FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.

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

                  For the quarterly period ended March 31, 2005

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934

        For the transition period from ____________ to _________________

Commission File Number 000-30563

                               DELTA MUTUAL, INC.

             (Exact name of registrant as specified in its charter)

                  DELAWARE                                14-1818394

        (State or other jurisdiction of               (I.R.S. Employer
        incorporation or organization)                Identification No.)

                 111 NORTH BRANCH STREET, SELLERSVILLE, PA 18960

                                 (215) 258-2800

             (Address and telephone number, including area code, of

                    registrant's principal executive office)

        (Former name, former address and former fiscal year, if changed

                               since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES |X| NO |_|

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

At May 16, 2005, there were 21,906,734 shares of Common Stock, $.0001 par value,
outstanding.

<PAGE>

                              DELTA MUTUAL, INC.

                                      INDEX

<TABLE>
<CAPTION>

                                                                                  Page
<S>                                                                                <C>
Part I.  Financial Information                                                     1

      Item 1. Financial Statements                                                 1

Consolidated Balance Sheet as of March 31, 2005 (unaudited)                        2

Consolidated Statement of Operations for the Three Months Ended March 31, 2005
and 2004 (unaudited)                                                               3

Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2005
and 2004 (unaudited)                                                               4-5

Notes to Unaudited Consolidated Financial Statements                               6

      Item 2. Management's Discussion and Analysis or Plan of Operation           18

      Item 3. Controls and Procedures                                              21

Part II. Other Information                                                         21

      Item 1. Legal Proceedings                                                    21

      Item 2. Changes in Securities

      Item 3. Defaults upon Senior Securities                                      22

      Item 4. Submission of Matters to a Vote of Security Holders                  22

      Item 5. Other Information                                                    22

      Item 6. Exhibits                                                             22

Signatures                                                                         22
</TABLE>

--------------------------------------------------------------------------------
                                     Page ii

<PAGE>


PART I. FINANCIAL INFORMATION

PART I. Financial Information

      Item 1. Financial Statements

            Certain information and footnote disclosures required under
accounting principles generally accepted in the United States of America have
been condensed or omitted from the following consolidated financial statements
pursuant to the rules and regulations of the Securities and Exchange Commission.
It is suggested that the following consolidated financial statements be read in
conjunction with the year-end consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2004.

            The results of operations for the three months ended March 31, 2005
and 2004 are not necessarily indicative of the results for the entire fiscal
year or for any other period.


--------------------------------------------------------------------------------
                                     Page 1
<PAGE>


                       DELTA MUTUAL INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS
                                                                     March 31,
                                                                    -----------
                                                                       2005
                                                                    -----------
                                                                    (Unaudited)
Current Assets:
     Cash                                                           $    13,788
     Employee advances                                                    1,000
     Prepaid expenses                                                    78,502
     Refundable deposits                                                 60,700
                                                                    -----------
           Total Current Assets                                         153,990

Fixed assets - net                                                        8,059

Investment in joint ventures                                                  1
Capitalized construction costs                                          170,000
Other assets                                                              3,526
                                                                    -----------
          TOTAL ASSETS                                              $   335,576
                                                                    ===========
                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
     Accounts payable                                               $   276,045
     Accrued expenses                                                   509,026
     Loan from stockholder                                               71,731
                                                                    -----------
          Total Current Liabilities                                     856,802
                                                                    -----------

Long term convertible debt                                              853,900
                                                                    -----------

TOTAL LIABILITIES                                                     1,710,702
                                                                    -----------

Minority interest in consolidated subsidiaries                          181,799
                                                                    -----------

Stockholders' Deficiency:
     Common stock $0.0001 par value - authorized
       100,000,000 shares;
       20,849,113 shares issued and outstanding                           2,085
     Additional paid-in-capital                                       4,587,010
     Accumulated deficit                                             (6,146,020)
                                                                    -----------
          Total Stockholders' Deficiency                             (1,556,925)
                                                                    -----------
          TOTAL LIABILITIES AND
            STOCKHOLDERS'  DEFICIENCY                               $   335,576
                                                                    ===========
See Notes to Unaudited Consolidated Financial Statements


--------------------------------------------------------------------------------
                                     Page 2
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

                                                   Three Months Ended March 31,
                                                   ----------------------------
                                                       2005            2004
                                                   ------------    ------------


Revenue                                            $         --    $         --
                                                   ------------    ------------

Costs and Expenses
     General and administrative
     expenses                                           375,993         279,504
                                                   ------------    ------------

     Loss from operations                              (375,993)       (279,504)
                                                   ------------    ------------

     Minority interest share of income/(loss)
     of consolidated subsidiaries                       (48,343)          8,609

     Writedown/loss from joint ventures                      --         (35,059)
     Interest expense                                   (11,584)         (8,372)
                                                   ------------    ------------
     Loss before benefit from income taxes             (435,920)       (314,326)
                                                   ------------    ------------

     Benefit from income taxes                               --              --
                                                   ------------    ------------

     Net loss                                      $   (435,920)   $   (314,326)
                                                   ============    ============

     Loss per common share -
       basic and diluted                           $      (0.02)   $      (0.03)
                                                   ============    ============

     Weighted average number of
       common shares outstanding-
       basic and diluted                             20,517,334      10,479,139
                                                   ============    ============

See Notes to Unaudited Consolidated Financial Statements


--------------------------------------------------------------------------------
                                     Page 3
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

                                                            Three Months
                                                           Ended March 31,
                                                      -----------------------
                                                        2005         2004
                                                      ---------    ---------
Cash flows from operating activities:
     Net loss                                         $(435,920)   $(314,326)
     Adjustment to reconcile net loss to
     net cash used in operating activities:
     Depreciation                                         1,338          439
     Non-cash employee compensation                      61,300      115,000
     Non-cash compensation                               12,250       42,250

     Writedown/loss from joint ventures                      --       35,059
     Minority interest in losses of consolidated
     subsidiaries                                        48,343       (8,609)
     Changes in operating assets
     and liabilities:                                   160,670     (150,885)
                                                      ---------    ---------
Net cash used in operating activities:                 (152,019)    (281,072)
                                                      ---------    ---------

Cash flows from investing activities:
     Proceeds from (repayments to) minority
     interests                                          (49,704)     148,000

     Advances to joint ventures                              --     (100,000)
                                                      ---------    ---------
Net cash (used in) provided by investing
activities                                              (49,704)      48,000
                                                      ---------    ---------
Cash flows from financing activities:
     Proceeds from sale of common stock                  30,000       37,500

     Proceeds from former officer and stockholder            --      284,400

     Repayment for former officer and stockholder            --      (56,364)

     Proceeds from related party                         71,731           --

     Repayment to related parties                            --      (10,000)
                                                      ---------    ---------
     Net cash provided by
       financing activities                             101,731      255,536
                                                      ---------    ---------

     Net increase  (decrease) in cash                   (99,992)      22,464
     Cash - Beginning of period                         113,780       14,057
                                                      ---------    ---------
     Cash - End of period                             $  13,788    $  36,521
                                                      =========    =========

See Notes to Unaudited Consolidated Financial Statements


--------------------------------------------------------------------------------
                                     Page 4
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Continued)

                                                             Three Months
                                                            Ended March 31,
                                                         ----------------------
                                                           2005         2004
                                                         ---------    ---------
Supplementary information:
  Cash paid during year for:
     Interest                                            $      --    $      --
                                                         =========    =========
     Income taxes                                        $      --    $      --
                                                         =========    =========

Changes in operating assets and liabilities
 consists of:
  (Increase) in loan receivable                          $      --    $ (51,221)

  (Increase) in employee advances                           (1,000)          --
  (Increase) decrease in prepaid expenses                  (78,462)       3,172

  Decrease in refundable deposits                           84,000           --
  (Increase) in other assets                                    --     (120,750)
  Increase in accounts payable
     and accrued expenses                                  156,132       60,164
                                                         ---------    ---------
                                                         $ 160,670    $(108,635)
                                                         =========    =========

Non-cash financing activities:
Issuance of common stock for debt                        $  37,500    $ 176,955
                                                         =========    =========
Issuance of common stock in lieu
  of payment of accrued expenses                         $      --    $  64,952
                                                         =========    =========

See Notes to Unaudited Consolidated Financial Statements


--------------------------------------------------------------------------------
                                     Page 5
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.    BASIS OF PRESENTATION

      The consolidated balance sheet as of March 31, 2005, and the consolidated
statements of operations and cash flows for the periods presented herein have
been prepared by Delta Mutual, Inc. (the "Company" or "Delta") and are
unaudited. In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly, the financial
position, results of operations and cash flows for all periods presented have
been made.

      DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The consolidated financial statements for the period ended March 31, 2005
have been prepared on a going concern basis which contemplates the realization
of assets and settlement of liabilities and commitments in the normal course of
business. Management recognizes that the Company's continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and the commencement of its planned principal
operations.

      The Company's business is subject to most of the risks inherent in the
establishment of a new business enterprise. The likelihood of success of the
Company must be considered in light of the expenses, difficulties, delays and
unanticipated challenges encountered in connection with the formation of a new
business, raising operating and development capital, and the marketing of a new
product. There is no assurance the Company will achieve a profitable level of
operations.

      The Company presently does not have sufficient liquid assets to finance
its anticipated funding needs and obligations. The Company's continued existence
is dependent upon its ability to obtain needed working capital through
additional equity and/or debt financing and achieve a level of sales adequate to
support its cost structure. Management is actively seeking additional capital to
ensure the continuation of its development activities and complete the proposed
joint ventures. However, there is no assurance that additional capital will be
obtained and the joint ventures will be profitable. These uncertainties raise
substantial doubt about the ability of the Company to continue as a going
concern. The accompanying financial statements do not include any adjustments
that might result from the outcome of these uncertainties should the Company be
unable to continue as a going concern.

Business Plan

      Since March 2004, new Company management has established joint venture
subsidiaries and two limited partnerships, primarily to establish business
operations focused on providing construction and environmental technologies and
services in Puerto Rico, the Middle East and the Far East. The Company,
simultaneously, made a strategic decision to minimize its activities in Eastern
Europe and to maintain a small passive investment in the area that can be
expanded in the future should circumstances change.

The Company has entered into strategic alliance agreements with several United
States-based entities with technologies in the environmental technology field to
support the Company's world wide activities.

On March 18, 2003 the Company entered into a Letter of Intent with Hi Tech
Consulting and Construction, Inc. to form a joint venture to provide
environmental technology services for certain business sectors in the Middle
East and Africa. The joint venture agreement was finalized January 14, 2004, and
the joint venture company, Delta-Envirotech, Inc., is based in the Commonwealth
of Virginia and incorporated in the State of Delaware.

Middle East

On January 22, 2004, the Company announced a strategic alliance agreement
between Delta-Envirotech, Inc. and ZAFF International, Ltd., a technology
company located in Saudi Arabia. The strategic alliance states that the two
companies will jointly pursue projects related to soil and water reclamation
requirements in the Middle East. On December 1, 2004, the Company announced that
ZAFF International, Ltd., Delta's strategic partner, received its operating
license from the Saudi Arabia environmental authorities to employ all soil,
refinery waste and waste water technologies held by Delta for environmental
recovery projects. ZAFF International, Ltd. is one of the first companies to be
granted a multi-technology environmental license in Saudi Arabia.


--------------------------------------------------------------------------------
                                     Page 6
<PAGE>

Far East

In April 2004, Delta-Envirotech, Inc., executed an agreement with the Indonesian
government's technology authority, LIPI. The agreement outlines a joint
cooperation between Delta-Envirotech, Inc. and a local Indonesian technology
company to commence energy and waste recovery operations in Indonesia. A local
joint venture is being established to conduct the actual recovery and processing
activities.

Puerto Rico

On January 20, 2004, the Company announced the formation of a joint venture
project to develop government sponsored, Section 124 low income housing in the
Commonwealth of Puerto Rico. The development, Brisas Del Atlantico, has been
approved for development under Section 124 of the Housing Department, which
provides for government subsidized low income housing. The Company is the
General Partner and the 75% majority owner of a limited partnership that is the
85% majority owner of Delta Developers Corp., a Puerto Rico corporation, formed
to manage the construction and related activities required to build
approximately 270 low income homes under Section 124. The necessary building
permits have been submitted for approval and a real estate agency has been hired
to sell the homes planned for construction. Due to events related to the ballot
recount in the Puerto Rico gubernatorial election held November 2, 2004, the
election of a new governor was not certified until late December 2004. These
events have delayed the Company's permit approval process. Currently, the
Company expects the building permits of the homes to be approved and presale of
the homes to begin in the third quarter of 2005.

On December 9, 2004, the Company announced the formation of a second joint
venture project to develop government sponsored Section 124 low income housing
in the Commonwealth of Puerto Rico using the same organizational structure as
the first project. The Company is the General Partner and 96% majority owner of
a limited partnership that is the 85% majority owner of Delta Developers
Guayanilla Corp., a Puerto Rico corporation. The Company plans to build
approximately 300 low income houses under Section 124.

SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF ACCOUNTING FOR OWNERSHIP INTERESTS IN PARTNER COMPANIES

The various interests that the Company acquires in its Partner Companies are
accounted for under two methods: consolidation and equity. The applicable
accounting method is generally determined based on the Company's voting interest
in a Partner Company.

Consolidation. Partner Companies in which the Company directly or indirectly
owns more than 50% of the outstanding voting securities are generally accounted
for under the consolidation method of accounting. Under this method, a Partner
Company's balance sheet and results of operations are reflected within the
Company's Consolidated Financial Statements. All significant intercompany
accounts and transactions have been eliminated. Participation of other Partner
Company stockholders in the net assets and in the earnings or losses of a
consolidated Partner Company is reflected in the caption "Minority interest" in
the Company's Consolidated Balance Sheet and Statements of Operations. Minority
interest adjusts the Company's consolidated results of operations to reflect
only the Company's share of the earnings or losses of the consolidated Partner
Company. The results of operations and cash flows of a consolidated Partner
Company are included through the latest interim period in which the Company
owned a greater than 50% direct or indirect voting interest for the entire
interim period or otherwise exercised control over the Partner Company. Upon
dilution of control below 50%, the accounting method is adjusted to the equity
or cost method of accounting, as appropriate, for subsequent periods.

Equity Method. Partner Companies that are not consolidated, but over which the
Company exercises significant influence, are accounted for under the equity
method of accounting. Whether or not the Company exercises significant influence
with respect to a Partner Company depends on an evaluation of several factors
including, among others, representation on the Partner Company's Board of
Directors and ownership level, which is generally 20% to 50% interest in the
voting securities of the Partner Company, including voting rights associated
with the Company's holdings in common, preferred and other convertible
instruments in the Partner Company. Under the equity method of accounting, a
Partner Company's accounts are not reflected within the Company's Consolidated
Balance Sheets and Statements of Operations; however, the Company's share of the
earnings or losses of the Partner Company is reflected in the caption "Equity
loss" in the Consolidated Statements of Operations. The carrying value of equity
method Partner Companies is reflected in "Ownership interests in Partner
Companies" in the Company's Consolidated Balance Sheets.

