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 September 30, 2004

                                       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 November 11, 2004, there were 15,415,688 shares of Common Stock, $.0001 par
value, outstanding.

<PAGE>

                              DELTA MUTUAL, INC.

                                      INDEX

                                                                            Page

Part I.  Financial Information

Item 1.  Financial Statements

Balance Sheet as of September 30, 2004 (unaudited)                             2

Statements of Operations for the Nine Months Ended September 30,
2004 and 2003 (unaudited) and the Period November 17, 1999 (Date of
Formation) through September 30, 2004                                          4

Statements of Cash Flows for the Nine Months Ended September 30, 2004
and 2003 (unaudited) and the Period November 17, 1999 (Date of Formation)
through September 30, 2004                                                   5-6

Notes to Financial Statements (unaudited)                                   7-13

Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations                                                      14-20

Item 14. Controls and Procedures                                              20

Part II. Other Information

Item 1.  Legal Proceedings                                                    21

Item 4.  Submission of Matters to a Vote of Security Holders                  21

Item 5.  Other Information                                                    21

Item 6.  Exhibits and Reports on Form 8-K                                     21

Signatures                                                                    22


<PAGE>

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, 2003.

                  The results of operations  for the three and nine months ended
September  30, 2004 and 2003 are not  necessarily  indicative of the results for
the entire fiscal year or for any other period.


                                        2

<PAGE>

                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET

                                     ASSETS
                                                                   September 30,
                                                                       2004
                                                                    -----------
                                                                    (Unaudited)
Current Assets:
   Cash                                                             $    98,152
   Loan receivable - former officer/stockholder                          51,221
   Due from related parties                                             192,000
   Prepaid expenses                                                          40
                                                                    -----------
         Total Current Assets                                           341,413

Fixed assets - net                                                       30,914
Investment in joint ventures                                            216,023
Capitalized construction costs                                          170,000
Other assets                                                              1,400
                                                                    -----------
                                                                        418,337
                                                                    -----------
        TOTAL ASSETS                                                $   759,750
                                                                    ===========

                 LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
   Current portion of convertible debtentures/notes                 $   331,500
   Accounts payable                                                     239,011
   Accrued expenses                                                     237,016
   Due to related party                                                 159,295
                                                                    -----------
        Total Current Liabilities                                       966,822
                                                                    -----------
Long Term Liabilities:
   Convertible debtentures/notes                                        517,400
                                                                    -----------
Minority interest in subsidiaries                                       122,218
                                                                    -----------
      TOTAL LIABILITIES                                               1,606,440

Stockholders' Deficiency:
   Common stock $0.0001 par value - authorized
     100,000,000 shares; 14,415,688
     shares issued and outstanding                                        1,442
   Additional paid-in-capital                                         3,351,370
   Deficit accumulated during
     the development stage                                           (4,199,502)
                                                                    -----------
        Total Stockholders' Deficiency                                 (846,690)
                                                                    -----------
        TOTAL LIABILITIES AND
          STOCKHOLDERS' DEFICIENCY                                  $   759,750
                                                                    ===========

           See notes to consolidated unaudited financial statements.

                                       3
<PAGE>

                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                            Period from
                                             Nine Months Ended               Three Months Ended         November 17, 1999
                                                September 30,                   September 30,          (Date of Formation)
                                        ----------------------------    ----------------------------         through
                                            2004            2003            2004            2003        September 30, 2004
                                        ------------    ------------    ------------    ------------    ------------------
Revenue                                 $         --    $         --    $         --    $         --       $         --
                                        ------------    ------------    ------------    ------------       ------------
<S>                                      <C>             <C>             <C>             <C>              <C>
Costs and Expenses
   General and administrative
     expenses                               (865,316)       (805,436)       (258,393)       (241,425)        (2,611,408)
   Compensatory element of
    warrant issuance                      (1,456,200)             --      (1,456,200)             --         (1,456,200)
                                        ------------    ------------    ------------    ------------       ------------
                                          (2,321,516)       (805,436)     (1,714,593)       (241,425)        (4,067,608)
                                        ------------    ------------    ------------    ------------       ------------
   Net loss from operations               (2,321,516)       (805,436)     (1,714,593)       (241,425)        (4,067,608)
                                        ------------    ------------    ------------    ------------       ------------

   Interest expense                          (16,889)        (35,877)         (5,519)         (3,318)           (60,197)
   Minority interest in losses of
     consolidated subsidiaries                38,578              --          13,850              --             38,578
   Equity in losses of joint ventures       (110,275)             --         (36,336)             --           (110,275)
                                        ------------    ------------    ------------    ------------       ------------
                                             (88,586)        (35,877)        (28,005)         (3,318)          (131,894)
                                        ------------    ------------    ------------    ------------       ------------
   Net loss                             $ (2,410,102)   $   (841,313)   $ (1,742,598)   $   (244,743)      $ (4,199,502)
                                        ============    ============    ============    ============       ============
   Loss per common share -
     basic and diluted                  $       0.17    $       0.14    $       0.12    $       0.03
                                        ============    ============    ============    ============
   Weighted average number of
     common shares outstanding-
     basic and diluted                    14,051,148       5,987,573      14,250,963       8,236,079
                                        ============    ============    ============    ============
</TABLE>

           See notes to consolidated unaudited financial statements.

                                       4
<PAGE>

                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    Period
                                                       Nine Months Ended       November 17, 1999
                                                         September 30,        (Date of Formation)
                                                  --------------------------       through
                                                     2004            2003      September 30, 2004
                                                  -----------    -----------  -------------------
<S>                                               <C>            <C>              <C>
Cash flows from operating activities:

   Net loss                                       $(2,410,102)   $  (841,313)     $(4,199,502)
   Adjustment to reconcile net loss to
     net cash used in operating activities:
   Depreciation                                         1,318            798            3,077
   Non-cash compensation                              214,400        260,500          641,412
   Equity in losses of joint ventures                 110,275             --          110,275
   Minority interest in losses of
     consolidated subsidiaries                        (38,578)            --          (38,578)
   Fair market value of warrants                    1,456,200             --        1,456,200
   Bad debt                                                --             --           96,625
   Changes in operating assets
   and liabilities:                                   (37,299)       253,998          403,067
                                                  -----------    -----------      -----------
Net cash used in operating activities:               (703,786)      (326,017)     $(1,527,424)
                                                  -----------    -----------      -----------

Cash flows from investing activities:
   Purchase of fixed assets                                --         (8,792)         (33,992)
   Advances to joint ventures                        (328,905)      (157,432)        (444,014)
                                                  -----------    -----------      -----------
Net cash used in investing activities                (328,905)      (166,224)        (478,006)
                                                  -----------    -----------      -----------

Cash flows from financing activities:
   Proceeds from sale of common stock                 186,250        100,000          339,500
   Proceeds from loans                                363,900             --          904,644
   Repayment of loans                                      --             --         (540,744)
   Proceeds from convertible debt                     485,000             --          735,000
   Proceeds from former officer and stockholder            --        377,504          570,411
   Proceeds from minority interest                    148,000             --          148,150
   Repayment to former officer and stockholder        (56,364)                       (165,379)
   Proceeds from related party                             --         22,000          187,000
   Repayment to related parties                       (10,000)            --          (75,000)
                                                  -----------    -----------      -----------
   Net cash provided by
     financing activities                           1,116,786        499,504        2,103,582
                                                  -----------    -----------      -----------

   Net (decrease) increase in cash                     84,095          7,263           98,152
   Cash - Beginning of period                          14,057          2,871               --
                                                  -----------    -----------      -----------
   Cash - End of period                           $    98,152    $    10,134      $    98,152
                                                  ===========    ===========      ===========
</TABLE>

           See notes to consolidated unaudited financial statements.

