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

                               AMENDMENT NO. 1 TO
                                   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, 2006

[ ]  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 $0.00.

         The aggregate market value of the voting and non-voting common equity
held by non-affiliates of the registrant was approximately $2,351,918 as of
April 16, 2007. 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 6,845,000 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 April 16, 2007, 450,603,167 shares of our common stock were
issued and outstanding.

         Documents Incorporated by Reference: None.

         Transitional Small Business Disclosure Format: No.

<PAGE>

                                     PART I

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

Item 1.   DESCRIPTION OF BUSINESS

General

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

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

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

Fiscal 2006 and First Quarter 2007 Developments

         Gwenco, Inc. Chapter 11 Reorganization. On March 2, 2007, Quest's
wholly owned subsidiary, Gwenco, Inc., filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code with the United
States Bankruptcy Court for the Eastern District of Kentucky. Management felt
this was a necessary step to further the company's financial restructuring
initiative and to protect Gwenco's assets from claims, debts, judgments,
foreclosures, and forfeitures of those creditors and stakeholders with whom both
Quest and Gwenco were unable to negotiate restructured agreements. The company
is currently overseeing Gwenco's operations as a debtor in possession, subject
to court approval of matters outside the ordinary course of business. Gwenco is
currently seeking court approval for debtor in possession financing from holders
of Gwenco's existing debt obligations in order to fund operating expenses. The
company intends to continue its mining operations at Pond Creek mine at Slater's
Branch while this matter is completed. Under Chapter 11, claims against Gwenco
in existence prior to the filing of the petitions for reorganization relief
under the federal bankruptcy laws are stayed while Gwenco is in bankruptcy.

         Rehabilitation and Reopening of Pond Creek Mine. In January 2007,
Gwenco received a permit from the Kentucky Department of Natural Resources to
conduct coal mining at its Pond Creed mine. In February 2007, Gwenco's
engineering firm, Alchemy Engineering of Prestonburg, Kentucky, completed a one
and five year mine plan and maps required by the Kentucky Department of Mines
and Minerals in connection with the permit to conduct coal mining at Pond Creek.
Gwenco has retained General Mining, LLC of Wallins, Kentucky to rehabilitate the
Pond Creek mine in February 2007 and further retained General Mining to conduct
mining operations at Pond Creek in March 2007. The company completed its initial
rehabilitation of the Pond Creek mine, recommenced mining operations, and began
shipping commercial coal for sale in May 2007.

         Sale and Forbearance of National City Bank Judgment. 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. On July 19, 2006, National City Bank of Kentucky sold its right,
title, and interest in and to the various judgments, judgment liens, and
security interests to a third party investor. The third party investor has
agreed to forbear on further collection, enforcement, and foreclosure with
respect to this indebtedness until further notice, in exchange for which Gwenco
agreed to grant the investor a royalty on gross profits of Gwenco.

         Letter of Intent with Parsons Branch. On July 21, 2006, Quest signed a
non-binding letter of intent with Parsons Branch Development to acquire a permit
to mine the Elkhorn #2 seam on Parsons Branch located in Mud Creek, Kentucky.

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<PAGE>

Parsons Branch Development has approximately 450,000 tons of clean coal under
lease at this location. Upon completion of the transfer of the permit to Quest,
it will retain all revenues from coal sales after payment of a royalty to
Parsons Branch of $1.50 per clean ton mined and expenses of mine operations,
which are expected to be carried out by a contract miner. The transaction is
subject to due diligence, negotiation of definitive agreements, regulatory
approval of the transaction, and satisfaction of other customary conditions to
closing.

         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.
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.

         At of the date of this report, Quest has not quantified the scope of
the apparent embezzlement or the impact that the apparent embezzlement will have
on its financial statements. Quest has retained a forensic accountant to
quantify the scope of the alleged fraud; however, the forensic accountant has
not completed its analysis at this time.

         In May, 2006, a federal grand jury indicted Mr. Runyon, Ms. Holbrook,
James Daniel Stollings, and Quest's former President and Chief Executive
Officer, William R. Wheeler on charges of bank fraud. In connection with the
indictments, Mr. Runyon and Ms. Holbrook each pled guilty. In December 2006, a
federal jury convicted Mr. Stollings and Mr. Wheeler of bank fraud. Mr. Wheeler
has appealed the conviction. Quest denies any wrongdoing in connection with
these matters.

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

         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.

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<PAGE>

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.

         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

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<PAGE>

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. On July
27, 2006, Quest settled the third party complaint with Anderson. As part of the
settlement, Gwenco received mining permit renewal and transfer documentation
which Gwenco is required to obtain in order to recommence mining operations at
its Pond Creek mine at Slater's Branch, Kentucky. Further, Anderson agreed to
provide all reasonable cooperation in recommencing mining operations at the
Slater's Branch mine. The parties also agreed to terminate all remaining rights,
duties, and obligations under the original stock purchase agreement entered into
in connection with the acquisition of Gwenco by Quest. Quest made a one-time
cash payment of $75,000 and issued 3,500,000 shares of common stock, subject to
a lock-up/leak out agreement, to Anderson, upon conversion of his Series B
Preferred Stock, the terms of which were amended under the settlement agreement.
Quest also granted Anderson a sliding scale royalty on coal sales. The parties
mutually dismissed their respective counter-claims against each other in the
civil action pending in Boyd County Court, Kentucky.


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<PAGE>

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:

         End Use                    Tons (millions)       Percentage of Total
         ------------------------   ------------------    --------------------

         Electricity generation     982                   86%
         Industrial users           66                    6%
         Exports                    64                    6%
         Steel making               27                    2%
         Residential & commercial   5                     --%
                                    ------------------    --------------------

         Total                      1,144                 100%
                                    ------------------    --------------------

         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:

         Electricity Generation Type         Cost per million Kilowatt Hours
         ---------------------------------   ----------------------------------

         Oil                                 $4.754
         Natural Gas                         $4.422
         Coal                                $1.819
         Nuclear                             $1.785
         Other (solar, wind, etc.)           $0.979
         Hydroelectric                       $0.527

         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."

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<PAGE>

         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:

         Electricity Generation Source   Percent of Total Electricity Generation
         -----------------------------   ---------------------------------------

         Coal                            51%
         Nuclear                         21%
         Natural Gas                     17%
         Hydro                           6%
         Oil                             3%
         Other                           2%
                                         ---------------------------------------

         Total                           100%
                                         ---------------------------------------

         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.

Gwenco Mines

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

         The primary reserves are in the Pond Creek, Lower Cedar Grove, 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

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<PAGE>

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
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

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<PAGE>

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,
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.

                                       9
<PAGE>

         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,
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.

                                       10
<PAGE>

         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.

         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

                                       11
<PAGE>

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, 2006, it has total recoverable
reserves of approximately twelve million tons consisting of both proven and
probable reserves. "Reserves" are defined by Securities and Exchange Commission
Industry Guide 7 as that part of a mineral deposit, which could be economically
and legally extracted or produced at the time of the reserve determination.
"Recoverable" reserves mean coal that is economically recoverable using existing
equipment and methods under federal and state laws currently in effect.
Approximately three million tons of Quest's reserves are classified as proven
reserves. "Proven (Measured) Reserves" are defined by Securities and Exchange
Commission Industry Guide 7 as reserves for which (a) quantity is computed from
dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or
quality are computed from the results of detailed sampling and (b) the sites for
inspection, sampling and measurement are spaced so closely and the geologic
character is so well defined that size, shape, depth and mineral content of
reserves are well-established. None of Quest's reserves are classified as
probable reserves. "Probable reserves" are defined by Securities and Exchange
Commission Industry Guide 7 as reserves for which quantity and grade and/or
quality are computed from information similar to that used for proven (measured)
reserves, but the sites for inspection, sampling, and measurement are farther
apart or are otherwise less adequately spaced. The degree of assurance, although
lower than that for proven (measured) reserves, is high enough to assume
continuity between points of observation.

                                       12
<PAGE>

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

         As with most coal-producing companies in Central Appalachia, all of
Quest's coal reserves are controlled pursuant to leases from third party
landowners. These leases convey mining rights to the coal producer in exchange
for a per ton or percentage of gross sales price royalty payment to the lessor.
The royalties for coal reserves from Quest's producing properties was
approximately $55,000 for the year ended December 31, 2006 and $55,000 for the
year ended December 31, 2005.

Employees

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


                                       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.

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

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

         Pending and threatened litigation could result in Quest losing its
primary operating assets. Currently, Quest is a party to various pending
lawsuits and judgments, including judgments in favor of 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. On July 19, 2006,
National City Bank sold its right, title and interest in and to the various
judgments, judgment liens, and security interests to a third party investor.
While the third party investor has agreed to forbear on further collections,
enforcement, and foreclosure with respect to this indebtedness, such investor
may withdraw such forbearance if we do not comply with our covenants with the
investor. It is possible that, in connection with the foreclosure action, the
leasehold interests or other assets of Quest could be sold to such third party
creditor, 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.

                                       14
<PAGE>

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

         Quest will need to continue to finance its operations through
additional bank borrowings or other capital financings, and if it is unable to
obtain additional capital, it may not be able to continue as a going concern.
Quest had a working capital deficit as of December 31, 2006 of $8,008,768. 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 2007 through cash flows generated from operations. Quest
will need to continue to finance its operations through additional borrowings or
other capital financings. Quest's collateral may not be sufficient to borrow
additional amounts at such time. Quest may also seek equity financing in the
form of a private placement or a public offering. Such additional financing may
not be available to Quest, when and if needed, on acceptable terms or at all. If
Quest is unable to obtain additional financing in sufficient amounts or on
acceptable terms, its operating results and prospects could be further adversely
affected.

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

         Quest may be unable to continue as a going concern, in which case its
securities will have little or no value. Quest's independent auditor has noted
in its report concerning Quest's financial statements as of December 31, 2006
that it has incurred recurring losses from operations and has a working capital
deficiency, which raises substantial doubt about its ability to continue as a
going concern. As shown in the consolidated financial statements included in
this report, Quest has incurred recurring losses from operations in 2006 and
2005, and has an accumulated deficit and a working capital deficit as of
December 31, 2006. These conditions raise substantial doubt as to Quest's
ability to continue as a going concern. It is possible that Quest will not
achieve operating profits in the future.

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

         Quest's relative amount of debt could have material consequences to its
business, including, but not limited to, the following: (i) making it more
difficult to satisfy debt covenants and debt service, lease payment, and other
obligations; (ii) increasing its vulnerability to general adverse economic and
industry conditions; (iii) limiting its ability to obtain additional financing

                                       15
<PAGE>

to fund future acquisitions, working capital, capital expenditures, or other
general corporate requirements; (iv) reducing the availability of cash flows
from operations to fund acquisitions, working capital, capital expenditures, or
other general corporate purposes; (v) limiting its flexibility in planning for,
or reacting to, changes in its business and the industry in which it competes;
or (vi) placing it at a competitive disadvantage when compared to competitors
with less relative amounts of debt.

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

         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

                                       16
<PAGE>

the development of expanded capacity by new or existing coal producers. Any
overcapacity could reduce coal prices in the future.

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

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

         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

                                       17
<PAGE>

         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, 2006, none of Quest's workforce was
represented by a union. However, in the event that Quest is required to hire
union labor, there may be an increased risk of strikes and other related work
actions, in addition to higher labor costs associated with union labor. Quest
has experienced some union organizing campaigns at some of its open shop
facilities within the past five years. If some or all of Quest's current open
shop operations were to become union represented, Quest could be subject to
additional risk of work stoppages and higher labor costs. Increased labor costs
or work stoppages could adversely affect the stability of production and reduce
its net income.

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

         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,

                                       18
<PAGE>

customers, and strategic partners. Quest may have to incur debt or issue equity
securities to pay for any future acquisitions. The issuance of equity securities
could be substantially dilutive to Quest's stockholders. In addition, Quest's
profitability may suffer because of acquisition related costs. Quest currently
has no agreements or commitments concerning any such additional acquisitions,
and it may not be able to identify any companies that satisfy its acquisition
criteria.

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

         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 sole officer and director owns a majority of Quest's outstanding
voting rights, and as long as he does, he will control the outcome of
stockholder voting. Quest's sole officer and director is the owner of all of the
outstanding shares of Quest's Series C Preferred Stock, pursuant to which he
holds approximately 66.7% of the outstanding voting rights for Quest's capital
stock. As long as Quest's sole officer and director owns the Series C Preferred
Stock, Quest's other stockholders will be unable to affect or change the
management or the direction of Quest without the support of its sole officer and
director. As a result, some investors may be unwilling to purchase Quest's

                                       19
<PAGE>

common stock. If the demand for Quest's common stock is reduced because Quest's
officer and director has significant influence over Quest, the price of Quest's
common stock could be materially depressed. The officer and director will be
able to exert significant influence over the outcome of all corporate actions
requiring stockholder approval, including the election of directors, amendments
to 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
21,140,000 shares of preferred stock and to determine the price, rights,
preferences, and privileges of those shares without any further vote or action
by Quest's stockholders. To date, Quest has issued 2,000,000 shares of Series A
preferred stock, 1,600,000 shares of Series B preferred stock and 260,000 shares
of Series C preferred stock. Any preferred stock issued by Quest's board of
directors may, and in certain cases, do contain rights and preferences adverse
to the voting power and other rights of the holders of common stock.

                         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

         Gwenco, Inc. Chapter 11 Reorganization. On March 2, 2007, our wholly
owned subsidiary, Gwenco, Inc., filed a voluntary petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy
Court for the Eastern District of Kentucky. Management felt this was a necessary
step to further our financial restructuring initiative and to protect Gwenco's
assets from claims, debts, judgments, foreclosures, and forfeitures of those
creditors and stakeholders with whom both Quest and Gwenco were unable to
negotiate restructured agreements. We are currently overseeing Gwenco's
operations as a debtor in possession, subject to court approval of matters
outside the ordinary course of business. We are currently seeking court approval
for debtor in possession financing from holders of Gwenco's existing debt
obligations in order to fund operating expenses. We intend to continue our
mining operations at Pond Creek Mine at Slater's Branch while this matter is
completed. Under Chapter 11, claims against Gwenco in existence prior to the
filing of the petitions for reorganization relief under the federal bankruptcy
laws are stayed while Gwenco is in bankruptcy.

         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 had 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. On July
27, 2006, Quest settled the third party complaint with Anderson. As part of the
settlement, Gwenco received mining permit renewal and transfer documentation
which Gwenco is required to obtain in order to recommence mining operations at
its Pond Creek mine at Slater's Branch, Kentucky. Further, Anderson agreed to
provide all reasonable cooperation in recommencing mining operations at the
Slater's Branch mine. The parties also agreed to terminate all remaining rights,
duties, and obligations under the original stock purchase agreement entered into
in connection with the acquisition of Gwenco by Quest. Quest made a one-time
cash payment of $75,000 and issued 3,500,000 shares of common stock, subject to
a lock-up/leak out agreement, to Anderson, upon conversion of his Series B
Preferred Stock, the terms of which were amended under the settlement agreement.
Quest also granted Anderson a sliding scale royalty on coal sales. The parties
mutually dismissed their respective counter-claims against each other in the
civil action pending in Boyd County Court, Kentucky.

         In March, 2006, National City Bank commenced an action commenced an
action in Pike County Court, Kentucky against Quest, Gwenco, and Quest Energy,
seeking to be adjudged a lien on certain real and personal property of Gwenco
pursuant to the aforementioned judgment and that said real and personal property
be sold to satisfy the aforesaid lien, and that the liens of National City Bank
attach to the proceeds of the sale. In July, 2006, National City Bank of
Kentucky sold its right, title, and interest in and to the various judgments,
judgment liens, security interests, and lines of credit to a third party
investor. The third party investor has agreed to forbear on further collection,

                                       21
<PAGE>

enforcement, and foreclosure with respect to this indebtedness, in exchange for
which Gwenco agreed to grant the investor a royalty on gross profits of Gwenco.
This foreclosure action was stayed against Gwenco as a result of Gwenco's
Chapter 11 filing.

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

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

         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. Quest Energy is actively defending the action. This action was
stayed against Gwenco as a result of Gwenco's Chapter 11 filing.

         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.

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

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, 2005 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.

2006 (OTC Bulletin Board)                       High Bid               Low Bid
------------------------------------------------------------------------------
First quarter                                      0.181                 0.079
Second quarter                                     0.152                 0.030
Third quarter                                      0.040                 0.016
Fourth quarter                                     0.019                 0.004

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 April 16, 2007, there were approximately 517 record holders of
Quest's common stock.

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

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

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

Recent Sales of Unregistered Securities

         1.       In September and October, 2006, Quest entered into settlement
agreements with various investors from a March 22, 2005 private placement,
pursuant to which it settled and resolved all outstanding disputes under the
unit purchase agreements with the investors and any and all documents related
thereto. The parties agreed to a complete restructuring of the obligations to
each investor under these agreements, effectuated through the issuance of
amended and restated instruments, as follows:

                  A.       Amended and Restated Unit Notes. Quest issued to each
investor an amended and restated convertible notes in the aggregate principal
amount of $325,000, which notes are now due on or before March 4, 2007. The
original convertible notes had maturity dates of March 31, 2006. These amended
and restated notes will initially be convertible into Quest common stock at a
rate of $.075 per share, subject to adjustment as provided in the amended and
restated notes. The issuance of the notes were exempt pursuant to Section
3(a)(9) of the Securities Act as well as Section 4(2) of the Securities Act.

                                       23
<PAGE>

                  B.       Termination of Unit Purchase Agreements. All of the
provisions contained in the unit purchase agreements, solely as to each
investor, were terminated and of no further force and effect. In addition, each
investor waived any and all right to any claims or damages previously incurred
under the unit purchase agreements due to Quest's default thereunder, including
any defaults under the registration rights agreement entered into in connection
with the unit purchase agreements.

                  C.       Termination of Registration Rights Agreement. All of
the provisions contained in the registration rights agreement entered into in
connection with the unit purchase agreement, solely as to each investor, were
terminated and of no further force and effect. In addition, each investor waived
any and all right to any liquidated damages previously incurred under the
registration rights agreement due to Quest's default thereunder.

         2.       During the quarter ended December 31, 2006, Quest issued an
aggregate of 63,654,127 shares of common stock upon conversions of amended and
restated 7% convertible notes. The aggregate principal and interest amount of
these notes that were converted was $503,470. The issuances were exempt pursuant
to Section 3(a)(9) of the Securities Act as well as Section 4(2) of the
Securities Act.

         3.       During the quarter ended December 31, 2006, Quest issued an
aggregate of 800,002 shares of common stock upon cashless exercise of various
outstanding warrants. The issuances were exempt pursuant to Section 3(a)(9) of
the Securities Act as well as Section 4(2) of the Securities Act.

         4.       During the quarter ended December 31, 2006, Quest issued an
aggregate of 11,000,000 shares of common stock upon partial conversion of a
secured note and judgment thereon. The aggregate principal and interest amount
of this judgment that was converted was $27,000. The issuances were exempt
pursuant to Section 3(a)(9) of the Securities Act as well as Section 4(2) of the
Securities Act.


                                       24
<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.

Restatement of 2005 and 2004 Consolidated Financial Statements

         This report contains Quest's restated consolidated financial statements
for the years ended December 31, 2005 and 2004. Quest performed an analysis of
its previously issued consolidated financial statements for 2005 and 2004 and
identified certain accounting errors. The nature of the errors and the
restatement adjustments that Quest has made to its financial statements for the
years ended December 31, 2005 and 2004 are set forth in Note 18 to its
consolidated financial statements.

         The restatements also affected the quarterly results of operations for
the periods ending March 31, 2005, June 30, 2005, September 30, 2005, March 31,
2006, June 30, 2006, and September 30, 2006. See Note 19 to Quest's consolidated
financial statements for a summary of its quarterly results of operations for
the years ended December 31, 2006 and 2005, and see Note 18 for a discussion
regarding restatement adjustments.

General

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

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

Fiscal 2006 and First Quarter 2007 Developments

         Gwenco, Inc. Chapter 11 Reorganization. On March 2, 2007, Quest's
wholly owned subsidiary, Gwenco, Inc., filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code with the United
States Bankruptcy Court for the Eastern District of Kentucky. Management felt
this was a necessary step to further the company's financial restructuring
initiative and to protect Gwenco's assets from claims, debts, judgments,
foreclosures, and forfeitures of those creditors and stakeholders with whom both
Quest and Gwenco were unable to negotiate restructured agreements. The company
is currently overseeing Gwenco's operations as a debtor in possession, subject
to court approval of matters outside the ordinary course of business. Gwenco is
currently seeking court approval for debtor in possession financing from holders
of Gwenco's existing debt obligations in order to fund operating expenses. The

                                       25
<PAGE>

company intends to continue its mining operations at Pond Creek mine at Slater's
Branch while this matter is completed. Under Chapter 11, claims against Gwenco
in existence prior to the filing of the petitions for reorganization relief
under the federal bankruptcy laws are stayed while Gwenco is in bankruptcy.