When the Company's investment in an equity method Partner Company is reduced to
zero, no further losses are recorded in the Company's consolidated financial
statements unless the Company guaranteed obligations of the Partner Company or
has committed additional funding. When the Partner Company subsequently reports
income, the Company will not record its share of such income until it equals the
amount of its share losses not previously recognized.


--------------------------------------------------------------------------------
                                     Page 7
<PAGE>

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
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 period. Actual results could differ from those
estimates.

LOSS PER SHARE

Basic and diluted loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during the year. Potential
common shares are excluded from the loss per share calculation, because the
effect would be antidilutive. Potential common shares relate to the convertible
debt and common stock warrants. As of March 31, 2005, there were 13,203,200
potential common shares related to convertible debt issued by the Company and
7,780,000 potential common shares related to common stock purchase warrants
issued by the Company. As of March 31, 2004 there were no potential common
shares.

REVENUE RECOGNITION ON CONSTRUCTION CONTRACTS

The Company will recognize revenue in accordance with the Guidance contained in
SEC Staff Accounting Bulletin No. 104 "Revenue Recognition Finance Statements"
(SAB No. 104).

Revenue and profits in construction contracts will be recorded under the
percentage of completion method. Progress toward completion is measured using
the cost to cost method, revenues and profits are recognized based on the ratio
that costs incurred bear to total costs. This method is subject to physical
verification of actual progress towards completion. To date the Company has
recognized no revenue as defined.

EVALUATION OF LONG-LIVED ASSETS

The Company reviews property and equipment for impairment whenever events or
changes in circumstances indicate the carrying value may not be recoverable in
accordance with guidance in SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." If the carrying value of the long-lived asset
exceeds the present value of the related estimated future cash flows, the asset
would be adjusted to its fair value and an impairment loss would be charged to
operations in the period identified.

DEPRECIATION AND AMORTIZATION

Property and equipment are stated at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of the related assets.

STOCK OPTION PLAN

The Company accounts for equity-based compensation issued to employees in
accordance with Accounting Principles Board ("APB") Opinion No. 25 "Accounting
for Stock Issued to Employees". APB No. 25 requires the use of intrinsic value
method, which measures compensation cost as the excess, if any, of the quoted
market price of the stock at the measurement date over the amount an employee
must pay to acquire the stock. The Company makes disclosures of pro forma net
loss and loss per share as if the fair-value-based method of accounting had been
applied as required by Statement on Financial Accounting Standard ("SFAS")
No.123 "Accounting for Stock-Based Compensation-Transition and Disclosure".

The Company grants stock options with exercise prices at fair market values at
the date of the grant. The Company will continue to account for stock-based
employee compensation under recognition and measurement principal of APB Opinion
No. 25 and related interpretations through December 15, 2005. Thereafter, the
Company will account for stock-based compensation under SFAS No. 123 (R). The
Company is currently evaluating its position and will make a determination to
account for the compensation costs either prospectively or retroactively at the
time of adoption.

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No.123). Had compensation cost for the Company's stock option plan been
determined based on the fair market value at the date of the grant of awards in
2004 consistent with the provisions of SFAS No. 123, the Company's net loss and
loss per share would have been reduced to the pro forma amounts included below:


--------------------------------------------------------------------------------
                                     Page 8
<PAGE>

                                                      For the three months
                                                         ended March 31,
                                                   ----------------------------
                                                       2005             2004
                                                   -----------      -----------

Net loss-as reported                               $  (435,920)     $  (314,326)

  Deduct:  Total stock-based
           employee compensation
           expense determined
           under the fair value
           based method for all
           awards, net of taxes                        101,563               --
                                                   -----------      -----------
Net loss-pro forma                                 $  (537,483)     $  (314,326)
                                                   ===========      ===========
Loss per common share
  basic and diluted -
  as reported                                      $     (0.02)     $     (0.03)

Loss per common share
  basic and diluted-
  pro forma                                        $     (0.03)     $     (0.03)

      The fair value of each option grant is estimated on the date of the grant
      using Black-Scholes option-pricing model with the following weighted
      average-average assumptions used for grants in 2004: dividends yield of
      0%, expected volatility of 116% and expected life of 10 years. No options
      were granted during the three months ended March 31, 2005 and 2004,
      respectively.

      The Company is also authorized to issue shares of stock to its employees
      from its 2001 Employee Stock Option Plan (the "2001 Plan"). The Company
      expenses the issuance of stock awards in accordance with SFAS No. 123.
      Shares issued from the 2001 Plan were expensed at the time of issuance, as
      common stock issued had no restrictions to the employees. The Company
      issued stock awards to 5 employees totaling 613,000 shares from the 2001
      Plan during the three months ended March 31, 2005 and 449,500 shares
      issued to 4 employees during the similar period of 2004. The shares issued
      were at fair market value as compensation to employees. The Company
      recorded compensation expense of $61,300 and $115,000 in the Company's
      statement of operations for the three months ended March 31, 2005 and
      2004, respectively.

      STOCK-BASED COMPENSATION

      The Company issues shares of its common stock to employees and
      non-employees as stock based compensation. The Company accounts for the
      services using the fair market value of the services rendered. For the
      three months ended March 31, 2005 and 2004, the Company issued 50,000 and
      285,000 common shares, respectively, and recorded expense of $12,250 and
      $42,250, respectively, in connection with the issuance of these shares.

      The Company did not grant any warrants during the three months ended March
      31, 2005 and 2004, respectively.

      INCOME TAXES

      The Company accounts for income taxes using an asset and liability
      approach under which deferred taxes are recognized by applying enacted tax
      rates applicable to future years to the differences between financial
      statement carrying amounts and the tax basis of reported assets and
      liabilities. The principal item giving rise to deferred taxes are future
      tax benefits of certain net operating loss carryforwards.

      FAIR VALUE OF FINANCIAL INSTRUMENTS

      For financial instruments including cash, accounts payable, accrued
      expenses, and convertible debt, it was assumed that the carrying amount
      approximated fair value because of the short maturities of such
      instruments.


--------------------------------------------------------------------------------
                                     Page 9
<PAGE>

      RECLASSIFICATIONS

      Certain reclassifications have been made to prior period amounts to
      conform to the current year presentation.

      NEW FINANCIAL ACCOUNTING STANDARDS

      In December 2004, the Financial Accounting Standard Board ("FASB") issued
      Statement on Financial Accounting Standards ("SFAS") No. 123(R),
      "Share-Based Payment" (revised), that will require compensation costs
      related to share-based payment transactions to be recognized in the
      financial statements. With limited exceptions, the amount of compensation
      cost will be measured based on the grant-date fair value of the equity or
      liability instruments issued. In addition, liability awards will be
      remeasured each reporting period. Compensation cost will be recognized
      over the period that an employee provides service in exchange for the
      reward. The statement also amends SFAS No. 95, "Statement of Cash Flows",
      to require that excess tax benefits be reported as a financing cash inflow
      rather than as a reduction of taxes paid. SFAS No. 123(R) is effective as
      to the Company as of the beginning of the first interim period that begins
      after June 15, 2005. The Company is currently evaluating its position and
      will make its determination to account for the compensation costs either
      prospectively or retroactively at the time of adoption. The adoption of
      SFAS 123(R) is expected to have a material effect on the Company's results
      of operations.

