**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-QSB**


**(Mark
      one)**





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





**For
      the quarterly period ended** **December
      31, 2007**





**o**
            **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**


(Exact
      name of small business issuer as specified in its charter)





**Nevada**
              (State
                or other jurisdiction of
              incorporation
                or organization)
            **23-2860734**
              (IRS
                Employer
              Identification
                No.)





**17
                Wilmont Mews, 5****th****Floor**
              **West
                Chester, Pennsylvania 19382**
              (Address
                of principal executive offices)
            **(610)
                429-0181**
              (Issuer’s
                telephone number)





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act 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 o





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








**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:





Number
      of
      shares outstanding of the issuer's Common Stock as of January 31, 2008:
      43,081,346


Number
      of
      shares outstanding of the issuer’s Series B Preferred Stock as of January 31,
      2008: 145,000





Transitional
      Small Business Disclosure Format (Check one): Yes o No x










**DALECO
        RESOURCES CORPORATION**
 **TABLE
        OF CONTENTS**
  **PAGE****PART
                  I - FINANCIAL INFORMATION**ITEM
                  1.
              CONSOLIDATED
                  FINANCIAL STATEMENTS
              3Consolidated
                  Balance Sheets
              3Consolidated
                  Statements of Income
              5Consolidated
                  Statements of Cash Flows
              6Notes
                  to Consolidated Financial Statements
              7ITEM
                  2.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATIONS
              12ITEM
                  3.
              CONTROLS
                  AND PROCEDURES
              16**PART
                  II - OTHER INFORMATION**ITEM
                  1.
              LEGAL
                  PROCEEDINGS
              18ITEM
                  2.
              UNREGISTERED
                  SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
              18ITEM
                  3.
              DEFAULTS
                  UPON SENIOR SECURITIES
              18ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              18ITEM
                  5.
              OTHER
                  INFORMATION
              18ITEM
                  6.
              EXHIBITS
              18**SIGNATURES**
              20
 
 -
            2
            -
 **PART
          I - FINANCIAL INFORMATION**
 
 **Item
                  1.**
                **Consolidated
                    Financial Statements.**
 
 **DALECO
          RESOURCES CORPORATION**
 **CONSOLIDATED
          BALANCE SHEETS**


**December
                31**
              **2007**
            
            **September
                30**
              **2007****(Unaudited)****ASSETS****Current
                Assets:**Cash
                and Equivalents
            
            $
            95,528
            
            $
            224,267Accounts
                Receivable
            
            
            339,293
            
            
            391,200Other
                Current Assets
            
            
            7,424
            
            
            7,424Total
                Current Assets
            
            
            442,245
            
            
            622,891**Other
                Assets:**Technology
                and Patent Rights
            
            
            6,594,500
            
            
            6,594,500Accumulated
                Amortization
            
            
            (4,189,075
            )
            
            (4,044,712
            )Net
                Technology and Patent Rights
            
            
            2,405,425
            
            
            2,549,788Equity
                Placement Costs
            
            
            35,750
            
            
            35,750Accumulated
                Amortization of Equity Placement Costs
            
            
            (27,428
            )
            
            (24,599
            )Net
                Equity Placement Costs
            
            
            8,322
            
            
            11,151Securities
                Available for Future Sale
            
            
            950
            
            
            5,700Restricted
                Cash Deposits
            
            
            145,066
            
            
            143,978Prepaid
                Mineral Royalties - Long-term
            
            
            460,000
            
            
            460,000Interest
                Receivable
            
            
            107,905
            
            
            97,076Total
                Other Assets
            
            
            3,127,668
            
            
            3,267,693**Property,
                Plant and Equipment:**Oil
                and Gas Properties, at cost
            
            
            5,276,563
            
            
            5,276,563Accumulated
                Depreciation, Depletion and Amortization
            
            
            (4,346,996
            )
            
            (4,303,047
            )Net
                Oil and Gas Properties
            
            
            929,567
            
            
            973,516Mineral
                Properties, at cost
            
            
            12,609,100
            
            
            12,609,100Accumulated
                Depreciation, Depletion and Amortization
            
            
            (850,000
            )
            
            (800,000
            )Net
                Mineral Properties
            
            
            11,759,100
            
            
            11,809,100Equipment,
                Furniture and Fixtures, at cost
            
            
            191,151
            
            
            191,151Accumulated
                Depreciation
            
            
            (165,994
            )
            
            (164,151
            )Net
                Equipment, Furniture and Fixtures
            
            
            25,157
            
            
            27,000Total
                Net Property, Plant and Equipment
            
            
            12,713,824
            
            
            12,809,616**TOTAL
                ASSETS**
            
            $
            16,283,737
            
            $
            16,700,200




SEE
      ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.




-
          3
          -


**DALECO
        RESOURCES CORPORATION**
 **CONSOLIDATED
        BALANCE SHEETS**


**December
                31**
              **2007**
            
            **September
                30**
              **2007****(Unaudited)****LIABILITIES
                AND SHAREHOLDERS’ EQUITY****Current
                Liabilities:**Accounts
                Payable
            
            $
            1,976,472
            
            $
            2,204,133Federal
                and State Income Taxes Payable
            
            
            192,427
            
            
            192,427Note
                Payable - Sonata
            
            
            75,000
            
            
            --Note
                Payable - Related Party
            
            
            45,485
            
            
            45,485Note
                Payable - Other
            
            
            22,475
            
            
            --EV&T
                Note - Current Portion
            
            
            567,213
            
            
            567,213Note
                Payable - First Regional Bank
            
            
            100,000
            
            
            100,000CAMI
                Notes
            
            
            514,881
            
            
            514,881Accrued
                Interest Expense
            
            
            492,994
            
            
            464,546Accrued
                Dividends Payable
            
            
            1,602,915
            
            
            1,602,915Accrued
                Expense Reimbursements
            
            
            50,942
            
            
            49,327Accrued
                Bonus Expense
            
            
            1,373,831
            
            
            1,373,831Accrued
                Salary Expense
            
            
            996,435
            
            
            991,002Total
                Current Liabilities
            
            
            8,011,070
            
            
            8,105,760**TOTAL
                LIABILITIES**
            
            
            8,011,070
            
            
            8,105,760**SHAREHOLDERS’
                EQUITY:**Preferred
                Stock - 20,000,000 shares authorizedSeries
                A Preferred Stock (outstanding: none)Series
                B Preferred Stock - par value of $0.01 per share (outstanding: 145,000
                shares)
            