                                       5
<PAGE>

                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                              Period
                                                Nine Months Ended        November 17, 1999
                                                  September 30,         (Date of Formation)
                                            ------------------------         through
                                               2004           2003       September 30, 2004
                                            ---------      ---------    -------------------
<S>                                         <C>            <C>              <C>
Non-cash financing activities:
Issuance of common stock for
  promissory note                           $      --      $  40,000        $ 458,630
                                            =========      =========        =========
Offset of note receivable and
  convertible debt in connection
  with termination agreement                $      --      $ 250,000        $ 253,638
                                            =========      =========        =========
Issuance of common stock for debt           $ 330,400      $      --        $ 330,400
                                            =========      =========        =========
Offset of note receivable to
  liquidate loan to officer                 $      --      $      --        $ 350,000
                                            =========      =========        =========
Issuance of common stock for
  investment in unconsolidated subsidiary   $   7,500      $      --        $  15,000
                                            =========      =========        =========
Issuance of common stock in lieu
  of payment of accrued expenses            $      --      $      --        $  93,625
                                            =========      =========        =========
 Forgiveness of debt to former
   shareholder                              $      --      $ 100,000        $ 398,653
                                            =========      =========        =========
Forgiveness of debt from officer
   shareholder                              $      --      $  93,625        $  93,625
                                            =========      =========        =========

Supplementary information:
  Cash paid during year for:
     Interest                               $      --      $      --        $      --
                                            =========      =========        =========
     Income taxes                           $      --      $      --        $      --
                                            =========      =========        =========

Changes in operating assets and
 liabilities consists of:
  (Increase) in loan receivable             $ (51,221)     $      --        $ (51,221)
  Decrease in prepaid expenses                  3,922             --              (40)
  (Increase) decrease in other assets        (170,750)          (650)        (171,400)
  Increase in accounts payable
     and accrued expenses                     180,750        254,648          625,728
                                            ---------      ---------        ---------
                                            $ (37,299)     $ 253,998        $ 403,067
                                            =========      =========        =========
</TABLE>


           See notes to consolidated unaudited financial statements.

                                       6
<PAGE>

                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION

         The  consolidated  balance  sheet as of  September  30,  2004,  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 Company's  consolidated  financial  statements for the period ended
September   30,  2004  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.  At  September  30,  2004
operations  had not yet commenced  and no revenue has been derived;  accordingly
the Company is considered a development stage enterprise.  There is no assurance
the Company will achieve a profitable level of 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.

        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.


                                       7
<PAGE>

         Organization

         The Company was incorporated under the name Delta Mutual, Inc. ("Delta"
or the "Company") on November 17, 1999 in the State of Delaware.  The Company is
a development stage company and at that time prior Company  management  intended
to  provide   mortgage   services  through  the  Internet  to  borrowers  having
substandard credit. Prior management intended to offer varied levels of mortgage
and lending  services  by  capitalizing  on the  popularity  of  Internet  based
financial  services  companies  and  secured  the domain name rights to the name
deltamutual.com.

         During its first year of existence,  prior management  believed that it
would be able to fund the Company's intended  operations through the sale of its
common  stock.  The  Company's  common  stock is quoted on the  Over-the-Counter
Electronic Bulletin Board under the symbol "DLTM". At the time of its formation,
companies with Internet based  businesses were treated  favorably in the capital
markets. In 2000, however, the market for the stock of Internet based businesses
deteriorated  substantially and many such companies went out of business because
they were  unable  to  generate  sufficient  revenues  and were  unable to raise
additional capital.

         From inception through September 30, 2004, the Company raised a limited
amount of capital  through  the sale of common  stock:  during  the period  from
inception  through  December 31, 2003, it raised  $153,250  through such private
placements,  and investments and $186,250 during the nine months ended September
30, 2004.  These funds were not  sufficient to  capitalize  any of the Company's
business plans.

         Prior Operations

         In April 2001, Kelcon,  Inc.  ("Kelcon"),  a company newly organized by
Kenneth A. Martin,  acquired a controlling  interest  (450,000  shares) in Delta
with  a  view  to  acquiring   the  assets  of   Enterprises   Solutions,   Inc.
("Enterprises").  Kelcon's  Delta  shares  were  acquired  from  two of  Delta's
directors, James E. Platek (300,000 shares) and Bonnie Cunningham (150,000), for
which Kelcon paid a total of $450,000.  Mr.  Martin paid $75,000 of the purchase
price for Delta's shares,  and an overseas investor who had previously  invested
in Enterprises paid $375,000,  for which Kelcon issued a 20% promissory note due
October 31,  2001.  The  investor  had the right to convert  $100,000  principal
amount of the note into 100,000 shares of Kelcon's Delta stock.  As part of this
transaction,  Mr. Platek,  Ms.  Cunningham,  and Delta's third director,  Robert
Franz,  resigned and appointed Mr. Martin as Delta's sole  director.  Mr. Martin
then  appointed  Mr.  Sailor  H.  Mohler  and Mr.  Phillip  Chung as  additional
directors.

         In May 2000, prior Company management entered into an Agreement of Sale
pursuant to which Delta was to acquire  substantially all Enterprises' assets in
exchange for  approximately  11,068,307  shares of Delta's common stock. In June
2001,  prior  Company  management  prepared  and filed with the  Securities  and
Exchange  Commission  a  registration  statement  for the shares to be issued to
Enterprises' stockholders, with a view to consummating the acquisition.


                                       8
<PAGE>

         Due to the death of Enterprises' president,  the Agreement of Sale with
Enterprises  was  terminated  and  the  Company's   registration  statement  was
withdrawn.  Shortly  thereafter,  Messrs.  Sailor H.  Mohler and  Phillip  Chung
resigned as directors of the Company.

         In August,  2002, prior Company management  executed a letter of intent
to merge with Helvetia Pharmaceuticals, Inc. After a due diligence period, prior
Company  management  terminated  negotiations and that proposed  transaction was
never consummated.

         Change of Control

         In November,  2002, Kelcon, Inc. contracted for the sale of its 450,000
Company  common  shares to Mr. Gary T.  Robinson,  a New York  businessman,  for
$275,000 in a private  transaction.  This  transaction  represented a "Change in
Control"  for the  Company.  As part of this  transaction,  on March  10,  2003,
Kenneth A. Martin  appointed  Mr. Gary  Robinson and Mr. Peter Russo to serve as
members of the Board of Directors.  On March 11, 2003 Mr. Robinson was appointed
as Chief Executive Officer and Chairman of the Board of Directors, and Mr. Russo
was appointed as President and  Secretary.  Thereafter,  on March 11, 2003,  Mr.
Martin resigned as an officer and director of the Company.  On June 11, 2003 Mr.
Robinson resigned as Chief Executive Officer and Mr. Russo was appointed to that
office. On November 28, 2003 Mr. Robinson resigned as a director.

Business Plan

         Since the change in control, new Company management has embarked upon a
new mission and strategic direction,  by establishing joint venture subsidiaries
and a limited partnership, primarily to establish business operations focused on
providing  construction  and  environmental  technologies and services in Puerto
Rico, the Middle East, Africa and the Far East.

