FORM
10-Q/A




SECURITIES
AND EXCHANGE COMMISSION




WASHINGTON,
D.C.





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





For the
quarterly period ended June 30, 2008





OR





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





For the
transition period from ____________ to _________________





Commission
File Number 000-30563




DELTA
MUTUAL, INC.




(Exact
name of registrant as specified in its charter)





DELAWARE
              
              14-1818394(State
      or other jurisdiction of
              
              (I.R.S.
      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 1934 during  the preceding 12 months (or for such
shorter period that the Registrant was  required to file such
reports), and (2) has been subject to such filing  requirements for
the past 90 days.  YES x NO
 ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  (Check
One):





Large
      accelerated filer   ̈
              Accelerated
      filer   ̈Non-accelerated
      filer  ̈
              Smaller
      reporting company  x(Do
      not check if a smaller reporting company)





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





The number of shares outstanding the
issuer's common stock, par value $.0001 per share, was 221,849,158 as of
September 15, 2008.









AS PART
OF THE REVIEW BY THE SECURITIES AND EXCHANGE COMMISSION OF THE COMPANY’S PAST
FILINGS UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, WE ARE FILING THIS
AMENDMENT NO. 1 TO OUR FORM10-Q FOR THE THREE-MONTH PERIOD ENDED JUNE
30, 2008 (THE ”JUNE 30, 2008 FORM 10-Q”). THIS  AMENDMENT
NO. 1 AMENDS THE FINANCIAL STATEMENTS AND THE INFORMATION UNDER THE CAPTION
“MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.” THECOMPANY’S REVERSE ACQUISITION WITH ALTONY S.A. BECAME
EFECTIVE ON MARCH 4. 2008, AND OUR FINANCIAL STATEMENTS AS OF DECEMBER 31, 2007
FILED IN THE JUNE 30, 2008 FORM 10-Q ARE RESTATED IN THIS AMENDMENT NO. 1 TO
REFLECT MARCH 4, 2008 AS THE EFFECTIVE DATE OF THE REVERSE ACQUISITION. IN ORDER
TO PRESERVE THE NATURE AND CHARACTER OF THE DISCLOSURES SET FORTH IN THE JUNE
30, 2008 FORM 10-Q AS OF SEPTEMBER 17, 2008, THE DATE ON WHICH THE JUNE 30, 2008
FORM 10-Q WAS FILED, NO ATTEMPT HAS BEEN MADE IN THIS AMENDMENT NO. 1 TO MODIFY
OR UPDATE DISCLOSURES EXCEPT AS DESCRIBED ABOVE AND, IN THE NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, ADDITIONAL DISCLOSURES AS TO AN
EXCHANGE OF DEVELOPMENT RIGHTS RELATING TO THE COMPANY’S OIL AND GAS
CONCESSIONS.





DELTA
MUTUAL, INC.





INDEX





PagePart
      I.  Financial Information
                                    3Item
      1
                                    Financial
      Statements
                                    3Consolidated
      Balance Sheet as of June 30, 2008 and as of December 31, 2007
      (unaudited)
                                    4Consolidated
      Statements of Operations for the Three and Six Months Ended June 30, 2008
      and 2007 (unaudited)
                                    5Consolidated
      Statement of Stockholders Equity (unaudited)
                                    6-7Consolidated
      Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007
      (unaudited)
                                    8-9Notes
      to Unaudited Consolidated Financial Statements
                                    10Item
      2.
                                    Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                    26Item
      3.
                                    Quantitative
      and Qualitative Disclosures About Market Risk
                                    28Item
      4T.
                                    Controls
      and Procedures.
                                    29Part
      II. Other Information
                                    29Item
      1A.
                                    Risk
      Factors.
                                    29Item
      5.
                                    Other
      Information.
                                    30Item
      6.
                                    Exhibits.
                                    30Signatures
                                    30





Page
2




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, 2007.




The
results of operations for the six and three months ended June 30, 2008 and 2007
are not necessarily indicative of the results for the entire
fiscal  year or for any other period.




Page
3




DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEET
 (UNAUDITED)
 
 June 30,
                        
                        
                        December 31,2008
                        
                        
                        2007ASSETSCurrent
      Assets:Cash
                        
                        $
                        5,220
                        
                        
                        $
                        -Investments
                        
                        
                        4,137,538
                        
                        
                        
                        5,879,020Prepaid
      expenses
                        
                        
                        -
                        
                        
                        
                        -Total
      Current Assets
                        
                        
                        4,142,758
                        
                        
                        
                        5,879,020Property
      and equipment - net
                        
                        
                        346,586
                        
                        
                        
                        -Intangible
      asset
                        
                        
                        -
                        
                        
                        
                        -Investments
      in oil and gas concessions
                        
                        
                        -
                        
                        
                        
                        1,130,000Other
      assets
                        
                        
                        650
                        
                        
                        
                        -TOTAL
      ASSETS
                        
                        $
                        4,489,994
                        
                        
                        $
                        7,009,020LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      Liabilities:Accounts
      payable
                        
                        $
                        161,668
                        
                        
                        $
                        239,552Accrued
      expenses
                        
                        
                        1,346,918
                        
                        
                        
                        -Convertible
      debt
                        
                        
                        253,740
                        
                        
                        
                        -Notes
      payable
                        
                        
                        2,087,605
                        
                        
                        
                        2,300,000Total
      Current Liabilities
                        
                        
                        3,849,931
                        
                        
                        
                        2,539,552Minority
      interest in consolidated subsidiaries
                        
                        
                        226,988
                        
                        
                        
                        -Stockholders'
      Equity:Common
      stock $0.0001 par value - authorized  250,000,000 shares;
      221,849,158 and 130,000,000  outstanding,
      respectively
                        
                        
                        22,185
                        
                        
                        
                        13,000Additional
      paid-in-capital
                        
                        
                        3,368,341
                        
                        
                        
                        2,587,000Retained
      earnings (deficit)
                        
                        
                        (2,977,451
                        )
                        
                        
                        1,869,468Total
      Stockholders' Equity
                        
                        
                        413,075
                        
                        
                        
                        4,469,468TOTAL
      LIABILITIES AND  STOCKHOLDERS' EQUITY
                        
                        $
                        4,489,994
                        
                        
                        $
                        7,009,020
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
4
  DELTA
MUTUAL INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
 
 Six Months Ended June 30,
                      
                      
                      Three Months Ended June 30,2008
                      
                      
                      2007
                      
                      
                      2008
                      
                      
                      2007Investment
      results
                      
                      $
                      (2,053,011
                      )
                      
                      $
                      (967,045
                      )
                      
                      $
                      7,942
                      
                      
                      $
                      (483,522
                      )Revenue
                      
                      
                      (2,053,011
                      )
                      
                      
                      (967,045
                      )
                      
                      
                      7,942
                      
                      
                      