            
            1,450
            
            
            1,450Common
                Stock - 100,000,000 shares authorized - parvalue
                of $0.01 per share(outstanding:
                43,081,346 shares)
            
            
            430,813
            
            
            430,813Additional
                Paid in Capital
            
            
            44,973,320
            
            
            44,911,213Retained
                Deficit
            
            
            (36,552,166
            )
            
            (36,173,036
            )Subscriptions
                Receivable
            
            
            (576,000
            )
            
            (576,000
            )Accumulated
                Other Comprehensive Loss
            
            
            (4,750
            )
            
            --**TOTAL
                SHAREHOLDERS’ EQUITY**
            
            
            8,272,667
            
            
            8,594,440**TOTAL
                LIABILITIES AND SHAREHOLDERS’ EQUITY**
            
            $
            16,283,737
            
            $
            16,700,200




SEE
      ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.





-
          4
          -


**DALECO
        RESOURCES CORPORATION**
 **CONSOLIDATED
        STATEMENTS OF INCOME**
 **(UNAUDITED)**




**Three
                Months Ended**
              **December
                31****2007**
            
            **2006****Revenues:**Oil
                and Gas Sales
            
            $
            179,114
            
            $
            213,039Royalty
                Receipts
            
            
            13,241
            
            
            10,800Mineral
                Sales
            
            
            1,155
            
            
            5,700Well
                Management Revenue
            
            
            57,815
            
            
            63,878Total
                Operating Revenues
            
            
            251,325
            
            
            293,417**Expenses:**Lease
                Operating Expenses - Oil and Gas
            
            
            52,907
            
            
            155,699Exploration
                Expenses - Minerals
            
            
            3,502
            
            
            --Operating
                Expenses and Other Costs - Minerals
            
            
            44,992
            
            
            15,536Production
                and Severance Taxes - Oil and Gas
            
            
            10,037
            
            
            18,227Depreciation,
                Depletion and Amortization
            
            
            240,155
            
            
            252,905Third
                Party Distributions - Oil and Gas
            
            
            9,812
            
            
            4,456Stock-Based
                Compensation Expense
            
            
            62,107
            
            
            139,000Bonus
                Expense
            
            
            --
            
            
            80,000General
                and Administrative Expenses
            
            
            157,734
            
            
            255,128Legal
                and Professional Fees and Expenses
            
            
            27,703
            
            
            135,323Shareholder
                Information Expenses
            
            
            1,330
            
            
            3,213Amortization
                of Equity Placement Costs
            
            
            2,829
            
            
            2,829Total
                Expenses
            
            
            613,108
            
            
            1,062,316**Other
                Income (Expense):**Interest
                and Dividend Income
            
            
            21,710
            
            
            12,649Interest
                Expense
            
            
            (39,057
            )
            
            (19,482
            )Total
                Other Income (Expense), Net
            
            
            (17,347
            )
            
            (6,833
            )Loss
                Before Income Taxes
            
            
            (379,130
            )
            
            (775,732
            )Taxes
                based on Income
            
            
            --
            
            
            --Net
                Loss
            
            $
            (379,130
            )
            $
            (775,732
            )Basic
                and Fully Diluted Net Loss per Share
            
            $
            (0.01
            )
            $
            (0.02
            )Weighted-average
                number of shares of Common Stock Outstanding
            
            
            43,081,346
            
            
            41,973,216




SEE
      ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.





-
          5
          -


**DALECO
      RESOURCES CORPORATION**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**FOR
      THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006**


**(UNAUDITED)**







**2007**
            
            **2006****Cash
                Flows From Operating Activities:**Net
                Loss
            
            $
            (379,130
            )
            $
            (775,732
            )Adjustments
                to Reconcile Net Loss to Net Cash Provided by(Used
                in) Operating Activities:Depreciation,
                Depletion and Amortization
            
            
            240,155
            
            
            252,905Amortization
                of Equity Placement Costs
            
            
            2,829
            
            
            2,829Bonus
                Expense
            
            
            --
            
            
            80,000Stock-Based
                Compensation Expense
            
            
            62,107
            
            
            139,000Changes
                in Operating Assets and Liabilities:Other
                Current Assets
            
            
            --
            
            
            2,113Pre-paid
                Mineral Royalties
            
            
            --
            
            
            (30,000
            )Restricted
                Cash Deposits
            
            
            (1,088
            )
            
            3,399Receivables
            
            
            41,078
            
            
            (135,451
            )Accounts
                Payable
            
            
            (227,661
            )
            
            249,921Other
                Accrued Expenses
            
            
            7,048
            
            
            (40,832
            )Net
                Cash Used in Operating Activities
            
            
            (254,662
            )
            
            (251,848
            )**Cash
                Flows From Investing Activities:**Purchases
                of Fixed Assets
            
            
            --
            
            
            (51,187
            )Net
                Cash Used in Investing Activities
            
            
            --
            
            
            (51,187
            )**Cash
                Flows From Financing Activities:**Proceeds
                of Notes Payable
            
