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                                DELTA MUTUAL INC

                                 Filing Type: 10-Q

                                 Description: N/A

                                 Filing Date: 05/15/04

                                      Ticker: DLTM
                                       Cusip: 247734
                                       State: PA

                                     Country: US

                                 Primary SIC: 7375

                            Primary Exchange: OTH

                     Billing Cross Reference:
                                Date Printed: 05/19/04


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                          Provided by Thomson Financial

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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                                TABLE OF CONTENTS

              To jump to section, click on hypertexted page number

                                 Filing Sections

Document.....................................................................
Base.........................................................................
Cover Page...................................................................
Table of Contents............................................................
Part I.......................................................................
Financial Statement Item.....................................................
Financial Statements.........................................................
Balance Sheet................................................................
Income Statement.............................................................
Cashflow Statement...........................................................
Financial Footnotes..........................................................
Management Discussion........................................................
Part II......................................................................
Legal Proceedings............................................................
Changes in Securities........................................................
Defaults Upon Securities.....................................................
Submission to a Vote.........................................................
Other Information............................................................
Exhibits and Reports.........................................................
List of Exhibits.............................................................
Signatures...................................................................

                                    Exhibits

Exhibits.....................................................................
Exhibit Index................................................................
Additional Exhibits .........................................................
Additional Exhibits .........................................................


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                                       ii

<PAGE>

                                  FORM 10-QSB


                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.

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

      For the quarterly period ended March 31, 2004

                                       OR

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


For the transition period from ____________ to _________________


Commission File Number 000-30563


                               DELTA MUTUAL, INC.
             (Exact name of registrant as specified in its charter)


           DELAWARE                                14-1818394
(State or other jurisdiction of                 (I.R.S. Employer
incorporation or organization)                  Identification No.)


                 111 NORTH BRANCH STREET, SELLERSVILLE, PA 18960
                                 (215) 258-2800
             (Address and telephone number, including area code, of
                    registrant's principal executive office)


        (Former name, former address and former fiscal year, if changed
                               since last report)

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

YES  X  NO

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

At May 16, 2004, there were 13,445,688 shares of Common Stock, $.0001 par value,
outstanding.


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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                              DELTA MUTUAL, INC.

                                      INDEX

                                                                            Page

Part I.     Financial Information

Item 1.     Financial Statements

            Balance Sheets as of March 31, 2004 (unaudited) and
            December 31, 2003                                                 2

            Statements of Operations for the Three Months Ended
            March 31, 2003 and 2002 (unaudited) and the
            Period November 17, 1999 (Date of Formation)
            through March 31, 2004                                            3

            Statements of Cash Flows for the Three Months Ended
            March 31, 2004 and 2003 (unaudited) and the Period
            November 17, 1999 (Date of Formation) through
            March 31, 2004                                                  4-5

            Notes to Financial Statements (unaudited)                      6-12

Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                           13-19

Item 14.    Controls and Procedures                                          19

Part II.    Other Information

Item 1.     Legal Proceedings                                                20

Item 2.     Changes in Securities                                            20

Item 3.     Defaults upon Senior Securities                                  20

Item 4.     Submission of Matters to a Vote of Security Holders              20

Item 5.     Other Information                                                20

Item 6.     Exhibits and Reports on Form 8-K                                 20

Signatures                                                                   21

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                                       ii
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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PART I. FINANCIAL INFORMATION

PART I. Financial Information

      Item 1. FINANCIAL STATEMENTS

      Certain information and footnote disclosures required under accounting
principles generally accepted in the United States of America have been
condensed or omitted from the following consolidated financial statements
pursuant to the rules and regulations of the Securities and Exchange Commission.
It is suggested that the following consolidated financial statements be read in
conjunction with the year-end consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2003.

      The results of operations for the three months ended March 31, 2004 and
2003 are not necessarily indicative of the results for the entire fiscal year or
for any other period.