                      (483,522
                      )General
      and administrative expenses
                      
                      
                      998,132
                      
                      
                      
                      399
                      
                      
                      
                      396,454
                      
                      
                      
                      199Loss
      on intellectual property
                      
                      
                      122,742
                      
                      
                      
                      -
                      
                      
                      
                      122,742
                      
                      
                      
                      -Valuation
      results
                      
                      
                      22
                      
                      
                      
                      (3,623
                      )
                      
                      
                      -
                      
                      
                      
                      (1,811
                      )1,120,896
                      
                      
                      
                      (3,224
                      )
                      
                      
                      519,196
                      
                      
                      
                      (1,612
                      )Loss
      from operations
                      
                      
                      (3,173,907
                      )
                      
                      
                      (963,821
                      )
                      
                      
                      (511,254
                      )
                      
                      
                      (481,910
                      )Interest
      expense
                      
                      
                      24,260
                      
                      
                      
                      -
                      
                      
                      
                      (7,949
                      )
                      
                      
                      -Loss
      before minority interest
                      
                      
                      (3,149,647
                      )
                      
                      
                      (963,821
                      )
                      
                      
                      (519,203
                      )
                      
                      
                      (481,910
                      )Minority
      interest share of (income) loss of consolidated
    subsidiaries
                      
                      
                      18,815
                      
                      
                      
                      -
                      
                      
                      
                      11,520
                      
                      
                      
                      -Loss
      before benefit from income taxes
                      
                      
                      (3,130,832
                      )
                      
                      
                      (963,821
                      )
                      
                      
                      (507,683
                      )
                      
                      
                      (481,910
                      )Benefit
      from income taxes
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      loss
                      
                      $
                      (3,130,832
                      )
                      
                      $
                      (963,821
                      )
                      
                      $
                      (507,683
                      )
                      
                      $
                      (481,910
                      )Loss
      per common share- basic and diluted
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.01
                      )
                      
                      $
                      (0.00
                      )
                      
                      $
                      (0.00
                      )Weighted
      average number of common shares outstanding- basic and
    diluted
                      
                      
                      189,660,387
                      
                      
                      
                      130,000,000
                      
                      
                      
                      221,316,564
                      
                      
                      
                      130,000,000
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
5
  DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
 (Unaudited)
 
 Number ofCommon
                    
                    
                    Common
                    
                    
                    Paid inShares
                    
                    
                    Stock
                    
                    
                    Capital
                    
                    
                    Retained Earnings
                    
                    
                    TotalBalance,
      January 1, 2007
                    
                    
                    130,000,000
                    
                    
                    $
                    13,000
                    
                    
                    $
                    2,587,000
                    
                    
                    $
                    1,527,912
                    
                    
                    $
                    4,127,912Net
      income
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    341,556
                    
                    
                    
                    341,556Balance,
      December 31, 2007
                    
                    
                    130,000,000
                    
                    
                    $
                    13,000
                    
                    
                    $
                    2,587,000
                    
                    
                    $
                    1,869,468
                    
                    
                    $
                    4,469,468
 
 See Notes to Unaudited Consolidated
Financial Statements
  Page
6
  DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENT OF STOCKHOLDERS' EQUITY
 (Unaudited)
 
 Number of
                  
                  
                  Common
                  
                  
                  Paid in
                  
                  
                  Retained EarningsShares
                  
                  
                  Stock
                  
                  
                  Capital
                  
                  
                  (Deficit)
                  
                  
                  TotalBalance,
      January 1, 2008
                  
                  
                  130,000,000
                  
                  
                  $
                  13,000
                  
                  
                  $
                  2,587,000
                  
                  
                  $
                  1,869,468
                  
                  
                  $
                  4,469,468Effect
      of reverse acquisition
                  
                  
                  78,882,953
                  
                  
                  
                  7,888
                  
                  
                  
                  -
                  
                  
                  
                  (1,716,087
                  )
                  
                  
                  (1,708,199
                  )Issuance
      of common stock for services (valued at $0.02 per share)
                  
                  
                  10,550,000
                  
                  
                  
                  1,055
                  
                  
                  
                  237,445
                  
                  
                  
                  -
                  
                  
                  
                  238,500Issuance
      of common stock for debt (valued at $0.05 - $0.07 per
    share)
                  
                  
                  2,300,571
                  
                  
                  
                  230
                  
                  
                  
                  143,370
                  
                  
                  
                  -
                  
                  
                  
                  143,600Issuance
      of common stock for interest (valued at $0.05 - $0.07 per
      share)
                  
                  
                  115,634
                  
                  
                  
                  12
                  
                  
                  
                  7,036
                  
                  
                  
                  -
                  
                  
                  
                  7,048Stock
      based compensation expense
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  393,490
                  
                  
                  
                  -
                  
                  
                  
                  393,490Net
      (loss)
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (3,130,832
                  )
                  
                  
                  (3,130,832
                  )Balance,
      June 30, 2008
                  
                  
                  221,849,158
                  
                  
                  $
                  22,185
                  
                  
                  $
                  3,368,341
                  
                  
                  $
                  (2,977,451
                  )
                  
                  $
                  413,075
 
 See Notes to Unaudited Consolidated
Financial Statements
  Page
7
  DELTA
MUTUAL INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 
 Six Months Ended June 30,2008
                      
                      
                      2007Cash
      flows from operating activities:Net
      loss
                      
                      $
                      (3,130,832
                      )
                      
                      $
                      (963,821
                      )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                      
                      
                      25,112
                      
                      
                      
                      -Non-cash
      compensation
                      
                      
                      245,548
                      
                      
                      
                      -Loss
      on intellectual property
                      
                      
                      122,742Compensatory
      element of option issuance
                      
                      
                      393,490
                      
                      
                      
                      -Minority
      interest in income (losses) of consolidated subsidiaries
                      
                      
                      (18,815
                      )
                      
                      
                      -Changes
      in operating assets and liabilities
                      
                      
                      (128,096
                      )
                      
                      
                      -Net
      cash used in operating activities
                      
                      
                      (2,490,851
                      )
                      
                      
                      (963,821
                      )Cash
      flows from investing activities:Decrease
      in investments
                      
                      
                      2,871,482
                      
                      
                      
                      963,821Net
      cash provided by investing activities
                      
                      
                      2,871,482
                      
                      
                      
                      963,821Cash
      flows from financing activities:Proceeds
      from loans
                      
                      
                      186,950
                      
                      
                      
                      -Repayment
      of loans
                      
                      
                      (640,000
                      )
                      
                      
                      -Proceeds
      from minority interest
                      
                      
                      20,006
                      
                      
                      
                      -Net
      cash used in financing activities
                      
                      
                      (433,044
                      )
                      
                      
                      -Net
      decrease in cash
                      
                      
                      (52,413
                      )
                      