            
            97,475
            
            
            --Payments
                on Other Notes and Debt
            
            
            --
            
            
            (63,394
            )Increase
                in Accrued Interest
            
            
            28,448
            
            
            10,298Proceeds
                of Equity Issuances
            
            
            --
            
            
            270,260Net
                Cash Provided by Financing Activities
            
            
            125,923
            
            
            217,164Net
                Change in Cash and Equivalents
            
            
            (128,739
            )
            
            (85,871
            )Cash
                and Equivalents at Beginning of Year
            
            
            224,267
            
            
            317,743Cash
                and Equivalents at End of Period
            
            $
            95,528
            
            $
            231,872**Supplemental
                Information:**Income
                Taxes Paid
            
            $
            --
            
            $
            --Interest
                Paid
            
            $
            10,447
            
            $
            9,184**Supplemental
                Disclosure of Non-cash Transactions:**Payment
                of Dividends in-kind
            
            $
            --
            
            $
            200,000




SEE
      ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.




-
          6
          -


**DALECO
        RESOURCES CORPORATION**
 **NOTES
        TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
        OF DECEMBER 31, 2007 AND 2006**





**1.**
            **Continued
                Operations and Going
                Concern**





The
      unaudited consolidated 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 its assets. The Company incurred a net loss of $379,130
      for the quarter ended December 31, 2007. The ability of the Company to meet
      its
      total liabilities of $8,011,070 and to continue as a going concern is dependent
      upon the availability of future funding, achieving profitability within its
      mineral segment and ongoing profitability within its oil and gas operations.
      If
      the Company is unable to continue as a going concern, there is uncertainty
      relative to full recoverability of its assets including the $20 million
      acquisition of Clean Age Minerals, Inc. in December 2000.





The
      Company will continue to seek out and entertain project specific funding
      commitments and other capital funding alternatives if and as they become
      available.





As
      of
      December 31, 2007, the Company and certain of its subsidiaries were in default
      of certain debt obligations and certain employment agreements. The holders
      of
      these instruments are working with the Company to achieve the ultimate
      extinguishment of the obligations.





**2.**
            **Summary
                of Significant Accounting
                Policies**





***Basis
      of Presentation***





The
      interim consolidated financial statements are unaudited but, in our opinion,
      reflect all adjustments necessary for a fair presentation of the results of
      operations and financial position for such periods in accordance with accounting
      principles generally accepted in the United Sates for interim financial
      information and with the instructions to Form 10-QSB and Item 310(b) of
      Regulation S-B. All such adjustments reflected in the interim consolidated
      financial statements are considered to be of a normal recurring nature. The
      results of operations for any interim period are not necessarily indicative
      of
      results for the full year. Accordingly, these financial statements should be
      read in conjunction with the financial statements and notes thereto contained
      in
      the Company’s Annual Report on Form 10-KSB for the year ended September 30,
      2007.





Unless
      otherwise noted, references to “year” pertain to the Company’s fiscal year,
      which begins on October 1 and ends on September 30; for example, 2008 refers
      to
      fiscal 2008, which is the period from October 1, 2007 to September 30,
      2008.





Certain
      reclassifications have been made to prior period financial statements to conform
      to the current period presentation.





***Significant
      Accounting Policies***





There
      were no changes to the Company’s Significant Accounting Policies from those
      disclosed in our 2007 Annual Report on Form 10-KSB.





***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 as of 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.




-
          7
          -


**DALECO
          RESOURCES CORPORATION**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**


***Recently
      Issued Accounting Standards***





In
      September 2006, the Securities and Exchange Commission issued Staff
      Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements” (“SAB 108”). SAB 108 provides guidance on how prior-year
      misstatements should be taken into consideration when quantifying misstatements
      in current-year financial statements for purposes of determining whether the
      current-year financial statements are materially misstated. SAB 108 permits
      registrants to record the cumulative effect of initial adoption by recording
      the
      necessary adjustments to the carrying values of assets and liabilities as of
      the
      beginning of that year with the offsetting adjustment recorded to the opening
      balance of retained earnings if material. We adopted SAB 108 as of September
      30,
      2007 and noted no material impact on our financial position or results of
      operations as a result of the adoption.





In
      June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes” (“FIN 48”). FIN 48 is an interpretation of FASB
      Statement No. 109, “Accounting for Income Taxes,” and it seeks to reduce
      the diversity in practice associated with certain aspects of measurement and
      recognition in accounting for income taxes. In addition, FIN 48 requires
      expanded disclosure with respect to the uncertainty in income taxes. We adopted
      FIN 48 as of October 1, 2007 and noted no material impact on our financial
      position or results of operations as a result of the adoption.





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework
      for measuring fair value in generally accepted accounting principles and expands
      disclosures about fair value measurements. This pronouncement is effective
      as of
      the beginning of our 2009 fiscal year. We are currently evaluating the impact,
      if any, that SFAS 157 will have on our financial position or results of
      operations.





In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting
      for Defined Benefit Pension and Other Postretirement Plans” (“SFAS 158”). SFAS
      158 requires employers to recognize the overfunded or underfunded status of
      a
      defined benefit postretirement plan as an asset or liability in its statement
      of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income. We adopted SFAS 158 as
      of
      September 30, 2007 and noted no material impact on our financial position or
      results of operations as a result of the adoption.





In
      February 2007, the
      Financial Accounting Standards Board (“FASB”) issued Statement of Financial
      Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to
      choose to measure many financial instruments and certain other items at fair
      value in order to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This pronouncement is effective as of the beginning
      of
      our 2009 fiscal year. We are currently evaluating the impact, if any, that
      SFAS
      159 will have on our financial position or results of operations.