      In December 2004, the FASB staff issued FSP No. FAS 109-2, "Accounting and
      Disclosure Guidance for the Foreign Earnings Repatriation Provision Within
      the American Jobs Creation Act of 2004" to provide accounting and
      disclosure guidance for the repatriation provisions included in the Act.
      The Act introduced a special limited-time dividends received deduction on
      the repatriation of certain foreign earnings to a U.S. taxpayer as more
      fully described in Note 8 of Notes to Consolidated Financial Statements.
      The FSP is effective upon issuance. The adoption of FAS 109-2 could have a
      material effect on the Company's results of operations and financial
      position.

      In December 2004, the FASB staff issued FASB Staff Position ("FSP") FAS
      109-1, "Application of FASB Statement No. 109, Accounting for Income
      Taxes, to the Tax Deduction on Qualified Production Activities Provided by
      the American Jobs Creation Act of 2004" to provide guidance on the
      application of Statement 109 to the provision within the American Jobs
      Creations Act of 2004 (the "Act") that provides tax relief to U.S.
      domestic manufacturers. The FSP states that the manufacturers, deduction
      provided for under the Act should be accounted for as a special deduction
      in accordance with Statement 109 and not as a tax rate reduction. The FSP
      is effective upon issuance. The adoption of FAS 109-1 could have a
      material effect on the Company's results of operations or financial
      position.

      In December 2004, the FASB issued SFAS No. 153 an amendment of APB Opinion
      No. 29 "Exchanges of Nonmonetary Assets". SFAS No. 153 amends APB Opinion
      No. 29 by eliminating the exception under APB No. 29 for nonmonetary
      exchanges of similar productive assets and replaces it with a general
      exception for exchanges of nonmonetary assets that do not have commercial
      substance. A nonmonetary exchange has commercial substance if the future
      cash flows of the entity are expected to change significantly as a result
      of the exchange. SFAS No. 153 is effective for periods beginning after
      June 15, 2005. The adoption of SFAS No. 153 is not expected to have a
      material effect on the Company's financial position or results of
      operations.

      In November 2004 the FASB issued SFAS No. 151, an amendment to ARB No. 43
      chapter 4 "Inventory Costs". SFAS No. 151 requires that abnormal costs of
      idle facility expenses, freight, handling costs and wasted material
      (spoilage) be recognized as current-period charges. SFAS No. 151 is
      effective for fiscal years beginning after June 15, 2005. Adoption of SFAS
      No. 151 is not expected to have a material impact on the Company's results
      of operations or financial position.


                                    Page 10
<PAGE>

2.    REFUNDABLE DEPOSITS

                                                                  March 31, 2005
                                                                  --------------

      Deposits on land                                                $60,700
                                                                      -------

3.    PROPERTY AND EQUIPMENT

                                                                  March 31, 2005
                                                                  --------------

      Equipment                                                      $  4,778
      Leasehold improvements                                            7,807
                                                                     --------
                                                                       12,585
      Less accumulated
      Depreciation                                                     (4,525)
                                                                     --------

                                                                     $  8,059
                                                                     ========

      Depreciation expense fore the three months ended March 31, 2005 and 2004,
      amounted to $629 and $439, respectively.

4.    INVESTMENT IN JOINT VENTURES

a)    In December 2003, the Company formed a joint venture project to develop
      government sponsored, Section 124, low income housing in the Commonwealth
      of Puerto Rico. The Company became the general partner and the 75%
      majority owner of a limited partnership, Delta Development Partners, LP,
      that holds the 85% majority share of Delta Developers Corp., a Puerto Rico
      corporation, formed to manage the construction and related activities
      required to build approximately 270 low income homes under Section 124.
      The operations of the joint venture have been consolidated with the
      Company for the three months ended March 31, 2005 and 2004, respectively.

      During the year ended December 31, 2004, Neil Berman, an investor,
      purchased a 25% interest in Delta Development Partners, LP for $148,000.

      On October 6, 2004, the Company entered into a second joint venture
      agreement to develop government sponsored, Section 124 low income housing
      in the Commonwealth of Puerto Rico. The Company became the general partner
      and majority owner of a limited partnership, Delta Development Partners
      II, LP, that holds the 85% majority share of Delta Developers Guayanilla
      Corp, a Puerto Rico corporation formed to manage the construction and
      related activities required to build approximately 300 low income houses
      under Section 124. The operations of the joint venture have been
      consolidated with the Company since October 6, 2004.

      During the period October 6, 2004 through December 31, 2004, Ebony
      Finance, Ltd. and T & T Asset Management, investors, purchased a 4%
      interest from the existing partners in Delta Development Partners II, LP
      for $40,000.

      See Notes 1 and 9 of Notes to Unaudited Consolidated Financial Statements
      for information regarding accounting for minority interests.

b)    On March 18, 2003, the Company entered into a letter of intent with
      Hi-Tech Consulting and Construction, Inc. ("Hi-Tech") to form a joint
      venture to provide environmental technology services primarily to markets
      in the Middle East and Africa. The joint venture company, named
      Delta-Envirotech, Inc., is based in Virginia and focuses on participating
      in foreign government sponsored pollution remediation projects. The joint
      venture agreement was concluded January 14, 2004 and Delta-Envirotech,
      Inc., a Delaware Corporation, was formed. On January 22, 2004, the Company
      announced the conclusion of a strategic alliance agreement between
      Delta-Envirotech, Inc. and ZAFF International, Ltd., an advanced
      technology company located in Saudi Arabia. The strategic alliance states
      that the two companies will jointly pursue projects related to soil and
      water reclamation requirements in the Middle East.

      On July 14, 2004, Delta and Hi-Tech, pursuant to an agreement to purchase
      stock dated January 14, 2004, each sold 75 shares of the joint venture to
      Ali Razmara, representing a ten (10%) percent interest for $2. Delta and
      Hi-Tech each own forty-five (45%) percent of the joint venture.


                                    Page 11
<PAGE>

      The operations of the joint venture have been consolidated with the
      Company for the three months ended March 31, 2005 (they were not
      consolidated for the three months ended March 31, 2004 because the Company
      had made certain payments to the venture's capital but less than the
      committed amount for the period ended March 31, 2004, and as a
      consequence, the Company was not able to exercise control. These
      circumstances changed during the latter part of 2004 as the Company
      contributed the total amount of required capital of $375,000 and all
      project funding), as the Company maintains effective control over the
      operations.

      See Notes 1 and 9 of Notes to Unaudited Consolidated Financial Statements
      for information regarding accounting for minority interests.

c)    On May 1, 2003, the Company entered into a joint venture in Romania,
      forming a new Company, Delta TP Mediu, SRL. The joint venture, of which
      the Company owns 10%, was organized to primarily pursue the sourcing,
      treatment and processing of hydrocarbon based and other industrial
      residuals and, where possible, to create alternative fuels and raw
      materials for industrial use primarily in Romania. The Company invested
      $33,800 in the joint venture, consisting of $18,800 in cash and issuance
      of 100,000 shares of the Company's common stock valued at $15,000. The
      Company made a strategic decision to minimize its activities in Eastern
      Europe and the investment has been written down to $1 and a charge taken
      against operations during the three months ended March 31, 2004.

