<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 FIRST AMENDMENT
                                  FORM 10-QSB/A

(X)   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2000
                               --------------

( )   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period from __________________ to ______________

Commission File Number 0-12214
                       -------

                          DALECO RESOURCES CORPORATION
--------------------------------------------------------------------------------
              Name of small business issue as specified in Charter

           Delaware                                      23-2860739
-------------------------------             ------------------------------------
(State or other jurisdiction of             (IRS Employer Identification Number)
incorporation or organization)

   983 Old Eagle School Road, Suite 615
       Wayne, Pennsylvania 19087                            (610) 293-9400
----------------------------------------             ---------------------------
(Address of Principal Executive Offices)             (Issuer's telephone number)


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after distribution under a
plan confirmed by court.
                                                        Yes ___ No ___


                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date.

3,102,574 shares of common stock as of May 1, 2000


<PAGE>


                                      INDEX

                                                                            PAGE
                                                                            ----
PART I      FINANCIAL INFORMATION

ITEM 1      FINANCIAL STATEMENTS (Unaudited)..................................3
            Consolidated Balance Sheets.......................................3
            Consolidated Statement Of Income..................................4
            Consolidated Statement Of Deficit.................................5
            Consolidated Statement Of Cash Flow...............................6
            Notes to Consolidated Financial Statements........................7

ITEM 2      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
            CONDITION AND RESULTS OF OPERATIONS..............................18

PART II     OTHER INFORMATION

ITEM 6      Exhibits and Reports on Form 8-K.................................19

SIGNATURES...................................................................20




                                      -2-
<PAGE>


DALECO RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
                                                                                         2000                 1999
                                                                                     ------------         ------------
<S>                                                                                  <C>                  <C>
ASSETS
Current Assets
     Cash and cash equivalents                                                       $    282,562         $    432,400
     Accounts receivable                                                                  509,084              342,581
     Other                                                                                  4,264               11,474
                                                                                     ------------         ------------
                  Total Current Assets                                               $    795,910         $    786,455

Oil and gas properties and equipment (note 3)                                           7,306,438            8,789,931
Property and equipment                                                                     27,633               32,632
Timber rights (note 4)                                                                    700,000              828,342
Mineral properties (note 5)                                                                  --                   --
Goodwill (note 15)                                                                           --                 37,693
Debt Issue Costs                                                                          172,815              272,815
                                                                                     ------------         ------------
                  Total Assets                                                       $  9,002,796         $ 10,747,868
                                                                                     ============         ============
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities                                             $  2,939,390         $  2,670,118
Current portion of long-term debt                                                       6,675,727              200,000
Note Payables (note)                                                                      452,092                   --
Due to related parties (note 7)                                                           537,511              445,839
                                                                                     ------------         ------------
                  Total Current Liabilities                                          $ 10,604,720         $  3,315,957
Long-term debt (note 10)                                                                     --              6,285,054
Debentures (note 9)                                                                          --                   --
                                                                                     ------------         ------------
                  Total Liabilities                                                  $ 10,604,720         $  9,601,011
                                                                                     ------------         ------------
Commitments and Contingencies (note 15 and 16)
Shareholders' Equity
     3,102,574 (1998--2,776,788) Common shares,
     par value $0.01 per share                                                       $     31,027         $     31,026
     16,000 Preferred Shares, par value $0.01 per share (note 7)                              160                  160
     Additional Paid in Capital                                                        14,451,128           14,388,255
     Accumulated deficit                                                              (16,084,239)         (13,272,584)
                                                                                     ------------         ------------
                  Total Shareholders' Equity                                           (1,601,924)           1,146,857
                                                                                     ------------         ------------
                  Total Liabilities and Shareholders' Equity                         $  9,002,796         $ 10,747,868
                                                                                     ============         ============

</TABLE>
                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      -3-

<PAGE>


DALECO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF LOSS FOR THE PERIODS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                          Three Months Ended                 Six Months Ended
                                                      --------------------------         --------------------------
                                                       March 31,       March 31,          March 31,       March 31,
                                                         2000            1999               2000            1999
                                                      ----------      ----------         ----------      ----------
<S>                                                     <C>             <C>              <C>               <C>
Gross Oil and Gas Operating Revenue                     $616,770        $379,916         $1,186,699        $816,735
Less:    Lease Operating Expenses                        383,707         195,184            910,387         473,165
         Severance taxes                                  26,824           6,425             72,885          12,550
         Net Profits Interest and Related Expenses            --         167,043            (10,541)        402,249
         Depletion, depreciation and amortization         29,200          55,000             56,423         120,000
                                                      ----------      ----------         ----------      ----------
Net Income (Loss) from Oil and Gas Operations            177,039         (43,736)           157,545        (191,229)
                                                      ----------      ----------         ----------      ----------

Timber Revenues                                               --              --                 --          22,032
Timber Operating Costs                                        --          21,867                 --          54,981
                                                      ----------      ----------         ----------      ----------
Net Loss From Timber Operations                               --        (21,867)                 --        (27,408)
                                                      ----------      ----------         ----------      ----------