In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS 141R revises the
      principles and requirements for how the acquirer recognizes and measures in
      its
      financial statements the identifiable assets acquired, the liabilities assumed,
      any noncontrolling interest in the acquiree, and the goodwill acquired in a
      business combination or gain from a bargain purchase. SFAS 141R also revises
      the
      principles and requirements for how the acquirer determines what information
      to
      disclose to enable users of the financial statements to evaluate the nature
      and
      financial effects of the business combination. This pronouncement is effective
      as of the beginning of our 2010 fiscal year. We are currently evaluating the
      impact, if any, that SFAS 141R will have on our financial position or results
      of
      operations.




-
          8
          -


**DALECO
          RESOURCES CORPORATION**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**




Also
      in
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest
      in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS
      160”). SFAS 160 amends ARB No. 51 to establish accounting and reporting
      standards for the noncontrolling interest in a subsidiary and for the
      deconsolidation of a subsidiary. This pronouncement is effective as of the
      beginning of our 2010 fiscal year. We are currently evaluating the impact,
      if
      any, that SFAS 160 will have on our financial position or results of
      operations.




**3.**
            **Capital
                Stock**




***Common
      Stock***





No
      shares
      of Common Stock were issued during the quarter ended December 31,
      2007.





***Series
      B Preferred Stock***




No
      shares
      of Series B Preferred Stock were issued or converted to Common Stock during
      the
      quarter ended December 31, 2007.





***Options
      and Warrants to Purchase Common Stock***





**Number
                of Options and Warrants**
            
            **Weighted
                Average Price per Share**Options
                and Warrants Outstanding at September 30, 2007
            
            
            6,935,641
            
            $
            0.58Options
                Expired**(1)**
            
            
            (800,000
            )
            $
            0.55Warrants
                Issued**(2)**
            
            
            822,305
            
            $
            0.55Warrants
                Expired**(3)
                (4)**
            
            
            (2,322,305
            )
            $
            0.65Options
                and Warrants Outstanding at December 31, 2007
            
            
            4,635,641
            
            $
            0.54





(1)
            During
                November 2007, (i) an option (held by a former director/officer of
                the
                Company) to purchase 600,000 shares of Common Stock (at an exercise
                price
                of $0.48 per share), and (ii) options (held by two former
                directors/officers of the Company) to purchase a total of 200,000
                shares
                of Common Stock (at an exercise price of $0.75 per share), expired
                unexercised.





(2)
            On
                December 21, 2007, Sonata loaned the Company $75,000 (see Note 5).
                The
                Company issued warrants for the purchase of 822,305 shares of Common
                Stock. Such warrants expire on December 31, 2010.





(3)
            On
                December 31, 2007, the Financing Sources Warrants expired
                unexercised.





(4)
            On
                November 29, 2007, TPA Warrants expired
                unexercised.




-
          9
          -


**DALECO
          RESOURCES CORPORATION**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**


Summarized
      information relating to the stock options to purchase Common Stock outstanding
      as of December 31, 2007, is as follows:





**Exercise****Price**
            
            **Options
                Outstanding**
            
            **Weighted
                Average Exercise**
              **Price**
            
            **Weighted
                Average Remaining Life (Years)**
            
            **Options
                Exercisable**
            
            **Weighted
                Average Exercise**
              **Price**$0.28-$0.85
            
            2,950,000
            
            $
                0.56
            
            2.28
            
            2,162,500
            
            $0.57





***Stock-Based
      Compensation***





During
      the quarter ended December 31, 2007, options to purchase 800,000 shares of
      Common Stock expired unexercised. There are options for 2,950,000 shares of
      Common Stock outstanding as of December 31, 2007, of which 2,700,000 are held
      by
      current officers, Directors and employees of the Company (“Insiders”). The
      exercise prices for the options held by Insiders range from $0.28 per share
      to
      $0.85 per share.





In
      accordance with the provisions of SFAS 123(R), “Share-Based Payment”, the
      Company has recorded stock-based compensation expense of $62,107 and $139,000
      for the quarters ended December 31, 2007 and 2006, respectively. The stock-based
      compensation expense is based on the fair value of the options at the grant
      date. The fair value of the options was estimated using the Black-Scholes
      option-pricing model with the following assumptions: risk free interest rates
      between 3.14% and 4.72%; expected life of three to seven years; and expected
      volatility between 56% and 184%.





***Net
      Income (Loss) Per Share***




Net
      income (loss) per share is computed in accordance with SFAS No. 128, "Earnings
      per Share". Basic net income (loss) per share is calculated by dividing the
      net
      income (loss) attributable to common shareholders by the weighted average number
      of shares outstanding during the period. Fully diluted earnings per share
      reflect the potential dilution of securities that could share in earnings of
      an
      entity. In a loss year, dilutive common equivalent shares are excluded from
      the
      loss per share calculation as the effect would be anti-dilutive.





Options
      and warrants to purchase shares of Common Stock were outstanding during the
      periods but have not been included in the computation of diluted earnings per
      share because such options and warrants would have an anti-dilutive effect
      on
      net loss per share. No other adjustments were made for purposes of per share
      calculations.





***Payment
      of Accrued Dividends***




There
      was
      no cash dividend payment in respect to the Series B Preferred Stock during
      the
      quarters ended December 31, 2007 and 2006. A total of 80,000 shares of Common
      Stock were issued during the quarter ended December 31, 2006 to a holder of
      the
      Series B Preferred Stock in satisfaction of accrued dividends.





**4.**
            **Employment
                Contracts and Separation
                Agreement**





In
      August
      2005, the Company entered into employment contracts with Stephan V. Benediktson
      as Chief Executive Officer of the Company and Nathan Trynin as Executive Vice
      President of the Company. The employment contracts contain bonus provisions
      tied
      to the performance of the Company's Common Stock. Accordingly, the Company
      recognized $80,000 of bonus expense during quarter ended December 31, 2006.
      In
      August 2007, Messrs. Benediktson and Trynin resigned from their respective
      positions with the Company. The Board of Directors approved bonuses aggregating
      $1,373,831.