5.    CONVERTIBLE DEBT

a)    On May 12, 2004, the Company issued two convertible notes in the principal
      amounts of $193,740 and $129,160, respectively, to a related party and the
      spouse of a related party. Each note is due May 12, 2006. Both notes bear
      interest at 4% per annum and are convertible into common stock at an
      initial conversion price of $0.125 per share, the fair market value at the
      date of issuance. Interest expense for the three months ended March 31,
      2005 and 2004, amounted to $3,229 and $-0-, respectively. As of March 31,
      2005, the balance of $5,908 is included in accrued expenses on the
      Company's balance sheet.

b)    On July 1, 2004, the Company issued a convertible note to a related party
      for $157,000 due December 31, 2006. The note bears interest at 4% per
      annum and is convertible into common stock at an initial conversion price
      of $0.05 per share, the fair market value at the date of issuance. On
      January 7, 2005 the Company issued 500,000 shares of common stock as
      partial conversion of $25,000 of the principal amount of the note.
      Interest expense for the three months ended March 31, 2005 and 2004,
      amounted to $1,339 and $-0-, respectively. As of March 31, 2005, the
      balance of $4,505 is included in accrued expenses on the Company's balance
      sheet.

c)    On July 16, 2004, the Company issued a convertible note to a related party
      for $37,500 due January 16, 2007. The note bears interest at 4% per annum
      and is convertible into common stock at an initial conversion price of
      $0.05 per share, the fair market value at date of issuance. Interest
      expense for the three months ended March 31, 2005 and 2004, amounted to
      $375 and $-0-, respectively. As of March 31, 2005, the balance of $1,057
      is included in accrued expenses on the Company's balance sheet.

d)    On September 20, 2004, the Company issued a series of convertible notes to
      various lenders in the aggregate amount of $301,500 with a maturity date
      of September 16, 2006. Of the aggregate principal amount, $71,500 was
      issued to three related parties. The notes bear interest at 6% per annum
      and are convertible into common stock at an initial conversion price of
      $0.05 per share, the fair market value at the date of issuance. On
      November 19, 2004, the Company issued 400,000 shares of common stock to
      one of the lenders as conversion of the principal amount of $20,000. The
      Company paid the interest on the note of $198 by issuing the lender an
      additional 3,951 shares of common stock. Interest expense for the three
      months ended March 31, 2005 and 2004, amounted to $4,773 and $-0-,
      respectively. As of March 31, 2005, the balance of $8,942 is included in
      accrued expenses on the Company's balance sheet.


                                    Page 12
<PAGE>

e)    On September 23 and September 27, 2004, the Company issued two convertible
      notes in the principal amounts of $10,000 and $20,000, respectively, to
      two related parties. The notes are due September 22, 2006 and September
      26, 2006, respectively. Each note bears interest at 6% per annum and is
      convertible into common stock at an initial conversion price of $0.05 per
      share, the fair market value at the date of issuance. Interest expense for
      the three months ended March 31, 2005 and 2004, amounted to $450 and $-0-,
      respectively. As of March 31, 2005, the balance of $925 is included in
      accrued expenses on the Company's balance sheet.

f.    On November 2 and November 5, 2004, the Company issued two convertible
      notes in the principal amounts of $12,5000 and $25,000, respectively, to
      two lenders, one of whom was a related party. The notes are due November
      1, 2006 and November 4, 2006, respectively. Each note bears interest at 6%
      per annum and is convertible into common stock at an initial conversion
      price of $0.05 per share, the fair market value at the date of issuance.
      On November 8, 2004, the Company converted the $25,000 note into 500,000
      shares of common stock with interest paid in cash. On January 3, 2005, the
      Company converted the $12,500 note by issuing 250,000 shares of common
      stock. The Company paid the interest of $127 by issuing the lender an
      additional 2,542 shares of common stock.

g.    On November 26, 2004, the Company entered into a settlement agreement and
      mutual release with a stockholder. As part of the settlement, the Company
      issued a convertible note for $50,000 due on November 24, 2006. The note
      bears interest at 6% per annum and is convertible into common stock at an
      initial conversion price of $0.05 per share, the fair market value at the
      date of issuance. The Company expensed the settlement amount at the time
      of issuance. Interest expense for the three months ended March 31, 2005
      and 2004, amounted to $750 and $-0-, respectively. As of March 31, 2005,
      the balance of $1,046 is included in accrued expenses on the Company's
      balance sheet.

f)    At March 31, 2005, the Company's outstanding convertible notes were
      convertible into 13,203,200 shares of Common stock.

      The following table shows the maturities by year of total long-term
      convertible debt obligations at March 31:

                                                 2005                   $      0
                                                 2006                    816,400
                                                 2007                     37,500
                                                                        --------
                                                                        $853,900
                                                                        ========
6.    ACCRUED EXPENSES

            Accrued expenses consist of the following:

                                                                Ended March 31,
                                                                     2005
                                                                    --------
Professional fees                                                   $ 29,252
Interest expense                                                      27,454
Payroll Expense                                                      138,110
Payroll expense officers                                             273,449
Payroll tax expense                                                   44,761
                                                                    --------
                                                                    $509,026
                                                                    ========

7.    LOAN RECEIVABLE - FORMER OFFICER/SHAREHOLDER

      During 2003, the Company entered into a revolving credit agreement with
      Gary Robinson ("Robinson"), the former Chairman and Chief Executive
      Officer of the Company. Robinson advanced funds to the Company and the
      Company made partial repayment to Robinson. The Company also made payments
      on Robinson's behalf to settle various claims against the Company.


                                    Page 13
<PAGE>

      After adjustments for expense reimbursements due Robinson and offsets as
      noted above, Robinson owed the Company $51,221 at December 31, 2004. The
      full amount of the receivable was written off as a bad debt as of December
      31, 2004.

8.    LOANS FROM RELATED PARTIES

a)    On January 7, 2003, the Company borrowed $15,000 from Michael Pisani
      ("Pisani") (a stockholder) of the Company. Pisani received 50,000 common
      shares of the Company's common stock which represented the payment of
      interest accruing on the unpaid principal balance through January 27,
      2003, the maturity date. The Company recorded interest expense of $15,000,
      the fair market value at the date of issuance, in 2003 for the issuance of
      the shares.

      The Company did not pay the outstanding balance on the maturity date and
      was required to pay monthly interest of one (1%) percent to Pisani. On
      April 7, 2003, the Company repaid Pisani $5,000 against the outstanding
      balance. In May 2003, the note was amended. Subsequently, a dispute arose
      between the parties about the validity of the amendment.

      In March 2004, the Company repaid the principal and interest due under the
      terms of the amended note. Pisani, through counsel, informed the Company
      that, by accepting repayment, he did not prejudice his position regarding
      the validity of the original note. The Company is attempting to resolve
      this dispute. If the matter can not be resolved and Pisani prevails in a
      legal action against the Company, Pisani may be entitled to, in addition
      to the principal amount and interest, shares of common stock as additional
      interest.

      The Company recorded interest expense of $-0- and $1,599 for the period
      March 31, 2005 and 2004, respectively.

b)    On May 15, 2003, the Company borrowed $12,000 from Michael Fasci ("Fasci")
      a stockholder of the Company. Fasci received 50,000 common shares (valued
      at fair market value) of the Company's common stock which represented the
      payment of interest through May 26, 2003, the maturity date. The Company
      recorded interest expense of $13,750 for the three months ended March 31,
      2004. On February 27, 2004 the Company issued 140,000 shares of common
      stock (valued at fair market value) in repayment of the loan, interest,
      penalty and expenses amounting to $19,100.

c)    On December 30, 2003, the Company borrowed $50,000 from Edward Tuccio
      ("Tuccio"), a shareholder of the Company. The note was due December 29,
      2004, with interest at six percent (6%) per annum. On February 11, 2004,
      the Company issued Tuccio 400,000 common shares of common stock (valued at
      fair market value) which represented the full payment of this loan plus
      interest amounting to $168 for the three months ended March 31, 2004.

d)    On December 11, 2003, the Company borrowed $50,000 from Neil Jones
      ("Jones"), a shareholder of the Company. The note was due December 16,
      2004 with interest at six percent (6%) per annum. On January 24, 2004, the
      Company issued Jones 400,000 shares of common stock (valued at fair market
      value) which represented the full payment of this loan plus interest. The
      Company recorded interest expense of $63 for the three months ended March
      31, 2004.

e)    On March 22, 2005, the Company borrowed $71,731 from Neil Berman, a
      shareholder of the Company. The loan bears interest at six percent (6%)
      per annum with the principal and interest due in three equal installments
      on June 21, September 19, and December 20,2005. The Company recorded
      interest expense of $118 for the three months ended March 31, 2005, which
      is included in accrued expenses on the Company's balance sheet.