Other Activities
Management and Administrative Fees                       107,140         153,844            240,056         276,289
Income from sale of Properties                           408,765              --            878,685              --
Administration Expenses                                 (163,051)       (222,969)          (528,736)       (403,787)
Amortization of Debenture Issue Costs                         --         (50,000)                --        (100,000)
Amortization of Goodwill                                      --        (100,000)                --        (200,000)
Interest expense                                       (219,552)        (177,978)        (1,120,913)       (343,756)
                                                      ----------      ----------         ----------      ----------
Net income (Loss) Other Activities                       133,302        (397,103)          (530,908)       (771,254)
                                                      ----------      ----------         ----------      ----------

Net income (Loss) for Period                          $   10,341      $ (462,706)        $ (373,363)     $ (989,891)
                                                      ==========      ==========         ==========      ==========

PRIMARY AND FULLY Diluted NET (LOSS)
  PER COMMON SHARE                                         $0.10         $(0.14)            $(0.12)         $(0.32)
                                                           =====         ======             ======          ======
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      -4-

<PAGE>


DALECO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF DEFICIT FOR THE PERIODS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                               2000              1999
                                                           ------------      ------------
<S>                                                        <C>               <C>
Deficit - Beginning of Period                              $(16,374,580)     $(12,242,693)
Net Income (loss) for the period                                310,341          (989,891)
Dividends on Preferred Stock                                    (20,000)          (40,000)
                                                           ------------      ------------
Deficit - End of Period                                    $(16,084,239)     $(13,272,584)
                                                           ============      ============
</TABLE>















                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      -5-

<PAGE>


DALECO RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE PERIODS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================

<TABLE>
<CAPTION>
                                                          Three Months Ended                  Six Months Ended
                                                       -------------------------         --------------------------
                                                       March 31,       March 31,          March 31,       March 31,
                                                          2000           1999               2000            1999
                                                       ---------      ----------         ----------      ----------
<S>                                                    <C>            <C>                <C>             <C>
Operating Activities
Net  Income (Loss)                                     $ 310,341      $ (462,706)        $ (373,163)     $ (989,891)
Items not affecting Working Capital Depletion:
Depreciation, and Amortization and Write-Downs            29,200         205,000             56,423         470,000
                                                       ---------      ----------         ----------      ----------
                                                         339,541        (257,706)          (316,740)       (519,891)
Item affecting Working Capital Depletion:
(Increase) Decrease in Other Assets                       58,880              --             58,405              --
(Increase) Decrease in Receivables                       (18,616)        (88,800)           (64,968)         (3,564)
Increase (Decrease) in Accounts Payable                 (117,751)        497,580           (231,917)        773,503
                                                       ---------      ----------         ----------      ----------
Cash provided (used) for Operations                      262,054         151,074          (555,220)         250,048
                                                       ---------      ----------         ----------      ----------

INVESTMENT ACTIVITIES
Leasing Acquisition and Well Costs Incurred                   --              --                --               --
                                                       ---------      ----------         ----------      ----------
Cash provided from/(used for) Investing Activities            --              --                --               --
                                                       ---------      ----------         ----------      ----------

Financing Activities
Increase (Decrease) in amounts due to Related Parties     37,972          12,010             48,972          30,010
Increase (Decrease) amounts due other notes                1,000              --            232,092              --
Dividends Paid                                           (20,000)        (20,000)           (40,000)        (40,000)
Proceeds From Long-Term Debt                                  --              --            390,673             --
                                                       ---------      ----------         ----------      ----------
Cash Provided From (used by) Financing Activities         18,972          (7,990)           631,737          (9,990)
                                                       ---------      ----------         ----------      ----------

NET INCREASE (DECREASE) IN CASH                          281,026         143,084             76,517         240,058
Cash - Beginning of Period                                 1,536         289,316            206,045         192,342
                                                       ---------      ----------         ----------      ----------
Cash - End of Period                                   $ 282,562      $  432,400         $  282,562      $  432,400
                                                       =========      ==========         ==========      ==========
</TABLE>


                 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS

                                      -6-

<PAGE>


DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
1.       CONTINUED OPERATIONS

                  The financial statements have been prepared on the basis of a
                  going concern, which contemplates that the Company will be
                  able to realize assets and discharge liabilities in the normal
                  course of business. Accordingly, they do not give effect to
                  adjustments that would be necessary should the Company be
                  required to liquidate it assets. As of March 31, 2000 the
                  Company has reported a gain of $133,302 of the three month
                  period then ending and a loss of $528,736 for the six month
                  period ending March 31,2000. The ability of the Company to
                  meet these liabilities and total liabilities of $ 10.6 Million
                  and to continue as a going concern is dependent upon the
                  availability of future funding, the successful completion of
                  its drilling projects (see Note 5), achieving profitable
                  timber operations (see Note 4) and consummation of its
                  acquisition of Clean Age Minerals.

                  As of the date of this report, certain of the Company's
                  subsidiaries are in default relative to certain debt
                  obligations.

