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, 2007 ****




OR




o
      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.
                  Employerincorporation
                  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 934 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
xNO
o




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of
      the
      Exchange Act).  o Yesx 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 9, 2007, there were 78,882,953 shares of Common Stock, $.0001 par
      value, outstanding.










DELTA
      MUTUAL, INC.




INDEX




PagePart
                  I. Financial Information
              
              
              1Item
                  1. Financial Statements
              
              
              1Consolidated
                  Balance Sheet as of September 30, 2007 (unaudited)
              
              
              2Consolidated
                  Statements of Operations for the Three and Nine Months EndedSeptember
                  30, 2007 and 2006 (unaudited)
              
              
              3Consolidated
                  Statements of Cash Flows for the Nine Months Ended September 30,
                  2007and
                  2006 (unaudited)
              
              
              4-5Notes
                  to Unaudited Consolidated Financial Statements
              
              
              6Item
                  2. Management's Discussion and Analysis or Plan of
                  Operation
              
              
              17Item
                  3. Controls and Procedures
              
              
              21Part
                  II. Other Information
              
              
              22Item
                  5. Other Information
              
              
              22Item
                  6. Exhibits
              
              
              22Signatures
              
              
              22









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, 2006.




The
      results of operations for the three and nine months ended September 30, 2007 and
      2006
      are not necessarily indicative of the results for the entire fiscal year
      or
      for any other period.




Page
          1


**DELTA
                  MUTUAL, INC. AND SUBSIDIARIES****CONSOLIDATED
                  BALANCE SHEETS****(UNAUDITED)**
  ASSETSSeptember
                  30,2007Current
                  Assets:Cash
              
              $
              166,506Prepaid
                  expenses
              
              
              1,914Total
                  Current Assets
              
              
              168,420Property
                  and equipment - net
              
              
              404,331Intangible
                  asset
              
              
              128,104Other
                  assets
              
              
              650TOTAL
                  ASSETS
              
              $
              701,505LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCYCurrent
                  Liabilities:Accounts
                  payable
              
              $
              217,377Accrued
                  expenses
              
              
              1,073,754Convertible
                  debt
              
              
              679,340Notes
                  payable
              
              
              240,655TOTAL
                  LIABILITIES
              
              
              2,211,126Minority
                  interest in consolidated subsidiaries
              
              
              63,845Stockholders'
                  Deficiency:Common
                  stock $0.0001 par value - authorized250,000,000
                  shares; 73,272,286outstanding
              
              
              7,327Additional
                  paid-in-captial
              
              
              8,887,142Accumulated
                  deficit
              
              
              (10,467,935
              )Total
                  Stockholders' Deficiency
              
              
              (1,573,466
              )TOTAL
                  LIABILITIES ANDSTOCKHOLDERS'
                  DEFICIENCY
              
              $
              701,505
  See
                  Notes to Unaudited Consolidated Financial Statements




Page
          2




**DELTA
                MUTUAL, INC. AND SUBSIDIARIES****CONSOLIDATED
                STATEMENTS OF OPERATIONS****(UNAUDITED)**




Nine
                Months Ended September 30,
            
            Three
                Months Ended September 30,2007
            
            2006
            
            2007
            
            2006Revenue
            
            $
            -
            
            $
            279,870
            
            $
            -
            
            $
            19,166Costs
                and ExpensesCost
                of Sales
            
            
            -
            
            
            112,549
            
            
            -
            
            
            33,117General
                and administrativeexpenses
            
            
            1,761,240
            
            
            1,825,636
            
            
            485,763
            
            
            461,9341,761,240
            
            
            1,938,185
            
            
            485,763
            
            
            495,051Loss
                from operations
            
            
            (1,761,240
            )
            
            (1,658,315
            )
            
            (485,763
            )
            
            (475,885
            )Accretion
                of convertible debt
            
            
            -
            
            
            (169,773
            )
            
            -
            
            
            (23,022
            )Interest
                expense
            
            
            (34,782
            )
            
            (33,461
            )
            
            (8,318
            )
            
            (9,918
            )Loss
                before minority interest
            
            
            (1,796,022
            )
            
            (1,861,549
            )
            
            (494,081
            )
            
            (508,825
            )Minority
                interest share of (income)loss
                of consolidated subsidiaries
            
            
            190,591
            
            
            (114,563
            )
            
            238,416
            
            
            (22,504
            )Loss
                before benefit from income taxes
            
            
            (1,605,431
            )
            
            (1,976,112
            )
            
            (255,665
            )
            
            (531,329
            )Benefit
                from income taxes
            
            
            -
            
            
            -
            
            
            -
            
            
            -Net
                loss
            
            $
            (1,605,431
            )
            $
            (1,976,112
            )
            $
            (255,665
            )
            $
            (531,329
            )Loss
                per common share-basic
                and diluted
            
            $
            (0.03
            )
            $
            (0.04
            )
            $
            (0.01
            )
            $
            (0.01
            )Weighted
                average number ofcommon
                shares outstanding-basic
                and diluted
            
            
            62,514,044
            
            
            50,436,864
            
            
            62,989,677
            
            
            54,324,578




See
                Notes to Unaudited Consolidated Financial
                Statements




Page
          3




**DELTA
      MUTUAL, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**




Nine
                Months Ended September 30,2007
            
            2006Cash
                flows from operatingactivities:Net
                loss
            
            $
            (1,605,431
            )
            $
            (1,976,112
            )Adjustments
                to reconcile net loss tonet
                cash used in operating activities:Depreciation
                and amortization
            
            
            39,113
            
            
            35,862Non-cash
                compensation
            
            
            13,880
            
            
            262,012Accretion
                of convertible debt
            
            
            -
            
            
            169,773Compensatory
                element of optionissuance
            
            
            590,235
            
            
            697,655Minority
                interest in (income) losses ofconsolidated
                subsidiaries
            
            
            (190,591
            )
            
            114,563Changes
                in operating assetsand
                liabilities
            
            
            507,767
            
            
            (154,384
            )Net
                cash used in operating activities
            
            
            (645,027
            )
            
            (850,631
            )Cash
                flows from investing activities:Deposit
                on land
            
            
            (25,000
            )
            
            -Purchase
                of fixed assets
            
            
            -
            
            
            (60,658
            )Refund
                of land deposit
            
            
            35,500
            
            
            -Net
                cash provided by (used in)investing
                activities
            
            
            10,500
            
            
            (60,658
            )Cash
                flows from financing activities:Proceeds
                from sale of common stockand
                deferred stock purchase
            
            
            10,000
            
            
            799,000Proceeds
                from exercise of warrants
            
            
            -
            
            
            73,000Proceeds
                from loans
            
            
            -
            
            
            30,000Proceeds
                from borrowings
            
            
            -
            
            
            16,000Proceeds
                from convertible debtfinancing
            
            
            567,000
            
            
            -Repayment
                of loan
            
            
            -
            
            
            (23,910
            )Payments
                to minority interests
            
            
            (60,376
            )
            