                      
                      -Cash
      - Beginning of period
                      
                      
                      57,633
                      
                      
                      
                      -Cash
      - End of period
                      
                      $
                      5,220
                      
                      
                      $
                      -
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
8
  DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (Continued)
 (UNAUDITED)
 
 Six Months Ended June 30,2008
                        
                        
                        2007Supplementary
      information:Changes
      in operating assets and liabilities consists of:Decrease
      in prepaid expenses
                        
                        $
                        1,914
                        
                        
                        $
                        -Increase
      in accounts payable and accrued expenses
                        
                        
                        (130,010
                        )
                        
                        
                        -$
                        (128,096
                        )
                        
                        $
                        -Cash
      paid during the year for:Interest
                        
                        $
                        -
                        
                        
                        $
                        -Income
      taxes
                        
                        $
                        -
                        
                        
                        $
                        -Non-cash
      financing activities:Issuance
      of common stock for debt
                        
                        $
                        143,600
                        
                        
                        $
                        -Issuance
      of common stock in lieu of payment of accrued expenses
                        
                        $
                        7,048
                        
                        
                        $
                        -Issuance
      of common stock for services
                        
                        $
                        238,500
                        
                        
                        $
                        -
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
9
  DELTA
MUTUAL, INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 For the
Six Months Ended June 30, 2008 and 2007
 
 1.
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 Organization
 
 Delta
Mutual, Inc. and subsidiaries (“Delta” or the “Company”) was incorporated in
Delaware on November 17, 1999. Since 2003, the principal business activities of
the Company were focused on providing environmental and construction
technologies and services to certain geographic reporting segments in the Far
East, Middle East and the United States.
 
 On March
4, 2008, the Company entered into a Membership Interest Purchase Agreement (the
“Agreement”) with Egani, Inc., an Arizona corporation (“Egani”). Pursuant to the
Agreement, the Company acquired from Egani all of the issued and outstanding
shares of stock of Altony S.A., an Uruguayan Sociedad Anonima (“Altony”), which
owns 100% of the issued and outstanding membership interests in South American
Hedge Fund LLC, a Delaware limited liability company (“SAHF”). At the closing of
the Agreement, the Company issued 130,000,000 shares of its common stock to
Egani for the purchase of all of the outstanding shares of stock in Altony which
constituted, following such issuance, a majority of the outstanding shares of
the Company’s common stock.
 
 Immediately
following the closing of the Agreement, Altony became a wholly owned subsidiary
of the Company. As originally filed, the shell public company was consolidated
with the acquirer as of January 1, 2007. For accounting purposes only, the
transaction was treated as a recapitalization of the Company as of March 4,
2008, with Altony as the acquirer. The financial statements prior to March 4,
2008 are those of Altony and reflect the assets and liabilities of Altony at
historical carrying amounts. The financial statements show a retroactive
restatement of Altony’s historical stockholders’ equity to reflect the
equivalent number of shares issued to the owner of the subsidiary.
 
 The
principal business activity of Altony is the ownership and management of its
SAHF subsidiary. SAHF has initially focused on oil and gas investments in
Argentina and intends to continue its focus on the energy sector, including the
development and supply of energy and alternate energy sources in Latin America
and the United States.
 
 In August
2007, SAHF signed a purchase option for a partial interest in three oil and gas
concessions in Argentina. SAHF is in the process of obtaining the necessary
government and environmental permits to operate these concessions. In the third
quarter of 2008, SAHF agreed to exchange certain development rights it held in
these concessions for ownership interests in the oil and gas production from
these concessions ranging from nine to 23.5 percent.
 
 The
Company intends to continue its environmental technology and service activities
in the Middle East that are conducted by its joint venture subsidiary
Delta-Envirotech, Inc. (“Envirotech”), headquartered in Virginia. The
construction technology activities that were conducted by the Company’s wholly
owned subsidiary Delta Technologies, Inc. (“Technologies”) are being phased out
because the Company has elected not to pursue its patent for the insulating
concrete wall forming (ICF) system known as Delta Wall.
  Page
10
 
 BASIS OF
PRESENTATION
 
 The
consolidated balance sheet as of June 30, 2008, 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 information for the consolidated balance sheet as
of December 31, 2007 was derived from the audited financial statements of Altony
S.A. and its wholly-owned subsidiary.
 
 The
consolidated financial statements for the period ended June 30, 2008 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 current activities and complete its proposed activities.
However, there is no assurance that additional capital will be obtained or that
the Company’s subsidiaries will be profitable. These uncertainties raise
substantial doubt about the ability of the Company to continue as a going
concern. The accompanying financial statements do not include any adjustments
that might result from the outcome of these uncertainties should the Company be
unable to continue as a going concern.
 
 SIGNIFICANT
ACCOUNTING POLICIES
 
 PRINCIPLES
OF CONSOLIDATION
  The
Company's financial statements include the accounts of all majority-owned
subsidiaries where its ownership is more than 50 percent of common stock. The
consolidated financial 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 minority ownership interests
are reported in the consolidated balance sheet as a liability. The minority
ownership interest of the Company's earnings or loss, net of tax, is classified as
"Minority interest share of income (loss) of consolidated subsidiaries" in the
consolidated statements of operations.
  Page
11
  USE OF
ESTIMATES
 
 The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those
estimates.
 
 LOSS PER
SHARE
 
 Basic and
diluted loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding during the year. Potential common
shares are excluded from the loss per share calculation because the effect would
be antidilutive. Potential common shares relate to the convertible debt, stock
options and common stock purchase warrants. As of June 30, 2008, there were
2,749,920 potential common shares related to convertible debt and 6,998,000
potential common shares related to stock options.
 
 REVENUE
RECOGNITION
 
 The
Company recognizes revenue from the results of its investment portfolio as the
difference between proceeds from the sale of securities and their acquisition
cost, less commissions paid to the firm that conducts the securities
transactions.
 
 EVALUATION
OF LONG-LIVED ASSETS
 
 The
Company reviews property and equipment and finite-lived intangible assets for
impairment whenever events or changes in 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 present value of the related estimated future cash flows, the asset
would be adjusted to its fair value and an impairment loss would be charged to
operations in the period identified.
 
 DEPRECIATION
AND AMORTIZATION
 
 Property
and equipment are stated at cost. Depreciation is provided for by the
straight-line method over the estimated useful lives of the related
assets.
  Page
12
 
 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 are 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 Cumulative Other Comprehensive Income. The translation gains
or losses were not material for the six and three months ended June 30, 2008 and
2007.
 
 INTANGIBLES
 
 SFAS No.
142, "Goodwill and Other Intangible Assets," specifies the financial accounting
and reporting for acquired goodwill and other intangible assets. Goodwill and
intangible assets deemed to have indefinite useful lives are not amortized but
are subject to, at a minimum, an annual impairment test. If the carrying value
of goodwill or intangible assets exceeds its fair market value, an impairment
loss would be recorded.
 