Puerto Rico

         The Company  formed a majority  owned  joint  venture in Puerto Rico to
manage the  construction  and  related  activities  required to build low income
homes in Puerto  Rico  under the  Federal  Government's  Section  124 low income
housing program. In December 2003, the Company secured the purchase rights to 36
acres that are  designated  Section 124 eligible.  Approximately  270 low-income
homes are planned for construction on this property.

Middle East, Africa and Far East

         The Company  intends to establish  local  operating  joint  ventures in
specific  countries in the Middle East and the Far East primarily  aimed at soil
and water reclamation.  The initial step of forming a strategic alliance leading
to a joint  venture  has been  established  with a local  organization  in Saudi
Arabia,  and in  Indonesia.  The Company  intends to provide only  environmental
remediation  services  in  Africa  as these  projects  are  primarily  funded by
international financial institutions.


                                       9
<PAGE>

Central and Eastern Europe

         The Company has 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 if current  circumstances  change. While the potential
for significant  environmental  remediation  activity remains,  local government
priorities  and hard  currency  shortages  relegate  these  activities  to a low
status.

SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION

         The  consolidated  financial  statements  include  the  accounts of the
Company and its  subsidiaries.  All intercompany  transactions and balances have
been eliminated.

         INVESTMENTS

     The Company has investments of 50% or less in associated companies that are
accounted  for under the equity  method and are included in  Investment in Joint
Ventures on the Company's  balance sheet at September 30, 2004.  Investments  in
associated   companies  where  the  Company  has  a  controlling   interest  are
consolidated with the Company's operations unless otherwise disclosed.

         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.  There were no  potential  common  shares  outstanding  as of
September 30, 2004 and 2003.

         REVENUE RECOGNITION ON CONSTRUCTION CONTRACTS

         Revenue and profits in  construction  contracts are recorded  under the
percentage of completion  method.  Progress toward  completion is measured using
the cost to cost method. Under the cost to cost method, revenues and profits are
recognized based on the ratio that costs incurred bear to total estimated costs.
This  method is subject to  physical  verification  of actual  progress  towards
completion.


                                       10
<PAGE>

         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 earnings and earnings per share as if the  fair-value-based  method of
accounting  had  been  applied  as  required  by  SFAS  No.123  "Accounting  for
Stock-Based Compensation-Transition and Disclosure".

         In  December  2002,  the FASB  issued  SFAS No.  148,  "Accounting  for
Stock-Based   Compensation-Transition   and  Disclosure  an  amendment  of  FASB
Statement No. 123". SFAS No. 148 provides  alternative methods of transition for
a voluntary  change to the fair value based method of accounting for stock-based
employee  compensation.  It also requires  disclosure in both annual and interim
financial  statements  about the method of accounting for  stock-based  employee
compensation and the effect of the method used on reported results. SFAS No. 148
is effective for annual and interim  periods  beginning after December 15, 2002.
The Company will continue to account for stock-based employee compensation under
the  recognition  and  measurement  principle  of APB Opinion No. 25 and related
interpretations.

         The Company has adopted the disclosure-only  provisions of Statement of
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation" (SFAS No.123) for stock options issued to employees.



                                       11
<PAGE>

         The Company is also  authorized  to make stock awards to its  employees
from its 2001  Employee  Stock Option Plan.  The Company has adopted the expense
provisions  of SFAS No. 123 in the  issuance of stock  awards.  Stock awards are
expensed at the time of issuance as the common stock issued has no  restrictions
to the  employees.  The Company  issued stock awards to two  employees  totaling
179,000  shares from the Plan during 2004. The shares were issued at fair market
value for compensation due to the employees.  The Company recorded  compensation
expense of $14,000 and is included in the Company's  statement of operations for
the nine months ended September 30, 2004.

         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 nine months ended
September 30, 2004 and 2003,  the Company  issued  1,794,500 and 840,000  common
shares,  respectively,   and  recorded  compensation  expense  of  $214,400  and
$260,500, respectively, in connection with the issuance of these shares.

         The Company also granted  6,630,000  warrants to the various lenders to
acquire the Company's  common stock. The warrants are exercisable at a price per
share of $0.10  per  share.  The  warrant  may be  exercised  anytime  after the
issuance. The warrants expire March 31, 2006.
         The fair value of the 6,630,000  warrants amounts to $1,456,200 and was
charged  to  operations  and  is  included  in   compensatory   element  in  the
accompanying  statement of  operations  for the nine months ended  September 30,
2004.

         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.

         RECLASSIFICATIONS

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


                                       12
<PAGE>

2. 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,  in the amount of $300,000.  The credit agreement bears interest at
the prime rate.  Robinson  advanced the Company  $515,383 and the Company repaid
Robinson $109,515 through September 30, 2004.

         Robinson was a guarantor on a note receivable due the Company from CEVA
International Inc. ("CEVA"). CEVA did not pay the note and the Company exercised
its right by  reducing  the amount  owed on the  revolving  line of credit  with
Robinson in the amount of $250,000.

         In March 2003,  the Company  entered into a consulting  agreement  with
M.U.R.G. and advanced M.U.R.G.  $100,000 against future compensation in the form
of a  promissory  note.  The project  did not go forward  and on June 16,  2003,
Robinson  agreed to assume  the  promissory  note from  M.U.R.G.  and reduce the
amount due him.

         On March 4, 2004,  the Company paid $121,508 to David Green  ("Green"),
which  constituted full and complete  repayment of a $100,000 loan made by Green
to  Robinson.  The loan was  secured by a pledge of Delta  Mutual,  Inc.  common
stock. The Company offset the payment to Green against the amount due Robinson.

         After adjustments for expense  reimbursements  due Robinson and offsets
as noted above, Robinson owed the Company $51,221 as of September 30, 2004.

         The Company  recorded  interest expense of $7,986 on the revolving line
of credit for the period November 17, 1999 (date of formation) through September
30, 2004.  No interest was recorded  during the nine months ended  September 30,
2004.

3. 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  majority  owner of a
limited  partnership,  Delta Development  Partners,  LP, that holds the 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 and nine months ended September 30,
2004.

         From  January 12, 2004 through  September  30,  2004,  Neil Berman,  an
investor,  purchased  a 25%  interest  in  Delta  Development  Partners,  LP for
$148,000.


                                       13
<PAGE>

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. As of December
31, 2003 the Company  expensed  $35,000  that was advanced to the Hi-Tech and is
included in the Company's  statement of operations  for the year ended  December
31, 2003.  In 2004,  the Company was unable to make all the payments due per the
agreement but Hi-Tech has indefinitely  extended the date of the payments. As of
September  30,  2004,  the Company  paid  $136,905  to the joint  venture and is
currently  obligated  to pay  the  joint  venture  an  additional  $155,595.  In
addition, the Company loaned the joint venture $192,000.

         On January 14, 2004, Delta and Hi-Tech agreed to each sell 75 shares of
the joint venture to Ali Razmara, representing a ten (10%) percent interest, for
$2. The transaction became effective July 14, 2004.

         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.

         For the nine months ended  September 30, 2004,  the Company  recorded a
loss of $110,277 from the joint venture.