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                                     Page 1
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET



                       ASSETS
                                                                      March 31,
                                                                       2004
                                                                    -----------
                                                                    (Unaudited)
Current Assets:
      Cash                                                          $    36,521
      Loan receivable - former officer/stockholder                       51,221
      Prepaid expenses                                                      790
                                                                    -----------
            Total Current Assets                                         88,532

Fixed assets - net                                                       31,794
Investment in joint ventures                                             98,741
Capitalized construction costs                                          120,000
Other assets                                                              1,400
                                                                    -----------
                                                                        251,935
                                                                    -----------
           TOTAL ASSETS                                             $   340,467
                                                                    ===========

     LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
      Accounts payable                                              $   219,415
      Accrued expenses                                                  183,233
      Notes payable related party                                       284,400
      Due to related party                                               11,200
                                                                    -----------
           Total Current Liabilities                                    698,248
                                                                    -----------
Minority interest in subsidiaries                                       142,984
                                                                    -----------
Commitments and Contingencies
Stockholders' Deficiency:
      Common stock $0.0001 par value - authorized
        20,000,000 shares; 11,775,688
        shares issued and outstanding                                     1,178
      Additional paid-in-capital                                      1,601,783
      Deficit accumulated during
        the development stage                                        (2,103,726)
                                                                    -----------
           Total Stockholders' Deficiency                              (500,765)
                                                                    -----------
           TOTAL LIABILITIES AND
             STOCKHOLDERS' DEFICIENCY                               $   340,467
                                                                    ===========


See Notes to Financial Statements

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                                     Page 2
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                Period from
                                                                              November 17, 1999
                                           Three Months Ended March 31,      (Date of Formation)
                                         ------------        ------------         through
                                            2004                2003            March 31, 2004
                                         ------------        ------------        ------------
<S>                                      <C>                 <C>                 <C>
Revenue                                  $         --        $         --        $         --
                                         ------------        ------------        ------------

Costs and Expenses
      General and administrative
        expenses                              279,504             114,800           2,025,596
                                         ------------        ------------        ------------

      Net loss from operations               (279,504)           (114,800)         (2,025,596)
                                         ------------        ------------        ------------

      Interest expense                         (8,372)               (900)            (51,680)

      Minority interest                         8,609                  --               8,609

      Loss from joint ventures                (35,059)                 --             (35,059)
                                         ------------        ------------        ------------
                                              (34,822)               (900)            (78,130)
                                         ------------        ------------        ------------

      Net loss                           $   (314,326)       $   (115,700)       $ (2,103,726)
                                         ============        ============        ============

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

      Weighted average number of
        common shares outstanding-
        basic and diluted                  10,475,139           5,798,151
                                         ============        ============
</TABLE>


See Notes to Financial Statements

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                                     Page 3
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                Period
                                                                                           November 17, 1999
                                                          Three Months Ended March 31,    (Date of Formation)
                                                         ------------------------------         through
                                                            2004              2003           March 31, 2004
                                                         -----------        -----------        -----------
<S>                                                      <C>                <C>                <C>
Cash  flows from operating activities:
      Net loss                                           $  (314,326)       $  (115,700)       $(2,103,726)
      Adjustment to reconcile net loss to
        net cash used in operating activities:
      Depreciation                                               439                 49              2,198
      Non cash compensation                                   77,000                 --            504,012
      Joint Ventures                                          35,059                 --             35,059
      Minority interest                                       (8,609)                --             (8,609)
      Bad debt                                                    --                 --             96,625
      Changes in operating assets
      and liabilities:                                       (70,635)            33,631            369,722
                                                         -----------        -----------        -----------
Net cash used in operating activities:                      (281,072)           (82,020)       $(1,104,719)
                                                         -----------        -----------        -----------

Cash flows from investing activities:
      Purchase of fixed assets                                    --               (985)           (33,992)
      Minority interest                                      148,000                 --            148,150
      Advances to joint ventures                            (100,000)                --           (215,100)
                                                         -----------        -----------        -----------
Net cash used in investing activities                         48,000               (985)          (100,942)
                                                         -----------        -----------        -----------