         Rehabilitation and Reopening of Pond Creek Mine. In January 2007,
Gwenco received a permit from the Kentucky Department of Natural Resources to
conduct coal mining at its Pond Creed mine. In February 2007, Gwenco's
engineering firm, Alchemy Engineering of Prestonburg, Kentucky, completed a one
and five year mine plan and maps required by the Kentucky Department of Mines
and Minerals in connection with the permit to conduct coal mining at Pond Creek.
Gwenco has retained General Mining, LLC of Wallins, Kentucky to rehabilitate the
Pond Creek mine in February 2007 and further retained General Mining to conduct
mining operations at Pond Creek in March 2007. The company completed its initial
rehabilitation of the Pond Creek mine, recommenced mining operations, and began
shipping commercial coal for sale in May 2007.

         Sale and Forbearance of National City Bank Judgment. 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. On July 19, 2006, National City Bank of Kentucky sold its right,
title, and interest in and to the various judgments, judgment liens, and
security interests to a third party investor. The third party investor has
agreed to forbear on further collection, enforcement, and foreclosure with
respect to this indebtedness until further notice, in exchange for which Gwenco
agreed to grant the investor a royalty on gross profits of Gwenco.

         Letter of Intent with Parsons Branch. On July 21, 2006, Quest signed a
non-binding letter of intent with Parsons Branch Development to acquire a permit
to mine the Elkhorn #2 seam on Parsons Branch located in Mud Creek, Kentucky.
Parsons Branch Development has approximately 450,000 tons of clean coal under
lease at this location. Upon completion of the transfer of the permit to Quest,
it will retain all revenues from coal sales after payment of a royalty to
Parsons Branch of $1.50 per clean ton mined and expenses of mine operations,
which are expected to be carried out by a contract miner. The transaction is
subject to due diligence, negotiation of definitive agreements, regulatory
approval of the transaction, and satisfaction of other customary conditions to
closing.

         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.
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.

         At of the date of this report, Quest has not quantified the scope of
the apparent embezzlement or the impact that the apparent embezzlement will have
on its financial statements. Quest has retained a forensic accountant to
quantify the scope of the alleged fraud; however, the forensic accountant has
not completed its analysis at this time.

         In May, 2006, a federal grand jury indicted Mr. Runyon, Ms. Holbrook,
James Daniel Stollings, and Quest's former President and Chief Executive
Officer, William R. Wheeler on charges of bank fraud. In connection with the
indictments, Mr. Runyon and Ms. Holbrook each pled guilty. In December 2006, a
federal jury convicted Mr. Stollings and Mr. Wheeler of bank fraud. Mr. Wheeler
has appealed the conviction. Quest denies any wrongdoing in connection with
these matters.

         The Federal Insurance Company, the insurer for Community Trust Bank,
commenced an action in Pike County Court, Kentucky against Quest Energy for
subrogation of monies it has paid to the bank and repayment of deductibles by
Community Trust as a part of an alleged criminal scheme and conspiracy by Mr.
Runyon, Ms. Holbrook, Mr. Stollings, and Mr. Wheeler. The insurer alleged that
former employees or associates of Quest Energy, including Mr. Runyon and Mr.
Wheeler, were primarily involved in the alleged scheme, that Quest Energy is
accordingly responsible for the actions of these former employees and
associates, and that Quest Energy obtained a substantial material benefit as a
result of this alleged scheme. Quest Energy has denied these allegations, that
it had any involvement with or responsibility for any of the actions alleged by

                                       26
<PAGE>

the insurer, and it further denies that it has benefited from any such alleged
scheme. Further, Quest Energy filed a counterclaim against the Federal Insurance
Company and Community Trust contending that the negligent actions and inactions
by Community Trust caused severe damage and loss to Quest Energy and Quest.

         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.

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.

         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.

                                       27
<PAGE>

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, 2006,
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,
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, 2006.

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.


                                       28
<PAGE>

Results of Operations

Basis of Presentation

         The following table sets forth, for the periods indicated, certain
audited selected financial data:

                                                        Year Ended
                                                        December 31,
                                                 ----------------------------
                                                     2006            2005
                                                 ------------    ------------
                                                                  (restated)
                                                 ------------    ------------
Revenues                                         $         --    $    356,741
Production costs                                           --         463,215
Selling, general and
 administrative                                     4,447,356       2,790,691
Stock Compensation                                    286,108              --
Interest                                              747,259         876,599
Depreciation and amortization                          49,392          67,849
Mine closing costs                                         --         593,371
                                                 ------------    ------------

Operating income (loss)                            (5,530,115)     (4,434,984)
                                                 ------------    ------------

Comparison of the year ended December 31, 2006 and 2005

         Net sales. Revenues for Quest were $0 for the year ended December 31,
2006, as compared to $356,741 for the year ended December 31, 2005. Quest has
not been generating revenues from any of its mines since June 2005, when, due to
equipment breakdowns and a lack of working capital, Quest had to shut down the
mines.

         Production costs. Production costs were $0 for the year ended December
31, 2006 as compared to $463,215 for the year ended December 31, 2005. Quest had
no production costs due to its lack of mining operations during the period.

         Selling, general, and administrative. Selling, general and
administrative expenses increased to $4,447,356, or 59.4%, for the year ended
December 31, 2006, from $2,790,691 for the year ended December 31, 2005. The
increase in selling, general, and administrative expenses results primarily from
increases in consulting services and other administrative expenditures incurred
with Quest's efforts to refurbish its mines and recommence mining operations, as
well as expense resulting from assumption of debt in connection with settlement
agreements with creditors and third-party claimants.

         Stock compensation expense. Stock compensation expense increased to
$286,108 for the year ended December 31, 2006 from $0 for the prior year,
resulting from the issuance and vesting of stock options during the 2006 fiscal
year.

         Interest. Interest expense decreased to $747,259, or 19.3%, for the
year ended December 31, 2006, from $876,599 for the year ended December 31,
2006. Quest's interest expense results from various outstanding debt
obligations, including obligations that Quest assumed in connection with the
acquisition of Gwenco and various notes issued in various financings since
October 2004. The decrease in interest expense results primarily from the
reduction of our outstanding indebtedness by means of conversions of such
indebtedness into common stock, as well as reduced interest rates on refinanced
debts.

         Depreciation and amortization. Depreciation expense decreased to
$49,392, or 27.2%, for the year ended December 31, 2006, from $67,849 for the
year ended December 31, 2005. Quest's depreciation expense decreased as
additional equipment was taken out of service in 2006.

                                       29
<PAGE>

         Operating loss. Quest incurred an operating loss of $5,530,115 for the
year ended December 31, 2006, compared to an operating loss of $4,434,984 for
the year ended December 31, 2005. It had higher operating losses in 2006 as
compared to 2005 primarily from increases in consulting services and other
administrative expenditures incurred with Quest's efforts to refurbish its mines
and recommence mining operations, as well as expense resulting from assumption
of debt in connection with settlement agreements with creditors and third-party
claimants. This was offset by mine closing costs in 2005 that were not incurred
in 2006.

Liquidity and Capital Resources

         Quest has financed its operations, acquisitions, debt service, and
capital requirements through cash flows generated from operations until June 30,
2005, and through issuance of debt and equity securities. Its working capital
deficit at December 31, 2006 was $8,008,768. It had cash of $52 as of December
31, 2006.

         Quest used $670,304 of net cash in operating activities for the year
ended December 31, 2006, compared to using $1,817,771 in the year ended December
31, 2005. Cash used in operating activities for the year ended December 31, 2006
was mainly due to an increase in prepaid expenses of $233,000. In addition,
Quest recorded a non-cash decrease of $5,137,142 in derivative liabilities. This
was offset by non-cash expenses of $49,392 in depreciation and amortization,
$766,000 in deferred consulting amortization, $77,038 of stock issued for
interest, $1,209,748 of stock issued for services, $849,000 for warrant
issuances and conversions expenses, $1,462,440 of investment expense, $279,323
for loss on asset impairment, $286,107 in deferred stock compensation expense,
and an increase of accounts payable and accrued expenses of $113,763.

         Net cash flows used by investing activities was $15,801 for the year
ended December 31, 2006, resulting from providing a security deposit and offset
by the sale of equipment, as compared to $127,000 of net cash flows used by
investing activities for the comparable period in 2005.

         Net cash flows provided by financing activities were $669,742 for the
year ended December 31, 2006, compared to net cash flows provided by financing
activities of $1,858,966 for the year ended December 31, 2005. This decrease in
net cash provided by financing activities is due to Quest's borrowings of
$676,135 and the issuance of shares of common stock of $24,990, offset by
repayment of $31,383 of debt.

Financings and Debt Restructurings

         Through 2005 and 2006, Quest has relied on debt and equity financings
to fund its capital requirements. From February through April 2005, Quest sold
an aggregate of 57 units at a price of $25,000 per unit. The aggregate gross
proceeds from the sale of the units were $1,425,000, which included $925,000 in
cash, $250,000 in placement agent and investment banking fees, and cancellation
of $250,000 in indebtedness. 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.

         During 2006, Quest and these investors amended and restated the notes
issued as part of the units. In addition, five units ($125,000 in principal
amount of notes) were cancelled. The amended and restated notes are convertible
at the option of the holder at a conversion price of $0.075 per share; provided,
that if the market price of Quest's common stock was less than $0.10 per share
for ten consecutive trading days, the conversion price would reduced to $0.05
per share; provided, further, that if the market price of the Company's common
stock was less than $0.05 per share for ten consecutive trading days, the
conversion price would become the lesser of (i) $0.05 per share or (ii) 70% of

                                       30
<PAGE>

the average of the 5 closing bid prices of the common stock immediately
preceding such conversion date.

         From December 2005 through January 2006, Quest issued 6,000,000 shares
of its common stock in an offshore private placement at $0.05 per share. In
addition, 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.
In January, 2007, Quest and these investors entered into an exchange agreement,
pursuant to which the shares and the note were exchanged for new notes in the
aggregate principal amount of $635,000. The notes are due on April 1, 2008, with
an annual interest rate of eight percent (8%). The notes are convertible into
the Company's common shares at an initial conversion price equal to the greater
of (a) $0.005 per share, and (b) 50% of the average market price during the
three trading days immediately preceding any conversion date.

         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 $0.21 per share. 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 $0.105 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. 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 $0.14 per share.

         During January of 2006, Quest entered into a loan agreement to receive
up to $300,000 in funds for operations in return for a 12% percent note due in
May of 2006. As additional collateral, the executive officers of Quest
guaranteed the loan and pledged 3,000,000 shares of their common stock to secure
the guarantee. As of the three months ended March 31, 2006, the lender has made
advances totaling $132,000. On April 3, 2006, the lender declared a default
under the loan agreement. Quest failed to repay the lender as required under the
loan agreement. The lender then enforced guarantees made by the officers of the
Company and foreclosed on the shares of the officer's common stock pledged to
the lender to secure the guarantee. The Company has indemnified one of the
officers and is currently negotiating the terms of indemnification of the other
officer as a result of this foreclosure.

         The lender continues to advance operational funding to Quest. Since
there has been no formal agreement regarding the balance owed, Quest accrues a
5% annual interest on the principal with the intent that a mutual arrangement
will be resolved between both parties.

         On or about August 24, 2006, Quest, Albert Anderson, and William S.
Whitson, a former stockholder of Gwenco, Inc., agreed to restructure certain of
Mr. Anderson's debt obligations to Mr. Whitson that are guaranteed by Gwenco and
Quest. In connection therewith, Quest and Gwenco guaranteed two amended and
restated promissory notes issued by Mr. Anderson to Mr. Whitson: a 5.26% note in
the principal amount of $535,473.90 due as a balloon payment on December 10,
2007, and a 5.12% note in the principal amount of $180,883.63, with monthly
payments of $5,461.60 due September 24, 2009. Quest's guarantee of the notes is
secured by a pledge of 50% of the capital stock of Gwenco.

                                       31
<PAGE>

Capital Requirements

         The report of Quest's independent accountants for the fiscal year ended
December 31, 2006 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.

         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. Quest is also seeking to fund the
capital requirements of Gwenco, Inc. through a debtor-in-possession financing
through the Gwenco bankruptcy proceedings.

         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.


                                       32
<PAGE>

Item 7.  FINANCIAL STATEMENTS

                         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-F48






<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 sheets of Quest Minerals &
Mining Corp. as of December 31, 2006, 2005, and 2004 and the related statements
of operations, changes in stockholders' equity (deficit) and cash flows for each
of the years in the three 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 audits 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, 2006, 2005, and 2004 and the results of its operations and cash
flows for each of the years in the three year period then ended in conformity
with accounting principles generally accepted in the United States of America.

As discussed in Note 16 to the consolidated financial statements, the Company is
a defendant in several lawsuits, and one of the Company's significant
subsidiaries is in bankruptcy. 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 these legal proceedings.

As discussed in Notes 18 and 19 to the consolidated financial statements, the
accompanying consolidated balance sheets as of December 31, 2005 and 2004, and
the related consolidated statements of operations, cash flows, and stockholders'
equity for each of the years in the two years ended December 31, 2005 have been
restated.

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
June 20, 2007


                                       F-2
<PAGE>
<TABLE>
<CAPTION>

                          QUEST MINERALS & MINING CORP.

                           CONSOLIDATED BALANCE SHEETS

                                                                                     December 31
                                                                     --------------------------------------------
                                                                         2006            2005            2004
                                                                     ------------    ------------    ------------
                                                                                       Restated        Restated
<S>                                                                     <C>         <C>            <C>
                                     ASSETS
Current Assets
  Cash                                                               $         52    $     16,415    $    102,220
  Receivables                                                                  --              --          38,559
                                                                     ------------    ------------    ------------
      Total current assets                                                     52          16,415         140,779

Leased mineral reserves, net (Note 2 & 5)                               5,210,471       5,210,471       5,224,057
Equipment, net (Note 6)                                                   176,384         405,782         434,404
Escrow - Trustee Account                                                       --         275,000              --
Deposits                                                                   38,300              --          23,000
Prepaid consulting expense                                                 71,000         589,000              --
Deferred stock option/warrant issuance, net (Note 18)                          --              --              --
Other receivables, net (Note 7)                                                --         668,000         668,000
                                                                     ------------    ------------    ------------

      TOTAL ASSETS                                                   $  5,496,207    $  7,164,668    $  6,490,240
                                                                     ============    ============    ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
  Accounts payable and accrued expenses (Note 8)                     $  2,598,397    $  2,484,634    $  2,195,775
  Loans payable (Note 9)                                                3,679,384       2,857,864       1,243,203
  Bank loans (Note 9)                                                   1,017,525       1,068,366       1,100,365
  Related party loans (Note 9)                                            713,514         695,000         359,034
                                                                     ------------    ------------    ------------

      TOTAL CURRENT LIABILITIES                                         8,008,820       7,105,864       4,898,377

Other Liabilities
  Derivative liability (Note 7)                                         1,420,588       6,557,730       2,196,896
  Long-term liabilities                                                        --              --         100,000
  Unearned revenues (Note 8)                                                   --         668,000         668,000
                                                                     ------------    ------------    ------------


      TOTAL LIABILITIES                                                 9,429,408      14,331,594       7,863,274

Commitments and Contingencies

Stockholders' equity (deficit)
  Preferred stock, par value $0.001, 10,000,000 shares authorized;
    SERIES A - issued and outstanding 453,000 shares                          453             453           1,000
    SERIES B - issued and outstanding 48,284 shares                            48             386             386

  Common stock, par value $0.001, 250,000,000 shares authorized;
    issued and outstanding 212,914,952 shares                             212,919          69,502          46,272

  Equity held in escrow (Note 12)                                        (587,500)       (587,500)       (262,500)

  Deferred Stock Compensation (Note 13)                                   (95,370)             --              --

  Paid-in capital (Note 14)                                            46,628,119      43,049,130      39,744,888
  Accumulated Deficit                                                 (50,091,870)    (49,698,897)    (40,903,080)
                                                                     ------------    ------------    ------------

Total Stockholders' Equity (Deficit)                                   (3,933,201)     (7,166,926)     (1,373,034)
                                                                     ------------    ------------    ------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)           $  5,496,207    $  7,164,668    $  6,490,240
                                                                     ============    ============    ============
</TABLE>

                       See Notes to Financial Statements.

                                       F-3
<PAGE>
<TABLE>
<CAPTION>

                          QUEST MINERALS & MINING CORP.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           Years Ended December 31
                                              -----------------------------------------------
                                                  2006             2005             2004
                                              -------------    -------------    -------------
                                                                 Restated         Restated
<S>                                           <C>              <C>              <C>
Revenue:
   Coal revenues                              $          --    $     356,741    $   2,912,574
   Interest and other                                    --               --               --
                                              -------------    -------------    -------------

          Total Revenues                                 --          356,741        2,912,574
                                              -------------    -------------    -------------

Expenses:
   Production costs                                      --          463,215        2,050,358
   Selling, general and administrative            4,447,356        2,790,691       10,481,839
   Interest                                         747,259          876,599          668,353
   Stock compensation                               286,108               --       21,917,633
   Deferred warrants expense                             --               --               --
   Depreciation and amortization                     49,392           67,849           77,619
   Mining option                                         --               --        5,020,000
   Mine closing costs                                    --          593,371               --
   Loss on rescission                                    --               --          680,250

          Total Operating Expenses                5,530,115        4,791,725       40,896,052
                                              -------------    -------------    -------------

Loss from Operations                             (5,530,115)      (4,434,984)     (37,983,478)

Other Income (Expense):
   Gain (loss) on derivatives                     5,137,142       (4,360,834)      (2,196,896)
                                              -------------    -------------    -------------

Loss before income taxes                           (392,973)      (8,795,818)     (40,180,374)
                                              -------------    -------------    -------------

Provision for income taxes                               --               --               --
                                              -------------    -------------    -------------

Net loss                                      $    (392,973)   $  (8,795,818)   $ (40,180,374)
                                              =============    =============    =============

Basic and diluted loss per common share       $     (0.0037)   $     (0.1722)   $     (1.0238)
                                              =============    =============    =============

Weighted average common shares outstanding      107,493,141       51,072,960       39,246,163
                                              =============    =============    =============

</TABLE>

                       See Notes to Financial Statements.

                                       F-4
<PAGE>
<TABLE>
<CAPTION>

                          QUEST MINERALS & MINING CORP.

             STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY (DEFICIT)
              For the years ended December 31, 2006, 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)            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)

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

Net Loss for twelve
 months ended
 December 31, 2004                                                                                      (40,180,374)    (40,180,374)
                       -----------    ---------    ----------   -------   -----------    ---------    -------------    ------------
Balances at
 January 1, 2005        46,271,233    $  46,272     1,386,275   $ 1,386    39,744,888    $(262,500)   $ (40,903,080)   $ (1,373,034)

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

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

Common Stock issued
 under Sections
 4(2)/3(a)(9)
     For consulting      1,454,545        1,455                               187,545                                       189,000
     For notes
       payable and
       interest
       expense
       conversions       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 Stock
 Incentive Plan
     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                                                                                       (8,795,818)     (8,795,818)
                       -----------    ---------    ----------   -------   -----------    ---------    -------------    ------------
Balances at
 January 1, 2006        69,500,778    $  69,502       839,608   $   839    43,049,130    $(587,500)   $ (49,698,898)   $ (7,166,927)

Stock Options                                                                 381,477                                       381,477

Deferred
 Compensation                                                                 (95,369)                                      (95,369)

Common Stock issued
 under Sections
 4(2)/3(a)(9)/Reg S
     For cash and
       investment
       expense             500,000          500                                74,500                                        75,000
     For consulting      4,800,000        4,800                               429,500                                       434,300
     For notes
       payable and
       interest
       expense
       conversions      91,760,362       91,761                             1,713,592                                     1,805,353
     For warrant
       exercises         3,650,003        3,650                               246,540                                       250,190

Common Stock issued
 under Stock
 Incentive Plan
     For consulting     13,703,809       13,706                               253,842                                       267,548
     For services       25,500,000       25,500                               482,700                                       508,200

Series B Preferred
 Conversion              3,500,000        3,500      (337,991)     (338)       (3,162)                                           --

Net Loss for
 twelve months
 ended
 December 31, 2006                                                                                         (392,973)       (392,973)
                       -----------    ---------    ----------   -------   -----------    ---------    -------------    ------------
Balances at
 December 31, 2006     212,914,952    $ 212,919       501,617   $   501    46,532,749    $(587,500)   $ (50,091,870)   $ (3,933,201)
                       ===========    =========    ==========   =======   ===========    =========    =============    ============
</TABLE>

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

                                       F-5
<PAGE>
<TABLE>
<CAPTION>

                          QUEST MINERALS & MINING CORP.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                             For the Twelve Months Ended
                                                                                    December 31,
                                                                     --------------------------------------------
                                                                        2006            2005            2004
                                                                     ------------    ------------    ------------
                                                                                       Restated        Restated
<S>                                                                  <C>             <C>             <C>
Operating Activities
--------------------
   Net Income (loss)                                                 $   (392,973)   $ (8,795,818)   $(40,180,374)
   Adjustments to reconcile net income (loss) to net cash provided
      (used) by operating activities:
   Depreciation and amortization                                           49,392          67,849          77,619
   Loss (gain) on derivatives                                          (5,137,142)      4,360,834       2,196,896
   Deferred consulting amortization                                       766,000              --              --
   Stock issued for interest                                               77,038         410,500         579,720
   Stock issued for services                                            1,209,748       1,344,106         412,918
   Stock issued for advertising                                                --        (250,000)        375,000
   Stock issued for royalties                                                  --         325,000              --
   Stock issued for option                                                     --              --       4,960,000
   Warrants issuances and conversions expense                             849,000              --              --
   Investment expense                                                   1,462,440              --              --
   Loss on asset impairments                                              279,323              --              --
   Loss on equipment valuation                                                 --              --         216,833
   Loss on discontinued operations                                             --              --         680,250
   Loss on mineral interests valuation                                         --              --       6,160,948
   Reverse merger adjustment                                                   --              --         (30,816)
   Deferred stock compensation                                            286,107              --      21,917,633
   Changes in operating assets and liabilities:
   (Increase) decrease in receivables                                          --          38,559         102,708
   (Increase) decrease in prepaid expenses                               (233,000)             --              --
   Increase (decrease) in accounts payable and accrued expenses           113,763         681,199         855,176
                                                                     ------------    ------------    ------------
   Net cash used by operating activities                                 (670,304)     (1,817,771)     (1,675,488)

Investing Activities
--------------------
   Equipment purchased                                                     22,499        (150,000)       (605,394)
   Security deposits                                                      (38,300)         23,000         (23,000)
                                                                     ------------    ------------    ------------
   Net cash used by investing activities                                  (15,801)       (127,000)       (628,394)

Financing Activities
--------------------
   Sale of common stock                                                    24,990         100,000       1,895,902
   Repayments                                                             (31,383)       (366,034)       (630,688)
   Borrowings                                                             676,135       2,125,000       1,140,338
                                                                     ------------    ------------    ------------
   Net cash provided by financing activities                              669,742       1,858,966       2,405,552
                                                                     ------------    ------------    ------------
   Increase (decrease) in cash                                            (16,363)        (85,805)        101,670
   Cash at beginning of period                                             16,415         102,220             550
                                                                     ------------    ------------    ------------
   Cash at end of period                                             $         52    $     16,415    $    102,220
                                                                     ============    ============    ============
Supplemental Disclosures of Cash Flow Information:
   Cash paid during year for:
     Interest                                                        $         --    $         --    $     24,282
                                                                     ============    ============    ============
     Commissions                                                               --              --         192,925
                                                                     ============    ============    ============
     Income taxes                                                    $         --    $         --    $         --
                                                                     ============    ============    ============

   Stock issued during year for:
     Services                                                        $  1,209,748    $  1,344,106    $    412,918
                                                                     ============    ============    ============
     Stock compensation                                                   286,107              --      21,917,633
                                                                     ============    ============    ============
     Interest                                                              77,038         410,500         579,720
                                                                     ============    ============    ============
     Mining option                                                             --              --       4,960,000
                                                                     ============    ============    ============
     Investment                                                           375,000              --              --
                                                                     ============    ============    ============
     Advertising                                                               --        (250,000)        375,000
                                                                     ============    ============    ============
</TABLE>
                       See Notes to Financial Statements.

                                       F-6
<PAGE>

                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 1 - ORGANIZATION & OPERATIONS

         Quest Minerals & Mining Corp. (the "Registrant" or the "Company") was
         incorporated in Utah on November 21, 1985. 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.

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.

         Interim Financial Information

         The unaudited balance sheets and unaudited statements of operations
         have been prepared in accordance with United States generally accepted
         accounting principles for interim financial information. In the opinion
         of management, all adjustments (consisting solely of normal recurring
         accruals) considered necessary for a fair presentation of the financial
         position and results of operations have been included in the interim
         periods reported in Note 19. Readers of these financial statements
         should note that the interim results are not necessarily indicative of
         the results that may be expected for the fiscal year as a whole.

         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.

                                      F-7
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 2 - SIGNICANT ACCOUNTING POLICIES (Continued)

         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 Expense

         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 under the guidance of IAS 36,
         pursuant to SEC Industry Guide 7. 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.

         Stock-Based Compensation

         Effective January 1, 2006, the Company began recording compensation
         expense associated with stock options and other forms of equity
         compensation in accordance with Statement of Financial Accounting
         Standards ("SFAS") No. 123R, Share-Based Payment, as interpreted by SEC
         Staff Accounting Bulletin No. 107. Prior to January 1, 2006, the
         Company had accounted for stock options according to the provisions of
         Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
         to Employees, and related interpretations, and therefore no related
         compensation expense was recorded for awards granted with no intrinsic
         value. The Company adopted the modified prospective transition method
         provided for under SFAS No. 123R, and, consequently, has not
         retroactively adjusted results from prior periods.

         There were 10,000,000 options issued to employees and non-employee
         directors during the year ending December 31, 2006, and there were no
         options issued to employees or non-employee directors during the year
         ended December 31, 2005. See Note 13 for details.

                                      F-8
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 2 - SIGNICANT ACCOUNTING POLICIES (Continued)

         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 December 31, 2006, 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 at December 31, 2006.
         The Company had no securities available-for-sale at December 31, 2006.

         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.

         Other Recent Accounting Pronouncements

         The Company does not expect that the adoption of other recent
         accounting pronouncements to have any impact on its financial condition
         or results of operations.

                                      F-9
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

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 operating losses of $5,069,317, $4,434,984, and
         $32,283,228 for the years ended December 31, 2006, 2005, and 2004,
         respectively, and had a working capital deficit of $8,008,768 at
         December 31, 2006. Although the Company received a derivative income
         credit of $5,137,142 for the twelve months ended December 31, 2006, it
         still incurred a net loss of $392,973. These factors still indicate
         that the Company's continuation as a going concern is dependent upon
         its ability to obtain adequate financing.

         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
         seeking additional funding to achieve its operational goals.

NOTE 4 - LEASEHOLD INTERESTS

         The Company maintains a number of coal leases with minimum lease or
         royalty payments that vary by lease as defined in the separate
         agreements. Several of the landowners have contended that the Company
         is in default under certain of these leases and that said leases are
         terminated. The Company disputes these contentions.

         Certain former owners of the Company's indirect, wholly-owned
         subsidiary, Gwenco, Inc. ("Gwenco") commenced an action in the Circuit
         Court of Pike County against Gwenco for damages resulting from an
         alleged failure to pay past royalties and other amounts allegedly due.
         On May 19, 2006, the former owners obtained a default judgment in this
         action in the amount of $687,391, from which Gwenco has taken appeal.
         The plaintiffs then amended their complaint, seeking to be adjudged a
         lien on certain real and personal property of Gwenco pursuant to the
         aforementioned judgment and that said real and personal property be
         sold to satisfy the aforesaid lien, and that the liens of the
         plaintiffs attach to the proceeds of the sale. Gwenco believes that it
         has several meritorious defenses and counterclaims to this action and
         intends to defend it vigorously. This foreclosure action was stayed
         against Gwenco as a result of Gwenco's filing of a voluntary petition
         for reorganization under Chapter 11 of the U.S. Bankruptcy Code. (See
         Note 17.)

         As of December 31, 2006, Gwenco owed approximately $193,142 in lease
         payments in addition to the judgment amount of $687,391.

                                      F-10
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

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, 2006, 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
                                                                 ============

         The Company maintains a number of coal leases with minimum lease or
         royalty payments that vary by lease as defined in the separate
         agreements. Several of the landowners have contended that the Company
         is in default under certain of these leases and that said leases are
         terminated. The Company disputes these contentions. Pursuant to IAS 36,
         management has reviewed the recoverable value of the Company's mineral
         reserves and has determined that no impairment loss has occurred. As
         long as the recoverable amount continues to exceed its carrying value,
         amortization will occur based on a proportionate ratio of depleted
         reserves as a result of future coal mining activity.

NOTE 6 - EQUIPMENT

         Equipment consisted of the following:
                                                 December 31,    December 31,
                                                     2006            2005
                                                 ------------    ------------
         Mining equipment (a)                    $    782,721    $    805,220
         Less accumulated depreciation               (250,517)       (399,438)
         Less allowance for Impairment (b)           (355,820)              0
                                                 ------------    ------------

         Equipment - net                         $    176,384    $    405,782
                                                 ============    ============

         (a) The Company depreciates its mining equipment over a 5 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.

                                      F-11
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 6 - EQUIPMENT (Contiuned)

         (b) On July 10, 2006, the Company entered into a settlement arrangement
         with an existing equipment lessor for the bill of sale on two pieces of
         equipment, of which the Company had retained possession while in
         default of prior lease payments. On October 10, 2006, the Pike County
         Circuit court entered an order enforcing this settlement agreement, and
         on December 19, 2006, the lessor was awarded summary judgment in the
         amount of $35,000 plus 8% accrued interest from August 9, 2006. As of
         December 31, 2006, the Company has accrued allowances against the
         equipment, as some of it has been repossessed with the understanding
         that it will be returned upon satisfaction of existing lease contracts,
         while the remaining equipment is unusable until required restoration
         and repairs can be made.


                                      F-12
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 7 - OTHER RECEIVABLES

         Other Receivables consisted of the following:

                                                    December 31,   December 31,
                                                        2006           2005
                                                    ------------   ------------
         D&D Contracting, Inc.(a)                   $    678,349   $    678,349
         Braxton Coal (b)                                 57,109             --
         Less allowance                                 (735,458)       (10,349)
                                                    ------------   ------------

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

         (a)      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
                  December 31, 2006, 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. As a result,
                  the Company has accrued an additional allowance on the entire
                  receivable until a settlement can be determined.

         (b)      During the twelve months ended December 31, 2006, the Company
                  hired a contract miner to mine the coal from the Gwenco
                  properties. The receivables represent initial startup and
                  maintenance expenses, which are to be paid back through a
                  royalty arrangement once coal production begins. As of
                  December 31, 2006, the contract miner continues to seek
                  funding to initiate production. As a result, the Company has
                  accrued an allowance against the receivable until revenues are
                  generated to recoup these initial expenses.

NOTE 8 - ACCOUNTS PAYABLE & ACCRUED EXPENSES

         Accounts payable and accrued expenses consist of the following:

                                                    December 31,   December 31,
                                                        2006           2005
                                                    ------------   ------------
         Accounts payable                           $    364,695   $     51,580
         Accrued royalties payable-operating (a)         193,142        579,278
         Accrued bank claim (b)                          650,000        650,000
         Accrued taxes                                    87,436        202,704
         Accrued interest                                291,597        351,712
         Accrued expenses (c)                          1,011,527        649,360
                                                    ------------   ------------
                                                       2,598,397      2,484,634

         Derivative Liability (d)                      1,420,588      6,557,730
         Unearned Revenues (e)                                 0        668,000

                                                    $  4,018,985   $  9,710,364
                                                    ============   ============

                                      F-13
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 8 - ACCOUNTS PAYABLE & ACCRUED EXPENSES (Continued)

         (a)      The Company maintains a number of coal leases with minimum
                  lease or royalty payments that vary by lease as defined in the
                  separate agreements. Several of the landowners have contended
                  that the Company is in default under certain of these leases
                  and that said leases are terminated. The Company disputes
                  these contentions. Certain former owners of Gwenco commenced
                  an action in the Circuit Court of Pike County against Gwenco
                  for damages resulting from an alleged failure to pay past
                  royalties and other amounts allegedly due. On May 19, 2006,
                  the former owners obtained a default judgment in this action
                  in the amount of $687,391, from which Gwenco has taken appeal.
                  Gwenco believes that it has several meritorious defenses and
                  counterclaims to this action and intends to defend it
                  vigorously. Since the judgment was approximately $500,000
                  above what the Company believes to have owed, the Company
                  reclassified the difference and recorded additional expense to
                  account for the liability. As of December 31, 2006, Gwenco
                  owed approximately $193,142 in lease and/or royalty payments
                  in addition to the judgment of $687,391 against Gwenco.

         (b)      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. The Company has filed suit against the bank and
                  all parties involving several counts of fraudulent misconduct.
                  As of December 31, 2006, no resolution has been determined.

         (c)      The Company recorded an accrued liability for indemnification
                  obligations of $390,000 to its officers, which represents the
                  fair value of shares of the Company's common stock which the
                  officers pledged as collateral for personal guarantees of a
                  loan to the Company. Upon default by the Company, the lender
                  foreclosed on the officer's pledged shares. In addition,
                  during the period ended December 31, 2004, the Company had
                  acquired these accrued expenses from its subsidiaries, E-Z
                  Mining Co. and Gwenco, Inc. The Company continues to carry
                  these balances until further validity can be determined.

         (d)      During the twelve months ending December 31, 2006, the Company
                  issued convertible notes at a discounted rate relative to the
                  market price of the underlying common stock, as well as
                  warrants. The Company has accrued additional derivative
                  liability allowances based on the market price volatility of
                  the common stock using the Black-Scholes method. The
                  valuations are adjusted each quarter to present a fair
                  representation of the liability until the underlying note or
                  warrant has matured, expired, or has been exercised,
                  cancelled, or satisfied. The Company's operating losses are
                  increased or decreased relative to the derivative liability
                  allowance. These adjusted valuations also remain relative to
                  the future capitalization costs that would incur from exercise
                  of the warrant issuances or settlement of existing debt
                  through conversion.

         (e)      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 December 31, 2006, 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.
                  As a result, the Company has reclassified the allowance under
                  Other Receivables until a settlement can be determined.

                                      F-14
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 -          NOTES PAYABLE
<TABLE>
<CAPTION>

         Notes payable consist of the following:

                                                                     December 31,    December 31,
                                                                         2006            2005
                                                                     ------------    ------------
<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
            12% Notes payable to Gross Foundation (c).                    218,623         280,000
            7% Notes payable to Greenwood Partners (d).                    78,000         100,000
            7% Notes payable to Professional Traders Fund (d).            184,000         350,000
            7% Notes payable to First Mirage (d).                         191,597         200,000
            7% Notes payable to Investors (e).                             75,000         375,000
            7% Notes payable to Greenwood Partners (f).                   175,000         350,000
            7% Notes payable to First Mirage (f).                          50,000          50,000
            10% Notes payable to Professional Traders Fund (g).           100,000         239,500
            8% Notes payable to Cornway Co (h).                           335,000        335,0000
            5% Advances from Mendiratta (i).                              430,837              --
            0% Notes payable (i).                                         126,000         125,500
            6% Notes payable to Westor Capital Group (k).                 125,000              --
            8% Notes payable to Kaila (l).                                300,000              --
         QUEST ENERGY, LTD.
            8% Summary Judgment payable to BH&P (m).                       35,000              --

         GWENCO, INC.:
            12% Judgment to Duke Energy Merchants (n).                    726,964         747,894
             9% Assigned Judgment to Mendiratta (o).                      278,796         235,907
            12.75% Assigned Judgment to Mendiratta (o).                    86,276          84,565
            9.5% Note payable to First Sentry Bank (p)                    262,402              --
            6% Note payable to United National Bank (p)                    28,159              --
            0% Default Judgment to Third-Party (q)                        687,391              --

         GWENCO, INC.: (Related-Party Loans)
            5.26% Notes payable to Scott Whitson (r).                     713,514         695,000
                                                                     ------------    ------------
                                                                        5,410,423       4,621,230
            Less current portion                                        5,410,423       4,621,230
                                                                     ------------    ------------

         Long-Term Debt:                                             $         --    $         --
                                                                     ============    ============
</TABLE>

                                      F-15
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (a)      On December 31, 2005, the Company closed E-Z 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. 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.

         (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. On February 13, 2006, the Company converted the note
                  into 5,000,000 shares of common stock in order to settle the
                  debt. The Company expensed $270,000 to interest for the
                  difference in market value at the time of issuance.

         (c)      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 was secured by certain of the Company's
                  equipment. In the event of default, the note became
                  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 issued
                  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 of 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 lender continues to make periodic partial
                  conversion requests to pay down the principal and accrued
                  interest. On July 26, 2006, the note was amended and restated
                  at 12%, due on April 18, 2007, with a new balance of $258,091,
                  which included the remaining principal and interest from the
                  original note. The note is convertible at the option of the
                  holder at a conversion price of $0.075 per share; provided,
                  that if the market price of the Company's common stock was
                  less than $0.10 per share for ten consecutive trading days,
                  the conversion price would reduced to $0.05 per share;
                  provided, further, that if the market price of the Company's
                  common stock was less than $0.05 per share for ten consecutive
                  trading days, the conversion price would become the lesser of
                  (i) $0.05 per share or (ii) 70% of the average of the 5
                  closing bid prices of the common stock immediately preceding
                  such conversion date. During the twelve months ended December
                  31, 2006, the lender made periodic partial conversions of the
                  principal and accruing interest. Since the convertible notes
                  were issued at a discount to the market price of the
                  underlying common stock, the Company has taken into
                  consideration the cost of issuing the common stock to settle
                  the debt at the time of issuance and has accrued additional
                  allowances based on a valuation of market price volatility.

                                      F-16
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (d)      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 was subject to
                  adjustment. Each Series A Warrant was 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 was 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. On February 14,
                  2006, the Company amended and restated a 7% convertible note
                  in the principal amount of $350,000, which is now due February
                  22, 2007, to one of the third party lenders. On June 5, 2006,
                  the Company amended and restated the remaining 7% convertible
                  notes in the principal amounts of $100,000 and $200,000,
                  respectively, which are also now due February 22, 2007. The
                  notes are convertible at the option of the holder at a
                  conversion price of $0.075 per share; provided, that if the
                  market price of the Company's common stock was less than $0.10
                  per share for ten consecutive trading days, the conversion
                  price would reduced to $0.05 per share; provided, further,
                  that if the market price of the Company's common stock was
                  less than $0.05 per share for ten consecutive trading days,
                  the conversion price would become the lesser of (i) $0.05 per
                  share or (ii) 70% of the average of the 5 closing bid prices
                  of the common stock immediately preceding such conversion
                  date. During the twelve months ended December 31, 2006, the
                  lenders made periodic partial conversions of the principal and
                  accruing interest. Since the convertible notes were issued at
                  a discount to the market price of the underlying common stock,
                  the Company has taken into consideration the cost of issuing
                  the common stock to settle the debt at the time of issuance
                  and has accrued additional allowances based on a valuation of
                  market price volatility.


                                      F-17
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (e)      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 was 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 was 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. During the
                  twelve months ended December 31, 2006, the Company amended and
                  restated 7% convertible notes in the aggregate principal
                  amount of $325,000, which are now due February 22, 2007. The
                  notes are convertible at the option of the holder at a
                  conversion price of $0.075 per share; provided, that if the
                  market price of the Company's common stock was less than $0.10
                  per share for ten consecutive trading days, the conversion
                  price would reduced to $0.05 per share; provided, further,
                  that if the market price of the Company's common stock was
                  less than $0.05 per share for ten consecutive trading days,
                  the conversion price would become the lesser of (i) $0.05 per
                  share or (ii) 70% of the average of the 5 closing bid prices
                  of the common stock immediately preceding such conversion
                  date. During the twelve months ended December 31, 2006,
                  several of the lenders made periodic partial conversions of
                  the principal and accruing interest. Since the convertible
                  notes were issued at a discount to the market price of the
                  underlying common stock, the Company has taken into
                  consideration the cost of issuing the common stock to settle
                  the debt at the time of issuance and has accrued additional
                  allowances based on a valuation of market price volatility.