9.    MINORITY INTERESTS


                                    Page 14
<PAGE>

      Minority interests primarily consists of ownership interest in
      Delta-Envirotech, Inc., Delta Development Partners, L.P., Delta
      Development Partners II, LP, Delta Developers Corp and Delta Developers
      Guayanilla Corp. The income and losses from operations of these entities
      and their respective minority interests have been reflected in the
      Company's statement of operations for the three months ended March 31,
      2005. There are losses for the minority interests in excess of the $48,343
      attributed to the minority interests due to basis limitations. In future
      periods, the profits first attributable to the minority interests will be
      first absorbed against any unused losses until the losses are fully
      absorbed. The amount on the Company's balance sheet represents the
      minority interests as of March 31, 2005.

      The following represents a schedule of minority interests as of March 31,

                                                                          2005
                                                                        --------
      Delta Development Partners L.P.                                   $141,666
      Delta Development Partners II, L.P.                                 39,983
      Delta Developers Guayanilla, Corp.                                     150
      Delta-Envirotech, Inc.                                                  --
      Delta Developers Corp.                                                  --
                                                                        --------
                                                                        $181,799
                                                                        --------

      On January 1, 2005, the Company reclassified $78,018 due to Hi-Tech
      Consulting and Construction, Inc. and $18,486 due to David Razmara from
      its Delta-Envirotech subsidiary from accounts payable to loans payable
      with an imputed interest rate of 5% per annum. Delta-Envirotech recorded
      interest expense of $99 and $794, respectively, for the three months ended
      March 31, 2005.

10.   STOCKHOLDER'S DEFICIENCY

      The Company issues shares of common stock for services or repayment of
      debt valued at fair market value at time of issuance.

a.    On January 14, 2004, the Company and David Razmara, entered into an
      agreement to compensate him for past services rendered to the Company in
      the amount of $4,125, all of which was accrued at December 31, 2003. The
      Company issued 50,000 shares of common stock in full payment of this debt.

b.    In February 2004, the Company sold to a private investor 300,000 shares of
      restricted common stock for $37,500, valued at $.125 per share.

c.    The Company and Citrus Land and Development Company entered into an
      agreement for services rendered to the Company in the amount of $25,000.
      In February 2004, the Company issued 355,000 shares of common stock in
      connection with this agreement.

d.    On March 31, 2004 the Company and MicroCap, Inc. entered into an agreement
      for services rendered to the Company in the amount of $9,000. The Company
      issued 30,000 shares of common stock in connection with this agreement.

e.    The Company and Kenneth Martin entered into an agreement to compensate him
      for past services in the amount of $50,000, all of which was accrued at
      December 31, 2003. In March 2004, the Company issued 200,000 shares of
      common stock in full payment of this debt.

f.    On March 31, 2004, pursuant to a joint venture agreement dated January 14,
      2004, the Company issued 50,000 shares of common stock to David Razmara in
      consideration of services rendered to the joint venture in the amount of
      $4,125.

g.    On April 16, 2004, the Company and Burton Lasalle Capital Corporation
      entered into an agreement for services rendered to the Company in the
      amount of $36,000. In April 2004 the Company issued 200,000 shares of
      common stock in connection with this agreement.

h.    On April 16, 2004, the Company and Basic Investors, Inc. entered into an
      agreement for services rendered to the Company in the amount of $72,000.
      In April 2004, the Company issued 400,000 shares of common stock in
      connection with this agreement.


                                    Page 15
<PAGE>

i.    On March 4, 2004, the Company and Charter Capital Resources, Inc. entered
      into an agreement for services rendered to the Company in the amount of
      $12,500. In May 2004, the Company issued 100,000 shares of common stock in
      connection with this agreement.

j.    On March 21, 2004 the Company and Clark Street Capital, entered into an
      agreement for services rendered to the Company in the amount of $72,000.
      In June 2004, the Company issued 400,000 shares of common stock in
      connection with this agreement.

k.    On April 5, 2004, the Company and Inna Turney, through her assignee
      Business Centres International, entered into an agreement for services
      rendered to the Company in the amount of $7,500. In April 2004, the
      Company issued 50,000 shares of common stock in full settlement of this
      debt.

l.    On May 5, 2004, the Company issued to three employees an aggregate of
      185,000 shares of common stock valued at $25,900 in consideration for
      their respective commitments as employees of the Company.

m.    During the second quarter of 2004 the Company sold 840,000 shares of
      restricted common stock for $105,000 valued at $.125 per share.

n.    In August 2004, pursuant to a placement agent agreement dated May 3, 2004,
      the Company issued 250,000 shares of common stock to T&T Asset Management
      of Zurich, Switzerland in consideration of past services rendered to the
      Company in the amount of $31,250, all of which was expensed at September
      30, 2004.

o.    On September 16, 2004, pursuant to a placement agent agreement dated
      September 1, 2004, the Company issued 125,000 shares of common stock to
      T&T Asset Management of Zurich, Switzerland in consideration of services
      rendered to the Company in the amount of $6,250.

p.    On September 17, 2004, pursuant to an amended and restated consulting
      services agreement dated September 7, 2004, the Company issued 100,000
      shares of common stock to Basic Investors, Inc. for past services rendered
      to the Company in the amount of $12,000 as full payment of the Company's
      debt, all of which was expensed at September 30, 2004. In return, Basic
      Investors returned to the Company 400,000 shares of common stock that was
      issued to Basic in April 2004 in consideration of services rendered to the
      Company in the amount of $72,000.

q.    On September 10, 2004, the Company and B C N investments, LLC. entered
      into an agreement for services rendered to the Company in the amount of
      $36,000 all of which was expensed at September 30, 2004. The Company
      issued 300,000 shares of common stock in connection with this agreement.

r.    On September 20, 2004, the Company and Commonwealth Holdings, Inc. entered
      into an agreement for services rendered to the Company in the amount of
      $12,000 all of which was expensed at September 30, 2004. The Company
      issued 100,000 shares of common stock in connection with this agreement.

s.    During the third quarter of 2004, the Company sold 350,000 shares of
      restricted common stock for $43,750 valued at $.125 per share.

t.    On October 4, 2004, pursuant to an agreement dated May 3, 2004, the
      Company issued 750,000 shares of common stock to Ebony Finance Ltd. of
      Zurich, Switzerland in consideration of past services rendered to the
      Company in the amount of $37,500, all of which was expensed during the
      year ended December 31, 2004.

u.    On October 22, 2004,the Company and VarGrowth Corp., Inc. entered into an
      agreement for services rendered to the Company in the amount of $35,375,
      all of which was expensed during the year ended December 31, 2004. The
      Company issued 250,000 shares of common stock in connection with this
      agreement.

v.    On November 1, 2004, the Company and Consulting Medical Management entered
      into an agreement for services rendered to the Company in the amount of
      $31,250, all of which was expensed during the year ended December 31,
      2004. The Company issued 250,000 shares of common stock in connection with
      this agreement.