Cash flows from financing activities:
      Proceeds from sale of common stock                      37,500                 --            190,750
      Proceeds from loan                                          --                 --            540,744
      Repayment of loan                                           --                 --           (540,744)
      Proceeds from convertible debt                              --                 --            250,000
      Proceeds from former officer and stockholder           284,400            227,940            854,811
      Repayment for former officer and stockholder           (56,364)          (165,379)
      Note receivable                                             --           (100,000)                --
      Proceeds from related party                                 --             15,000            187,000
      Repayment to related parties                           (10,000)           (75,000)
                                                         -----------        -----------        -----------
      Net cash provided by
        financing activities                                 255,536            142,940          1,242,182
                                                         -----------        -----------        -----------

      Net increase in cash                                    22,464             59,935             36,521
      Cash - Beginning of period                              14,057              2,871                 --
                                                         -----------        -----------        -----------

      Cash - Ending of period                            $    36,521        $    62,806        $    36,521
                                                         ===========        ===========        ===========
</TABLE>

See Notes to Financial Statements


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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                  Period
                                                                                            November 17, 1999
                                                             Three Months Ended March 31,   (Date of Formation)
                                                              --------------------------          through
                                                                 2004           2003           March 31, 2004
                                                              -----------    -----------        -----------
<S>                                                            <C>           <C>            <C>
Non-cash financing activities:
Issuance of common stock for
  promissory note                                              $      --        $      --        $ 458,630
                                                               =========        =========        =========
Offset of note receivable and
  convertible debt in connection
  with termination agreement                                   $      --        $      --        $ 253,638
                                                               =========        =========        =========
Issuance of common stock for debt                              $ 176,955        $  87,124        $ 591,452
                                                               =========        =========        =========
Offset of note receivable to
  liquidate loan to officer                                    $      --        $      --        $ 350,000
                                                               =========        =========        =========
Issuance of common stock for
  investment in unconsolidated subsidiary                      $      --        $      --        $   7,500
                                                               =========        =========        =========
Issuance of common stock in lieu
  of payment of accrued expenses                               $  64,952        $      --        $ 158,577
                                                               =========        =========        =========
 Forgiveness of debt to former
   shareholder                                                 $      --        $      --        $ 398,653
                                                               =========        =========        =========

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

Changes in operating assets and liabilities consists of:
  (Increase) in loan receivable                                $ (51,221)       $      --        $ (51,221)
  Decrease in prepaid expenses                                     3,172               --             (790)
  (Increase) decrease in other assets                           (120,750)            (650)        (121,400)
  Increase in accounts payable
     and accrued expenses                                         98,164           34,281          543,133
                                                               ---------        ---------        ---------
                                                               $ (70,635)       $  33,631        $ 369,722
                                                               =========        =========        =========
</TABLE>

See Notes to Financial Statements

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                                     Page 5
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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                               DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.    BASIS OF PRESENTATION

      The consolidated balance sheet as of March 31, 2004, and the consolidated
statements of operations and cash flows for the periods presented herein have
been prepared by Delta Mutual, Inc. (the "Company" or "Delta") and are
unaudited. In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly, the financial
position, results of operations and cash flows for all periods presented have
been made.

     DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The Company's financial statements for the period ended March 31, 2004
have been prepared on a going concern basis which contemplates the realization
of assets and settlement of liabilities and commitments in the normal course of
business. Management recognizes that the Company's continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and the commencement of its planned principal
operations. At March 31, 2004 operations had not yet commenced and no revenue
has been derived; accordingly the Company is considered a development stage
enterprise. There is no assurance the Company will achieve a profitable level of
operations.

      The Company's business is subject to most of the risks inherent in the
establishment of a new business enterprise. The likelihood of success of the
Company must be considered in light of the expenses, difficulties, delays and
unanticipated challenges encountered in connection with the formation of a new
business, raising operating and development capital, and the marketing of a new
product.