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 $15,100 in cash,
the issuance of 100,000  shares of the Company's  common stock valued at $15,000
and a cash  obligation  of $3,700 to the joint  venture which is included in the
Due to Related  Party amount on the  Company's  balance  sheet at September  30,
2004.

d) On April 25, 2003, the Company entered into a letter of intent with Ms. Jamie
Burrows and Burrows  Consulting,  Inc., a Texas based corporation  (collectively
referred to as "Burrows")  to form a joint venture  company to be known as Delta
Specialty Services based in Houston,  Texas and was to engage in providing waste
remediation  technologies  and services on a project  basis to the United States
Government,  foreign  governments and their  respective  departments,  agencies,
political  sub-divisions  as well as to private  entities around the world.  The
funding  commitments were not accomplished on the established  timetable and the
joint venture has not commenced  operations.  The Company  expensed $75,000 that
had  been  advanced  to the  joint  venture  and is  included  in the  Company's
statement of operations for the year ended December 31, 2003.


                                       14
<PAGE>

         The following  represents a schedule of investments as of September 30,
2004:

                        Delta-Envirotech, Inc.    $ 182,223
                        Delta TP Mediu               33,800
                                                  ---------
                                                  $ 216,023
                                                  =========

4.    CONVERTIBLE DEBENTURES/NOTES

a)    The Company  entered into several  agreements with various lenders for the
      issuance of $331,500 of the Company's convertible debentures due September
      20, 2006. The debentures bear interest of 6% per annum and are convertible
      into the Company's  common stock at an initial  conversion  price of $0.05
      per share.

b)    The Company issued a convertible note to a related party for $37,500 which
      is due January 16,  2007.  The note bears  interest of 4% per annum and is
      convertible into the Company's common stock at an initial conversion price
      of $0.05 per share.  The Company  issued a  convertible  note to a related
      party for $157,000 which is due December 31, 2006. The note bears interest
      of 4% per annum and is convertible  into the Company's  common stock at an
      initial  conversion  price  of  $0.05  per  share.  The  Company  issued a
      convertible  note to a  related  party for  $193,740  which is due May 12,
      2006. The note bears interest of 4% per annum and is convertible  into the
      Company's common stock at an initial conversion price of $0.125 per share.
      The Company issued a convertible note to the spouse of a related party for
      $129,160  which is due May 12,  2006.  The note bears  interest  of 4% per
      annum and is  convertible  into the  Company's  common stock at an initial
      conversion price of $0.125 per share.

c)    As of September 30, 2004,  the holders of the  convertible  debentures and
      convertible notes can convert the  debentures/notes  into 9,213,200 shares
      of the Company's common stock.


5.   ACCRUED EXPENSES

     Accrued expenses consist of the following:

                                                September 30,
                                                     2004
                                                -------------
                Professional fees                $    8,058
                Interest expense                      9,792
                Payroll expense                     202,574
                Payroll tax expense                  16,594
                                                 ----------
                                                 $  237,018
                                                 ==========


                                       15
<PAGE>

6. LOANS TO 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 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, has informed the Company
that, by accepting  repayment,  he does 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  that he has received  from the  Company,  shares of common
stock as additional interest.

         The  Company  recorded  interest  expense of $1,599 for the nine months
ended  September  30, 2004 and $3,199 for the period  November 17, 1999 (date of
formation) through September 30, 2004.

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 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 in connection
with the issuance of the shares.

         The Company did not pay the  outstanding  balance on the maturity  date
and the amount of $12,000 was due as of December 31, 2003.  In  accordance  with
the  agreement the Company must pay monthly  interest of one (1%) to Fasci.  The
Company recorded  interest expense in the amount of $240 and $1,080 for the nine
months  ended  September  30, 2004,  and  November 17, 1999 (date of  formation)
through  September  30,  2004,  respectively.  On February  27, 2004 the Company
issued  140,000 common shares in repayment of the loan plus interest and penalty
amounting to $18,705.

c. On December 30, 2003,  the Company  borrowed  $50,000 from Edward  Tuccio,  a
shareholder  of the Company.  The note is due  December 29, 2004,  interest at 6
(6%) per annum.  On February 11, 2004,  the Company issued Tuccio 400,000 shares
of the Company's  common stock which  represented  the full payment of this loan
plus  interest  amounting  to  $168,  which  is  included  in the  statement  of
operations  for the nine  months  ended  September  30,  2004 and for the period
November 17, 1999 (date of formation) through September 30, 2004.


                                       16
<PAGE>

d. On  December  11,  2003,  the Company  borrowed  $50,000  from Neil Jones,  a
shareholder of the Company.  The note was due December 16, 2004 with interest at
six (6%) per annum. On January 24, 2004, the Company issued Jones 400,000 shares
of the Company's  common stock which  represented  the full payment of this loan
plus interest.  The Company  recorded  interest  expense of $63 and $195 for the
nine months ended  September 30, 2004 and for the period November 17, 1999 (date
of formation) through September 30, 2004, respectively.

e. The Company  borrowed  $322,900 from Neil Berman,  a shareholder,  and Sophie
Angelastri,  the  assignee of a  shareholder  of the Company,  on various  dates
during the period ending June 30, 2004. The loans bear interest at four (4%) per
annum and are due May 2006, and are convertible  into 2,583,200 shares of common
stock of the  Company at a  conversion  price of $0.125 per share.  The  Company
recorded interest expense of $3,074 for the nine months ended September 30, 2004
and for the period November 17, 1999 (date of formation)  through  September 30,
2004.

f. The  Company  borrowed  $157,000  from  Neil  Berman , a  shareholder  of the
Company,  of which  $41,000  was  received  as of June 30,  2004 and the balance
received in July, 2004. The note bears interest at 4% and principal and interest
are due  December  31,  2006,  and the  principal  amount  is  convertible  into
3,140,000 shares of the Company's common stock at a conversion price of $.05 per
share.

7. MINORITY INTERESTS

         Minority  interests  primarily  consists of a twenty-five (25%) percent
ownership  interest in Delta  Development  Partners,  L.P.  and a fifteen  (15%)
percent ownership  interest in Delta Developers 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 nine months ended
September 30, 2004.  The amount on the Company's  balance sheet  represents  the
minority interests as of September 30, 2004.

         The  following  represents  a  schedule  of  minority  interests  as of
September 30, 2004:

                Delta Development Partners L.P.      $ 144,384
                Delta Developers Corp                  (22,166)
                                                     ---------
                                                     $ 122,218
                                                     =========

8. STOCKHOLDER'S DEFICIENCY

a. The former president of the Company  purchased 300,000 shares of common stock
for $33 in November of 1999.  Such shares were issued  without  registration  in
reliance on an exemption in federal  security laws that permit issuance of stock
up to $1 million without registration of the securities.