 2.      Summary of Significant Accounting Policies

         a.       Use of estimates

                        The preparation of financial statements in conformity
                        with generally accepted accounting principles 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.

         b.       Basis of consolidation

                        The consolidated financial statements of Daleco
                        Resources Corporation (the "Company") have been prepared
                        in accordance with generally accepted accounting
                        principles and include the accounts of the Company and
                        its wholly-owned subsidiaries Westlands Resources
                        Corporation ("Westlands", Sustainable Forest Industries
                        Inc. ("Sustainable"), Deven Resources, Inc. ("Deven"),
                        Tri-Coastal Energy, Inc., and Haly Corp. The Company's
                        investments in oil and gas leases are accounted for
                        using proportionate consolidation whereby the Company's
                        prorata share of each of the assets, liabilities,
                        revenues and expenses of the investments are aggregated
                        with those of the Company in its financial statements.

         c.       Oil and gas properties and equipment

                        The Company follows the successful efforts method of
                        accounting for the costs of exploration and development
                        activities. Direct acquisition costs of developed and
                        undeveloped leases are capitalized. Costs of undeveloped
                        leases on which proven reserves are found are

                                      -7-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
                        transferred to proven oil and gas properties. Each
                        undeveloped lease with significant acquisition cost is
                        reviewed periodically and a valuation allowance provided
                        for any estimated decline in value. Capitalized costs of
                        proven developed leases are charged to income on the
                        units of production basis based upon total proved
                        reserves. The capitalized costs of these proven
                        developed leases are written down to their projected net
                        recoverable amount.

                        Costs of exploratory wells found to be dry during the
                        year or before the issuance of these financial
                        statements are charged against earnings in that year.
                        Costs of successful exploration wells and development
                        wells are capitalized. All costs of development wells
                        and successful exploration wells are charged to earnings
                        on a unit-of-production basis based upon proven
                        developed reserves. Where the costs of developed wells
                        and successful exploration wells exceed projected net
                        recoverable amounts, such wells are written down to
                        their projected net recoverable amount. Net recoverable
                        amount is the aggregate of estimated un-discounted
                        future net revenues from proven reserves less operating
                        and production expenses.

                        Effective in the first quarter of 1997, the Company
                        began assessing the impairment of capitalized costs of
                        proved oil and gas properties and other long-lived
                        assets in accordance with Statement of Financial
                        Accounting Standards No. 121 (SFAS 121), Accounting for
                        the Impairment of Long-Lived Assets and for Long-Lived
                        Assets to be Disposed of. Under this method, the Company
                        generally assesses its oil and gas properties on a
                        field-by-field basis utilizing its current estimate of
                        future revenues and operating expenses. In the event net
                        undiscounted cash flow is less than the carrying value,
                        an impairment loss is recorded based on estimated fair
                        value, which would consider discounted future net cash
                        flows. SFAS 121 did not have any impact on the Company's
                        change in method of assessing impairment of oil and gas
                        properties and other long-lived assets.

         d.       Site restoration, dismantlement and abandonment costs

                        The salvage value of producing wells is expected to
                        exceed the cost of site restoration and abandonment. As
                        a result, no such costs are accrued in these financial
                        statements.

         e.       Property and Equipment

                        Property and equipment are recorded at cost and
                        depreciated over the straight-line method over a period
                        of five years.

         f.       Timber Rights

                        The Company has recorded the acquisition of timber
                        rights at cost. These costs are deferred until
                        commercial production commences. Where the costs exceed
                        projected net recoverable amounts, the timber rights are
                        written down to the projected net recoverable amount.
                        Net recoverable amount is the aggregate of estimated
                        un-discounted future net revenues from the sale of
                        timber less operating and production expenses.

                                      -8-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
         g.       Debt Issue Costs

                        Debt issue costs as of March 31, 2000 and 1999,
                        represent those associated with the Heller Financial,
                        Inc. loan (see Note 9) and will be amortized over a
                        period of five years.

         h.       Cash and Cash Equivalents

                        Cash and cash equivalents include cash and investments
                        with original maturities of three months or less.

         I.       Goodwill

                        Goodwill associated with the acquisition of Deven
                        Resources, Inc. is being amortized over a three (3) year
                        period.

         j.      Fair Value of Financial Instruments

                        Cash and cash equivalents, receivables, and all
                        liabilities have fair values approximating carrying
                        amounts, except for the Heller Financial, Inc., and
                        Sonata Investment Company, LTD., loans for which it is
                        not practicable to estimate fair values. The loans are
                        to be repaid out of net cash flows. Additional interest
                        or profit participation is payable after the payment of
                        principal.

         k.       Reverse Stock Split

                        Effective February 24, 1998, the majority of
                        stockholders of the Company approved a reverse
                        ten-for-one stock split. The effect of the reverse stock
                        split has been retroactively reflected in these
                        financial statements. All reference to the number of
                        common and preferred shares, stock options, warrants,
                        and per share amounts elsewhere in these financial
                        statements and related footnotes have been restated as
                        appropriate to reflect the effect of the reverse split
                        for all periods presented.

                                      -9-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
 3.      Oil and Gas and Equipment

<TABLE>
<CAPTION>
                                                                        2000                1999
                                                                        ----                ----
<S>                                                                   <C>                <C>
Proven lease acreage costs                                            5,429,995          $6,071,637

Proven undeveloped lease acreage costs                                1,745,810           1,906,220

Well costs                                                            4,795,605           4,795,605
                                                                    -----------         -----------
                                                                    $11,971,410         $12,773,462
Accumulated depletion, depreciation and amortization                  4,664,972           3,983,531
                                                                    -----------         -----------
                                                                    $ 7,306,438         $ 8,789,931
                                                                    ===========         ===========
</TABLE>

4.       Timber Rights Acquisition

         Effective September 29, 1995, the Company entered into an agreement
         ("Acquisition Agreement") to purchase 100% of the issued and
         outstanding shares of the common stock of Sustainable Forest Industries
         Inc. ("Sustainable"), a privately held Delaware Company, in exchange
         for 150,000 shares of common stock of the Company.