-
          10
          -


**DALECO
          RESOURCES CORPORATION**
 **NOTES
          TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**
 **AS
          OF DECEMBER 31, 2007 AND 2006**




In
      October 2007, the Company gave notice to Mr. Matz that it does not intend to
      extend his employment agreement beyond the term that ends in January 2008.
      During the first quarter of 2008, the Company defaulted in respect to payments
      of salary required pursuant to the employment agreements with Messrs. Novinskie,
      Matz and Blackstone.





In
      October 2006, Mr. Amir and the Company entered into a Separation Agreement.
      The
      Company has not made certain payments required by the Separation Agreement
      applicable to the Amir Debt. Also, pursuant to the Separation Agreement the
      Company was to satisfy the loan from First Regional Bank to the Company or
      provide sufficient substitute collateral for the bank so that the Amir Assets
      were released. The Company has not been able to accomplish either of these
      and
      the Amir Assets have not been released by the bank.





**5.**
                **Notes
                    Payable**





In
      April
      2007, the Company defaulted in respect to payments required by the Settlement
      Agreement with EV&T (see Note 6d of the Notes to Consolidated Financial
      Statements included in the 2007 Annual Report on Form 10-KSB).





During
      November 2007, the Company renewed the $100,000 note payable to First Regional
      Bank and the maturity date was extended to November 17, 2008. Mr. Amir has
      pledged certain of his personal assets as collateral (“Amir Assets”) for such
      note.





On
      December 21, 2007, Sonata loaned the Company $75,000. The maturity date of
      such
      loan is December 20, 2008, and interest, at 8%, is due quarterly. The Company
      used the proceeds for general working capital purposes. In connection with
      this
      loan, the Company issued warrants for the purchase of 822,305 shares of Common
      Stock at a purchase price of $0.55 per share with an expiration date of December
      31, 2010.





**6.**
            **Audit
                Fee Refund**





General
      and administrative expenses were reduced by $42,000 during the three months
      ended December 31, 2007 as the Company received $42,000 (plus interest) in
      respect to fees charged by a prior auditor engaged by the Company in fiscal
      2004
      while such auditor was not licensed by the PCAOB.





**7.**
            **Oil
                and Gas Properties**





During
      December 2007, the Company accepted an offer to purchase its interests in
      certain operated gas wells in West Virginia with cash consideration to the
      Company of $150,000.




-
          11
          -




**Item
              2.**
            **Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations.**





**Forward
      Looking Statements**





This
      Quarterly Report on Form 10-QSB contains forward-looking statements, within
      the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended.





The
      following discussion is intended to inform existing and potential security
      holders generally of some of the risks and uncertainties that can affect the
      Company and to take advantage of the “safe harbor” protection for
      forward-looking statements afforded under Federal securities laws. From time
      to
      time, management or persons acting on the Company’s behalf make forward-looking
      statements to inform existing and potential security holders about the Company.
      Forward-looking statements are generally accompanied by words such as
“estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “plan” or
      other words that convey the uncertainty of future events or
      outcomes.





Except
      for statements of historical or present facts, all other statements contained
      in
      this report are forward-looking statements. The forward-looking statements
      may
      appear in a number of places and include statements with respect to, among
      other
      things, business objectives and strategic plans; operating strategies;
      acquisition strategies; drilling of wells; oil and gas reserve estimates
      (including estimates of future net revenues associated with such reserves and
      the present value of such future net revenues); estimates of future production
      of oil, natural gas and minerals; expected results or benefits associated with
      recent acquisitions; marketing of oil, gas and minerals; expected future
      revenues and earnings, and results of operations; future capital, development
      and exploration expenditures; expectations regarding cash flow and future
      borrowings sufficient to fund ongoing operations and debt service, capital
      expenditures and working capital requirements; nonpayment of dividends;
      expectations regarding competition; impact of the adoption of new accounting
      standards and the Company’s financial and accounting systems; and effectiveness
      of the Company’s control over financial reporting.





These
      statements by their very nature are subject to certain risks, uncertainties
      and
      assumptions and will be influenced by various factors. Should any of the
      assumptions underlying a forward-looking statement prove incorrect, actual
      results could vary substantially.





The
      factors described under “Risk Factors” in the Company’s Annual Report on Form
      10-KSB for the period ending September 30 of each year could cause actual
      results to differ materially from those expressed in forward-looking statements,
      including, without limitation, the following:





·
            volatility
                of the market price for both crude oil and natural
                gas;


·
            volatility
                of the market price for the Company’s
                minerals;


·
            market
                capacity and demand for the Company’s
                minerals;


·
            the
                timing, effects and success of the Company’s acquisitions, exploration and
                development activities;


·
            the
                timing, quantity and marketability of
                production;


·
            effectiveness
                of management’s strategies and
                decisions;


·
            competition;


·
            changes
                in the legal and/or regulatory environment and/or changes in accounting
                standards;


·
            policies
                and practices or related interpretations by auditors and/or regulatory
                agencies;


·
            climatic
                conditions; and


·
            unanticipated
                problems, issues or events.




-
          12
          -




Many,
      if
      not all, of these factors are beyond the Company’s control and are impossible to
      predict. These factors are not intended to represent an exhaustive list of
      the
      general or specific facts or factors that may affect the Company.





All
      forward-looking statements speak only as of the date made. All subsequent
      forward-looking statements are expressly qualified in their entirety by the
      cautionary statements above. Except as may be required by law, the Company
      undertakes no obligation to update any forward-looking statement to reflect
      events or circumstances after the date on which the forward-looking statement
      is
      made or to reflect the occurrence (or non-occurrence) of anticipated or
      unanticipated events or circumstances.





