U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(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, 2005

[ ]  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                         (I.R.S. Employer
    incorporation or organization)                       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

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

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 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 days.
Yes [X]  No [ ]

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act. [ ]

         Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         The issuer's revenues for the most recent fiscal year were $356,741.

         The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant was approximately $8,894,161 as of
March 31, 2006. Shares of common stock held by each officer and director and by
each person or group who owns 10% or more of the outstanding common stock
amounting to 59,692,354 shares have been excluded in that such persons or groups
may be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

         As of March 31, 2006, 78,687,354 shares of Quest's common stock were
issued and outstanding.

         Documents Incorporated by Reference: None.

         Transitional Small Business Disclosure Format: No.
<PAGE>

                                     PART I

Item 1.   DESCRIPTION OF BUSINESS

General

         Quest Minerals & Mining Corp., or Quest, 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. Quest Energy is the
parent corporation of E-Z Mining Co., Inc, a Kentucky corporation, or E-Z
Mining, of Gwenco, Inc., a Kentucky corporation, or Gwenco, and of Quest Marine
Terminal, Ltd., a Kentucky corporation, or Quest Marine.

         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 quality compliance
coal is located at Slater's Branch, South Williamson, Kentucky.

Material Developments

         Cessation of Mining Operations. 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. Since that time, Quest has been seeking sufficient
working capital to resume mining operations at this mine. In the fourth quarter
of 2005, Quest completed the required rehabilitation of the Pond Creek mine. In
March, 2006, Quest reopened its Pond Creek mine and has placed mining equipment
back into the mine. Quest had believed that it had received the required
insurance, permits, and approval to recommence mining operations; however, Quest
was subsequently advised that it required additional insurance, permits, and
approvals permits to recommence the mining operations. Quest is currently
seeking to obtain these necessary insurance, permits, and approvals and intends
to recommence mining operations upon receipt of the necessary insurance,
permits, and approvals.

         Quest has recently retained Braxton Mining as its contract miner to
resume mining operations at Pond Creek. Braxton has replaced Shelbi Coal Company
as the contract miner for Quest. Under the terms of the agreement with Braxton,
Braxton will provide all equipment and labor necessary for the coal mining
production at the Pond Creek mine, and Quest will receive $7.75 per ton of clean
coal mined from Pond Creek, which will be escrowed under the terms of the Boyd
County Court order and used to repay accrued royalties and creditors of Quest's
wholly-owned subsidiary, Gwenco, Inc. Further, to the extent that coal from the
mine is sold to a washing plant at a price that exceeds $45.00 per clean ton,
Quest will receive thirty percent (30%) of the revenues in excess of $45.00 per
clean ton, and, to the extent that coal from the mine is sold directly to the
open market at a price that exceeds $60.00 per clean ton, Quest will receive
thirty percent (30%) of the revenues in excess of $60.00 per clean ton. This
arrangement is subject to revision, amendment, or revocation by the Boyd County
Court.

         Using continuous mining techniques, before the shutdown of the Gwenco
mines, Quest had driven approximately 1,200 feet to where the coal may be
thickening to above 36 inches, based on estimates from core-hole drilling.
During the initial period, coal was sent to a preparation plant to be washed.
After re-opening the Pond Creek mine, once thicker coal is reached, Quest and
Braxton intend to commence implementation of two continuous mining operations
estimated to yield about 20,000 tons of clean coal per month.

         National City Bank Foreclosure Action. 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. National City Bank has obtained judgment in
that action in the amount of approximately $340,000.

                                       2
<PAGE>

         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. Quest intends to defend this action while
continuing negotiations with National City Bank. If National City Bank is
successful in this action, Gwenco could lose substantially all of its assets in
a foreclosure sale.

         Embezzlement/Check-Kiting. In December, 2004, Quest terminated its
former Chief Financial Officer, Fred Runyon. Quest Energy, Ltd., an indirect,
wholly-owned subsidiary of Quest, also terminated Mr. Runyon as President of
Quest Energy. On April 7, 2005, Quest announced that, upon completion of the
initial phase of an audit by counsel retained by Quest for that purpose, among
others, Quest began an investigation into an apparent embezzlement from Quest
and a conspiracy to commit embezzlement by some former employees of Quest,
Quest's indirect wholly-owned subsidiary, Quest Energy, Ltd., and its former
indirect wholly-owned subsidiary, D&D Contracting, Inc, including Mr. Runyon.

         At this time, Quest is unable to quantify the scope of the apparent
embezzlement or the impact that the apparent embezzlement will have on its
financial statements, but management currently estimates that between $250,000
and $1,000,000 was apparently embezzled from Quest. Quest has retained a
forensic accountant to quantify the scope of the alleged fraud; however, the
forensic accountant has been unable to complete its analysis at this time.

         Most of the embezzled funds result from Runyon apparently engaging in a
"check-kiting" scheme with the complicity of his sister, Judy Holbrook, the
manager of Community Trust Bank, where Quest Energy maintained bank accounts.

         Federal and state law enforcement authorities are investigating the
activities of Mr. Runyon, Ms. Holbrook, and other apparent co-conspirators.
According to news reports, on or about May 5, 2006, four people were charged
with kiting checks in a scheme that federal prosecutors said cost a bank more
than $1 million. According to the reports, a federal grand jury indicted Mr.
Runyon, Ms. Holbrook, James Daniel Stollings, and Quest's President and Chief
Executive Officer, William R. Wheeler. The four are charged with bank fraud.
According to the reports, Federal prosecutors said that Wheeler, Stollings, and
Runyon were business associates with Quest when they convinced Holbrook, a
branch manager for Community Trust Bank to issue unfunded cashier's checks.
According to the Federal prosecutors, the cashier's checks covered bad checks
written by Quest subsidiaries. No court date has been scheduled for any of the
four. Both Mr. Wheeler and Quest deny any wrongdoing in connection with these
matters.

         The Federal Insurance Company, the insurer for Community Trust Bank,
has notified Quest Energy that is seeking to obtain subrogation of monies it has
paid to Community Trust Bank and repayment of deductibles by the bank as a part
of an alleged criminal scheme and conspiracy by former employees of the bank and
other individuals. The Federal Insurance Company has alleged that former
employees or associates of Quest Energy, including Mr. Runyon, 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 denies that it had any involvement with or responsibility for any
of the actions alleged by the Federal Insurance Company, and it further denies
that it has benefited from any such alleged scheme. Further, Quest Energy
contends that the negligent actions and inactions by Community Trust Bank caused
severe damage and loss to Quest Energy. There is currently no action pending
with respect to this matter.

         In light of these occurrences, Quest has determined that the design and
operation of its disclosure controls and procedures, as defined in Exchange Act
Rule 13a-14(c) have not been effective to ensure that information required to be
disclosed in its Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to them to allow timely decisions regarding required disclosure.
Quest is currently reviewing and revising its controls and procedures to
increase the effectiveness of its disclosure controls and procedures.

                                       3
<PAGE>

         JJ Resources. On September 12, 2005, Quest entered into a right of
first refusal agreement with JJ Resources of Kentucky, Inc. Pursuant to this
agreement, JJ Resources granted to Quest a right of first refusal to provide all
financing to JJ Resources for certain coal and oil and gas properties owned,
leased, or otherwise controlled by JJ Resources. Quest has the right to provide
$500,000.00 for the first property, called the Apollo #1 project, within ninety
(90) days of the agreement, for which Quest will be paid $5.00 per ton of clean
coal for the first 150,000 tons of clean coal mined from Apollo #1, $2.00 per
ton of clean coal for the next 1,000,000 tons of clean coal mined from Apollo
#1, and $1.00 per ton of clean coal mined from Apollo #1 thereafter. In
addition, each additional financing for property owned, leased, or otherwise
controlled by JJ Resources will be negotiated on a case-by-case basis, but Quest
shall have the exclusive right for a minimum of ninety (90) days in each case to
provide the desired financing, in whole or in part, upon investment terms to be
negotiated. In exchange for this right of first refusal, Quest issued 2,000,000
shares of its common stock to JJ Resources Land Trust.

         JJ Resources has breached the terms of the right of first refusal
agreement by expropriating $125,000, which Quest provided to finance certain of
the JJ Resources coal and oil and gas properties, for uses other than to finance
said properties. Further, JJ Resources and its principal, William Spears, has
violated their obligations to Quest in attempting to divert business
relationships from Quest and otherwise interfering with Quest's business
relationships while acting as an agent for Quest. Quest intends to commence
legal action against JJ Resources, Mr. Spears, and other related parties to seek
reparations for all liquidated, special, general and punitive damages as allowed
by law, along with appropriate injunctive relief.

         Closing of Burning Fork #1. E-Z Mining, an indirect, wholly-owned
subsidiary of Quest, operated a high-quality compliance blend coal deep mine
named "Burning Fork #1" in Pike County, Kentucky. Quest has permanently shut
down the operations at the Burning Fork #1 mine.

         Monday Coal Lease. Quest Marine, an indirect, wholly-owned subsidiary
of Quest, had leased from Monday Coal, LLC a barge loadout facility and
associated real property, consisting of approximately 13.89 acres, located at
Mile Point 318.9 on the Ohio River. Monday Coal terminated the lease for
non-payment in February 2005, and Quest is currently seeking a refund of its
deposit with Monday Coal of approximately $28,000.

Business Development of Quest

         Quest Minerals (Nevada), was organized on November 19, 2003 to acquire
and operate privately held coal mining companies in the southeast United States.
On January 1, 2004, Quest Minerals (Nevada) acquired E-Z Mining Co., Inc. On
February 9, 2004, Quest Minerals (Nevada) completed a "reverse merger" with
Tillman International, Inc., or Tillman, a publicly-traded shell corporation and
a fully reporting company registered under the Securities Exchange Act of 1934.
On April 8, 2004, Tillman changed its name to "Quest Minerals & Mining Corp."

         E-Z Mining Acquisition. On January 1, 2004, Quest Minerals (Nevada)
acquired E-Z Mining pursuant to a stock purchase agreement whereby Quest Energy
acquired 100% of the outstanding shares of capital stock of E-Z Mining. Under
the stock purchase agreement, Quest Minerals (Nevada) issued 2,000,000 shares of
its Series A convertible preferred stock and 23,000 shares of its common stock
to the stockholders of E-Z Mining in exchange for all of the outstanding shares
of capital stock of E-Z Mining.

         Each share of Quest Minerals (Nevada) Series A preferred stock is now
convertible into a maximum of five (5) shares of Quest common stock, or such
lesser shares as determined by dividing $3.00 by the average closing bid price
of one share of Quest common stock during the ten trading days preceding actual
receipt of a notice of conversion, subject to proportional adjustment for
stock-splits, stock dividends, recapitalizations, and subsequent dilutive
issuances of common stock. The Series A preferred stock is convertible at the
option of the holder. The holders of the Series A preferred stock shall be
entitled to receive cumulative dividends at the rate of $0.0001 per share per
annum in preference to the holders of common stock. The holders of the Series A
preferred stock shall also be entitled to receive, upon liquidation, an amount
equal to $3.00 per share for the Series A preferred stock plus all declared and
unpaid dividends, in preference to the holders of the common stock. After March
31, 2004, Quest has the option of redeeming the Series A preferred stock at a
price equal to $3.00 per share for the Series A preferred stock plus all
declared and unpaid dividends. The Series A Preferred Stock has no voting
rights. As of June 9, 2005, 1,546,667 shares of the Series A preferred stock had
been converted into an aggregate of 2,004,689 shares of Quest common stock.

                                       4
<PAGE>

         Reverse Merger. Quest was incorporated on November 21, 1985 in the
State of Utah under the name "Sabre, Inc." It subsequently changed its name to
Tillman International, Inc., or Tillman. On February 9, 2004, Tillman acquired
100% of the outstanding common stock of Quest Minerals (Nevada) pursuant to a
securities purchase agreement and plan of reorganization. Under the plan of
reorganization, Tillman issued 20,700,000 shares of its common stock to the
stockholders of Quest Minerals (Nevada) in exchange for all of the outstanding
shares of common stock of Quest Minerals (Nevada). In addition, Tillman agreed
to issue to the stockholders of Quest Minerals (Nevada) an additional 1,800,000
shares of its common stock upon completion of an amendment to its articles of
incorporation to increase the authorized common stock of Tillman to 250,000,000
shares. Pursuant to the plan of reorganization, 22,464,358 shares of Tillman
common stock held by Silvestre Hutchinson, the former President of Tillman and
one of its former directors, were cancelled. Upon the completion of the
reorganization, William R. Wheeler and Eugene Chiaramonte, Jr., the former
directors of Quest Minerals (Nevada), were appointed as directors of Tillman. On
April 8, 2004, Tillman amended its articles of incorporation to change its name
to "Quest Minerals & Mining Corp." The additional 1,800,000 shares of Quest
common stock were issued in May 2004.

         Gwenco Acquisition. Effective April 28, 2004, Quest Minerals (Nevada)
acquired 100% of the outstanding capital stock of Gwenco in exchange for
1,600,000 shares of Series B preferred stock of Quest Minerals (Nevada) and the
assumption of up to $1,700,000 in debt. Each share of Series B preferred stock
carries a liquidation preference of $2.50 per share. In addition, each share of
Series B Preferred Stock is convertible into one share of Quest common stock.
After the acquisition, the parties agreed to a post-closing adjustment to the
purchase price to adjust for the liabilities of Gwenco exceeding $1,700,000. As
a result of this adjustment, the number of shares of Series B preferred stock
issued to the former stockholders of Gwenco was reduced to 1,386,275. On
November 1, 2004, 1,000,000 shares of the Series B preferred stock were
converted into 1,000,000 shares of Quest common stock. In connection with this
acquisition, Quest appointed Albert Anderson, the former principal stockholder
of Gwenco, to Quest's board of directors.

         On March 24, 2005, the board of directors asked Albert Anderson to
resign as a director of Quest, and on April 4, 2005, Mr. Anderson submitted his
resignation. In connection with his resignation, Mr. Anderson alleged that Quest
has defaulted under the stock purchase agreement by and between Quest, Gwenco,
Inc., and the former stockholders of Gwenco, which includes Mr. Anderson. Quest
has denied Mr. Anderson's allegations, believes that the allegations are
baseless and without merit, and further believes that it has several claims
against Mr. Anderson which it could assert.

         In or about May, 2004, National City Bank of Kentucky commenced an
action in Boyd County Court, Kentucky against 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. National City Bank has obtained judgment in
that action in the amount of approximately $340,000.

         In that action, Anderson has filed a third-party complaint against
Quest (Nevada) and Taylor Mining, two of Quest's subsidiaries, for breach of
contract, fraud in the inducement, breach of the covenant of good faith and fair
dealing, unjust enrichment, conversion, and breach of fiduciary duties. Mr.
Anderson seeks to rescind Quest's acquisition of Gwenco, or alternatively, seeks
unspecified compensatory and punitive damages, and he also seeks injunctive
relief. Quest believes that Mr. Anderson's allegations are without merit and is
defending the action vigorously. Quest has also asserted counter-claims against
Mr. Anderson for breach of the Stock Purchase Agreement.

         D&D Acquisition/Rescission. In June, 2004, Quest Minerals (Nevada)
acquired 100 % of the outstanding capital stock of D&D in exchange for 500,000
shares of Quest common stock. On December 24, 2004, Quest and D&D Contracting,
Inc. entered into a rescission agreement, effective November 1, 2004, relating
to Quest's acquisition of D&D on June 15, 2004. Under the terms of the
rescission agreement, Quest agreed to transfer all of the capital stock of D&D
back to the original D&D stockholders, and D&D and its original stockholders
agreed to waive any and all rights it had under the terms of the stock purchase
agreement relating to the acquisition of D&D. In addition, (i) D&D agreed to
provide Quest with all bank records and accounting statements relating to D&D,
(ii) Quest granted D&D the right to purchase certain equipment from Quest, (iii)
D&D agreed to pay Quest a royalty on coal sales of $0.25 per clean ton, (iv) in
the event that D&D ceases to operate the D&D mine, D&D must purchase certain
equipment from Quest or release the same to Quest, (v) D&D shall maintain
certain insurance requirements, (vi) D&D shall assume a certain loan with
Community Trust Bank in the approximate amount of $45,000, and (vii) certain

                                       5
<PAGE>

assets in the name of D&D were to be transferred to Quest. Further, all
employment agreements between Quest or any of subsidiaries and James Stollings,
a former principal of D&D, have been terminated.

         D&D has breached the terms of the rescission agreement by failing to
honor any of its obligations recited above. Quest intends to commence legal
action against D&D, Mr. Stollings, Landmark, and other related parties to seek
reparations for all liquidated, special, general and punitive damages as allowed
by law, along with appropriate injunctive relief.

Industry Overview

         As a major contributor to the world energy supply, coal represents
approximately 23% of the world's primary energy consumption, according to the
World Coal Institute. The primary use for coal is to fuel electric power
generation. In calendar year 2002, it is estimated that coal generated 51% of
the electricity produced in the United States, according to the Energy
Information Administration, a statistical agency of the U. S. 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, South
Africa, and Australia. The United States is the largest holder of coal reserves
in the world, with over 250 years supply at current production rates. U.S. coal
reserves are more plentiful than oil or natural gas, with coal representing
approximately 70% of the nation's fossil fuel reserves, according to Energy
Ventures Analysis. Total coal reserves are estimated by comparing the total
probable heat value (British thermal units, or BTUs, per pound) of the
demonstrated coal reserve tonnage reported by the Department of Energy to the
heat value of other fossil fuel energy resources reported by the Department of
Energy.

         U.S. coal production has more than doubled during the last 30 years. In
2002, total coal production as estimated by the United States Department of
Energy, or DOE, was 1.1 billion tons. The primary producing regions were the
Powder River Basin (38%), Central Appalachia (23%), Midwest (14%), Northern
Appalachia (12%), West (other than the Powder River Basin) (12%), and other
(1%). All of Quest's coal production comes from the Central Appalachian region.
Approximately 66% of U.S. coal is produced by surface mining methods. The
remaining 34% is produced by underground mining methods.

         Coal is used in the United States by utilities to generate electricity,
by steel companies to make products with blast furnaces, and by a variety of
industrial users to heat and 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 west coast terminals.
The breakdown of 2002 U.S. coal demand, as estimated by Resource Data
International, Inc., or RDI, is as follows:
<TABLE>
<CAPTION>

         End Use                              Tons (millions)        Percentage of Total
         -------------------------            -------------------    -------------------
<S>                                           <C>                     <C>
         Electricity generation               982                     86%
         Industrial users                     66                      6%
         Exports                              64                      6%
         Steel making                         27                      2%
         Residential & commercial             5                       --%
                                              -------------------    -------------------

         Total                                1,144                    100%
                                              -------------------    -------------------
</TABLE>

                                       6
<PAGE>

         Coal has long been favored as an electricity generating fuel by
regulated utilities 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. RDI estimated the average total production costs of electricity, using
coal and competing generation alternatives in 2002 as follows:
<TABLE>
<CAPTION>

         Electricity Generation Type           Cost per million Kilowatt Hours
         -------------------------------       ---------------------------------------
<S>                                            <C>
         Oil                                   $4.754
         Natural Gas                           $4.422
         Coal                                  $1.819
         Nuclear                               $1.785
         Other (solar, wind, etc.)             $0.979
         Hydroelectric                         $0.527
</TABLE>

         According to RDI, 15 of the 25 lowest operating cost power plants in
the United States during 2001 were fueled by coal. Coal used as fuel to generate
electricity is commonly referred to as "steam coal."

         There are factors other than fuels 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 U.S. electricity generation by fuel source in
2002, as estimated by the Energy Information Administration, is as follows:
<TABLE>
<CAPTION>

         Electricity Generation Source         Percent of Total Electricity Generation
         -------------------------------       ---------------------------------------
<S>                                            <C>
         Coal                                  51%
         Nuclear                               21%
         Natural Gas                           17%
         Hydro                                 6%
         Oil                                   3%
         Other                                 2%
                                               ---------------------------------------

         Total                                 100%
                                               ---------------------------------------
</TABLE>

         RDI projects that generators of electricity will increase their demand
for coal as demand for electricity increases. Since 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. Demand for electricity
has historically grown in proportion to U.S. economic growth.

         Coal shipped for North American consumption is typically sold at the
mine loading facility with transportation costs being borne by the purchaser.
According to the National Mining Association, approximately two-thirds of U.S.
coal production is shipped via railroads. Final delivery to consumers often
involves more than one transportation mode. A significant portion of U.S.
production is delivered to customers via barges on the inland waterway system
and ships loaded at Great Lakes ports.

Market Opportunity

         In the recent 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. $70 to U.S. $80 per ton. Nymex
July 2004 coal deliveries were trading just above $51 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.

                                       7
<PAGE>

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 this seam.

         The primary reserves are in the Pond Creek, Lower Cedar Grove, and
Taylor seams. 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's management has
over 30 years of energy related projects and has managed over $60,000,000 of oil
and gas exploration and production in Appalachia, Oklahoma, Colorado, North
Dakota and Louisiana. 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 intends to sell all of its coal on the spot market to coal
brokers. Quest seeks to enter into long-term contracts (exceeding one year in
duration) with many of its customers. 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.

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

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<PAGE>

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 Matters

         Quest is subject to federal, state, and local laws and regulations
relating to environmental protection and plant and mine safety and health,
including, but not limited to, the federal Surface Mining Control and
Reclamation Act of 1977, the Occupational Safety and Health Act, the Mine Safety
and Health Act of 1977, the Water Pollution Control Act, as amended by the Clean
Water Act, the Clean Air Act, the Black Lung Benefits Revenue Act of 1977, and
the Black Lung Benefits Reform Act of 1977. Quest is rarely subject to
permitting or enforcement under the Resource Conservation and Recovery Act, or
RCRA, or the Comprehensive Environmental Response, Compensation, and Liability
Act, or CERCLA, and does not consider the effects of those statutes on its
operations to be material for purposes of disclosure.

         SMCRA. The Surface Mining Control and Reclamation Act, or SMCRA, which
is administered by the Office of Surface Mining Reclamation and Enforcement,
establishes mining, environmental protection and reclamation standards for all
aspects of surface mining as well as many aspects of deep mining. 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 Surface
Mining Control and Reclamation Act, imposes a fee on all current mining
operations, the proceeds of which are used to restore mines closed before 1977.
The maximum tax is $0.35 per ton on surface-mined coal and $0.15 per ton on
deep-mined coal. A mine operator must submit a bond or otherwise secure the
performance of these reclamation obligations. Mine operators must receive
permits and permit renewals for surface mining operations from the Office of
Surface Mining Reclamation and Enforcement or, where state regulatory agencies
have adopted federally approved state programs under the act, the appropriate
state regulatory authority. Quest does not engage in surface mining, but intends
to do so in the future.

         On March 29, 2002, the U.S. District Court for the District of Columbia
issued a ruling that could restrict underground mining activities conducted in
the vicinity of public roads, within a variety of federally protected lands,

                                       9
<PAGE>

within national forests, and within certain proximity to occupied dwellings. The
lawsuit, Citizens Coal Council v. Norton, was filed in February 2000 to
challenge regulations issued by the Department of Interior providing, among
other things, that subsidence and underground activities that may led to
subsidence are not surface mining activities within the meaning of SMCRA. SMCRA
generally contains restrictions and certain prohibitions on the locations where
surface mining activities can be conducted. The District Court entered summary
judgment upon the plaintiff's claims that the Secretary of the Interior's
determination violated SMCRA. By order dated April 9, 2002, the court remanded
the regulations to the Secretary of the Interior for reconsideration. The
significance of this decision for the coal mining industry remains unclear
because this ruling is subject to appellate review. The Department of Interior
and the National Mining Association, a trade group that intervened in this
action, sought a stay of the order pending appeal to the U.S. Court of Appeals
for the District of Columbia Circuit and the stay was granted. If the District
Court's decision is not overturned, or if some legislative solution is not
enacted, this ruling could have a material adverse effect on all coal mine
operations that utilize underground mining techniques, including those that
Quest may use in the future. While it still may be possible to obtain permits
for underground mining operations in these areas, the time and expense of that
permitting process are likely to increase significantly.

         Black Lung. The U.S. Department of Labor has issued a final rule
amending the regulations implementing the federal black lung laws which, among
other things, establish a presumption in favor of a claimant's treating
physician and limit a coal operator's ability to introduce medical evidence
regarding the claimant's medical condition. The amendments could have an adverse
impact on Quest, the extent of which cannot be accurately predicted.

         Clean Air Act. The Clean Air Act and corresponding state laws
extensively regulate emissions into the air of particulate matter and other
substances, including sulfur dioxide, nitrogen oxides and mercury. Although
these regulations apply directly to impose certain requirements for the
permitting and operation of Quest's mining facilities, by far their greatest
impact on Quest and the coal industry generally is the effect of emission
limitations on utilities and other prospective customers. Owners of coal-fired
power plants and industrial boilers have been required to expend considerable
resources in an effort to comply with these ambient air standards. Significant
additional emissions control expenditures will be needed in order to meet the
current national ambient air standard for ozone. In particular, coal-fired power
plants will be affected by state regulations designed to achieve attainment of
the ambient air quality standard for ozone. Ozone is produced by the combination
of two precursor pollutants: volatile organic compounds and nitrogen oxides.
Nitrogen oxides are a by-product of coal combustion. Accordingly, emissions
control requirements for new and expanded coal-fired power plants and industrial
boilers will continue to become more demanding in the years ahead. The 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. In July 1997, the
EPA adopted new, more stringent National Ambient Air Quality Standards for very
fine particulate matter and ozone. The Court of Appeals for the District of
Columbia issued an opinion in May 1999 limiting the manner in which the EPA can
enforce these standards. After a request by the federal government for a
rehearing by the Court of Appeals was denied, the Supreme Court agreed in
January 2000 to review the case. On February 27, 2001, the Supreme Court found
in favor of the EPA in material part and remanded the case to the Court of
Appeals. On remand, the Court of Appeals for the D.C. Circuit affirmed the EPA's
adoption of these more stringent ambient air quality standards. As a result of
the finalization of these standards, states that are not in attainment for these
standards will have to revise their State Implementation Plans to include
provisions for the control of ozone precursors and/or particulate matter.
Revised State Implementation Plans could require electric power generators to
further reduce nitrogen oxide and particulate matter emissions. The potential
need to achieve such emissions reductions could result in reduced coal
consumption by electric power generators. Thus, future regulations regarding
ozone, particulate matter and other pollutants could restrict the market for
coal and Quest's development of new mines. This in turn may result in Quest's
decreased production and a corresponding decrease in its revenue. Although the
future scope of these ozone and particulate matter regulations cannot be
predicted, future regulations regarding these and other ambient air standards
could restrict the market for coal and the development of new mines.