         (f)      On April 18, 2005, the Company signed a series of unit
                  purchase agreements with two third-party lenders 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 was 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 was 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. On June 5, 2006, the
                  Company amended and restated the 7% convertible notes in the
                  principal amounts of $100,000, $125,000, and $50,000,
                  respectively, which are now due April 18, 2007. As part of the
                  amendment and restatement, one of the noteholders forgave a 7%
                  senior secured convertible note in the principal amount of
                  $125,000. The notes are convertible at the option of the
                  holder at a conversion price of $0.075 per share; provided,
                  that if the market price of the Company's common stock was
                  less than $0.10 per share for ten consecutive trading days,
                  the conversion price would reduced to $0.05 per share;
                  provided, further, that if the market price of the Company's
                  common stock was less than $0.05 per share for ten consecutive
                  trading days, the conversion price would become the lesser of
                  (i) $0.05 per share or (ii) 70% of the average of the 5
                  closing bid prices of the common stock immediately preceding
                  such conversion date. During the twelve months ended December
                  31, 2006, the lenders made periodic partial conversions of the
                  principal and accruing interest. Since the convertible notes
                  were issued at a discount to the market price of the
                  underlying common stock, the Company has taken into
                  consideration the cost of issuing the common stock to settle
                  the debt at the time of issuance and has accrued additional
                  allowances based on a valuation of market price volatility.

                                      F-18
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (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. As of
                  December 31, 2005, the Company had made a payment of $5,500.
                  On February 14, 2006, in connection with a settlement
                  agreement with the lender, the Company made a payment of
                  $264,000 and issued an amended and restated 10% note in the
                  amount of $100,000. The note covered accrued interest and
                  additional legal fees. The amended and restated note is
                  convertible into the Company's common stock at a rate of $0.10
                  per share and is due February 22, 2007. Since the convertible
                  note was issued at a discount to the market price of the
                  underlying common stock, the Company has taken into
                  consideration the cost of issuing the common stock to settle
                  the debt at the time of issuance and has accrued additional
                  allowances based on a valuation of market price volatility.

         (h)      On December 8, 2005, the Company issued a convertible secured
                  promissory note in the principal amount of $335,000. The note
                  was 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. As of December 31, 2006, the
                  Company was in default. Since the convertible notes were
                  issued at a discount to the market price of the underlying
                  common stock, the Company has taken into consideration the
                  cost of issuing the common stock to settle the debt at the
                  time of issuance and has accrued additional allowances based
                  on a valuation of market price volatility.

         (i)      During January of 2006, the Company entered into a loan
                  agreement to receive up to $300,000 in funds for operations in
                  return for a 12% percent note due in May of 2006. As
                  additional collateral, the officers of the Company guaranteed
                  the loan and pledged their own shares of common stock. As of
                  the three months ended March 31, 2006, the lender has made
                  advances totaling $132,000. On April 3, 2006, the lender
                  declared a default under the terms of the loan agreement. The
                  Company failed to repay the lender as required under the loan
                  agreement. The lender then enforced guarantees made by the
                  officers of the Company and foreclosed on shares of the
                  officer's common stock pledged to the lender to secure the
                  guarantee. Along with accrued interest, the Company recorded a
                  capital contribution from its officers of $260,000. As of
                  December 31, 2006, the Company was negotiating the terms of
                  indemnification of the officers as a result of this
                  foreclosure. During the year ended December 31, 2006, the
                  lender continued to advance operational funding into the
                  Company. Since there has been no formal agreement regarding
                  the balance owed, the Company accrues a 5% annual interest on
                  the principal with the intent that a mutual arrangement will
                  be resolved between both parties.

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

                                      F-19
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (k)      On April 5, 2006, the Company 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 the
                  Company's common stock at an exercise price of $0.21 per
                  share. 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
                  $0.105 per share, subject to adjustment, including a
                  "weighted-average" reduction of the conversion price in the
                  event that the Company issued additional stock or stock
                  equivalents at a price lower than the conversion price.
                  Commencing on the fifth month of the notes, the Company 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. Since the convertible notes were issued
                  at a discount to the market price of the underlying common
                  stock, the Company has taken into consideration the cost of
                  issuing the common stock to settle the debt at the time of
                  issuance and has accrued additional allowances based on a
                  valuation of market price volatility. As of December 31, 2006,
                  these notes were in default, and the Company is in the process
                  of re-negotiating the notes with the holders.

         (l)      On April 1, 2006, the Company entered into a settlement and
                  release agreement with a third party individual pursuant to
                  which the Company issued a convertible secured promissory note
                  in the principal amount of $300,000. The note is due on April
                  1, 2008, with an annual interest rate of eight percent (8%).
                  The note is convertible into the Company's common shares at an
                  initial conversion price equal to the greater of (a) $0.005
                  per share, and (b) 50% of the average market price during the
                  three trading days immediately preceding any conversion date.
                  The holder may not convert any outstanding principal amount of
                  this note or accrued and unpaid interest thereon to the extent
                  such conversion would result in the holder beneficially owning
                  in excess of 4.999% of the then issued and outstanding common
                  shares of the Company. Since the convertible note was issued
                  at a discount to the market price of the underlying common
                  stock, the Company has taken into consideration the cost of
                  issuing the common stock to settle the debt at the time of
                  issuance and has accrued additional allowances based on a
                  valuation of market price volatility.

         (m)      On July 10, 2006, the Company entered into a settlement
                  arrangement with an existing equipment lessor for the bill of
                  sale on two pieces of equipment, of which the Company had
                  retained possession while in default of prior lease payments.
                  On October 10, 2006, the Pike County Circuit court entered an
                  order enforcing this settlement agreement, and on December 19,
                  2006, the lessor was awarded summary judgment in the amount of
                  $35,000 plus 8% accrued interest from August 9, 2006. As of
                  December 31, 2006, the Company remains in default.

         (n)      On April 28, 2004, in connection with the Company's
                  acquisition of Gwenco, Inc., the Company assumed a promissory
                  note which was in default. The note was secured by certain
                  assets of Gwenco. The former stockholder of Gwenco has
                  personally guaranteed most of the above loans. On May 20,
                  2005, the lender, Duke Energy, was awarded a judgment of
                  $670,964 plus legal fees of $56,000, which accrues interest at
                  the rate of twelve percent. As of December 31, 2006, the
                  balance remains outstanding. Duke Energy has obtained a
                  judgment lien against the Company and its assets.

                                      F-20
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (o)      On April 28, 2004, in connection with the Company's
                  acquisition of Gwenco, Inc., the Company assumed a commercial
                  installment note and a commercial time note, both of which
                  were in default. The notes were secured by certain assets of
                  Gwenco. The former stockholder of Gwenco has personally
                  guaranteed most of the above loans. In 2005, the Company
                  entered into an agreed judgment in with the lender, National
                  City Bank of Kentucky, with respect to the defaulted notes.
                  National City Bank obtained a judgment lien against the
                  Company and its assets. On July 19, 2006, National City Bank
                  sold its right, title, and interest in and to the various
                  judgments, judgment liens, security interests, and lines of
                  credit, all of which are based on the notes issued to National
                  City Bank of Kentucky, also referenced in Note 16, to a third
                  party investor. The third party investor has agreed to forbear
                  on further collection, enforcement, and foreclosure with
                  respect to this indebtedness until further notice. In
                  connection therewith, the Company granted the investor a
                  royalty on fifty percent of the Company's gross profits
                  generated from coal mining at the Company's leased mine. Also
                  in connection therewith, the Company entered into a judgment
                  conversion agreement where the investor shall have the right,
                  but not the obligation, to convert all or any portion of the
                  then aggregate outstanding amounts due under the judgments
                  into the Company's common shares at the rate of $0.001 per
                  share. The investor shall not be entitled to convert any
                  portion of the judgment if such conversion would result in
                  beneficial ownership by the investor of more than 4.99% of the
                  outstanding common shares of the Company. Since the
                  convertible note was issued at a discount to the market price
                  of the underlying common stock, the Company has taken into
                  consideration the cost of issuing the common stock to settle
                  the debt at the time of issuance and has accrued additional
                  allowances based on a valuation of market price volatility.

         (p)      On July 27, 2006, the Company assumed two promissory notes in
                  connection with a settlement agreement with the former owner
                  of Gwenco. The notes are in default.

         (q)      Certain former owners of Gwenco commenced an action in the
                  Circuit Court of Pike County against Gwenco for damages
                  resulting from an alleged failure to pay past royalties and
                  other amounts allegedly due. On May 19, 2006, the former
                  owners obtained a default judgment in this action in the
                  amount of $687,391, from which Gwenco has taken appeal. The
                  plaintiffs then amended their complaint, seeking to be
                  adjudged a lien on certain real and personal property of
                  Gwenco pursuant to the aforementioned judgment and that said
                  real and personal property be sold to satisfy the aforesaid
                  lien, and that the liens of the plaintiffs attach to the
                  proceeds of the sale. Gwenco believes that it has several
                  meritorious defenses and counterclaims to this action and
                  intends to defend it vigorously. This foreclosure action was
                  stayed against Gwenco as a result of Gwenco's filing of a
                  voluntary petition for reorganization under Chapter 11 of the
                  U.S. Bankruptcy Code. (See Note 17.)


                                      F-21
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 9 - NOTES PAYABLE (Continued)

         (r)      The Company has 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 required 4
                  annual payments of approximately $75,000 plus interest. As of
                  December 31, 2005, the Company was in default. Additionally, a
                  3.7% annual rate note in the amount of $495,000 due in
                  December 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.
                  On August 24, 2006, the Company amended the original note of
                  $300,000 to $180,884, which included the remaining principal
                  and interest, which has an interest rate of 5.21% and is due
                  on September 24, 2009. The Company also amended the $495,000
                  note due on December 10, 2007 to $543,473, which also included
                  the accrued interest; having an interest rate of 5.26% to be
                  paid through monthly payments equal to the sum of $.50 per
                  clean sellable ton of coal removed the property.

         On December 31, 2006, the Company had 250,000,000 common shares
         authorized, of which 212,914,952 shares were issued and outstanding. As
         of December 31, 2006, the number of common shares of the Company that
         could be issued upon conversion of all outstanding convertible notes
         exceeded 718,000,000 common shares, leaving the Company with
         insufficient authorized common stock to honor all possible conversion
         requests.


                                      F-22
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

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 $28,000,000 at December 31, 2006, and
         $24,000,000 at December 31, 2005. 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>

                                                                    2006            2005
                                                                ------------    ------------
<S>                                                             <C>             <C>
         Current income tax (benefit) expense                   $ (1,680,000)   $ (2,998,000)

         Deferred income tax expense (benefit)                     1,680,000       2,998,000
                                                                ------------    ------------
                                                                $         --    $         --
                                                                ============    ============
</TABLE>

         The reconciliation of the income tax computed at the U.S. Federal
         statutory rate to income tax expense for the periods ended December 31,
         2006 and 2005:
<TABLE>
<CAPTION>


                                                                    2006            2005
                                                                ------------    ------------
<S>                                                             <C>             <C>
         Tax expense (benefit) at Federal rate (34%)            $ (1,428,000)   $ (2,302,000)
         State and local income tax, net of Federal benefit         (252,000)       (123,000)
         Effect of timing difference                                      --          27,000

         Change in valuation allowance                             1,680,000       2,998,000
                                                                ------------    ------------
                Net income tax (benefit) allowance              $         --    $         --
                                                                ============    ============
</TABLE>


                                      F-23
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 10 - INCOME TAXES (Continued)

         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,
                                                     2006            2005
                                                 ------------    ------------
         Net operating loss carry forward        $ 11,392,000    $  9,712,000

         Valuation allowance                      (11,392,000)     (9,712,000)
                                                 ------------    ------------
         Net deferred tax assets                 $          0    $          0
                                                 ============    ============

         The Company recognized no income tax benefit for the loss generated for
         the periods through December 31, 2006.

         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, state, or 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.

                                      F-24
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 11 - PREFERRED STOCK (Continued)

         Series B

         Effective July 2006, each share of the Company's Series B preferred
         stock is convertible into 10.355 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 July 27, 2006, the Company settled a third party complaint by the
         former owner of Gwenco. As part of the settlement, the Company issued
         3,500,000 shares of common stock for the conversion of 337,991 shares
         of Series B preferred stock issued pursuant to the purchase agreement
         with Gwenco, Inc.

NOTE 12 - COMMON STOCK

         On January 4, 2006, the Company sold 500,000 shares of common stock to
         an unrelated third party pursuant to a unit deal transaction for
         proceeds of $25,000. The Company expensed $50,000 to interest for the
         difference in market value when the shares were issued.

         On January 18, 2006, the Company issued 262,383 shares of 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 $13,119 in interest from the difference in market value at the
         time of issuance.

         On February 1, 2006, the Company issued 50,000 shares of common stock
         at $.10 per share in order to satisfy a stock purchase agreement
         originally booked as an advance. The Company expensed $1,500 due to the
         difference in market value at the time of issuance.

         On February 1, 2006, the Company issued 700,000 shares of common stock
         in order to satisfy the cashless exercise of Series A warrants issued
         in February, 2005. The Company expensed $91,000 due to the difference
         in market value at the time of issuance.

         On February 8, 2006, the Company issued 5,000,000 shares of common
         stock at $.05 per share to satisfy an outstanding note with an
         unrelated third party lender. The Company expensed $325,000 to interest
         for the difference in market value when the shares were issued.

         On February 10, 2006, the Company issued 2,250,000 shares of common
         stock as per various consulting agreements. The Company expensed
         $236,250 to consulting services.

         On February 13, 2006, the Company issued 140,860 shares of 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 $563 in interest from the difference in market value at the
         time of issuance.

                                      F-25
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On February 14, 2006, the Company issued 50,000 shares of common stock
         in order to satisfy the cashless exercise of Series A warrants issued
         in April, 2006. The Company expensed $4,850 due to the difference in
         market value at the time of issuance.

         On February 14, 2006, the Company issued 233,333 shares of common stock
         in order to satisfy the cashless exercise of Series B warrants received
         from an exercise transaction of Series A warrants on February 1, 2006.
         The Company expensed $22,633 due to the difference in market value at
         the time of issuance.

         On February 16, 2006, the Company issued 2,000,000 shares of common
         stock to an unrelated third party to satisfy a consulting agreement.
         The Company posted $178,000 to prepaid expenses and will amortize the
         expense through the one-year term of the agreement.

         On March 14, 2006, the Company issued 400,000 shares of common stock in
         order to satisfy the cashless exercise of Series A warrants issued in
         February and April of 2005. The Company expensed $33,200 due to the
         difference in market value at the time of issuance.

         On March 14, 2006, the Company issued 650,000 shares of common stock in
         order to satisfy the cashless exercise of Series A warrants issued in
         February and April of 2005.

         The Company expensed $53,950 due to the difference in market value at
         the time of issuance.

         On March 20, 2006, the Company issued 118,882 shares of 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 $2,495 in interest from the difference in market value at the
         time of issuance.

         On April 24, 2006, the Company issued 200,000 shares of common stock to
         an unrelated third party as part of a consulting agreement to mine one
         of their coal seams. The Company expensed $22,000 due to the difference
         in market value at the time of issuance. . On May 8, 2006, the Company
         issued 1,000,000 shares of common stock under its 2006 Stock Incentive
         Plan for various legal services. The Company expensed $110,000 due to
         the difference in market value at the time of issuance.

         On May 16, 2006, the Company issued 363,493 shares of 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 issuance
         reduced the debt by $30,000 principal and $6,349 in accrued interest.

         On May 24, 2006, the Company issued 400,000 shares of common stock PTF
         as part of an exercised cashless warrants conversion originally issued
         in February of 2006. The Company expensed $24,000 due to the difference
         in market value at the time of issuance.

         On June 8, 2006, the Company issued 200,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $7,800 due to the difference in market value at the
         time of issuance.

         On June 12, 2006, the Company issued 500,000 shares of common stock to
         an unrelated third party to satisfy a consulting agreement. The Company
         posted $20,000 to prepaid expenses and will amortize the expense
         through the four (4) month term of the agreement.

                                      F-26
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On June 12, 2006, the Company issued 1,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for various legal services. The
         Company expensed $40,000 due to the difference in market value at the
         time of issuance.

         On June 13, 2006, the Company issued 181,818 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $10,000 due to the difference in market value at the
         time of issuance.

         On June 13, 2006, the Company issued 1,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for various legal services. The
         Company expensed $55,000 due to the difference in market value at the
         time of issuance.

         On June 20, 2006, the Company issued 1,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company posted $35,000 to prepaid expenses and will amortize the
         expense through the two-year term of the agreement. . On June 23, 2006,
         the Company issued 200,000 shares of common stock under its 2006 Stock
         Incentive Plan for consulting services. The Company expensed $6,600 due
         to the difference in market value at the time of issuance.

         On June 27, 2006, the Company issued 400,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $13,600 due to the difference in market value at the
         time of issuance.

         On June 27, 2006, the Company issued 200,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $6,800 due to the difference in market value at the
         time of issuance.

         On June 29, 2006, the Company issued 216,667 shares of common stock in
         order to satisfy the cashless exercise of Series B warrants issued in
         February and April of 2005. The Company expensed $6,717 due to the
         difference in market value at the time of issuance.

         On July 13, 2006, the Company issued 1,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for legal services. The Company
         expensed $23,500 due to the difference in market value at the time of
         issuance.

         On July 19, 2006, the Company issued 2,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for legal services. The Company
         expensed $50,000 due to the difference in market value at the time of
         issuance.

         On July 19, 2006, the Company issued 500,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services rendered.
         The Company reduced accrued expenses of $7,000 and expensed $5,500 due
         to the difference in market value at the time of issuance.

         On July 24, 2006, the Company issued 3,000,000 shares of common stock
         at $.0167 per share to Greenwood Partners, LP, as a partial conversion
         pursuant to their promissory note due on April 18, 2007. The issuance
         reduced the debt by $50,000 in principal and the Company expensed
         $16,000 due to the difference in market value at the time of issuance.

                                      F-27
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On July 26, 2006, the Company issued 414,010 shares of common stock at
         $.018 per share to Gross Foundation as a partial conversion pursuant to
         their promissory note, which matured on June 17, 2005. The issuance
         reduced the debt by $5,997 principal and $1,481 in accrued interest.
         The Company expensed $4,944 due to the difference in market value at
         the time of issuance.

         On July 31, 2006, the Company issued 3,500,000 shares of common stock
         for the conversion of 337,991 shares of Preferred Series B issued
         pursuant to the purchase agreement with the former stockholder of
         Gwenco, Inc.

         On August 1, 2006, the Company issued 4,500,000 shares of common stock
         to satisfy a portion of debt sold by National City Bank of Kentucky
         including its right, title, and interest in and to various judgments,
         judgment liens, security interests, and lines of credit, all of which
         are based on the Gwenco notes issued to National City Bank of Kentucky,
         referenced in Notes 9 and 16, to a third party investor. The debt was
         reduced by $4,500 and $99,450 was expensed for the difference in market
         value at the time of issuance.

         On August 2, 2006, the Company issued 400,000 shares of common stock
         under its 2006 Stock Incentive Plan to a third party consultant for
         services rendered. The Company expensed $9,200 due to the difference in
         market value at the time of issuance.

         On August 2, 2006, the Company issued 400,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $9,200 due to the difference in market value at the
         time of issuance.

         On August 2, 2006, the Company issued 361,991 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $8,326 due to the difference in market value at the
         time of issuance.

         On August 2, 2006, the Company issued 2,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for legal services. The Company
         expensed $46,000 due to the difference in market value at the time of
         issuance.

         On August 4, 2006, the Company issued 400,000 shares of common stock at
         $.0174 per share to First Mirage, Inc. as a partial conversion pursuant
         to their promissory note due on April 18, 2007. The issuance reduced
         the debt by $2,467 principal and $4,516 in accrued interest. The
         Company expensed $4,217 due to the difference in market value at the
         time of issuance.

         On August 29, 2006, the Company issued 2,000,000 shares of common stock
         under its 2006 Stock Incentive Plan for legal services. The Company
         expensed $46,000 due to the difference in market value at the time of
         issuance.

         On September 1, 2006, the Company issued 938,888 shares of common stock
         at $.016 per share to Gross Foundation as a partial conversion pursuant
         to their promissory note, which matured on June 17, 2005. The issuance
         reduced the debt by $15,000 principal and $182 in accrued interest. The
         Company expensed $10,167 due to the difference in market value at the
         time of issuance.

         On September 12, 2006, the Company issued 800,000 shares of common
         stock under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $20,000 due to the difference in market value at the
         time of issuance

                                      F-28
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On September 18, 2006, the Company issued 133,334 shares of common
         stock to satisfy a warrant conversion pursuant to two unit purchase
         agreement, each of which consisted of a $25,000 7% senior secured
         convertible note due March 6, 2006 and 150,000 Series A Warrants.

         On September 20, 2006, the Company issued 66,667 shares of common stock
         to satisfy a warrant conversion pursuant to a unit purchase agreement,
         which consisted of a $25,000 7% senior secured convertible note due
         March 6, 2006 and 150,000 Series A Warrants.

         On September 26, 2006, the Company issued 1,967,779 shares of common
         stock to satisfy a convertible note of $25,000 plus accrued interest
         pursuant to a unit purchase agreement, which consisted of a 7% senior
         secured convertible note due March 6, 2006 and 150,000 Series A&B
         Warrants. The Company expensed an additional $7,578 due to the
         difference in market value at the time of issuance.