**Results
      of Operations** **:**





*For
      the three months ended December 31, 2007, compared to the three months ended
      December 31, 2006:*


**Three
                Months Ended****2007**
            
            **2006****Revenues**
            
            $
            251,325
            
            $
            293,417**Net
                Loss**
            
            $
            (379,130
            )
            $
            (775,732
            )**Oil
                and Gas Production and Cost Information:**Production:Oil
                (Bbl)
            
            
            872
            
            
            1,179Gas
                (Mcf)
            
            
            12,376
            
            
            21,074Average
                Price:Oil
                (per Bbl)
            
            $
            89.23
            
            $
            58.16Gas
                (per Mcf)
            
            $
            8.19
            
            $
            6.85Lease
                Operating Expense and Production Tax per Mcfe
            
            $
            3.57
            
            $
            6.18


_____


Bbl
      = One
      barrel of oil or condensate


Mcf
      = One
      thousand cubic feet


Mcfe
      =
      One thousand cubic feet gas equivalent





The
      decrease in oil production is primarily a result of the timing in scheduling
      a
      service rig for certain well workovers in respect to the properties operated
      by
      the Company in Texas. The decrease in gas production is primarily a result
      of
      (i) the aforementioned workovers of certain wells in Texas; (ii) the occasional
      curtailment by the transporting pipeline of production from certain wells in
      West Virginia; and, (iii) the cessation of production from certain other wells
      in West Virginia while compression facilities were being installed by the
      Company.





The
      decrease in Lease Operating Expenses and Production Tax per Mcfe is primarily
      the result of the decrease in Lease Operating Expenses in three months ended
      December 31, 2007. Such expenses were greater in the first quarter of the prior
      fiscal year primarily as a result of the workover expenses incurred to maintain
      and enhance production of the Company’s properties in Texas.




-
          13
          -




**Minerals
      Operations**





The
      Company is not a Production Stage Company in respect to any of its minerals.
      It
      is a Development Stage company for a portion of its kaolin deposit in New Mexico
      and a portion of its zeolite deposit in Texas and is an Exploration Stage
      company in respect to the remainder of its mineral holdings.





***Minerals
      Exploration Expenses***





Minerals
      exploration expenses were $3,502 for the three months ended December 31, 2007.
      The Company did not incur minerals exploration expenses in first quarter of
      the
      prior fiscal year. These expenses are primarily for costs associated with the
      exploration and quantification of mineral resources and mineral reserves.





***Minerals
      Operating Expenses and Other Costs***





Minerals
      operating expenses and other costs increased to $44,992 for the three months
      ended December 31, 2007 as compared to $15,536 for the first quarter of the
      prior fiscal year. The increase is primarily attributable to lease payments
      related to the calcium carbonate and zeolite properties during the three months
      ended December 31, 2007.





**Depreciation,
      Depletion and Amortization: Oil and Gas**





Depreciation,
      depletion and amortization (“DD&A”) totaled $43,950 and $56,700 for the
      three months ended December 31, 2007 and 2006, respectively. The decrease in
      DD&A is primarily a result of the decrease in oil and gas
      production.





**Depreciation,
      Depletion and Amortization: Minerals**





Depreciation,
      depletion and amortization totaled $194,563 for each of the three months ended
      December 31, 2007 and 2006.





**Stock
      Based Compensation Expense**





The
      Company recorded stock based compensation expense of $62,107 and $139,000 during
      the three months ended December 31, 2007 and 2006, respectively. See Note 3
      of
      the Notes to Unaudited Consolidated Financial Statements included in this
      interim report.





**Bonus
      Expense**





The
      Company recognized $80,000 of bonus expense during the three months ended
      December 31, 2006. See Note 4 of the Notes to Unaudited Consolidated Financial
      Statements included in this interim report.





**General
      and Administrative Expenses, Legal and Professional Fees and Shareholder
      Information Expenses**





These
      expenses decreased 53% to $186,767 for the three months ended December 31,
      2007
      as compared to $393,664 for the three months ended December 31, 2006. The
      decrease is primarily attributed to the Company’s decreased staff and decreased
      professional fees related to potential acquisitions and resource development.
      Also, general and administrative expenses were reduced by $42,000 which the
      Company received during the three months ended December 31, 2007, in respect
      to
      fees charged by a prior auditor engaged by the Company in fiscal 2004 while
      such
      auditor was not licensed by the PCAOB.




-
          14
          -




**Interest
      Expense**





Interest
      expense increased $19,575 to $39,057 for the three months ended December 31,
      2007, as compared to $19,482 for the three months ended December 31, 2006.
      This
      increase is primarily attributable to default interest rates associated with
      certain debt as the Company has defaulted on certain required payments.





**Liquidity
      and Capital Resources**





Liquidity
      is a measure of a company’s ability to access cash. The Company has historically
      addressed its long-term liquidity requirements through the issuance of equity
      securities, through cash provided by operating activities and through borrowings
      or debt financing for certain activities.





During
      the three months ended December 31, 2007, the Company’s cash used in operating
      activities was $254,662. In an effort to address liquidity shortfalls, the
      Company has instituted cost containment procedures, sold certain of its oil
      and
      gas properties, and is evaluating the sale of additional oil and gas
      properties..





The
      prices the Company receives for its oil and gas and the level of production
      have
      a significant impact on the Company’s cash flows. The Company is unable to
      predict with any degree of certainty the prices the Company will receive for
      its
      future oil and gas production and the success of the Company’s exploration,
      exploitation and production activities. Increases in the sales of the Company’s
      minerals, which to date have not been mined in substantial commercial
      quantities, will also affect cash flow.





At
      present, the Company does not have a credit facility or other line of credit
      upon which it may draw. As operating activities increase, the Company will
      evaluate the need for such a credit facility. For desired acquisitions or
      project enhancements, the Company must seek project specific financing. None
      of
      the Company’s properties is encumbered.





