors, are approved by vote of the
stockholders, or are fair to us as a corporation as of the time it is us at is
authorized, approved or ratified by the board.  We will conduct an
appropriate review of all related party transactions on an ongoing basis, and,
where appropriate, we will utilize our audit committee for the review of
potential conflicts of interest.





Director
Independence




For our
description of director independence, see “Director Independence” under the
section entitled “Directors, Executive Officers, Promoters, Control Persons and
Corporate Governance; Compliance with Section 16(a) of the Exchange Act”
above.





Item
14. PRINCIPAL ACCOUNTING FEES AND SERVICES.





We will
file an amendment to this annual report to provide principal accountants fees
and services as required by Item 9(e) of Schedule 14A (Sec.240.14a-101 of this
chapter).




30





Item
15. EXHIBITS




Exhibit
No.                                Description





3.1
            Restated
      Articles of Incorporation of Sabre, Inc. (now known as Quest Minerals
      & Mining Corp.), incorporated by reference to Quest’s Registration
      Statement on Form 10-SB filed on December 18,
  2000.





3.2
            Articles
      of Amendment to Articles of Incorporation of Tillman International, Inc.
      (now known as Quest Minerals & Mining Corp.), incorporated by
      reference to Quest’s Definitive Information Statement on Schedule 14C
      filed on March 16, 2004.




3.3
            Articles
      of Amendment to Articles of Incorporation of Quest Minerals & Mining
      Corp., incorporated by reference to our Annual Report on Form 10 KSB/A for
      the year ended December 31, 2006, filed on July 19,
  2007.




3.4
            Articles
      of Amendment to Articles of Incorporation of Quest Minerals & Mining
      Corp., incorporated by reference to our Annual Report on Form 10 KSB/A for
      the year ended December 31, 2006, filed on July 19,
  2007.




3.5
            Articles
      of Amendment to Articles of Incorporation of Quest Minerals & Mining
      Corp., incorporated by reference to Quest’s Current Report on Form 8-K
      filed on January 30, 2007.




3.6
            Articles
      of Amendment to Articles of Incorporation of Quest Minerals & Mining
      Corp., incorporated by reference to Quest’s Definitive Information
      Statement on Schedule 14C filed on January 29,
  2007.




3.7
            Bylaws
      of Tillman International, Inc. (now known as Quest Minerals & Mining
      Corp), incorporated by reference to Quest’s Registration Statement on Form
      10-SB filed on December 18, 2000.




3.8
            Certificate
      of Amendment to Certificate of Designation of Class A Preferred Stock of
      Quest Minerals & Mining Ltd. filed with the Nevada Secretary of State
      of December 19, 2007, incorporated by reference to Quest’s Current Report
      no Form 8-K filed on December 21,
2007.




3.9
            Articles
      of Amendment to Articles of Incorporation of Quest Minerals & Mining
      Corp., incorporation by reference to Appendix A of Quest’s Definitive
      Information Statement on Form 14C filed on
      August 15, 2008.




4.1
            Specimen
      Certificate of Quest Mineral & Mining Corp.’s common stock,
      incorporated by reference to our Annual Report on Form 10 KSB/A for the
      year ended December 31, 2006, filed on July 19,
  2007.




4.2
            Amended
      and restated convertible promissory note, incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007.




4.3
            Form
      of amended and restated convertible promissory note, incorporated by
      reference to Quest’s Current Report on Form 8-K filed on June 17,
      2006.





4.4
            Convertible
      promissory note, incorporated by reference to our Annual Report on Form 10
      KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.





4.5
            Secured
      promissory note, incorporated by reference to our Annual Report on Form 10
      KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.




31




4.6
            Form
      of convertible promissory note, incorporated by reference to our Annual
      Report on Form 10 KSB/A for the year ended December 31, 2006, filed on
      July 19, 2007.





4.7
            Convertible
      promissory note, incorporated by reference to our Annual Report on Form 10
      KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.





4.8
            Promissory
      Note dated February 21, 2000, as amended, incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007.





4.9
            Commercial
      Installment Note dated January 20, 1997, incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007





4.10
            Commercial
      Time Note dated February 21, 2000, incorporated by reference to our Annual
      Report on Form 10 KSB/A for the year ended December 31, 2006, filed on
      July 19, 2007





4.11
            Amended
      Promissory Note dated August 24, 2006, incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007.





4.12
            Amended
      Promissory Note dated August 24, 2006, incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007.





4.13
            Warrant,
      incorporated by reference to Quest’s Current Report on Form 8-K filed on
      October 25, 2005.





4.14
            Form
      of Warrant, incorporated by reference to our Annual Report on Form 10
      KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.





4.15
            Form
      of Series A Warrant, incorporated by reference to our Annual Report on
      Form 10 KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.