         On October 2, 2006, the Company issued 2,172,458 shares of common stock
         to satisfy a convertible note of $25,000 plus accrued interest pursuant
         to a unit purchase agreement, which consisted of a 7% senior secured
         convertible note due March 6, 2006 and 150,000 Series A&B Warrants. The
         Company expensed an additional $9,090 due to the difference in market
         value at the time of issuance.

         On October 2, 2006, the Company issued 66,667 shares of common stock to
         satisfy a warrant conversion pursuant to a unit purchase agreement,
         which consisted of a $25,000 7% senior secured convertible note due
         March 6, 2006 and 150,000 Series A Warrants.

         On October 3, 2006, the Company issued 2,014,841 shares of common stock
         to satisfy a convertible note of $25,000 plus accrued interest pursuant
         to a unit purchase agreement, which consisted of a 7% senior secured
         convertible note due March 6, 2006 and 150,000 Series A&B Warrants. The
         Company expensed an additional $10,440 due to the difference in market
         value at the time of issuance.

         On October 5, 2006, the Company issued 7,817,450 shares of common stock
         to satisfy a convertible note of $25,000 plus accrued interest pursuant
         to a unit purchase agreement, which consisted of a 7% senior secured
         convertible note due March 6, 2006 and 150,000 Series A&B Warrants. The
         Company expensed an additional $37,164 due to the difference in market
         value at the time of issuance.

         On October 5, 2006, the Company issued 133,334 shares of common stock
         to satisfy a warrant conversion pursuant to two unit purchase
         agreement, each of which consisted of a $25,000 7% senior secured
         convertible note due March 6, 2006 and 150,000 Series A Warrants.

         On October 5, 2006, the Company issued 4,000,000 shares of common stock
         at $.005 per share to satisfy a portion of debt sold by National City
         Bank of Kentucky including its right, title, and interest in and to
         various judgments, judgment liens, security interests, and lines of
         credit, all of which are based on the Gwenco notes issued to National
         City Bank of Kentucky, referenced in Notes 9 and 16, to a third party
         investor. The debt was reduced by $20,000 and $56,000 was expensed for
         the difference in market value at the time of issuance.

         On October 5, 2006, the Company issued 2,500,000 shares of common stock
         under its 2006 Stock Incentive Plan for legal services. The Company
         expensed $47,500 due to the difference in market value at the time of
         issuance.

                                      F-29
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On October 5, 2006, the Company issued 1,060,000 shares of common stock
         under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $20,140 due to the difference in market value at the
         time of issuance.

         On October 5, 2006, the Company issued 400,000 shares of common stock
         PTF as part of an exercised cashless warrants conversion originally
         issued in February of 2006. The Company expensed $7,600 due to the
         difference in market value at the time of issuance.

         On October 18, 2006, the Company issued 3,000,000 shares of common
         stock under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $45,000 due to the difference in market value at the
         time of issuance.

         On October 18, 2006, the Company issued 633,800 shares of common stock
         to First Mirage, Inc. as a partial conversion pursuant to their
         promissory note. The issuance reduced the debt by $5,936 principal and
         $684 in accrued interest. The Company expensed $2,988 due to the
         difference in market value at the time of issuance.

         On October 18, 2006, the Company issued 2,106,472 shares of common
         stock to Greenwood Partners as a partial conversion pursuant to their
         promissory note. The issuance reduced the debt by $22,000 principal.
         The Company expensed $9,597 due to the difference in market value at
         the time of issuance.

         On October 19, 2006, the Company issued 2,390,514 shares of common
         stock to satisfy a convertible note of $25,000 pursuant to a unit
         purchase agreement, which consisted of a 7% senior secured convertible
         note due March 6, 2006 and 150,000 Series A&B Warrants. The Company
         expensed an additional $12,500 due to the difference in market value at
         the time of issuance.

         On October 25, 2006, the Company issued 5,000,000 shares of common
         stock to satisfy a convertible note of $50,000 pursuant to a unit
         purchase agreement, which consisted of a 7% senior secured convertible
         note due March 6, 2006 and 300,000 Series A&B Warrants. The Company
         expensed an additional $10,000 due to the difference in market value at
         the time of issuance.

         On October 25, 2006, the Company issued 133,334 shares of common stock
         to satisfy a warrant conversion pursuant to two unit purchase
         agreement, each of which consisted of a $25,000 7% senior secured
         convertible note due March 6, 2006 and 150,000 Series A&B Warrants. The
         Company expensed an additional $1,600 due to the difference in market
         value at the time of issuance.

         On October 27, 2006, the Company issued 1,700,000 shares of common
         stock under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $20,400 due to the difference in market value at the
         time of issuance.

         On November 1, 2006, the Company issued 5,102,041 shares of common
         stock to Professional Traders Fund as a partial conversion pursuant to
         their promissory note. The issuance reduced the debt by $40,000
         principal. The Company expensed $5,408 due to the difference in market
         value at the time of issuance.

         On November 9, 2006, the Company issued 5,060,335 shares of common
         stock to Professional Traders Fund as a partial conversion pursuant to
         their promissory note. The issuance reduced the debt by $26,000
         principal. The Company expensed $39,784 due to the difference in market
         value at the time of issuance.

                                      F-30
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On November 9, 2006, the Company issued 6,281,967 shares of common
         stock at $.0049 per share to Gross Foundation as a partial conversion
         pursuant to their promissory note, which matured on June 17, 2005. The
         issuance reduced the debt by $30,000 principal and $1,045 in accrued
         interest. The Company expensed $50,621 due to the difference in market
         value at the time of issuance.

         On November 13, 2006, the Company issued 2,500,000 shares of common
         stock to satisfy a convertible note of $25,000 pursuant to a unit
         purchase agreement, which consisted of a 7% senior secured convertible
         note due March 6, 2006 and 150,000 Series A&B Warrants. There was no
         additional expense due to the difference in market valuation at the
         time of issuance.

         On November 13, 2006, the Company issued 66,667 shares of common stock
         to satisfy a warrant conversion pursuant to a unit purchase agreement,
         which consisted of a $25,000 7% senior secured convertible note due
         March 6, 2006 and 150,000 Series A&B Warrants. The Company expensed
         $627 due to the difference in market value at the time of issuance.

         On November 14, 2006, the Company issued 2,500,000 shares of common
         stock to satisfy a convertible note of $25,000 pursuant to a unit
         purchase agreement, which consisted of a 7% senior secured convertible
         note due March 6, 2006 and 150,000 Series A&B Warrants. There was no
         additional expense due to the difference in market valuation at the
         time of issuance.

         On November 20, 2006, the Company issued 2,000,000 shares of common
         stock under its 2006 Stock Incentive Plan for legal services. The
         Company expensed $14,000 due to the difference in market value at the
         time of issuance.

         On November 22, 2006, the Company issued 5,265,005 shares of common
         stock to Professional Traders Fund as a partial conversion pursuant to
         their promissory note. The issuance reduced the debt by $30,000
         principal. The Company expensed $6,855 due to the difference in market
         value at the time of issuance.

         On November 27, 2006, the Company issued 4,919,323 shares of common
         stock to Professional Traders Fund as a partial conversion pursuant to
         their promissory note. The issuance reduced the debt by $25,000
         principal. The Company expensed $10,419 due to the difference in market
         value at the time of issuance.

         On November 28, 2006, the Company issued 1,700,000 shares of common
         stock under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $12,580 due to the difference in market value at the
         time of issuance.

         On November 28, 2006, the Company issued 5,000,000 shares of common
         stock under its 2006 Stock Incentive Plan for legal services. The
         Company expensed $37,000 due to the difference in market value at the
         time of issuance.

         On December 7, 2006, the Company issued 5,221,387 shares of common
         stock at $.0048 per share to PTF as a partial conversion pursuant to
         their Amended and Restated 7% Senior Secured promissory note. The
         issuance reduced the debt by $25,000 principal and the Company expensed
         an additional $13,116 due to the difference in market value at the time
         of issuance.

                                      F-31
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 12 - COMMON STOCK (Continued)

         On December 7, 2006, the Company issued 4,668,534 shares of common
         stock at $.0042 per share to PTF as a partial conversion pursuant to
         their Amended and Restated 7% Senior Secured promissory note. The
         issuance reduced the debt by $20,000 principal and the Company expensed
         an additional $14,080 due to the difference in market value at the time
         of issuance.

         On December 8, 2006, the Company issued 2,000,000 shares of common
         stock under its 2006 Stock Incentive Plan for legal services. The
         Company expensed $15,200 due to the difference in market value at the
         time of issuance.

         On December 18, 2006, the Company issued 1,400,000 shares of common
         stock under its 2006 Stock Incentive Plan for consulting services. The
         Company expensed $8,400 due to the difference in market value at the
         time of issuance.

         On December 18, 2006, the Company issued 4,000,000 shares of common
         stock under its 2006 Stock Incentive Plan for legal services. The
         Company expensed $24,000 due to the difference in market value at the
         time of issuance.

         On December 18, 2006, the Company issued 7,000,000 shares of common
         stock at par to satisfy a portion of debt sold by National City Bank of
         Kentucky including its right, title, and interest in and to various
         judgments, judgment liens, security interests, and lines of credit, all
         of which are based on the Gwenco notes issued to National City Bank of
         Kentucky, referenced in Notes 9 and 16, to a third party investor. The
         debt was reduced by $7,000 and $35,000 was expensed for the difference
         in market value at the time of issuance.

         On December 31, 2006, the Company had 250,000,000 common shares
         authorized, of which 212,914,952 was issued and outstanding. As of
         December 31, 2006, the number of common shares of the Company that
         could be issued upon conversion of all outstanding convertible notes
         exceeded 718,000,000 common shares, leaving the Company with
         insufficient authorized common stock to honor all possible conversion
         requests.

                                      F-32
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

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

Stock Option / Warrant Issuances consist of the following:

                                                                                                                  December 31,
                                                                                                                      2006
                                                                                                    Exercise      ------------
                                                                                      Warrants        Price         Valuation
                                                                                    ------------   ------------   ------------
<S>                                                                                      <C>       <C>            <C>
October 6, 2004 issuance of 250,000 warrants; expiration 2009 (a).                       250,000   $       0.75   $         11
December 17, 2004 issuance of 600,000 warrants; expiration 2009 (b).                     600,000           1.50             16
December 21, 2004 issuance of 200,000 warrants; expiration 2009 (k).                     200,000           1.50              5
March 4, 2005 issuance of 2,250,000 series A warrants; expiration 2010 (d).            2,250,000           0.50            126
March 4, 2005 issuance of 2,250,000 series B warrants; expiration 2010 (d).            2,250,000           1.00             56
April 18, 2005 issuance of 2,400,000 series B warrants; expiration 2010 (f).             150,000           1.00             12
February 14, 2006 issuance of 10,260,028 warrants; expiration 2007 (g).                5,460,028           0.05              2
February 14, 2006 issuance of 5,000,000 warrants; expiration 2009 (h).                 5,000,000           0.10          1,176
April 5, 2006 issuance of 1,187,083 warrants; expiration 2009 (i).                     1,187,083            .21            141
May 18, 2006 issuance of 5,000,000 options; expiration 2011 (j).                       5,000,000            .05        238,423
May 18, 2006 issuance of 5,000,000 options; expiration 2011 (j).                       3,000,000            .05        143,054
                                                                                    ------------                  ------------

                                                                 TOTALS:              22,647,111                  $    383,022
                                                                                    ============                  ============

<CAPTION>

                                                                                                       Avg.
                                                                                      Warrants     Ex. Price ($)    Valuation
                                                                                    ------------   ------------   ------------
<S>                                                                                      <C>       <C>            <C>
Total Options/Warrants outstanding as of December 31, 2005                            34,410,028   $        .16      5,559,687
------------------------------------------------------------------------------------------------------------------------------

Options/Warrants Issued                                                               26,447,111            .05        478,165

Options/Warrants Expired / Cancelled                                                 (12,260,028)         (0.10)    (1,380,510)

Options/Warrants Exercised                                                           (25,950,000)         (0.10)    (4,274,320)
------------------------------------------------------------------------------------------------------------------------------

Total Warrants outstanding as of December 31, 2006                                    22,647,111   $       0.22        383,022
                                                                                    ==========================================
</TABLE>

                                      F-33
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 13 - STOCK OPTION / WARRANTS (Continued)

         (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 principal and/or accrued interest amount in excess
                  of 4.999% 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. Based on the market price volatility of the common
                  stock, the warrants are valued using the Black-Scholes method.
                  The Company accrues additional liability allowances relative
                  to the future capitalization costs that would incur from
                  exercise.

         (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. Based on the market price volatility of
                  the common stock, the warrants are valued using the
                  Black-Scholes method. The Company accrues additional liability
                  allowances relative to the future capitalization costs that
                  would incur from exercise.

         (k)      On December 21, 2004, the Company issued 200,000 common stock
                  warrants at $1.50 as commission fee. The warrants have
                  anti-dilution privileges and piggyback registration rights.
                  Based on the market price volatility of the common stock, the
                  warrants are valued using the Black-Scholes method. The
                  Company accrues additional liability allowances relative to
                  the future capitalization costs that would incur from
                  exercise.

         (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 Based on the market price volatility of the common
                  stock, the warrants are valued using the Black-Scholes method.
                  The Company accrues additional liability allowances relative
                  to the future capitalization costs that would incur from
                  exercise. On February 2, 2006, a holder of 2,100,000 Series A
                  warrants exercised these warrants on a cashless basis,
                  pursuant to which the holder received 700,000 shares of common
                  stock and 700,000 Series B warrants. On February 17, 2006,
                  this holder exercised 700,000 Series B warrants, pursuant to
                  which the holder received 233,333 shares of common stock. On
                  March 14, 2006, another holder of 1,200,000 Series A warrants
                  exercised on a cashless basis, pursuant to a settlement
                  agreement on 7% senior secured underlying notes in which the
                  holder waived their rights to all series B warrants. On March
                  14, 2006, the third holder of the remaining 600,000 Series A
                  warrants exercised on a cashless basis. On June 29, 2006, they
                  then exercised the remaining Series B warrants awarded from
                  the exercise of the Series A warrants.

                                      F-34
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

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. Based on the market price volatility of the common
                  stock, the warrants are valued using the Black-Scholes method.
                  The Company accrues additional liability allowances relative
                  to the future capitalization costs that would incur from
                  exercise. During the twelve months ended December 31, 2006,
                  1,350,000 Series A and Series B warrants were exercised on a
                  cashless basis pursuant to the agreements.

         (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 ten
                  (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. Based on the
                  market price volatility of the common stock, the warrants are
                  valued using the Black-Scholes method. The Company accrues
                  additional liability allowances relative to the future
                  capitalization costs that would incur from exercise. As of the
                  twelve months ended December 31, 2006, the warrant holders
                  waived any and all rights to exercise these warrants as part
                  of settlement agreement involving underlying 7% senior secured
                  convertible notes. The valuations have been closed out.

         (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. Based on
                  the market price volatility of the common stock, the warrants
                  are valued using the Black-Scholes method. The Company accrues
                  additional liability allowances relative to the future
                  capitalization costs that would incur from exercise. On
                  February 17, 2006, as part of a settlement agreement with one
                  of the holders, the holder exercised 150,000 Series A warrants
                  on a cashless bases, pursuant to which the holder received
                  50,000 shares of common stock, constituting full satisfaction
                  of the 150,000 Series A Warrants under the terms of the
                  settlement agreement. See Note 17. On March 14, 2006, the
                  remaining holder of the 2,250,000 Series A warrants forgave
                  750,000 Series A warrants and exercised the balance on a
                  cashless basis pursuant to a settlement agreement on the
                  underlying 7% senior secured convertible notes originally
                  issued with the warrants. On June 29, 2006, they then
                  exercised the remaining Series B warrants awarded from the
                  exercise of the Series A warrants.

                                      F-35
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 13 - STOCK OPTION / WARRANTS (Continued)

         (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. Based on
                  the market price volatility of the common stock, the warrants
                  are valued using the Black-Scholes method. The Company accrues
                  additional liability allowances relative to the future
                  capitalization costs that would incur from exercise. On
                  February 14, 2006, as part of a settlement agreement with the
                  lender, the Company amended and restated this warrant issuance
                  to reflect a $0.05 per share exercise price. See Note 17. On
                  May 24, 2006 the holder exercised 1,600,000 warrants on a
                  cashless basis pursuant to which they received 400,000 shares
                  common stock based on the terms of the issuance. The Company
                  expensed $24,000 due the difference in market value at the
                  time of issuance. As of the twelve months ended December 31,
                  2006, the holder continues to exercise periodic partial
                  conversions, to which 4,800,000 warrants have now been
                  retired.

         (h)      On February 14, 2006, the Company issued 5,000,000 warrants
                  exercisable at $.10 per share as part of a settlement
                  agreement with one of its lenders. They are due to expire in
                  2009. Based on the market price volatility of the common
                  stock, the warrants are valued using the Black-Scholes method.
                  The Company accrues additional liability allowances relative
                  to the future capitalization costs that would incur from
                  exercise. See Note 16.

         (i)      On April 5, 2006, the Company 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 the
                  Company's common stock at an exercise price of $0.21 per
                  share. 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
                  $0.105 per share, subject to adjustment, including a
                  "weighted-average" reduction of the conversion price in the
                  event that the Company issued additional stock or stock
                  equivalents at a price lower than the conversion price.
                  Commencing on the fifth month of the notes, the Company 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. Based on the calculation terms of the
                  agreement, a total of 1,187,083 warrants were issued Based on
                  the market price volatility of the common stock, the warrants
                  are valued using the Black-Scholes method. The Company accrues
                  additional liability allowances relative to the future
                  capitalization costs that would incur from exercise.

                                      F-36
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 13 - STOCK OPTION / WARRANTS (Continued)

         (j)      On May 18, 2006, the Company granted non-qualified options to
                  honor employment agreements previously entered into with each
                  of its President and Vice President. Each agreement called for
                  the President and Vice President to receive options to
                  purchase up to 5,000,000 shares of the Company's common stock
                  pursuant to a new stock compensation plan adopted by the
                  Company. The options would be exercisable at $.05 per share,
                  the fair market value at the time of grant, and would vest as
                  follows: (i) options to purchase up to 2,000,000 shares
                  vesting immediately, (ii) options to purchase up to 2,000,000
                  shares vesting 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 vesting six
                  months after the date of the option agreements. The 10,000,000
                  options were valued at $476,846 using the Black Scholes
                  method, of which $286,108 was deferred against Paid-in
                  capital. Since 2,000,000 of these options would vest six
                  months from issuance and 4,000,000 million would vest upon a
                  stipulated performance, the Company has accrued a deferred
                  stock compensation allowance against the issued
                  capitalization. On May 31, 2006, the Company's President
                  resigned. The Company and the former President then entered
                  into a consulting agreement, under which it was agreed that
                  2,000,000 options initially awarded to him would remain vested
                  and 1,000,000 options would be allowed to vest in six months.
                  2,000,000 options that vested upon the Company's raising one
                  million dollars were mutually voided. The Company credited
                  both the deferred stock compensation and the accrued paid-in
                  capital by $95,369, which reversed the valued portion of the
                  issuance. On November 18, 2006, the 2,000,000 options vested
                  pursuant to the agreements. The Company adjusted the deferred
                  stock compensation and expensed $95,369 for compensation.

                  On December 31, 2006, the Company had 250,000,000 common
                  shares authorized, of which 212,914,952 was issued and
                  outstanding. As of December 31, 2006, the number of common
                  shares of the Company that could be issued upon conversion of
                  all outstanding convertible notes exceeded 718,000,000 common
                  shares, leaving the Company with insufficient authorized
                  common stock to honor all possible conversion requests.

NOTE 14 - STOCK COMPENSATION PLAN

         On May 8, 2006, the board of directors of the Company adopted its 2006
         Stock Incentive Plan, which allows for the issuance of up to 23,000,000
         shares of the Company's Common Stock to officers, employees, directors,
         consultants, and advisors. The board of directors also authorized the
         filing of a Form S-8 Registration Statement with the Securities and
         Exchange Commission for the issuance of shares under the Plan.

         On September 27, 2006, the board of directors of the Company adopted
         its 2006 Stock Incentive Plan No. 2, which allows for the issuance of
         up to 30,000,000 shares of the Company's Common Stock to officers,
         employees, directors, consultants, and advisors. The board of directors
         also authorized the filing of a Form S-8 Registration Statement with
         the Securities and Exchange Commission for the issuance of shares under
         the Plan.