The
      Company has accepted an offer to purchase its interests in certain gas wells
      in
      West Virginia. The sale transaction would result in cash proceeds to the Company
      of $150,000.





**Acquisition
      and Growth**





The
      efforts of the Company and Tecumseh Professional Associates, LLC, to evaluate
      the Sierra KaolinTM deposit are progressing. The confirmation core evaluation
      program was completed and third party consultants have been engaged to provide
      certified mineral resource estimates. Work continues on product identification
      and process flow sheet design and is expected to be completed in the next few
      months.





**Off-balance
      Sheet Arrangements**





The
      Company has no “off-balance sheet arrangements” and does not expect to enter
      into any such arrangements in the foreseeable future.





**Historical
      Cash Flow**





The
      Company’s cash flow used in operating activities was $254,662 and 251,848 for
      the three months ended December 31, 2007 and 2006, respectively. Funds have
      been
      and are being deployed in efforts to enhance the commercial viability of the
      Company’s existing resource assets, to identify potential expansion
      opportunities and to retire obligations associated with the Company’s assets.
      The Company’s net cash at December 31, 2007, decreased to $95,528.




-
          15
          -




**Other
      Sources of Cash**





During
      December 2007, Sonata loaned the Company $75,000 which the Company used to
      satisfy certain delinquent vendor payables.





**Item
              3.**
            **Controls
                and Procedures.**





(a) *Evaluation
      of Disclosure Controls and Procedures.* As of
      the end of the period covered by this Quarterly Report on Form 10-Q, our Chief
      Executive Officer/Chief Financial Officer evaluated, with the participation
      of
      management, the effectiveness of our disclosure controls and procedures (as
      defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of
      1934, as amended (the “Exchange Act”)). Based upon this evaluation, our Chief
      Executive Officer/Chief Financial Officer has concluded that our disclosure
      controls and procedures were effective as of December 31, 2007 to ensure
      that information required to be disclosed in the reports that we file or submit
      under the Exchange Act is recorded, processed, summarized and reported within
      the time periods specified in the Securities and Exchange Commission’s rules and
      forms.




(b) *Changes
      in Internal Control Over Financial Reporting.* No
      changes were made to our internal control over financial reporting (as such
      term
      is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our
      most recent fiscal quarter that have materially affected, or are reasonably
      likely to materially affect, our internal control over financial
      reporting.





***INTERNAL
      CONTROL OVER FINANCIAL REPORTING***





The Company’s Annual Report on Form 10-KSB for the fiscal year ended September 30,
      2007, does not include a report of management’s assessment regarding internal
      control over financial reporting or an attestation report of the Company’s
      registered public accounting firm due to a transition period established by
      rules of the Securities and Exchange Commission for a small business
      issuer.





On
      December 31, 2007, the Company had six employees. All day-to-day financial
      matters are overseen by the interim Chief Executive Officer/President/Chief
      Financial Officer and the Controller, with oversight by the Board of Directors.
      All contracting by the Company, for other than everyday items, is done with
      the
      approval the entire Board of Directors.





In
      light
      of the size of the Company, its limited cash flow and the transparency of its
      actions, the Company has instituted a limited number of formal controls and
      procedures, in addition to those required under the Sarbanes Oxley Act of
      2002 related to the composition of its Board of Directors and the establishment
      of various Board Committees. These policies include an Employee Manual outlining
      procedures relating but not limited to employee dispute resolution and issues
      related to “controlled substances” and policies in handling the recordation and
      transfer of funds. Any problem which cannot be resolved internally or which
      an
      employee does not desire to discuss with a superior may be discussed with
      counsel or an independent member of the Board of Directors.





The
      Chief
      Financial Officer and the Chief Executive Officer, with the assistance of the
      Audit Committee, have established, consistent with the provisions of Rule
      13a-15(f) and Rule 15d-15(f) of the '34 Act, a procedure and check list for
      the
      filing of all information and reports required by the Securities and Exchange
      Act of 1934, as amended and the Sarbanes-Oxley Act ("SOX"). Since the Company
      employs only six people, as of the filing date, the responsibility for reporting
      and filing reports falls on the shoulders of the Company's interim Chief
      Executive Officer/President/Chief Financial Officer In addition to the mandatory
      filing requirements established by the Securities and Exchange Commission,
      OTC:BB (the exchange on which the Registrant's stock is traded) and SOX, the
      Registrant has taken the position that any transaction that could impact the
      value of the Company or the Company's stock by five percent or greater requires
      disclosure. All press releases are published by the Company only after submittal
      to the Board of Directors and counsel for review, comment and
      approval.




-
          16
          -




The
      Company's Internal Controls over financial reporting and record maintenance
      has
      been developed by the Company as approved by the Board of Directors. These
      procedures are for the detailed and accurate recordation of all transactions
      in
      which the Company is involved and the disposition of assets. They provide
      reasonable assurance that the transactions recorded permit the accurate
      preparation of financial statements in accordance with generally accepted
      accounting principals and that receipts and expenditures of the Company are
      being made only in accordance with authorization of management. The controls
      provide reasonable assurances regarding the prevention and timely detection
      of
      unauthorized use of Company assets and acquisition or disposition of the
      Company's assets that could have a material effect on the Company's financial
      statements.





**Code
      of Ethics**





The
      Board
      of Directors of the Company has adopted a Code of Ethics (see Exhibit
      14.1 to the
      Company’s Annual Report on Form 10-KSB for the fiscal year ended September 30,
      2007) for
      all
      of the Company's employees, officers and Directors. Each officer and Director
      of
      the Company annually affirms that he has read the Company’s Code of Ethics and
      agrees to be bound thereby.