4.16
            Form
      of Series B Warrant, incorporated by reference to our Annual Report on
      Form 10 KSB/A for the year ended December 31, 2006, filed on July 19,
      2007





4.17
            Warrant,
      incorporated by reference to Quest’s Current Report on Form 8-K filed on
      February 21, 2006.





4.18
            Amended
      and Restated Warrant, incorporated by reference to Quest’s Current Report
      on Form 8-K filed on February 21,
2006.





4.19
            Form
      of Warrant, incorporated by reference to our Annual Report on Form 10
      KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.





4.20
            Convertible
      Promissory Note dated  March 11, 2008, incorporated by reference
      to Quest’s Current Report on Form 8-K, filed on March 17,
      2008.





10.1
            Securities
      Purchase Agreement and Plan of Reorganization dated February 9, 2004,
      incorporated by reference to Quest’s Current Report on Form 8-K filed on
      February 24, 2004.




10.2
            Securities
      Purchase Agreement and Plan of Reorganization by and among Tillman
      International, Inc., Quest Minerals & Mining, Ltd., Gwenco, Inc., and
      the stockholders of Gwenco, Inc., dated as of April 28, 2004, incorporated
      by reference to Quest’s Current Report on Form 8-K filed on May 6,
      2004.





10.3
            William
      R. Wheeler Employment Agreement, incorporated by reference to Quest’s
      Quarterly Report on Form 10-QSB for the quarter ending September 30,
      2005.




32




10.4
            Eugene
      Chiaramonte, Jr. Employment Agreement, incorporated by reference to
      Quest’s Quarterly Report on Form 10-QSB for the quarter ending September
      30, 2005.




10.5
            William
      R. Wheeler Consulting Agreement, incorporated by reference to our Annual
      Report on Form 10 KSB/A for the year ended December 31, 2006, filed on
      July 19, 2007.




10.6
            Eugene
      Chiaramonte, Jr. Indemnification Agreement, incorporated by reference to
      Quest’s Current Report on Form 8-K filed on January 30,
    2007.




10.7
            2006
      Stock Incentive Plan, incorporated by reference to Quest’s Registration
      Statement on Form S-8, filed on May 9, 2006 (File No.
      333-133939).




10.8
            2006
      Stock Incentive Plan No. 2, incorporated by reference to Quest’s
      Registration Statement on Form S-8, filed on September 28, 2006 (File No.
      333-137645).




10.9
            Coal
      Mining Agreement dated February 23, 2007, incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007.




10.10
            Stock
      Purchase Agreement, incorporated by reference to our Annual Report on Form
      10 KSB/A for the year ended December 31, 2006, filed on July 19,
      2007.




10.11
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.12
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.13
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.14
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.15
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.16
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.17
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.18
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.19
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.20
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.21
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.22
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




33




10.23
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.24
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.25
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.26
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.27
            Lease
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.28
            Forbearance
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.29
            Conversion
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.30
            Royalty
      Agreement, incorporated by reference to our Annual Report on Form 10 KSB/A
      for the year ended December 31, 2006, filed on July 19,
    2007.




10.31
            2007
      Stock Incentive Plan, incorporated by reference to Quest’s Registration
      Statement on Form S-8, filed on February 26, 2007 (File No.
      333-140872).




10.32
            2007
      Stock Incentive Plan No. 2, incorporated by reference to Quest’s
      Registration Statement on Form S-8, filed on November 26, 2007 (File No.
      333-147612).




10.33
            Convertible
      Note Purchase Agreement dated March 10, 2008, incorporated by reference to
      Quest’s Current Report on Form 8-K, filed on March 17,
    2008.




21.1
            Subsidiaries
      of Quest Minerals and Mining Corp., incorporated by reference to our
      Annual Report on Form 10 KSB/A for the year ended December 31, 2006, filed
      on July 19, 2007




23.1
            Consent
      of Independent Public Accountants, RBSM, LLP, to be filed by
      amendment




23.2
            Consent
      of Independent Public Accountants, Kempisty & Company., to be filed by
      amendment




31.1
            Certificationof Eugene Chiaramonte, Jr.  pursuant to Rule
      13a-14(a), to
      be filed by amendment




32.1
            Certification
      of Eugene Chiaramonte, Jr. pursuant to 18 U.S.C Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to be filed by
      amendment.




34





SIGNATURES




In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.




QUEST MINERAL AND
      MINING CORP.By:
              /s/ Eugene
      Chiaramonte, Jr.Eugene
      Chiaramonte, Jr.
                President(Principal
      Executive Officer and Principal Accounting Officer)




Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated.





Signature
              
              Title
              
              Date/s/
      Eugene Chiaramonte, Jr.
              
              President
      and sole Director
              
              April
      15, 2009Eugene
      Chiaramonte, Jr.




35