                                      F-37
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 15 - RELATED PARTY TRANSACTIONS

         The Company has 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 required 4 annual payments of approximately $75,000
         plus interest. As of December 31, 2005, the Company was in default.
         Additionally, a 3.7% annual rate note in the amount of $495,000 due in
         December 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. On August 24,
         2006, the Company amended the original note of $300,000 to $180,884,
         which included the remaining principal and interest, which has an
         interest rate of 5.21% and is due on September 24, 2009. The Company
         also amended the $495,000 note due on December 10, 2007 to $543,473,
         which also included the accrued interest; having an interest rate of
         5.26% to be paid through monthly payments equal to the sum of $.50 per
         clean sellable ton of coal removed the property.

         During January of 2006, the Company entered into a loan agreement to
         receive up to $300,000 in funds for operations in return for a 12%
         percent note due in May of 2006. As additional collateral, the officers
         of the Company guaranteed the loan and pledged their own shares of
         common stock. As of the three months ended March 31, 2006, the lender
         had made advances totaling $132,000. On April 3, 2006, the lender
         declared a default under the terms of the loan agreement. The Company
         failed to repay the lender as required under the loan agreement. The
         lender then enforced guarantees made by the officers of the Company and
         foreclosed on shares of the officer's common stock pledged to the
         lender to secure the guarantee. Along with accrued interest, the
         Company recorded an accrued liability for indemnification obligations
         to the officers of $390,000, the fair value of the pledged shares lost
         in the foreclosure. In January 2007, the Company entered into an
         indemnity agreement with one of the officers by which the Company
         issued 260,000 shares of Series C Preferred Stock to the officer in
         satisfaction of the Company's indemnification obligation. See Note 17.

         On May 31, 2006, the Company entered into a one (1) year consulting
         agreement with the former CEO and President for the purposes of
         procuring other mining opportunities on a non-exclusive basis and to
         advise the Company with respect to mining operations and matters
         related thereto. Compensation shall be paid at $10,000 per month, with
         a royalty payment of 1% of gross sales on all mine products, including
         but not limited to coal, oil and gas, that originate from mines and/or
         wells introduced to the Company pursuant to the consultant's
         performance efforts for a period of six (6) years after the termination
         of the said agreement. Additionally, the consultant had been previously
         issued certain options pursuant to his employment contract with the
         Company. The first option to purchase 2,000,000 shares was deemed to
         have vested on May 18, 2006, and a second option to purchase 1,000,000
         shares would vest six months from the signing of the consulting
         agreement.

         On June 6, 2006, the Company entered into a two-year agreement to
         acquire administrative services from a third party consulting company
         owned by the son of its now acting president (assumed after original
         president resigned). The agreement consisted of an initial 1,000,000
         shares common stock issued under a Stock Incentive Plan, along with a
         monthly payment of $6,500. The initial shares were valued at $35,000
         and will be amortized over the term of the agreement.


                                      F-38
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 16 - 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.

         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. The bank's insurer commenced an action in
         Pike County Court, Kentucky against Quest Energy, the Company's
         subsidiary, for subrogation of monies it has paid to the 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 insurer alleged that former employees or associates of
         Quest Energy, including the Company's former CEO and CFO, were
         primarily involved in the alleged scheme, that Quest Energy is
         accordingly responsible for the actions of these former employees and
         associates, and that Quest Energy obtained a substantial material
         benefit as a result of this alleged scheme. Quest Energy has denied
         these allegations, that it had any involvement with or responsibility
         for any of the actions alleged by the insurer, and it further denies
         that it has benefited from any such alleged scheme. Further, Quest
         Energy filed a counterclaim against the bank and the insurer contending
         that the negligent actions and inactions by the bank caused severe
         damage and loss to Quest Energy and the Company.

         Since management has determined that the existing liabilities and debt
         from the Company were all related to the issues involving these claims,
         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. As of December 31, 2006,
         no outcome has been determined.

         In light of these occurrences and due in part to the apparent
         participation of its former Chief Financial Officer in this scheme, the
         Company 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.

         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. National City Bank has obtained judgment in that action in the
         amount of approximately $340,000, and Duke Energy has obtained judgment
         as well.

                                      F-39
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 16 - COMMITMENTS AND CONTINGENCIES (Continued)

         In March, 2006, National City Bank commenced an action commenced an
         action in Pike County Court, Kentucky against the Company, Gwenco,
         Inc., and Quest Energy, Ltd. 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. The Company intends to defend this action
         while continuing negotiations with National City Bank. On July 19,
         2006, National City Bank of Kentucky sold its right, title, and
         interest in and to various judgments, judgment liens, security
         interests, and lines of credit, all of which are based on the Gwenco
         notes issued to National City Bank of Kentucky, to a third party
         investor. The third party investor has agreed to forbear on further
         collection, enforcement, and foreclosure with respect to this
         indebtedness until further notice.

         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. On July 27, 2006, the
         Company settled the third party complaint by the former owner of
         Gwenco. As part of the settlement, Gwenco received mining permit
         renewal and transfer documentation, which Gwenco is required to obtain
         in order to recommence mining operations at its Pond Creek mine at
         Slater's Branch, Kentucky. Further, the former Gwenco owner agreed to
         provide all reasonable cooperation in recommencing mining operations at
         the Slater's Branch mine. The parties also agreed to terminate all
         remaining rights, duties, and obligations under the original stock
         purchase agreement entered into in connection with the acquisition of
         Gwenco by the Company. The Company made a one-time cash payment of
         $75,000 and issued 3,500,000 shares of the Company's common stock,
         subject to a lock-up/leak out agreement, to the former owner of Gwenco,
         upon conversion of his Series B Preferred Stock, the terms of which
         were amended under the settlement agreement. The Company also granted
         the former owner of Gwenco a sliding scale royalty on coal sales. The
         Company also assumed two promissory notes made by the former owner of
         Gwenco in the aggregate principal amount of $290,561. The notes are in
         default. The parties mutually dismissed their respective counter-claims
         against each other in the civil action pending in Boyd County Court,
         Kentucky.

         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 $2,500,000, and a purported
         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 purported mortgage obligation expires on March 31, 2035.

                                      F-40
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 16 - COMMITMENTS AND CONTINGENCIES (Continued)

         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 sought approximately
         $264,000 in principal as well as interest, fees, and costs. In
         addition, 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 again sued for breach of the credit agreement and seeking
         approximately $264,000 in principal as well as interest, fees, and
         costs. Further, ANC Group sought, as collateral agent for the benefit
         of Professional Traders Fund, to 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.

         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.

                                      F-41
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 16 - COMMITMENTS AND CONTINGENCIES (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 or about December 3, 2003, a third party individual delivered
         $300,000.00 (the "Funds") to an attorney-client trust account. The
         individual alleges that the payment of the Funds was a loan to the
         Company's former controlling stockholder for the purpose of acquiring a
         controlling interest in the Company's common stock and for payment of
         legal fees in connection therewith. On or about December 23, 2003, the
         former controlling stockholder purchased 800,000 shares of the
         Company's "pre-split" common stock for $275,000, which purchase was
         paid for out of the Funds. The Company and the former controlling
         stockholder incurred an additional $25,000 in legal fees in connection
         with this purchase and the resulting change in control of the Company,
         which fees were also paid for out of the Funds. The individual has
         alleged that the Company and the third party stockholder are obligated
         to repay the Funds and has demanded repayment of all Funds from the
         third party stockholder and the Company (the "Claim"). The Company
         denied the validity as a matter of fact and law of any and all of the
         Claim.

                                      F-42
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 16 - COMMITMENTS AND CONTINGENCIES (Continued)

         On April 1, 2006, the Company entered into a settlement and release
         agreement with the investor to dispose of and resolve fully and
         completely any and all disputes, claims, issues and differences between
         them arising out of the Claim. In connection therewith, Quest issued a
         convertible promissory note to the investor in the principal amount of
         $300,000.00 in exchange for a full and unconditional release of the
         Claim. On June 6, 2006, the Company entered into a settlement agreement
         with First Mirage, Inc. ("First Mirage"), resolving all outstanding
         disputes under the unit purchase agreements with First Mirage and any
         and all documents related thereto. The Company issued First Mirage
         amended and restated convertible notes in the aggregate principal
         amounts of $200,000.00 and $50,000, respectively, payable on or before
         February 22, 2007 and April 18, 2007, respectively, convertible into
         the Company's common stock initially at a rate of $.075 per share,
         subject to adjustment. In addition, the Company issued First Mirage
         share certificates representing 400,000 shares of the Company's common
         stock in consideration of First Mirage's exercise in full (on a
         cashless basis) of all Series A warrants held by them. First Mirage
         waived any rights arising out of or relating to a Series A Warrant
         purportedly issued in April 2005, any shares of common stock issuable
         upon exercise of such Series A Warrant, any Series B Warrant issuable
         upon exercise of such Series A Warrant, or any shares of common stock
         issuable upon exercise of such a Series B Warrant. All of the
         provisions contained in the unit purchase agreements, solely as to
         First Mirage, were terminated and of no further force and effect. In
         addition, First Mirage waived any and all right to any claims or
         damages previously incurred under the unit purchase agreements due to
         the Company's default thereunder, including any defaults under the
         registration rights agreement entered into in connection with the unit
         purchase agreements. All of the provisions contained in the
         registration rights agreement entered into in connection with the unit
         purchase agreement, solely as to First Mirage, were terminated and of
         no further force and effect. In addition, First Mirage waived any and
         all right to any liquidated damages previously incurred under the
         registration rights agreement.

         On July 10, 2006, the Company entered into a settlement arrangement
         with an existing equipment lessor for the bill of sale on two pieces of
         equipment, of which the Company had retained possession while in
         default of prior lease payments. On October 10, 2006, the Pike County
         Circuit court entered an order enforcing this settlement agreement, and
         on December 19, 2006, the lessor was awarded summary judgment in the
         amount of $35,000 plus 8% accrued interest from August 9, 2006. As of
         December 31, 2006, the Company remains in default. .

                                      F-43
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 16 - COMMITMENTS AND CONTINGENCIES (Continued)

         On June 29, 2006, the Company entered into a settlement agreement with
         Greenwood Partners, LP ("Greenwood"), resolving all outstanding
         disputes under the unit purchase agreements, a financial advisory
         agreement dated as of April 15, 2005, and any and all documents related
         thereto. Five (5) units issued to Greenwood as compensation under the
         financial advisory agreement (which included (i) convertible notes in
         the aggregate principal amount of $125,000, and (ii) Series A Warrants
         to purchase (a) up to 750,000 shares of common stock and (b) Series B
         Warrants to purchase up to an additional 750,000 shares of common
         stock) were be cancelled and of no further force and effect. The
         Company issued to Greenwood Partners amended and restated convertible
         notes in the aggregate principal amounts of $100,000.00, $125,000 and
         $100,000, respectively, payable on or before February 22, 2007, April
         15, 2007 and April 18, 2007, respectively, and convertible into the
         Company's common stock initially at a rate of $.075 per share, subject
         to adjustment. In addition, the Company issued to Greenwood Partners
         share certificates representing 866,667 shares of the Company's common
         stock in consideration of Greenwood Partners' 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 financial advisory agreement were
         terminated and of no further force and effect. In addition, the parties
         waived any and all right to any claims or damages allegedly incurred by
         such party under the financial advisory agreement. All of the
         provisions contained in the unit purchase agreements, solely as to
         Greenwood Partners, were terminated and of no further force and effect.
         In addition, Greenwood Partners waived any and all right to any claims
         or damages previously incurred under the unit purchase agreements due
         to the Company's default thereunder, including any defaults under the
         registration rights agreement entered into in connection with the unit
         purchase agreements. All of the provisions contained in the
         registration rights agreement entered into in connection with the unit
         purchase agreement, solely as to Greenwood Partners, were terminated
         and of no further force and effect. In addition, Greenwood Partners
         waived any and all right to any liquidated damages previously incurred
         under the registration rights agreement.

         Certain former owners of Gwenco commenced an action in the Circuit
         Court of Pike County against Gwenco for damages resulting from an
         alleged failure to pay past royalties and other amounts allegedly due.
         On May 19, 2006, the former owners obtained a default judgment in this
         action in the amount of $687,391, from which Gwenco has taken appeal.
         The plaintiffs then amended their complaint, seeking to be adjudged a
         lien on certain real and personal property of Gwenco pursuant to the
         aforementioned judgment and that said real and personal property be
         sold to satisfy the aforesaid lien, and that the liens of the
         plaintiffs attach to the proceeds of the sale. Gwenco believes that it
         has several meritorious defenses and counterclaims to this action and
         intends to defend it vigorously. This foreclosure action was stayed
         against Gwenco as a result of Gwenco's filing of a voluntary petition
         for reorganization under Chapter 11 of the U.S. Bankruptcy Code. (See
         Note 17.)

                                      F-44
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 17 - SUBSEQUENT EVENTS

         As set forth in Note 9(e), 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 the
         transaction. Since September 30, 2006, the Company has amended and
         restated the unit agreements to mature on February 22, 2007 with most
         of the remaining lenders, of which, several have converted the
         principal and interest into common stock pursuant to the notes to
         satisfy the obligations. Subsequently, the remaining obligations have
         matured and are currently in default. The Company is negotiating with
         the remaining few lenders to restructure their obligations.

         On December 8, 2005, the Company issued a convertible secured
         promissory note in the principal amount of $335,000. The note was due
         on December 8, 2006, with an annual interest rate of eight percent
         (8%), and was convertible into the Company's common shares at an
         initial conversion price of $0.05 per share, subject to adjustment. As
         of December 31, 2006, the note was in default. Subsequently, the
         Company has restructured the debt.

         During January of 2006, the Company entered into a loan agreement to
         receive up to $300,000 in funds for operations in return for a 12%
         percent note due in May of 2006. As additional collateral, the officers
         of the Company guaranteed the loan and pledged their own shares of
         common stock. As of the three months ended March 31, 2006, the lender
         had made advances totaling $132,000. On April 3, 2006, the lender
         declared a default under the terms of the loan agreement. The Company
         failed to repay the lender as required under the loan agreement. The
         lender then enforced guarantees made by the officers of the Company and
         foreclosed on shares of the officer's common stock pledged to the
         lender to secure the guarantee. Along with accrued interest, the
         Company recorded an accrued liability for indemnification obligations
         to the officers of $390,000, the fair value of the pledged shares lost
         in the foreclosure. In January 2007, the Company entered into an
         indemnity agreement with one of the officers by which the Company
         issued 260,000 shares of Series C Preferred Stock to the officer in
         satisfaction of the Company's indemnification obligation. The Company
         is currently negotiating the terms of indemnification of with the other
         former officer as a result of this foreclosure.

         On February 9, 2007, the Company's stockholders authorized the Company
         to take the following actions: (i) to amend the articles of
         incorporation to increase the number of shares of common stock that
         were authorized to issue form 250,000,000 to 975,000,000; (ii) to amend
         the articles of incorporation authorizing the board of directors to
         effectuate a stock split or reversed stock split without stockholder
         approval; (iii) a resolution to authorizing the directors to change the
         Company's name to be determined by the board at a later date.

         On February 21, 2007, the board of directors of the Company adopted its
         2007 Stock Incentive Plan, which allows for the issuance of up to
         70,000,000 shares of the Company's common stock to officers, employees,
         directors, consultants, and advisors. The board of directors also
         authorized the filing of a Form S-8 Registration Statement with the
         Securities and Exchange Commission for the issuance of shares under the
         Plan.

                                      F-45
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 17 - SUBSEQUENT EVENTS (Continued)

         On May 18, 2006, the Company granted non-qualified options to honor
         employment agreements previously entered into with each of its
         President and Vice President. Each agreement called for the President
         and Vice President to receive options to purchase up to 5,000,000
         shares of the Company's common stock pursuant to a new stock
         compensation plan adopted by the Company. The options would be
         exercisable at $.05 per share, the fair market value at the time of
         grant, and would vest as follows: (i) options to purchase up to
         2,000,000 shares vesting immediately, (ii) options to purchase up to
         2,000,000 shares vesting 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 vesting six months after the
         date of the option agreements. On May 31, 2006, the President resigned.
         However, based on a consulting agreement that followed, it was agreed
         that the first 2,000,000 options awarded to him would remain vested.
         Subsequently, on January 2, 2007, the option agreement was terminated.

         On February 28, 2007, one of the Company's wholly-owned subsidiaries,
         Gwenco, Inc., filed a voluntary petition for reorganization under
         Chapter 11 of the U.S. Bankruptcy Code. Neither the Company nor any of
         its other subsidiaries were included in the filing. As a result, all
         pending legal actions against Gwenco, including the pending foreclosure
         actions, were automatically stayed.

         As of December 31, 2006, Gwenco had assets of $5,424,155, which
         included all the mineral rights of the Company valued at $5,210,471,
         and liabilities (other than liabilities that have been guaranteed by
         the Company or another of its wholly-owned subsidiaries) of $4,623,204.
         Of these liabilities, $2,299,482 was owed to Quest Minerals & Mining
         and Quest Energy, Ltd. These receivables are unsecured and Quest
         Minerals & Mining and Quest Energy, Ltd have reserved 100% of the
         receivable as doubtful at December 31, 2006.

         The following is the combined balance sheet of the Company at December
         31, 2006, which includes Gwenco, Inc. and the Company and its other
         subsidiaries:

                          QUEST MINERALS & MINING CORP.
                             COMBINED BALANCE SHEET
                                DECEMBER 31, 2006
<TABLE>
<CAPTION>
                                                                     QUEST & SUB        GWENCO       ADJUSTMENTS        COMBINED
                                                                     ------------    ------------    ------------    ------------
<S>                                                                  <C>             <C>             <C>
                                     ASSETS
Current Assets
  Cash                                                                         52              --                    $         52
  Receivables                                                                  --              --                              --
                                                                     ------------    ------------    ------------    ------------
      Total current assets                                                     52              --                              52

Leased Mineral Reserves, net (Note 2 & 5)                                      --       5,210,471                       5,210,471
Equipment, net (Note 6)                                                        --         176,384                         176,384
Deposits                                                                    1,000          37,300                          38,300
Prepaid consulting Expense                                                 71,000              --                          71,000
Intercompany, net                                                              --              --                              --
Other receivables, net (Note 7)                                                --              --                              --
                                                                     ------------    ------------    ------------    ------------
            TOTAL ASSETS                                             $     72,052    $  5,424,155    $               $  5,496,207
                                                                     ============    ============    ============    ============
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities
  Accounts payable and accrued expenses (Note 8)                     $  1,979,591    $    618,806                    $  2,598,397
  Loans payable (Note 9)                                                2,991,993         687,391                       3,679,384
  Bank loans (Note 9)                                                          --       1,017,525                       1,017,525
  Related party loans (Note 9)                                            713,514              --                         713,514
                                                                     ------------    ------------    ------------    ------------
            TOTAL CURRENT LIABILITIES                                   5,685,098       2,323,722                       8,008,820

Other Liabilities
  Intercompany                                                                 --       2,299,482      (2,299,482)             --
  Derivative Liability (Note 7)                                         1,420,588              --                       1,420,588
  Unearned revenues (Note 8)                                                   --              --                              --
                                                                     ------------    ------------    ------------    ------------
            TOTAL LIABILITIES                                           7,105,686       4,623,204      (2,299,482)      9,429,408

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              --                             453
    SERIES B - issued and outstanding 48,284 shares                            --              48                              48

  Common stock, par value $0.001, 975,000,000 shares authorized;
    issued and outstanding 428,478,277 shares                             212,919           4,500          (4,500)        212,919

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

  Deferred Stock Compensation (Note 13)                                   (95,370)             --                         (95,370)

  Paid-in capital (Note 14)                                            44,071,070       2,557,049                      46,628,119
  Accumulated Deficit                                                 (50,635,206)     (1,760,646)      2,303,982     (50,091,870)
                                                                     ------------    ------------    ------------    ------------
Total Stockholders' Equity                                             (7,033,634)        800,951       2,299,482      (3,933,201)
                                                                     ------------    ------------    ------------    ------------
           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $     72,052    $  5,424,155    $         --    $  5,496,207
                                                                     ============    ============    ============    ============
</TABLE>

                       See Notes to Financial Statements.

                                    F-46
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 18 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

         The Company's previously issued financial statements have been restated
         as a result of an internal review of its previously issued financial
         statements, which review was prompted by an informal inquiry, and
         thereafter, a formal investigation regarding an unrelated company,
         which is being conducted by the United States Securities and Exchange
         Commission upon its review of the Company's annual and quarterly
         reports filed pursuant to the Securities Act of 1934, as amended. After
         review of the inquiry and investigation and further analysis, the
         Company determined that it incorrectly evaluated its embedded
         derivative liability and warrant liability accounting treatment in
         connection with convertible debt and warrant financing transactions and
         did not adequately assess and measure derivative liability values on a
         quarterly basis. The Company also found that it had incorrectly
         recorded the fair value of warrants as deferred warrant expense and
         thereafter amortized the fair value over the life of the accompanying
         convertible note. The Company also believes such restatements reflect
         the correction of any errors and omissions of material disclosures in
         the financial statements in accordance with SFAS 154: Accounting
         changes and error corrections (as amended).