            (6,514
            )Proceeds
                from minority interest
            
            
            73,262
            
            
            82,893Net
                cash provided byfinancing
                activities
            
            
            589,886
            
            
            970,469Net
                increase (decrease) in cash
            
            
            (44,641
            )
            
            59,180Cash
                - Beginning of period
            
            
            211,147
            
            
            67,042Cash
                - End of period
            
            $
            166,506
            
            $
            126,222




See
      Notes
      to Unaudited Consolidated Financial Statements




Page
          4




**DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(Continued)**
 **(UNAUDITED)**
  Nine
                  Months Ended September 30,2007
              
              2006Supplementary
                  information:Cash
                  paid during year for:Interest
              
              $
              -
              
              $
              1,564Income
                  taxes
              
              $
              -
              
              $
              -Changes
                  in operating assets andliabilities
                  consists of:(Increase)
                  in accounts receivable
              
              
              -
              
              
              (280,317
              )(Increase)
                  decrease in prepaid expenses
              
              
              248,040
              
              
              17,809(Increase)
                  decrease in deposits
              
              
              -
              
              
              -(Increase)
                  decrease in other assets
              
              
              750
              
              
              -Increase
                  in accounts payableand
                  accrued expenses
              
              
              258,977
              
              
              108,124$
              507,767
              
              $
              (154,384
              )Non-cash
                  financing activities:Issuance
                  of common stock for debt
              
              $
              550,000
              
              $
              357,074Issuance
                  of convertible notes fordeferred
                  stock purchase
              
              $
              292,600
              
              $
              -Issuance
                  of common stock in lieu ofpayment
                  of accrued expenses
              
              $
              13,880
              
              $
              -Issuance
                  of common stock for services
              
              $
              -
              
              $
              400,391Issuance
                  of common stockfor
                  settlement
              
              $
              -
              
              $
              42,750





See
        Notes
        to Unaudited Consolidated Financial Statements
  Page
            5


DELTA
            MUTUAL INC. AND SUBSIDIARIES
 NOTES
            TO
            UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 **** September
            30, 2007
 
 1.
            DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
            POLICIES
 
 Organization
 
 Delta
            Mutual, Inc. and subsidiaries ("Delta" or the "Company") are engaged
            in providing
            environmental and construction technologies and services to certain geographic
            reporting segments in the Far East, the Middle East and the United States.
            The Company had formerly operated in a fourth reportable segment, Puerto
            Rico.
            As of the close of the quarterly reporting period ended September 30,
            2007, the
            Company discontinued all operations in Puerto Rico. See Note 4 and Note
            11 to
            the unaudited consolidated financial statements for further information
            regarding these discontinued operations.
 
 The
            Company’s environmental activities are conducted by its joint venture subsidiary
            Delta-Envirotech, Inc. (“Envirotech”) headquartered in Virginia. Envirotech
            has established a strategic alliance with ZAFF International, Ltd., a
            technology
            company in Saudi Arabia, to pursue environmental and other projects in
            Saudi
            Arabia and other areas of the Middle East. Envirotech also formed a local
            joint
            venture company in Indonesia, PT Triyudha-Envirotech, to perform energy
            and
            waste recovery operations in that country.
 
 The
            Company’s construction technology activities are conducted through its wholly
            owned U.S., subsidiary, Delta Technologies, Inc (“Technologies”). Technologies
            acquired the intellectual property rights and filed a patent for a
            new
            insulating concrete wall forming (ICF) system known as *Delta
            Wall* .
 
 BASIS
            OF
            PRESENTATION
 
 The
            consolidated balance sheet as of September 30, 2007, and the consolidated statements
            of operations and cash flows for the periods presented herein have been
            prepared by the Company 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.
 
 The
            consolidated financial statements for the period ended September 30,
            2007 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 revenue to cover expenses as the Company continues
            to incur losses.
 
 The
            Company's business is subject to most of the risks inherent in the establishment
            of a new business enterprise. The likelihood of success of the Company
            must be considered in light of the expenses, difficulties, delays and unanticipated
            challenges encountered in connection with the formation of a new business,
            raising operating and development capital, and the marketing of a new product.
            There is no assurance the Company will ultimately achieve a profitable level
            of
            operations.
 
 The
            Company presently does not have sufficient liquid assets to finance its anticipated
            funding needs and obligations. The Company's continued existence is dependent
            upon its ability to obtain needed working capital through additional equity
            and/or debt financing and achieve a level of sales adequate to support its
            cost
            structure. Management is actively seeking additional capital to ensure the
            continuation of its development activities. However,
            there is no assurance that additional capital will be o btained.
            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.
 
 Page
                6
  SIGNIFICANT
            ACCOUNTING POLICIES
 
 PRINCIPLES
            OF CONSOLIDATION
 
 The
            Company's consolidated financial statements include the accounts of all majority-owned
            subsidiaries where its ownership is more than 50 percent of common
            stock. The consolidated statements also include the accounts of any Variable
            Interest Entities ("VIEs") where the Company is deemed to be the primary
            beneficiary, regardless of its ownership percentage. All significant intercompany
            balances and transactions with consolidated subsidiaries are eliminated
            in the consolidated financial statements. Where the Company's ownership
            interest is less than 100 percent, the outside stockholders’ interest
            are shown as minority interest. The minority ownership interest of
            the
            Company's earnings or loss, net of tax, is classified as "Minority
            interest in earnings of consolidated subsidiaries" in the consolidated
            statements of operations.
 
 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.
 
 CONCENTRATION
            OF CREDIT RISK
 
 Financial
            instruments which potentially subject the Company to concentration of
            credit
            risk consist principally of accounts receivable. The Company grants credit
            to
            customers based on  the
            customer’s financial condition, without requiring collateral. Exposure to losses
            on the receivables is principally dependent on each customer’s financial
            condition. The Company controls its exposure to credit risk through credit
            approvals.
 
 LOSS
            PER
            SHARE
 
 Basic
            and
            diluted loss per common share is computed by dividing net loss by the weighted
            average number of common shares outstanding during the year. Potential common
            shares are excluded from the loss per share calculation because the effect
            would be antidilutive. Potential common shares relate to the convertible debt
            and
            stock options. As of September 30, 2007,
            there were 10,008,587 potential common shares related to convertible
            debt and
            7,978,000 potential common shares related to stock options. As of September
            30,
            2006, there were 4,816,587 potential common shares related to convertible
            debt
            and 8,778,000 potential common shares related to stock options.
  REVENUE
            RECOGNITION
 
 The
            Company recognizes revenue in accordance with the guidance contained
            in SEC Staff
            Accounting Bulletin No. 104 "Revenue Recognition Financial Statements" (SAB
            No.
            104). Revenue is recognized from the Company's environmental remediation
            operation as the services are performed over the life of the remediation
            contracts.
 