 FAIR
VALUE OF FINANCIAL INSTRUMENTS
 
 For
financial instruments including cash, investments, accounts payable, accrued
expenses, notes payable and convertible debt, it was assumed that the carrying
amount approximated fair value because of the short maturities of such
instruments.
  Page
13
  NEW
FINANCIAL ACCOUNTING STANDARDS
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” an amendment of FASB Statement No. 133 (“SFAS No.
161”).  The new standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance and cash flows.  It
is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008.  The Company does not
believe that SFAS No. 161 will have a material impact on its financial
statements.
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”).  SFAS No. 162 identifies the
sources of accounting principles and the framework for selecting the principles
to be used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles (GAAP) in the United States.  This Statement is effective
sixty days following the SEC’s approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.”  The
Company is currently evaluating the potential impact, if any, of the adoption of
SFAS No. 162 on its financial statements.
  2.
INVESTMENTS
 
 The
Company invests in public and private securities of the United States and Latin
American countries as well as long-term investments in oil and gas concessions.
The fair market value of these investments at June 30, 2008 and December 31,
2007 is indicated below.
  June 30,
                            
                            
                            December 31,2008
                            
                            
                            2007Public
      securities
                            
                            $
                            —
                            
                            
                            $
                            322,300Private
      securities
                            
                            
                            2,409,000
                            
                            
                            
                            5,556,720Other
      current investments
                            
                            
                            1,728,538Current
      investments
                            
                            
                            4,137,538
                            
                            
                            
                            5,879,020Oil
      and gas concessions
                            
                            
                            —
                            
                            
                            
                            1,130,000$
                            4,137,538
                            
                            
                            $
                            7,009,020
  Page
14
 
 3.
PROPERTY AND EQUIPMENT
  June
      30,
                            
                            
                            December 31,2008
                            
                            
                            2007Equipment
                            
                            $
                            455,035
                            
                            
                            $
                            —Deposits
      on land
                            
                            
                            —
                            
                            
                            
                            —Leasehold
      improvements
                            
                            
                            7,807
                            
                            
                            
                            —462,842
                            
                            
                            
                            —Less
      accumulateddepreciation
                            
                            
                            116,256
                            
                            
                            
                            —$
                            346,586
                            
                            
                            $
                            —
 
 Depreciation
expense for the six months ended June 30, 2008, amounted to
$25,112.
 
 4.
INTANGIBLE ASSETS
 
 Intangible
assets are intellectual property included in a patent application. The Company
has elected not to pursue the patent application and has written-off $122,742 of
the unamortized amounts effective as ofthe quarter ended June
30, 2008. Amortization expense was $3,575 and $1,787 for the six and three
months ended June 30, 2008, respectively. Other intangible assets consisted of
the following:
  June 30,
                      
                      
                      December 31,2008
                      
                      
                      2007Gross
      Carrying Amount
                      
                      $
                      143,000
                      
                      
                      $
                      —Accumulated
      Amortization
                      
                      
                      143,000
                      
                      
                      
                      —Intellectual
      property costs
                      
                      $
                      —
                      
                      
                      $
                      —
 
 
 5.    INVESTMENT
IN JOINT VENTURES
 
 a.
              In
      December 2003, the Company formed a joint venture to
      developSection
      124, low income housing in the Commonwealth of PuertoRico.  The
      Company became the general partner and 75% majorityowner
      of a limited partnership, Delta Development Partners, LPthat
      owned the 85% majority share of Delta Developers Corp., aPuerto
      Rico corporation, formed to manage the construction andrelated
      activities required to build approximately 270 homesunder
      Section 124. During the year ended December 31, 2006,
      theactivities
      associated with this joint venture were
  discontinued.
 
 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 owned 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 homes under
Section 124. During the first quarter of 2007, the activities
associated with this joint venture were discontinued a nd the
land deposit was returned to the joint venture.
  Page
15
 
 In
November 2006, the Company entered into a new joint venture to develop
Section 124 housing in Puerto Rico. The Company became the
general partner and 35% minority owner of limited partnership,
Delta TA, LP formed to manage the construction and related
activities to build approximately 338 residential units under the
Section 124 program. As of the quarter ended September 30, 2007,
the Puerto Rico housing development activities associated
with this partnership were discontinued.
 
 b.
              On
      January 14, 2004, the Company entered into a joint ventureagreement
      with Hi-Tech Consulting and Construction, Inc. (“Hi-Tech”)
      forming Delta-Envirotech, Inc. for the purpose ofproviding
      environmental technologies and services to markets inthe
      Middle East. The joint venture company is based in
      Virginiaand
      focuses on participating in foreign government sponsoredpollution
      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 for $2. The Company  and Hi-Tech each own
forty-five percent (45%) of the joint venture.
 
 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 outside investorsownership
      interest in Delta Development Partners, L.P.;Delta
      Development Partners II, L.P.; Delta TA, LP; DeltaDevelopers
      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 statement of operations for the six and three months
ended June 30, 2008. 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.
  Page
16
 
 The
amount on the Company's consolidated balance sheet represent the
minority interests as of June 30, 2008.
  The
following represents a schedule of minority interests as of:
 
 June 30,
                  
                  
                  December 31,2008
                  
                  
                  2007Delta
      Development Partners L.P.
                  
                  $
                  83,790
                  
                  
                  $
                  —Delta
      Development Partners II, L.P.
                  
                  
                  37,718
                  
                  
                  
                  —Delta
      TA L.P.
                  
                  
                  105,480
                  
                  
                  
                  —Delta
      Developers Corp.
                  
                  
                  —
                  
                  
                  
                  —Delta
      Developers Guayanilla Corp.
                  
                  
                  —
                  
                  
                  
                  —Delta-Envirotech,
      Inc.
                  
                  
                  —
                  
                  
                  
                  —PT
      Triyudha - Envirotech
                  
                  
                  —
                  
                  
                  
                  —$
                  226,988
                  
                  
                  $
                  —
 
 6. NOTES
PAYABLE
 
 In April
2005, the Company issued three 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 these notes became payable on written demand by the
lenders. In March 2008, the Company paid $60,000 of the principal amount of the
original notes and each of the three notes was amended and restated. By
amendment, the noteholders waived all of the accrued and unpaid interest on the
original notes and the aggregate principal amount was reduced to $150,655. The
amended and restated notes bear interest of 8% and mature in November
2008.  Interest expense for the six and three months ended June 30,
2008 amounted to $(33,843) and $3,013, respectively. As of June 30, 2008,
accrued interest of $4,017 is included in accrued expenses on the Company's
consolidated balance sheet.
 