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

      ORGANIZATION

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

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

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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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      From inception through March 31, 2004, the Company raised a limited amount
of capital through the sale of common stock: during the period from inception
through December 31, 2001, it raised $10,750 through such private placements,
and raised $30,000 in December, 2002, raised $112,500 in 2003 and $37,500 in
quarter ending March, 2004 through investments. These funds were not sufficient
to capitalize any of the Company's business plans.

      PRIOR OPERATIONS

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


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

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

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

      CHANGE OF CONTROL

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


Business Plan

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

Puerto Rico

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

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                                     Page 7
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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Middle East, Africa and Far East

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

Central and Eastern Europe

      The Company has made a strategic decision to minimize its activities in
Eastern Europe and to maintain a small passive investment in the area that can
be expanded in the future if current circumstances change. While the potential
for significant environmental remediation activity remains, local government
priorities and hard currency shortages relegate these activities to a low
status.

      The Company is currently dependent on equity investments from private
investors to pay its operating expenses. There are no assurances that such
investors will continue to advance funds or invest in the Company's securities/.
In the event the Company is unable to obtain additional capital or funding it
might be unable to pursue its business plans. Due to the fact that the Company
has limited operations at this time, it is anticipated that is cash requirements
will be limited, and that all necessary capital, to the extent required, will be
provided by investors. The Company anticipates that it will be required to raise
capital in the approximate amount of $1,800,000 in the next 12 months in order
to fund its limited operations and to finance its planned business operations.

SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION

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

      INVESTMENTS

      The Company has investments of 50% or less in associated companies that
are accounted for under the equity method and are included in Investment in
Joint Ventures on the Company's balance sheet at March 31, 2004. Investments in
associated companies where the Company has a controlling interest are
consolidated with the Company's operations unless otherwise disclosed.

      USE OF ESTIMATES

      The preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those
estimates

      LOSS PER SHARE

      Basic and diluted loss per common share is computed by dividing net loss
by the weighted average number of common shares outstanding during the year.
Potential common shares are excluded from the loss per share calculation,
because the effect would be antidilutive. Potential common shares relate to the
convertible debt. There were no potential common shares outstanding as of March
31, 2004 and 2003.

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                                     Page 8
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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      EVALUATION OF LONG-LIVED ASSETS

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

      DEPRECIATION AND AMORTIZATION

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

      STOCK OPTION PLAN

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

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

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

      The Company is also authorized to make stock awards to its employees from
the Plan. The Company has adopted the expense provisions of SFAS No. 123 in the
issuance of stock awards. Stock awards are expensed at the time of issuance as
the common stock issued has no restrictions to the employees. The Company issued
stock awards to five employees totaling 539,000 shares from the Plan during
2004. The shares were issued at fair market value for compensation due to the
employees. The Company recorded compensation expense of $43,000 and is included
in the Company's statement of operations for the three months ended March 31,
2004 and $79,000 as repayment of debt.

      STOCK-BASED COMPENSATION

      The Company issues shares of its common stock to employees and
non-employees as stock-based compensation. The Company accounts for the services
using the fair market value of the services rendered. For the three months ended
March 31, 2004 and 2003 the Company issued 209,500 and -0- common shares,
respectively, and recorded compensation expense of $43,000 and $-0-,
respectively, in connection with the issuance of these shares.

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                                     Page 9
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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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      INCOME TAXES

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

      FAIR VALUE OF FINANCIAL INSTRUMENTS

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

      RECLASSIFICATIONS

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

2.    LOAN RECEIVABLE - FORMER OFFICER/SHAREHOLDER

      During 2003, the Company entered into a revolving credit agreement with
Gary Robinson ("Robinson"), the former Chairman and Chief Executive Officer of
the Company, in the amount of $300,000. The credit agreement bears interest at
the prime rate. Robinson advanced the Company $515,383 and the Company repaid
Robinson $109,015 through March 31, 2004.