 PREACQUISITION
            COSTS
 
 The
            Company accounts for costs incurred prior to the date of acquisition
            of a parcel
            of real property as preacquisition costs. Preacquisition costs are capitalized
            if the property was acquired or the acquisition of the property is probable.
            Capitalized preacquisition costs in excess of recoverable amounts are
            charged to
            expense.
  Page
                7
  EVALUATION
            OF LONG-LIVED ASSETS
 
 The
            Company reviews property and equipment and finite-lived intangible assets for
            impairment whenever events or changes n circumstances indicate the carrying value
            may
            not be recoverable in accordance with guidance in Statement of Financial
            Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or Disposal
            of Long-Lived Assets." If the carrying value of the long-lived asset exceeds
            the undiscounted amount 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-BASED
            COMPENSATION
 
 The
            Company has a stock-based compensation plan under which stock options are
            granted to employees. Effective January 1, 2006, the Company accounts
            for stock based compensation under Statement of Financial Accounting Standards
            ("SFAS") No. 123(R), "Share-Based Payment." The Company adopted SFAS 123(R)
            using the modified prospective method. Under modified prospective application,
            this SFAS applies to new awards and to awards for which the requisite
            service has not been rendered that are outstanding as of the required effective
            date shall be recognized as the requisite service is rendered on or after
            the
            required effective date. The compensation cost for the portion of awards
            shall be based on the grant-date fair value of those awards as calculated for
            either recognition or pro forma disclosures under SFAS 123. Changes to
            the grant-date
            fair value of equity awards granted before the required effective date
            of
            this Statement are precluded. The compensation cost for those
            earlier awards
            shall be attributed to periods beginning on or after the required effective
            date of this SFAS using the attribution method that was used under SFAS
            123,
            except that the method of recognizing forfeitures only as they occur shall
            not
            be continued.
 
 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 is the future tax benefits of certain net
            operating loss carryforwards.
 
 FOREIGN
            CURRENCY TRANSLATION
 
 The
            functional currency for some foreign operations is the local currency. Assets
            and liabilities of foreign operations are translated at balance sheet date
            rates of exchange and income, expense and cash flow items are translated
            at the
            average exchange rate for the period. Translation adjustments in future periods
            will be recorded in Accumulated Other Comprehensive Income. The translation
            gains or losses were not material for the nine and three months ended
            September
            30, 2007 and 2006.
  INTANGIBLES
 
 In
            June
            2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets."
            SFAS No. 142 specifies the financial accounting and reporting for acquired
            goodwill and other intangible assets. Goodwill and intangible assets that
            have
            indefinite useful lives are not amortized but rather they are tested at
            least
            annually for impairment unless certain impairment indications are identified.
  Page
                8
  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.
 
 NEW
            FINANCIAL ACCOUNTING STANDARDS
 
 In
            September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which
            enhances existing guidance for measuring assets and liabilities using
            fair value.
            This Statement provides a single definition of fair value, together with
            a
            framework for measuring it, and requires additional disclosure about
            the use
            of
            fair value to measure assets and liabilities. SFAS No. 157 is effective for
            financial statements issued for fiscal years beginning after November
            15, 2007,
            and interim periods within those fiscal years. The Company does not believe
            that
            SFAS No. 157 will have a material impact on its  consolidated financial
            statements.
 
 In
            February 2007, the FASB issued SFAS No. 159 (“SFAS No. 159”) “The Fair Value
            Option for Financial Assets and Financial Liabilities," providing companies
            with
            an option to report selected financial assets and liabilities at fair
            value. The
            Standard’s objective is to reduce both complexity in accounting for financial
            instruments and the volatility in earnings caused by measuring related
            assets
            and liabilities differently. It also requires entities to display the
            fair value
            of those assets and liabilities for which the company has chosen to use
            fair
            value on the face of the balance sheet. SFAS 159 is effective for fiscal
            years
            beginning after November 15, 2007. The Company is currently evaluating
            the
            impact of the adoption of this Statement on its consolidated financial
            statements.
  2.
            PROPERTY AND EQUIPMENT
  September
                        30, 2007Equipment
                    
                    $
                    480,035Leasehold
                        improvements
                    
                    
                    7,807487,842Less
                        accumulatedDepreciation
                    
                    
                    83,511$
                    404,331
  Depreciation
              expensive for the nine and three months ended September 30, 2007 and
              2006,
              amounted to $33,750 and $11,209; and $30,499 and $11,178,
              respectively.
  3.
            INTANGIBLE ASSETS
 
 Intellectual
            property costs are intellectual property included in a patent application.
            If the patent is not issued, the Company will write-off the
 unamortized
            amounts immediately. Other intangibles are being amortized over 20 years.
            Amortization expense was $5,363 and $1,787; and $5,363 and $1,788 for
            the nine
            and three months ended September 30, 2007 and 2006, respectively.
  Page
                9
  Other
              intangible assets consist of the following:
  September
                        30, 2007Gross
                        Carrying
                    
                    AccumulatedAmount
                    
                    AmortizationIntellectual
                        property costs
                    
                    $
                    143,000
                    
                    $
                    14,896$
                    143,000
                    
                    $
                    14,896
  Estimated
              amortization expense for intangible assets for the next five years
              is as
              follows:
  EstimatedYear
                        Ending
                    
                    AmortizationDecember
                        31,
                    
                    Expense2007
                    
                    $
                    1,7872008
                    
                    
                    7,1502009
                    
                    
                    7,1502010
                    
                    
                    7,1502011
                    
                    
                    7,150
 
 2007
              represents amortization from October 1, through December 31, 2007.
  4.
                    INVESTMENT
                        IN JOINT VENTURES
 
 a.
                    In
                        December 2003, the Company formed a joint venture project
                        to develop
                        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
                        85% majority
                        share of Delta Developers Corp., a Puerto Rico corporation,
                        formed to
                        manage the construction and related activities required to
                        build
                        approximately 270 low income homes under Section 124. During
                        the year
                        ended December 31, 2006, the activities associated with this
                        joint venture
                        were discontinued. The operations of the joint venture have
                        been
                        consolidated with the Company for the nine and three months
                        ended
                        September 30, 2007 and 2006,
                        respectively.
  In
                        October 2004, the Company formed a second joint venture to
                        develop Section
                        124 low income housing in Puerto Rico. The Company became
                        the general
                        partner and majority owner of a limited partnership, Delta
                        Development
                        Partners II, LP, that holds the 85% majority share of Delta
                        Developers
                        Guayanilla Corp., a Puerto Rico corporation formed to manage
                        the
                        construction and related activities required to build approximately
                        300
                        low income homes under Section 124. During the first quarter
                        of 2007, the
                        activities associated with this joint venture were discontinued
                        and the
                        land option deposit was returned to the Company.The operations
                        of the
                        joint venture have been consolidated with the Company for
                        the nine and
                        three months ended September 30, 2007 and 2006,
                        respectively.
  In
                        November 2006, The Company formed a new joint venture to
                        develop Section
                        124 housing in Puerto Rico. The Company became the general
                        partner and
                        minority owner of a limited partnership, Delta TA, LP, formed
                        to manage
                        the construction and related activities to build approximately
                        330
                        residential units under Section 124. As of the quarter ended
                        September 30,
                        2007, the activities associated with this partnership have
                        been
                        discontinued. The operations of this partnership have been
                        consolidated
                        with the Company since November
                        2006.
  Page
                  10
  b.
                    In
                        January 2004, the Company entered into a joint venture agreement
                        with Hi
                        Tech Consulting and Construction, Inc. (”Hi Tech”) forming
                        Delta-Envirotech, Inc. for the purpose of providing environmental
                        technologies and services to markets in the Middle East.
                        The joint venture
                        company is based in Virginia and focuses on participating
                        in foreign
                        government sponsored pollution remediation and other
                        projects.
 