 In May
2006, the Company borrowed $30,000 from an investor (formerly a related party)
at interest of 6% per annum with the principal and interest due on May 17, 2008.
In May 2008, the note was amended extending the maturity date to August 15,
2008. The Company did not repay the note on the maturity date but the noteholder
has verbally agreed not to make written demand for payment. The Company is
currently negotiating amended terms with the noteholder. If the Company and the
noteholder can not agree upon an amendment to the note, including an extension
of the maturity date, the Company may receive a notice of
default.  Interest expense for the six and three months ended June 30,
2008 amounted to $900 and $450, respectively. As of June 30, 2008, accrued
interest of $3,822 is included in accrued expenses on the Company's consolidated
balance sheet.
 
 In August
2007, the SAHF borrowed $2,300,000 from Oxipetrol-Petroleros de Ocidente, S.A.
in conjunction with its investment in oil and gas concessions. This is a non
interest-bearing loan with a maturity date of July 15, 2008. During the second
quarter of 2008, $580,00 of the principal amount was repaid. The principal
amount of $1,720,000 is included in notes payable on the Company’s consolidate
balance sheet at June 30, 2008. The remaining principal amount of this note was
repaid in July 2008.
  Page
17
 
 7.
CONVERTIBLE DEBT
 
 During
the year ended December 31, 2004, the Company issued convertible notes in the
principal amounts of $961,400. The convertible notes had interest rates from 4%
to 6% and matured at various dates between May 12, 2006 and January 16, 2007.
These notes are convertible into common stock at a conversion price of $0.05 to
$0.125 per share. One note, in the original principal amount of $129,160 that
originally matured in May 2006 was amended during 2006 and 2007 extending the
maturity date until June 2008. After partial conversion of the principal amount
of this note in July 2006, and the payment of accrued interest in March 2007,
the remaining principal amount and all accrued interest was converted into
1,491,886 shares of common stock in April 2008. Another note, in the principal
amount of $193,740 that originally matured in May 2006 was amended during 2006
and 2007 extending the maturity date to December 1, 2007. The Company did not
repay the note on the maturity date but the holder of this note has verbally
agreed not to make written demand for payment. The Company is currently
negotiating amended terms with the noteholder. If the Company and the noteholder
can not agree upon an amendment to the note, including an extension of the
maturity date, the Company may receive a notice of default. One note issued by
the Company in the principal amount of $60,000, became payable upon written
demand by the lender in September 2006. The balance of the convertible notes
issued in 2004 was converted into 12,923,280 shares of common stock through June
30, 2008.
 
 In
connection with the issuance of the convertible notes, the Company issued
8,880,000 common stock purchase warrants at an exercise price of $0.10 per
share. The warrants expired March 31, 2006.
 
 The
Company accounted for the warrants and the convertible debt with detachable
warrants in accordance with Emerging Issues Task Force 00-27 and 00-19 and SFAS
No. 33. The Company performed calculations allocating the proceeds of
convertible debt with detachable warrants to each respective security at their
fair values. The Company used the conversion value of the convertible debt and
calculated fair value of the warrants using the Black-Scholes valuation model
for its estimate of fair value. The Company compared the allocated proceeds of
the convertible debt to the difference between its conversion value and face
amount. The calculated fair value of the convertible debt of $722,855 was
recorded as the value of the Beneficial Conversion Feature and accordingly
credited to Additional Paid-in Capital. The value of the warrants of $235,545
was recorded as a reduction of the convertible debt. The convertible debt was
recorded at zero. The convertible debt was accreted to its face value after
2004, 2005 and 2006 conversions, under the interest method per APB 21, until it
either converted or matured.
  Page
18
  In May
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 was 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 and upon maturity 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 $1,440 of 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 a conversion price of $0.05 per share,
the fair value at the date of issuance. Both notes matured 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
2008, the Company issued 340,000 shares of common stock in payment of the
principal amount of the $17,000 note and issued 20,400 shares of common stock in
payment of the accrued interest of $1,020.
 
 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 conversion price of $0.05 per share, the fair value at the date of
issuance, with a maturity date of April 9, 2008. On the maturity date, the
Company issued 532,000 shares of common stock in payment of the principal amount
and 31,920 shares of common stock in payment of the accrued interest of
$1,596.
 
 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 the 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.
 
 At June
30, 2008, the Company's outstanding convertible notes were convertible into
2,749,920 shares of common stock.
 
 The
following table shows the maturities by year of total face amount of the
convertible debt obligations at June 30, 2008:
 
 2008
                            
                            $
                            253,740$
                            253,740
 
 For the
six and three months ended June 30, 2008, the Company recorded interest expense
of $5,791 and $2,199, respectively. As of June 30, 2008, accrued interest of
$38,400 is included in accrued expenses on the Company's consolidated balance
sheet.
 
 8.
ACCRUED EXPENSES
 
 Accrued
expenses consists of the following:
  Page
19
 
 June
      30,
                            
                            
                            December 31,2008
                            
                            
                            2007Professional
      fees
                            
                            $
                            34,000
                            
                            
                            $
                            —Interest
      expense
                            
                            
                            49,132
                            
                            
                            
                            —Payroll
      expense
                            
                            
                            553,127
                            
                            
                            
                            —Payroll
      expense-officers
                            
                            
                            158,061
                            
                            
                            
                            —Payroll
      tax expense
                            
                            
                            46,264
                            
                            
                            
                            —Accrued
      consulting fees
                            
                            
                            144,000
                            
                            
                            
                            —Other
      accrued expenses
                            
                            
                            362,334
                            
                            
                            
                            —$
                            1,346,918
                            
                            
                            $
                            —
 
 9. LOANS
FROM RELATED PARTIES
 
 In March
2008, the Company borrowed $121,000, in the aggregate, from two stockholders of
the Company, with interest of 6% per annum and the principal and interest due on
September 6, 2008. The Company did not repay the two loans on the maturity date
but both lenders verbally agreed to extend the maturity dates and further agreed
not to make written demand for payment. The balance due to the stockholders is
included in Notes Payable on the Company’s consolidated balance sheet at June
30, 2008. Accrued interest of $2,420 is included in accrued expenses on the
Company’s consolidated balance sheet at June 30, 2008. The Company recorded
interest expense of $2,420 and $1,815 for the six and three months ended June
20, 2008, respectively.
 
 During
April and May 2008, the Company borrowed $20,000, $9,550 and $16,900,
respectively, from two stockholders of the Company. Each note bears interest of
6% per annum with the principal and accrued interest due on October 15, October
25, and November 14, 2008, the respective maturity dates. On June 27, 2008 the
Company borrowed $19,500 from a stockholder and issued a 6% promissory note with
principal and accrued interest due upon written demand by the lender. Accrued
interest of $377 is included in accrued expenses on the Company’s consolidated
balance sheet at June 30, 2008. The Company recorded interest expense of $377
and $377 for the six and three months ended June 20, 2008,
respectively.
 