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

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

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

      After adjustments for expense reimbursements due Robinson and offsets as
noted above, Robinson owed the Company $51,221 as of March 31, 2004.

      The Company recorded interest expense of $7,986 on the revolving line of
credit for the period November 17, 1999 (date of formation) through March 31,
2004. No interest was recorded during the three months ended March 31, 2004.

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3.    INVESTMENT IN JOINT VENTURES

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

      From January 12, 2004 through March 31, 2004, Neil Berman, an investor,
purchased a 25% interest in Delta Development Partners, LP for $148,000.

b) On March 18, 2003, the Company entered into a letter of intent with Hi-Tech
Consulting and Construction, Inc. ("Hi-Tech") to form a joint venture to provide
environmental technology services primarily to markets in the Middle East and
Africa. The joint venture company, named Delta-Envirotech, Inc., is based in
Virginia and focuses on participating in foreign government sponsored pollution
remediation projects. The joint venture agreement was concluded January 14, 2004
and Delta-Envirotech, Inc., a Delaware Corporation, was formed. As of December
31, 2003 the Company expensed $35,000 that was advanced to the Hi-Tech and is
included in the Company's statement of operations for the year ended December
31, 2003. In 2004, the Company was unable to make payments due per the agreement
but Hi-Tech has indefinitely extended the date of the payments. On January 14,
2004, Delta and Hi-Tech agreed to each sell 75 shares of the joint venture to
Ali Razmara, representing a ten (10%) percent interest, for $2. The transaction
does not take effect until July 14, 2004.

      On January 22, 2004, the Company announced the conclusion of a strategic
alliance agreement between Delta-Envirotech, Inc. and ZAFF International, Ltd.,
an advanced technology company located in Saudi Arabia. The strategic alliance
states that the two companies will jointly pursue projects related to soil and
water reclamation requirements in the Middle East.

      For the three months ended March 31, 2004, the Company recorded a loss of
$35,059.

c) On May 1, 2003, the Company entered into a joint venture in Romania, forming
a new Company, Delta TP Mediu, SRL. The joint venture, of which the Company owns
10%, was organized to primarily pursue the sourcing, treatment and processing of
hydrocarbon based and other industrial residuals and, where possible, to create
alternative fuels and raw materials for industrial use primarily in Romania. The
Company invested $33,800 in the joint venture, consisting of $15,100 in cash,
the issuance of 50,000 shares of the Company's common stock valued at $7,500 and
a cash obligation of $11,200 to the joint venture which is included in Due to
related party on the Company's balance sheet at March 31, 2004.

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

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4.    ACCRUED EXPENSES

      Accrued expenses consist of the following:


                                                              March 31,
                                                                2004
                                                              --------

          Professional fees                                   $ 20,000
          Consulting fees                                          625
          Interest expense                                       1,088
          Payroll expense                                      144,847
          Payroll tax expense                                   16,673
                                                              --------
                                                              $183,233
                                                              ========

5.    LOANS TO RELATED PARTIES

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

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

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

      The Company recorded interest expense of $1,599 for the three months ended
March 31, 2004 and $3,199 for the period November 17, 1999 (date of formation)
through March 31, 2004.

b. On May 15, 2003, the Company borrowed $12,000 from Michael Fasci ("Fasci") a
stockholder of the Company. Fasci received 50,000 common shares of the Company's
common stock which represented the payment of interest through May 26, 2003, the
maturity date. The Company recorded interest expense of $13,750 in connection
with the issuance of the shares.

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

c. On December 30, 2003, the Company borrowed $50,000 from Edward Tuccio, a
shareholder of the Company. The note is due December 29, 2004, interest at 6
(6%) per annum. On February 11, 2004, the Company issued Tuccio 400,000 common
shares of the Company's common stock which represented the full payment of this
loan plus interest amounting to $168, which is included in the statement of
operations for the three months ended March 31, 2004 and for the period November
17, 1999 (date of formation) through March 31, 2004.