         Furthermore, in October 1998, the EPA finalized a rule that will
require 19 states in the Eastern United States that have ambient air quality
problems to make substantial reductions in nitrogen oxide emissions by the year
2004. The final rule was largely upheld by the United States Court of Appeals
for the District of Columbia Circuit. To achieve reductions in nitrogen oxide
emissions by 2004, many power plants would be required to install additional
control measures such as capital-intensive selective catalytic reduction (SCR)
devices. The installation of these measures would make it more costly to operate
coal-fired power plants and, depending on the requirements of individual state
implementation plans, could make coal a less attractive fuel. In addition,

                                       10
<PAGE>

reductions in nitrogen oxide emissions can be achieved at a low capital cost
through a combination of low nitrogen oxide burners and coal produced in western
U.S. coal mines. As a result, changes in current emissions standards could also
impact the economic incentives for eastern U.S. coal-fired power plants to
consider using more coal produced in western U.S. coal mines.

         Along with these regulations addressing ambient air quality, the EPA
has initiated a regional haze program designed to protect and to improve
visibility at and around National Parks, National Wilderness Areas and
International Parks. This program restricts the construction of new coal-fired
power plants whose operation may impair visibility at and around federally
protected areas. Moreover, this program may require certain existing coal-fired
power plants to install additional control measures designed to limit
haze-causing emissions, such as sulfur dioxide, nitrogen oxides and particulate
matter. EPA's final rule concerning best available retrofit technology (BART) is
currently on remand to the Agency from the United States Court of Appeals for
the District of Columbia Circuit. By imposing limitations upon the placement and
construction of new coal-fired power plants, the EPA's regional haze program
could affect the future market for coal.

         Additionally, the U.S. Department of Justice, on behalf of the EPA, has
filed lawsuits against several investor-owned electric utilities and brought an
administrative action against one government-owned electric utility for alleged
violations of the Clean Air Act. The EPA claims that these utilities have failed
to obtain permits required under the Clean Air Act for alleged major
modifications to their power plants. Quest may indirectly supply coal to some of
the currently affected utilities, and it is possible that other end users of
Quest's coal will be sued. These lawsuits could require the utilities to pay
penalties and install pollution control equipment or undertake other emission
reduction measures, which could adversely impact their demand for coal.

         Other Clean Air Act programs are also applicable to power plants that
may use Quest's coal. For example, the acid rain control provisions of Title IV
of the Clean Air Act require a reduction of sulfur dioxide emissions from power
plants. Because sulfur is a natural component of coal, required sulfur dioxide
reductions can affect coal mining operations. Title IV imposes a two-phase
approach to the implementation of required sulfur dioxide emissions reductions.
Phase I, which became effective in 1995, regulated the sulfur dioxide emissions
levels from 261 generating units at 110 power plants and targeted the highest
sulfur dioxide emitters. Phase II, implemented January 1, 2000, made the
regulations more stringent and extended them to additional power plants,
including all power plants of greater than 25 megawatt capacity. Affected
electric utilities can comply with these requirements by doing one or more of
the following:

         1        burning lower sulfur coal, either exclusively or mixed with
                  higher sulfur coal;

         2        installing pollution control devices such as scrubbers, which
                  reduce the emissions from high sulfur coal;

         3        reducing electricity generating levels; or

         4        purchasing or trading emission credits.

         Specific emissions sources receive these credits that electric
utilities and industrial concerns can trade or sell to allow other units to emit
higher levels of sulfur dioxide. Each credit allows its holder to emit one ton
of sulfur dioxide.

         In addition to emissions control requirements designed to control acid
rain and to attain the national ambient air quality standards, the Clean Air Act
also imposes standards on sources of hazardous air pollutants. Although these
standards have not yet been extended to coal mining operations, the EPA recently
announced that it will regulate hazardous air pollutants from coal-fired power
plants. Under the Clean Air Act, coal-fired power plants will be required to
control hazardous air pollution emissions by no later than 2009. These controls
are likely to require significant new improvements in controls by power plant
owners. The most prominently targeted pollutant is mercury, although other
by-products of coal combustion may be covered by future hazardous air pollutant
standards for coal combustion sources. However, the introduction of mercury
emissions limits could place coal produced in western U.S. mines at a
competitive disadvantage to coal produced in eastern U.S. mines, as current
mercury-removal technology is more effective on eastern U.S. coal. The EPA has
announced that it intends to issue a proposed rule concerning maximum achievable
control technology (MACT) for utilities by December 2003.

                                       11
<PAGE>

         Other proposed initiatives may have an effect upon coal operations.
Several so-called multi-pollutant bills, which could regulate a variety of air
emissions, including carbon dioxide and mercury, have been proposed. One such
proposal is the Bush Administration's recently announced Clear Skies initiative.
As proposed, this initiative is designed to reduce emissions of sulfur dioxide,
nitrogen oxides and mercury from power plants. Senator James Jeffords has also
introduced a bill that would place tight caps on coal-fired emissions, including
mandatory limits on carbon dioxide emissions, and require shorter implementation
time frames. While the details of these proposed initiatives vary, there is
clearly a movement towards increased regulation of air emissions, including
carbon dioxide and mercury, which could cause power plants to shift away from
coal as a fuel source.

         The Bush administration recently pledged $2 billion to the Clean Coal
Technology (CCT) Program. The CCT Program is a government and industry co-funded
effort to demonstrate a new generation of innovative coal-utilization processes
in a series of "showcase" facilities built across the country. These projects
are carried out in sufficiently large scale to prove commercial worthiness and
generate data for design, construction, operation, and technical/economic
evaluation of full -scale commercial applications. The goal of the CCT Program
is to furnish the U.S. energy marketplace with advanced, more efficient
coal-based technologies, technologies that are capable of mitigating some of the
economic and environmental impediments that inhibit the use of coal as an energy
source.

         1992 Framework Convention on Global Climate Change. The United States
has not implemented the 1992 Framework Convention on Global Climate Change, or
Kyoto Protocol, which is intended to limit or reduce emissions of greenhouse
gases, such as carbon dioxide. Under the terms of the Kyoto Protocol, which
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 period
from 2008 through 2012. Although the United States has not ratified the emission
targets and no comprehensive regulations focusing on 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 affect the price and demand for coal. In March 2001, President Bush
reiterated his opposition to the Kyoto Protocol and further stated that he did
not believe that the government should impose mandatory carbon dioxide emission
reductions on power plants. In February 2002, President Bush announced a new
approach to climate change, confirming the Administration's opposition to the
Kyoto Protocol and proposing voluntary actions to reduce the greenhouse gas
intensity of the United States. Greenhouse gas intensity measures the ratio of
greenhouse gas emissions, such as carbon dioxide, to economic output. The
President's climate change initiative calls for a reduction in greenhouse gas
intensity over the next 10 years which is approximately equivalent to the
reduction that has occurred over each of the past two decades.

         Operations - Permitting; Compliance. Quest is in the process of
obtaining all the permits required for its current operations under the SMCRA,
the Clean Water Act, the Clean Air Act, and corresponding state laws. Once all
required permits are obtained, Quest intends to be 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, 2005, it has total recoverable
reserves of approximately two to three 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

                                       12
<PAGE>

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 $55,000
for the year ended December 31, 2005.

Employees

         Quest and its subsidiaries currently employ two people. 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 Braxton
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.


                                       13
<PAGE>

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 currently are not mining coal, and we may not be able to recommence
mining operations. 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. Since that time, Quest has been seeking sufficient working capital to
resume mining operations at this mine. In the fourth quarter of 2005, Quest
completed the required rehabilitation of the Pond Creek mine. In March, 2006,
Quest reopened its Pond Creek mine and has placed mining equipment back into the
mine. Quest had believed that it had received the required insurance, permits,
and approval to recommence mining operations; however, Quest was subsequently
advised that it required additional insurance, permits, and approvals permits to
recommence the mining operations. Quest is currently seeking to obtain these
necessary insurance, permits, and approvals and intends to recommence mining
operations upon receipt of the necessary insurance, permits, and approvals.
However, it is possible that Quest never obtains the necessary insurance,
permits, or approvals, or that Quest does not obtain sufficient working capital
to recommence mining operations. It is possible that Quest may never recommence
coal mining operations.

         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 National City Bank and
Duke Energy Merchants and third-party complaint by the former owner of Gwenco,
Inc., Albert Anderson. National City Bank has commenced an action commenced an
action against Quest, Gwenco, and Quest Energy, seeking to foreclose on our
assets, including our leasehold interests in the mines. It is possible that, in
connection with the foreclosure action, the leasehold interests or other assets
of Quest could be sold to National City Bank, Duke Energy Merchants, another
creditor, or 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. Quest is currently negotiating with National City Bank to
reorganize and restructure its debt obligations, but if it is unable to do so,
there is a significant chance that Quest or its 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.

         Further, in his third-party complaint, Mr. Anderson is seeking to
rescind his sale of Gwenco to Quest and is also seeking injunctive relief
against Quest. Although Quest believes that Mr. Anderson's claims are frivolous
and wholly without merit, if Mr. Anderson is successful in his claims, it is
likely that Quest would lose its primary subsidiary and coal generating
operations, which would have a significantly adverse impact its financial
results and position and on its ability to continue as a going concern.

         Quest's President and Chief Executive Officer has been indicted by a
federal grand jury, which may negatively effect the public's perception of Quest
and its operations, and may result in the resignation or termination of our
President and Chief Executive Officer. According to news reports, on or about
May 5, 2006, four people were charged Friday with kiting checks in a scheme that
federal prosecutors said cost a bank more than $1 million. According to the
reports, a federal grand jury indicted Mr. Runyon, Ms. Holbrook, James Daniel
Stollings, and Quest's President and Chief Executive Officer, William R.
Wheeler. The four are charged with bank fraud. According to the reports, Federal
prosecutors said that Wheeler, Stollings, and Runyon were business associates
with Quest when they convinced Holbrook, a branch manager for Community Trust
Bank to issue unfunded cashier's checks. According to the Federal prosecutors,
the cashier's checks covered bad checks written by Quest subsidiaries. No court
date has been scheduled for any of the four. Both Mr. Wheeler and Quest deny any
wrongdoing in connection with these matters. As of the date of this report, Mr.
Wheeler has not resigned as an officer or director of Quest. Quest is currently
determining what action, if any, it will take as a result of this indictment.
Although Quest does not believe that this indictment will affect the business
plans of Quest, it is possible that Mr. Wheeler be convicted of the criminal
charges underlying the indictment. It is also 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

                                       14
<PAGE>

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 of $7,089,449 as of December 31, 2005. 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 2005 through cash flows generated from operations, as Quest
is not currently generating any cash flows. 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.

         Quest has substantial indebtedness outstanding, and its operations are
significantly leveraged. In order to finance its operations, Quest has incurred
substantial indebtedness. As of December 31, 2005, Quest had approximately
$7,700,000 of total indebtedness outstanding. 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 is currently
negotiating with its creditors to reorganize and restructure its debt
obligations, but if it is unable to do so, there is a significant chance that
Quest or its 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, 2005
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 of $20,455,782
and $38,005,209 in 2005 and 2004, respectively, and has an accumulated deficit
of $59,183,787, and a working capital deficit of $7,089,449 as of December 31,
2005. 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. As of December 31, 2005, Quest had approximately
$5,700,000 of total indebtedness outstanding. 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

                                       15
<PAGE>

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.

         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.

                                       16
<PAGE>

         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.

         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:

     o   geological conditions;

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

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

     o   assumptions governing future prices; and

     o   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, 2005, 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

                                       17
<PAGE>

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.

         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

                                       18
<PAGE>

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.

         There is a limited active trading market for Quest shares. Quest common
stock is traded on the OTC Bulletin Board under the symbol "QMMG.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 officers and directors collectively own a majority of Quest's
outstanding common stock, and as long as they do, they will control the outcome
of stockholder voting. Quest's officers and directors are collectively the
beneficial owners of approximately 24.1% of the outstanding shares of Quest's
common stock. As long as Quest's officers and directors collectively own a
significant percentage of Quest's common stock, Quest's other stockholders may
generally be unable to affect or change the management or the direction of Quest
without the support of its officers and directors. As a result, some investors
may be unwilling to purchase Quest's common stock. If the demand for Quest's
common stock is reduced because Quest's officers and directors have significant
influence over Quest, the price of Quest's common stock could be materially
depressed. The officers and directors will be able to exert significant
influence over the outcome of all corporate actions requiring stockholder
approval, including the election of directors, amendments to Quest's articles 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's board of directors has the authority to issue up to an additional
21,400,000 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 and 1,600,000 shares of Series B preferred stock. Any preferred
stock issued by Quest's board of directors may contain rights and preferences
adverse to the voting power and other rights of the holders of common stock.

                                       19
<PAGE>

                         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.

                                       20
<PAGE>

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

         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. National City Bank has obtained judgment in that action in the amount of
approximately $353,000.

         In that action, Anderson has filed a third-party complaint against
Quest (Nevada) and Taylor Mining, two of Quest's subsidiaries, for breach of
contract, fraud in the inducement, breach of the covenant of good faith and fair
dealing, unjust enrichment, conversion, and breach of fiduciary duties. Mr.
Anderson seeks to rescind Quest's acquisition of Gwenco, or alternatively, seeks
unspecified compensatory and punitive damages, and he also seeks injunctive
relief. Quest believes that Mr. Anderson's allegations are without merit and is
defending the action vigorously. Quest has also asserted counter-claims against
Mr. Anderson for breach of the stock purchase agreement pursuant to which Quest
acquired Gwenco.

         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. Quest intends to defend this action while
continuing negotiations with National City Bank. If National City Bank is
successful in this action, Gwenco could lose substantially all of its assets in
a foreclosure sale. If Quest is unable to successfully renegotiate with National
City Bank to reorganize and restructure its debt obligations, there is a
significant chance that Quest or its 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.

         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. D&D and Quest Energy are actively
defending the action.

         The Federal Insurance Company has notified Quest Energy that is seeking
to obtain subrogation of monies it has paid to Community Trust Bank and
repayment of deductibles by the bank as a part of an alleged criminal scheme and
conspiracy by former employees of the bank and other individuals. The Federal
Insurance Company has alleged that former employees or associates of Quest
Energy 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 denies that it had any involvement
with or responsibility for any of the actions alleged by the Federal Insurance
Company, and it further denies that it has benefited from any such alleged
scheme. Further, Quest Energy contends that the negligent actions and inactions
by Community Trust Bank caused severe damage and loss to Quest Energy. The
Federal Insurance Company has commenced an action against Quest Energy and
others in Pike County Court, Kentucky with respect to these allegations;

                                       21
<PAGE>

however, the action has not yet been served on Quest Energy. In the event that
Quest Energy is served, it believes that it has several meritorious defenses and
counterclaims to this action and intends to defend it vigorously.

         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. Quest is in the process of negotiating a settlement of this action.

         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. Gwenco and Quest Energy are actively defending the action.

         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
the amount of approximately $225,000, plus pre and post judgment interest as
provided by law, costs, and fees. Quest Energy believes that it has several
meritorious defenses and counterclaims to this action and is defending it
vigorously.

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

         None.

                                       22
<PAGE>

                                     PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Quest's common stock has traded on the OTC Bulletin Board under the
symbol "QMMG" since April 13, 2004. Before that date, its common stock is traded
on the OTC Bulletin Board under the symbol "TLLM," and before that, it traded on
the OTC Bulletin Board under the symbol "TILL." The following table shows the
high and low bid prices for Quest's common stock for each quarter since January
1, 2003 as reported by the OTC Bulletin Board. All share prices have been
adjusted to provide for the one for 100 reverse split which was effected in
January, 2004 (i.e. they have been increased 100 times to compare them to
current prices). 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.

2004 (OTC Bulletin Board)                High Bid                     Low Bid
-----------------------------------------------------------------------------
First quarter                                2.50                        1.25
Second quarter                               3.50                        2.00
Third quarter                                3.60                        2.55
Fourth quarter                               3.40                        1.15

2005 (OTC Bulletin Board)                High Bid                     Low Bid
-----------------------------------------------------------------------------
First quarter                                2.00                        0.70
Second quarter                               0.99                        0.13
Third quarter                                0.28                        0.03
Fourth quarter                               0.38                        0.07

         As of March 31, 2006, there were approximately 760 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.

                                       23
<PAGE>

         Securities Authorized for Issuance Under Equity Compensation Plans. The
following provides information concerning compensation plans under which Quest's
equity securities have been authorized for issuance as of December 31, 2005:
<TABLE>
<CAPTION>

                                                (a)                    (b)                         (c)
------------------------------------    -------------------   ----------------------     ------------------------
Plan Category                                Number of          Weighted-average          Number of securities
                                          securities to be      exercise price of          remaining available
                                            issued upon       outstanding options,         for future issuance
                                            exercise of        warrants and rights            under equity
                                            outstanding                                    compensation plans
                                         options, warrants                                (excluding securities
                                             and rights                                    reflected in column
                                                                                                  (a))
------------------------------------    -------------------   ----------------------     ------------------------
<S>                                           <C>                      <C>                   <C>
Equity compensation plans approved
by security holders                              --                   $ --                         --
Equity compensation plans not
approved by security holders
(1)(2)(3)                                        --                   $ --                         --
Total                                            --                   $ --                         --
</TABLE>

     (1) 2005 Stock Incentive Plan. On August 29, 2005, our board of directors
         adopted our 2005 Stock Incentive Plan. The purpose of the plan is to
         further align the interests of employees, directors and non-employee
         consultants with those of the stockholders by providing incentive
         compensation opportunities tied to the performance of the common stock
         and by promoting increased ownership of the common stock by such
         individuals. The plan is also intended to advance the interests of the
         company and its shareholders by attracting, retaining and motivating
         key personnel upon whose judgment, initiative and effort the successful
         conduct of the company's business is largely dependent. We are
         permitted to grant awards of stock options, stock awards, and
         restricted stock awards under the plan. The maximum aggregate number of
         shares of common stock that may be issued and sold under all awards
         granted under the plan is 7,000,000 shares, and to date, we have issued
         all 7,000,000 shares under the plan.

     (2) Amended and Restated 2005 Stock Incentive Plan No. 2. On October 20,
         2005, our board of directors adopted our Amended and Restated 2005
         Stock Incentive Plan No. 2. The purpose of the plan is to further align
         the interests of employees, directors and non-employee consultants with
         those of the stockholders by providing incentive compensation
         opportunities tied to the performance of the common stock and by
         promoting increased ownership of the common stock by such individuals.
         The plan is also intended to advance the interests of the company and
         its shareholders by attracting, retaining and motivating key personnel
         upon whose judgment, initiative and effort the successful conduct of
         the company's business is largely dependent. We are permitted to grant
         awards of stock options, stock awards, and restricted stock awards
         under the plan. The maximum aggregate number of shares of common stock
         that may be issued and sold under all awards granted under the plan is
         2,000,000 shares, and to date, we have issued all 2,000,000 shares
         under the plan.

     (3) 2004 Stock Compensation Plan. In 2004, Quest adopted its 2004 Stock
         Compensation Plan on January 20, 2004. The purpose of the plan was to
         advance the best interests of Quest by providing its employees,
         directors, consultants, and other persons associated with Quest with
         additional incentive and by increasing their proprietary interest in
         the success of Quest. The plan also encourages those employees and
         consultants to maintain their relationship with Quest.

         Quest may grant stock or stock options under the plan. The total number
         of shares of Quest available for grants of stock options or stock is
         17,500,000. This amount is subject to adjustment in the event of a
         merger, consolidation, other reorganization, recapitalization,
         reclassification, combination of shares, stock split-up, or stock
         dividend; however, the amount of shares available under the plan is not
         subject to adjustment in the event of a reverse stock split, i.e. a
         reverse stock split by Quest shall not affect or result in any
         reduction in the number of plan shares remaining in the plan at the
         effective time of such reverse stock split. To date, Quest has issued
         all 17,500,000 shares pursuant to stock grants.

                                       24
<PAGE>

Recent Sales of Unregistered Securities

         1.       On February 22, 2005, Quest issued an aggregate of 26 units at
a price of $25,000 per unit. The aggregate gross proceeds from the sale of the
units were $650,000, which included $350,000 in cash and cancellation of
$300,000 in indebtedness, including the cancellation of $250,000 worth of notes
issued to Professional Traders Fund, LLC, as reported on Quest's current report
on Form 8-K filed with the Securities and Exchange Commission on October 25,
2004. Each unit consists of a convertible secured promissory note in the
principal amount of $25,000 and "Series A" warrants to purchase (a) 150,000
shares of Quest common stock, and (b) "Series B" warrants to purchase up to
150,000 shares of Quest common stock at an exercise price of $1.00 per share, at
an exercise price of $75,000. The unit notes are due on March 31, 2006 and are
secured by a security interest in Quest machinery and equipment. The notes bear
interest at a rate of seven percent (7%) and are convertible into Quest common
shares at an initial conversion price of $0.50 per share, subject to adjustment,
including a "weighted-average" reduction of the conversion price in the event
that Quest issued additional stock or stock equivalents at a price lower than
the conversion price. Quest agreed to register the secondary offering and resale
of the shares issuable upon conversion of the notes, the Series A warrants, the
shares issuable upon exercise of the Series A warrants, the Series B warrants,
and the shares issuable upon exercise of the Series A warrants, the Series B
warrants within 14 days of the final closing of the private placement of the
units. In connection with the offer and sale of the notes and the warrants,
Quest engaged Greenwood Partners, LP, an NASD licensed broker-dealer, as its
placement agent. Under the placement agent agreement, Greenwood is to receive a
ten percent (10%) cash commission on the sale of the units.

         In April, 2005, Greenwood Partners required Quest to sign an amendment
to the notes which purports to change the adjustment provisions of the
conversion price from "weighted-average" to "full-ratchet" in the event that
Quest issues additional stock or stock equivalents at a price lower than the
conversion price. Quest is currently investigating the circumstances regarding
the investment and this purported amendment and currently disputes the validity
of the amendment.

         Quest relied on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, for the offer and sale of the
units. Before investing, each subscriber was provided with or had access to
information regarding our company substantially similar to that included in a
registration statement on Form SB-2. In each case, we received, before accepting
the subscription of each subscriber, unit purchase agreements executed by the
subscribers. Each of the subscribers represented and warranted to us that such
subscriber (i) was sophisticated enough to evaluate the merits of an investment
in the securities and did not need the benefits of registration under the Act,
(ii) had a prior substantive relationship with at least one of our officers or
directors or the selling broker-dealer, if any, (iii) was purchasing with
investment intent and not with a view to distribution, and (iv) had not been
solicited through any form of general solicitation. In addition, we believe,
based on the representations of the subscribers and our officers' and directors'
prior substantive relationship with the subscribers, that each of the
subscribers were accredited investors within the meaning of Rule 501(a) of the
Act.

         2.       On March 4, 2005, Quest issued an aggregate of 15 units at a
price of $25,000 per unit. The aggregate gross proceeds from the sale of the
units were $375,000. Each unit consists of a convertible secured promissory note
in the principal amount of $25,000 and "Series A" warrants to purchase (a)
150,000 shares of Quest common stock, and (b) "Series B" warrants to purchase up
to 150,000 shares of Quest common stock at an exercise price of $1.00 per share,
at an exercise price of $75,000. The unit notes are due on March 31, 2006 and
are secured by a security interest in Quest machinery and equipment. The notes
bear interest at a rate of seven percent (7%) and are convertible into Quest
common shares at an initial conversion price of $0.50 per share, subject to
adjustment, including a "weighted-average" reduction of the conversion price in
the event that Quest issued additional stock or stock equivalents at a price
lower than the conversion price. Quest agreed to register the secondary offering
and resale of the shares issuable upon conversion of the notes, the Series A
warrants, the shares issuable upon exercise of the Series A warrants, the Series
B warrants, and the shares issuable upon exercise of the Series A warrants, the
Series B warrants within 14 days of the final closing of the private placement
of the units. In connection with the offer and sale of the notes and the
warrants, Quest engaged Greenwood Partners, LP, an NASD licensed broker-dealer,
as its placement agent. Under the placement agent agreement, Greenwood is to
receive a ten percent (10%) cash commission on the sale of the units.

         In April, 2005, Greenwood Partners required Quest to sign an amendment
to the notes which purports to change the adjustment provisions of the
conversion price from "weighted-average" to "full-ratchet" in the event that
Quest issues additional stock or stock equivalents at a price lower than the
conversion price. Quest is currently investigating the circumstances regarding

                                       25
<PAGE>

the investment and this purported amendment and currently disputes the validity
of the amendment and various other provisions of this financing.

         Quest relied on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, for the offer and sale of the
units. Before investing, each subscriber was provided with or had access to
information regarding our company substantially similar to that included in a
registration statement on Form SB-2. In each case, we received, before accepting
the subscription of each subscriber, unit purchase agreements executed by the
subscribers. Each of the subscribers represented and warranted to us that such
subscriber (i) was sophisticated enough to evaluate the merits of an investment
in the securities and did not need the benefits of registration under the Act,
(ii) had a prior substantive relationship with at least one of our officers or
directors or the selling broker-dealer, if any, (iii) was purchasing with
investment intent and not with a view to distribution, and (iv) had not been
solicited through any form of general solicitation. In addition, we believe,
based on the representations of the subscribers and our officers' and directors'
prior substantive relationship with the subscribers, that each of the
subscribers were accredited investors within the meaning of Rule 501(a) of the
Act.