 In
                        July 2004, the Company and Hi Tech, pursuant to an agreement
                        to purchase
                        stock dated January 14, 2004, each sold 75 shares of the
                        joint venture to
                        a third party, representing a ten percent (10%) interest.
                        The Company and
                        Hi-Tech each own forty-five percent (45%) of the joint
                        venture.
 
 The
                        operations of the joint venture have been consolidated with
                        the Company
                        for the nine and three months ended September 30, 2007 and
                        2006.
                        Delta-Envirotech, Inc. meets the definition of a Variable
                        Interest Entity
                        as defined in Financial Accounting Standards Board Interpretation
                        No. 46
                        (“FIN 46”), "Consolidation of Variable Interest Entities" requiring
                        the
                        primary beneficiaries of a variable interest entity to consolidate
                        that
                        entity. The primary beneficiary of a variable interest entity
                        is the party
                        that absorbs the majority of the expected losses of the entity
                        or receives
                        a majority of the entity's expected residual return, or both,
                        as a result
                        of ownership, contractual or other financial interest in
                        the
                        entity.
  c.
                    Minority
                        interests primarily consist of ownership interest in Delta
                        Development
                        Partners, LP; Delta Development Partners II, LP; Delta TA,
                        LP; Delta
                        Developers Corp.; Delta Developers Guayanilla Corp.; Delta-Envirotech,
                        Inc. and PT Triyudha-Envirotech.
  The
                          income and losses from operations of these entities and
                          their respective
                          minority interests have been reflected in the Company's
                          consolidated
                          statements of operations for the nine and three months
                          ended September 30,
                          2007 and 2006. There are excess losses not absorbed by
                          the minority
                          interests due to limitations of their capital contributions.
                          In future
                          periods, the profits first attributable to the minority
                          interests will be
                          first absorbed against any unused losses until the losses
                          are fully
                          absorbed. The amount on the Company's consolidated balance
                          sheet
                          represents the minority interests as of September 30,
                          2007.
 As
                            of September 30, 2007, excess losses of $163,719 have
                            been attributed to
                            the minority interest holders of Delta Development Partners,
                            LP; Delta
                            Development Partners II, LP and Delta TA,
                            LP.
  The
                                following represents a schedule of minority interests
                                as of September
                                30,
 2007Delta
                        Development Partners LP
                    
                    $
                    --Delta
                        Development Partners II, LP
                    
                    
                    --Delta
                        TA, LP
                    
                    
                    63,845Delta
                        Developers Corp
                    
                    
                    .
                        --Delta
                        Developers Guayanilla Corp.
                    
                    
                    --Delta-Envirotech,
                        Inc.
                    
                    
                    --PT
                        Triyudha - Envirotech
                    
                    
                    --$
                    63,845
  5.
              NOTES
              PAYABLE
 
 In
              April
              2005, the Company issued 8% term notes to private investors in the
              amount of
              $210,655, with the principal and interest due at maturity on October
              2, 2005.
              Pursuant to note modification agreements, the maturity dates of these
              notes were
              extended and in June 2006, became payable on written demand by the
              lenders.
              Interest expense for the nine and three months ended September 30,
              2007 and 2006
              amounted to $12,639 and $4,213; and $12,639 and $4,213, respectively.
              As of
              September 30, 2007 accrued interest of $33,647 is included in accrued
              interest
              expense on the Company's consolidated balance sheet.
  Page
                  11
  6.
              CONVERTIBLE DEBT
  In
              September 2004, the Company issued a 6% convertible note to an investor
              in the
              principal amount of $60,000, convertible into common stock at $0.05
              per share.
              In September 2006, this note became payable upon written demand by
              the
              lender.
  In
              May
              2004, The Company issued to two related parties, two 4% convertible
              notes, in
              the aggregate principal amount of $322,900, convertible into common
              stock at
              $0.125 per share. By subsequent amendments, the maturity dates of these
              notes
              have been extended until December 1, 2007 and February 28, 2008. In
              2006, one of
              the noteholders converted $29,160 of the principal amount into shares
              of common
              stock. At September 30, 2007, the principal amount of these two notes
              was
              $293,740.
 
 On
              May 3,
              2006, the Company issued a convertible note to a related party in the
              principal
              amount of $16,000, bearing interest at 6% per annum. The note is convertible
              into common stock at a conversion price of $0.06 per share, the fair
              value at
              the date of issuance. The note matured on November 3, 2007. On the
              maturity
              date, the Company issued 266,667 shares of common stock in payment
              of the
              principal amount and 24,000 shares of common stock in payment of all
              accrued
              interest.
 
 During
              the first quarter of 2007, the Company issued a convertible note to
              a related
              party in the principal amount of $17,000, and a convertible note to
              an investor
              in the principal amount of $266,000. Both notes bear interest of 6%
              per annum
              and are convertible into common stock at an initial conversion price
              of $0.05
              per share, the fair value at the date of issuance. The notes mature
              in April
              2008. In conjunction with the issuance of these two notes, the Company
              reclassified $266,000 recorded as deferred stock purchase, on its consolidated
              balance sheet as of December 31, 2006, to convertible notes at March
              31, 2007. On
              October 30, 2007, the holder of the $266,000 note converted the principal
              amount
              of the note into 5,320,000 shares of common stock and waived all accrued
              interest.
  In
              April
              2007, the Company issued a convertible note to a related party in the
              principal
              amount of $26,600 bearing interest of 6% per annum and convertible
              into common
              stock at the initial conversion price of $0.05 per share, the fair
              value at the
              date of issuance. The note matures in April 2008.
 
 During
              the second and third quarters of 2007, the Company borrowed $550,000
              from an
              investor pursuant to the terms of a convertible promissory note with a
              maturity date of May 2008; interest of 10% per annum; and convertible
              into
              common stock at an initial conversion price of $0.05 per share, the
              fair value
              at the date of issuance. In September 2007, the investor converted
              the principal
              amount of the note into 11,000,000 shares of common stock and waived
              all accrued
              interest.
 