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d. On December 11, 2003, the Company borrowed $50,000 from Neil Jones, a
shareholder of the Company. The note was due December 16, 2004 with interest at
six (6%) per annum. On January 24, 2004, the Company issued Jones 400,000 common
shares of the Company's common stock which represented the full payment of this
loan plus interest. The Company recorded interest expense of $63 and $195 for
the three months ended March 31, 2004 and for the period November 17, 1999 (date
of formation) through March 31, 2004, respectively.

e. The Company borrowed $284,000 from Neil Berman and Ivano Angelastri,
shareholders of the Company, on various dates during the period ending March 31,
2004. The loan bears interest at four (4%) per annum. The Company recorded
interest expense of $1,088 for the three months ended March 31, 2004 and for the
period November 17, 1999 (date of formation) through March 31, 2004.

6.    MINORITY INTERESTS

      Minority interests primarily consists of a twenty-five (25%) percent
ownership interest in Delta Development Partners, L.P. and a fifteen (15%)
percent ownership interest in Delta Developers Corp. The income and losses from
operations of these entities and their respective minority interests have been
reflected in the Company's statement of operations for the three months ended
March 31, 2004. The amount on the Company's balance sheet represents the
minority interests as of March 31, 2004.

7.    STOCKHOLDER'S DEFICIENCY

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

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

c. During November 2002, Gary Robinson acquired the controlling equity position
from Kelcon, Inc. in a private transaction.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

v. On November 21, 2003, the Company and Nela Pavaliou and Business Center
International entered into an agreement for compensation of services in the
$1,750 for each. The Company issued 100,000 shares of the Company common stock
in full payment of this debt.

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

x. In February 2004, the Company sold 300,000 shares of restricted common stock
for $37,500, valued at $.13 per share, fair market value at the time of
issuance.

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

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

8.    COMMITMENTS AND CONTINGENCIES

a.    EXECUTIVE EMPLOYMENT AGREEMENT

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

b.    LICENSE AGREEMENTS

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

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

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

      In the event that Friedman and the Company are not able to resolve any
dispute that may arise, Friedman may seek additional shares of the Company's
common stock that could be substantial.

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

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c.    FINANCING AGREEMENT

      On July 8, 2003, the Company entered into an agreement with Rolan Jansen
and Ivano Angelastri ("J&A") to introduce and arrange equity debt or other
financing agreements with strategic partners, for the Company, or its affiliates
for a finders fee of 6.0% to Rolan Jansen and 2.0% to Ivano Angelastri of the
gross proceeds of the equity financing. For the three months ended March 31,
2004, no financing was introduced to the Company in connection with this
agreement.

9.    NEW FINANCIAL ACCOUNTING STANDARDS

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

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

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

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

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

      In December 2003, the FASB issued SFAS No. 132 (Revised) ("SFAS No.
132-R"), "Employer's Disclosure about Pensions and Other Postretirement
Benefits." SFAS No. 132-R retains disclosure requirements of the original SFAS
No. 132 and requires additional disclosures relating to assets, obligations,
cash flows, and net periodic benefit cost for defined benefit pension plans and
defined benefit post retirement plans. SFAS No. 132-R is effective for fiscal
years ending after December 15, 2003, except that certain disclosures are
effective for fiscal years ending after June 15, 2004. Interim period
disclosures are effective for interim periods beginning after December 15, 2003.
The adoption of the disclosure provisions of revised SFAS No. 132-R did not have
a material impact on the Company's historical disclosure.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

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

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

GENERAL

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

RESULTS OF OPERATIONS

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

FIRST QUARTER

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

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

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2004 COMPARED TO 2003

The net loss increased from approximately $116,000 for the three months ended
March 31, 2003 to approximately $314,000 for the three months ended March 31,
2004.