         3.       On April 18, 2005, Quest issued an aggregate of 16 units at a
price of $25,000 per unit. The aggregate gross proceeds from the sale of the
units were $400,000, which included $250,000 in fees to Greenwood Partners, LP
under a Financial Services Advisory Agreement for services to be rendered by
Greenwood, $10,000 to Greenwood Partners, LP for payment of commissions owed
under the placement agent agreement, $50,000 to Greenwood Partners, LP for
reimbursement of Greenwood's legal fees incurred in connection with the February
and March private placements, and $90,000 in cash. Each unit consists of a
convertible secured promissory note in the principal amount of $25,000 and
"Series A" warrants to purchase (a) 150,000 shares of Quest common stock, and
(b) "Series B" warrants to purchase up to 150,000 shares of Quest common stock
at an exercise price of $1.00 per share, at an exercise price of $75,000. The
unit notes are due on March 31, 2006 and are secured by a security interest in
Quest machinery and equipment. The notes bear interest at a rate of seven
percent (7%) and are convertible into Quest common shares at an initial
conversion price of $0.50 per share, subject to adjustment, including a
"weighted-average" reduction of the conversion price in the event that Quest
issued additional stock or stock equivalents at a price lower than the
conversion price. Quest agreed to register the secondary offering and resale of
the shares issuable upon conversion of the notes, the Series A warrants, the
shares issuable upon exercise of the Series A warrants, the Series B warrants,
and the shares issuable upon exercise of the Series A warrants, the Series B
warrants within 14 days of the final closing of the private placement of the
units. In connection with the offer and sale of the notes and the warrants,
Quest engaged Greenwood Partners, LP, an NASD licensed broker-dealer, as its
placement agent. Under the placement agent agreement, Greenwood is to receive a
ten percent (10%) cash commission on the sale of the units.

         4.       In April, 2005, Greenwood Partners required Quest to sign an
amendment to the notes which purports to change the adjustment provisions of the
conversion price from "weighted-average" to "full-ratchet" in the event that
Quest issues additional stock or stock equivalents at a price lower than the
conversion price. Quest is currently investigating the circumstances regarding
the investment and this purported amendment and currently disputes the validity
of the amendment and various other provisions of this financing.

         Quest relied on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, for the offer and sale of the
units. Before investing, each subscriber was provided with or had access to
information regarding our company substantially similar to that included in a
registration statement on Form SB-2. In each case, we received, before accepting
the subscription of each subscriber, unit purchase agreements executed by the
subscribers. Each of the subscribers represented and warranted to us that such
subscriber (i) was sophisticated enough to evaluate the merits of an investment
in the securities and did not need the benefits of registration under the Act,
(ii) had a prior substantive relationship with at least one of our officers or
directors or the selling broker-dealer, if any, (iii) was purchasing with
investment intent and not with a view to distribution, and (iv) had not been
solicited through any form of general solicitation. In addition, we believe,
based on the representations of the subscribers and our officers' and directors'
prior substantive relationship with the subscribers, that each of the
subscribers were accredited investors within the meaning of Rule 501(a) of the
Act.

         5.       From May 16, 2005 through June 30, 2005, Quest borrowed
approximately $245,000 from Professional Traders Fund, and, in connection
therewith, Professional Traders Fund required Quest to execute several
documents, including a credit agreement, promissory note, various guarantees, an
amended and restated security agreement, and a mortgage. The note has a term of
three months and bears interest at a rate of ten percent (10%). In addition,
Professional Traders Fund required Quest to execute a warrant agreement to grant
Professional Traders Fund purchase an aggregate of up to 10,260,028 shares of
Quest's common stock at an exercise price of $0.10 per share, payable only upon

                                       26
<PAGE>

cancellation of any indebtedness owed to Professional Traders Fund. Under the
terms of the warrant agreement, in the event of default under the note, the
exercise price was to be reduced to $0.05 per share and the warrant could be
exercise by payment of cash as well as cancellation of indebtedness. As set
forth under Item I of Part II, Professional Traders Fund has commenced two
separate legal actions for breach of these agreements. The parties entered into
a settlement agreement in February, 2006.

         Quest relied on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, for the offer and sale of the
note. Before investing, Professional Traders Fund was provided with or had
access to information regarding our company substantially similar to that
included in a registration statement on Form SB-2. We received, before accepting
the subscription of Professional Traders Fund, subscription documents executed
by the subscriber. The subscriber represented and warranted to us that it (i)
was sophisticated enough to evaluate the merits of an investment in the
securities and did not need the benefits of registration under the Act, (ii) had
a prior substantive relationship with at least one of our officers or directors
or the selling broker-dealer, if any, (iii) was purchasing with investment
intent and not with a view to distribution, and (iv) had not been solicited
through any form of general solicitation. In addition, we believe, based on the
representations of the subscriber and our officers' and directors' prior
substantive relationship with the subscribers, that the subscriber was an
accredited investor within the meaning of Rule 501(a) of the Act.

         Professional Traders Fund has also contended that, in May 2005, Quest
agreed to issue to Professional Traders Fund 50,000 shares of common stock for
$0.10 per share. Quest issued the shares as part of a settlement agreement
executed in February, 2006.

         6.       On or about September 12, 2005, Quest issued 2,000,000 shares
of its common stock to JJ Resources Land Trust in connection with a right of
first refusal agreement between Quest and JJ Resources of Kentucky, Inc.
Pursuant to this agreement, JJ Resources granted to Quest a right of first
refusal to provide all financing to JJ Resources for certain coal and oil and
gas properties owned, leased, or otherwise controlled by JJ Resources. Quest has
the right to provide $500,000.00 for the first property, called the Apollo #1
project, within ninety (90) days of the agreement, for which Quest will be paid
$5.00 per ton of clean coal for the first 150,000 tons of clean coal mined from
Apollo #1, $2.00 per ton of clean coal for the next 1,000,000 tons of clean coal
mined from Apollo #1, and $1.00 per ton of clean coal mined from Apollo #1
thereafter. In addition, each additional financing for property owned, leased,
or otherwise controlled by JJ Resources will be negotiated on a case-by-case
basis, but Quest shall have the exclusive right for a minimum of ninety (90)
days in each case to provide the desired financing, in whole or in part, upon
investment terms to be negotiated.

         Quest relied on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, for the offer and sale of the
shares. Before investing, JJ Resources was provided with or had access to
information regarding our company substantially similar to that included in a
registration statement on Form SB-2. We received, before accepting the
subscription of JJ Resources, subscription documents executed by the subscriber.
The subscriber represented and warranted to us that it (i) was sophisticated
enough to evaluate the merits of an investment in the securities and did not
need the benefits of registration under the Act, (ii) had a prior substantive
relationship with at least one of our officers or directors or the selling
broker-dealer, if any, (iii) was purchasing with investment intent and not with
a view to distribution, and (iv) had not been solicited through any form of
general solicitation. In addition, we believe, based on the representations of
the subscriber and our officers' and directors' prior substantive relationship
with the subscribers, that the subscriber was an accredited investor within the
meaning of Rule 501(a) of the Act.

         7.       On September 12, 2005, Quest issued 454,545 shares to Magnum
Capital Management, Inc. in connection with and pursuant to an IR/PR-Services
Agreement with Magnum Capital. Quest relied on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended, for the
offer and sale of the shares. Before investing, Magnum was provided with or had
access to information regarding our company substantially similar to that
included in a registration statement on Form SB-2. We received, before accepting
the subscription of Magnum, subscription documents executed by the subscriber.
The subscriber represented and warranted to us that it (i) was sophisticated
enough to evaluate the merits of an investment in the securities and did not
need the benefits of registration under the Act, (ii) had a prior substantive
relationship with at least one of our officers or directors or the selling
broker-dealer, if any, (iii) was purchasing with investment intent and not with
a view to distribution, and (iv) had not been solicited through any form of
general solicitation. In addition, we believe, based on the representations of
the subscriber and our officers' and directors' prior substantive relationship
with the subscribers, that the subscriber was an accredited investor within the
meaning of Rule 501(a) of the Act.

                                       27
<PAGE>

         8.       On September 28, 2005, Quest issued 800,000 shares to UTEK
Corporation in connection with and pursuant to a Strategic Alliance Agreement
with UTEK. The shares vest 1/12th per month. Quest relied on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933, as amended,
for the offer and sale of the shares. Before investing, UTEK was provided with
or had access to information regarding our company substantially similar to that
included in a registration statement on Form SB-2. We received, before accepting
the subscription of UTEK, subscription documents executed by the subscriber. The
subscriber represented and warranted to us that it (i) was sophisticated enough
to evaluate the merits of an investment in the securities and did not need the
benefits of registration under the Act, (ii) had a prior substantive
relationship with at least one of our officers or directors or the selling
broker-dealer, if any, (iii) was purchasing with investment intent and not with
a view to distribution, and (iv) had not been solicited through any form of
general solicitation. In addition, we believe, based on the representations of
the subscriber and our officers' and directors' prior substantive relationship
with the subscribers, that the subscriber was an accredited investor within the
meaning of Rule 501(a) of the Act.

         9.       On December 8, 2005, Quest issued 5,000,000 shares of its
common stock in an offshore private placement at $0.05 per share. The issuance
was exempt from registration pursuant to Regulation S of the Act. Before
investing, the subscribers were provided with or had access to information
regarding our company substantially similar to that included in a registration
statement on Form SB-2. We received, before accepting the subscription of each
subscriber, subscription documents executed by such subscriber. Each subscriber
represented and warranted to us, among other things, that it (i) was a non U.S.
person, (ii) would not offer to resell the securities in the United States
during the restricted period, (iii) was purchasing with investment intent and
not with a view to distribution, and (iv) had not been solicited through any
form of general solicitation.

         10.      On December 8, 2005, Quest issued a convertible secured
promissory note in the principal amount of $335,000. The note is due on December
8, 2006, bears interest at a rate of eight percent (8%), and is convertible into
Quest common shares at an initial conversion price of $0.05 per share, subject
to adjustment. The issuance was exempt from registration pursuant to Regulation
S of the Act. The issuance was exempt from registration pursuant to Regulation S
of the Act. Before investing, the subscribers were provided with or had access
to information regarding our company substantially similar to that included in a
registration statement on Form SB-2. We received, before accepting the
subscription of each subscriber, subscription documents executed by such
subscriber. Each subscriber represented and warranted to us, among other things,
that it (i) was a non U.S. person, (ii) would not offer to resell the securities
in the United States during the restricted period, (iii) was purchasing with
investment intent and not with a view to distribution, and (iv) had not been
solicited through any form of general solicitation.

         11.      From December, 2005 through January, 2006, Quest issued and
aggregate of 1,500,000 shares of its common stock in an offshore private
placement at $0.05 per share. The issuance was exempt from registration pursuant
to Regulation S of the Act. Before investing, the subscribers were provided with
or had access to information regarding our company substantially similar to that
included in a registration statement on Form SB-2. We received, before accepting
the subscription of each subscriber, subscription documents executed by such
subscriber. Each subscriber represented and warranted to us, among other things,
that it (i) was a non U.S. person, (ii) would not offer to resell the securities
in the United States during the restricted period, (iii) was purchasing with
investment intent and not with a view to distribution, and (iv) had not been
solicited through any form of general solicitation.

         12.      On February 14, 2006, Quest entered into a settlement
agreement with Professional Traders Fund LLC ("PTF") pursuant to which Quest
settled and resolved all outstanding disputes under that certain Unit Agreement
dated as of February 22, 2005 (the "Unit Agreement"), that certain Credit
Agreement dated as of May 16, 2005 (the "Credit Agreement") and any and all
documents related thereto (collectively, the "Prior Financing Documents").
Pursuant to the Agreement, the parties agreed to a complete restructuring of the
obligations under the Prior Financing Documents, effectuated through the
issuance of amended and restated instruments, new instruments, and common stock.

         The settlement and restructuring consisted of the following
transactions:

                  A.       Unit Agreement Restructuring. The Unit Agreement (and
all related documentation) was restructured as follows:

                                       28
<PAGE>

                           1.       Amended and Restated Unit Note. We issued
PTF an amended and restated Unit Note (the "Amended and Restated Unit Note") in
the aggregate principal amount of $350,000.00, which note is now payable on or
before February 22, 2007. The original Unit Note had a maturity date of March
31, 2006. This Amended and Restated Unit Note will be convertible into our
common stock initially at a rate of $.075 per share, subject to adjustment as
provided in the Amended and Restated Unit Note.

                           2.       Issuance of Quest Common Stock. We issued
PTF share certificates representing 1,000,000 shares of our common stock in
consideration of PTF's exercise in full (on a cashless basis) of all Series A
and Series B Warrants held by them. The amount of common stock due PTF upon
exercise of these warrants was previously disputed.

                           3.       Termination of Unit Agreement. All of the
provisions contained in the Unit Agreement, solely as to PTF, were terminated
and of no further force and effect upon closing of the Agreement. In addition,
PTF waived any and all right to any claims or damages previously incurred under
the Unit Agreement due to our default thereunder, including any defaults under
the registration rights agreement entered into in connection with the Unit
Agreement (the "Unit Registration Rights Agreement").

                           4.       Termination of Unit Registration Rights
Agreement. All of the provisions contained in the Unit Registration Rights
Agreement, solely as to PTF, were terminated and of no further force and effect
upon closing of the Agreement. In addition, PTF waived any and all right to any
liquidated damages previously incurred under the Unit Registration Rights
Agreement due to our default thereunder.

                           5.       Dismissal of Unit Litigation. A Stipulation
for Dismissal without Prejudice was filed with respect to that certain action
filed against us by PTF in the United States District Court for the Southern
District of New York, Case No 06-CV-00309.

                  B.       Credit Agreement Restructuring. The Credit Agreement
         (and all related documentation) was restructured as follows:

                           1.       Repayment of Principal. We paid PTF $264,000
representing payment in full of all principal owed to PTF by Quest under that
certain promissory note dated as of May 16, 2005 in an amount up to $500,000
made by us in favor of PTF (the "Credit Note").

                           2.       Amended and Restated Credit Note. As payment
in full for all: (i) accrued interest due PTF under the Credit Note and (ii) any
and all collection fees incurred by PTF thereunder, we issued PTF an amended and
restated Credit Note (the "Amended and Restated Credit Note") in the aggregate
principal amount of $100,000.00 in favor of PTF, which note is payable on the
earlier of: July 10, 2006 or our closing of a new debt or equity financing or
series of related financings, in excess of $1,500,000.00. In addition, upon an
"event of default" (as defined), this note will be convertible into shares of
our common stock at an initial conversion rate of $0.10 per share, subject to
adjustment as set forth therein.

                           3.       Amended and Restated Warrant. We issued PTF
an amended and restated warrant (the "Amended and Restated PTF Credit Warrant")
to purchase up to 10,260,028 shares of our common stock. Under this Amended and
Restated Warrant 2,500,000 shares will be exercisable on a "cashless basis",
provided, however, that PTF's ability to utilize such cashless exercise feature
will be limited to 400,000 shares of common stock per quarter. The original
warrant did not provide for cashless exercise, which feature was included as
additional consideration for the settlement and restructuring.

                           4.       Waivers under Credit Agreement. Any and all
defaults under the Credit Agreement prior to the execution of the Agreement were
waived by PTF, including any defaults under that certain registration rights
agreement entered into in connection therewith (the "Credit Registration Rights
Agreement"). PTF expressly agreed that, notwithstanding in the Credit Agreement
to the contrary, the execution and delivery of the Agreement or any of the
documents executed in connection therewith do not constitute a breach of the
Credit Agreement or the Amended and Restated Credit Note.

                           5.       Termination of Credit Registration Rights
Agreement. The Credit Registration Rights Agreement was terminated and of no
further force and effect upon closing of the Agreement. In addition, PTF waived
any and all right to any liquidated damages previously incurred under the Credit
Registration Rights Agreement due to our default thereunder.

                                       29
<PAGE>

                           6.       Dismissal of Credit Agreement Litigation and
Kentucky Litigation. A Stipulation for Dismissal without Prejudice was filed
with respect to that certain action filed by PTF (i) on November 2, 2005 against
us and Gwenco in the United States District Court for the Southern District of
New York, Case No. 05-CV-9311, to collect all amounts owing under the Credit
Note, including collection fees (ii) on November 3, 2005 against us, Quest
Energy Ltd., and Gwenco, Inc. in the Pike County Circuit Court for the
Commonwealth of Kentucky, Case No. 05-CI-01494, to collect all amounts owing
under the Credit Note, including collection fees, and to seek judicial
foreclosure on certain assets held by Gwenco pursuant to the security agreement
and mortgage.

                  C.       New Warrant. As additional consideration for the
settlement and restructuring, we issued PTF a warrant to purchase up to
5,000,000 shares of our common stock, with an initial exercise price of $0.10
per share and an expiration date of February 10, 2009.

         13.      On April 5, 2006, Quest issued an aggregate of 1.25 units at a
price of $100,000 per unit. The aggregate gross proceeds from the sale of the
units were $125,000. Each unit consists of a convertible promissory note in the
principal amount of $100,000 and warrants to purchase shares of Quest common
stock at an exercise price of 150% of the average closing price of Quest's
common stock for the five trading days preceding the final closing date. The
unit notes are due on July 5, 2007. The notes bear interest at a rate of six
percent (6%) and are convertible into Quest common shares at an initial
conversion price of 75% of the average closing price of Quest's common stock for
the five trading days preceding the final closing date, subject to adjustment,
including a "weighted-average" reduction of the conversion price in the event
that Quest issued additional stock or stock equivalents at a price lower than
the conversion price. Commencing on the fifth month of the notes, Quest must
make amortizing payments of the outstanding principal amount and interest on
each note until the principal amount and interest have been paid in full, either
in cash of 102% of the monthly amount due or by conversion of such amount into
our common shares at a conversion rate of seventy-five percent of the volume
weighted average price of our common shares for the five trading days prior to a
conversion date, subject to certain limitations.

         Quest agreed to register the secondary offering and resale of the
shares issuable upon conversion of the notes and the warrants within thirty
business days of the final closing of the private placement of the units. In
connection with the offer and sale of the notes and the warrants, Quest engaged
Westor Capital Group, Inc., an NASD licensed broker-dealer, as its placement
agent. Under the placement agent agreement, Westor is to receive a ten percent
(10%) cash commission on the sale of the units, a three percent (3%)
non-accountable expense allowance, and ten warrants for each one-hundred
warrants issued as part of the units with an exercise price of 120 % of the of
the average closing price of Quest's common stock for the five trading days
preceding the final closing date.

         Quest relied on the exemption from registration provided by Section
4(2) of the Securities Act of 1933, as amended, for the offer and sale of the
units. Before investing, each subscriber was provided with or had access to
information regarding our company substantially similar to that included in a
registration statement on Form SB-2. In each case, we received, before accepting
the subscription of each subscriber, unit purchase agreements executed by the
subscribers. Each of the subscribers represented and warranted to us that such
subscriber (i) was sophisticated enough to evaluate the merits of an investment
in the securities and did not need the benefits of registration under the Act,
(ii) had a prior substantive relationship with at least one of our officers or
directors or the selling broker-dealer, if any, (iii) was purchasing with
investment intent and not with a view to distribution, and (iv) had not been
solicited through any form of general solicitation. In addition, we believe,
based on the representations of the subscribers and our officers' and directors'
prior substantive relationship with the subscribers, that each of the
subscribers were accredited investors within the meaning of Rule 501(a) of the
Act.

                                       30
<PAGE>

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

         The following discussion and analysis should be read in conjunction
with Quest's financial statements and related notes included in this report.
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The statements contained in
this report that are not historic in nature, particularly those that utilize
terminology such as "may," "will," "should," "expects," "anticipates,"
"estimates," "believes," or "plans" or comparable terminology are
forward-looking statements based on current expectations and assumptions.
Various risks and uncertainties could cause actual results to differ materially
from those expressed in forward-looking statements. Please refer to the Risk
Factors section of this report on page 4 for a description of these risks and
uncertainties.

         All forward-looking statements in this document are based on
information currently available to Quest as of the date of this report, and
Quest assumes no obligation to update any forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results to differ materially from any
future results, performance or achievements expressed or implied by such
forward-looking statements.

General

         Quest Minerals & Mining Corp., or Quest, 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. Quest Energy is the
parent corporation of E-Z Mining Co., Inc, a Kentucky corporation, or E-Z
Mining, of Gwenco, Inc., a Kentucky corporation, or Gwenco, and of Quest Marine
Terminal, Ltd., a Kentucky corporation, or Quest Marine.

         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 quality compliance
coal is located at Slater's Branch, South Williamson, Kentucky.

         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
the fourth quarter of 2005, Quest completed the required rehabilitation of the
Pond Creek mine. In March, 2006, Quest reopened its Pond Creek mine and has
placed mining equipment back into the mine. Quest had believed that it had
received the required insurance, permits, and approval to recommence mining
operations; however, Quest was subsequently advised that it required additional
insurance, permits, and approvals permits to recommence the mining operations.
Quest is currently seeking to obtain these necessary insurance, permits, and
approvals and intends to recommence mining operations upon receipt of the
necessary insurance, permits, and approvals.

         Quest has recently retained Braxton Mining as its contract miner to
resume mining operations at Pond Creek. Braxton has replaced Shelbi Coal Company
as the contract miner for Quest. Under the terms of the agreement with Braxton,
Braxton will provide all equipment and labor necessary for the coal mining
production at the Pond Creek mine, and Quest will receive $7.75 per ton of clean
coal mined from Pond Creek, which will be escrowed under the terms of the Boyd
County Court order and used to repay accrued royalties and creditors of Quest's
wholly-owned subsidiary, Gwenco, Inc. Further, to the extent that coal from the
mine is sold to a washing plant at a price that exceeds $45.00 per clean ton,
Quest will receive thirty percent (30%) of the revenues in excess of $45.00 per
clean ton, and, to the extent that coal from the mine is sold directly to the
open market at a price that exceeds $60.00 per clean ton, Quest will receive
thirty percent (30%) of the revenues in excess of $60.00 per clean ton. This
arrangement is subject to revision, amendment, or revocation by the Boyd County
Court.

         Using continuous mining techniques, before the shutdown of the Gwenco
mines, Quest had driven approximately 1,200 feet to where the coal may be
thickening to above 36 inches, based on estimates from core-hole drilling.
During the initial period, coal was sent to a preparation plant to be washed.
After re-opening the Pond Creek mine, once thicker coal is reached, Quest and

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<PAGE>

Braxton intend to commence implementation of two continuous mining operations
estimated to yield about 20,000 tons of clean coal per month.

         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. National City Bank has obtained judgment in that action in the amount of
approximately $340,000.

         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. Quest intends to defend this action while
continuing negotiations with National City Bank. If National City Bank is
successful in this action, Gwenco could lose substantially all of its assets in
a foreclosure sale.

         In December, 2004, Quest terminated its former Chief Financial Officer,
Fred Runyon. Quest Energy, Ltd., an indirect, wholly-owned subsidiary of Quest,
also terminated Mr. Runyon as President of Quest Energy. On April 7, 2005, Quest
announced that, upon completion of the initial phase of an audit by counsel
retained by Quest for that purpose, among others, Quest began an investigation
into an apparent embezzlement from Quest and a conspiracy to commit embezzlement
by some former employees of Quest, Quest's indirect wholly-owned subsidiary,
Quest Energy, Ltd., and its former indirect wholly-owned subsidiary, D&D
Contracting, Inc, including Mr. Runyon.

         At this time, Quest is unable to quantify the scope of the apparent
embezzlement or the impact that the apparent embezzlement will have on its
financial statements, but management currently estimates that between $250,000
and $1,000,000 was apparently embezzled from Quest. Quest has retained a
forensic accountant to quantify the scope of the alleged fraud; however, the
forensic accountant has been unable to complete its analysis at this time.

         Most of the embezzled funds result from Runyon apparently engaging in a
"check-kiting" scheme with the complicity of his sister, Judy Holbrook, the
manager of Community Trust Bank, where Quest Energy maintained bank accounts.

         Federal and state law enforcement authorities are investigating the
activities of Mr. Runyon, Ms. Holbrook, and other apparent co-conspirators.
According to news reports, on or about May 5, 2006, four people were charged
Friday with kiting checks in a scheme that federal prosecutors said cost a bank
more than $1 million. According to the reports, a federal grand jury indicted
Mr. Runyon, Ms. Holbrook, James Daniel Stollings, and Quest's President and
Chief Executive Officer, William R. Wheeler. The four are charged with bank
fraud. According to the reports, Federal prosecutors said that Wheeler,
Stollings, and Runyon were business associates with Quest when they convinced
Holbrook, a branch manager for Community Trust Bank to issue unfunded cashier's
checks. According to the Federal prosecutors, the cashier's checks covered bad
checks written by Quest subsidiaries. No court date has been scheduled for any
of the four. Both Mr. Wheeler and Quest deny any wrongdoing in connection with
these matters.

         The Federal Insurance Company, the insurer for Community Trust Bank,
has notified Quest Energy that is seeking to obtain subrogation of monies it has
paid to Community Trust Bank and repayment of deductibles by the bank as a part
of an alleged criminal scheme and conspiracy by former employees of the bank and
other individuals. The Federal Insurance Company has alleged that former
employees or associates of Quest Energy, including Mr. Runyon, 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 denies that it had any involvement with or responsibility for any
of the actions alleged by the Federal Insurance Company, and it further denies
that it has benefited from any such alleged scheme. Further, Quest Energy
contends that the negligent actions and inactions by Community Trust Bank caused
severe damage and loss to Quest Energy. There is currently no action pending
with respect to this matter.

                                       32
<PAGE>

         In light of these occurrences, Quest has determined that the design and
operation of its disclosure controls and procedures, as defined in Exchange Act
Rule 13a-14(c) have not been effective to ensure that information required to be
disclosed in its Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to them to allow timely decisions regarding required disclosure.
Quest is currently reviewing and revising its controls and procedures to
increase the effectiveness of its disclosure controls and procedures.

         E-Z Mining operated a high-quality compliance blend coal deep mine
named "Burning Fork #1" in Pike County, Kentucky. Quest has permanently shut
down the operations at the Burning Fork #1 mine.

         Quest Marine had leased from Monday Coal, LLC a barge loadout facility
and associated real property, consisting of approximately 13.89 acres, located
at Mile Point 318.9 on the Ohio River. Monday Coal terminated the lease for
non-payment in February 2005, and Quest is currently seeking a refund of its
deposit with Monday Coal of approximately $28,000.