 The
              following table shows the maturities by year of total face amount of
              the
              convertible debt obligations at September 30, 2007:
  2007
                    
                    $
                    269,7402008
                    
                    
                    409,600679,340
  Page
                  12
  For
              the
              nine and three months ended September 30, 2007 and 2006, the Company
              recorded
              interest expense of $34,782 and $8,318; and $33,461 and $9,918, respectively.
              In
              March 2007, the Company paid $13,880 of accrued interest to a convertible
              noteholder by issuing 111,040 shares of common stock. As of September
              30, 2007,
              accrued interest of $48,061 is included in accrued expenses on the
              Company's
              consolidated balance sheet.
  7.
              ACCRUED EXPENSES
 
 Accrued
              expenses consist of the following:
 
 September
                        30,2007Professional
                        fees
                    
                    $
                    9,605Interest
                        expense
                    
                    
                    84,180Payroll
                        expense
                    
                    
                    434,320Payroll
                        expense officers
                    
                    
                    117,436Payroll
                        tax expense
                    
                    
                    37,902Other
                        accrued expenses
                    
                    
                    390,311$
                    1,073,754
  8.
              LOANS
              FROM RELATED PARTIES
  On
              May
              17, 2006, the Company borrowed $30,000 from a shareholder of the Company,
              at
              interest of 6% per annum with the principal and interest due on May
              17, 2008.
              Interest expense for the nine and three months ended September 30,
              2007 and 2006
              amounted to $1,350 and $450; and $672 and $450, respectively. The balance
              due to
              the shareholder is included in Notes Payable on the Company's consolidated
              balance sheet at September 30, 2007. Accrued interest of $2,472 is
              included in
              accrued expenses on the Company’s consolidated balance sheet at September 30,
              2007.
 
 9.
              OTHER
              RELATED PARTY TRANSACTIONS
 
 The
              Company's Envirotech subsidiary pays monthly office rent to David Razmara,
              the
              president of Envirotech and a shareholder of the Company, in the current
              amount
              of $2,000. The rent expense for the nine and three months ended September
              30,
              2007 and 2006 amounted to $18,000 and $6,000; and $9,000 and $3,000,
              respectively.
  10.
              STOCKHOLDERS' DEFICIENCY
 
 The
              Company issues shares of common stock for services and repayment of
              debt and
              interest at fair market value at time of issuance.
 
 For
              the
              nine months ended September 30, 2007, the Company issued 111,040 shares
              of
              common stock in payment of accrued interest valued at $0.125 per share;
              and
              issued 11,000,000 shares of common stock upon conversion of the principal
              amount
              of a convertible note, valued at $0.05 per share.
 
 11.
              DISCONTINUED OPERATIONS
 
 During
              the three months ended September 30, 2007, the Company adopted a formal
              plan to
              discontinue all its operations in Puerto Rico. As a result of the Company’s
              decision, the operations of Delta Development Partners, LP; Delta Developers
              Corp.; Delta Development Partners II, LP; Delta Developers Guayanilla
              Corp., and
              Delta TA, LP have been classified as discontinued operations. For the
              nine and
              three months ended September 30, 2007 and 2006, the assets and liabilities,
              results of operations, and cash flows of these discontinued operations
              have been
              included with the operations of the Company in its unaudited consolidated
              financial statements due to the immaterial nature of the
              transactions.
  Page
                  13
  12.
              BUSINESS SEGMENT INFORMATION
 
 The
              Company's reporting business segments are geographic and include the
              Far East
              (Indonesia), the Middle East, North America (United States) and Puerto
              Rico. The
              primary criteria by which financial performance is evaluated and resources
              allocated are revenue and operating income.
 
 The
              following is a summary of key financial data:
 
 Nine
                        Months
                    
                    Nine
                        Monthsended
                        September 30,
                    
                    ended
                        September 30,2007
                    
                    2006
                    
                    2007
                    
                    2006Total
                        Revenue:North
                        America
                    
                    $
                    --
                    
                    
                    --
                    
                    $
                    --
                    
                    $
                    --Indonesia
                    
                    
                    --
                    
                    $
                    279,870
                    
                    
                    --
                    
                    
                    19,166Middle
                        East
                    
                    
                    --
                    
                    
                    --
                        --
                    
                    
                    --Puerto
                        Rico
                    
                    
                    --
                    
                    
                    --
                    
                    
                    --
                    
                    
                    --$
                    --
                    
                    $
                    279,870
                    
                    $
                    --
                    
                    $
                    19,166Operating
                        Loss:North
                        America
                    
                    $
                    (1,673,279
                    )
                    $
                    (1,670,309
                    )
                    $
                    (451,278
                    )
                    $
                    (592,998
                    )Indonesia
                    
                    
                    (27,963
                    )
                    
                    65,453
                    
                    
                    (9,988
                    )
                    
                    (9,866
                    )Middle
                        East
                    
                    
                    (15,000
                    )
                    
                    (44,100
                    )
                    
                    (5,000
                    )
                    
                    (14,700
                    )Puerto
                        Rico
                    
                    
                    (44,998
                    )
                    
                    (9,359
                    )
                    
                    (19,497
                    )
                    
                    141,679$
                    (1,761,240
                    )
                    $
                    (1,658,315
                    )
                    $
                    (485,763
                    )
                    $
                    (475,885
                    )
  13.
              SHARE
              BASED COMPENSATION
 
 On
              January 1, 2006, the Company adopted SFAS No. 123(R) "Share-Based Payment,"
              requiring the recognition of compensation expense in the Consolidated
              Statements
              of Operations related to the fair value of its employee share-based
              options and
              awards. SFAS No. 123(R) revised SFAS No. 123 "Accounting for Stock-Based
              Compensation" and supercedes APB Opinion No. 25 "Accounting for Stock
              Issued to
              Employees." SFAS No. 123(R) is supplemented by SEC Staff Accounting
              Bulletin
              ("SAB") No. 107 "Share-Based Payment." SAB No. 107 expresses the SEC
              staff's
              views regarding the interaction between SFAS No. 123(R) and certain
              SEC rules
              and regulations including the valuation of share-based payment
              arrangements.
 
 The
              Company recognizes the cost of all employee stock options on a straight-line
              attribution basis over their respective contractual term periods, net
              of
              estimated forfeitures. The Company has selected the modified prospective
              method
              of transition; accordingly, prior periods have not been vested. Prior
              to
              adopting SFAS No. 123(R), the Company applied APB Opinion No. 25, and
              related
              interpretation in accounting for its stock-based compensation plans.
              All
              employee stock options were granted at or above the grant date market
              price.
              Accordingly, no compensation cost was recognized for fixed stock option
              grants.
 
 At
              September 30, 2007, the Company had one share-based compensation plan,
              which is
              described below. During the nine and three months ended September 30,
              2007 and
              2006, the aggregate pretax compensation expense recognized in net loss
              for stock
              based compensation amounted to $590,235 and $196,745; and $438,750
              and $146,250,
              respectively.
  Page
                  14
  The
              Company also issues shares of its common stock to non-employees as
              stock based
              compensation. The Company accounts for the services using the fair
              market value
              of the services rendered. For the nine and three months ended September
              30,
              2007, the Company did not issue any shares of common stock to non-employees
              for
              services rendered. During the nine and three months ended September
              30, 2006,
              the Company issued 2,051,730 and 561,5781 shares; and recorded expense
              of
              $400,341 and $92,500, respectively,
 
 Stock
              Option Plan
 
 In
              December 2001, the Company's stockholders approved a stock option plan
              entitled
              the 2001 Employee Stock Option Plan (the "2001 Plan"), pursuant to
              which
              2,000,000 shares of common stock were reserved for issuance. In August
              2004, the
              Company's stockholders approved the 2004 Stock Option Plan (the 2004
              Plan"),
              pursuant to which 10,000,000 shares of common stock were reserved for
              issuance.
              As of September 30, 2007, all shares under the 2001 Plan had been issued,
              and
              2,022,000 shares of common stock remained available for issuance under
              the 2004
              Plan.
 