The items of significant increase (or decrease) in the three months ended March
31, 2004 over the comparable period of the prior year were an increase in
general and administrative expense from approximately $115,000 in 2003 to
approximately $280,000 for the three months ended March 31, 2004, an increase in
interest expense from approximately $900 in 2003 to approximately $8,400 for the
three months ended March 31, 2004, and a loss from joint venture activities of
approximately $35,000 for the three month ended March 31, 2004.

PLAN OF OPERATION

Since the three months ended March 31, 2003, new Company management has embarked
upon a new mission and strategic direction, by establishing joint venture
subsidiaries and a limited partnership, primarily to establish business
operations focused on providing construction and environmental technologies and
services in Puerto Rico, the Middle East, Africa and the Far East.

Puerto Rico

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

Middle East, Africa and Far East

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

Central and Eastern Europe

The Company has made a strategic decision to minimize its activities in Eastern
Europe and to maintain a small passive investment in the area that can be
expanded in the future if current circumstances change. While the potential for
significant environmental remediation activity remains, local government
priorities and hard currency shortages relegate these activities to a low
status.

We are currently dependent on equity investments from private investors to pay
our operating expenses. There are no assurances that such investors will
continue to advance funds or invest in the Company's securities. In the event we
are unable to obtain additional capital or funding we may be unable to pursue
our business plans. Due to the fact that we have limited operations at this
time, it is anticipated that our cash requirements will be limited, and that all
necessary capital, to the extent required, will be provided by investors. We
anticipate that we will be required to raise capital in the approximate amount
of $1,800,000 in the next 12 months in order to continue to fund our limited
operations and to finance our planned business operations.

LIQUIDITY

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

At December 31, 2003, we had a working capital deficit of $623,423, and at March
31, 2004 we had a working deficit of $609,716, as compared with a working
capital deficit of $265,646 at March 31, 2003. The increase in our working
capital deficit is a result of the net loss incurred during the year ended
December 31, 2003. Since we have no source of revenue, our working capital
deficit will continue to increase as we incur additional operating expenses.
Presently, we have no external sources of cash and we are dependent upon private
placements of our stock for funding.

In 2003, we raised $112,500 of equity capital, through the sale of 450,000
shares of common stock. In addition, we borrowed $100,000 from our Former Chief
Executive Officer in March 2003 to make a payment of an identical amount to a
consultant. On June 30, 2003, the Former Chief Executive Officer agreed to
release the Company from the note and assume the responsibility for recovering
the amount paid to the Consultant.

In the three months ended March 31, 2004, we raised $37,500 of equity capital.

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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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ASSETS

At December 31, 2003, we had total assets of $84,702, and at March 31, 2004, we
had total assets of $340,467, as compared to total assets of $164,392 at March
31, 2003. The increase in assets as of March 31, 2004, was due to a $98,741
investment in a joint venture subsidiary and $120,000 of capitalized
construction costs.

CRITICAL ACCOUNTING ISSUES

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

OTHER MATTERS

ACCOUNTING PRONOUNCEMENTS

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

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

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

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

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

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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, and interpretation of FASB
Statements No. 5, 57,and 107 and Rescission of FASB Interpretation No. 34. FIN
45 clarifies the requirements of FASB Statement No. 5, Accounting for
Contingencies, relating to the guarantor's accounting for, and disclosure of,
the issuance of certain types of guarantees. This interpretation clarifies that
a guarantor is required to recognize, at the inception of certain types of
guarantees, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantor's fiscal year-end. The disclosure requirements in this interpretation
are effective for financial statements of interim or annual periods ending after
December 15, 2002. The Company adopted FIN 45 on January 1, 2003. The adoption
of FIN 45 did not have a material impact on the Company's results of operations
or financial position.

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Fair Value of Financial Instruments - The following disclosure of the estimated
fair value of financial instruments is made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments". The estimated fair values of financial
instruments have been determined by the Company using available market
information and appropriate valuation methodologies. However, considerable
judgment is required in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein are not necessarily
indicative of the amounts that the Company could realize in a current market
exchange.