                                    Page 16
<PAGE>

w.    On November 9, 2004, the Company and Michael Schantz entered into an
      agreement for services rendered to the Company in the amount of $25,000,
      all of which was expensed during the year ended December 31, 2004. The
      Company issued 250,000 shares of common stock in connection with this
      agreement.

x.    On November 15, 2004, pursuant to a monthly retainer agreement dated
      August 15, 2004, the Company issued 45,000 shares of common stock to Focus
      Partners LLC in consideration of past services rendered to the Company in
      the amount of $5,400, all of which was expensed during the year ended
      December 31, 2004.

y.    On November 16, 2004, pursuant to an advisory agreement dated June 7,
      2004, the Company issued 250,000 shares of common stock to Constellation
      Capital Corp. in consideration of past services rendered to the Company in
      the amount of $37,500, all of which was expensed during the year ended
      December 31, 2004.

z.    On November 26, 2004, pursuant to a settlement agreement and mutual
      general release, the Company issued 412,000 shares of common stock to
      Joseph Friedman and Sons International, Inc. ("Friedman"), a stockholder
      of the Company, in respect of the complete release provided by Friedman to
      the Company as contained in the settlement agreement. The consideration
      for the release was in the amount of $70,040, all of which was expensed
      during the year ended December 31, 2004.

aa.   In December 2004, the Company issued 800,000 shares of its common stock
      through the exercise of the Company's common stock warrants, held by four
      warrant holders, at an exercise price of $0.10 per share, valued at
      $80,000.

bb.   During the fourth quarter of 2004, the Company sold 54,055 shares of its
      restricted common stock for $10,000, valued at $0.185 per share.

cc.   On January 25, 2005, the Company issued 300,000 shares of common stock
      through the exercise of the Company's common stock warrants, held by a
      warrant holder, at an exercise price of $0.10 per share, valued at
      $30,000.

dd.   On February 15, 2005, pursuant to a monthly retainer agreement dated
      August 15, 2004, the Company issued 45,000 shares of common stock to Focus
      Partners LLC in consideration of past services rendered to the Company in
      the amount of $11,250, all of which was expensed during the three months
      ended March 31, 2005.

ee.   On March 9, 2005, pursuant to a monthly retainer agreement dated March 9,
      2005, the Company issued 5,000 shares of common stock to Northern Hills,
      Inc. in conjunction with the agreement in the amount of $1,000, all of
      which was expensed during the three months ended March 31, 2005.

11.   SUBSEQUENT EVENTS

a.    On April 5, 2005, the Company issued 8% Promissory Notes to private
      investors in the amount of $210,655, with the principal and interest due
      at maturity, on October 2, 2005.

b.    On April 27 and May 4, 2005, the Company sold a total of 736,667 shares of
      restricted common stock for $221,000, valued at $0.30 per share, fair
      market value at time of issuance.


                                    Page 17
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion of our financial condition and results of operations
should be read in conjunction with the financial statements and notes thereto
and other financial information included elsewhere in this report.

Certain statements contained in this report, including, without limitation,
statements containing the words "believes," "anticipates," "expects" and words
of similar import, constitute "forward looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks and uncertainties. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including our ability to create, sustain, manage
or forecast our growth; our ability to attract and retain key personnel; changes
in our business strategy or development plans; competition; business
disruptions; adverse publicity; and international, national and local general
economic and market conditions.

OVERVIEW

GENERAL

We were incorporated in the State of Delaware on November 17, 1999 and will
require additional capital to execute our planned business operations.

RESULTS OF OPERATIONS

During the three months ended March 31, 2005 we incurred a net loss of $435,920,
because we had no revenue to offset operating and other expenses. During the
three months ended March 31, 2004 we incurred a net loss of $314,326, for the
same reasons.

FIRST QUARTER

The Note 1 of the Notes to Unaudited Consolidated Financial Statements
accompanying this report states that substantial doubt has been raised about our
ability to continue as a going concern. Our present business operations do not
generate any revenue with which to cover our expenses. We will have to raise
capital through the placement of our securities in order to remain viable. We
are continuing to incur management and administrative costs, professional fees
and other expenses. If we are unable to raise capital we will be unable to fund
our plan of operations. Because we will continue to incur net losses, we may
have to cease operations entirely. This factor, among others, raises substantial
doubt about our ability to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability to
obtain funds to meet our obligations on a timely basis, obtain additional
financing or refinancing as may be required, and ultimately to attain
profitability. There are no assurances that we will be able to obtain any
additional financing or, if we are able to obtain additional financing, that
such financing will be on terms favorable to us. The inability to obtain
additional financing when needed would have a material adverse effect on our
operating results.

THREE MONTHS ENDED MARCH 31, 2005 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2004.

The net loss increased from approximately $314,000 for the three months ended
March 31, 2004 to approximately $436,000 for the three months ended March 31,
2005.

The items of significant increase (or decrease) in the three months ended March
31, 2005 over the comparable period of the prior year were an increase in
general and administrative expense from approximately $280,000 in 2004 to
approximately $376,000 in 2005, attributable to increased salaries and related
payroll taxes of about $67,700, increased travel and living expenses of
approximately $36,200, and partially offset by reduced consulting expenses of
about $31,200. Interest expense increased from approximately $8,400 in 2004 to
approximately $12,000 in 2005, an increase in the loss from minority interests
in subsidiaries from approximately $8,600 in 2004 to about $48,300 for 2005 and
a writedown in a joint venture of about $35,100 in 2004.

CRITICAL ACCOUNTING ISSUES

The Company's discussion and analysis of its financial condition and results of
operations are based upon the Company's financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of the financial statements requires
the Company to make estimates and judgments that affect the reported amount of
assets, liabilities, and expenses, and related disclosures of contingent assets
and liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to intangible assets, operation of joint ventures,
income taxes and contingencies and litigation. The Company bases its estimates
on historical experience and on various assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.


                                    Page 18
<PAGE>

PLAN OF OPERATION

Since March 2004, the Company has established joint venture subsidiaries and two
limited partnerships, primarily to establish business operations focused on
providing environmental and construction technologies and services in the Middle
East, the Far East and Puerto Rico. The Company, simultaneously, made a
strategic decision to minimize its activities in Eastern Europe and to maintain
a small passive investment in the area that can be expanded in the future should
circumstances change.

The Company has entered into strategic alliance agreements with several United
States-based entities with technologies in the environmental technology field to
support the Company's world wide activities.

On March 18, 2003 the Company entered into a Letter of Intent with Hi Tech
Consulting and Construction, Inc. to form a joint venture to provide
environmental technology services for certain business sectors in the Middle
East and Africa. The joint venture agreement was finalized January 14, 2004, and
the joint venture company, Delta-Envirotech, Inc., is based in the Commonwealth
of Virginia and incorporated in the State of Delaware.

Middle East

On January 22, 2004, the Company announced a strategic alliance agreement
between Delta-Envirotech, Inc. and ZAFF International, Ltd., a technology
company located in Saudi Arabia. The strategic alliance states that the two
companies will jointly pursue projects related to soil and water reclamation
requirements in the Middle East. On December 1, 2004, the Company announced that
ZAFF International, Ltd., Delta's strategic partner, received its operating
license fro the Saudi Arabia environmental authorities to employ all soil,
refinery waste and waste water technologies held by Delta for environmental
recovery projects. ZAFF International, Ltd. is one of the first companies to be
granted a multi-technology environmental license in Saudi Arabia.

Far East

In April 2004, Delta-Envirotech, Inc., executed an agreement with the Indonesian
government's technology authority, LIPI. The agreement outlines a joint
cooperation between Delta-Envirotech, Inc. and a local Indonesian technology
company to commence energy and waste recovery operations in Indonesia. A local
joint venture is being established to conduct the actual recovery and processing
activities.