Quest's Corporate History

         Quest was incorporated on November 21, 1985 in the State of Utah under
the name "Sabre, Inc." It subsequently changed its name to Tillman
International, Inc. On February 9, 2004, Tillman acquired 100% of the
outstanding common stock of Quest Minerals (Nevada) pursuant to a securities
purchase agreement and plan of reorganization. Under the plan of reorganization,
Tillman issued 20,700,000 shares of its common stock to the stockholders of
Quest Minerals (Nevada) in exchange for all of the outstanding shares of common
stock of Quest Minerals (Nevada). In addition, Tillman agreed to issue to the
stockholders of Quest Minerals (Nevada) an additional 1,800,000 shares of its
common stock upon completion of an amendment to its articles of incorporation to
increase the authorized common stock of Tillman to 250,000,000 shares. Pursuant
to the plan of reorganization, 22,464,358 shares of Tillman common stock held by
Silvestre Hutchinson, the former President of Tillman and one of its former
directors, were cancelled. Upon the completion of the reorganization, William R.
Wheeler and Eugene Chiaramonte, Jr., the former directors of Quest Minerals
(Nevada), were appointed as directors of Tillman. On April 8, 2004, Tillman
amended its articles of incorporation to change its name to "Quest Minerals &
Mining Corp."

         Since the stockholders of Quest Minerals (Nevada) owned approximately
53% of Tillman's outstanding voting shares after giving effect to the
reorganization, and since Tillman was a development stage company with limited
operations before the reorganization, Quest Minerals (Nevada) is deemed to be
the acquirer for accounting purposes, and the transaction will be reflected as a
recapitalization of Quest Minerals (Nevada). In a recapitalization, the
historical stockholders' equity of Quest Minerals (Nevada) prior to the
reorganization will be retroactively restated for the equivalent number of
shares received in the merger after giving effect to any difference in par value
of Tillman's stock and Quest Minerals (Nevada)'s stock by an offset to capital.

Critical Accounting Policies

         The discussion and analysis of Quest's financial conditions and results
of operations is based upon Quest's consolidated financial statements, which
have been prepared in accordance with generally accepted accounting principles
in the United States. The preparation of financial statements requires managers
to make estimates and disclosures on the date of the financial statements. On an
on-going basis, Quest evaluates its estimates, including, but not limited to,
those related to revenue recognition. It uses authoritative pronouncements,
historical experience, and other assumptions as the basis for making judgments.
Actual results could differ from those estimates. Quest believes the following
critical accounting policies affect its more significant judgments and estimates
in the preparation of our consolidated financial statements.

Mineral Interests

         The purchase acquisition costs of mineral properties are deferred until
the properties are placed into production, sold or abandoned. These deferred
costs will be amortized on the unit-of-production basis over the estimated
useful life of the properties following the commencement of production or
written-off if the properties are sold, allowed to lapse or abandoned.

                                       33
<PAGE>

         Mineral property acquisition costs include any cash consideration and
the fair market value of common shares and preferred shares, based on the
trading price of the shares, or, if no trading price exists, on other indicia of
fair market value, issued for mineral property interests, pursuant to the terms
of the agreement or based upon an independent appraisal.

         Administrative expenditures are expensed in the year incurred.

Coal Acquisition Costs

         The costs to obtain coal lease rights are capitalized and amortized
primarily by the units-of-production method over the estimated recoverable
reserves. Amortization occurs either as Quest mines on the property or as others
mine on the property through subleasing transactions.

         Rights to leased coal lands are often acquired through royalty
payments. As mining occurs on these leases, the accrued royalty is charged to
cost of coal sales.

Mining Acquisition Costs

         The costs to obtain any interest in third-party mining operations are
expensed unless significantly proven reserves can be established for the entity.
At that point, capitalization would occur.

Mining Equipment

         Mining equipment is recorded at cost. Expenditures that extend the
useful lives of existing plant and equipment or increase the productivity of the
asset are capitalized. Mining equipment is depreciated principally on the
straight-line method over the estimated useful lives of the assets, which range
from three to 15 years.

Deferred Mine Equipment

         Costs of developing new mines or significantly expanding the capacity
of existing mines are capitalized and amortized using the units-of-production
method over the estimated recoverable reserves that are associated with the
property being benefited.

Asset Impairment

         If facts and circumstances suggest that a long-lived asset may be
impaired, the carrying value is reviewed. If the review indicates that the value
of the asset will not be recoverable, as determined based on projected
undiscounted cash flows related to the asset over its remaining life, then the
carrying value of the asset is reduced to its estimated fair value.

Revenue Recognition

         Coal sales revenues are sales to customers of coal produced at Quest's
operations. Quest recognizes revenue from coal sales at the time title passes to
the customer.

Income Taxes

         Quest provides for the tax effects of transactions reported in the
financial statements. The provision, if any, consists of taxes currently due
plus deferred taxes related primarily to differences between the basis of assets
and liabilities for financial and income tax reporting. The deferred tax assets
and liabilities, if any, represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of the year ended December 31, 2005,
Quest had no material current tax liability, deferred tax assets, or liabilities
to impact on its financial position because the deferred tax asset related to
Quest's net operating loss carry forward was fully offset by a valuation
allowance.

Fair Value

         Quest's financial instruments, as defined by SFAS No. 107, "Disclosure
about Fair Value of Financial Instruments", include cash, advances to affiliate,
trade accounts receivable, investment in securities available-for-sale,

                                       34
<PAGE>

restricted cash, accounts payable and accrued expenses and short-term
borrowings. All instruments other than the investment in securities
available-for-sale are accounted for on a historical cost basis, which, due to
the short maturity of these financial instruments, approximates fair value as at
December 31, 2005.

Earnings loss per share

         Quest adopted SFAS No. 128, which provides for the calculation of
"basic" and "diluted" earnings per share. Basic earnings per share includes no
dilution and is computed by dividing net income available to common stockholders
by the weighted average common shares outstanding for the period. Diluted
earnings per share reflect the potential dilution of securities that could share
in the earnings similar to fully diluted earnings per share.

Other Recent Accounting Pronouncements

         Quest does not expect that the adoption of other recent pronouncements
from the Public Company Oversight Board to have any impact on its financial
statements.

Results of Operations

Basis of Presentation

         The following table sets forth, for the periods indicated, certain
audited selected financial data expressed as a percentage of net sales:

                                                       Year Ended
                                                      December 31,
                                              ---------------------------
                                                  2005            2004
                                              ------------   ------------
Net sales                                            100.0%         100.0%
Production costs                                     129.9           70.4
Selling, general and administrative                  821.1          359.9
Stock compensation                                      --          752.5
Mining Option                                           --          172.4
Loss on Rescission                                      --           23.4
Interest                                             676.3           22.9
Deferred Warrant Expense                           4,021.4             --
Depreciation and amortization                         19.0            3.4
Mine Closing Costs                                   166.3             --
                                              ------------   ------------

Operating income (loss)                           (5,734.1)%     (1,304.9)%
                                              ------------   ------------

Comparison of the year ended December 31, 2005 and 2004

         Net sales. Net sales for Quest decreased to $356,741, or a decrease of
87.8%, for the year ended December 31, 2005, from $2,912,574 for the year ended
December 31, 2004. Quest's sales decreased because Quest has not been generating
revenues from its Burning Fork mine since 2004, as the Burning Fork mine has not
been in operations since 2004. Further, Quest had only been able to generate
revenues from its Gwenco operations in the first half of 2005, and did not
generate any revenues from Gwenco during the third quarter. Equipment breakdowns
and lack of working capital caused interruptions in coal mining operations
during the first half of 2005, and thereafter, as a result of equipment
breakdowns and a lack of working capital, Quest had to shut down the mines. No
revenues were generated during these interruptions.

         Production costs. Production costs decreased to $463,215, or a decrease
of 77.4% for the year ended December 31, 2005, from $2,050,357 for the year
ended December 31, 2004. As a percentage of net sales, production costs
increased to 129.5% of net sales for the year ended December 31, 2005 versus
77.4% of sales for the year ended December 31, 2004. On an absolute basis, Quest
had lower production costs primarily because it had lower sales and production.

                                       35
<PAGE>

On a percentage of sales basis, Quest's production costs were greater in 2005
than in 2004 due to ongoing labor costs it incurred even though the mines were
no longer in production.

         Selling, general, and administrative. Selling, general and
administrative expenses decreased to $2,929,357 or 72.05%, for the year ended
December 31, 2005, from $10,481,839 for the year ended December 31, 2004. As a
percentage of net sales, selling, general, and administrative expenses were
821.1% for the year ended December 31, 2005, as compared to 359.9% for the
comparable period in 2004. The decrease in selling, general, and administrative
expenses results from not having incurred certain expenses relating to the
reverse acquisition of Quest Minerals & Mining, Ltd. that were incurred in 2004.
The decrease is further attributable to Quest's reduction of administrative
personnel in 2005. Finally, and most significantly, there were several non-cash
expenses, such as Quest's acquisition of an option to purchase a Honduran mining
operation, certain equipment valuation adjustments, certain mineral interest
valuation adjustments, and asset impairments that resulted in such a large
selling, general, and administrative expense in 2004 that were non-recurring.
The decrease was offset by the classification of supplies expenses, as most of
the supplies were not purchased on a percentage ratio of production, but rather
on volume discounted opportunities. Additionally, there were more maintenance
and repairs incurred on machinery, as Quest was not in a financial position to
buy newer equipment. Further, Quest incurred $1,369,925 in stock compensation
expense for the year ended December 31, 2005.

         Depreciation and amortization. Depreciation expense decreased to
$67,849, or 31.7%, for the year ended December 31, 2005, from $99,351 for the
year ended December 31, 2004. As a percentage of net sales, depreciation expense
was 19.0% for the year ended December 31, 2005, as compared to 3.4% for the
comparable period in 2004. Quest's depreciation expense decreased primarily
because certain equipment was taken out of service in 2005 resulting from the
closing of E-Z Mining and the rescission of the D&D Contracting acquisition.

         Stock Compensation. Quest incurred stock compensation expense of
$21,917,633 in the year ended December 31, 2004. This expense in 2004 resulted
from the issuance of 17,500,000 shares of common stock pursuant to Quest's stock
compensation plan to various consultants pursuant to consulting agreements, and
the issuance of additional shares to various consultants pursuant to consulting
agreements.

         Deferred Warrant Expense. Quest incurred a warrant amortization expense
of $14,346,143 for the year ended December 31, 2005, compared to no such expense
in the year ended December 31, 2004. This expense in 2005 resulted from the
issuance of 23,950,000 warrants to purchase common stock pursuant to various
financings since October 2004.

         Interest expense. Interest expense increased to $2,412,678, or 361.0%,
for the year ended December 31, 2005, from $668,353 for the year ended December
31, 2004. Quest's interest expense results from various debt obligations which
it has incurred since the first quarter of 2004, including obligations that
Quest assumed in connection with the acquisition of Gwenco, various notes issued
in various financings since October 2004, and the expense associated with the
issuance of a warrant for 10,260,028 shares of common stock in connection with a
loan in May 2005.

         Operating loss. Quest incurred an operating loss of $20,455,872 for the
year ended December 31, 2005, compared to an operating loss of $38,005,209 for
the year ended December 31, 2004. It had lower operating losses in 2005 as
compared to 2004 primarily because of the stock compensation expense of
$21,917,633 that Quest recorded in 2004 in connection with the issuance of its
stock under the Quest stock compensation plan and to other consultants outside
the plan. Further, it recorded a $5,020,000 expense in 2004 for issuance of
stock to acquire an option to purchase a Honduran mining operation. Without the
stock compensation and the mining option expense, the operating loss for 2004
was $11,067,576. The operating loss for 2005 was largely the result of the
deferred warrant amortization expense of $14,346,143 in connection with the
issuance of warrants pursuant to various financings since October 2004. Without
the deferred warrant amortization, the operating loss for 2005 was $6,109,729.
This loss resulted from no revenues from E-Z mining in 2005, a lack of revenues
in the second half of 2005, significantly increased selling, general, and
administrative expenses, $2,412,678 in interest expense, and stock compensation
expense of $1,369,925.

         Provision for income taxes. Quest incurred operating losses for the
year ended December 31, 2005 and for the year ended December 31, 2004.
Accordingly, it has made no provision for income taxes.

                                       36
<PAGE>

Liquidity and Capital Resources

         Before the reorganization of Quest and Quest Minerals (Nevada), Quest
has financed its operations and capital requirements through cash flows
generated from debt financing. Thereafter, Quest has financed its operation by
the sale of its equity securities and debt financing. Its working capital
deficit at December 31, 2005 was $7,089,429. It had cash of $16,415 as of
December 31, 2005.

         Quest used $1,817,771 of net cash in operating activities for the year
ended December 31, 2005, compared to using $1,675,488 in the year ended December
31, 2004. Cash used in operating activities for the year ended December 31, 2005
was mainly due its net loss of $20,445,872, but also to a cancellation of stock
previously issued for advertising, valued at $250,000. The net loss was offset
by $67,849 of depreciation, $410,500 of stock issued for interest, $1,369,925 of
stock issued for services, $325,000 of stock issued for royalties, $12,948,480
in deferred warrant amortization, $1,536,079 as warrants issued for interest
expense, $1,510,510 as stock issued for investment, a decrease of $38,559 in
account receivables, and an increase of $681,199 in accounts payable and accrued
expenses

         Net cash flows used in investing activities were $127,000 for the year
ended December 31, 2005, compared to using $628,394 in the year ended December
31, 2004. Cash used by investing activities for the year ended December 31, 2005
resulted from the purchase of equipment of $150,000, offset by the refund of a
security deposit in the amount of $23,000.

         Net cash flows provided by financing activities were $1,858,966 for the
year ended December 31, 2005, compared to $2,405,552 provided by financing
activities the year ended December 31, 2004. This increase in net cash provided
by financing activities is due to Quest's borrowings of $2,125,000 pursuant to
various notes and the issuance of shares of common stock of $100,000. This
increase was offset by repayments of loans payable of $366,034.

Capital Requirements

         The report of Quest's independent accountants for the fiscal year ended
December 31, 2005 states that Quest has incurred operating losses since
inception and requires additional capital to continue operations, and that these
conditions raise substantial doubt about its ability to continue as a going
concern. Quest believes that, as of the date of this report, in order to fund
its plan of operations over the next 12 months, it will need to fund its
operations out of cash flows generated from operations, to the extent such
operations are resumed, and from the sale of additional securities. In 2004,
Quest completed two private placements of common stock, receiving gross proceeds
of approximately $1,160,000.

         In addition, through December 31, 2004, Quest issued an aggregate of
approximately 548,235 shares of its common stock in an offshore offering
pursuant to Regulation S at a price equal to the closing "bid" price of Quest's
common stock as quoted on the OTC Bulletin Board on the date of issuance. The
average price per share of the shares sold pursuant to Regulation S was
approximately $3.36 per share, and the gross proceeds from non-U.S. persons was
approximately $1,839,750. The purchase price of each share sold was paid into an
escrow account, from which forty percent (40%) of the purchase price, or
approximately $735,900, was paid to Quest. The remaining sixty percent (60%), or
approximately $1,103,850, was collectively paid to a non-U.S. third-party
advisor and the escrow agent. In addition, Quest paid four percent (4%) of the
purchase price, or approximately $73,590, as a finder's fee. In total, Quest
received thirty-six (36%) of the purchase price, or approximately $662,310, from
the shares sold in the Regulation S offering.

         On October 19, 2004, Quest borrowed $250,000 from Professional Traders
Fund, LLC and, in connection therewith, delivered a convertible secured
promissory note to Professional Traders Fund in the principal amount of
$250,000. The note had a term of six months and is secured by a first priority
security interest in certain equipment of Quest's indirect subsidiary, Quest
Energy, Ltd. The note bore interest at a rate of eight percent (8%) and was
convertible at a floating conversion price of fifty percent (50%) of the average
of the per share market value during the three (3) trading days immediately
preceding a conversion date. In addition, Quest issued to Professional Traders
Funds a five-year warrant to purchase up to 250,000 shares of Quest's common
stock at an exercise price of $2.00 per share. In February, 2005, as part of a
private placement of units as described below, Professional Traders Fund agreed
to cancel this note in exchange for 5 units in the private placement. In
connection therewith, Professional Traders Fund had required Quest to sign an
agreement which purports to reduce the exercise price on the warrant to $0.75

                                       37
<PAGE>

per share. As also described below, Quest has entered into a settlement
agreement with Professional Traders Fund regarding these financings.

         From December 17 through 21, 2004, Quest borrowed an aggregate of
$600,000 and, in connection therewith, delivered a series of secured promissory
notes in the principal amount of $600,000. The notes have a term of six months
and are secured by a security interest in certain assets of Quest's indirect
subsidiary, Quest Energy, Ltd. The notes bear interest at a rate of fifteen
percent (15%) and become convertible in the event of default at a conversion
price of $0.10 per share. In addition, Quest issued to the investors warrants to
purchase an aggregate of up to 600,000 shares of Quest's common stock at an
exercise price of $1.00 per share. The exercise price of the warrants were to be
reduced by fifty percent (50%) in the event of a default under the notes. Quest
agreed to register the secondary offering and resale of the shares underlying
the warrants in the event that it files a registration statement under the
Securities Act. In connection with the offer and sale of the notes and the
warrants, Quest engaged Saddle River Associates, Inc. as a finder, and issued to
Saddle River a warrant to purchase 100,000 shares of common stock at an exercise
price of $1.00 per share. As of March 31, 2005, the holders of these notes have
converted a portion of these notes into shares of Quest's common stock.

         On February 22, 2005, Quest issued an aggregate of 26 units at a price
of $25,000 per unit. The aggregate gross proceeds from the sale of the units
were $650,000, which included $350,000 in cash and cancellation of $300,000 in
indebtedness, including the cancellation of $250,000 worth of notes issued to
Professional Traders Fund, LLC, as reported on Quest's current report on Form
8-K filed with the Securities and Exchange Commission on October 25, 2004. Each
unit consists of a convertible secured promissory note in the principal amount
of $25,000 and "Series A" warrants to purchase (a) 150,000 shares of Quest
common stock, and (b) "Series B" warrants to purchase up to 150,000 shares of
Quest common stock at an exercise price of $1.00 per share, at an exercise price
of $75,000. The unit notes are due on March 31, 2006 and are secured by a
security interest in Quest machinery and equipment. The notes bear interest at a
rate of seven percent (7%) and are convertible into Quest common shares at an
initial conversion price of $0.50 per share, subject to adjustment, including a
"weighted-average" reduction of the conversion price in the event that Quest
issued additional stock or stock equivalents at a price lower than the
conversion price. Quest agreed to register the secondary offering and resale of
the shares issuable upon conversion of the notes, the Series A warrants, the
shares issuable upon exercise of the Series A warrants, the Series B warrants,
and the shares issuable upon exercise of the Series A warrants, the Series B
warrants within 14 days of the final closing of the private placement of the
units. In connection with the offer and sale of the notes and the warrants,
Quest engaged Greenwood Partners, LP, an NASD licensed broker-dealer, as its
placement agent. Under the placement agent agreement, Greenwood is to receive a
ten percent (10%) cash commission on the sale of the units.

         On March 4, 2005, Quest issued an aggregate of 15 units at a price of
$25,000 per unit. The aggregate gross proceeds from the sale of the units were
$375,000. Each unit consists of a convertible secured promissory note in the
principal amount of $25,000 and "Series A" warrants to purchase (a) 150,000
shares of Quest common stock, and (b) "Series B" warrants to purchase up to
150,000 shares of Quest common stock at an exercise price of $1.00 per share, at
an exercise price of $75,000. The unit notes are due on March 31, 2006 and are
secured by a security interest in Quest machinery and equipment. The notes bear
interest at a rate of seven percent (7%) and are convertible into Quest common
shares at an initial conversion price of $0.50 per share, subject to adjustment,
including a "weighted-average" reduction of the conversion price in the event
that Quest issued additional stock or stock equivalents at a price lower than
the conversion price. Quest agreed to register the secondary offering and resale
of the shares issuable upon conversion of the notes, the Series A warrants, the
shares issuable upon exercise of the Series A warrants, the Series B warrants,
and the shares issuable upon exercise of the Series A warrants, the Series B
warrants within 14 days of the final closing of the private placement of the
units. In connection with the offer and sale of the notes and the warrants,
Quest engaged Greenwood Partners, LP, an NASD licensed broker-dealer, as its
placement agent. Under the placement agent agreement, Greenwood is to receive a
ten percent (10%) cash commission on the sale of the units.

         On April 18, 2005, Quest issued an aggregate of 16 units at a price of
$25,000 per unit. The aggregate gross proceeds from the sale of the units were
$400,000, which included $250,000 in fees to Greenwood Partners, LP under a
Financial Services Advisory Agreement for services to be rendered by Greenwood,
$10,000 to Greenwood Partners, LP for payment of commissions owed under the
placement agent agreement, $50,000 to Greenwood Partners, LP for reimbursement
of Greenwood's legal fees incurred in connection with the February and March
private placements, and $90,000 in cash. Each unit consists of a convertible
secured promissory note in the principal amount of $25,000 and "Series A"
warrants to purchase (a) 150,000 shares of Quest common stock, and (b) "Series
B" warrants to purchase up to 150,000 shares of Quest common stock at an
exercise price of $1.00 per share, at an exercise price of $75,000. The unit

                                       38
<PAGE>

notes are due on March 31, 2006 and are secured by a security interest in Quest
machinery and equipment. The notes bear interest at a rate of seven percent (7%)
and are convertible into Quest common shares at an initial conversion price of
$0.50 per share, subject to adjustment, including a "weighted-average" reduction
of the conversion price in the event that Quest issued additional stock or stock
equivalents at a price lower than the conversion price. Quest agreed to register
the secondary offering and resale of the shares issuable upon conversion of the
notes, the Series A warrants, the shares issuable upon exercise of the Series A
warrants, the Series B warrants, and the shares issuable upon exercise of the
Series A warrants, the Series B warrants within 14 days of the final closing of
the private placement of the units. In connection with the offer and sale of the
notes and the warrants, Quest engaged Greenwood Partners, LP, an NASD licensed
broker-dealer, as its placement agent. Under the placement agent agreement,
Greenwood is to receive a ten percent (10%) cash commission on the sale of the
units.

         In April, 2005, Greenwood Partners required Quest to sign an amendment
to the notes which purports to change the adjustment provisions of the
conversion price from "weighted-average" to "full-ratchet" in the event that
Quest issues additional stock or stock equivalents at a price lower than the
conversion price. Quest is currently investigating the circumstances regarding
the investment and this purported amendment and currently disputes the validity
of the amendment and various other provisions of this financing.

         From May 16, 2005 through June 30, 2005, Quest borrowed approximately
$245,000 from Professional Traders Fund, and, in connection therewith,
Professional Traders Fund required Quest to execute several documents, including
a credit agreement, promissory note, various guarantees, an amended and restated
security agreement, and a mortgage. The note has a term of three months and
bears interest at a rate of ten percent (10%). In addition, Professional Traders
Fund required Quest to execute a warrant agreement to grant Professional Traders
Fund purchase an aggregate of up to 10,260,028 shares of Quest's common stock at
an exercise price of $0.10 per share, payable only upon cancellation of any
indebtedness owed to Professional Traders Fund. Under the terms of the warrant
agreement, in the event of default under the note, the exercise price was to be
reduced to $0.05 per share and the warrant could be exercise by payment of cash
as well as cancellation of indebtedness. Professional Traders Fund had commenced
two separate legal actions for breach of these agreements.

         Since June 30, 2005, Quest has relied on private borrowings from third
parties to fund its capital requirements. On December 8, 2005, Quest issued
5,000,000 shares of its common stock in an offshore private placement at $0.05
per share. On December 8, 2005, Quest also issued a convertible secured
promissory note in the principal amount of $335,000. The note is due on December
8, 2006, bears interest at a rate of eight percent (8%), and is convertible into
Quest common shares at an initial conversion price of $0.05 per share, subject
to adjustment. These issuances were exempt from registration pursuant to
Regulation S of the Act.

         From December, 2005 through January, 2006, Quest issued and aggregate
of 1,500,000 shares of its common stock in an offshore private placement at
$0.05 per share. The issuance was exempt from registration pursuant to
Regulation S of the Act.

         On February 14, 2006, Quest entered into a settlement agreement with
Professional Traders Fund LLC ("PTF") pursuant to which Quest settled and
resolved all outstanding disputes under that certain Unit Agreement dated as of
February 22, 2005 (the "Unit Agreement"), that certain Credit Agreement dated as
of May 16, 2005 (the "Credit Agreement") and any and all documents related
thereto (collectively, the "Prior Financing Documents"). Pursuant to the
Agreement, the parties agreed to a complete restructuring of the obligations
under the Prior Financing Documents, effectuated through the issuance of amended
and restated instruments, new instruments, and common stock. The settlement and
restructuring consisted of the following transactions:

                  A.       Unit Agreement Restructuring. The Unit Agreement (and
all related documentation) was restructured as follows:

                           1.       Amended and Restated Unit Note. We issued
PTF an amended and restated Unit Note (the "Amended and Restated Unit Note") in
the aggregate principal amount of $350,000.00, which note is now payable on or
before February 22, 2007. The original Unit Note had a maturity date of March
31, 2006. This Amended and Restated Unit Note will be convertible into our
common stock initially at a rate of $.075 per share, subject to adjustment as
provided in the Amended and Restated Unit Note.

                           2.       Issuance of Quest Common Stock. We issued
PTF share certificates representing 1,000,000 shares of our common stock in
consideration of PTF's exercise in full (on a cashless basis) of all Series A

                                       39
<PAGE>

and Series B Warrants held by them. The amount of common stock due PTF upon
exercise of these warrants was previously disputed.

                           3.       Termination of Unit Agreement. All of the
provisions contained in the Unit Agreement, solely as to PTF, were terminated
and of no further force and effect upon closing of the Agreement. In addition,
PTF waived any and all right to any claims or damages previously incurred under
the Unit Agreement due to our default thereunder, including any defaults under
the registration rights agreement entered into in connection with the Unit
Agreement (the "Unit Registration Rights Agreement").

                           4.       Termination of Unit Registration Rights
Agreement. All of the provisions contained in the Unit Registration Rights
Agreement, solely as to PTF, were terminated and of no further force and effect
upon closing of the Agreement. In addition, PTF waived any and all right to any
liquidated damages previously incurred under the Unit Registration Rights
Agreement due to our default thereunder.