                                       17
<PAGE>

b. In April 2001, Kelcon, Inc., a Delaware corporation, purchased 450,000 shares
of common stock from former officers of the Company,  in a private  transaction,
effectively changing the ownership of the Company.

c. During  November 2002,  Gary Robinson  contracted for the  acquisition of the
controlling equity position from Kelcon, Inc. in a private transaction.

d. On December 11, 2002,  Cyberlinx Inc.  purchased 300,000 restricted shares of
the Company's common stock for $30,000 at $.10 per share.

e. On January 12, 2003,  the Company  entered into an agreement with Ken Martin,
the  Company's  former  controlling  shareholder,  to  compensate  him for  past
services  rendered  to the  Company in the amount of  $12,454,  all of which was
accrued at December 31, 2002.  The Company issued 30,000 shares of the Company's
common stock on Form S-8 registration statement in full payment of the Company's
debt.

f. On February 4, 2003,  the Company and J. Dapray  Muir,  Esq. ( the  Company's
previous attorney) entered into an agreement to compensate him for past services
rendered to the  Company in the amount of  $34,669,  all of which was accrued at
December 31, 2002.  The Company  issued 50,000  shares of the  Company's  common
stock on a Form S-8  registration  statement  in full  payment of the  Company's
debt.

g. On  February  3, 2003,  the  Company and Peter  Russo,  an  executive  of the
Company,  entered into an agreement to compensate him for past services rendered
to the Company in the amount  $20,000,  all of which was accrued at December 31,
2002. The Company issued 40,000 shares of the Company's common stock on Form S-8
registration statement in full payment of the Company's debt

h. On February 10, 2003, the Company and Jerome Kindrachuk,  an executive of the
Company,  entered into an agreement to compensate him for past services rendered
to the  Company in the amount of  $20,000,  all of which was accrued at December
31, 2002. The Company  issued  200,000  shares of the Company's  common stock in
full payment of the Company's debt in February 2003.

i. On February 24, 2003,  the Board of Directors  effected a forward stock split
of five for one.  All  references  to common  stock after that date  reflect the
forward stock split.

j. On April 29, 2003, the Company and Peter Russo, the president of the Company,
entered into an agreement to compensate him in recognition of his commitment for
services in the amount of  $22,500.  The Company  issued  100,000  shares of the
Company stock in full payment of this debt.

k. On April 29,  2003,  the Company and Jerry  Kindrachuk,  an  executive of the
Company,  entered into an  agreement to  compensate  him in  recognition  of his
commitment  for services in the amount of $22,500.  The Company  issued  100,000
shares of the Company stock in full payment of this debt.


                                       18
<PAGE>

l. On April 29, 2003 the Company and Steven L. Gray,  entered  into an agreement
to  compensate  him for past  services  rendered to the Company in the amount of
$50,000.  The Company issued 100,000 shares of the Company stock in full payment
of this debt.

m. On April 29, 2003, the Company and Kevin  Forcier,  entered into an agreement
to  compensate  him for past  services  rendered to the Company in the amount of
$10,000.  The Company  issued 20,000 shares of the Company stock in full payment
of this debt.

n.  On  April  29,  2003,  the  Company  and T&T  Asset  Management  of  Zurich,
Switzerland,  entered  into an agreement to  compensate  them for past  services
rendered in the amount of  $50,000.  The Company  issued  240,000  shares of the
Company stock in full payment of this debt.

o. On June 30 and July 23,  2003,  the  Company and Michael  Kahn  entered  into
agreements  to compensate  him for past services  rendered to the Company in the
amount of $16,500 and $16,500 respectively.  The Company issued 80,000 shares of
the Company stock in full payment of this debt.

p. On July 1, 2003, the Company entered into an agreement with Gary Robinson,  a
stockholder, former CEO and former chairman, to compensate him for past services
rendered  to the  Company  in the  amount  of  $93,625,  the  fair  value of the
services.  The Company issued  280,000  shares of the Company's  common stock on
Form S-8 registration statement in full payment of the Company's debt.

q. On August 8, 2003 the Company and Joseph Tomasek entered into an agreement to
compensate him for past services rendered in the amount of $40,000.  The Company
issued 200,000 shares of the Company stock in full payment of this debt.

r. On August 8, 2003,  the Company and Peter Hallam entered into an agreement to
sell 100,000 shares of the Company's common stock for $50,000.

s. On August 11, 2003,  the Company and Joy Miller entered into an agreement for
compensation  of services  to the Company in the amount of $43,750.  The Company
issued 100,000 shares of the Company stock in full payment of this debt.

t. On August 22, 2003, the Company and Michael Kahn entered into an agreement to
sell 250,000 shares of the Company common stock for $50,000.

u. On October 21, 2003, the Company entered into agreements for compensation for
services  with Nela  Pavaliou and Business  Centres  International,  Inc. in the
amount of $1,750 for each.  The Company  issued  50,000  shares of the Company's
common stock to each in full payment of this debt.

v. On November 15, 2003,  the Company and Neil Berman  entered into an agreement
to sell 100,000 shares of the Company common stock for $12,500.

         On  November  15 and  December  15,  2003 the  Company  and Neil Berman
entered into consulting  agreements for  compensation  and consulting for $8,500
and $850 respectively. The Company issued 100,000 and 10,000 shares respectively
in full payment of this debt.


                                       19
<PAGE>

w. 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 the Company's common stock in full payment of this debt.

x. In February 2004, the Company sold 300,000 shares of restricted  common stock
for  $37,500,  valued  at $.125  per  share,  fair  market  value at the time of
issuance.

y. 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 the Company common stock in connection with
these agreements.

z. 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 the Company's
common stock in full payment of this debt.

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

bb. 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 the Company common
stock in connection with this agreement.

cc. 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 the Company common stock in
connection with this agreement.

dd. 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 the Company common stock in
connection with this agreement.

ee. 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 the  Company  common  stock  in
connection with this agreement.

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

gg.  During  the second  quarter  of 2004 the  Company  sold  840,000  shares of
restricted  common  stock for  $105,000  valued at $.125 per share,  fair market
value at the time of issuance.


                                       20
<PAGE>

hh. In August 2004,  pursuant to a placement  agent agreement dated May 3, 2004,
the  Company  issued  250,000  shares  of  Company  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.

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

jj. On  September  17,  2004,  pursuant  to an amended and  restated  consulting
services agreement dated September 7, 2004, the Company issued 100,000 shares of
Company  common  stock to Basic  Investors,  Inc.  to  compensate  them 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 Company common stock
that was issued to Basic in April 2004 in consideration of services  rendered to
the Company in the amount of $72,000.

kk. On September 10, 2004,  the Company and B C N  Investments,  L.L.C.  entered
into an agreement to compensate them 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 the Company's  common stock in  connection  with this
agreement.

ll. On September 20, 2004, the Company and Commonwealth  Holdings,  Inc. entered
into an agreement to compensate them 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 the Company's  common stock in  connection  with this
agreement.

mm.  During the third  quarter  of 2004,  the  Company  sold  350,000  shares of
restricted common stock for $43,750 valued at $.125 per share, fair market value
at the time of issuance..

9. COMMITMENTS AND CONTINGENCIES

a. Executive Employment Agreement

         Effective  March 11,  2003,  the  Company  entered  into an  employment
agreement  with Peter  Russo for three  years with a renewal  option upon mutual
agreement. The agreement compensates Mr. Russo $10,800 per month.  Additionally,
Mr. Russo will  receive an  incentive of 1.5% of adjusted net profits  beginning
with the year  2003 and each  fiscal  year  thereafter  during  the term of this
agreement,  payable in stock.  This agreement and Mr. Russo's  employment may be
terminated by the Company at its  discretion at any time after the initial term,
provided that the Mr. Russo be paid six months of his base  compensation then in
effect.  Effective  June 11, 2003,  Mr. Russo was appointed  president and chief
executive  officer  and in  recognition  of his new  responsibilities  agreed to
compensation of $15,000 per month effective July 1, 2003. On September 20, 2004,
Mr.  Russo's  employment  agreement  was  amended by mutual  agreement,  and his
monthly  salary was reduced to $6,500 for the entire year 2004. In addition,  he
will be eligible for any incentive  compensation  program for senior  executives
that is established by the board of directors.