 The
              fair
              value of each option grant is estimated on the date of the grant using
              the
              Black-Scholes option-pricing model with the following weighted-average
              assumptions used for grants in 2006: dividends yield of 0%, expected
              volatility
              of 116% and expected life of 5 years.
 
 During
              the nine and three months ended September 30, 2007, the Company did
              not issue
              any stock options. During the nine and three months ended September
              30, 2006,
              the Company issued 8,756,000 and 7,978,000 stock options to five employees;
              and
              recorded an expense of $697,655 and $250,220, respectively.
 
 A
              summary
              of option activity under the 2004 Plan as of December 31, 2006 and
              changes
              during the nine months ended September 30, 2007 is presented below:
  WeightedAverageWeighted
                      
                      Remaining
                      
                      AggregateAverage
                      
                      Contractual
                      
                      IntrinsicOptions
                      
                      Shares
                      
                      ExercisePrice
                      
                      Term
                      
                      ValueOutstanding
                          at January 1, 2007:
                      
                      
                      7,978,000
                      
                      $
                      0.11Granted
                      
                      
                      --
                      
                      
                      --Exercised
                      
                      
                      --
                      
                      
                      --Forfeited,
                          expired or cancelled:
                      
                      
                      --
                      
                      
                      --Outstanding
                          at Sept. 30, 2007
                      
                      
                      7,978,000
                      
                      $
                      0.11
                      
                      
                      3.8
                      
                      $
                      (478,680
                      )Exercisable
                          at Sept. 30, 2007
                      
                      
                      7,978,000
                      
                      $
                      0.11
                      
                      
                      3.8
                      
                      
                      --
  A
              summary
              of the status of the Company's nonvested options as of December 31,
              2006 and
              changes during the nine months ended September 30, 2007 is presented
              below:
  Weighted-AverageGrant-DateNonvested
                          Options
                      
                      Options
                      
                      Fair
                          ValueNonvested
                          at January 1, 2007:
                      
                      
                      4,069,060
                      
                      $
                      0.11Granted
                      
                      
                      --
                      
                      
                      --Vested
                      
                      
                      (4,069,060
                      )
                      
                      0.11Forfeited,
                          expired or cancelled:
                      
                      
                      --
                      
                      
                      --Nonvested
                          at Sept. 30, 2007
                      
                      
                      --
                      
                      $
                      --
  Page
                    15
  At
              September 30, 2007, there was $1,606,015 of total unrecognized compensation
              cost
              related to share-based compensation arrangements granted under the
              2004 Plan.
              The cost is expected to be recognized over a weighted average period
              of 3.8
              years.
 
 14.
              COMMITMENTS AND CONTINGENCIES
 
 Consulting
              Agreements
 
 In
              August
              2005, the Company entered into a consulting agreement with Juan B.
              Rodriguez
              Pagan ("Rodriguez") to provide certain services and assistance to the
              Company in
              developing its construction and building materials businesses. By written
              notice, the Company terminated this agreement effective June 2, 2007,
              and
              informed Rodriguez that the reason for termination was because he had
              violated
              certain provisions of the agreement. In conjunction with the termination,
              the
              Company recorded a one-time charge of $248,000.
  For
              the
              nine months ended September 30, 2007, consulting fees of $74,667 are
              included in
              accrued expenses on the Company's consolidated balance sheet. For the
              nine and
              three months ended September 30, 2007 and 2006, the Company expensed
              $248,000
              and $-0-; and $141,750 and $47,250, respectively, in consulting fees
              in
              conjunction with the issuance of common stock to Rodriguez.
  In
              August
              2005, Delta Technologies, Inc., a wholly-owned subsidiary of the Company
              ,
              entered into a consulting agreement with Richard F. Straub, Jr. ("Straub")
              for a
              period of three years, to provide ongoing technical assistance and
              support in
              the production of insulating concrete wall forming products.
 
 For
              the
              nine and three months ended September 30, 2007 and 2006, consulting
              fees of
              $39,600 and $13,200; and $39,600 and $13,200, respectively have been
              expensed.
              For the nine months ended September 30, 2007, $54,167 of the stock
              value
              associated with the issuance of shares to Straub, is included in accrued
              expenses on the Company's consolidated statements of operations and
              consolidated
              balance sheet, respectively.
  15.
                    INCOME
                        TAXES
 
 The
              Company adopted the provisions of Financial Accounting Standards Board
              Interpretation No. 48 “Accounting for Uncertainties in Income Taxes,” (“FIN 48”)
              on January 1, 2007. As a result of the implementation of FIN 48, the
              Company
              recognized no adjustments in the net liability for unrecognized income
              tax
              benefits.
  Page
                  16
 ITEM
            2.
            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
  The
            following discussion of our financial condition and results of operations
            should
            be read in conjunction with the financial statements and notes thereto
            and other
            financial information included elsewhere in this report.
  Certain
            statements contained in this report, including, without limitation, statements
            containing the words "believes," "anticipates," "expects" and words of
            similar
            import, constitute "forward looking statements" within the meaning of
            the
            Private Securities Litigation Reform Act of 1995. Such forward-looking
            statements involve known and unknown risks and uncertainties. Our actual
            results
            may differ materially from those anticipated in these forward-looking
            statements
            as a result of certain factors, including our ability to create, sustain,
            manage
            or forecast our growth; our ability to attract and retain key personnel;
            changes
            in our business strategy or development plans; competition; business
            disruptions; adverse publicity; and international, national and local
            general
            economic and market conditions.
  GENERAL
  We
            were
            incorporated in the State of Delaware on November 17, 1999 and will require
            additional capital to execute our current and planned business operations.
 
 RESULTS
            OF OPERATIONS
  During
            the nine months ended September 30, 2007, we incurred a net loss of $1,605,431,
            because we had no revenue to offset operating expenses. 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.
  Page
                17
  THREE
            MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER
            30,
            2006.
 
 The
            net
            loss decreased by approximately $275,000 from $531,329 for the three
            months
            ended September 30, 2006 to $255,665 for the three months ended September
            30,
            2007.
 
 General
            and administrative expenses for the three months ended September 30,
            2007 were
            $485,763 compared to $461,934 in the comparable period in the prior year.
            This
            increase was primarily due to a commission expense of $25,000 in conjunction
            with a debt financing. The item of significance that decreased our quarterly
            net
            loss was an increase in the consolidated operating loss attributed to
            the
            minority owners of our discontinued subsidiaries of approximately
            $164,000.
 
 NINE
            MONTHS ENDED SEPTEMBER 30, 2007 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
            30,
            2006.
 