                           5.       Dismissal of Unit Litigation. A Stipulation
for Dismissal without Prejudice was filed with respect to that certain action
filed against us by PTF in the United States District Court for the Southern
District of New York, Case No 06-CV-00309.

                  B.       Credit Agreement Restructuring. The Credit Agreement
         (and all related documentation) was restructured as follows:

                           1.       Repayment of Principal. We paid PTF $264,000
representing payment in full of all principal owed to PTF by Quest under that
certain promissory note dated as of May 16, 2005 in an amount up to $500,000
made by us in favor of PTF (the "Credit Note").

                           2.       Amended and Restated Credit Note. As payment
in full for all: (i) accrued interest due PTF under the Credit Note and (ii) any
and all collection fees incurred by PTF thereunder, we issued PTF an amended and
restated Credit Note (the "Amended and Restated Credit Note") in the aggregate
principal amount of $100,000.00 in favor of PTF, which note is payable on the
earlier of: July 10, 2006 or our closing of a new debt or equity financing or
series of related financings, in excess of $1,500,000.00. In addition, upon an
"event of default" (as defined), this note will be convertible into shares of
our common stock at an initial conversion rate of $0.10 per share, subject to
adjustment as set forth therein.

                           3.       Amended and Restated Warrant. We issued PTF
an amended and restated warrant (the "Amended and Restated PTF Credit Warrant")
to purchase up to 10,260,028 shares of our common stock. Under this Amended and
Restated Warrant 2,500,000 shares will be exercisable on a "cashless basis",
provided, however, that PTF's ability to utilize such cashless exercise feature
will be limited to 400,000 shares of common stock per quarter. The original
warrant did not provide for cashless exercise, which feature was included as
additional consideration for the settlement and restructuring.

                           4.       Waivers under Credit Agreement. Any and all
defaults under the Credit Agreement prior to the execution of the Agreement were
waived by PTF, including any defaults under that certain registration rights
agreement entered into in connection therewith (the "Credit Registration Rights
Agreement"). PTF expressly agreed that, notwithstanding in the Credit Agreement
to the contrary, the execution and delivery of the Agreement or any of the
documents executed in connection therewith do not constitute a breach of the
Credit Agreement or the Amended and Restated Credit Note.

                           5.       Termination of Credit Registration Rights
Agreement. The Credit Registration Rights Agreement was terminated and of no
further force and effect upon closing of the Agreement. In addition, PTF waived
any and all right to any liquidated damages previously incurred under the Credit
Registration Rights Agreement due to our default thereunder.

                           6.       Dismissal of Credit Agreement Litigation and
Kentucky Litigation. A Stipulation for Dismissal without Prejudice was filed
with respect to that certain action filed by PTF (i) on November 2, 2005 against
us and Gwenco in the United States District Court for the Southern District of
New York, Case No. 05-CV-9311, to collect all amounts owing under the Credit
Note, including collection fees (ii) on November 3, 2005 against us, Quest
Energy Ltd., and Gwenco, Inc. in the Pike County Circuit Court for the
Commonwealth of Kentucky, Case No. 05-CI-01494, to collect all amounts owing
under the Credit Note, including collection fees, and to seek judicial

                                       40
<PAGE>

foreclosure on certain assets held by Gwenco pursuant to the security agreement
and mortgage.

                  C.       New Warrant. As additional consideration for the
settlement and restructuring, we issued PTF a warrant to purchase up to
5,000,000 shares of our common stock, with an initial exercise price of $0.10
per share and an expiration date of February 10, 2009.

         On April 5, 2006, Quest issued an aggregate of 1.25 units at a price of
$100,000 per unit. The aggregate gross proceeds from the sale of the units were
$125,000. Each unit consists of a convertible promissory note in the principal
amount of $100,000 and warrants to purchase shares of Quest common stock at an
exercise price of 150% of the average closing price of Quest's common stock for
the five trading days preceding the final closing date. The unit notes are due
on July 5, 2007. The notes bear interest at a rate of six percent (6%) and are
convertible into Quest common shares at an initial conversion price of 75% of
the average closing price of Quest's common stock for the five trading days
preceding the final closing date, subject to adjustment, including a
"weighted-average" reduction of the conversion price in the event that Quest
issued additional stock or stock equivalents at a price lower than the
conversion price. Commencing on the fifth month of the notes, Quest must make
amortizing payments of the outstanding principal amount and interest on each
note until the principal amount and interest have been paid in full, either in
cash of 102% of the monthly amount due or by conversion of such amount into our
common shares at a conversion rate of seventy-five percent of the volume
weighted average price of our common shares for the five trading days prior to a
conversion date, subject to certain limitations.

         Quest agreed to register the secondary offering and resale of the
shares issuable upon conversion of the notes and the warrants within thirty
business days of the final closing of the private placement of the units. In
connection with the offer and sale of the notes and the warrants, Quest engaged
Westor Capital Group, Inc., an NASD licensed broker-dealer, as its placement
agent. Under the placement agent agreement, Westor is to receive a ten percent
(10%) cash commission on the sale of the units, a three percent (3%)
non-accountable expense allowance, and ten warrants for each one-hundred
warrants issued as part of the units with an exercise price of 120 % of the of
the average closing price of Quest's common stock for the five trading days
preceding the final closing date.

         Quest is continuing to seek to fund its capital requirements over the
next 12 months from the additional sale of its debt and equity securities. It is
possible that Quest will be unable to obtain sufficient additional capital
through the sale of its securities as needed.

         Part of Quest's growth strategy is to acquire additional coal mining
operations. Where appropriate, Quest will seek to acquire operations located in
markets where it currently operates to increase utilization at existing
facilities, thereby improving operating efficiencies and more effectively using
capital without a proportionate increase in administrative costs. Quest does not
currently have binding agreements or understandings to acquire any other
companies.

         Quest intends to retain any future earnings to pay its debts, finance
the expansion of its business and any necessary capital expenditures, and for
general corporate purposes.

                                       41
<PAGE>

Item 7.  FINANCIAL STATEMENTS

         The financial statements and related notes for Quest are contained on
pages F-1 to F-32 of this report.

Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

         On March 18, 2004, Quest dismissed Bierwolf, Nilson & Associates as its
independent accountants, and it engaged Kempisty & Company as its independent
accountants.

         The reports of Bierwolf, Nilson & Associates on Quest's financial
statements for the fiscal years ended December 31, 2001 and 2002 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 Bierwolf, Nilson & Associates on our financial
statements as of and for the year ended December 31, 2002 stated that Quest had
suffered recurring losses from operations and had a net capital deficiency that
raised substantial doubt about Quest's ability to continue as a going concern.

         The decision to change accountants from Bierwolf, Nilson & Associates
to Kempisty & Company was approved by Quest's board of directors.

         During our fiscal years ended December 31, 2001 and 2002 and the
subsequent interim period through March 18, 2004, the date of the dismissal of
Bierwolf, Nilson & Associates, Quest did not have any disagreement with
Bierwolf, Nilson & Associates 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)(i-v) of Regulation S-B adopted by the Securities and Exchange
Commission, except that the accountant's reports of Bierwolf, Nilson &
Associates on Quest's financial statements as of and for the year ended December
31, 2002 stated that Quest had suffered recurring losses from operations and had
a net capital deficiency that raised substantial doubt about Quest's ability to
continue as a going concern.

         Quest engaged Kempisty & Company on March 18, 2004. Quest had not
consulted Kempisty & Company regarding any of the matters specified in Item
304(a)(2) of Regulation S-B.

         Quest provided Bierwolf, Nilson & Associates with a copy of this
disclosure prior to its filing with the Commission. Bierwolf, Nilson &
Associates provided a letter to Quest, dated March 29, 2004 and addressed to the
Commission, which is attached to Quest's Current Report on Form 8-K dated April
1, 2004 as Exhibit 16.1 and is hereby incorporated herein by reference.

Item 8A. CONTROLS AND PROCEDURES.

         Quest carried out an evaluation, under the supervision and with the
participation of its Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of its disclosure controls and
procedures, as defined in Exchange Act Rule 13a-14(c) as of the end of the
period covered by this Annual Report on Form 10-KSB. Based on that evaluation,
they concluded that Quest's disclosure controls and procedures are not effective
to ensure that information required to be disclosed in Quest's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, and that
such information is accumulated and communicated to them to allow timely
decisions regarding required disclosure. For purposes of increasing the
effectiveness of its disclosure controls and procedures, Quest has retained the
services of a forensic accountant to quantify any alleged embezzlements and is
currently reviewing and revising its controls and procedures to increase the
effectiveness of its disclosure controls and procedures.

         There has been no change in Quest's internal control over financial
reporting that occurred during its last fiscal quarter that has materially
affected, or is reasonably likely to materially affect, its internal control
over financial reporting.

                                       42
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                                     INDEX
                                     -----

                                                                            PAGE
                                                                            ----

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                       F2

CONSOLIDATED BALANCE SHEET                                                    F3

CONSOLIDATED STATEMENTS OF OPERATIONS                                         F4

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)                       F5

CONSOLIDATED STATEMENTS OF CASH FLOWS                                         F6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                F7-F32


                                       F1
<PAGE>

KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
--------------------------------------------------------------------------------
15 MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038 - TEL (212) 406-7272 -
FAX (212) 513-1930

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Quest Minerals & Mining Corp.


We have audited the accompanying consolidated balance sheet of Quest Minerals &
Mining Corp. as of December 31, 2005 and the related statements of operations,
changes in stockholders' equity and cash flows for each of the years in the two
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required at
this time, to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Quest Minerals & Mining Corp.
at December 31, 2005 and the results of its operations and cash flows for each
of the years in the two year period then ended in conformity with accounting
principles generally accepted in the United States of America.

As more fully described in Note 17, the Company is a defendant in several
lawsuits. An adverse ruling could result in the loss of the Company's operating
assets. It is not possible at this time to predict the outcome of this
litigation.

The accompanying financial statements have been prepared assuming that Quest
Minerals & Mining Corp. will continue as a going concern. As more fully
described in Note 3, the Company has incurred operating losses since inception
and requires additional capital to continue operations. Additionally, the
Company could lose all of its operating assets through current and/or pending
litigation. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding these matters are
described in Note 3. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.


/s/ Kempisty & Company CPAs, P.C.


Kempisty & Company
Certified Public Accountants PC
New York, New York
May 3, 2006


                                       F2
<PAGE>

                          QUEST MINERALS & MINING CORP.

                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2005


                               ASSETS

Current Assets
   Cash                                                            $     16,415
   Receivables                                                               --
                                                                   ------------
      Total current assets                                               16,415

Leased Mineral Reserves (Note 2 & 5)                                  5,210,471
Equipment, net (Note 6)                                                 405,782
Escrow - Trustee Account                                                275,000
Prepaid consulting Expense                                              589,000
Other receivables, net (Note 7)                                         668,000
Deferred stock option/warrant issuance, net (Note 13)                 3,097,903
                                                                   ------------

TOTAL ASSETS                                                       $ 10,262,571
                                                                   ============

         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
   Accounts payable and accrued expenses (Note 8)                  $  2,484,634
   Loans payable (Note 9)                                             2,857,864
   Bank loans (Note 9)                                                1,068,366
   Related party loans (Note 9)                                         695,000
                                                                   ------------

TOTAL CURRENT LIABILITIES                                             7,105,864

Other Liabilities
   Unearned revenues (Note 8)                                           668,000
                                                                   ------------

TOTAL LIABILITIES                                                     7,773,864

Commitments and Contingencies

Stockholders' equity
Preferred stock, par value $0.001, 10,000,000 shares authorized;
   SERIES A - issued and outstanding 453,000 shares                         453
   SERIES B - issued and outstanding 386,275 shares                         386

Common stock, par value $0.001, 250,000,000 shares authorized;
   issued and outstanding 69,500,778 shares                              69,502

Equity held in escrow (Note 12)                                        (587,500)

Paid-in capital (Note 14)                                            62,189,653
Accumulated Deficit                                                 (59,183,787)
                                                                   ------------

Total Stockholders' Equity                                            2,488,707
                                                                   ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                         $ 10,262,571
                                                                   ============

                       See Notes to Financial Statements.

                                       F3
<PAGE>

                          QUEST MINERALS & MINING CORP.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For the years ended December 31, 2005 and 2004


                                                      2005             2004
                                                  ------------     ------------
Revenue:
   Coal Revenues                                  $    356,741     $  2,912,574
   Interest and Other                                       --               --
                                                  ------------     ------------

          Total Revenues                               356,741        2,912,574
                                                  ------------     ------------
Expenses:
   Stock compensation                                       --       21,917,633
   Production costs                                    463,215        2,050,357
   Selling, general and administrative               2,929,357       10,481,839
   Mining Option                                            --        5,020,000
   Loss on rescission                                       --          680,250
   Interest                                          2,412,678          668,353
   Deferred Warrants Expense                        14,346,143               --
   Depreciation and Amortization                        67,849           99,351
   Mine closing costs                                  593,371               --
                                                  ------------     ------------

          Total Operating Expenses                  20,812,613       40,917,783
                                                  ------------     ------------

Loss from Operations                               (20,455,872)     (38,005,209)

Provision for Income taxes                                  --               --
                                                  ------------     ------------

Net loss                                          $(20,455,872)    $(38,005,209)
                                                  ============     ============

Basic and diluted loss per common share           $      (0.40)    $      (0.97)
                                                  ============     ============

Weighted average common shares outstanding          51,072,960       39,246,163
                                                  ============     ============


                       See Notes to Financial Statements.

                                       F4
<PAGE>
<TABLE>
<CAPTION>

                          QUEST MINERALS & MINING CORP.

             STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
                 For the years ended December 31, 2005 and 2004


                                                                                           Escrow /
                                    Common Stock         Preferred Stock      Additional  Adjustments
                                --------------------   -------------------     Paid-in     Common
                                  Shares     Amount      Shares     Amount     Capital      Stock        Deficit          Totals
                                ----------  --------   ----------   ------  ------------  ---------    ------------    ------------
<S>                             <C>         <C>         <C>         <C>       <C>         <C>          <C>             <C>
Balances at
 January 01, 2004               22,535,642    22,536           --       --       307,742         --        (722,706)       (392,428)

Common Stock issued
 for Advertising                   150,000       150                             374,850                                    375,000

Common Stock issued
 for Consulting                    191,667       192                             412,726                                    412,918

Common Stock issued
 for Interest                      150,000       150                             487,350                                    487,500

Common Stock issued
 for Acquisition                 2,050,000     2,050                           6,557,950                                  6,560,000

Sale of Common Stock under
 Section 4(2) and/or REG-D       1,616,990     1,617                           1,374,083                                  1,375,700

Sale of Common Stock under
 REG-S                             423,045       423                             611,997                                    612,420

Stock compensation              17,500,000    17,500                          21,902,053                                 21,919,553

Preferred Stock B issued
 for Acquisition                                        1,386,275    1,386     3,055,211                                  3,056,597

Preferred Stock A issued
 for Acquisition                                        2,000,000    2,000     6,000,000                                  6,002,000

Common Stock Returned to
 Treasury                             (800)       (1)                             (1,919)                                    (1,920)

Common Stock (Outstanding)
 Rescinded                        (500,000)     (500)                         (1,599,500)                                (1,600,000)

Common Stock issued under
 Rule 144                          150,000       150                             262,350                                    262,500

Preferred Stock B converted
 into common stock               1,000,000     1,000   (1,000,000)  (1,000)           --                                         --

Preferred Stock A converted
 into common stock               1,004,689     1,005   (1,000,000)  (1,000)           (5)                                        (0)

Stock Option / Warrants                                                          924,800                                    924,800

Equity held in escrow                                                                      (262,500)                       (262,500)

Net Loss                                                                                                (38,005,209)    (38,005,209)
                                ----------  --------   ----------   ------  ------------  ---------    ------------    ------------
Balances at
 January 1, 2005                46,271,233  $ 46,272    1,386,275   $1,386    40,669,688  $(262,500)   $(38,727,915)   $  1,726,931

Preferred Stock A converted
 into common stock               1,000,000     1,000     (546,667)    (547)         (453)                                        --

Stock Option / Warrants                                                       18,215,723                                 18,215,723

Equity held in escrow                                                                      (325,000)                       (325,000)

Common Stock issued under
 Rule 144
     For Consulting              1,454,545     1,455                             187,545                                    189,000
     For notes payable and
      interest expense           3,200,000     3,200                             668,800                                    672,000
     For investment expense      2,000,000     2,000                             198,000                                    200,000
     For royalties                 250,000       250                             324,750                                    325,000
     For accrued interest          450,000       450                              94,050                                     94,500

Common Stock issued under
 Reg. S
     For cash and investment
      expense                    6,000,000     6,000                           1,404,500                                  1,410,500
     For legal fees              1,400,000     1,400                             189,600                                    191,000

Common Stock issued under
 Reg S
     For Consulting              7,575,000     7,575                             982,350                                    989,925

Common Stock returned
 to treasury                      (100,000)     (100)                           (249,900)                                  (250,000)

Adjustment from additional
  debt                                                                          (495,000)                                  (495,000)

Net Loss for twelve months
 ended December 31, 2005                                                                                (20,455,872)    (20,455,872)
                                ----------  --------   ----------   ------  ------------  ---------    ------------    ------------

Balances at December 31, 2005   69,500,778  $ 69,502      839,608   $  839    62,189,653  $(587,500)   $(59,183,787)   $  2,488,707
                                ==========  ========   ==========   ======  ============  =========    ============    ============
</TABLE>

    The accompanying notes are an integral part of thee financial statements.

                                       F5
<PAGE>
<TABLE>
<CAPTION>

                         QUEST MINERALS & MINING CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                   For the Twelve Months Ended
                                                                           December 31,
                                                                  ----------------------------
                                                                      2005            2004
                                                                  ------------    ------------
<S>                                                               <C>             <C>
Operating Activities
--------------------
   Net loss                                                       $(20,455,872)   $(38,005,209)
   Adjustments to reconcile net (loss) to net cash provided
    (used) by operating activities:
   Depreciation and Amortization                                        67,849          99,351
   Stock compensation                                                       --      21,917,633
   Stock issued for interest                                           410,500         579,720
   Stock issued for Services                                         1,369,925         412,918
   Stock issued for Advertising                                       (250,000)        375,000
   Stock issued for royalties                                          325,000              --
   Deferred Warrants- Amortization                                  12,948,480              --
   Warrants issued for interest expense                              1,536,079
   Loss on recission                                                        --         680,250
   Stock issued for Investment                                       1,510,510       4,960,000
   Loss on equipment valuation                                              --         216,833
   Loss on mineral Interests valuation                                      --       6,160,948
   Reverse Merger adjustment                                                --         (30,816)
   Changes in operating assets and liabilities:
   (Increase) decrease in receivables                                   38,559         102,708
   Increase (decrease) in accounts payable and accrued expenses        681,199         855,176
                                                                  ------------    ------------
   Net cash used by operating activities                            (1,817,771)     (1,675,488)

Investing Activities
--------------------
   Mine Development                                                         --              --
   Equipment purchased                                                (150,000)       (605,394)
   Security deposits                                                    23,000         (23,000)
                                                                  ------------    ------------
   Net cash used by investing activities                              (127,000)       (628,394)

Financing Activities
--------------------
   Sale of Common Stock                                                100,000       1,895,902
   Repayments                                                         (366,034)       (630,688)
   Borrowings                                                        2,125,000       1,140,338
                                                                  ------------    ------------
   Net cash provided by financing activities                         1,858,966       2,405,552
                                                                  ------------    ------------
   Increase (decrease) in cash                                         (85,805)        101,670
   Cash at beginning of period                                         102,220             550
                                                                  ------------    ------------
   Cash at end of period                                          $     16,415    $    102,220
                                                                  ============    ============

Supplemental Disclosures of Cash Flow Information:
   Cash paid during year for:
    Interest                                                      $         --    $     24,282
                                                                  ============    ============
    Commissions                                                        136,416         192,925
                                                                  ============    ============
    Income taxes                                                  $         --    $         --
                                                                  ============    ============

   Stock issued during year for:
    Services                                                      $  1,369,925    $    412,918
                                                                  ============    ============
    Stock compensation                                                              21,917,633
                                                                  ============    ============
    Interest                                                           410,500         579,720
                                                                  ============    ============
    Investment                                                       1,510,510       4,960,000
                                                                  ============    ============
    Advertising                                                       (250,000)        375,000
                                                                  ============    ============
</TABLE>

                       See Notes to Financial Statements.

                                       F6
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 1 - ORGANIZATION & OPERATIONS

         Quest Minerals & Mining Corp. (the "Registrant" or the "Company") was
         incorporated in Utah on November 21, 1985, as Sabre, Inc. for the
         purpose of seeking and consummating a merger or acquisition with a
         business entity organized as a private corporation, partnership, or
         sole proprietorship. The Company subsequently changed its name to
         Tillman International, Inc., then Quest Minerals & Mining Corp. The
         Company has leasehold interests in certain properties in Eastern
         Kentucky, is seeking to re-commence coal mining operations on these
         properties, and is looking to acquire additional coal properties.

         Acquisitions

         Effective February 9, 2004, Quest Minerals and Mining Ltd. ("Quest") (a
         subsidiary of the Company and the parent company of EZ Mining Co., Inc.
         ("EZ")) entered into an agreement with the Company, then known as
         Tillman International, Inc. ("Tillman"). The agreement provided for
         Tillman to issue 22,500,000 shares of its common stock and assume
         liabilities of approximately $767,000 in exchange for all of the
         outstanding shares of Quest in a transaction accounted for as a reverse
         merger. As a result, Quest is considered, for accounting purposes, to
         be the acquiring company since the stockholders of Quest acquired more
         than 50% of the issued and outstanding stock of Tillman. The
         accompanying consolidated financial statements give effect to this
         reverse merger.

         On April 28, 2004, the Company acquired Gwenco, Inc pursuant to an
         agreement to issue 1,600,000 shares of series B convertible preferred
         stock (subject to adjustments) with a $2.50 per share liquidation
         preference and the assumption of approximately $1,700,000 in
         liabilities. After further review of the financial statements, the
         shares to be issued were adjusted to 1,386,275 in order to adjust for
         the difference in liabilities exceeding $1.7 million. Gwenco, Inc. owns
         coal leases in eastern Kentucky.

         On June 15, 2004, the Company acquired D&D Contracting, Inc. ("D&D")
         pursuant to an agreement to issue 500,000 shares of common stock along
         with an employment contract signed with the former managing director to
         include an undetermined amount of stock options to be issued in the
         future. D&D has a mining contract to mine a leased property containing
         20 million tons of coal reserves for which it will receive a fixed fee
         per ton. Subsequently, an employment contract was signed with the
         former managing director of D&D involving a fixed salary along with an
         option to purchase 400,000 shares of common stock.

         On July 14, 2004, the Company agreed to purchase an option transfer to
         acquire all of the outstanding equity interest of a third party mining
         company. In exchange for the right to exercise this option, the Company
         agreed to make cash payment of $60,000 plus issue 1,550,000 common
         shares to the original option holder. At market share valuation, the
         Company expensed this issuance at $4,960,000. A post-closing
         cancellation clause in the agreement allows these shares to be
         rescinded based on the following: (a) if the Company is unable to
         exercise the option on or before December 31, 2005 notwithstanding all
         reasonable efforts to do so, or (b) if after exercising the option and
         investing a minimum of $250,000 into the mining operation, the Company
         is unable to generate at least an equal return on investment within 12
         months, 775,000 shares shall be re-conveyed back to the Company. As of
         the year ended December 31, 2005, the Company is disputing the
         expiration terms of the option.

                                       F7
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 1 - ORGANIZATION & OPERATIONS (Continued)

         On September 20, 2004 the Company formed a subsidiary called Quest
         Marine Terminal in order to facilitate the acquisition of a barge load
         out facility. The company agreed to issue payment of $30,000 cash as an
         initial deposit to acquire the leasing rights this barge load out
         facility located in Kentucky. The term of the agreement consists of a
         five (5) year lease renewable up to five (5) additional terms. This
         essentially works out to a 25-year arrangement. The facility will allow
         the company to sell, transfer, store, crush, grade, process, wash and
         load its own coal as well as broker these services to other mining
         operations. The cash was paid in October of 2004. As of year ended
         December 31, 2005, the lease agreement was terminated. The company is
         currently seeking reimbursement for the $30,000 deposit.

         On November 1, 2004, the Company rescinded its original transaction
         with D&D Contracting Co. As part of the agreement the Company reversed
         the outstanding issuance of 500,000 shares of common stock. There was
         no loss valuation assigned to these shares as they had only been booked
         as a reconciliation entry. Additional terms included the cancellation
         of the original employment and warrant option agreement with the
         managing director, a two (2) year lease arrangement for the existing
         equipment purchased by Quest, a limited 2 million ton royalty
         arrangement at $.25/ton, and the assumption of all existing liabilities
         to include, but not be limited to, the debt with Landmark and payroll
         taxes. As of December 31, 2005 the lease and royalty agreements were in
         default.

         On November 7, 2005, the Company officially dissolved Taylor Mining,
         Ltd., a wholly owned subsidiary located in Kentucky.

         On December 31, 2005, the Company closed EZ Mining Co., Inc.

         During the period ended December 31, 2004, the Company's bank initiated
         a claim for an overdraft recovery. Since it was later determined that
         there was a much larger malice perpetrated against the Company by
         existing bank employees, allowances have been accrued until a
         resolution can be determined. As of the year ended December 2005, the
         Company is still negotiating with the bank for a resolution. Since,
         management has determined that the existing liabilities and debt from
         the Company were all related to the issues involving this claim, the
         assets have been written down in consideration for the allowance
         already accrued by the company. The Company has accrued the existing
         liabilities until validity can be determined.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

         Principles of Consolidation

         The consolidated financial statements include the accounts of the
         Company and its wholly owned subsidiaries, Quest Mineral & Mining,
         Ltd., Quest Energy, Ltd., and Gwenco, Inc. (collectively, the
         "Company"). All significant intercompany transactions and balances have
         been eliminated in consolidation.

                                       F8
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Management Estimates

         The preparation of financial statements in conformity with accounting
         principles generally accepted in the United States requires management
         to make estimates and assumptions that affect the reported amounts of
         assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the financial statements, and the reported
         amounts of revenues and expenses during the reporting period. Actual
         results could differ from those estimates.