         Prior to this, Sustainable entered into a Timber Acquisition Agreement
         on September 27, 1995 with Oreu Timber and Trading Co., Ltd. ("Oreu"),
         a Guyana Corporation which is an affiliate of May Joy Agricultural
         Cooperative Society Ltd. ("May Joy"). Under the terms of the agreement,
         Sustainable has been assigned the exclusive harvesting and cutting
         rights for the timber concession issue by Permit No. 1367. This permit
         was originally granted to May Joy who subsequently assigned harvesting
         rights to Oreu as per an agreement dated January 3,1995.

         In exchange for the timber rights, Oreu received a 10% ownership of
         Sustainable. This ownership was subsequently converted to equivalent
         shares of the Company as a result of the acquisition of Sustainable.

         The acquisition has been accounted for by the purchase method. The
         purchase price of $962,500 was determined based on the fair value of
         the 150,000 common shares of Daleco given up to acquire Sustainable.
         The fair value of the net liabilities of Sustainable acquired was
         $65,842 resulting in consideration of approximately $1,028,500 that has
         been recorded as timber rights.

         During Fiscal 1997, the Company obtained funds to permit Sustainable to
         begin implementation of its business plan. (See Note 9).

5.       Mineral Properties

         In February 1995, the Company acquired 109 mining claims from
         shareholders of the Company for $15,673 representing their cost to
         acquire the claims. Additional costs of $8,300 were incurred during
         fiscal 1997 to maintain these claims. The claims were not renewed and
         written-off during Fiscal 1998.

                                      -10-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
6.       Notes Payable

         During the year ended September 30, 1995, the Company received
         $1,100,000 in return for two notes payable, with the producing wells of
         the Company used as collateral. Interest of 10% per annum was due
         monthly.

         During fiscal 1996, the Company repaid $300,000 of the outstanding
         balance. During fiscal 1997, the remaining $800,000 was converted into
         16,000 shares of 10% cumulative preferred stock, at $50.00 per share.
         The 160,000 shares were to have been repurchased by the Company as of
         August 22, 1999. (See Note 17, Litigation).

         During fiscal 1998, the Company borrowed $145,000 from four (4)
         persons. The debt was evidenced by Notes that matured on November 21,
         1998. The Notes earned interest at 2% over the prime rate charged by
         the Huntingdon National Bank of Columbus, Ohio, through the maturity
         date, and 18% thereafter. The Noteholders were also given warrants.
         (See Note 10(b)--Warrants).

7.       Due to (from) Related Parties

<TABLE>
<CAPTION>
                                                                       2000              1999
                                                                     --------          --------
<S>                                                                  <C>               <C>
                  Net due (from) to Amir and Erlich
                           Bearing interest at prime +3%             $ 91,062          $ 91,062
                           Bearing interest at 7%                     446,449           354,777
                                                                     --------          --------
                                                                     $537,511          $445,839
                                                                     ========          ========
</TABLE>

         The amounts due to Haly Corporation were eliminated through the
         acquisition of Haly as of September 30, 1997 (see Note 18). Amir and
         Erlich are officers and shareholders of the Company. These amounts have
         no fixed repayment terms.

8.       Debentures
                                                     2000         1999
                                                   -------       -------
                            8% Convertible         $30,000       $30,000
                                                   -------       -------
                            Debentures

         a.       7% Convertible Debentures

                        On May 31, 1996 the Company issued $1,000,000 of 7%
                        convertible debentures with interest payable in cash or
                        stock on a semi-annual basis, and a term of three years.
                        The placement agent's fees were 10% of the gross
                        proceeds and 10,000 warrants at $10.00, with an
                        expiration date of May 30, 2001 (see Note 12). The
                        debentures could be converted after a holding period of:
                        (a) as to 50% of the principal amount, 40 days (July 10,
                        1996), and (b) the remaining 50%, 60 days (July 30,
                        1996). The debentures are convertible into the Company's
                        common stock at the lessor of (1) a 35% discount on the


                                      -11-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
                        previous five day average closing bid price at
                        conversion, or; (2) the previous day average closing bid
                        price at closing (May 31, 1996). As of September 30,
                        1996, $600,000 of the 7% debentures had been converted
                        into 107,712 common shares. The remaining balance was
                        converted into 80,579 common shares during 1997.

         b.       8% Convertible Debentures

                        On September 11, 1996, the Company issued $1,310,000
                        worth of 8% convertible debentures with interest payable
                        in stock only and accruing until conversion or
                        redemptions after the term of two years. The placement
                        agent's fees were 10% of the gross proceeds and 12,111
                        warrants at $10.07 expiring November 16, 2001. The
                        debentures may be converted after a holding period of 45
                        days after closing at the lessor of: (1) the fixed
                        conversion price ($1 0.171875), or (2) 75% of the
                        average closing bid price for the five trading days
                        immediately preceding the date of conversion. As of
                        March 31, 2000, $1,280,000 of the 8% debentures had been
                        converted into 981,322 common shares.