 The
            net
            loss decreased by approximately $371,000 from $1,976,112 for the nine
            months
            ended September 30, 2006 to $1,605,431 for the nine months ended September
            30,
            2007.
 
 General
            and admistrative expenses for the nine months ended September 30, 2007
            decreased
            approximately $65,000 from the comparable period in 2006. The other items
            of
            significant decrease in the nine months ended September 30, 2007 over
            the
            comparable period of the prior year were a decrease in accretion of convertible
            debt of approximately $170,000 and the increase in our consolidated operating
            loss attributed to the minority owners of our discontinued operations
            of
            approximately $305,000.
 
 PLAN
            OF
            OPERATION
 
 The
            Company has established a wholly-owned subsidiary and a joint venture
            subsidiary, primarily to establish business operations focused on providing
            environmental and construction technologies and services in the Far East,
            the
            Middle East and the United States. As of the close of the quarterly period
            ended
            September 30, 2007, we have terminated all operations in Puerto Rico
            because the
            limited partner in our Tao Alta low-income housing project elected not
            to
            proceed with the project redesigned for moderate income housing.
 
 Our
            environmental remediation operations are carried out through Delta-Envirotech,
            Inc., a joint venture company formed in January 2004, with Hi Tech Consulting
            and Construction, Inc., to provide environmental technology and other
            services
            for certain business segments located in the Far East and the Middle
            East. We
            have operating control of, and a forty-five percent ownership interest
            in,
            Delta-Envirotech. We have entered into strategic alliance agreements
            with
            several United States-based entities with technologies and products in
            the
            environmental field to support the Company's worldwide activities.
 
 Our
            construction technology activities are carried out by Delta Technologies,
            Inc.
            (our wholly owned subsidiary) and focused on the United States construction
            industry but are equally well suited for use internationally.
 
 Far
            East
            (Indonesia)
 
 In
            Indonesia, we formed a local joint venture company to commence energy
            and waste
            recovery operations. The joint venture company, PT Triyudha-Envirotech,
            began
            operations in December 2005, pursuant to a contract with Pertamina, the
            government owned oil company. The initial contract that required us to
            process
            3,000 metric tons of oil sludge was successfully completed in October
            2006. In
            January 2007, we began negotiating a second contract to process an unlimited
            amount of oil sludge over a 12-month period at the same refinery. We
            have
            experienced unexpected delays in the negotiations. If they can be concluded
            before year-end, processing should begin in the first quarter of 2008.
 
 Middle
            East
 
 In
            2004,
            we entered into a strategic alliance agreement between our environmental
            remediation joint venture, Delta-Envirotech, Inc. ("Envirotech"), and
            ZAFF
            International, Ltd., to jointly pursue environmental and other projects
            in the
            Middle East.
 
 In
            August
            2005, we reached a working agreement to provide equipment to manufacture
            insulating concrete form (ICF) products for the building industry in
            Saudi
            Arabia. In September 2006, Envirotech received a letter of intent from
            a
            purchaser.
 
 On
            March
            8, 2007, Envirotech received the purchase agreement to supply the equipment
            and
            services for the factory in Saudi Arabia. This is our first contract
            in Saudi
            Arabia and our largest to date, valued at $3,369,000.
  Page
                18
  The
            equipment specified in the agreement consists of several ICF technologies
            including the machinery that produces our Delta Wall system. The agreement
            requires payment by letter of credit in four installments. Due to delays
            by the
            purchaser, we currently anticipate that the letter of credit will be
            opened
            during the fourth quarter of 2007 and that the final payment will be
            received in
            the third quarter of 2008.
 
 During
            July and August 2006, we announced that Envirotech expanded its product
            line by
            securing the master distribution rights for the Middle East for environmentally
            friendly organic emulsifiers (designed for use in combination with a
            centrifuge)
            used to clean oil wells and oil storage tanks, as well as a gas-imaging
            product
            used in oilfield and refining operations. The emulsifiers did not perform
            to the
            satisfaction of ARAMCO and all remaining testing has been stopped.
 
 The
            gas-imaging product has been approved for testing at an ARAMCO designated
            site,
            pending availability of the equipment from the manufacturer.
 
 Over
            the
            past 12 months, Envirotech has been working with the operators of oil
            sludge
            processing facilities in Bahrain and Kuwait to improve the processing
            technology
            currently in
            use.
            The operators have agreed to evaluate new processing equipment provided
            through
            Envirotech. A demonstration unit was shipped during the third quarter
            that is
            scheduled for evaluation on site, by the respective operators, during
            the fourth
            quarter.
 
 Saudi
            Arabia has a network of farms that produce fruit, grains and cattle feed.
            During
            the second half of 2007, Envirotech introduced an organic supplement,
            designed
            to increase crop yield, to one of the major farming operations. The farm
            operator has indicated a willingness to purchase the product, after it
            receives
            government approval, which is expected during the fourth quarter.
 
 United
            States
 
 In
            August
            2005, Delta Technologies, Inc. acquired certain intellectual property
            and filed
            a patent application for a new insulating concrete wall forming (ICF)
            system,
            now known as Delta Wall.
 
 Production
            of the Delta Wall blocks began in September 2006. An independent testing
            laboratory was hired in January 2007 to evaluate the blocks for the purpose
            of
            applying for International Commercial Code (ICC) approval. The testing
            laboratory has issued its interim report. The data in the interim report
            provided the information necessary to begin the
            required engineering studies. We are in the process of evaluating proposals
            from
            structural engineering firms.
 
 Strategic
            Acquisition
 
 Our
            Board
            of directors has determined that our business model should be re-evaluated
            to
            include a strategic acquisition of another business through a business
            combination. Our new management plans are to restructure the Company
            by making a
            strategic acquisition, with the goal of making Delta Mutual, Inc. a leading
            technology company in those markets in which we currently operate as
            well as in
            those planned for future expansion. With the assistance of one consultant,
            we
            are focusing our efforts on identifying a business to acquire. As of
            this date,
            we have not entered into any agreements related to any such
            acquisitions.
 
 We
            anticipate the search for a complementary business combination will be
            complex
            and extremely risky. Due to the general economic conditions and shortages
            of
            available capital, we believe that there may be some firms seeking the
            perceived
            benefits of a publicly traded reporting company. Such perceived benefits
            may
            include, among other things, facilitating or improving the terms on which
            additional equity financing may be sought, providing liquidity for incentive
            stock options or similar benefits to key employees, and providing liquidity
            (subject to restrictions of applicable statutes) for all shareholders.
            Potentially, available business opportunities may occur in different
            industries
            and at various stages of development, all of which will make the task
            of
            comparative investigation and analysis of such business opportunities
            extremely
            difficult and complex.
 
 We
            will
            rely upon the efforts of our officers, directors and our consultant,
            in
            implementing and evaluating candidates. We do not anticipate hiring any
            other
            outside consultants or advisors, except for counsel and accountants.
            As of the
            date of this report, we do not have any other contracts or agreements
            with any
            outside consultants and none are contemplated.
 