 10.  OTHER
RELATED PARTY TRANSACTION
 
 The
Company's subsidiary, Delta-Envirotech, Inc. ("Envirotech") pays monthly office
rent to David Razmara, the president of Envirotech and a
stockholder of the Company, in the current amount of $2,000. The rent expense
for the six and three months ended June 30, 2008 amounted to $12,000 and $6,000,
respectively.
 
 11.   STOCKHOLDERS'
EQUITY
 
 The
Company issues shares of common stock for services and repayment of debt and
interest valued at fair market value at time of issue.
 
 a. For
the six months ended June 30, 2008, the Company issued 10,550,000 shares of
common stock for services valued at $238,500, valued at $0.02 - $0.07 per
share.
 
 b. For
the six months ended June 30, 2008, the Company issued 2,300,571 shares of
common stock upon the conversion of convertible notes in the principal amount of
$143,600, valued at $0.05 - $0.07 per share; and 115,634 shares of common stock
for payment of accrued interest in the amount of $7,048, valued at $0.05 - $0.07
per share.
  Page
20
 
 12.
DISCONTINUED OPERATIONS
 
 As of
June 30, 2008, the Company discontinued all its operations
in  Indonesia. The activities of PT Triyhuda-Envirotech have been
classified as discontinued operations. 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 consolidated financial statements for
the six and three months ended June 30, 2008 due to the immaterial nature of the
transactions.
 
 13.   BUSINESS
SEGMENT INFORMATION
 
 The
Company’s reporting business segments are geographic and
include  North America (United States), South America, the Middle East
and the Far East (Indonesia). The Company formerly operated in a fifth reporting
segment, 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:
 
 Six Months Ended
                  
                  
                  Three months EndedJune 30,
                  
                  
                  June 30,2008
                  
                  
                  2007
                  
                  
                  2008
                  
                  
                  2007Total
      Revenue:North
      America
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —South
      America
                  
                  
                  (2,053,011
                  )
                  
                  
                  (967,045
                  )
                  
                  
                  7,942
                  
                  
                  
                  (483,522
                  )Indonesia
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Middle
      East
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —Puerto
      Rico
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —
                  
                  
                  
                  —$
                  (2,053,011
                  )
                  
                  $
                  (967,045
                  )
                  
                  $
                  7,942
                  
                  
                  $
                  (483,522
                  )Loss
      from Operations:North
      America
                  
                  $
                  (1,065,037
                  )
                  
                  $
                  —
                  
                  
                  $
                  (510,666
                  )
                  
                  $
                  —South
      America
                  
                  
                  (2,053,033
                  )
                  
                  
                  (963,821
                  )
                  
                  
                  7,942
                  
                  
                  
                  (481,910
                  )Indonesia
                  
                  
                  28,250
                  
                  
                  
                  —
                  
                  
                  
                  37,238
                  
                  
                  
                  —Middle
      East
                  
                  
                  (69,881
                  )
                  
                  
                  —
                  
                  
                  
                  (31,875
                  )
                  
                  
                  —Puerto
      Rico
                  
                  
                  (14,206
                  )
                  
                  
                  —
                  
                  
                  
                  (13,893
                  )
                  
                  
                  —$
                  (3,173,907
                  )
                  
                  $
                  (963,821
                  )
                  
                  $
                  (511,524
                  )
                  
                  $
                  (481,910
                  )
  14.   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 adjustment in the net liability for unrecognized income tax
benefits.
  Page
21
  15. 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) revises 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 terms, net of estimated
forfeitures. The Company has selected the modified prospective method of
transition; accordingly, prior periods have not been restated. 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 June
30, 2008, the Company had one share-based compensation plan, which is described
below. During the six and three months ended June 30, 2008, the adoption of SFAS
No.123(R) resulted in an aggregate pretax compensation expense recognized in net
loss for stock based compensation of $393,490 and $196,745, respectively. For
the six and three months ended June 30, 2008, the aggregate pretax compensation
expense caused basic and diluted earnings per common share to decrease by $-0-
and $-0- per share, respectively.
 
 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 six months ended June 30, 2008, the Company
issued 10,550,000 shares, and recorded compensation expense of $238,500 in
conjunction with the issuance of these shares.
 
 Stock
Option Plan
 
 In
December 2001, the Company's stockholders approved 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 June 30,
2008, there were 3,002,000 shares of common stock available for issuance under
the 2004 Plan.
 
 The
Company was also authorized to issue shares of stock to its employees from its
2001 Plan. The Company expensed the issuance of stock awards in accordance with
SFAS No. 123. Shares issued from the 2001 Plan were expensed at the time of
issuance, as the stock issued had no restrictions to the
employees.
  Page
22
 
 The
Company did not issue any stock options to its employees during the six months
ended June 30, 2008.
 
 A summary
of the option activity under the 2004 Plan as of December 31, 2007 and changes
during the six months ended June 30, 2008, is presented below.
 
 Options
                      
                      Shares
                      
                      
                      Weighted-Average
           Exercise Share
                        Price
                      
                      
                      Weighted-
                        Average
                        Remaining
                        Contractual
                        Term
                      
                      
                      Aggregate
                        Intrinsic
                        ValueOutstanding
      at January 1, 2008
                      
                      
                      7,978,000
                      
                      
                      $
                      0.11Options
      granted
                      
                      
                      -
                      
                      
                      $
                      -Options
      exercised
                      
                      
                      -
                      
                      
                      $
                      -Options
      cancelled/expired
                      
                      
                      (980,000
                      )
                      
                      $
                      0.11Outstanding
      at June 30, 2008
                      
                      
                      6,998,000
                      
                      
                      $
                      0.11
                      
                      
                      
                      2.9
                      
                      
                      $
                      (279,920
                      )Exercisable
      at June 30, 2008
                      
                      
                      6,998,000
                      
                      
                      $
                      0.11
                      
                      
                      
                      2.9
                      
                      
                      
                      —
 
 
 Stock
compensation expense applicable to stock options for the six and three months
ended June 30, 2008 was approximately $393,490 and $196,745, respectively. The
aggregate intrinsic value of options outstanding as of June 30, 2008 and
December 31, 2007 was $(279,920) and $(718,020), respectively.
 
 At June
30, 2008, there was $1,015,780 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 2.9
years.
  Page
23
  
 16.
COMMITMENTS AND CONTINGENCIES
  Consulting
Agreements
 
 In August
2005, Delta Technologies, Inc. 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 Technologies'
insulating concrete wall forming products.
 
 For the
six and three moths ended June 30, 2008, consulting fees of $26,400 and $13,200,
respectively, have been expensed and $91,667 of the stock value associated with
the issuance of shares to Straub is included in accrued expenses on the
Company's consolidated balance sheets as of June 30, 2008.
 