         Mineral Interests

         The purchase acquisition costs of mineral properties are deferred until
         the properties are placed into production, sold or abandoned. These
         deferred costs will be amortized on the unit-of-production basis over
         the estimated useful life of the properties following the commencement
         of production or written-off if the properties are sold, allowed to
         lapse or abandoned.

         Mineral property acquisition costs include any cash consideration and
         the fair market value of common shares and preferred shares, based on
         the trading price of the shares, or, if no trading price exists, on
         other indicia of fair market value, issued for mineral property
         interests, pursuant to the terms of the agreement or based upon an
         independent appraisal.

         Administrative expenditures are expensed in the year incurred.

         Coal Acquisition Costs

         The costs to obtain coal lease rights are capitalized and amortized
         primarily by the units-of-production method over the estimated
         recoverable reserves. Amortization occurs either as the Company mines
         on the property or as others mine on the property through subleasing
         transactions.

         Rights to leased coal lands are often acquired through royalty
         payments. As mining occurs on these leases, the accrued royalty is
         charged to cost of coal sales.

         Mining Acquisition Costs

         The costs to obtain any interest in third-party mining operations are
         expensed unless significantly proven reserves can be established for
         the entity. At that point, capitalization would occur.

         Mining Equipment

         Mining equipment is recorded at cost. Expenditures that extend the
         useful lives of existing plant and equipment or increase the
         productivity of the asset are capitalized. Mining equipment is
         depreciated principally on the straight-line method over the estimated
         useful lives of the assets, which range from three to 15 years.

         Deferred Mine Equipment

         Costs of developing new mines or significantly expanding the capacity
         of existing mines are capitalized and amortized using the
         units-of-production method over the estimated recoverable reserves that
         are associated with the property being benefited.

                                       F9
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Asset Impairment

         If facts and circumstances suggest that a long-lived asset may be
         impaired, the carrying value is reviewed. If the review indicates that
         the value of the asset will not be recoverable, as determined based on
         projected undiscounted cash flows related to the asset over its
         remaining life, then the carrying value of the asset is reduced to its
         estimated fair value.

         Revenue Recognition

         Coal sales revenues are sales to customers of coal produced at the
         Company's operations. The Company recognizes revenue from coal sales at
         the time title passes to the customer.

         Income Taxes

         The Company provides for the tax effects of transactions reported in
         the financial statements. The provision, if any, consists of taxes
         currently due plus deferred taxes related primarily to differences
         between the basis of assets and liabilities for financial and income
         tax reporting. The deferred tax assets and liabilities, if any,
         represent the future tax return consequences of those differences,
         which will either be taxable or deductible when the assets and
         liabilities are recovered or settled. As of the year ended December 31,
         2005, the Company had no material current tax liability, deferred tax
         assets, or liabilities to impact on the Company's financial position
         because the deferred tax asset related to the Company's net operating
         loss carry forward was fully offset by a valuation allowance.

         Fair Value

         The Company's financial instruments, as defined by SFAS No. 107,
         "Disclosure about Fair Value of Financial Instruments", include cash,
         advances to affiliate, trade accounts receivable, investment in
         securities available-for-sale, restricted cash, accounts payable and
         accrued expenses and short-term borrowings. All instruments other than
         the investment in securities available-for-sale are accounted for on a
         historical cost basis, which, due to the short maturity of these
         financial instruments, approximates fair value as at December 31, 2005.
         The Company had no securities available-for-sale at December 31, 2005.

         Earnings loss per share

         The Company adopted SFAS No. 128, which provides for the calculation of
         "basic" and "diluted" earnings per share. Basic earnings per share
         includes no dilution and is computed by dividing net income available
         to common stockholders by the weighted average common shares
         outstanding for the period; after provisions for cumulative dividends
         on Series A preferred stock. Diluted earnings per share reflect the
         potential dilution of securities that could share in the earnings
         similar to fully diluted earnings per share.

         Reverse stock split

         On January 29, 2004, the Company effected a 1-for-100 reverse stock
         split. All share and per share information included in these financial
         statements has been adjusted to reflect this reverse stock split.

                                      F10
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Other Recent Accounting Pronouncements

         The Company does not expect that the adoption of other recent
         pronouncements from the Public Company Oversight Board to have any
         impact on its financial statements.

NOTE 3 - GOING CONCERN

         The accompanying financial statements have been prepared on a going
         concern basis, which contemplates the realization of assets and the
         satisfaction of liabilities in the normal course of business. The
         Company incurred net losses of $38,005,209 and $416,864 for the years
         ended December 31, 2004 and 2003 and had a working capital deficit of
         $4,757,598 at December 31, 2004. For the year ended December 31, 2005
         the Company had a net loss of $20,455,872 of which $14,346,143 was due
         to deferred warrant amortization. The working capital deficit as of
         December 31, 2005 was $7,089,448. Additionally, the Company could lose
         all of its operating assets through current and/or pending litigation.
         These factors indicate that the Company's continuation as a going
         concern is dependent upon its ability to obtain adequate financing and
         resolve its outstanding litigation and judgments.

         The Company will require substantial additional funds to finance its
         business activities on an ongoing basis and will have a continuing
         long-term need to obtain additional financing. The Company's future
         capital requirements will depend on numerous factors including, but not
         limited to, continued progress developing additional mines and
         increasing mine production. Currently, the Company is in the process of
         raising additional funding to achieve its operational goals and resolve
         its outstanding litigation and judgments.

NOTE 4 - OPERATING AGREEMENTS

         On July 23, 2003, the Company entered into an operating agreement (the
         "Agreement") with the coal leaseholder to assume the responsibilities
         under the coal lease for its Burning Fork coal property. The Agreement
         requires the Company to pay the leaseholder coal royalties as defined
         in the Agreement. The minimum lease payment is $1,000 per month and the
         underlying lease is renewable on an annual basis. The leaseholder also
         has a lien on all equipment of the Company. On July 23, 2004, these
         leases expired. The Company is in an ongoing month-to-month
         arrangement.

         As a result of the acquisition of Gwenco, Inc., the Company has assumed
         a number of coal leases with minimum lease or royalty payments that
         vary by lease as defined in the separate agreements. As of the year
         ended December 31, 2005, Gwenco owed approximately $361,454 in lease
         payments.

         On September 12, 2005, the Company entered into an option agreement
         that grants them the right of first refusal to provide funding to a
         third party entity for various coal and oil and gas properties owned,
         leased, or otherwise controlled by the third party entity. As of the
         year ended December 31, 2005, the option agreement has expired.

                                      F11
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 5 - LEASED MINERAL RESERVES

         All of the Company's existing reserves remain in Gwenco, Inc., a wholly
         owned subsidiary. The total reserves are a combination of several coal
         seams throughout the spectrum of leased properties.

         At December 31, 2005, the leased mineral reserves, valued at
         $5,210,471, consisted of the following:

                                                                 Proven Reserves
         Seams                                                         Tons
         -----                                                    ------------
         Winifrede                                                     214,650
         Taylor                                                      1,783,500
         Cedar Grove                                                 3,702,600
         Pond Creek                                                  4,095,500
                                                                  ------------
                    Total Reserves                                   9,796,250
                                                                  ============


NOTE 6 - EQUIPMENT

          Equipment consisted of the following:

                                                 December 31,      December 31,
                                                     2005              2004
                                                 ------------     ------------

         Mining equipment                        $    805,220     $    831,820
         Office equipment                                                3,869
         Less accumulated depreciation               (399,438)        (411,117)
                                                 ------------     ------------

         Equipment - net                         $    405,782     $    424,572
                                                 ============     ============

         The Company depreciates its mining equipment over a 15-year period,
         while the office equipment is depreciated over a 7-year period. In both
         cases, the straight-line method is used. Depending on the type of
         equipment needed at any given point in production, the company will
         sell existing equipment and replace it with new or used machinery;
         which can reflect a fluctuation in the asset valuation.

                                      F12
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 7 - OTHER RECEIVABLES

         Other Receivables consisted of the following:

                                                 December 31,      December 31,
                                                     2005              2004
                                                 ------------     ------------

         D&D Contracting, Inc.*                  $    678,349     $    678,349

         Less allowance                               (10,349)         (10,349)
                                                 ------------     ------------

         Other Receivables - net                 $    668,000     $    668,000
                                                 ============     ============

         *The receivable with D&D Contracting, Inc. exists as a result of the
         rescission agreement dated November 1, 2004. The Company holds an
         equipment lease and a limited royalty agreement totaling $668,000.
         Unearned revenues have been recorded as an allowance. The remaining
         balance is the cash and account deposits that have not yet been
         reimbursed. The Company has booked an allowance against this amount. As
         of the year ended December 31, 2005, D&D was in default of their
         obligations to the Company. The Company is currently negotiating with
         the existing leaseholders to receive subsidized payments from the coal
         mined by D&D to secure their lease payments.

                                      F13
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005


NOTE 8 - ACCOUNTS PAYABLE & ACCRUED EXPENSES

         Accounts payable and accrued expenses December 31, December 31, consist
         of the following:

                                                     2005            2004
                                                 ------------     ------------
         Accounts payable                        $     51,580     $     36,076

         Accrued royalties payable-operating          579,278          554,503

         Accrued bank claim (a)                       650,000          650,000

         Accrued taxes                                202,704          195,091

         Accrued interest                             351,712           66,101

         Accrued expenses (b)                         649,360          694,004
                                                 ------------     ------------
                                                    2,484,634        2,195,775

         Unearned Revenues (c)                        668,000          668,000

                                                 $  3,152,634     $  2,863,775
                                                 ============     ============

         (a)      During the period ended December 31, 2004, the Company's bank
                  initiated a claim for an overdraft recovery. Since it was
                  later determined that there was a much larger malice
                  perpetrated against the Company by existing bank employees,
                  allowances have been accrued until a resolution can be
                  determined. As of the year ended December 31, 2005, the
                  Company is still negotiating with the bank for a resolution.

         (b)      During the period ended December 31, 2004, the company had
                  acquired these accrued expenses from its subsidiaries EZ
                  Mining Co. and Gwenco, Inc. The company continues to carry
                  these balances until further validity can be determined.

         (c)      As part of the rescission agreement with D&D on November 1,
                  2004, the Company posted receivables based on a two-year lease
                  agreement for equipment still owned as well as a limited
                  2,000,000 ton royalty payout of $0.25 per ton. Management has
                  initiated a liability allowance until the receivables are
                  recognized. As of the year ended December 31, 2005, D&D was in
                  default of this agreement. The Company is currently
                  negotiating with the existing leaseholders to receive
                  subsidized payments from the coal mined by D&D to secure D&D's
                  obligations to the Company.

                                      F14
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 9 - NOTES PAYABLE

<TABLE>
<CAPTION>

Notes payable consist of the following:
                                                           December 31,        December 31,
                                                               2005                2004
                                                           ------------        ------------
<S>                                                        <C>                 <C>
E-Z MINING CO., INC.:
  0% Notes payable (a).                                    $    202,864        $    202,864

QUEST MINERALS & MINING CORP.
  0% Notes payable to IAB (b).                                  250,000             250,000
  8% Notes payable to TRADERS FUND, LLC (c).                          0             250,000
 15% Notes payable to GROSS FOUNDATION (d).                     280,000             300,000
 15% Notes payable to AF CAPITAL, LLC (e).                            0             300,000
  7% Notes payable to GREENWOOD PARTNERS (f).                   650,000
  7% Notes payable to GREENWOOD PARTNERS (g).                   375,000
  7% Notes payable to GREENWOOD PARTNERS (h).                   400,000
 10% Notes payable to GREENWOOD PARTNERS (i).                   239,500
  8% Notes payable to CORNWAY CO., LTD. (j).                    335,000
  0% Notes payable (k).                                         125,500

QUEST ENERGY, LTD:
 18% Employee Notes (l).                                              0              40,339

GWENCO, INC.: (Bank Loans)
  10% Notes payable to Duke Energy Merchants (m).               747,894             747,894
   6% Note payable to National City Bank of Kentucky (m).       235,907             267,907
91/2% Note payable to National City Bank of Kentucky (m).        84,565              84,565

GWENCO, INC.: (Related-Party Loans)
   0% Notes Due Officers (n).                                         0              84,034
   6% Notes payable to Scott Whitson (o).                       695,000             275,000
                                                           ------------        ------------
                                                              4,621,230           2,802,602
   Less current portion                                       4,621,230           2,702,602
                                                           ------------        ------------

Long-Term Debt:                                            $          0        $    100,000
                                                           ============        ============
</TABLE>

         (a)      On December 31, 2005, the Company closed EZ Mining Co., Inc.
                  During the period ended December 31, 2004, the Company's bank
                  initiated a claim for an overdraft recovery. Since it was
                  later determined that there was a much larger malice
                  perpetrated against the Company by existing bank employees,
                  allowances have been accrued until a resolution can be
                  determined. As of the year ended December 2005, the Company is
                  still negotiating with the bank for a resolution. These
                  current notes consist of various third parties related to the
                  former CFO of the company. All notes are due on demand except
                  $110,000, which is due from future royalties. All notes are
                  non-interest bearing.

                                       F15
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 9 - NOTES PAYABLE (Continued)

         (b)      On July 15, 2004, the Company signed a 0% promissory note with
                  IAB for $250,000 payable on demand. As part of this loan
                  agreement, 150,000 shares valued at $487,500 were issued as
                  interest.

         (c)      On October 6, 2004, the Company obtained a $250,000 loan from
                  a third party due on April 6, 2005 at an 8% annual interest
                  rate. The Company collateralized this loan with a convertible
                  promissory note along with 250,000 common stock warrants
                  exercisable at $2.00. According to the limitations set forth
                  in the promissory note, the payee may not convert an
                  outstanding principle and/or accrued interest amount in excess
                  of 4.99% of the total number of common stock shares
                  outstanding. Additionally, the Company has pledged a portion
                  of their equipment to the third party under the UCC
                  guidelines. On February 22, 2005, the Company signed a series
                  of unit purchase agreements with three individual third-party
                  lenders for a total sale amount of $650,000, of which,
                  $250,000 was used to pay down this note.

         (d)      On December 17, 2004, the Company signed a 15% per annum
                  promissory note with Gross Foundation for $300,000 due on June
                  17, 2005. The note is secured by certain of the Company's
                  equipment. In the event of default, the note becomes
                  convertible into shares of the Company's common stock at the
                  option of the holder at a conversion price of $0.10 per share.
                  As additional compensation to the lender, the Company agreed
                  to issue 300,000 common stock warrants at $1.50. The warrants
                  have anti-dilution privileges and piggyback registration
                  rights. On December 20, 2005, the Company issued 200,000
                  shares common stock at $.10 per share to Gross Foundation as a
                  partial conversion pursuant to their promissory note, which
                  matured on June 17, 2005. As of the period ended December 31,
                  2005, the balance remains in default.

         (e)      On December 17, 2004, the Company signed a 15% per annum
                  promissory note with AF Capital for $300,000 due on June 17,
                  2005. The note is secured by certain of the Company's
                  equipment. In the event of default, the note becomes
                  convertible into shares of the Company's common stock at the
                  option of the holder at a conversion price of $0.10 per share.
                  As additional compensation to the lender, the Company agreed
                  to issue 300,000 common stock warrants at $1.50. The warrants
                  have anti-dilution privileges and piggyback registration
                  rights. On December 16, 2005, the Company issued 3,450,000
                  shares common stock at $.10 per share to AF Capital. In
                  consideration for $300,000 convertible debt and $45,000
                  accrued interest pursuant to this convertible, which matured
                  on June 17, 2005.

         (f)      On February 22, 2005, the Company signed a series of unit
                  purchase agreements with three individual third-party lenders
                  for a total sale amount of $650,000. Each unit was sold at
                  $25,000 and consisted of a 7% senior secured convertible note
                  due March 6, 2006 and 150,000 Series A Warrants. The notes are
                  secured by certain of the Company's assets and were initially
                  convertible into shares of the Company's common stock at the
                  rate of $0.50 per share, which conversion price is subject to
                  adjustment. Each Series A Warrant is exercisable into one (1)
                  share of common stock at an exercise price of $0.50 and one
                  (1) Series B Warrant. Each Series B Warrant is exercisable
                  into one (1) share of common stock at an exercise price of
                  $1.00. The Company categorized the convertible notes as a
                  liability in the amount of $650,000. A 10% commission was paid
                  to the agent who arranged the transaction.

                                      F16
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 9 - NOTES PAYABLE (Continued)

         (g)      On March 4, 2005, the Company signed a series of unit purchase
                  agreements with thirteen individual third-party lenders for a
                  total sale amount of $375,000. Each unit was sold at $25,000
                  and consisted of a 7% senior secured convertible note due
                  March 6, 2006 and 150,000 Series A Warrants. The notes are
                  secured by certain of the Company's assets and were initially
                  convertible into shares of the Company's common stock at the
                  rate of $0.50 per share, which conversion price is subject to
                  adjustment. Each Series A Warrant is exercisable into one (1)
                  share of common stock at an exercise price of $0.50 and one
                  (1) Series B Warrant. Each Series B Warrant is exercisable
                  into one (1) share of common stock at an exercise price of
                  $1.00. The Company categorized the convertible notes as a
                  liability in the amount of $375,000. A 10% commission was paid
                  to the agent who arranged in the transaction.

         (h)      On April 18, 2005, the Company signed a series of unit
                  purchase agreements with a third-party lender for a total sale
                  amount of $400,000. Each unit was sold at $25,000 and
                  consisted of a 7% senior secured convertible note due March 6,
                  2006 and 150,000 Series A Warrants. The notes are secured by
                  certain of the Company's assets and were initially convertible
                  into shares of the Company's common stock at the rate of $0.50
                  per share, which conversion price is subject to adjustment.
                  Each Series A Warrant is exercisable into one (1) share of
                  common stock at an exercise price of $0.50 and one (1) Series
                  B Warrant. Each Series B Warrant is exercisable into one (1)
                  share of common stock at an exercise price of $1.00. The
                  Company categorized the convertible notes as a liability in
                  the amount of $400,000. A $14,000 commission was paid to the
                  agent who arranged in the transaction.

         (i)      On May 16, 2005, the Company entered into a credit agreement
                  with a third party lender in which $245,000 was issued as a
                  10% note due August 19, 2005. According to the credit
                  agreement, the lender may, in its sole and absolute
                  discretion, make additional loans to the Company of $255,000
                  for an aggregate total of $500,000. Additionally, the lender
                  was issued 10,260,028 warrants. The loans subject to the
                  credit agreement are secured by certain assets of the Company.
                  The warrants have an exercise price of $0.10 per share,
                  subject to adjustment, and expire on May 31, 2007. The
                  warrants were valued at $1,536,079 based on the Black Sholes
                  method and were expensed as interest since the underlying
                  convertible note has already matured. As of December 31, 2005,
                  the company had made a payment of $5,500, while the balance
                  remained in default, and the Company was renegotiating a
                  settlement.

         (j)      On December 8, 2005, the Company issued a convertible secured
                  promissory note in the principal amount of $335,000. The note
                  is due on December 8, 2006, with an annual interest rate of
                  eight percent (8%), and is convertible into the Company's
                  common shares at an initial conversion price of $0.05 per
                  share, subject to adjustment. The issuance was exempt from
                  registration pursuant to Regulation S of the Act.

         (k)      Periodically, the Company borrows funds from third party
                  lenders. The loans are due on demand and carry a 0% interest
                  rate.

                                      F17
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 9 - NOTES PAYABLE (Continued)

         (l)      On September 20, 2004, several Company employees borrowed
                  funds through personal credit loans at an average rate of 15%
                  and lent these funds to the Company. Quest Energy accepted
                  these funds as employee contributions and has assumed the bank
                  payments on the individual loans. On December 31, 2005, the
                  company officially recognized EZ Mining Co., Inc. as a
                  discontinued operation. During the period ended December 31,
                  2004, the Company's bank initiated a claim for an overdraft
                  recovery. Since it was later determined that there was a much
                  larger malice perpetrated against the Company by existing bank
                  employees, allowances have been accrued until a resolution can
                  be determined. As of the year ended December 2005, the Company
                  is still negotiating with the bank for a resolution. Since,
                  management has determined that the existing liabilities and
                  debt from the company were all related to the issues involving
                  this claim, the assets and liabilities have been written down
                  in consideration for the allowance already accrued by the
                  company.

         (m)      These Gwenco notes are in default and are past due. The
                  Company is currently re-negotiating the terms of the notes.
                  Gwenco, Inc. was acquired by the Company on April 28, 2004.
                  The former stockholder of Gwenco has personally guaranteed
                  most of the above loans. Additionally, the lenders have liens
                  against most of the property purchased from the original
                  loans.

         (n)      Periodically, the officers of the Company will insert
                  operational funding from their personal finances as a
                  short-term, 0% loans. As of the period ended December 31,
                  2005, officers of the Company had a loan balance of $0.00 with
                  the Company.

         (o)      On April 28, 2004, in connection with the acquisition of
                  Gwenco, Inc., the Company guaranteed payment on a note in the
                  amount of $300,000 made to a former stockholder of Gwenco by
                  another former stockholder of Gwenco. This note is secured by
                  50% of the outstanding capital stock of Gwenco. The debt will
                  be satisfied by 4 annual payments of approximately $75,000
                  plus interest. As of the period ended December 31, 2005, the
                  Company is in default and is currently renegotiating the terms
                  of these notes with the creditor. Additionally, a 3.7% annual
                  rate note in the amount of $495,000 due in February 2007 was
                  agreed upon in consideration for royalties to be paid out on a
                  schedule based on the level of production from the mine. Since
                  the initial agreement was made effective in March of 2004, the
                  Company has accrued two years of interest expense and has
                  adjusted its paid in capital to reflect the future correction
                  on the issuance of preferred stock associated with the
                  original acquisition of Gwenco, Inc.

                                      F18
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 10 - INCOME TAXES

         Due to the Company's net loss, there was no provision for income taxes.
         The Company has net operating loss carry forwards for income tax
         purposes of approximately $24,318,000 at December 31, 2005, and
         $16,810,000 at December 31, 2004. These carry forward losses are
         available to offset future taxable income, if any, and expire starting
         in the year 2015. The Company's utilization of this carry forward
         against future taxable income may become subject to an annual
         limitation due to a cumulative change in ownership of the Company of
         more than 50 percent.

         The components of the Company's Tax provision were as follows:
<TABLE>
<CAPTION>

                                                          2005            2004
                                                      ------------   ------------
<S>                                                   <C>            <C>
         Current income tax (benefit) expense         $ (2,998,000)  $ (4,625,000)

         Deferred income tax expense (benefit)           2,998,000      4,625,000
                                                      ------------   ------------
                                                      $         --   $         --
                                                      ============   ============
<CAPTION>

         The reconciliation of the income tax computed at the U.S. Federal
         statutory rate to income tax expense for the periods ended December 31,
         2005 and 2004:

                                                          2005           2004
                                                      ------------   ------------

<S>                                                   <C>            <C>
         Tax expense (benefit) at Federal rate (34%)  $ (2,302,000)  $ (3,503,000)
         State and local income tax, net of
          Federal benefit                                 (123,000)    (1,162,000)
         Effect of timing difference                        27,000         40,000

         Change in valuation allowance                   2,998,000      4,625,000
                                                      ------------   ------------
                Net income tax (benefit) allowance    $         --   $         --
                                                      ============   ============
<CAPTION>

         Deferred income taxes reflect the net income tax effect of temporary
         differences between the carrying amounts of the assets and liabilities
         for financial reporting purposes and amounts used for income taxes. The
         Company's deferred income tax assets and liabilities consist of the
         following:

         Deferred tax asset:                          December 31,   December 31,
                                                          2005           2004
                                                      ------------   ------------
<S>                                                   <C>            <C>
         Net operating loss carry forward             $  9,712,000   $  6,714,000

         Valuation allowance                            (9,712,000)    (6,714,000)
                                                      ------------   ------------
         Net deferred tax assets                      $          0   $          0
                                                      ============   ============
</TABLE>

                                      F19
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 10 - INCOME TAXES (Continued)

         The Company recognized no income tax benefit for the loss generated for
         the periods through December 31, 2005.

         SFAS No. 109 requires that a valuation allowance be provided if it is
         more likely than not that some portion or all of a deferred tax asset
         will not be realized. The Company's ability to realize the benefit of
         its deferred tax asset will depend on the generation of future taxable
         income. Because the Company has yet to recognize significant revenue
         from the sale of its products, it believes that the full valuation
         allowance should be provided.

         The Company has not filed corporate federal, and state and local income
         tax returns since 2002, and believes that due to its operating losses
         it does not have a material tax liability.

NOTE 11 - PREFERRED STOCK

         Series A

         Each share of Quest Series A preferred stock is convertible into a
         maximum of five (5) shares of the Company's common stock, or such
         lesser shares as determined by dividing $3.00 by the average closing
         bid price of one share of the Company's common stock during the ten
         trading days preceding actual receipt of a notice of conversion,
         subject to proportional adjustment for stock-splits, stock dividends,
         recapitalizations, and subsequent dilutive issuances of common stock.
         The Series A preferred stock is convertible at the option of the
         holder. The holders of the Series A preferred stock shall be entitled
         to receive cumulative dividends at the rate of $0.0001 per share per
         annum in preference to the holders of common stock. The holders of the
         Series A preferred stock shall also be entitled to receive, upon
         liquidation, an amount equal to $3.00 per share for the Series A
         preferred stock plus all declared and unpaid dividends, in preference
         to the holders of the common stock. After March 31, 2004, the Company
         has the option of redeeming the Series A preferred stock at a price
         equal to $3.00 per share for the Series A preferred stock plus all
         declared and unpaid dividends. The Series A Preferred Stock has no
         voting rights.

         On October 5, 2004, 1,000,000 shares of the Series A preferred stock
         were converted into 1,004,689 shares of the Company's common stock.

         On March 9, 2005, 546,667 shares of the Series A preferred stock were
         converted into 1,000,000 shares of the Company's common stock.