 Page
                19
  FUNDING
 
 We
            are
            currently dependent on equity investments or borrowing from private investors
            to
            pay our operating expenses. There are no assurances that such investors
            will
            continue to advance funds or invest in the Company's securities. In the
            event we
            are unable to obtain additional capital or funding we may be unable to
            pursue
            our business plans. We anticipate that we will be required to raise capital
            in
            an amount up to $500,000 during the next six months in order to continue
            to fund
            our current activities and to carry out our new strategic plans.
 
 LIQUIDITY
 
 We
            have
            generated limited revenue from our current operations. We must rely primarily
            on
            private placements of Company stock or debt to pay operating
            expenses.
 
 At
            September 30, 2007 we had a working capital deficit of approximately
            $2,000,000,
            an increase of approximately $1,000,000 in our working capital deficit
            compared
            with the close of the third quarter of 2006. This increase for the period
            ended
            September 30, 2007 is a result of a decrease in accounts receivable and
            prepaid
            expenses and an increase in accrued expenses, accounts payable and convertible
            debt. Since we have limited sources of revenue, we expect a working capital
            deficit until our revenue is sufficient to cover our operating
            expenses.
 
 In
            the
            nine months ended September 30, 2007, we reclassified $266,000 of stock
            purchase
            deposits to convertible debt, borrowed $43,600 from a stockholder of
            the Company
            and borrowed $550,000 from an investor, pursuant to the terms of a convertible
            promissory note dated May 1, 2007.
  ASSETS
 
 At
            September 30, 2007, we had total assets of $701,505, compared to total
            assets of
            $1,324,842 at September 30, 2006. The decrease in total assets as of
            September
            30, 2007 was due to decreases in accounts receivable of approximately
            $300,000;
            prepaid expenses of approximately $295,000; and fixed assets of approximately
            $62,000, partially offset by a modest increase in cash.
  CRITICAL
            ACCOUNTING ISSUES
 
 The
            Company's discussion and analysis of its financial condition and results
            of
            operations are based upon the Company's financial statements, which have
            been
            prepared in accordance with accounting principles generally accepted
            in the
            United States of America. The preparation of the financial statements
            requires
            the Company to make estimates and judgments that affect the reported
            amount of
            assets, liabilities, and expenses, and related disclosures of contingent
            assets
            and liabilities. On an on-going basis, the Company evaluates its estimates,
            including those related to intangible assets, 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
            September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements,"
            which
            enhances existing guidance for measuring assets and liabilities using
            fair
            value. This Standard provides a single definition of fair value, together
            with a
            framework for measuring it, and requires additional disclosure about
            the use of
            fair value to measure assets and liabilities. SFAS No. 157 is effective
            for
            financial statements issued for fiscal years beginning after November
            15, 2007,
            and interim periods within those fiscal years. The Company does not believe
            that
            SFAS No. 157 will have a material impact on its consolidated financial
            statements.
  Page
                20
  In
            February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for
            Financial
            Assets and Financial Liabilities," providing companies with an option
            to report
            selected financial assets and liabilities at fair value. The Standard's
            objective is to reduce both complexity in accounting for financial instruments
            and the volatility in earnings caused by measuring related assets and
            liabilities differently. It also requires entities to display the fair
            value of
            those assets and liabilities for which the Company has chosen to use
            fair value
            on the face of the balance sheet. SFAS 159 is effective for fiscal years
            beginning after November 15, 2007. The Company is currently evaluating
            the
            impact of the adoption of this Statement on its consolidated financial
            statements.
 
 FOREIGN
            CURRENCY TRANSLATION
 
 The
            functional currency for some foreign operations is the local currency.
            Assets
            and liabilities of foreign operations are translated at balance sheet
            date rates
            of exchange and income, expense and cash flow items are translated at
            the
            average exchange rate for the period. Translation adjustments in future
            periods
            will be recorded in Other Comprehensive Income. The translation gains
            or losses
            were not material for the year ended December 31, 2006.
 
 GOODWILL
            AND OTHER INTANGIBLES
 
 In
            June
            2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets."
            SFAS
            No. 142 specifies the financial accounting and reporting for acquired
            goodwill
            and other intangible assets. Goodwill and intangible assets that have
            indefinite
            useful lives are not amortized but rather they are tested at least annually
            for
            impairment unless certain impairment indications are identified.
 
 Quantitative
            and Qualitative Disclosures About Market Risk
 
 Fair
            Value of Financial Instruments - The following disclosure of the estimated
            fair
            value of financial instruments is made in accordance with the requirements
            of
            Statement of Financial Accounting Standards No. 107, "Disclosures about
            Fair
            Value of Financial Instruments". The estimated fair values of financial
            instruments have been determined by the Company using available market
            information and appropriate valuation methodologies.
 
 However,
            considerable judgment is required in interpreting market data to develop
            the
            estimates of fair value. Accordingly, the estimates presented herein
            are not
            necessarily indicative of the amounts that the Company could realize
            in a
            current market exchange.
 
 The
            Company has not entered into, and does not expect to enter into, financial
            instruments for trading or hedging purposes. The Company does not currently
            anticipate entering into interest rate swaps and/or similar instruments.
            The
            Company's carrying values of cash, marketable securities, accounts receivable,
            accounts payable and accrued expenses are a reasonable approximation
            of their
            fair value.
  ITEM
            3.
            CONTROLS AND PROCEEDURES
  a.  Disclosure
            controls and procedures.
 
 As
            of the
            end of the Company's most recently completed fiscal quarter (the fourth
            fiscal
            quarter in the case of an annual report) covered by this report, the
            Company
            carried out an evaluation, with the participation of the Company's management,
            including the Company's Chief Executive Officer and Chief Financial Officer,
            of
            the effectiveness of the Company's disclosure controls and procedures
            pursuant
            to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the
            Company's Chief Executive Officer and Chief Financial Officer concluded
            that the
            Company's disclosure controls and procedures are effective in ensuring
            that
            information required to be disclosed by the Company in the reports that
            it files
            or submits under the Securities Exchange Act is recorded, processed,
            summarized
            and reported, within the time periods specified in the SEC's rules and
            forms.
  Page
                21
  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
            5.
            OTHER INFORMATION
 
 None.
  ITEM
            6.
            EXHIBITS
  4.6f
                  Amendment,
                      dated September 7, 2007, to Convertible Promissory Note in
                      the principal
                      amount of $193,740.
  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.
   SIGNATURES
  In
            accordance with the requirements of the Exchange Act, the Company has
            caused
            this report to be signed on its behalf by the undersigned, thereunto
            duly
            authorized.
  DELTA
                    MUTUAL, INC.By:
                  /s/ Peter
                    F.
                    RussoPeter
                      F. Russo
                    President
                      and Chief Executive Officer
 Dated:
            November 9, 2007
 
  EXHIBIT
            INDEX
 
  4.6f
                  Amendment,
                      dated September 7, 2007, to Convertible Promissory Note in
                      the principal
                      amount of $193,740.
 
 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.
  Page
                22