                                       21
<PAGE>

b.       License Agreements

(1) In April 2003,  the Company  entered into a License  Agreement (the "License
Agreement") with Joseph Friedman and Sons International,  Inc.  ("Friedman") for
the territory of the Former Soviet Union.  The License  Agreement was predicated
upon  technologies  that were assigned to Delta Mutual,  Inc. under an agreement
with the technology  owner. Due to actions taken against the technology owner by
its creditors  during the latter part of 2003, it lost its ability to assign the
technologies to the Company. Accordingly, the Company was unable to convey these
rights to Friedman.

         The Company and Friedman  executed an Addendum to the License Agreement
(the  "Addendum")  in April 2003 that granted  Friedman  shares of the Company's
common stock and a seat on the Company's board of directors.  The Company issued
Friedman  288,368  shares of common  stock  representing  a value of  $40,000 in
consideration of Friedman executing and delivering of the license agreement.  In
November 2003,  Friedman made a claim for additional shares of stock, citing the
antidilution  language in the Addendum.  Friedman also required that its nominee
be appointed to the Board of Directors.

         In light of the events that have  effected the License  Agreement,  the
Company  notified  Friedman  on March  30,  2004,  as  provided  in the  License
Agreement,  terminating the License Agreement and the Addendum.  The Company has
taken the position  that the  termination  of the License  Agreement  eliminates
Friedman's right to a board seat.

         The Company has agreed to a settlement amount to be paid to Friedman in
settlement  of its claims  against the  Company,  and  expects to  conclude  the
settlement in the near future.

(2) The  Company  and  Delta  Envirotech  ("Licensee")  entered  into a  license
agreement permitting the licensee to utilize any and all technologies,  licenses
and  permits  acquired  by the  Company  to  develop  environmental  remediation
projects.  The license agreement  included the Middle East,  Africa, and the Far
East.  The  current  license  agreement  lapsed and a new license  agreement  is
pending.

c.       Financing Agreement

         On July 8, 2003,  the  Company  entered  into an  agreement  with Rolan
Jansen and Ivano  Angelastri  ("J&A") to  introduce  and arrange  equity debt or
other financing  agreements  with strategic  partners,  for the Company,  or its
affiliates  for a  finders  fee of 6.0%  to  Rolan  Jansen  and  2.0%  to  Ivano
Angelastri of the gross  proceeds of the equity  financing.  For the nine months
ended  September  30,  2004,  no  financing  was  introduced  to the  Company in
connection with this agreement.


                                       22
<PAGE>

9.       NEW FINANCIAL ACCOUNTING STANDARDS

         In June 2002,  the FASB  issued  SFAS No.  146,  "Accounting  for Costs
Associated with Exit or Disposal  Activities." This Statement requires recording
costs  associated  with exit or disposal  activities at their fair values when a
liability has been incurred.  Under previous  guidance,  certain exit costs were
accrued upon  management's  commitment to an exit plan. The Company adopted SFAS
No. 146 on January 1, 2003. The adoption of SFAS No. 146 did not have a material
impact on the Company's result of operations or financial position.

         In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of Statement
No. 133 on Derivative Instruments and Hedging Activities." This statement amends
and clarifies  financial  accounting and reporting for  derivative  instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging  activities  under FASB  Statement No. 133,  "Accounting  for Derivative
Instruments and Hedging  Activities."  This Statement is effective for contracts
entered  into or modified  after June 30,  2003,  and for hedging  relationships
designated  after  June 30,  2003.  Adoption  of this  statement  did not have a
material impact on the Company's results of operations or financial position.

         In November 2002, the FASB issued FASB  Interpretation No. 45 (FIN 45),
Guarantor's  Accounting and Disclosure  Requirements  for Guarantees,  Including
Indirect  Guarantees  of  Indebtedness  of Others,  and  interpretation  of FASB
Statements No. 5, 57,and 107 and Rescission of FASB  Interpretation  No. 34. FIN
45  clarifies  the   requirements  of  FASB  Statement  No.  5,  Accounting  for
Contingencies,  relating to the  guarantor's  accounting for, and disclosure of,
the issuance of certain types of guarantees.  This interpretation clarifies that
a guarantor  is required to  recognize,  at the  inception  of certain  types of
guarantees,  a  liability  for the fair value of the  obligation  undertaken  in
issuing  the  guarantee.   The  initial   recognition  and  initial  measurement
provisions of this  Interpretation  are  applicable  on a  prospective  basis to
guarantees  issued or modified  after  December  31, 2002,  irrespective  of the
guarantor's fiscal year-end. The disclosure  requirements in this interpretation
were  effective for financial  statements  of interim or annual  periods  ending
after  December 15,  2002.  The Company  adopted FIN 45 on January 1, 2003.  The
adoption of FIN 45 did not have a material  impact on the  Company's  results of
operations or financial position.

         In January 2003, the FASB issued FIN No. 46,  Consolidation of Variable
Interest Entities.  In December 2003, the FASB issued FIN No. 46 (Revised) ("FIN
46-R") to address  certain FIN 46  implementation  issues.  This  interpretation
requires that the assets,  liabilities,  and results of activities of a Variable
Interest  Entity ("VIE") be  consolidated  into the financial  statements of the
enterprise  that has a  controlling  interest in the VIE. FIN 46R also  requires
additional  disclosures by primary  beneficiaries and other significant variable
interest holders. For entities acquired or created before February 1, 2003, this
interpretation  is  effective  no later  than the end of the  first  interim  or
reporting  period  ending after March 15, 2004,  except for those VIE's that are
considered to be special  purpose  entities,  for which the effective date is no
later than the end of the first interim or annual  reporting period ending after
December 15, 2003. For all entities that were acquired subsequent to January 31,
2003, this  interpretation is effective as of the first interim or annual period
ending after  December 31, 2003.  The adoption of FIN 46 did not have a material
impact on the Company's results of operations or financial position.


                                       23
<PAGE>

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity." SFAS
No.  150  clarifies  the  accounting  for  certain  financial  instruments  with
characteristics   of  both  liabilities  and  equity  and  requires  that  those
instruments be classified as  liabilities  in statements of financial  position.
Previously,  many of those financial instruments were classified as equity. SFAS
No. 150 is effective for financial  instruments  entered into or modified  after
May 31, 2003,  and  otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. The adoption of the provisions of SFAS No.
150 did not have a material impact on the Company's financial position.

         In December  2003,  the FASB issued SFAS No. 132  (Revised)  ("SFAS No.
132-R"),   "Employer's   Disclosure  about  Pensions  and  Other  Postretirement
Benefits." SFAS No. 132-R retains  disclosure  requirements of the original SFAS
No. 132 and requires  additional  disclosures  relating to assets,  obligations,
cash flows,  and net periodic benefit cost for defined benefit pension plans and
defined  benefit post retirement  plans.  SFAS No. 132-R is effective for fiscal
years ending  after  December 15,  2003,  except that  certain  disclosures  are
effective  for  fiscal  years  ending  after  June  15,  2004.   Interim  period
disclosures are effective for interim periods beginning after December 15, 2003.



                                       24
<PAGE>

ITEM 6. 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 the 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.

GENERAL

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

RESULTS OF OPERATIONS

During the fiscal year ended December 31, 2003 we incurred a net loss of
$1,249,509, because we had no revenue to offset operating expenses. During the
fiscal year ended December 31, 2002 we incurred a net loss of $325,384 that was
primarily attributable to bad debts in the aggregate amount of $96,625,
consulting expenses of approximately $71,000 and professional fees in the
approximate amount of $114,500. From inception (November 17, 1999) to December
31, 2003, we had a net loss of $1,789,400. For the nine months ended September
30, 2004, we incurred a net loss of $2,410,102.

