ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.

Overview

Unless the context otherwise requires, all preferences to "Quantum," "our," "us," "we" and the "Company" refer to Quantum Energy, Inc. and its subsidiaries, as a combined entity.

We were incorporated on February 5, 2004, in the State of Nevada. Our principal executive offices are located at 7250 NW Expressway, suite 260, Oklahoma City, OK. Our telephone number is (405) 728-3800.

Starting in May of 2006, we decided to embark on a new business path in oil and gas exploration and acquisitions. We acquired interests in numerous oil & gas properties in the Barnett Shale area of West Texas. Our business strategy is to acquire interest in the properties of, and working interests in the production owned by, established oil and gas production companies, whether public or private, in the United States oil producing areas. We believe such opportunities exist in the United States. We also believe that these opportunities have considerable future potential for the development of additional oil reserves. Such new reserves might come from the development of existing but as yet undeveloped reserves as well as from future success in exploration.

Barnett Shale Developments; after the initial success of the Barnett Shale leases, the production program in the Barnett Shale area encountered substantial difficulties. Numerous wells throughout this extensive area experienced production difficulties. In addition to the production problems was the severe drop in natural gas prices. All of the wells in which the Company had interests were suspended and all marginal wells have been capped, resulting in the Company abandoning the Company's interest in the Barnett Shale area

When and if funding becomes available, we plan to acquire high-quality oil and gas properties, primarily "proven producing and proven undeveloped reserves." We will also explore low-risk development drilling and work-over opportunities with experienced, well-established operators.

Results of Operations

Three months ended May 31, 2009 compared to three months ended May 31, 2008

Revenues for the three months ended May 31, 2009 and May 31, 2008 were $nil.

Operating expenses totaled $7,332 for the three months ended May 31, 2009 as compared to operating expenses of $17,589 for the three months ended May 31, 2008. This was a decrease of $10,257 or 58%. This decrease was primarily due to a decrease in management fees and marketing costs incurred by us.

Interest expense for the three months ended May 31, 2009 was $26,738 as compared to interest expenses of $25,979 for the three months ended May 31, 2008. This was an increase of $759 and consistent with the interest calculations computed on funds from the date the funds were received.

The net loss for the three months ended May 31, 2009 was $37,659 as compared to $44,494 for the three months ended May 31, 2008. The decrease in losses for the three months ended May 31, 2009 was due to the decrease in operating expense.

Liquidity and Capital Resources

Total current assets as of May 31, 2009 were $645 as compared to $1,036 as of February 29, 2009, all in cash. Additionally, a shareholders deficiency in the amount of $3,278,679 as of May 31, 2009 as compared to $3,241,019 as of February 28, 2009, a direct result of the Company not obtaining sufficient revenues.

We had a negative cash flow of $391 from operating activities for three months ended May 31, 2009, as compared to a negative cash flow of $18,609 for the three months ended May 31, 2008, a decrease in cash outflow of approximately 97%.

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There was no cash inflow from financing activities.

The on-going negative cash flow from operations raises substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent on the ability to raise additional capital and implement its business plan.

We have not attained profitable operations and will require additional funding in order to cover the anticipated professional fees and general administrative expenses and to proceed with the anticipated investigation to identify and purchase new mineral properties worthy of exploration or any other business opportunities that may become available to it. We anticipate that additional funding will be required in the form of equity financing from the sale of common stock. However, we cannot provide investors with any assurance that sufficient funding from the sale of common stock to fund the purchase and the development of any future projects can be obtained. We believe that debt financing will not be an alternative for funding future corporate programs. We do not have any arrangements in place for any future equity financings.

As of May 31, 2009, we had a working capital deficiency of $2,516,907 as compared to $2,479,306 as of February 28, 2009. A major portion of debt is attributed to payments made for mineral properties, and operating deficiency.

At May 31, 2009 there was no bank debt.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Going Concern

We have not attained profitable operations and is dependent upon obtaining financing to pursue its business objectives. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt we will be able to continue as a going concern without further financing.

We may continue to rely on equity sales of the common shares in order to continue to fund the Company's business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned business activities.