                                      F20
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 11 - PREFERRED STOCK (Continued)

         Series B

         Each share of the Company's Series B preferred stock is convertible
         into one shares of the Company's common stock, subject to proportional
         adjustment for stock-splits, stock dividends, and recapitalizations.
         The Series B preferred stock is convertible at the option of the
         holder, but shall be automatically converted into the Company's common
         stock, at the then applicable conversion price, in the event that,
         during any period of fifteen (15) consecutive trading days, the average
         closing price per share of Quest's common stock as reported on a
         national securities exchange, the NASDAQ NMS or Small Cap Market, or
         the OTC Bulletin Board, equals or exceeds $4.00 (subject to
         anti-dilution, recapitalization, and reorganization adjustments). The
         holders of the Series B preferred stock shall be entitled to receive
         dividends on a pro-rata, as-if converted basis with the Series A
         preferred stock. The holders of the Series B preferred stock shall also
         be entitled to receive, upon liquidation, an amount equal to $2.50 per
         share for the Series B preferred stock plus all declared and unpaid
         dividends, in preference to the holders of the common stock.

         On November 1, 2004, 1,000,000 shares of the Series B preferred stock
         were converted into 1,000,000 shares of the Company's common stock.

NOTE 12 - COMMON STOCK

         On February 6, 2004, the Company issued 17,500,000 shares of its common
         stock pursuant to its 2004 Stock Compensation Plan.

         On February 9, 2004, the Company issued 22,500,000 shares of common
         stock in exchange for all of the outstanding shares of Quest in a
         transaction accounted for as a reverse merger.

         During the quarter ended March 31, 2004, the Company sold 400,000
         restricted common shares for $0.25 per share for proceeds of $100,000.
         The Company subsequently sold 550,000 restricted common shares at $1.00
         per share for proceeds of $550,000.

         On April 28, 2004, the Company agreed to issue 1,600,000 shares of
         series B convertible preferred stock to acquire Gwenco, Inc., a mining
         operation owning coal leases in eastern Kentucky. After further review
         of the financial statements, the shares to be issued were adjusted to
         1,386,275 in order to adjust for the difference in liabilities
         exceeding $1.7 million originally agreed upon in the stock purchase
         agreement.

         During the quarter ended June 30, 2004, the Company sold 510,000
         restricted common shares at $1.00 per share for proceeds of $510,000.
         Additionally, the Company issued 191,667 shares for advertising and
         consulting services. The Company expensed the shares issued for
         services at the then current market value totaling $510,418.

         During the quarter ended June 30, 2004, the Company entered into an
         agreement with an unrelated third party in which the third party would
         act as an escrow agent to sell common stock of the Company to foreign
         investors under Regulation S. Under this agreement, the Company would
         receive 40% of the shares sold at the offer-price. The unrelated third
         party would receive the remaining 60%. The Company subsequently sold
         391,245 shares for net proceeds of $520,200. A 10% finder's fee of the
         net proceeds went to another unrelated third party and was expensed to
         consulting.

                                      F21
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 12 - COMMON STOCK (Continued)

         On July 14, 2004, the Company issued 1,550,000 common shares as part of
         an Option Transfer Agreement, which, if exercised, would give the
         Company all of the outstanding equity interests of another mining
         company. The agreement also included a $60,000 cash payment. At market
         share valuation, the Company expensed this issuance for $4,960,000.

         On July 15, 2004, the Company entered into a loan agreement with an
         unrelated third party in which a promissory note of $250,000 was issued
         at a rate of 0% (payable upon demand), as well as 150,000 shares of
         common stock, which the Company booked as interest.

         During the quarter ended September 30, 2004, the Company entered into
         an agreement with an unrelated third party in which the third party
         would act as an escrow agent to sell common stock of the Company to
         foreign investors under Regulation S. Under this agreement, the Company
         would receive 40% of the shares sold at the offer-price. The unrelated
         third party would receive the remaining 60%. The Company subsequently
         sold 156,990 shares for net proceeds of $215,700. A 10% finder's fee of
         the net proceeds went to another unrelated third party and was expensed
         to consulting.

         On September 30, 2004, the Company issued 31,800 shares valued at
         $92,188 to investors as per a penalty agreed to in the original
         Regulation D private placement.

         On October 5, 2004, the Company issued 1,004,689 shares of common stock
         upon conversion of 1,000,000 shares of Series A preferred stock.

         On October 22, 2004, the Company received 800 shares of common stock
         that were issued under a wrong name. The Company reduced its paid-in
         capital by $1,920.

         On November 1, 2004, the Company reversed its outstanding issuance of
         500,000 shares of common stock due to its rescission agreement with D&D
         Contracting. There was no loss valuation assigned to these shares, as
         they had only been booked as a reconciliation entry.

         On November 1, 2004, the Company issued 1,000,000 shares of common
         stock upon conversion of Series B preferred stock.

         On November 22, 2004, the Company issued 150,000 shares of common stock
         valued at $262,500 to reduce existing accrued royalties. As of the
         quarter ended September 30, 2005, the shares were being held in escrow
         until an agreement can be made to settle the existing debt. Since the
         shares are on reserve, the Company has accrued the valuation against
         paid-in capital.

         On December 23, 2004, the Company issued 150,000 shares of common stock
         valued at $277,500 to a third party consulting firm for services
         rendered.

         On March 9, 2005, the Company issued 1,000,000 shares of common stock
         upon conversion of 546,667 shares of Series A preferred stock.

         On March 10, 2005, the Company issued 250,000 shares of common stock
         valued at $325,000 to reduce existing accrued royalties. As of the
         quarter ended September 30, 2005 the shares were being held in escrow
         until an agreement can be made to settle the existing debt. Since the
         shares are on reserve, the Company has accrued the valuation against
         paid-in capital.

                                      F22
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 12 - COMMON STOCK (Continued)

         On September 12, 2005, the Company issued 2,000,000 shares of common
         stock valued at $200,000 pursuant to an agreement with JJ Resources,
         which allows the Company the right of first refusal to acquire
         financing for future mining opportunities. The issuance was expensed to
         investment.

         On September 13, 2005, the Company issued 2,400,000 shares of common
         stock pursuant to its 2005 Stock Incentive Plan as stock awards for
         various consulting and legal services. The Company expensed $312,000 as
         per market valuation at time of issuance.

         On September 26, 2005, the Company issued 1,575,000 shares of common
         stock pursuant to its 2005 Stock Incentive Plan as stock awards for
         various consulting and legal services. The Company expensed $218,925 as
         per market valuation at time of issuance.

         On September 29, 2005, the Company issued 800,000 shares of common
         stock at market value as per a consulting agreement initiated with an
         unrelated third party. The Company expensed $120,000 as per market
         valuation at the time of issuance.

         On September 29, 2005, the Company issued 454,545 shares of common
         stock at market value as per a consulting agreement initiated with an
         unrelated third party on August 31, 2005. The Company expensed $50,000
         as per market valuation at the time of issuance.

         On October 5, 2005, the Company issued 200,000 shares of common stock
         valued at $19,000 as per a consulting agreement initiated with an
         unrelated third party.

         On October 13, 2005, the Company issued 3,000,000 shares of common
         stock pursuant to its 2005 Stock Incentive Plan as stock awards for
         various consulting services. The Company expensed $330,000 as per
         market valuation at time of issuance.

         On October 19, 2005, the Company issued 2,000,000 shares of common
         stock pursuant to its 2005 Stock Incentive Plan as stock awards for
         various consulting services. The Company expensed $320,000 as per
         market valuation at time of issuance.

         On November 29, 2005, the Company sold one (1) unit consisting of 1
         million shares of common stock at $.05 per share in an offshore private
         placement transaction. The issuance was exempt from registration
         pursuant to Regulation S of the Act. The Company expensed $160,000 in
         interest from the difference in market value at the time of sale.

         On December 6, 2005, the Company sold one (1) unit consisting of 4
         million shares of common stock at $0.05 per share in an offshore
         private placement transaction. The issuance was exempt from
         registration pursuant to Regulation S of the Act. The Company reduced
         and existing short-term loan from the third party and expensed $800,000
         to investment, which was the difference in market value at the time of
         sale.

         On December 14, 2005, the Company received 100,000 shares of common
         stock back into treasury. Since the original issue was valued at
         $250,000 in 2004, the Company credited its paid in capital for the
         same.

         On December 16, 2005, the Company issued 3,450,000 million shares
         common stock at $.10 per share to AF Capital LLC in consideration for
         $300,000 convertible debt and $45,000 accrued interest pursuant to
         their convertible note, which matured on June 17, 2005. The Company
         expensed $379,500 to interest for the difference in market value when
         the shares were issued.

                                      F23
<PAGE>
                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 12 - COMMON STOCK (Continued)

         On December 20, 2005, the Company issued 200,000 shares common stock at
         $.10 per share to Gross Foundation as a partial conversion pursuant to
         their promissory note, which matured on June 17, 2005. The Company
         expensed $22,000 in interest from the difference in market value at the
         time of sale.

         On December 23, 2005, the Company sold 1,000,000 shares common stock to
         an unrelated third party pursuant to a unit deal transition for
         proceeds of $50,000. The company expensed $150,500 to investments for
         the difference in market value when the shares were issued.

NOTE 13 - STOCK OPTION / WARRANTS
<TABLE>
<CAPTION>

 Stock Option / Warrant Issuances consist of the following:
                                                                                           December 31,
                                                                                               2005
                                                                              Exercise     ------------
                                                                Warrants        Price        Valuation
                                                              -----------   ------------   ------------
<S>        <C>                                                    <C>       <C>            <C>
October 6, 2004 issuance of 250,000 warrants;
expiration 2009 (a)                                               250,000   $       0.75   $    377,750

December 17, 2004 issuance of 600,000 warrants;
expiration 2009 (b)                                               600,000           1.50        544,800

February 22, 2005 issuance of 3,900,000 series A warrants;
expiration 2010 (c)                                             3,900,000           0.50      6,090,937

February 22, 2005 issuance of 3,900,000 series B warrants;
expiration 2010 (c)                                             3,900,000           1.00      4,685,272

March 4, 2005 issuance of 2,250,000 series A warrants;
expiration 2010 (d)                                             2,250,000           0.50      2,284,426

March 4, 2005 issuance of 2,250,000 series B warrants;
expiration 2010 (d)                                             2,250,000           1.00      1,558,737

April 15, 2005 issuance of 3,000,000 series A warrants;
expiration 2010 (e)                                             3,000,000           0.50        727,885

April 15, 2005 issuance of 3,000,000 series B  warrants;
expiration 2010 (e)                                             3,000,000           1.00        288,408

April 18, 2005 issuance of 2,400,000 series A warrants;
expiration 2010 (f)                                             2,400,000           0.50        624,289

April 18, 2005 issuance of 2,400,000 series B warrants;
expiration 2010 (f)                                             2,400,000           1.00        253,190

May 16, 2005 issuance of 10,260,028 warrants;
expiration 2007 (g)                                            10,260,028           0.10      1,536,079

Costs associated issued equity                                                                  166,500
                                                              -----------                  ------------
                                           Sub-Total:                                        19,138,273

Less Amortization                                                                           (16,040,370)

                                              TOTALS:          34,210,028                  $  3,097,903
                                                              ===========                  ============
</TABLE>

                                      F24
<PAGE>
<TABLE>
<CAPTION>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 13 - STOCK OPTION / WARRANTS (Continued)

                                                                   Avg. Ex.
                                                      Warrants     Price ($)    Valuation
                                                     ----------   ----------   ----------

<S>                                                   <C>       <C>             <C>
Total Warrants outstanding as of January 01, 2005       800,000   $    1.125      922,550
-----------------------------------------------------------------------------------------

Warrants Issued                                      33,260,028          .68   18,215,723

Warrants Expired                                              0            0            0

Warrants Exercised                                            0            0            0
-----------------------------------------------------------------------------------------

Total Warrants outstanding as of December 31, 2005   34,210,028   $     0.76   19,138,273
                                                     ====================================
</TABLE>

         (a) On October 6, 2004, the Company obtained a $250,000 loan from a
         third party due on April 6, 2005 at an 8% annual interest rate. In
         consideration of this loan, the Company issued a convertible promissory
         note along with 250,000 common stock warrants exercisable at $2.00.
         According to the limitations set forth in the promissory note, the
         payee may not convert an outstanding principle and/or accrued interest
         amount in excess of 4.99% of the total number of common stock shares
         outstanding. Additionally, the Company had pledged a portion of their
         equipment to the third party under the UCC guidelines. On February 22,
         2005, this promissory note was satisfied through a unit deal
         transaction. However, the warrants originally issued were changed to an
         exercise price of $0.75. The warrants were adjusted to a valuation of
         $591,896 based on the Black Sholes method and were completely
         amortized.

         (b) On December 17, 2004, the Company signed a 15% per annum promissory
         note with two third parties, each for $300,000 due on June 17, 2005.
         The notes are secured by certain of the Company's equipment. In the
         event of default, the notes become convertible into shares of the
         Company's common stock at the option of the holder at a conversion
         price of $0.10 per share. As additional compensation to these lenders,
         the Company agreed to issue them 600,000 common stock warrants at
         $1.50. The warrants have anti-dilution privileges and piggyback
         registration rights. The warrants were valued at $544,800 based on the
         Black Sholes method and will be amortized over a six (6) month period
         until the convertible notes mature.

         (c) On February 22, 2005, the Company signed a series of unit purchase
         agreements with three individual third-party lenders for a total sale
         amount of $650,000. Each unit was sold at $25,000 and consisted of a 7%
         senior secured convertible note due March 6, 2006 and 150,000 Series A
         Warrants. The notes are secured by certain of the Company's assets and
         were initially convertible into shares of the Company's common stock at
         the rate of $0.50 per share, which conversion price is subject to
         adjustment. Each Series A Warrant is exercisable into one (1) share of
         common stock at an exercise price of $0.50 and one (1) Series B
         Warrant. Each Series B Warrant is exercisable into one (1) share of
         common stock at an exercise price of $1.00. The warrants were valued at
         $10,776,209 based on the Black Sholes method and will be amortized over
         a twelve (12) month period until the convertible notes mature.

                                      F25
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 13 - STOCK OPTION / WARRANTS (Continued)

         (d) On March 4, 2005, the Company signed a series of unit purchase
         agreements with thirteen individual third-party lenders for a total
         sale amount of $375,000. Each unit was sold at $25,000 and consisted of
         a 7% senior secured convertible note due March 6, 2006 and 150,000
         Series A Warrants. The notes are secured by certain of the Company's
         assets and were initially convertible into shares of the Company's
         common stock at the rate of $0.50 per share, which conversion price is
         subject to adjustment. Each Series A Warrant is exercisable into one
         (1) share of common stock at an exercise price of $0.50 and one (1)
         Series B Warrant. Each Series B Warrant is exercisable into one (1)
         share of common stock at an exercise price of $1.00. The warrants were
         valued at $3,843,163 based on the Black Sholes method and will be
         amortized over a twelve (12) month period until the convertible notes
         mature.

         (e) On April 15, 2005, the Company engaged in a financial advisory
         agreement with a third party for assistance with its strategic planning
         and capital structure evaluation and analysis. Compensation for this
         advisor included the issuance of twenty (10) units, each of which
         consisted of a $25,000 senior secured convertible 7% note due March 31,
         2006 and 150,000 Series A warrants, which are convertible into one (1)
         share of common stock at an exercise price of $.50, and one (1) Series
         B Warrant. Each Series B Warrant is convertible into one (1) share of
         common stock at an exercise price of $1.00. The Company categorized the
         convertible notes as a liability in the amount of $250,000. On April
         18, 2005, these obligations were satisfied through a unit deal
         transaction. The warrants were valued at $1,016,293 based on the Black
         Sholes method and will be amortized over a twelve (12) month period
         until the convertible notes mature.

         (f) On April 18, 2005, the Company signed a series of unit purchase
         agreements with a third-party lender for a total sale amount of
         $400,000. Each unit was sold at $25,000 and consisted of a 7% senior
         secured convertible note due March 6, 2006 and 150,000 Series A
         Warrants. The notes are secured by certain of the Company's assets and
         were initially convertible into shares of the Company's common stock at
         the rate of $0.50 per share, which conversion price is subject to
         adjustment. Each Series A Warrant is exercisable into one (1) share of
         common stock at an exercise price of $0.50 and one (1) Series B
         Warrant. Each Series B Warrant is exercisable into one (1) share of
         common stock at an exercise price of $1.00. The warrants were valued at
         $877,479 based on the Black Sholes method and will be amortized over a
         twelve (12) month period until the convertible notes mature.

         (g) On May 16, 2005, the Company entered into a credit agreement with a
         third party lender in which $245,000 was issued as a 10% note due
         August 19, 2005. According to the credit agreement, the lender may, in
         its sole and absolute discretion, make additional loans to the Company
         of $255,000 for an aggregate total of $500,000. Additionally, the
         lender was issued 10,260,028 warrants. The loans subject to the credit
         agreement are secured by certain assets of the Company. The warrants
         have an exercise price of $0.10 per share, subject to adjustment, and
         expire on May 31, 2007. The warrants were valued at $1,536,079 based on
         the Black Sholes method and were expensed as interest since the
         underlying convertible note has already matured.

                                      F26
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 14 - PAID IN CAPITAL

         On April 28, 2004, in connection with the acquisition of Gwenco, Inc.,
         the Company guaranteed payment on a note in the amount of $300,000 made
         to a former stockholder of Gwenco by another former stockholder of
         Gwenco. This note is secured by 50% of the outstanding capital stock of
         Gwenco. The debt will be satisfied by 4 annual payments of
         approximately $75,000 plus interest. As of the period ended December
         31, 2005, the Company is in default and is currently renegotiating the
         terms of these notes with the creditor. Additionally, a 3.7% annual
         rate note in the amount of $495,000 due in February 2007 was agreed
         upon in consideration for royalties to be paid out on a schedule based
         on the level of production from the mine. Since the initial agreement
         was made effective in March of 2004, the company has accrued two years
         of interest expense and has adjusted its paid in capital to reflect the
         future correction on the issuance of preferred stock associated with
         the original acquisition of Gwenco, Inc.

NOTE 15 - STOCK COMPENSATION PLAN

         During January 2004 and prior to the reverse merger, the Company
         approved the 2004 Stock Compensation Plan for employees and consultants
         (the "Plan"). In February 2004, pursuant to the Plan, 17,500,000 shares
         of common stock were issued as payment to consultants in lieu of cash
         for services provided pursuant to consulting agreements. The fair value
         of the shares of $21,875,000 was recorded as deferred compensation
         expense to be amortized over the period of the consulting agreements.
         These shares were registered on a Form S-8 registration statement. As
         of December 31, 2004, the Company has amortized the entire amount to
         stock compensation expense.

NOTE 16 - RELATED PARTY TRANSACTIONS

         On April 28, 2004, in connection with the acquisition of Gwenco, Inc.,
         the Company guaranteed payment on a note in the amount of $300,000 made
         to a former stockholder of Gwenco by another former stockholder of
         Gwenco. This note is secured by 50% of the outstanding capital stock of
         Gwenco. The debt will be satisfied by 4 annual payments of
         approximately $75,000 plus interest. As of the quarter ended September
         30, 2005, the Company is in default, however, the creditor has agreed
         to provide an extension of payment.

         Periodically, the officers of the Company will insert operational
         funding from their personal finances as a short-term, 0% loans. As of
         the period ended December 31, 2005, officers of the Company had a loan
         balance of $0.00 with the Company.

         On January 28, 2005, the Vice President of the Company loaned the
         Company $28,500 in order to satisfy a debt payment that had accrued.
         The loan was fully reimbursed as of March 9, 2005.

         The Company acquires administrative services from a third party
         consulting company owned by the son of its vice president. For the
         period ended December 31, 2005, the Company paid $37,250 in cumulative
         fees for services rendered.

                                      F27
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 16 - RELATED PARTY TRANSACTIONS (Continued)

         On December 8, 2005, the Company entered into an employment agreement
         with each of its President and Vice President. Each agreement is for
         five years and provides for an annual base salary during the term of
         the agreement as follows: (i) an annual base salary of $120,000 for the
         first year of the agreement; (ii) an annual base salary of $180,000 for
         the second year of the agreement; (iii) an annual base salary of
         $240,000 for the third year of the agreement; (ii) an annual base
         salary of $300,000 for the fourth year of the agreement; and (iv) an
         annual base salary of $360,000 for the fifth year of the agreement. In
         addition, each of the President and Vice President will receive options
         to purchase up to 5,000,000 shares of the Company's common stock
         pursuant to a new stock compensation plan to be adopted by the Company.
         The options will vest as follows: (i) options to purchase up to
         2,000,000 shares will vest immediately, (ii) options to purchase up to
         2,000,000 shares will vest upon the Company's receipt of an aggregate
         of $1,000,000 in cash or cash equivalents in its accounts, and (iii)
         options to purchase up to 1,000,000 shares will vest six months after
         the date of the employment agreements.

NOTE 17 - COMMITMENTS AND CONTINGENCIES

         The Company is subject to certain asserted and unasserted claims
         encountered in a fraud action committed by former employees of the
         Company against a local bank. It is the Company's belief that the
         resolution of these matters will not have a material adverse effect on
         the financial position or results of operations, however, the Company
         cannot provide assurance that damages that result in a material adverse
         effect on its financial position or results of operations will not be
         imposed in these matters.

         On or about December 21, 2004, the Company terminated its Chief
         Financial Officer for cause, as it had reason to believe he had
         participated in a bank fraud scheme. The Chief Financial Officer's
         replacement has not been appointed at this time.

         Upon initial completion of an audit by counsel retained by the Company
         for that purpose, among others, it has been determined that over
         $700,000 has been embezzled by former employees of the Company and its
         indirect wholly-owned subsidiary, Quest Energy, Ltd., including the
         Company's former Chief Financial Officer and Quest Energy's former
         President and assisted by others who conspired with them. At this time,
         the Company is unable to quantify the scope of the fraud or the impact
         that the fraud will have on its financial statements. The Company has
         retained a forensic accountant to quantify the scope of the fraud.

         As an indirect result of this embezzlement, the Company currently lacks
         sufficient working capital. The Company anticipates that it will
         receive equity financing and/or debt financing in the form of a private
         placement, or public offering to provide additional working capital,
         and it believes that it will be successful in obtaining additional
         working capital. However, it is possible that the Company will be
         unable to obtain additional financing on acceptable terms or at all.

                                      F28
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 17 - COMMITMENTS AND CONTINGENCIES (Continued)

         In or about May 2004, National City Bank of Kentucky commenced an
         action in Boyd County Court, Kentucky against the Company's indirect
         wholly owned subsidiary, Gwenco, Inc., and a former director of the
         Company 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. Gwenco is actively defending the action. As of the year end
         December 31, 2005, the plaintiffs were awarded a summary judgment. No
         further action has occurred.

         On May 11, 2005, the former director of the Company, who is also the
         former stockholder of Gwenco, filed a third party complaint in this
         action against the Company and its subsidiary, Taylor Mining, seeking
         control of the mines leased by Gwenco and/or damages for fraud in the
         inducement of the Gwenco purchase agreement. The Company believes that
         it has meritorious defenses, and counterclaims, against the former
         director. The Company has been defending the Duke litigation for about
         one year and believes that that portion of the litigation will be
         settled for a modest discount on the amount owed to Duke. Certain
         allegations could result in forfeiture of control of the mine. While
         the Company believes that it has meritorious defenses and set-offs
         against the former director, an adverse ruling would materially and
         adversely affect the Company and could result in the loss of the
         Company's sole operating mines.

         The Company has not filed corporate federal, and state and local income
         tax returns since 2002, and believes that, due to its operating losses,
         it does not have a material tax liability.

         On May 16, 2005, the Company entered into various financing documents
         in order to secure previous loans and obligations. These agreements
         included a term loan, assignment of leases and subleases, security
         agreement and fixture filing mortgage up to $1,000,000, and a
         collateral agency and intercreditor agreement, all of which were
         designed to grant a security interest in various assets of the Company
         and Gwenco, one of the Company's wholly owned subsidiaries, to the
         creditors. The mortgage obligation expires on March 31, 2035.

         In light of these occurrences and due in part to the apparent
         participation of its former Chief Financial Officer in this scheme, the
         Company has determined that the design and operation of its disclosure
         controls and procedures, as defined in Exchange Act Rule 13a-15(f) have
         not been effective to ensure that information required to be disclosed
         in its Exchange Act reports is recorded, processed, summarized and
         reported within the time periods specified in the Securities and
         Exchange Commission's rules and forms, and that such information is
         accumulated and communicated to them to allow timely decisions
         regarding required disclosure. The Company is currently reviewing and
         revising its controls and procedures to increase the effectiveness of
         its disclosure controls and procedures.

         On or about November 2, 2005, Professional Traders Fund commenced an
         action in the United States District Court for the Southern District of
         New York against the Company and Gwenco for breach of a credit
         agreement and guaranty. Professional Traders Fund is seeking
         approximately $264,000 in principal as well as interest, fees, and
         costs. The Company believes that it has several meritorious defenses to
         this action and is defending it vigorously.

                                      F29
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 17 - COMMITMENTS AND CONTINGENCIES (Continued)

         On or about November 3, 2005, Professional Traders Fund and ANC Group,
         Inc., as collateral agent for Professional Traders Fund, commenced an
         action in Pike County Court, Kentucky against the Company, Gwenco,
         Quest Energy, National City Bank of Kentucky, Duke Energy Merchants,
         and Mountain Edge Mining. In this action, Professional Traders Fund is
         again suing for breach of the credit agreement and seeking
         approximately $264,000 in principal as well as interest, fees, and
         costs. Further, ANC Group is seeking, as collateral agent for the
         benefit of Professional Traders Fund, be adjudged a lien on certain
         real and personal property of Gwenco pursuant to an amended and
         restated security agreement, that said real and personal property be
         sold to satisfy the aforesaid lien and that the liens of ANC Group, as
         collateral agent for the benefit of Professional Traders Fund, attach
         to the proceeds of the sale, and that the claims of National City Bank
         of Kentucky, Duke Energy Merchants, and Mountain Edge Mining be
         required to set up their claims or be forever barred. The Company
         believes that it has several meritorious defenses to this action and is
         defending it vigorously. As of December 31, 2005, the Company is
         negotiating new settlement terms.