 17.
RESTATEMENT
 
 The
balance sheet as of December 31, 2007 has been restated to reflect the reverse
merger as of March 4, 2008. The following table reflects the historical balance
sheet of the acquired company in the reverse acquisition.
  Page
24
 
 Balance
      Sheet
                          
                          
                          
                          
                          
                          
                          
                          AdjustedAs filed
                          
                          
                          
                          
                          
                          
                          
                          Balance SheetDecember 31, 2007
                          
                          
                          
                          
                          Adjustments (1)
                          
                          
                          December 31, 2007ASSETSCurrent
      Assets:Cash
                          
                          $
                          57,633
                          
                          
                          
                          (57,633
                          )
                          
                          $
                          -Investments
                          
                          
                          4,709,020
                          
                          
                          
                          1,170,000
                          
                          
                          
                          5,879,020Prepaid
      expenses
                          
                          
                          1,914
                          
                          
                          
                          (1,914
                          )
                          
                          
                          -Total
      Current Assets
                          
                          
                          4,768,567
                          
                          
                          
                          
                          
                          
                          
                          5,879,020Property
      and equipment –net
                          
                          
                          368,123
                          
                          
                          
                          (368,123
                          )Intangible
      asset
                          
                          
                          126,317
                          
                          
                          
                          (126,317
                          )Investments
      in oil and gas concessions
                          
                          
                          2,300,000
                          
                          
                          
                          (1,170,000
                          )
                          
                          
                          1,130,000Other
      assets
                          
                          
                          650
                          
                          
                          
                          (650
                          )
                          
                          
                          -TOTAL
      ASSETS
                          
                          $
                          7,563,657
                          
                          
                          
                          
                          
                          
                          $
                          7,009,020LIABILITIES
      AND STOCKHOLDER'S EQUITYCurrent
      Liabilities:Accounts
      payable
                          
                          $
                          412,922
                          
                          
                          
                          (173,370
                          )
                          
                          $
                          239,552Accrued
      expenses
                          
                          
                          1,225,674
                          
                          
                          
                          (1,225,674
                          )
                          
                          
                          -Convertible
      debt
                          
                          
                          397,340
                          
                          
                          
                          (397,340
                          )
                          
                          
                          -Notes
      payable
                          
                          
                          2,540,655
                          
                          
                          
                          (240,655
                          )
                          
                          
                          2,300,000Total
      Current Liabilities
                          
                          
                          4,576,591
                          
                          
                          
                          
                          
                          
                          
                          2,539,552Minority
      interests in consolidated subsidiaries
                          
                          
                          225,797
                          
                          
                          
                          (225,797
                          )
                          
                          
                          -Stockholders'
      Equity:Common
      stock $0.0001 par value - authorized 250,000,000 shares;
      218,882,953 and 208,882,953 outstanding, respectively
                          
                          
                          20,888
                          
                          
                          
                          (7,888
                          )
                          
                          
                          13,000Additional
      paid-in capital
                          
                          
                          11,953,766
                          
                          
                          
                          (9,366,766
                          )
                          
                          
                          2,587,000Accumulated
      deficit
                          
                          
                          (9,213,385
                          )
                          
                          
                          11,082,853
                          
                          
                          
                          1,869,468Total
      Stockholders' Equity
                          
                          
                          2,761,269
                          
                          
                          
                          
                          
                          
                          
                          4,469,468TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                          
                          $
                          7,563,657
                          
                          
                          
                          
                          
                          
                          $
                          7,009,020
 
 (1)
              To
      reflect the elimination of the parent company at December 31, 2007 as the
      merger was not consumated until March 4,
2008.
  Page
25





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





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. Since 2003, our
principal business activities were focused on providing environmental and
construction technologies and services in the Far East, the Middle East, and the
United States.





On
March 4, 2008, we entered into a Membership Interest Purchase Agreement (the
“Agreement”) with Egani, Inc., an Arizona corporation (“Egani”). Pursuant to the
Agreement, we acquired from Egani all of the issued and outstanding shares of
stock in Altony S.A., an Uruguayan Sociedad Anonima, (“Altony”) which owns 100%
of the issued and outstanding membership interests in South American Hedge Fund
LLC, a Delaware limited liability company (“South American Hedge Fund”). At the
closing of the Agreement, we issued 130,000,000 shares of our common stock to
Egani for the purchase from Egani, of all of the outstanding shares of stock in
Altony which constituted, following such issuance, a majority of the outstanding
shares of our common stock. Immediately following the closing of the Agreement,
Altony became a wholly owned subsidiary of the Company. For accounting purposes,
the transaction was treated as a recapitalization of the Company, as of March 4,
2008, with Altony as the acquirer.





The
principal business of Altony is the ownership and management of South American
Hedge Fund,  a hedge fund that maintains its business office in
Uruguay and invests in public and private securities of the United States and
Latin American countries. South American Hedge Fund also plans to proceed with
investments in oil and gas concessions in Argentina and intends to focus its
investments in the energy sector, including development of energy producing
investments and alternative energy production in Latin America and the United
States.





RESULTS
OF OPERATIONS





During
the six months ended June 30, 2008, we incurred a net loss of $3,130,832
primarily attributable to investment results of the South American Hedge Fund.
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 additional
financing or that such financing will be on terms favorable to us. The inability
to obtain additional financing when needed would have a material adverse effect
on our operating results.





THREE
MONTHS ENDED JUNE 30, 2008 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2007.




During
the three months ended June 30, 2008, we incurred a net loss of approximately
$508,000 compared to a net loss of approximately $482,000 for the three months
ended June 30, 2007.





The increase of $29,344 in our
operating loss for the three months ended June 30, 2008 over the comparable
period of the prior year was primarily due to a net increase in revenue of
approximately $491,000, offset by an increase in general and administrative
expenses of approximately $396,000 and a loss on intellectual property of
approximately $123,000..


Page
26





SIX
MONTHS ENDED JUNE 30, 2008 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2007.




During
the six months ended June 30, 2008, we incurred a net loss of approximately
$3,131,000 compared to a net loss of approximately $964,000 for the six months
ended June 30, 2007.





The
increase in our operating loss for the six months ended June 30, 2008 over the
comparable period of the prior year was due to an decrease of approximately
$1,086,000 in invetment results combined with an increase of approximately
$997,000 in general and administrative expenses.





PLAN OF
OPERATION





Energy Sector





The
Company’s newly acquired South American Hedge Fund subsidiary has oil and gas
investments in Argentina and will continue to focus on the energy sector,
including the development and supply of energy and alternative energy sources in
Latin America and the United States.