         The following are explanations of the restatement adjustments and
         presentation of affected accounts in the consolidated balance sheets
         and statements of operations as previously reported and restated.

         2005 Statement of Operations

         The Company restated previously recognized deferred warrant expense by
         $14,346,143 in 2005, where the fair value of certain warrants issued in
         connection with convertible debt financings were incorrectly recorded
         as deferred assets and thereafter amortized and expensed the fair value
         of the warrant over the life of the accompanying convertible note.

         The Company restated previously recognized selling, general, and
         administrative expenses by $138,666 in 2005 due to reclassification of
         commission expenses, which involved the reversal of amortization costs
         that were originally capitalized.

         The Company restated previously recognized interest expense by
         $1,536,079 in 2005 due to a reclassification of amortization expenses
         coupled with the cancellation and reissuance of certain warrants that
         have been subsequently reversed.

         The Company recorded a loss on derivative expense of $4,360,834 in 2005
         as a result of the issuance of convertible notes and warrants at a
         discounted rate relative to the market price of the underlying common
         stock. The Company has determined that the issuances should be valued
         based on the market price volatility of the common stock using the
         Black-Scholes method and accrues additional liability allowances
         relative to the future capitalization costs that would incur from
         exercise of the warrants or the settlement of existing debt through
         conversion. Valuation adjustments are made quarterly.

         As a result of the foregoing, the Company restated basic and diluted
         loss per common share by $0.23 in 2005 due to the reduction in net loss
         of the Company.

                                      F-47
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 18 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Continued)

         2005 Balance Sheet

         Adjustments were made to deferred stock option/warrant expense of
         $3,097,903 as of December 31, 2005, where the fair value of certain
         warrants issued in connection with convertible debt financings were
         incorrectly recorded as deferred assets and thereafter amortized and
         expensed the fair value of the warrant over the life of the
         accompanying convertible note.

         Adjustments were made to record a derivative liability of $6,557,730 as
         of December 31, 2005 as a result of the issuance of convertible notes
         and warrants at a discounted rate relative to the market price of the
         underlying common stock. The Company has determined that the issuances
         should be valued based on the market price volatility of the common
         stock using the Black-Scholes method and accrues additional liability
         allowances relative to the future capitalization costs that would incur
         from exercise of the warrants or the settlement of existing debt
         through conversion. Valuation adjustments are made quarterly.

         Adjustments were made to stockholder's equity (deficit) to reflect the
         restatements to the statements of operations.

         2004 Statement of Operations

         The Company restated previously recognized depreciation and
         amortization by $21,732 in 2004, where the fair value of certain
         warrants issued in connection with convertible debt financings were
         incorrectly recorded as deferred assets and thereafter amortized and
         expensed the fair value of the warrant over the life of the
         accompanying convertible note.

         The Company recorded a loss on derivative expense of $2,196,896 in 2004
         as a result of the issuance of convertible notes and warrants at a
         discounted rate relative to the market price of the underlying common
         stock. The Company has determined that the issuances should be valued
         based on the market price volatility of the common stock using the
         Black-Scholes method and accrues additional liability allowances
         relative to the future capitalization costs that would incur from
         exercise of the warrants or the settlement of existing debt through
         conversion. Valuation adjustments are made quarterly.

         As a result of the foregoing, the Company restated basic and diluted
         loss per common share by ($0.05) in 2004 due to the increase in net
         loss of the Company.

         2004 Balance Sheet

         Adjustments were made to deferred stock option/warrant expense of
         $903,068 as of December 31, 2004, where the fair value of certain
         warrants issued in connection with convertible debt financings were
         incorrectly recorded as deferred assets and thereafter amortized and
         expensed the fair value of the warrant over the life of the
         accompanying convertible note.

         Adjustments were made to record a derivative liability of $2,196,896 as
         of December 31, 2004 as a result of the issuance of convertible notes
         and warrants at a discounted rate relative to the market price of the
         underlying common stock. The Company has determined that the issuances
         should be valued based on the market price volatility of the common
         stock using the Black-Scholes method and accrues additional liability
         allowances relative to the future capitalization costs that would incur
         from exercise of the warrants or the settlement of existing debt
         through conversion. Valuation adjustments are made quarterly.

                                      F-48
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 18 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (Continued)

         Adjustments were made to stockholder's equity (deficit) to reflect the
         restatements to the statements of operations.

         Adjustments

         The consolidated financial statements as of December 31, 2005 and 2004
         and for the years then ended, and the notes thereto, have been restated
         to include the items described above. The following financial statement
         line items were impacted:
<TABLE>
<CAPTION>

Consolidated Balance Sheet
                                                        As Previously        Restated          As Previously          Restated
                                                     Reported Year Ended    Year Ended      Reported Year Ended      Year Ended
                                                         December 31,      December 31,         December 31,        December 31,
                                                             2005              2005                 2004                2004
                                                      ---------------     ---------------     ---------------     ---------------
<S>                                                   <C>                 <C>                 <C>                 <C>
Deferred stock option/warrant issuance, net           $     3,097,903     $            --     $       903,068     $            --
Total assets                                               10,262,571           7,164,668           7,393,308           6,490,240
Derivative liability                                               --           6,557,730                  --           2,196,896
Total liabilities                                           7,773,864          14,331,594           5,666,377           7,863,274
Paid-in capital                                            62,189,653          43,049,130          40,669,688          39,744,888
Accumulated deficit                                       (59,183,787)        (49,698,697)        (38,727,915)        (40,903,080)
Total stockholders' equity (deficit)                        2,488,707          (7,166,926)          1,726,931          (1,373,034)

<CAPTION>

Consolidated Statements of Operations

                                                        As Previously        Restated          As Previously          Restated
                                                     Reported Year Ended    Year Ended      Reported Year Ended      Year Ended
                                                         December 31,      December 31,         December 31,        December 31,
                                                             2005              2005                 2004                2004
                                                      ---------------     ---------------     ---------------     ---------------
<S>                                                   <C>                 <C>                 <C>                 <C>
Selling, general, and administrative                  $     2,929,357     $     2,790,691     $    10,481,839     $    10,481,839
Interest                                                    2,412,678             876,599             668,353             668,353
Deferred warrants expense                                  14,346,143                  --                  --                  --
Depreciation and amortization                                  67,849              67,849              99,351              77,619
Total operating expenses                                   20,812,613           4,791,725          40,917,783          40,896,052
Loss from operations                                      (20,455,872)         (4,434,984)        (38,005,209)        (37,983,478)
Loss on derivatives                                                --          (4,360,834)                 --          (2,196,896)
Net loss                                                  (20,455,872)         (8,795,818)        (38,005,209)        (40,180,374)
Basic and diluted loss per common share                         (0.40)              (0.17)              (0.97)              (1.02)
</TABLE>


                                      F-49
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 19 - QUARTERLY FINANCIAL STATEMENTS (UNAUDITED)

         The following is a summary of the quarterly results of operations for
         the interim periods in the years ended December 31, 2006 and 2005. See
         Note 18 for discussion regarding restatement adjustments.

<TABLE>
<CAPTION>


                                      As Previously                   As Previously                  As Previously
                                        Reported        Restated        Reported        Restated       Reported         Restated
                                      Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended  Quarter Ended   Quarter Ended
                                        March 31,        March 31,      June 30,        June 30,      September 30,   September 30,
                                          2005             2005           2005            2005            2005            2005
                                      ------------    ------------    ------------    ------------    ------------    ------------
<S>                                   <C>             <C>             <C>             <C>             <C>             <C>
Revenue:
   Coal revenues                      $    304,151    $    304,151    $     52,590    $     52,590    $         --    $         --
   Interest and other                           --              --              --              --              --              --
                                      ------------    ------------    ------------    ------------    ------------    ------------

          Total Revenues                   304,151         304,151          52,590          52,590              --              --
                                      ------------    ------------    ------------    ------------    ------------    ------------

Expenses:
Deferred warrant amortization            1,856,865              --       4,184,415              --       4,176,577              --

Deferred stock compensation                     --              --              --              --                              --
Production costs                           399,210         399,210          64,005          64,005              --              --
Selling, general and administrative        527,353         679,833         923,607         937,607         710,721         615,930
Interest                                    64,724          64,724         125,790          78,327       1,566,506          77,887
Depreciation and amortization               26,302          26,302          19,728          19,728          12,388          12,388

          Total Operating Expenses       2,874,434       1,170,069       5,317,545       1,099,667       6,466,192         706,205
                                      ------------    ------------    ------------    ------------    ------------    ------------

Loss from Operations                    (2,570,283)       (865,918)     (5,264,955)     (1,047,077)     (6,466,192)       (706,205)

Other Income (Expense):
 Gain (loss) derivatives                        --      (6,868,387)             --       4,715,994              --         (87,570)
                                      ------------    ------------    ------------    ------------    ------------    ------------

Income (loss) before income taxes       (2,570,283)     (7,734,305)     (5,264,955)      3,668,917      (6,466,192)       (793,775)
                                      ------------    ------------    ------------    ------------    ------------    ------------

Provision for income taxes                      --              --              --              --              --              --
                                      ------------    ------------    ------------    ------------    ------------    ------------

Net income (loss)                     $ (2,570,283)   $ (7,734,305)     (5,264,955)   $  3,668,917    $ (6,466,192)   $   (793,775)
                                      ============    ============    ============    ============    ============    ============

Basic income (loss) per common
 share                                $      (0.06)   $      (0.17)   $      (0.11)   $       0.08    $      (0.13)   $      (0.02)
                                      ============    ============    ============    ============    ============    ============
Diluted income (loss) per common
 share                                $      (0.06)   $      (0.17)   $      (0.11)   $       0.07    $      (0.13)   $      (0.02)
                                      ============    ============    ============    ============    ============    ============
Weighted average common shares
 outstanding                            46,584,420      46,584,420      47,521,233      47,521,233      48,506,008      48,506,008
                                      ============    ============    ============    ============    ============    ============
Weighted average diluted shares
 outstanding                            46,584,420      46,584,420      47,521,233      51,624,994      48,506,008      48,506,008
                                      ============    ============    ============    ============    ============    ============
</TABLE>

                                      F-50
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 19 - QUARTERLY FINANCIAL STATEMENTS (UNAUDITED) (Continued)
<TABLE>
<CAPTION>
                                     As Previously                  As Previously                    As Previously
                                       Reported        Restated        Reported        Restated        Reported       Restated
                                    Quarter Ended   Quarter Ended   Quarter Ended   Quarter Ended    Quarter Ended  Quarter Ended
                                       March 31,       March 31,       June 30,        June 30,      September 30,   September 30,
                                         2006            2006            2006            2006            2006            2006
                                     ------------    ------------    ------------    ------------    ------------    ------------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>
Revenue:
 Coal revenues                       $         --    $         --    $         --    $         --    $         --    $         --
 Interest and other                            --              --              --              --              --              --
                                     ------------    ------------    ------------    ------------    ------------    ------------

          Total Revenues                       --              --              --              --              --              --
                                     ------------    ------------    ------------    ------------    ------------    ------------

Expenses:
Deferred warrant amortization           1,930,782              --          77,231              --           3,965              --
Deferred stock compensation                    --              --              --         190,739              --              --
Production costs                               --              --              --              --              --              --
Selling, general and administrative     1,400,257         736,117         664,059       1,813,811         822,619       1,048,180
Interest                                  468,094         468,094          74,061          74,061          71,321         104,756
Depreciation and amortization              13,421          13,421          13,421          13,421          13,421          13,421

          Total Operating Expenses      3,812,554       1,217,632         828,772       2,092,032         911,326       1,166,357
                                     ------------    ------------    ------------    ------------    ------------    ------------

Loss from Operations                   (3,812,554)     (1,217,632)       (828,772)     (2,092,032)       (911,326)     (1,166,357)

Other Income (Expense):
 Gain (loss) on derivatives                    --       2,481,387              --       2,834,222              --        (620,504)
                                     ------------    ------------    ------------    ------------    ------------    ------------

Income (loss) before income taxes      (3,812,554)      1,263,755        (828,772)        742,190        (911,326)     (1,786,861)
                                     ------------    ------------    ------------    ------------    ------------    ------------

Provision for income taxes                     --              --              --              --              --              --
                                     ------------    ------------    ------------    ------------    ------------    ------------

Net income (loss)                    $ (3,812,554)   $  1,263,755    $   (828,772)   $    742,190    $   (911,326)   $ (1,786,861)
                                     ============    ============    ============    ============    ============    ============
Basic income (loss) per common
 share                               $      (0.05)   $       0.02    $      (0.01)   $       0.01    $      (0.01)   $      (0.02)
                                     ============    ============    ============    ============    ============    ============
Diluted income (loss)
 per common share                    $      (0.05)   $       0.01    $      (0.01)   $       0.01    $      (0.01)   $      (0.02)
                                     ============    ============    ============    ============    ============    ============

Weighted average common shares
 outstanding                           73,855,818      73,855,818      84,821,140      84,821,140     101,275,011     101,275,011
                                     ============    ============    ============    ============    ============    ============
Weighted average diluted shares
 outstanding                           73,855,818      84,851,429      84,821,140     120,893,997     101,275,011     101,275,011
                                     ============    ============    ============    ============    ============    ============
</TABLE>

                                      F-51
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 19 - QUARTERLY FINANCIAL STATEMENTS (UNAUDITED) (Continued)

         The following is a summary of the quarterly balance sheets for the
         interim periods in the years ended December 31, 2006 and 2005. See Note
         18 for discussion regarding restatement adjustments.
<TABLE>
<CAPTION>

                                      As Previously                    As Previously                  As Previously
                                         Reported        Restated        Reported        Restated        Reported        Restated
                                      Quarter Ended   Quarter Ended    Quarter Ended  Quarter Ended    Quarter Ended   Quarter Ended
                                         March 31,      March 31,        June 30,        June 30,      September 30,   September 30,
                                           2005            2005            2005            2005            2005            2005
                                       ------------    ------------    ------------    ------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>             <C>             <C>
Assets
   Current Assets
   Cash                                $     16,585    $     16,585    $      3,919    $      3,919    $      2,241    $      2,241
   Receivables                                   --              --              --              --              --              --
          Total current assets               16,585          16,585           3,919           3,919           2,241           2,241

Leased mineral reserves, net              5,213,977       5,213,977       5,210,471       5,210,471       5,410,471       5,410,471
Equipment, net                              568,182         568,182         551,960         551,960         424,572         424,572
Deposits                                     23,000          23,000              --              --              --              --
Prepaid consulting expense                       --              --              --              --              --              --
Other receivables, net                      668,000         668,000         668,000         668,000       7,267,814         668,000
Deferred stock option/warrant
 issuance, net                           13,813,283              --      11,437,725              --              --              --

Total assets                           $ 20,303,027    $  6,489,744    $ 17,872,075    $  6,434,350    $ 13,773,098    $  6,505,284

Liabilities and stockholder's
 equity (deficit)

Current liabilities
Accounts payable and accrued
 expenses                              $  2,299,691    $  2,299,671    $  2,281,533    $  2,281,533    $  2,521,071    $  2,521,071
Loans payable                             2,115,228       2,115,228       3,161,549       3,161,549       2,798,228       2,798,228
Bank loans                                1,068,366       1,068,366       1,068,366       1,068,366       1,068,366       1,068,366
Related party loans                         280,534         280,534         244,034         244,034         244,034         244,034

Total current liabilities                 5,763,819       5,763,799       6,755,482       6,755,482       6,631,699       6,631,699

Other liabilities
Derivative liability                             --       9,065,283              --       4,349,289              --       4,436,859
Unearned revenues                           668,000         668,000         668,000         668,000         668,000         668,000
Long-term liabilities                       100,000         100,000         100,000         100,000         100,000              --

Total liabilities                         6,531,819      15,597,082       7,523,482      11,872,771       7,399,699      11,836,558

Commitments and Contingencies

Stockholders' equity
Preferred stock, par value $0.001,
 10,000,000 shares authorized
   Series A                                     453             453             453             453             453             453
   Series B                                     386             386             386             386             386             386

Common stock, par value $0.001,
 250,000,000 shares authorized               47,522          47,522          47,522          47,522          54,752          54,752

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


Paid-in capital                          55,608,565      40,069,185      57,450,885      40,069,185      59,934,653      40,962,880
Accumulated Deficit                     (41,298,198)    (48,637,384)    (46,563,153)    (44,968,467)    (53,029,345)    (45,762,245)

Total stockholder's equity               13,771,228      (9,107,338)     10,348,593      (5,438,421)      6,373,399      (5,331,274)

Total liabilities and
 stockholders' equity                  $ 20,303,027    $  6,489,744    $ 17,872,075    $  6,434,350    $ 13,773,098    $  6,505,284
</TABLE>

                                      F-52
<PAGE>
                         QUEST MINERALS AND MINING CORP.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2006

NOTE 19 - QUARTERLY FINANCIAL STATEMENTS (UNAUDITED) (Continued)
<TABLE>
<CAPTION>

                                    As Previously                   As Previously                   As Previously
                                       Reported         Restated       Reported         Restated       Reported        Restated
                                    Quarter Ended    Quarter Ended  Quarter Ended    Quarter Ended   Quarter Ended   Quarter Ended
                                       March 31,        March 31,      June 30,         June 30,     September 30,   September 30,
                                         2006             2006           2006             2006           2006            2006
                                     ------------    ------------    ------------    ------------    ------------    ------------
<S>                                  <C>             <C>             <C>             <C>             <C>             <C>
Assets
   Current Assets
   Cash                              $      3,307    $      3,307    $        985    $        985    $      1,528    $      1,528
   Receivables                                 --              --              --              --              --              --
          Total current assets              3,307           3,307             985             985           1,528           1,528

Leased mineral reserves, net            5,210,471       5,210,471       5,210,471       5,210,471       5,210,471       5,210,471
Equipment, net                            392,361         392,361         378,940         378,940         365,519         365,519
Deposits                                       --              --              --              --           1,000           1,000
Prepaid consulting expense                316,500         316,500         336,200         336,200         149,850         149,850
Other receivables, net                    698,301         698,301         719,163         719,163         725,109         725,109
Deferred stock option/warrant
 issuance, net                            155,860              --          15,860              --          11,895              --

Total assets                         $  6,776,800    $  6,620,940    $  6,661,619    $  6,645,759    $  6,465,372    $  6,453,477

Liabilities and stockholder's
 equity (deficit)

Current liabilities
Accounts payable and accrued
 expenses                            $  2,448,852    $  2,448,852    $  2,593,345    $  2,792,833    $  2,406,124    $  2,639,047
Loans payable                           2,508,864       2,508,864       2,444,588       3,431,979       3,041,762       4,064,153
Bank loans                              1,047,436       1,047,436       1,047,436       1,047,436         726,964       1,017,525
Related party loans                       695,000         695,000         695,000         695,000         737,131         737,131

Total current liabilities               6,700,152       6,700,152       6,780,369       7,967,248       6,911,981       8,457,856

Other liabilities
Derivative liability                           --       4,076,343              --       1,242,121              --       1,862,625
Unearned revenues                         668,000         668,000         668,000         668,000         668,000         668,000

Total liabilities                       7,368,152      11,444,495       7,448,369       9,877,369       7,579,981      10,988,481

Commitments and Contingencies

Stockholders' equity
Preferred stock, par value $0.001,
 10,000,000 shares authorized
   Series A                                   453             453             453             453             453             453
   Series B                                   386             386             386             386              48              48

Common stock, par value $0.001,
 250,000,000 shares authorized             78,807          78,807          88,719          88,719         113,103         113,103

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

Deferred stock compensation              (190,739)       (190,739)

Paid-in capital                        62,912,843      44,119,441      63,636,305      45,150,022      64,095,726      45,609,443
Accumulated Deficit                   (62,996,341)    (48,435,142)    (63,925,113)    (47,692,951)    (64,736,439)    (49,479,812)

Total stockholder's equity               (591,352)     (4,823,555)       (786,750)     (3,231,610)     (1,114,609)     (4,535,004)

Total liabilities and
 stockholders' equity                $  6,776,800    $  6,620,940    $  6,661,619    $  6,645,759    $  6,465,372    $  6,453,477
</TABLE>


                                      F-53
<PAGE>

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

         None.

Item 8A. CONTROLS AND PROCEDURES.