The Independent Auditors' Report and Note 1 of the Notes to Financial Statements
accompanying this report state 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.

2004 COMPARED TO 2003

The net loss increased from approximately $841,313 for the nine months ended
September 30, 2003 to approximately $2,410,102 for the nine months ended
September 30, 2004. The items of significant increase or decrease in the nine
months ended September 30, 2004 over the comparable period of the prior year
were $1,456,200 compensatory stock expense resulting from the issuance of
warrants to purchase an aggregate of 6,630,000 of our common stock, as compared
with no such expense in 2003, an increase in general and administrative expense
from approximately $805,436 in 2003 to approximately $865,316 for the nine
months ended September 30, 2004, and a decrease in interest expense from
approximately $35,873 in 2003 to approximately $16,889 for the nine months ended
September 30, 2004.

The net loss increased from approximately $244,743 for the three months ended
September 30, 2003 to approximately $1,742,598 for the three months ended
September 30, 2004. The items of significant increase or decrease in the three
months ended September 30, 2004 over the comparable period of the prior year
were $1,456,200 compensatory stock expense resulting from the issuance of
warrants to purchase an aggregate of 6,630,000 shares of our common stock, as
compared with no such expense in 2003,an increase in general and administrative
expense from approximately $241,425 in 2003 to approximately $258,393 for the
three months ended September 30, 2004, and an increase in interest expense from
approximately $3,318 in 2003 to approximately $5,519 for the three months ended
September 30, 2004.

                                       25
<PAGE>

PLAN OF OPERATION

Since the Change in Control, new Company management has embarked upon a new
mission and strategic direction, by establishing joint venture subsidiaries and
a limited partnership, primarily to establish business operations focused on
providing construction and environmental technologies and services in Puerto
Rico, the Middle East, Africa and the Far East.

Puerto Rico
The Company formed a majority owned joint venture in Puerto Rico to manage the
construction and related activities required to build low income homes in Puerto
Rico under the Federal Government's Section 124 low income housing program. In
December 2003, the Company secured the purchase rights to 36 acres that are
designated Section 124 eligible. Approximately 270 low-income homes are planned
for construction on this property. The necessary building permits have been
submitted for approval and a real estate agency has been hired to sell the homes
planned for construction.

Middle East, Africa and Far East
We intend to establish local operating joint ventures in specific countries in
the Middle East and the Far East primarily aimed at soil and water reclamation.
The initial step of forming a strategic alliance leading to a joint venture has
been established with a local organization in Saudi Arabia and Indonesia. The
Company intends to provide environmental remediation services only in Africa as
these projects are primarily funded by international financial institutions.

Central and Eastern Europe
The Company has 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 if current circumstances change. While the potential for
significant environmental remediation activity remains, local government
priorities and hard currency shortages relegate these activities to a low
status.

We are currently dependent on equity investments 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. Due to the fact that we have limited operations at this
time, it is anticipated that our cash requirements will be limited, and that all
necessary capital, to the extent required, will be provided by investors. We
estimate that we will require approximately $400,000 in working capital for
Puerto Rico, and $637,000 for our environmental activities in the Middle East
and Indonesia. We anticipate that we will be required to raise capital in the
approximate amount of $1,800,000 in the next 12 months in order to continue to
fund our limited operations and to finance our planned business operations.

LIQUIDITY

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

At December 31, 2003, we had a working capital deficit of $623,423, and at
September 30, 2004 we had a working deficit of $ 625,409, as compared with a
working capital deficit of $411,625 at September 30, 2003. The increase in our
working capital deficit in 2003 is a result of the net loss incurred during the
year ended December 31, 2003 and the nine month period ended September 30, 2004.
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.

In 2003, we raised $162,500 of equity capital, through the sale of 550,000
shares of common stock. In addition, we borrowed $100,000 from our Former Chief
Executive Officer in March 2003 to make a payment of an identical amount to a
consultant. On June 30, 2003, the Former Chief Executive Officer agreed to
release the Company from the note and assume the responsibility for recovering
the amount paid to the Consultant.

In the nine months ended September 30, 2004, we raised $186,250 of equity
capital from private investors through the sale of common stock and $484,900
through the issuance of convertible notes to private investors.

                                       26
<PAGE>

ASSETS

At December 31, 2003, we had total assets of $84,702, and at September 30, 2004,
we had total assets of $759,750, as compared to total assets of $466,210 at
September 30, 2003. The increase in assets as of September 30, 2004, was due to
an increase in cash, an increase in fixed assets, an investment in joint
ventures, and capitalized construction costs.

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 effect 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, 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.

Other Matters

Accounting Pronouncements

In August 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations". SFAS No. 143 addresses financial accounting and reporting for
obligations and costs associated with the retirement of tangible long-lived
assets. The Company adopted SFAS 143 on January 1, 2003. The adoption of SFAS
No.143 did not have a material impact on the Company's results of operations or
financial position.

In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections".
This statement eliminates the automatic classification of gain or loss on
extinguishment of debt as an extraordinary item of income and requires that such
gain or loss be evaluated for extraordinary classification under the criteria of
Accounting Principles Board No. 30 "Reporting Results of Operations". This
statement also requires sales-leaseback accounting for certain lease
modifications that have economic effects that are similar to sales-leaseback
transactions, and makes various other technical corrections to existing
pronouncements. This statement will be effective for the Company for the year
ending December 31, 2003. Management believes that adopting this statement will
not have a material effect on the Company's results of operations or financial
position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." This Statement requires recording costs
associated with exit or disposal activities at their fair values when a
liability has been incurred. Under previous guidance, certain exit costs were
accrued upon management's commitment to an exit plan. The Company adopted SFAS
No. 146 on January 1, 2003. The adoption of SFAS No. 146 did not have a material
impact on the Company's result of operations or financial position.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No. 123".
SFAS No. 148 provides alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee
compensation. It also requires disclosure in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. SFAS No. 148 is effective
for annual and interim periods beginning after December 15, 2002. The Company
will continue to account for stock-based employee compensation under the
recognition and measurement principle of APB Opinion No. 25 and related
interpretations. The Company complied with the additional annual and interim
disclosure requirements effective December 31, 2002 and September 30, 2003.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No. 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under FASB Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement is effective for contracts
entered into or modified after June 30, 2002, and for hedging relationships
designated after June 30, 2003. Management believes that adopting this statement
will not have a material effect on the Company's results of operations or
financial position.

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, and interpretation of FASB
Statements No. 5, 57,and 107 and Rescission of FASB Interpretation No. 34. FIN
45 clarifies the requirements of FASB Statement No. 5, Accounting for

                                       27
<PAGE>

Contingencies, relating to the guarantor's accounting for, and disclosure of,
the issuance of certain types of guarantees. This interpretation clarifies that
a guarantor is required to recognize, at the inception of certain types of
guarantees, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantor's fiscal year-end. The disclosure requirements in this interpretation
are effective for financial statements of interim or annual periods ending after
December 15, 2002. The Company adopted FIN 45 on January 1, 2003. The adoption
of FIN 45 did not have a material impact on the Company's results of operations
or financial position.