NOTE 18 - SUBSEQUENT EVENTS

         On February 14, 2006, the Company entered into a settlement agreement
         with Professional Traders Fund, LLC ("PTF") resolving all outstanding
         disputes involving a Unit Agreement dated February 22, 2005, a Credit
         Agreement dated May 16, 2005, and any and all documents related
         thereto. The settlement and restructuring consisted of the following
         transactions:

         Under the Unit Agreement restructuring, the Company issued PTF an
         amended and restated Unit Note in the aggregate principal amount of
         $350,000, payable on or before February 22, 2007, and convertible into
         the Company's common stock initially at a rate of $.075 per share,
         subject to adjustment. In addition, the Company issued PTF share
         certificates representing 1,000,000 shares of the Company's common
         stock in consideration of PTF's exercise in full (on a cashless basis)
         of all Series A and Series B Warrants held by them. All of the
         provisions contained in the Unit Agreement, solely as to PTF, were
         terminated and of no further force and effect upon closing of the
         Agreement. In addition, PTF waived any and all right to any claims or
         damages previously incurred under the Unit Agreement due to the
         Company's default thereunder, including any defaults under the
         registration rights agreement entered into in connection with the Unit
         Agreement. All of the provisions contained in the registration rights
         agreement relating to the Unit Agreement, solely as to PTF, were
         terminated and of no further force and effect. In addition, PTF waived
         any and all right to any liquidated damages previously incurred under
         the registration rights agreement. A Stipulation for Dismissal without
         Prejudice was filed with respect to that certain action filed against
         the Company by PTF in the United States District Court for the Southern
         District of New York, Case No 06-CV-00309.

                                      F30
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 18 - SUBSEQUENT EVENTS (Continued)

         Under the Credit Agreement restructuring, the Company paid PTF $264,000
         representing payment in full of all principal owed to PTF by the
         Company under that certain promissory note dated as of May 16, 2005 in
         an amount up to $500,000. In addition, as payment in full for all (i)
         accrued interest due PTF under the Credit Note, and (ii) any and all
         collection fees incurred by PTF thereunder, the Company issued PTF an
         amended and restated Credit Note in the aggregate principal amount of
         $100,000.00 in favor of PTF, which note is payable on the earlier of
         July 10, 2006 or the Company's closing of a new debt or equity
         financing or series of related financings, in excess of $1,500,000. In
         addition, upon an "event of default" (as defined), this note will be
         convertible into shares of the Company's common stock at an initial
         conversion rate of $0.10 per share, subject to adjustment as set forth
         therein. Further, the Company issued PTF an amended and restated
         warrant to purchase up to 10,260,028 shares of the Company's common
         stock. Under this amended and restated warrant, 2,500,000 shares will
         be exercisable on a "cashless basis", provided, however, that PTF's
         ability to utilize such cashless exercise feature will be limited to
         400,000 shares of common stock per quarter. Any and all defaults under
         the Credit Agreement were waived by PTF, including any defaults under
         that certain registration rights agreement entered into in connection
         therewith. PTF expressly agreed that, notwithstanding in the Credit
         Agreement to the contrary, the execution and delivery of the Agreement
         or any of the documents executed in connection therewith do not
         constitute a breach of the Credit Agreement or the amended and restated
         credit note. The registration rights agreement for the warrant shares
         was terminated and of no further force and effect. In addition, PTF
         waived any and all right to any liquidated damages previously incurred
         under the registration rights agreement due. A Stipulation for
         Dismissal without Prejudice was filed with respect to that certain
         action filed by PTF (i) on November 2, 2005 against the Company and
         Gwenco in the United States District Court for the Southern District of
         New York, Case No. 05-CV-9311, and (ii) on November 3, 2005 against the
         Company, Quest Energy Ltd., and Gwenco, Inc. in the Pike County Circuit
         Court for the Commonwealth of Kentucky, Case No. 05-CI-01494.

         As additional consideration for the settlement and restructuring, the
         Company issued PTF a warrant to purchase up to 5,000,000 shares of the
         Company's common stock, with an initial exercise price of $0.10 per
         share and an expiration date of February 10, 2009.

         On February 22, 2005, the Company signed a series of unit purchase
         agreements with three individual third-party lenders for a total sale
         amount of $650,000. Each unit was sold at $25,000 and consisted of a 7%
         senior secured convertible note due March 6, 2006 and 150,000 Series A
         Warrants. The notes are secured by certain of the Company's assets and
         were initially convertible into shares of the Company's common stock at
         the rate of $0.50 per share, which conversion price is subject to
         adjustment. Each Series A Warrant is exercisable into one (1) share of
         common stock at an exercise price of $0.50 and one (1) Series B
         Warrant. Each Series B Warrant is exercisable into one (1) share of
         common stock at an exercise price of $1.00. The Company categorized the
         convertible notes as a liability in the amount of $650,000. A 10%
         commission was paid to the agent who arranged the transaction.
         Subsequently, the convertible debt is in default. The Company is
         currently negotiating a settlement.

                                      F31
<PAGE>

                         QUEST MINERALS AND MINING CORP.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2005

NOTE 18 - SUBSEQUENT EVENTS (Continued)

         On March 4, 2005, the Company signed a series of unit purchase
         agreements with thirteen individual third-party lenders for a total
         sale amount of $375,000. Each unit was sold at $25,000 and consisted of
         a 7% senior secured convertible note due March 6, 2006 and 150,000
         Series A Warrants. The notes are secured by certain of the Company's
         assets and were initially convertible into shares of the Company's
         common stock at the rate of $0.50 per share, which conversion price is
         subject to adjustment. Each Series A Warrant is exercisable into one
         (1) share of common stock at an exercise price of $0.50 and one (1)
         Series B Warrant. Each Series B Warrant is exercisable into one (1)
         share of common stock at an exercise price of $1.00. The Company
         categorized the convertible notes as a liability in the amount of
         $375,000. A 10% commission was paid to the agent who arranged in the
         transaction. Subsequently, the convertible debt is in default. The
         Company is currently negotiating a settlement.

         On April 18, 2005, the Company signed a series of unit purchase
         agreements with a third-party lender for a total sale amount of
         $400,000. Each unit was sold at $25,000 and consisted of a 7% senior
         secured convertible note due March 6, 2006 and 150,000 Series A
         Warrants. The notes are secured by certain of the Company's assets and
         were initially convertible into shares of the Company's common stock at
         the rate of $0.50 per share, which conversion price is subject to
         adjustment. Each Series A Warrant is exercisable into one (1) share of
         common stock at an exercise price of $0.50 and one (1) Series B
         Warrant. Each Series B Warrant is exercisable into one (1) share of
         common stock at an exercise price of $1.00. The Company categorized the
         convertible notes as a liability in the amount of $400,000. A $14,000
         commission was paid to the agent who arranged in the transaction.
         Subsequently, the convertible debt is in default. The Company is
         currently negotiating a settlement.


                                      F32
<PAGE>

                                    PART III

Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         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                  Position
-----------------------   -----   ----------------------------------------------
William R. Wheeler         56     Chairman of the Board of Directors, President,
                                  Chief Executive Officer, and Chief Financial
                                  Officer

Eugene Chiaramonte, Jr.    61     Vice President, Secretary, and Director

         William R. Wheeler is Quest's President, Chief Executive Officer, Chief
Financial Officer, and the Chairman of the Board. Mr. Wheeler was appointed to
these positions in February, 2004, except that Mr. Wheeler became the Chief
Financial Officer on January 1, 2005. Mr. Wheeler has been developing coal mine
opportunities in eastern Kentucky and southwestern West Virginia since 2002. In
1990, Mr. Wheeler founded Spinnaker Associates, a consulting firm for emerging
companies, and he has operated Spinnaker from 1990 to the present. From 1976 to
1990, Mr. Wheeler operated Buckeye Petroleum, Inc., a company which Mr. Wheeler
founded and which was involved with drilling over 350 oil and gas wells, with
offices in Ohio, Oklahoma, and Lousiana. Mr. Wheeler received an AM degree in
Geology from Harvard University in 1972 and an MBA from Harvard Business School
in 1974.

         According to news reports, on or about May 5, 2006, four people were
charged Friday with kiting checks in a scheme that federal prosecutors said cost
a bank more than $1 million. According to the reports, a federal grand jury
indicted Mr. Runyon, Ms. Holbrook, James Daniel Stollings, and Quest's President
and Chief Executive Officer, William R. Wheeler. The four are charged with bank
fraud. According to the reports, Federal prosecutors said that Wheeler,
Stollings, and Runyon were business associates with Quest when they convinced
Holbrook, a branch manager for Community Trust Bank to issue unfunded cashier's
checks. According to the Federal prosecutors, the cashier's checks covered bad
checks written by Quest subsidiaries. No court date has been scheduled for any
of the four. Both Mr. Wheeler and Quest deny any wrongdoing in connection with
these matters. As of the date of this report, Mr. Wheeler has not resigned as an
officer or director of Quest. Quest is currently determining what action, if
any, it will take as a result of this indictment.

         Eugene Chiaramonte, Jr. is Quest's Vice President and Secretary and is
one of Quest's directors. Mr. Chiaramonte was appointed to these positions in
February, 2004. 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.

         Our Board of Directors has not established any committees, since there
are only two directors.

         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 two directors
who would serve to act as the committee in any event, and due to the additional
and unnecessary costs associated with administering the committees.

                                       43
<PAGE>

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, 2005, 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, except that William R. Wheeler and Eugene Chiaramonte, Jr. have
failed to file any Form 4s relating to the disposition of 1,800,000 and
1,605,000 shares, respectively.

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 10. EXECUTIVE COMPENSATION

         The following table sets forth the cash compensation paid to the Chief
Executive Officer and to all other executive officers for services rendered
during the fiscal years ended December 31, 2005, 2004, and 2003.
<TABLE>
<CAPTION>

                                          Annual Compensation                     Long-Term Compensation
                          ------------------------------------------------   --------------------------------
                                                                                             Common Shares        All
                                                                              Restricted       Underlying        Other
                                                             Other Annual       Stock       Options Granted      Compen
   Name and Position        Year     Salary       Bonus      Compensation     Awards ($)       (# Shares)       -sation
------------------------- -------- ---------     -------   ---------------   -----------    ---------------    ---------
<S>                        <C>     <C>              <C>      <C>                  <C>                <C>           <C>
William R. Wheeler         2005    $      0        -0-       $ 8,966 (1)         -0-                -0-(2)        -0-
Chairman, President and    2004    $ 62,000        -0-           -0-             -0-                -0-           -0-
Chief Executive Officer    2003    $      0        -0-           -0-             -0-                -0-           -0-

Eugene Chiaramonte, Jr.    2005    $ 14,000        -0-           -0-             -0-                -0-(2)        -0-
Vice President             2004    $ 62,000        -0-           -0-             -0-                -0-           -0-
and Secretary              2003    $      0        -0-           -0-             -0-                -0-           -0-

Fred Runyon, Jr.           2005    $      0        -0-           -0-             -0-                -0-           -0-
Former Chief Financial     2004    $101,709        -0-           -0-             -0-                -0-           -0-
Officer                    2003    $      0        -0-           -0-             -0-                -0-           -0-

Silvestre Hutchinson       2005    $      0        -0-           -0-             -0-                -0-           -0-
Former Chief Executive     2004    $      0        -0-           -0-             -0-                -0-           -0-
Officer                    2003    $      0        -0-           -0-             -0-                -0-           -0-

Wallace T. Boyack          2005    $      0        -0-           -0-             -0-                -0-           -0-
Former Chief Executive     2004    $      0        -0-           -0-             -0-                -0-           -0-
Officer                    2003    $      0        -0-           -0-             -0-                -0-           -0-
</TABLE>

(1)  Miscellaneous income. Amount does not include repayment of advances of
     $44,000 made by Mr. Wheeler to Quest.
(2)  Does not include stock options which Quest agreed to issue under executive
     employment agreements between Quest and each of Mr. Wheeler and Mr.
     Chiaramonte. See Employment Agreements, below.

Option Grants and Exercises

         There were no option grants or exercises by any of the executive
officers named in the Summary Compensation Table above; however, Quest did agree
to make option grants to the executive officers as described under Employment
Agreements, below.

                                       44
<PAGE>

Employment Agreements

         On December 8, 2005, Quest entered into an employment agreement with
William R. Wheeler pursuant to which Quest employs Mr. Wheeler as its President.
The agreement is for five years and provides for an annual base salary during
the term of the agreement as follows: (i) an annual base salary of $120,000 for
the first year of the agreement; (ii) an annual base salary of $180,000 for the
second year of the agreement; (iii) an annual base salary of $240,000 for the
third year of the agreement; (ii) an annual base salary of $300,000 for the
fourth year of the agreement; (ii) an annual base salary of $360,000 for the
fifth year of the agreement. In addition, Mr. Wheeler will receive options to
purchase up to 5,000,000 shares of Quest's common stock pursuant to a new stock
compensation plan to be adopted by Quest. The options will vest as follows: (i)
options to purchase up to 2,000,000 shares will vest immediately, (ii) options
to purchase up to 2,000,000 shares will vest upon Quest's receipt of an
aggregate of $1,000,000 in cash or cash equivalents in its accounts, and (iii)
options to purchase up to 1,000,000 shares will vest six months after the date
of the employment agreement. As of the date hereof, Quest has not granted or
priced the options referenced in the employment agreement.

         The agreement also contains the following material provisions: (i)
participation in Quest's executive bonus plan on the same basis as other senior
executive officers of Quest; (ii) reimbursement for all reasonable travel and
other out-of-pocket expenses incurred in connection with his employment; (iii)
four (4) weeks paid vacation leave, which shall accumulate in the event that Mr.
Wheeler elects not to take such vacation leave in any fiscal year; (iv) medical
and dental benefits as those provided to other senior executive officers of
Quest; (v) a severance payment of six (6) month's salary at the then-applicable
base salary rate in the event that Quest terminates Mr. Wheeler's employment
without cause; (vi) a severance payment of all base salary due under the
remaining term of the employment agreement in the event that Mr. Wheeler's
employment is terminated due to death or disability; (vii) a payment of
5,000,000 shares of Quest's common stock in the event of a change in control of
Quest as such term is defined in the employment agreement; (viii) a severance
payment, at Mr. Wheeler's election, in the event that (a) Mr. Wheeler is
required to relocate as a condition of employment, (b) there is a substantial
change in Mr. Wheeler's responsibilities at the direction of Quest's board of
directors, or (c) a change in control of Quest.

         Mr. Wheeler also acts as Quest's Chief Executive Officer and Chief
Financial Officer.

         On December 8, 2005, Quest entered into an employment agreement with
Eugene Chiaramonte, Jr. pursuant to which Quest employs Mr. Chiaramonte as its
Vice President. The agreement is for five years and provides for an annual base
salary during the term of the agreement as follows: (i) an annual base salary of
$120,000 for the first year of the agreement; (ii) an annual base salary of
$180,000 for the second year of the agreement; (iii) an annual base salary of
$240,000 for the third year of the agreement; (ii) an annual base salary of
$300,000 for the fourth year of the agreement; (ii) an annual base salary of
$360,000 for the fifth year of the agreement. In addition, Mr. Chiaramonte will
receive options to purchase up to 5,000,000 shares of Quest's common stock
pursuant to a new stock compensation plan to be adopted by Quest. The options
will vest as follows: (i) options to purchase up to 2,000,000 shares will vest
immediately, (ii) options to purchase up to 2,000,000 shares will vest upon
Quest's receipt of an aggregate of $1,000,000 in cash or cash equivalents in its
accounts, and (iii) options to purchase up to 1,000,000 shares will vest six
months after the date of the employment agreement. As of the date hereof, Quest
has not granted or priced the options referenced in the employment agreement.

         The agreement also contains the following material provisions: (i)
participation in Quest's executive bonus plan on the same basis as other senior
executive officers of Quest; (ii) reimbursement for all reasonable travel and
other out-of-pocket expenses incurred in connection with his employment; (iii)
four (4) weeks paid vacation leave, which shall accumulate in the event that Mr.
Chiaramonte elects not to take such vacation leave in any fiscal year; (iv)
medical and dental benefits as those provided to other senior executive officers
of Quest; (v) a severance payment of six (6) month's salary at the
then-applicable base salary rate in the event that Quest terminates Mr.
Chiaramonte's employment without cause; (vi) a severance payment of all base
salary due under the remaining term of the employment agreement in the event
that Mr. Chiaramonte's employment is terminated due to death or disability;
(vii) a payment of 5,000,000 shares of Quest's common stock in the event of a
change in control of Quest as such term is defined in the employment agreement;
(viii) a severance payment, at Mr. Chiaramonte's election, in the event that (a)
Mr. Chiaramonte is required to relocate as a condition of employment, (b) there
is a substantial change in Mr. Chiaramonte's responsibilities at the direction
of Quest's board of directors, or (c) a change in control of Quest.

                                       45
<PAGE>

Compensation of Directors

         All directors receive reimbursement for reasonable out-of-pocket
expenses in attending board of directors meetings and for promoting Quest's
business. From time to time, Quest may engage certain members of the board of
directors to perform services on Quest's behalf. In such cases, Quest
compensates the members for their services at rates no more favorable than could
be obtained from unaffiliated parties.

         Stock Compensation Plan. In February, 2004, Quest's board of directors
adopted its 2004 Stock Compensation Plan. The purpose of the plan is to
encourage and enable Quest's officers, employees, directors, consultants,
advisors, and other key persons, as well as those of Quest's subsidiaries, upon
whose judgment, initiative and efforts Quest largely depends for the successful
conduct of its business, to acquire a proprietary interest in Quest. It is
anticipated that providing such persons with a direct stake in Quest's welfare
will assure a closer identification of their interests with those of Quest,
thereby stimulating their efforts on Quest's behalf and strengthening their
desire to remain with Quest.

         The total number of shares of common stock available for grants of
stock options and compensation stock under the plan is 17,500,000 shares of
Quest's common stock. These shares may include authorized but unissued shares or
shares Quest reacquired at any time. The number of shares of common stock
reserved for issuance under the plan is subject to equitable adjustments for any
recapitalizations, mergers, consolidations, stock dividends, split-ups,
combinations, exchanges or any other similar changes which may be required to
prevent dilution. As of the date of this report, Quest has issued 17,500,000
shares of common stock under the plan. No stock options have been granted under
the plan.

         2005 Stock Incentive Plan. On August 29, 2005, Quest's board of
directors adopted its 2005 Stock Incentive Plan. The purpose of the plan is to
further align the interests of employees, directors and non-employee consultants
with those of the stockholders by providing incentive compensation opportunities
tied to the performance of the common stock and by promoting increased ownership
of the common stock by such individuals. The plan is also intended to advance
the interests of the company and its shareholders by attracting, retaining and
motivating key personnel upon whose judgment, initiative and effort the
successful conduct of the company's business is largely dependent. Quest is
permitted to grant awards of stock options, stock awards, and restricted stock
awards under the plan. The maximum aggregate number of shares of common stock
that may be issued and sold under all awards granted under the plan is 7,000,000
shares, and to date, Quest has issued all 7,000,000 shares under the plan.

         Amended and Restated 2005 Stock Incentive Plan No. 2. On October 20,
2005, Quest's board of directors adopted its Amended and Restated 2005 Stock
Incentive Plan No. 2. The purpose of the plan is to further align the interests
of employees, directors and non-employee consultants with those of the
stockholders by providing incentive compensation opportunities tied to the
performance of the common stock and by promoting increased ownership of the
common stock by such individuals. The plan is also intended to advance the
interests of the company and its shareholders by attracting, retaining and
motivating key personnel upon whose judgment, initiative and effort the
successful conduct of the company's business is largely dependent. Quest are
permitted to grant awards of stock options, stock awards, and restricted stock
awards under the plan. The maximum aggregate number of shares of common stock
that may be issued and sold under all awards granted under the plan is 2,000,000
shares, and to date, Quest has issued all 2,000,000 shares under the plan.

                                       46
<PAGE>

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of Quest's common stock as of the date of this report by
the following persons:

         o        each person who is known to be the beneficial owner of more
                  than five percent (5%) of Quest's issued and outstanding
                  shares of common stock;
         o        each of Quest's directors and executive officers; and
         o        all of Quest's directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                  Number Of Shares
Name And Address                                 Beneficially Owned     Percentage Owned
----------------                                 ------------------     ----------------
<S>                                                  <C>                       <C>
William R. Wheeler (1).......................        9,400,000                 11.9%
Eugene Chiaramonte, Jr. (2) .................        9,595,000                 12.2%

All directors and officers as a group........       18,995,000                 24.1%
</TABLE>

         (1)      The address is 26 Davidson Hill Road (P.O. Box 353), Belfry,
                  Kentucky 41502. Includes 1,000,000 shares that have been
                  pledged to a third party lender to secure payment under a
                  personal guarantee for a loan to Quest, said guarantee being
                  collateralized by the shares.

         (2)      The address is 18B East 5th Street, Paterson, NJ 07524.
                  Includes 2,000,000 shares that have been pledged to a third
                  party lender to secure payment under a personal guarantee for
                  a loan to Quest, said guarantee being collateralized by the
                  shares.

         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 the date of this report 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 the date of this
report.

                                       47
<PAGE>

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On February 9, 2004, Quest acquired 100% of the outstanding common
stock of Quest Minerals (Nevada) pursuant to a securities purchase agreement and
plan of reorganization. Under the plan of reorganization, Quest issued
20,700,000 shares of its common stock to the stockholders of Quest Minerals
(Nevada) in exchange for all of the outstanding shares of common stock of Quest
Minerals (Nevada). In addition, Quest agreed to issue to the stockholders of
Quest Minerals (Nevada) an additional 1,800,000 shares of its common stock upon
completion of an amendment to its articles of incorporation to increase the
authorized common stock of Tillman to 250,000,000 shares. Pursuant to the plan
of reorganization, 22,464,358 shares of Tillman common stock held by Silvestre
Hutchinson, the former President of Quest and one of its former directors, were
cancelled. Upon the completion of the reorganization, William R. Wheeler and
Eugene Chiaramonte, Jr., the former directors of Quest Minerals (Nevada), were
appointed as directors of Quest. In this plan of reorganization, Quest issued an
aggregate of 22,400,000 shares of common stock to Messrs. Wheeler and
Chiaramonte.

         Quest acquires administrative and accounting services from a third
party consulting company owned by Gene Chiaramonte III, the son of Eugene
Chiaramonte, Jr., Quest's Vice President and Secretary.

         During 2005, William R. Wheeler, Quest's President and Chief Executive
Officer, loaned an aggregate of approximately $44,000 to Quest. Quest repaid the
funds by the end of the year.

         During 2005, Eugene Chiaramonte, Jr., Quest's Vice President and
Secretary, loaned an aggregate of $28,500 to Quest. Quest repaid the funds by
the end of the fiscal year.

         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.

Item 13. EXHIBITS

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

10.1*             Securities Purchase Agreement and Plan of Reorganization dated
                  February 9, 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.

10.3***           Lease Agreement between Monday Coal, LLC and Quest Marine
                  Terminal, Ltd.

10.4****          William R. Wheeler Employment Agreement

10.5****          Eugene Chiaramonte, Jr. Employment Agreement

21.1              Subsidiaries of Quest Minerals and Mining Corp.

31.1              Certification of William R. Wheeler pursuant to Rule 13a-14(a)

32.1              Certification of William R. Wheeler pursuant to 18 U.S.C
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002

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

                                       48
<PAGE>


*    Filed as an exhibit to a Current Report on Form 8-K filed on February 24,
     2004, incorporated herein by reference.

**   Filed as an exhibit to a Current Report on Form 8-K filed on May 6, 2004,
     incorporated herein by reference.

***  Filed as an exhibit to a Current Report on Form 8-K filed on November 22,
     2004, incorporated herein by reference.

**** Filed as an exhibit to the Quarterly Report on Form 10-QSB for the quarter
     ending September 30, 2005, incorporated herein by reference.

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

                                       49
<PAGE>

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Appointment of Auditors

         Our Board of Directors has not yet selected independent accountants to
audit our financial statements for the year ending December 31, 2006. Kempisty &
Company previously audited our consolidated financial statements for the fiscal
year ended December 31, 2005 and 2004.

Audit Fees

         Kempisty & Company billed us $35,000 in fees for our 2005 annual audit,
$25,000 in fees for our 2004 annual audit, $15,000 in fees for the review of our
quarterly financial statements for 2005, and $15,000 in fees for the review of
our quarterly financial statements for 2004.

Audit-Related Fees

         We did not pay any fees to Kempisty & Company for assurance and related
services that are not reported under Audit Fees above in 2005 or 2004.

Tax Fees

         We did not pay any fees to Kempisty & Company for tax compliance, tax
advice or tax planning in 2005 or 2004.

All Other Fees

         In 2005, Kempisty & Company billed us $3,000 for work in connection
with our registration statements on Form S-8, and $0 for all other fees. We did
not pay any fees to Kempisty & Company for any registration statement work, tax
services, or any other fees in 2004. Pre-Approval Policies and Procedures

         We have implemented pre-approval policies and procedures related to the
provision of audit and non-audit services. Under these procedures, our board of
directors pre-approves all services to be provided by Kempisty & Company and the
estimated fees related to these services.

         All audit, audit related, and tax services were pre-approved by the
audit committee, which concluded that the provision of such services by Kempisty
& Company was compatible with the maintenance of that firm's independence in the
conduct of its auditing functions. Our pre-approval policies and procedures
provide for the board of directors' pre-approval of specifically described
audit, audit-related, and tax services on an annual basis, but individual
engagements anticipated to exceed pre-established thresholds must be separately
approved. The policies and procedures also require specific approval by the
audit committee if total fees for audit-related and tax services would exceed
total fees for audit services in any fiscal year. The policies and procedures
authorize the audit committee to delegate to one or more of its members
pre-approval authority with respect to permitted services.

                                       50
<PAGE>

                                   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/ WILLIAM R. WHEELER
                                        ----------------------------------------
                                        William R. Wheeler, Chairman, President,
                                        Chief Executive Officer, and Chief
                                        Financial 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.


Signatures                               Title                          Date
--------------------------------------------------------------------------------

/s/ WILLIAM R. WHEELER          Chairman of the Board, President,    May 8, 2006
---------------------------     Chief Executive Officer, and
William R. Wheeler              Chief Financial Officer



/s/ EUGENE CHIARAMONTE, JR.     Vice President, Secretary,           May 8, 2006
---------------------------     and Director
Eugene Chiaramonte, Jr.


                                       51