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

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

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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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Item 4. Controls and Procedures

(a) Disclosure controls and procedures. As of the end of the Company's most
recently completed fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) covered by this report, the Company carried out an
evaluation, with the participation of the Company's management, including the
Company's Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the Company's disclosure controls and procedures pursuant to
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.


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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no legal proceedings against the Company, however, the two claims
discussed below are currently under negotiation.

Joseph Friedman and Sons International, Inc.

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

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

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

In the event that Friedman and the Company are not able to resolve any dispute
that may arise, Friedman may seek additional shares of the Company's common
stock that could be substantial.

B.    Michael Pisani

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

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

On March 24, 2004, the Company repaid the principal and interest due under the
terms of the amended note. Pisani, through counsel, informed the Company that,
by accepting repayment, he does not prejudice his position regarding the
validity of the original note.

The Company is attempting to resolve this dispute. If Pisani prevails in a legal
action against the Company, he may be entitled to, in additional to the
principal amount and interest, an amount of the Company's common stock that
could be substantial.


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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities

(c)   Sales of Unregistered Securities

<TABLE>
<CAPTION>
                                                                                     PRINCIPAL           TOTAL OFFERING
      DATE                       TITLE AND AMOUNT                  PURCHASER       UNDERWRITER    PRICE/UNDERWRITING DISCOUNTS
      ----                       ----------------                  ---------       -----------    ----------------------------
<S>                       <C>                                   <C>                <C>            <C>
January 14, 2004          50,000 shares of common stock         Consultant              NA               $.0825 per share/NA
January 24, 2004          400,000   shares of common stock      Private Investor        NA               $.125 per share/NA
February 11, 2004         400,000 shares of common stock        Private Investor        NA               $.125 per share/NA
February 18, 2004         200,000 shares of common stock        Private Investor        NA               $.125 per share/NA
February 25, 2004         155,000 shares of common stock        Private Investor        NA               $.1613 per share/NA
February 25, 2004         200,000 shares of common stock        Private Investor        NA               $.10 per share/NA
February 26, 2004         100,000 shares of common stock        Private Investor        NA               $.125 per share/NA
February 27, 2004         140,000 shares of common stock        Private Investor        NA               $.1364 per share/NA
March 2, 2004             200,000 shares of common stock        Consultant              NA               $.25 per share/NA
March 31, 2004            30,000 shares of common stock         Consultant              NA               $.30 per share/NA
March 31, 2004            50,000 shares of common stock         Consultant              NA               $.0825 per share/NA
</TABLE>


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 and Reports on Form 8-K

(a)   Exhibits:

10.18    Consulting Agreement, dated as of March 21, 2004, between Delta Mutual,
         Inc. and Clark Street Capital.

10.19    Consulting Services Agreement, dated as of April 16, 2004, between
         Delta Mutual, Inc. and Basic Investors, Inc.

10.20    Memorandum of Understanding, dated as of March 17, 2004, by and between
         Delta-Envirotech, Inc., PT Faryan Nusantara and Crescent Aeronautical
         Technology.

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

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

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

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


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DELTA MUTUAL INC - 10-Q                                    Filing Date: 05/19/04
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(b)   Reports on Form 8-K

During the quarter ended March 31, 2004, the Company filed four Current Reports
on Form 8-K with the Securities and Exchange Commission on January 9, two
reports on January 20, and on January 22, respectively.



                                   SIGNATURES

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


                                          DELTA MUTUAL, INC.


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


Dated: May 19, 2004


                                  EXHIBIT INDEX

10.18    Consulting Agreement, dated as of March 21, 2004, between Delta Mutual,
         Inc. and Clark Street Capital.

10.19    Conslting Services Agreement, dated as of April 16, 2004 between Delta
         Mutual, Inc. and Basic Investors, Inc.

10.20    Memorandum of Understanding, dated as of March 17, 2004, by and between
         Delta-Envirotech, Inc., PT Faryan Nusantara and Crescent Aeronautical
         Technology.

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

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

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

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


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