9.       Debt

         The debt of the Company consists of the following:

         a.       Heller Financial, Inc.

                        During the forth quarter of fiscal 1997, the Company
                        entered into an arrangement with Heller Financial, Inc.
                        ("Heller") whereby Heller has agreed to provide the
                        Company with up to $15,000,000 to rework existing
                        horizontal wells, re-complete its vertical wells as
                        horizontal wells, and develop additional acreage. Under
                        the terms of the agreement, all of the properties of
                        Westlands were transferred to a newly formed Limited
                        Partnership, Tri-Coastal Energy, L.P., the general
                        partner of which is Tri-Coastal Energy, Inc.,
                        (Tri-Coastal) and the sole limited partner of which is
                        Westlands. Westlands is also the sole shareholder of
                        Tri-Coastal. The amount outstanding under this
                        arrangement as of March 31, 1999, was $5,835,054.
                        Interest on the borrowings is at prime plus 2%.
                        Principal is paid out of 85% of the net cash flow from
                        the properties. Additional interest is payable from 50%
                        of the net cash flow from these properties after the
                        payment of principal. In January 1999, Heller declared
                        the Loan to be in default, as a result of the pledged
                        properties failure to generate the required interest
                        payments. This was solely due to the decrease in the
                        price for oil world wide. As a result, the full amount
                        of the Heller loan has been reclassified as current
                        debt.

                                      -12-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
         b.       Sonata Investment Company, LTD.

                        During the third quarter of fiscal 1997, Sustainable
                        entered into a loan agreement with Sonata Investment
                        Company, LTD. for $250,000, which remains outstanding as
                        of September 30, 1997. Sustainable has the right to
                        request an additional $250,000 prior to December 31,
                        1999. The Company and Westlands are guarantors of the
                        loan with Westlands (now Tri-Coastal Energy, L.P.) wells
                        being pledged as collateral, subordinated to the Heller
                        Financing. The loan is to be repaid out of 25% of
                        Sustainable's net cash flow with any remaining balance
                        due by December 31, 1999. Interest is at 12%. In
                        addition, Sonata will receive a profits participation of
                        25% of the net profits of Sustainable while the loan is
                        outstanding and 20% after the loan is repaid (after
                        payout). Should Sustainable request the additional
                        $250,000 from Sonata and should Sonata elect not to make
                        said advance, then the after payout rate reduces from
                        20% to 15%. The full remaining balance of this loan has
                        been reclassified as current debt.

         c.       PNC Bank Loan

                        During the fourth quarter of fiscal 1998, Deven
                        Resources, Inc. obtained a term loan of $300,000 with
                        interest at prime plus 12%. Principal is due at $25,000
                        per quarter. The loan is secured by specific properties
                        owned by Deven. This loan was paid off on December 15,
                        1999 through the sale of Deven's Net Profits interests
                        in certain properties in Armstrong and Fayette Counties,
                        Pennsylvania.

         d.       First Regional Bank

                        As of December 31, 1997, the Company assumed a $100,000
                        loan with First Regional Bank when it acquired Haly
                        Corporation. Interest is at 6.9% and the loan matures in
                        1999. The loan is secured by personal assets of an
                        officer of the Company.

10.      Capital Stock

<TABLE>
<CAPTION>
                                                          NUMBER OF COMMON SHARES,      NUMBER OF PREFERRED
                                                                 PAR VALUE                SHARES PAR VALUE
                                                              $0.01 PER SHARE             $0.01 PER SHARE     AMOUNT
                                                              ---------------             ---------------     ------
      Authorized                                                 20,000,000                  10,000,000
                                                                 ----------                  ----------
<S>                                                              <C>                        <C>             <C>
      Balance as at September 30, 1997                            2,756,988                                 $14,086,131
      Issued for Professional services rendered                     194,900                                     273,377
                                                                                               16,000           800,000
                                                                                               ------       -----------
      Shares cancelled due to cancellation of
        Fractional Shares                                               (46)
                                                                       ====
      Balance as at September 30, 1998                            2,951,642                    16,000       $14,329,827
                                                                                               ------       ===========
      Issued for Professional services rendered                     150,932
                                                                  =========
      Balance as at September 30, 1999                            3,102,574                    16,000        14,388,258
                                                                  =========                    ======        ==========
      Balance as of December 31, 1999                             3,102,574                    16,000        14,388,258
                                                                  =========                    ======        ==========
</TABLE>

                                      -13-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
Upon re-domestication of the Company into the U.S. as of October 1,1997, par
value was established at $0.01 per share for both common and preferred stock.

         a.       Common Stock Options

                        In January 1995, the Company granted fully vested common
                        stock purchase options expiring on January 6, 2000 for
                        85,000 common shares at $2.50 per share. On the same
                        date, the common stock purchase options previously
                        outstanding, which expired on September 5,1995 for
                        35,670 common shares at $3.20 per share, were gifted
                        back to the Company and canceled. The following summary
                        sets out the activity in common stock purchase options:

                                                    1999            1998
--------------------------------------------------------------------------
Outstanding and Exercisable
at beginning of year                               35,000          700,000
--------------------------------------------------------------------------
Canceled                                           15,000         (350,000)
--------------------------------------------------------------------------
Granted                                           120,000               --
--------------------------------------------------------------------------
Exercised                                              --               --
                                                  -------         --------
--------------------------------------------------------------------------
Outstanding and Exercisable
at end of year                                    140,000           35,000
                                                  =======         ========
--------------------------------------------------------------------------

                        In October 1995, the Financial Accounting Standards
                        Board issued Statement of Financial Accounting Standards
                        No. 123, Accounting for Stock-Based Compensation, (SFAS
                        123). SFAS 123 permits the Company's continued use of
                        the intrinsic value based method prescribed by
                        Accounting Principles Board Opinion No. 25 (APB 25).
                        SFAS 123 requires additional disclosures, including
                        proforma calculations of net earnings and earnings per
                        share, as if the fair value method of accounting
                        prescribed by SFAS 123 had been applied. The fair value
                        of stock options and compensation cost are measured at
                        the date of grant.

                        The common stock purchase options were issued for past
                        services at an exercise price of $2.50 per share when
                        the underlying stock was at $2.245 per share. Had
                        compensation cost been determined based on the fair
                        value of the common stock purchase options using the
                        provisions of SFAS 123, the Company's net loss and loss
                        per share in 1995 would have increased by $161,500 and
                        $0.10, respectively.

                        For the proforma calculation, the fair value of each
                        option on the date of grant was estimated using the
                        Black-Scholes option pricing model and the following
                        assumptions for awards in 1995: zero dividend yield
                        expected volatility of 119.64%, risk -free interest rate
                        of 7.84%, and expected life of 5 years. Using these
                        assumptions, the grant-date fair value per share of the
                        options granted in 1995 was $1.80.

                                      -14-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
         b.       Common Stock Warrants

                        Common stock warrants outstanding at March 31, 1999,
                        consist of the following:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
              Issuance                        Expiration Date                  Amount                    Price Per Share
------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                               <C>                        <C>
Acquisition of Sustainable                  September 30, 2000                 50,000                          $3.50
------------------------------------------------------------------------------------------------------------------------------
Consulting Agreements                         May 8, 2001 to                  160,000                          $3.50
                                              October 1, 2001
------------------------------------------------------------------------------------------------------------------------------
Consulting Agreement                        September 30, 2001                 10,000                         $10.00
------------------------------------------------------------------------------------------------------------------------------
8% Debenture Holders and                   September 11, 2001 to              186,470                      $4.386 to
Placement Agents (I.)                          June 8, 2002                                                   $10.81
------------------------------------------------------------------------------------------------------------------------------
$145,000 Loan                                November 20, 2003                263,638                           $.55
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         (1.)     Common Stock Warrants Attached to Debenture

                  In connection with the issuance of the 8% convertible
                  debentures in September 1996; a number of warrants were
                  granted to the holders of the debentures, the agents, and
                  subagents who placed the debentures.

                  With respect to the warrants granted to the debenture holders
                  and subagents, the warrants were granted in three equal
                  installments of September 11, 1996; November 26, 1996; and
                  June 8,1997. These warrants will expire five years from the
                  date of each installment: September 11, 2001; November 26,
                  2001; and June 8, 2002. The number of shares of common stock
                  into which the warrants may be converted and the exercise
                  price of the warrants were determined by (among other
                  variables and future events) the amount of debentures still
                  outstanding on each date of grant, and the average closing bid
                  price of the Company's common stock for the five trading days
                  immediately preceding each date of grant.

                  On September 11, 1996, a total of 12,211 warrants expiring on
                  September 11, 2001 were granted to the agents. The warrants
                  may be exercised at any time before the expiration date by
                  either of the two methods as follows: (1) each warrant may be
                  exercised for one common share with an exercise price of
                  $10.73, or (2) all or a portion of the warrants may be
                  exercised on a cashless basis where a reduced number of shares
                  of common stock will be issued based upon the difference
                  between the average closing price of the Company's common
                  stock for the five business days immediately preceding the
                  date of exercise and the exercise price, divided by the
                  average closing market price, times the number of warrants
                  being exercised.

         c.       Net Income Per Share

                        Net income per share was calculated on the basis of the
                        weighted average number of shares outstanding, which
                        amounted to 3,102,574 for, the period ended March 31,
                        2000. For the period ended March 31, 2000 and 1999 the
                        exercise of the options and warrants outstanding as at
                        year end did not have a dilutive effect on the net
                        income per share.

                                      -15-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
12.      Income Taxes

         The Company has no current and deferred taxes payable. The Company and
         its subsidiary have significant tax losses to be applied against future
         income. The subsidiary Company's tax filings show net operating losses
         to be applied against future taxable income in the amount of
         approximately $27 million to be utilized in various years through 2009.
         The tax benefit of these losses is estimated to be approximately $10
         million. No potential benefit of these losses has been recognized in
         the accounts.