In August
2007, South American Hedge Fund signed a purchase option for three interests in
oil and gas concessions in Argentina. We are in the process of obtaining the
necessary government and environmental operating permits for our operation of
these concessions.Our
primary focus will be, upon receipt of the governmental approvals relative to
our investment in these concessions, to develop two wells per month. In the
third quarter of 2008, South American Hedge Fund agreed to exchange certain
development rights it held in these concessions for ownership interests in the
oil and gas production from these concessions ranging from nine to 23.5
percent.




To supplement our growth,
we may also consider mergers and acquisitions, although we have no acquisitions
contemplated or under discussion at this time.




In
addition, we are currently evaluating newly developed alternative energy
technologies for possible investment and development.





Environmental and Construction
Technologies and Services





Following
the acquisition of Altony and South America Hedge Fund, we have continued to
pursue environmental remediation and other projects in the Middle East. These
activities are conducted by our joint venture subsidiary, Delta-Envirotech, Inc.
(“Envirotech”). We have operating control of Envirotech and hold a 45% percent
ownership interest. Envirotech has  entered into strategic alliance
agreements with several United States-based entities with technologies and
products in the environmental field to support its activities.




In March
2007, we reached a working agreement to provide equipment to manufacture
insulating concrete form (ICF) products for the building industry in Saudi
Arabia. Because of lengthy and unexpected delays by the potential purchaser, we
are currently evaluating whether or not it is in the Company’s best interests to
continue with this agreement or seek other purchasers of the equipment.
Envirotech expanded its product line by securing the master distribution rights
for the Middle East for a gas-imaging product used in oilfield and refining
operations that has been approved for testing by ARAMCO, the Saudi government
oil company. ARAMCO has scheduled field trials to test this equipment that we
expect will be completed by the end of September 2008.





We have
withdrawn from the Indonesia market. Our decision was based on the additional
expenses we would incur to meet the new requirement of a second contract with
Pertamina (the government-owned oil company), that our processing equipment be
moved off the refinery property. We are currently evaluating whether to redeploy
the processing equipment or sell it to a third party.





Our
construction technology activities were conducted by our wholly owned
subsidiary, Delta Technologies, Inc. (“Technologies”). In August 2005,
Technologies acquired certain intellectual property and filed a patent
application for a new insulating concrete wall forming (ICF) system, call Delta Wall. We have elected
not to incur the additional expense required to pursue the Delta Wall patent application
and are developing a strategy to exit this business segment.





LIQUIDITY





At June
30, 2008 we had a working capital surplus of $292,827, compared with a surplus
of $4,469,468 at December 31, 2007. This decrease at June 30, 2008 is a result
of a decrease in current investments of approximately
$1,741,000.


Page
27





ASSETS





At June
30, 2008, we had total assets of $4,489,994, compared to total assets of
$7,009,020 at December 31, 2007. The decrease in total assets was primarily due
to the decrease in total investments of approximately $2,870,000 and a decrease
in intangible assets of approximately $123,000.





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 June
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” an amendment of FASB Statement No. 133 (“SFAS No.
161”).  The new standard is intended to improve financial reporting
about derivative instruments and hedging activities by requiring enhanced
disclosures to enable investors to better understand their effects on an
entity’s financial position, financial performance and cash flows.  It
is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008.  The Company does not
believe that SFAS No. 161 will have a material impact on its financial
statements.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. This Statement is effective sixty days following the SEC’s
approval of the Public Company  Accounting Oversight Board amendments
to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles.” The Company is currently evaluating the
potential impact, if any, of the adoption of SFAS No. 162 on its 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 periods ended June 30, 2008 and 2007.





GOODWILL
AND OTHER INTANGIBLES





SFAS No.
142, "Goodwill and Other Intangible Assets,” 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.




ITEM 3.   QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.





We are
primarily exposed to foreign currency risk, interest rate risk and commodity
price risk.





Foreign
Currency Risk - Our financial results could be affected by factors such as
changes in foreign currency exchange rates or, weak economic conditions in
foreign markets. Because our revenue is reported in U.S. dollars, fluctuating
exchange rates of the local currency, when converted into U.S. dollars, may have
an adverse impact on our revenue and income. We have not hedged foreign
currency exposures related to transactions denominated in currencies other than
U.S. dollars. We do not engage in financial transactions for trading or
speculative purposes.


Page
28





Interest
Rate Risk - Interest rate risk refers to fluctuations in the value of a security
resulting from changes in the general level of interest rates. Investments that
are classified as cash and cash equivalents have original maturities of three
months or less. Interest income is sensitive to changes in the general level of
U.S. interest rates. Although we have significant short-term investments, due to
the short-term nature of our investments, we believe that there is not a
material risk exposure.





Commodity
Price Risk - With operations in the energy sector, our results will be dependent
on the pricing of energy commodities.





ITEM
4T. 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.




b.
Changes in internal controls over financial reporting.


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




PART II–OTHER
INFORMATION





Item
1.   LEGAL PROCEEDINGS.




On
September 16, 2008, the Company was notified of a compliant filed with the
Pennsylvania Department of Labor & Industry by its former President and CEO
alleging non-payment of wages in the amount of $53,271. The Company also
received notice of a similar complaint filed by a former employee alleging
non-payment of wages in the amount of $17,782.





ITEM
1A.   RISK FACTORS.





Not
applicable.





ITEM 2.   UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS.





The following table sets
forth the sales of unregistered securities since the Company’s last report filed
under this
item.




Date
                                        
                                        Title
      and Amount
                                        
                                        Purchaser
                                        
                                        Principal
                                          Underwriter
                                        
                                        Total
      Offering Price/
                                          Underwriting DiscountsApril
      9, 2008
                                        
                                        924,320
      shares of common stock, issued upon conversion of principal and accrued
      interest of a promissory note in the principal amount of
      $43,600.
                                        
                                        Private
      investor.
                                        
                                        NA
                                        
                                        $46,216/NAApril
      16, 2008
                                        
                                        550,000
      shares of common stock.
                                        
                                        Consultant.
                                        
                                        NA
                                        
                                        $38,500/NAApril
      23, 2008
                                        
                                        1,491,885
      shares of common stock, issued upon conversion of principal and accrued
      interest of a promissory note in the principal amount of
      $100,000.
                                        
                                        Private
      investor.
                                        
                                        NA
                                        
                                        $104,432/NA


Page
29





ITEM
3.   DEFAULTS UPON SENIOR SECURITIES.





Not
applicable.





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





Not
applicable.





ITEM 5.   OTHER
INFORMATION.





Not
applicable.





ITEM
6.  EXHIBITS.





31.1
            Certification
      of Principal 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 Principal Executive Officer Pursuant to 18  U.S.C. Section
      1350 as  adopted pursuant to Section 906 of the Sarbanes-Oxley
      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 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/ Malcolm W. ShermanMalcolm
      W. ShermanExecutive
      Vice President andPrincipal
      Executive Officer


Dated:
December 16, 2008




Page
30





EXHIBIT
INDEX





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


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


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


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


Page
31