Puerto Rico

On January 20, 2004, the Company announced the formation of a joint venture
project to develop government sponsored, Section 124 low income housing in the
Commonwealth of Puerto Rico. The development, Brisas Del Atlantico, has been
approved for development under Section 124 of the Housing Department, which
provides for government subsidized low income housing. The Company is the
General Partner and the 75% majority owner of a limited partnership that is the
85% majority owner of Delta Developers Corp., a Puerto Rico corporation, formed
to manage the construction and related activities required to build
approximately 270 low income homes under Section 124. The necessary building
permits have been submitted for approval and a real estate agency has been hired
to sell the homes planned for construction. Due to events related to the ballot
recount in the Puerto Rico gubernatorial election held November 2, 2004, the
election of a new governor was not certified until late December 2004. These
events have delayed the Company's permit approval process. Currently, the
Company expects the building permits of the homes to be approved and presale of
the homes to begin in the third quarter of 2005.

On December 9, 2004, the Company announced the formation of a second joint
venture project to develop government sponsored Section 124 low income housing
in the Commonwealth of Puerto Rico using the same construction as the first
project. The Company is the General Partner and 96% majority owner of a limited
partnership that is the 85% majority owner of Delta Developers Guayanilla Corp.,
a Puerto Rico corporation. The Company plans to build approximately 300 low
income houses under Section 124.

                                    Page 19
<PAGE>

LIQUIDITY

We are currently dependent on equity investments or borrowing from private
investors to pay our operating expenses. There are no assurances that such
investors will continue to advance funds or invest in the Company's securities.
In the event we are unable to obtain additional capital or funding we may be
unable to pursue our business plans. We anticipate that we will be required to
raise capital in the approximate amount of $3,000,000 in the next 12 months in
order to continue to fund our limited operations and to finance our planned
business operations.

We have no current operations that have generated any revenue. We must rely
entirely on private placements of Company stock or debt to pay operating
expenses.

At March 31, 2004, we had a working capital deficit of $609,716, and at March
31, 2005 we had a working capital deficit of $702,812. The increase in our
working capital deficit is primarily a result of the net loss incurred during
the three months ended March 31, 2005. Since we have no source of revenue, our
working capital deficit will continue to increase as we incur additional
operating expenses. Presently, we have no external sources of cash and we are
dependent upon private placements of our stock or debt for funding.

For the three months ended March 31, 2005, we raised $30,000 of equity capital
through the sale of 300,000 shares of common stock. In addition, we borrowed
$71,371 from a related party to provide financing for our activities.

ASSETS

At March 31, 2004, we had total assets of $340,467, and at March 31, 2005, we
had total assets of $335,576. The decrease in assets as of March 31, 2005, was
due to a decrease in cash, the elimination of a loan receivable from a former
officer, the writedown of an investment in joint ventures, a decrease in fixed
assets, partially offset by an increase in prepaid expenses, refundable deposits
and capitalized construction costs.

Other Matters

Accounting Pronouncements

In December 2004, the Financial Accounting Standard Board ("FASB") issued
Statement on Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment" (revised), that will require compensation costs related to share-based
payment transactions to be recognized in the financial statements. With limited
exceptions, the amount of compensation cost will be measured based on the
grant-date fair value of the equity or liability instruments issued. In
addition, liability awards will be remeasured each reporting period.
Compensation cost will be recognized over the period that an employee provides
service in exchange for the reward. The statement also amends SFAS No. 95,
"Statement of Cash Flows", to require that excess tax benefits be reported as a
financing cash inflow rather than as a reduction of taxes paid. SFAS No. 123(R)
is effective as to the Company as of the beginning of the first interim period
that begins after June 15, 2005. The Company is currently evaluating its
position and will make its determination to account for the compensation costs
either prospectively or retroactively at the time of adoption. The adoption of
SFAS 123(R) is expected to have a material effect on the Company's results of
operations.

In December 2004, the FASB staff issued FSP No. FAS 109-2, "Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision Within the
American Jobs Creation Act of 2004" to provide accounting and disclosure
guidance for the repatriation provisions included in the Act. The Act introduced
a special limited-time dividends received deduction on the repatriation of
certain foreign earnings to a U.S. taxpayer as more fully described in Note 8 of
Notes to Consolidated Financial Statements. The FSP is effective upon issuance.
The adoption of FAS 109-2 could have a material effect on the Company's results
of operations and financial position.

In December 2004, the FASB staff issued FASB Staff Position ("FSP") FAS 109-1,
"Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004" to provide guidance on the application of Statement 109 to
the provision within the American Jobs Creations Act of 2004 (the "Act") that
provides tax relief to U.S. domestic manufacturers. The FSP states that the
manufacturers, deduction provided for under the Act should be accounted for as a
special deduction in accordance with Statement 109 and not as a tax rate
reduction. The FSP is effective upon issuance. The adoption of FAS 109-1 could
have a material effect on the Company's results of operations or financial
position.


                                    Page 20
<PAGE>

In December 2004, the FASB issued SFAS No. 153 an amendment of APB Opinion No.
29 "Exchanges of Nonmonetary Assets". SFAS No. 153 amends APB Opinion No. 29 by
eliminating the exception under APB No. 29 for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
periods beginning after June 15, 2005. The adoption of SFAS No. 153 is not
expected to have a material effect on the Company's financial position or
results of operations.

In November 2004 the FASB issued SFAS No. 151, an amendment to ARB No. 43
chapter 4 "Inventory Costs". SFAS No. 151 requires that abnormal costs of idle
facility expenses, freight, handling costs and wasted material (spoilage) be
recognized as current-period charges. SFAS No. 151 is effective for fiscal years
beginning after June 15, 2005. Adoption of SFAS No. 151 is not expected to have
a material impact on the Company's results of operations or financial position.

Quantitative and Qualitative Disclosures About Market Risk

Fair Value of Financial Instruments - The following disclosure of the estimated
fair value of financial instruments is made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments". The estimated fair values of financial
instruments have been determined by the Company using available market
information and appropriate valuation methodologies.

However, considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that the Company could realize in
a current market exchange.

The Company has not entered into, and does not expect to enter into, financial
instruments for trading or hedging purposes. The Company does not currently
anticipate entering into interest rate swaps and/or similar instruments.

The Company's carrying values of cash, marketable securities, accounts
receivable, accounts payable and accrued expenses are a reasonable approximation
of their fair value.

Item 3. Controls and Procedures

(a) Disclosure controls and procedures. As of the end of the Company's most
recently completed fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) covered by this report, the Company carried out an
evaluation, with the participation of the Company's management, including the
Company's Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company's disclosure controls and procedures pursuant to
Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Company's
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in ensuring that information
required to be disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.

(b) Changes in internal controls over financial reporting. There have been no
changes in the Company's internal controls over financial reporting that
occurred during the Company's last fiscal quarter to which this report relates
that have materially affected, or are reasonably likely to materially affect,
the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no legal proceedings against the Company.

ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities

Not applicable.


                                    Page 21
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable

ITEM 6. Exhibits

31.1  Certification of Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002, filed herewith.

31.2  Certification of Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002, filed herewith.

32.1  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
      1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002, filed herewith.

32.2  Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
      1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002, filed herewith.

                                   SIGNATURES

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

                                       DELTA MUTUAL, INC.

                                       BY: /s/ Peter F. Russo
                                           ------------------------------
                                           Peter F. Russo
                                           President and Chief
                                           Executive Officer

Dated: May 20, 2005

                                  EXHIBIT INDEX

31.1  Certification of Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.

31.2  Certification of Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002, filed herewith.

32.1  Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
      1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002, filed herewith.

32.2  Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
      1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002, filed herewith.


                                    Page 22