13.      Employment Contracts and Commitments

         In connection with the acquisition of Sustainable and under Management
         Agreement dated April 17, 1995, the Company agreed to engage two key
         officers for a period of seven years ending April 17, 2002. The two key
         officers are entitled to a base salary of $75,000 plus additional
         incentive payments each based upon a percentage of net income of
         Sustainable. At the time of termination for any reason, the key
         officers are entitled to a severance payment equal to the total of the
         annual base salary plus additional annual incentive payments he is then
         receiving multiplied by the remaining years, or portions thereof, of
         the contract period. During fiscal 1997, the Company reached a
         settlement with one of the officers in the total amount of $60,000 to
         be paid at $5,000 per month through February 1998.

         In connection with the acquisition of Deven and under the Stock
         Purchase Agreement dated October 1,1996, the Company agrees that should
         certain Deven officers be involuntarily terminated, other than in
         response to the Deven Officer's gross negligence, willful misconduct,
         ineptitude or inability to perform the duties of his position,
         ("Involuntary Personnel Action") on or before September 30, 2001
         ("Coverage Period"), the said Deven Officer who was the object of said
         Involuntary Personnel Action shall be entitled to receive a sum equal
         to 150% of the aggregate base salary plus the cash equivalent of all
         benefits for the period of time between the date of the Involuntary
         Personnel Action and the remaining portion of the Coverage Period
         ("Settlement Consideration").

         However, the Settlement Consideration shall not be less than two years
         severance even though the period between the Involuntary Personnel
         Action and the expiration of the Coverage Period be less than two
         years.

         The Company had two contracts with financial advisors during fiscal
         1997. The first expired in May 1997; the second expired October 31,
         1997. Neither contract was renewed.

14.      Litigation Settlement

         In April 1997, the Company commenced an Adversary Action styled Daleco
         Resources Corporation v. Reserve Production Inc., Liquidating Trust and
         Leonard Pipkin, Trustee, in the United States Bankruptcy Court for the
         Eastern District of Texas, Tyler Division, Case No. 97-6036. The case
         was commenced to enforce the Company's rights under that certain Asset
         Purchase Agreement dated December 20, 1996 (Asset Purchase Agreement)
         as approved by the Bankruptcy Court on February 13, 1997. In the
         Adversary Action, the Company alleged that the defendants' had failed

                                      -16-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
         to meet their conditions to Closing under the Asset Purchase Agreement
         and were thus required to refund the Company's $100,000 Earnest Money
         Deposit and pay for the reworking of the Jody Well. Subsequent to the
         commencement of the Company's adversary action, a case was commenced in
         the United States District Court for the Eastern District of Texas,
         Tyler Division, styled Reserve Production Liquidating Trust v. Daleco
         Resources Corporation, Westlands Resources Corporation, David F.
         Lincoln, Gary J. Novinskie and C. Warren Trainor, C.A. No.: 6:97 CV 705
         ("District Court Action"). The District Court Action was in essence a
         counter claim against the Company and three of is directors asserting
         matters, which should have been addressed in an answer to the Adversary
         Action. The Company filed a motion to dismiss the District Court
         Action; however, prior to ruling on the Company's Motion, the Adversary
         Action was resolved through Court mandated mediation. Under the terms
         of the settlement, the Company's Earnest Money Deposit was returned and
         the Reserve Production Inc., Liquidating Trust, Reserve Production
         Liquidating partnership, and Leonard Pipkin, trustee, were required to
         resolve all outstanding claims for the reworking of the Jody Well.

         The Company incurred $224,875 in costs to settle this litigation.

 15.     Acquisitions

         During fiscal 1997, the Company completed the acquisitions of Deven
         Resources, Inc. and Haly Corporation.

         All of the outstanding stock of Deven was acquired on October 1, 1996
         in exchange for 2.6 million shares of Daleco stock plus $150,000 in
         cash. The market value of the stock was approximately $2.4 million. The
         acquisition was accounted for as a purchase resulting in oil and gas
         properties of $1.5 million, goodwill of $1.25 million less liabilities
         assumed of $200,000. Deven receives an annual management fee of
         $200,000 from a partnership of which it has a 1% general partner
         interest.

         All of the outstanding stock of Haly, a related party, was acquired on
         September 30, 1997. Daleco issued 3 million shares of common stock to
         Messrs. Amir and Erlich along with $1,000 cash. In exchange, the
         Company received and retired 3 million shares of common stock owned by
         Haly along with interests in wells owned by Haly. The acquisition was
         accounted for as a purchase. The amounts due Haly were written off into
         common stock less the First Regional Bank loan assumed by Daleco (see
         Note 10).

         Mid Continent:

                  On March 27, 1998, but affective as of November 1, 1997,
         Tri-Coastal Energy acquired in the States of Kansas and Oklahoma
         consisting of 298 wells, 6,409 gross and 4,828 net acres. The purchase
         price for the acquisition was $2,315,000. The purchase was funded by an
         Amendment to the Heller Transaction, which increased the Heller
         Transaction Loan Commitment to $19,000,000. An additional $2,294,397
         was drawn down by Tri-Coastal at closing for development of the
         Mid-Continent properties. In January 2000, the majority of these
         properties were divested.

                                      -17-
<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
16.      Subsequent event

         On December 18, 1998, an unaffiliated company agreed to purchase
         1,848,566 shares of common stock for $9 Million. The Company has not
         yet received the proceeds on this sale and no stock has been issued.
         The Company is pursuing its options to seek performance under the terms
         of the stock purchase agreement, to include filing a complaint in
         Arbitration before the American Arbitration Association in
         Philadelphia, Pennsylvania under the contracts dispute resolution
         provisions.