         We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports that we file
under the Securities Exchange Act of 1934, as amended, 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 our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure based on the definition of "disclosure controls and
procedures" in Rule 13a-15(e). In designing and evaluating the disclosure
controls and procedures, our management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

         At the end of the period covered by this Annual Report on Form 10-KSB,
we carried out an evaluation, under the supervision and with the participation
of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on the foregoing, our Chief Executive Officer and
our Chief Financial Officer concluded that our disclosure controls and
procedures were not effective to ensure that all material information required
to be disclosed in this Annual Report on Form 10-KSB has been made known to them
in a timely fashion. In addition, our Chief Executive Officer and Chief
Financial Officer have identified significant deficiencies that existed in the
design or operation of our internal control over financial reporting that they
consider to be "material weaknesses." The Public Company Accounting Oversight
Board has defined a material weakness as a "significant deficiency or
combination of significant deficiencies that results in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected." In light of the material
weaknesses described below, we performed additional procedures to ensure that
the consolidated financial statements are prepared in accordance with generally
accepted accounting principles. Accordingly, management believes that the
financial statements included in this Annual Report fairly present in all
material respects our financial condition, results of operations and cash flows
for the periods presented.

         We did not design and maintain effective entity-level controls as
defined in the Internal Control--Integrated Framework published by the Committee
of Sponsoring Organizations of the Treadway Commission ("COSO"). Specifically:

         1.       We lacked the technical expertise and did not maintain
adequate procedures to ensure that the accounting for derivative financial
instruments under SFAS No. 133, Accounting for Derivative Instruments, and under
Emerging Issues Task Force 00-19, was appropriate. Procedures relating to
convertible debt and warrant financing transactions did not operate effectively
to (a) properly evaluate embedded derivative liability and warrant liability
accounting treatment, (b) meet the documentation requirements of SFAS No. 133
and EITF 00-19, and (c) adequately assess and measure derivative liability
values on a quarterly basis. This material weakness resulted in a restatement of
prior financial statements, as described in Note 18 to the Consolidated
Financial Statements and, if not remediated, has the potential to cause a
material misstatement in the future.

         2.       We did not maintain a sufficient complement of personnel with
an appropriate level of technical accounting knowledge, experience, and training
in the application of generally accepted accounting principles commensurate with
our financial accounting and reporting requirements and low materiality
thresholds. This material weakness contributed to the restatement of prior
financial statements, as described in Note 18 to the Consolidated Financial
Statements and, if not remediated, has the potential to cause a material
misstatement in the future.

         3.       Due to the previously reported material weaknesses, as
evidenced by the restatements related to derivative liabilities, management has
concluded that the controls over the period-end financial reporting process were

                                       34
<PAGE>

not operating effectively. Specifically, controls were not effective to ensure
that significant non-routine transactions, accounting estimates, and other
adjustments were appropriately reviewed, analyzed, and monitored on a timely
basis. A material weakness in the period-end financial reporting process could
result in our not being able to meet our regulatory filing deadlines and, if not
remediated, has the potential to cause a material misstatement or to miss a
filing deadline in the future.

         These conditions constitute deficiencies in both the design and
operation of entity-level controls. As a result of these deficiencies, our
original Annual Report on Form 10-KSB did not contain all material information
which is required to be disclosed, and in particular, our financial statements
for the fiscal year ended December 31, 2006. In addition, we have restated our
financial statements for the fiscal years ended December 31, 2005 and 2004 and
the interim financial statements for the periods ending March 31, 2005, June 30,
2005, September 30, 2005, March 31, 2006, June 30, 2006, and September 30, 2006.

         These significant deficiencies in the design and operation of our
internal controls include the needs to hire additional staffing and to provide
training to existing and new personnel in SEC reporting requirements and
generally accepted accounting principles. Furthermore, the deficiencies include
the need for formal control systems for journal entries and closing procedures,
the need to form an independent audit committee as a form of internal checks and
balances and oversight of our management, to implement budget and reporting
procedures, and the need to provide internal review procedures for schedules,
SEC reports, and filings prior to submission to the auditors and/or filing with
the SEC.

         These deficiencies have been disclosed to our Board of Directors.
Additional effort is needed to fully remedy these deficiencies and we are
seeking to improve and strengthen our control processes and procedures. We are
in the process of improving our internal control over financial reporting in an
effort to remediate these deficiencies by adding additional accounting
personnel, improving supervision and increasing training of our accounting staff
with respect to generally accepted accounting principles, providing additional
training to our management regarding use of estimates in accordance with
generally accepted accounting principles, increasing the use of contract
accounting assistance, and increasing the frequency of internal financial
statement review. We will continue to take additional steps necessary to
remediate the material weaknesses described above.

         Our Chief Executive Officer and Chief Financial Officer have also
evaluated whether any change in our internal controls occurred during the last
fiscal quarter and have concluded that there were no changes in our internal
controls or in other factors that occurred during the last fiscal quarter that
has materially affected, or is reasonably likely to materially affect, these
controls.

Item 8B. OTHER INFORMATION.

         None.


                                       35
<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
-----------------------    -----       ---------------------------------------
Eugene Chiaramonte, Jr.     62         President, Secretary, and sole Director

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

Information about our Board and its Committees.

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

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, 2006, 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 (1) Mr. Chiaramonte was 1 day late in filing a Form 4
in connection with his disposition of shares of common stock in December 2006,
(2) Mr. Chiaramonte was late in filing a Form 4 in connection with the
foreclosure upon shares of his common stock in April 2006, (3) Mr. Wheeler
failed to file a Form 4 in connection with the foreclosure upon shares of his
common stock in April 2006, and (4) Mr. Wheeler failed to file a Form 4 when he
ceased to be an officer, director or stockholder holding more than 10% of the
outstanding common stock..

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.

                                       36
<PAGE>

Item 10. EXECUTIVE COMPENSATION

         The following table sets forth the compensation paid to the Chief
Executive Officer and our other executive officers for services rendered during
the fiscal years ended December 31, 2006 and 2005.
<TABLE>
<CAPTION>

                                                           Summary Compensation Table
-----------------------------------------------------------------------------------------------------------------------------------

                                                                    Stock              Option         All Other
   Name and Position           Year      Salary        Bonus       Awards ($)        Awards ($)      Compensation        Total ($)
----------------------------  ------   ----------     --------    -----------       -----------      ------------      ------------
<S>                            <C>     <C>              <C>       <C>               <C>              <C>               <C>
Eugene Chiaramonte             2006    $ 120,0000(1)        --             --       $   143,053(2)             --      $    263,053
President and Secretary        2005        14,000           --             --                --                --      $     14,000

William R. Wheeler             2006    $   50,000(3)        --    $    69,620(4)    $   143,053(2)   $    303,442(5)   $    566,115
Former Chairman, President     2005    $       --           --             --                --      $      8,966(6)   $      8,966
and Chief Executive Officer
(Resigned May 31, 2006)
</TABLE>

(1)  $44,000 has been accrued but not paid.

(2)  On May 18, 2006, we granted each of Mr. Chiaramonte and Mr. Wheeler a stock
     option to purchase up to 5,000,000 shares of our common stock at a price of
     $0.05 per share pursuant to their employment agreements. The value
     represents the compensation costs of stock options for financial reporting
     purposes for the year under FAS 123R.

(3)  $10,650 has been accrued but not paid.

(4)  Mr. Wheeler provided consulting services to us in 2006, for which we paid
     him a total of 3,881,818 shares of our common stock valued at $69,620 at
     the time of grant, which value represents the compensation costs of the
     stock awards for financial reporting purposes for the year under FAS 123R.

(5)  This amount represents amounts accrued and common stock issued for payment
     of legal fees incurred by Mr. Wheeler which Quest has been paying under its
     indemnification arrangements with Mr. Wheeler.

(6)  Miscellaneous income. Amount does not include repayment of advanced of
     $44,000 made by Mr. Wheeler.


                                       37
<PAGE>

Outstanding Equity Awards

         The following table sets forth the outstanding option awards granted to
the Chief Executive Officer and our other executive officers for services
rendered as of December 31, 2006.
<TABLE>
<CAPTION>

                                     Outstanding Equity Awards At Fiscal Year-End

--------------------------------------------------------------------------------------------------------
                             Number of Securities     Number of Securities
                                  Underlying               Underlying           Option        Option
                             Unexercised Options       Unexercised Options     Exercise      Exercise
    Name and Position            Exercisable              Unexercisable         Price          Date
------------------------- ------------------------ ------------------------- -----------  --------------
<S>                               <C>               <C>                      <C>          <C>
Eugene Chiaramonte                2,000,000(1)                                   $0.05        5/17/11
President and Secretary           1,000,000(1)                                   $0.05        5/17/11
                                                          2,000,000(1)           $0.05        5/17/11

William R. Wheeler                2,000,000                                      $0.05        5/17/11
Former Chairman,                  1,000,000                                      $0.05        5/17/11
President and Chief
Executive Officer
</TABLE>

(1)  In January, 2007, Quest and Mr. Chiaramonte mutually agreed to cancel and
     void these options. No replacement options have been issued.

Employment Agreements

         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
received options to purchase up to 5,000,000 shares of Quest's common stock at
an exercise price of $0.05 per share. 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.

         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.

Consulting Agreement

         On May 31, 2006, Quest entered into a consulting agreement with William
R. Wheeler, Quest's former Chief Executive Officer. The agreement is for one
year and is renewal for successive periods of two (2) years. The agreement

                                       38
<PAGE>

provides for a monthly consulting fee, payable in cash or as a stock award under
a stock incentive plan. In addition, Quest shall pay Mr. Wheeler a one percent
royalty on gross sales on all mine products that originate from mines and/or
wells introduced to Quest by Mr. Wheeler. With respect to the options to
purchase up to 5,000,000 shares of Quest's common stock granted to Mr. Wheeler,
options to purchase up to 2,000,000 shares were deemed vested, options to
purchase up to 1,000,000 shares will vest six months after the date of the
consulting agreement, and the balance of the options were voided.

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.

         From time to time we may engage certain members of the Board of
Directors to perform services on our behalf. In such cases, we compensate the
members for their services at rates no more favorable than could be obtained
from unaffiliated parties. Other than as set forth above, we did not engage any
members of the Board of Directors to perform services our behalf in 2006.

         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, 2006:

<TABLE>
<CAPTION>

                                       (a)                   (b)                   (c)
------------------------------   -----------------    ------------------    -------------------
Plan Category                       Number of         Weighted-average          Number of
                                  securities to        exercise price           securities
                                  be issued upon       of outstanding           remaining
                                   exercise of            options,            available for
                                   outstanding          warrants and         future issuance
                                     options,              rights              under equity
                                   warrants and                                compensation
                                      rights                                 plans (excluding
                                                                                securities
                                                                               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)(4)(5)             3,000,000               $ 0.05             1,996,191

Total                               3,000,000               $ 0.05             1,996,191
</TABLE>

(1)  2006 Stock Incentive Plan. The purpose of our 2006 Stock Incentive Plan is
     to advance the best interests of the company by providing those persons who
     have a substantial responsibility for our management and growth with
     additional incentive and by increasing their proprietary interest in the
     success of the company, thereby encouraging them to maintain their
     relationships with us. Further, the availability and offering of stock
     options and common stock under the plan supports and increases our ability
     to attract and retain individuals of exceptional talent upon whom, in large
     measure, the sustained progress, growth and profitability which we depend.
     The total number of shares available for the grant of either stock options
     or compensation stock under the plan is 23 million shares, subject to
     adjustment, and to date, we have issued 18,643,809 shares and have reserved
     3,000,000 shares for option grants.

     Our compensation committee which is appointed by our board of directors
     administers our plan and has full power to grant stock options and common
     stock, construe and interpret the plan, establish rules and regulations and
     perform all other acts, including the delegation of administrative
     responsibilities, it believes reasonable an proper. Any decision made, or
     action taken, by the compensation committee or our board of directors
     arising out of or in connection with the interpretation and administration
     of the plan is final and conclusive.

                                       39
<PAGE>

     The compensation committee or our board of directors, in its absolute
     discretion, may award common stock to employees of, consultants to, and
     directors of the company, and such other persons as the board of directors
     or compensation committee may select, and permit holders of common stock
     options to exercise such options prior to full vesting therein and hold the
     common stock issued upon exercise of the option as common stock. Stock
     options may also be granted by our board of directors or compensation
     committee to non-employee directors of the company or other persons who are
     performing or who have been engaged to perform services of special
     importance to the management, operation or development of the company.

     In the event that our outstanding common stock is changed into or exchanged
     for a different number or kind of shares or other securities of the company
     by reason of merger, consolidation, other reorganization, recapitalization,
     combination of shares, stock split-up or stock dividend, prompt,
     proportionate, equitable, lawful and adequate adjustment shall be made of
     the aggregate number and kind of shares subject to stock options which may
     be granted under the plan.

     Our board of directors may at any time, and from time to time, suspend or
     terminate the plan in whole or in part or amend it from time to time in
     such respects as our board of directors may deem appropriate and in our
     best interest.

(2)  2006 Stock Incentive Plan No. 2. The purpose of our 2006 Stock Incentive
     Plan No. 2 is to advance the best interests of the company by providing
     those persons who have a substantial responsibility for our management and
     growth with additional incentive and by increasing their proprietary
     interest in the success of the company, thereby encouraging them to
     maintain their relationships with us. Further, the availability and
     offering of stock options and common stock under the plan supports and
     increases our ability to attract and retain individuals of exceptional
     talent upon whom, in large measure, the sustained progress, growth and
     profitability which we depend. The total number of shares available for the
     grant of either stock options or compensation stock under the plan is 30
     million shares, subject to adjustment, and to date, we have issued
     29,360,000 shares.

     Our compensation committee which is appointed by our board of directors
     administers our plan and has full power to grant stock options and common
     stock, construe and interpret the plan, establish rules and regulations and
     perform all other acts, including the delegation of administrative
     responsibilities, it believes reasonable an proper. Any decision made, or
     action taken, by the compensation committee or our board of directors
     arising out of or in connection with the interpretation and administration
     of the plan is final and conclusive.

     The compensation committee or our board of directors, in its absolute
     discretion, may award common stock to employees of, consultants to, and
     directors of the company, and such other persons as the board of directors
     or compensation committee may select, and permit holders of common stock
     options to exercise such options prior to full vesting therein and hold the
     common stock issued upon exercise of the option as common stock. Stock
     options may also be granted by our board of directors or compensation
     committee to non-employee directors of the company or other persons who are
     performing or who have been engaged to perform services of special
     importance to the management, operation or development of the company.

     In the event that our outstanding common stock is changed into or exchanged
     for a different number or kind of shares or other securities of the company
     by reason of merger, consolidation, other reorganization, recapitalization,
     combination of shares, stock split-up or stock dividend, prompt,
     proportionate, equitable, lawful and adequate adjustment shall be made of
     the aggregate number and kind of shares subject to stock options which may
     be granted under the plan.

     Our board of directors may at any time, and from time to time, suspend or
     terminate the plan in whole or in part or amend it from time to time in
     such respects as our board of directors may deem appropriate and in our
     best interest.

                                       40
<PAGE>

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of our common stock as of 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 our issued and outstanding shares of
                  common stock;

         o        each of our directors and executive officers; and

         o        all of our directors and executive officers as a group.
<TABLE>
<CAPTION>

                                             Number Of Shares
      Name And Address                      Beneficially Owned    Percentage Owned
      ----------------                      ------------------    ----------------
<S>                                            <C>                            <C>
Eugene Chiaramonte, Jr....................     39,445,000(1)                  12.0%


All directors and officers as a group.....     39,445,000                     12.0%

</TABLE>

(1)  Includes 32,500,000 shares of common stock issuable upon conversion of
     260,000 shares of Series C Preferred Stock. Mr. Chiaramonte is our
     President, Secretary, and sole director. Mr. Chiaramonte's address is 18B
     East 5th Street, Paterson, NJ 07524.

         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.

                                       41
<PAGE>

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

         Our board of directors authorized the creation of a series of preferred
stock of the company to be known as Series C Preferred Stock, par value $0.001
per share. The conversion price at which shares of common stock shall be
deliverable upon conversion of Series C Preferred Stock without the payment of
any additional consideration by the holder thereof is the lesser of (i) $0.008
per share or (ii) 100% of the average of the 5 closing bid prices of the common
stock immediately preceding such conversion date. Holders of the Series C
Preferred Stock shall be entitled to receive dividends or other distributions
with the holders of our common stock on an as converted basis when, as, and if
declared by our board of directors. The holders of the Series C Preferred Stock
shall also be entitled to receive, upon liquidation, an amount equal to $1.00
per share of the Series C Preferred Stock plus all declared but unpaid dividends
with respect to such shares. The shares of Series C Preferred Stock are not
redeemable.

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

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

         On June 6, 2006, Quest entered into a two-year agreement to acquire
administrative services from a third party consulting company owned by Gene
Chiaramonte III, the son of Eugene Chiaramonte, Jr., Quest's President and
Secretary. The agreement consisted of an initial 1,000,000 shares common stock
issued under a Stock Incentive Plan, along with a monthly payment of $6,500.

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

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

                                       42
<PAGE>

Item 13. EXHIBITS

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

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

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

3.3            Articles of Amendment to Articles of Incorporation of Quest
               Minerals & Mining Corp., filed herewith.

3.4            Articles of Amendment to Articles of Incorporation of Quest
               Minerals & Mining Corp., filed herewith.

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

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

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

4.1            Specimen Certificate of Quest Mineral & Mining Corp.'s common
               stock, filed herewith.

4.2            Amended and restated convertible promissory note, filed herewith.

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

4.4            Convertible promissory note, filed herewith.

4.5            Secured promissory note, filed herewith.

4.6            Form of convertible promissory note, filed herewith.

4.7            Convertible promissory note, filed herewith.

4.8            Promissory Note dated February 21, 2000, as amended, filed
               herewith.

4.9            Commercial Installment Note dated January 20, 1997, filed
               herewith

4.10           Commercial Time Note dated February 21, 2000, filed herewith

4.11           Amended Promissory Note dated August 24, 2006, filed herewith.

4.12           Amended Promissory Note dated August 24, 2006, filed herewith.

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

                                       43
<PAGE>

4.14           Form of Warrant, filed herewith.

4.15           Form of Series A Warrant, filed herewith.

4.16           Form of Series B Warrant, filed herewith

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

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

4.19           Form of Warrant, filed herewith.

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

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

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

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

10.5           William R. Wheeler Consulting Agreement, filed herewith.

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

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

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

10.9           Coal Mining Agreement dated February 23, 2007, filed herewith.

10.10          Stock Purchase Agreement, filed herewith.

10.11          Lease Agreement, filed herewith.

10.12          Lease Agreement, filed herewith.

10.13          Lease Agreement, filed herewith.

10.14          Lease Agreement, filed herewith.

10.15          Lease Agreement, filed herewith.

10.16          Lease Agreement, filed herewith.

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<PAGE>

10.17          Lease Agreement, filed herewith.

10.18          Lease Agreement, filed herewith.

10.19          Lease Agreement, filed herewith.

10.20          Lease Agreement, filed herewith.

10.21          Lease Agreement, filed herewith.

10.22          Lease Agreement, filed herewith.

10.23          Lease Agreement, filed herewith.

10.24          Lease Agreement, filed herewith.

10.25          Lease Agreement, filed herewith.

10.26          Lease Agreement, filed herewith.

10.27          Lease Agreement, filed herewith.

10.28          Forbearance Agreement, filed herewith.

10.29          Conversion Agreement, filed herewith.

10.30          Royalty Agreement, filed herewith.

21.1           Subsidiaries of Quest Minerals and Mining Corp., filed herewith

23.1           Consent of Independent Public Accountants, Kempisty & Company,
               filed herewith.

31.1           Certification of Eugene Chiaramonte, Jr. pursuant to Rule
               13a-14(a), filed herewith.

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

__________________


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, 2007. Kempisty &
Company previously audited our consolidated financial statements for the fiscal
year ended December 31, 2006 and 2005.

Audit Fees

         Kempisty & Company billed us $25,000 in fees for our 2006 annual audit,
$35,000 in fees for our 2005 annual audit, $15,000 in fees for the review of our
quarterly financial statements in 2006, and $15,000 in fees for the review of
our quarterly financial statements for 2005.

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<PAGE>

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 2006 or 2005.

Tax Fees

         We did not pay any fees to Kempisty & Company for tax compliance, tax
advice or tax planning in 2006 or 2005.

All Other Fees

         In 2006, Kempisty & Company billed us $1,500 for work in connection
with our registration statements on Form S-8, and $0 for 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. .

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.



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<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/ EUGENE CHIARAMONTE, JR.
                                           -------------------------------------
                                           Eugene Chiaramonte, Jr.
                                           President
                                           (Principal Executive Officer and
                                           Principal Accounting Officer)


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


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

/s/ EUGENE CHIARAMONTE, JR.         President and sole Director    July 19, 2007
------------------------------
Eugene Chiaramonte, Jr.



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