In January 2003, the Financial Accounting Standards Board issued Interpretation
No. 46, "Consolidation of Variable Interest Entities," which addresses
consolidation by business enterprises of variable interest entities. In general,
a variable interest entity is a corporation, partnership, trust, or any other
legal structure used for business purposes that either (a) does not have equity
investors with voting rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities. A
variable interest entity often holds financial assets, including loans or
receivables, real estate or other property. A variable interest entity may be
essentially passive or it may engage in research and development or other
activities on behalf of another company. The objective of Interpretation No. 46
is not to restrict the use of variable interest entities but to improve
financial reporting by companies involved with variable interest entities. Until
now, a company generally has included another entity in its consolidated
financial statements only if it controlled the entity through voting interests.
Interpretation No. 46 changes that by requiring a variable interest entity to be
consolidated by a company if that company is subject to a majority of the risk
of loss from the variable interest entity's activities or entitled to receive a
majority of the entity's residual returns or both. The consolidation
requirements of Interpretation No. 46 apply immediately to variable interest
entities created after January 31, 2003. The consolidation requirements apply to
older entities in the first fiscal year or interim period beginning after June
15, 2003. Certain of the disclosure requirements apply in all financial
statements issued after January 31, 2003, regardless of when the variable
interest entity was established. The Company does not have any variable interest
entities, and, accordingly, adoption is not expected to have a material effect
on the Company's results or operations or financial position.

In May 2003, the FASB issued SFAS No. 150 "Accounting for Financial Instruments
with the Characteristics of Both Liabilities and Equities". SFAS No. 150
establishes standards regarding the manner in which an issuer classifies and
measures certain types of financial instruments having characteristics of both
liabilities and equity. Pursuant to SFAS No. 150, such freestanding financial
instruments (i.e. those entered into separately from an entity's other financial
instruments or equity transactions or that are legally detachable and separately
exercisable) must be classified as liabilities or, in some cases, assets. In
addition, SFAS No. 150 requires that financial instruments containing
obligations to repurchase the issuing entity's equity shares and, under certain
circumstances, obligations that are settled by delivery of the issuer's shares
be classified as liabilities. The Statement is effective for financial
instruments entered into or modified after May 31, 2003 and for other
instruments at the beginning of the first interim period after June 15, 2003.
Management believes adopting this statement will not have a material effect on
the statement of operations or financial position.

Item 3. 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 4. 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

                                       28
<PAGE>

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, however, the two claims
discussed below are currently under negotiation.

Joseph Friedman and Sons International, Inc.

In April 2003, the Company entered into a License Agreement (the "License
Agreement") with Joseph Friedman and Sons International, Inc. ("Friedman") for
territory of the Former Soviet Union. The License Agreement was predicated upon
technologies that were assigned to Delta Mutual, Inc. under an agreement with
the technology owner. Due to actions taken against the technology owner by its
creditors during the latter part of 2003, it lost its ability to assign the
technologies to the Company and its agreement with the Company was terminated.
Accordingly, the Company was unable to convey these rights to Friedman.

The Company and Friedman executed an Addendum to the License Agreement (the
"Addendum") in April 2003 that granted Friedman shares of the Company's common
stock and a seat on the Company's board of directors. The Company issued
Friedman 288,368 shares of common stock in consideration of Friedman executing
the License Agreement. In October 2003, Friedman made a claim for additional
shares of stock, citing the antidilution language in the Addendum, and requested
that its nominee be appointed to the Company's board of directors.

In light of the events that have effected the License Agreement, the Company
notified Friedman on March 30, 2004 that it considers the License Agreement
terminated and that the termination of the License Agreement eliminates
Friedman's right to a seat on the Company's board of directors.

We have agreed to a settlement amount to be paid to Friedman in settlement of
its claims against the Company, and are expecting to conclude the settlement in
the near future.

B. Michael Pisani

On January 7, 2003, the Company borrowed $15,000 from B. Michael Pisani
("Pisani"), a stockholder of the Company, which was payable with interest on
January 27, 2003. The promissory note provided for the issuance of shares of
common stock to Pisani for each month that amounts due and owing were not paid
by the Company. The Company did not pay the outstanding balance on the maturity
date. In April 2003, the Company repaid $5,000 of the outstanding balance.

In May 2003, the promissory note was amended to eliminate the requirement of
additional shares and subsequently a dispute arose about the validity of the
amendment.

On March 24, 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 does not prejudice his position regarding the
validity of the original note.

The Company is attempting to resolve this dispute. If Pisani prevails in a legal
action against the Company, he may be entitled to, in additional to the
principal amount and interest that he has received from the Company, shares of
common stock as additional interest.

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

         (a) The Company held its Annual Meeting of Stockholders on August 30,
2004, at the offices of the Company in Sellersville, Pennsylvania.

                                       29
<PAGE>

         (c) At the Annual Meeting, a total of 9,136,917 shares were present in
person or by proxy out of 13,590,688 shares outstanding. The following is the
result of stockholder voting on the proposals before the meeting:

                                                                 Abstentions/
       Proposal          Votes in Favor    Votes Against       Broker Nonvotes

Election of Peter F.       9,127,917             9,000                0
Russo as sole Director

Increase of Authorized     8,811,694           325,223                0
Common Stock to
100,000,000 shares

Authorization of New       5,060,746           321,023           0/3,755,148
Class of Preferred
Stock*

Adoption of 2004           5,317,384            39,385        25,000/3,755,148
Stock Option Plan
(10,000,000 shares)

-----------
* The proposal to authorize a new class of preferred stock was not approved. All
  other proposals were approved.


ITEM 5. OTHER INFORMATION

         Effective September 22, 2004, the Company entered into agreements with
Peter F. Russo, its President and Chief Executive Officer, and Jerome
Kindrachuk, its Vice President-International to modify their employment
agreements with the Company. For the year 2004, Messrs. Russo and Kindrachuk
agreed to a reduction in monthly salary to $6,500 and $6,000, respectively. In
addition, their incentive compensation formula was eliminated but they will be
eligible for any future incentive program for senior executives that is
established by the board of directors. All other material provisions of their
employment agreements remain in effect.

ITEM 6. Exhibits

3.1b     Form of Restatement of Certificate of Incorporation of Delta Mutual,
         Inc., as amended.

4.5      4% Convertible Promissory Note of the Company due May 2006 issued in
         the principal amount of $129,160 on May 12, 2004.

4.6      Convertible Promissory Note of the Company due May 2006 issued in the
         principal amount of $193,740 on May 12, 2004.

4.7      4% Convertible Promissory Note "A" of the Company due December 2006
         issued in the principal amount of $157,000 on July 1, 2004.

4.8      4% Convertible Promissory Note "B" of the Company due January 2007
         issued in the principal amount of $37,500 on July 16, 2004.

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.


                                       30
<PAGE>

                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant 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: November 15, 2004

                                  EXHIBIT INDEX

3.1b     Form of Restatement of Certificate of Incorporation of Delta Mutual,
         Inc., as amended.

4.5      4% Convertible Promissory Note of the Company due May 2006 issued in
         the principal amount of $129,160 on May 12, 2004.

4.6      Convertible Promissory Note of the Company due May 2006 issued in the
         principal amount of $193,740 on May 12, 2004.

4.7      4% Convertible Promissory Note "A" of the Company due December 2006
         issued in the principal amount of $157,000 on July 1, 2004.

4.8      4% Convertible Promissory Note "B" of the Company due January 2007
         issued in the principal amount of $37,500 on July 16, 2004.

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.

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.

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.

                                       31