17.      Litigation

         On January 14, 2000, Daniel Kane individually and his Trustee and
         Stanley B. Kane individually and his Trustee commenced an action
         against Daleco Resources Corporation, Dov Amir an individual and Louis
         W. Erlich an individual to force the buyback provisions under the Loan
         Conversion Agreement dated August 22, 1997. Specifically the Complaint
         alleged that under the Loan Buyback Agreement, the Kanes conversion of
         $800,000 in debt to equity (See Note 6, Notes Payable) was due on or
         about August 22, 1999. Messrs. Amir and Erlich were sued in their
         capacity as individual guarantors under the obligation, each of whom
         was liable for repayment of one-half of the sum due and owing to the
         Plaintiffs by Daleco Resources Corporation. On or about February 2000,
         Mr. Amir satisfied his obligation to the Plaintiff's and was dismissed
         from the case. The case is currently active in the Superior Court in
         the Central District of California.



                                      -18-

<PAGE>


DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
ITEM 2 -          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS.

                  The Private Securities Litigation Reform Act of 1995 (the
                  "Reform Act") provides a safe harbor for forward-looking
                  statements made by or on behalf of the Company. All
                  statements, other than statements of historical facts, which
                  address activities, event or developments that the Company
                  expects or anticipates will or may occur in the future,
                  including such things as the anticipated development of
                  revenues, acquisition of additional properties or the
                  obtaining of capital, business strategy, development trends in
                  the industry segments in which the Company is active,
                  expansion and growth of the Company's business and operations
                  and other such matters are forward-looking statements. To take
                  advantage of the safe harbor provisions provided by the Reform
                  Act, the Company is identifying certain factors that could
                  cause actual results to differ materially from those expressed
                  in any forward-looking statements, whether oral or written,
                  made by or on behalf of the Company. Many of these factors
                  have previously been identified in filings or statements made
                  by or on behalf of the Company.

                  All phases of the Company's operations are subject to
                  influences outside of the Company's control. Any one, or a
                  combination, of these factors could materially affect the
                  results of the Company's operations. These factors include:
                  competitive pressures, inflation, trade restrictions, interest
                  rate fluctuations and other capital market conditions,
                  weather, future and options trading in, and the availability
                  of natural resources and services from other sources.
                  Forward-looking statements are made by or on behalf of the
                  Company's knowledge of its business and the environment in
                  which it operates, but because of the factors listed above, as
                  well as other environmental factors over which the Company has
                  no control, actual results may differ from those in the
                  forward-looking statements. Consequently, all of the
                  forward-looking statements made are qualified in their
                  entirety by these cautionary statements and there can be no
                  assurance that the actual results or developments anticipated
                  by the Company will be realized or, even if substantially
                  realized, that they will have the expected effect on the
                  business and/or operations of the Company.

                  The Company's performance during its second fiscal Quarter
                  ended March 31, 2000, was influenced by a variety of factors:

                        -Oil prices improved during the quarter, which resulted
                         in a net gain from oil and gas operations. The Company,
                         like most domestic independents, is unable to influence
                         the price of oil. The announcements by OPEC of its
                         intent to reduce production and thus increase the
                         demand for oil on a worldwide basis should, if it
                         occurs, materially benefit the Company through the
                         resultant increase in oil pricing.

                                      -19-

<PAGE>

DALECO RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999 - PREPARED BY MANAGEMENT (UNAUDITED)
================================================================================
                        -The Company's timber subsidiary, Sustainable Forest
                         Industries continues to attempt to market Guyana woods
                         domestically. To date, while there has been a
                         tremendous interest shown in the potential for Guyana
                         woods, especially in the railroad industry, no
                         substantial contracts have been obtained.

                        -On December 18, 1998, the Company entered into a
                         contract with Infinite Networks Corporation whereby the
                         Company agreed to sell 1, 848,566 shares of common
                         stock for $9 Million. This agreement has yet to be
                         consummated. The Company is pursuing its options to
                         seek performance under the terms of the stock purchase
                         agreement.

                        -The Company is investigating alternative funding
                         sources to near term acquisition capital needs.

                  With the end of the fiscal quarter ending March 31, 2000,
                  several elements which will affect the Company's future
                  economic performance improved. For example, the crude oil
                  prices received throughout the Company's operating areas began
                  to firm in response to output restriction put in place by the
                  OPEC nations. Early indications are that the crude price gains
                  experienced during the quarter will hold throughout the fiscal
                  year. In addition, natural gas prices have risen significantly
                  in response to market demand. These two price factors should
                  stabilize the Company's overall cash flow and operating
                  performance.


PART II.          OTHER INFORMATION

ITEM 6            Exhibits and Reports on Form 8-K

                  None.


                                      -20-

<PAGE>



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                          DALECO RESOURCES CORPORATION



Date:  November 27, 2000               /s/ Gary J. Novinskie
                                       --------------------------------------
                                       Gary J. Novinskie
                                       President


Date: November 27, 2000                /s/ Dov Amir
                                       --------------------------------------
                                       Dov Amir
                                       Chairman of the Board of Directors and
                                       Chief Executive Officer

                                      -21-