***RECENTLY
      ADOPTED ACCOUNTING STANDARDS***





In
      September 2006, the Securities and Exchange Commission issued Staff
      Accounting Bulletin No. 108, “Considering the Effects of Prior Year
      Misstatements when Quantifying Misstatements in Current Year Financial
      Statements” (“SAB 108”). SAB 108 provides guidance on how prior-year
      misstatements should be taken into consideration when quantifying misstatements
      in current-year financial statements for purposes of determining whether the
      current-year financial statements are materially misstated. SAB 108 permits
      registrants to record the cumulative effect of initial adoption by recording
      the
      necessary adjustments to the carrying values of assets and liabilities as of
      the
      beginning of that year with the offsetting adjustment recorded to the opening
      balance of retained earnings if material. We adopted SAB 108 as of September
      30,
      2007 and noted no material impact on our financial position or results of
      operations as a result of the adoption.





In
      June 2006, the FASB issued FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes” (“FIN 48”). FIN 48 is an interpretation of FASB
      Statement No. 109, “Accounting for Income Taxes,” and it seeks to reduce
      the diversity in practice associated with certain aspects of measurement and
      recognition in accounting for income taxes. In addition, FIN 48 requires
      expanded disclosure with respect to the uncertainty in income taxes. We adopted
      FIN 48 as of October 1, 2007 and noted no material impact on our financial
      position or results of operations as a result of the adoption.





In
      September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting
      for Defined Benefit Pension and Other Postretirement Plans” (“SFAS 158”). SFAS
      158 requires employers to recognize the overfunded or underfunded status of
      a
      defined benefit postretirement plan as an asset or liability in its statement
      of
      financial position and to recognize changes in that funded status in the year
      in
      which the changes occur through comprehensive income. We adopted SFAS 158 as
      of
      September 30, 2007 and noted no material impact on our financial position or
      results of operations as a result of the adoption.





***RECENTLY
      ISSUED ACCOUNTING STANDARDS***





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value
      Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework
      for measuring fair value in generally accepted accounting principles and expands
      disclosures about fair value measurements. This pronouncement is effective
      as of
      the beginning of our 2009 fiscal year. We are currently evaluating the impact,
      if any, that SFAS 157 will have on our financial position or results of
      operations.




-
          17
          -




In
      February 2007, the
      Financial Accounting Standards Board (“FASB”) issued Statement of Financial
      Accounting Standards (“SFAS”) No. 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to
      choose to measure many financial instruments and certain other items at fair
      value in order to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently without having to apply complex
      hedge
      accounting provisions. This pronouncement is effective as of the beginning
      of
      our 2009 fiscal year. We are currently evaluating the impact, if any, that
      SFAS
      159 will have on our financial position or results of operations.





In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      SFAS No. 141R, “Business Combinations” (“SFAS 141R”). SFAS 141R revises the
      principles and requirements for how the acquirer recognizes and measures in
      its
      financial statements the identifiable assets acquired, the liabilities assumed,
      any noncontrolling interest in the acquiree, and the goodwill acquired in a
      business combination or gain from a bargain purchase. SFAS 141R also revises
      the
      principles and requirements for how the acquirer determines what information
      to
      disclose to enable users of the financial statements to evaluate the nature
      and
      financial effects of the business combination. This pronouncement is effective
      as of the beginning of our 2010 fiscal year. We are currently evaluating the
      impact, if any, that SFAS 141R will have on our financial position or results
      of
      operations.





Also
      in
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest
      in Consolidated Financial Statements — an amendment of ARB No. 51” (“SFAS
      160”). SFAS 160 amends ARB No. 51 to establish accounting and reporting
      standards for the noncontrolling interest in a subsidiary and for the
      deconsolidation of a subsidiary. This pronouncement is effective as of the
      beginning of our 2010 fiscal year. We are currently evaluating the impact,
      if
      any, that SFAS 160 will have on our financial position or results of
      operations.




**PART
      II. OTHER INFORMATION**





**Item
              1.**
            **Legal
                Proceedings.**





None





**Item
              2.**
            **Unregistered
                Sales of Equity Securities and Use of
                Proceeds.**





None





**Item
              3.**
            **Defaults
                Upon Senior Securities.**





None




**Item
              4.**
            **Submission
                of Matters to a Vote of Security
                Holders.**





None





**Item
              5.**
            **Other
                Information.**





The
      Company's Common Stock is traded on the Over the Counter Market, Bulletin Board
      ("OTC:BB") symbol “DLOV.”




-
          18
          -




**Item
              6.**
            **Exhibits.**





Exhbit
                Number
              
              Description
              
              Located
                  at31.1
              
              Certification
                  of CEO under Section 302 of the Sarbanes-Oxley Act of 2002
              
              Filed
                  Herewith31.2
              
              Certification
                  of CFO under Section 302 of the Sarbanes-Oxley Act of 2002
              
              Filed
                  Herewith32.1
              
              Certification
                  of CEO under Section 906 of the Sarbanes-Oxley Act of 2002
              
              Filed
                  Herewith32.2
              
              Certification
                  of CFO under Section 906 of the Sarbanes-Oxley Act of 2002
              
              Filed
                  Herewith


The
      Registrant incorporates by reference its Exhibit List as attached to its Form
      10-KSB for the fiscal year ended September 30, 2007.




-
          19
          -




**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**Dated:
              February 19, 2008
            By:
            /s/ Gary
              J.
              NovinskieGary J. Novinskie
              Interim
                  Chief Executive Officer, President, ChiefFinancial
                  Officer and Director
                (Principal
                  Executive Officerand
                  Principal Financial Officer)  Dated:
                February 19, 2008
              By:
              /s/ Richard
                W. BlackstoneRichard W. Blackstone
                Secretary and Controller
                (Principal Accounting Officer)
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