UNITED
STATES





SECURITIES
AND EXCHANGE COMMISSION





WASHINGTON,
D.C.







FORM
10-Q





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





For the
quarterly period ended June 30, 2009





OR





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





For the
transition period from ____________ to _________________





Commission
File Number 000-30563





DELTA
MUTUAL, INC.





(Exact
name of registrant as specified in its charter)





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





14301 North 87th
      Street, #130, Scottsdale, AZ
              
              85260(Address
      of Principal Executive Offices)
              
              (Zip
      Code)





(480) 221-1989(Registrant’s
      Telephone Number, Including Area
Code)





(Former
      Name, Former Address and Former Fiscal Year, if changed since last
      report)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant
was


required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.  YES x NO
 ̈





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


Yes  ̈             No
 ̈





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





Large
      accelerated filer   ̈
              
              Accelerated
      filer   ̈Non-accelerated
      filer     ̈
              
              Smaller
      reporting company  x





(Do not
check if a smaller reporting company)





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


 ̈
Yes               
x
No




The
number of shares outstanding the issuer's common stock, par value $.0001 per
share, was 22,384,916 as of August 4, 2009.








DELTA
MUTUAL, INC.




INDEX




PagePart
      I.  Financial Information
                        3Item
      1. Financial Statements.
                        3Consolidated
      Balance Sheets as of June 30, 2009 and as of December 31, 2008
      (unaudited)
                        4Consolidated
      Statements of Operations for the Six and Three Months Ended June 30, 2009
      and 2008 (unaudited)
                        5Consolidated
      Statements of Stockholders’ Equity (Deficiency) as of June 30, 2009
      (unaudited)
                        6-7Consolidated
      Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008
      (unaudited)
                        8-9Notes
      to Unaudited Consolidated Financial Statements
                        10Item
      2. Management's Discussion and Analysis of Financial Condition and Results
      of Operations.
                        27Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk.
                        31Item
      4T.Controls and Procedures.
                        31Part
      II. Other Information
                        31Item
      1.  Legal Proceedings.
                        31Item
      4.  Submission of Matters to a Vote of Security
      Holders.
                        32Item
      6.  Exhibits.
                        33Signatures
                        33




Page
2





PART I.
FINANCIAL INFORMATION





Item 1.
Financial Statements





Certain
information and footnote disclosures required under accounting principles
generally accepted in the United States of America have been condensed or
omitted from the following consolidated financial statements pursuant to the
rules and regulations of the Securities and Exchange Commission. It is suggested
that the following consolidated financial statements be read in conjunction with
the year-end consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31,
2008.





The
results of operations for the six and three months ended June 30, 2009 and 2008
are not necessarily indicative of the results for the entire fiscal year or for
any other period.




Page
3


DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
BALANCE SHEETS
 (UNAUDITED)
 
 June
      30,
                        
                        
                        December
      31,2009
                        
                        
                        2008ASSETSCurrent
      Assets:Cash
                        
                        $
                        3,826
                        
                        
                        $
                        13,957Property
      and equipment - net
                        
                        
                        465
                        
                        
                        
                        804Investments
      in non-consolidated affiliates
                        
                        
                        2,044,024
                        
                        
                        
                        1,780,024Other
      assets
                        
                        
                        6,368
                        
                        
                        
                        650TOTAL
      ASSETS
                        
                        $
                        2,054,683
                        
                        
                        $
                        1,795,435LIABILITIES
      AND DEFICIENCYCurrent
      Liabilities:Accounts
      payable
                        
                        $
                        454,792
                        
                        
                        $
                        363,004Accrued
      expenses
                        
                        
                        1,469,141
                        
                        
                        
                        1,363,395Convertible
      debt
                        
                        
                        253,740
                        
                        
                        
                        253,740Notes
      payable
                        
                        
                        762,569
                        
                        
                        
                        461,208Total
      Current Liabilities
                        
                        
                        2,940,242
                        
                        
                        
                        2,441,347DeficiencyDelta
      Mutual Inc. and Subsidiaries Stockholders' Deficiency:Preferred
      stock $0.0001 par value-authorized 10,000,000 shares; no shares issued and
      outstanding at June 30, 2009 and December 31, 2008,
      respectively
                        
                        
                        -
                        
                        
                        
                        -Common
      stock $0.0001 par value - authorized 250,000,000 shares; 22,384,916 and
      22,184,916 shares issued and outstanding at June 30, 2009 and December 31,
      2008, respectively
                        
                        
                        2,239
                        
                        
                        
                        2,219Additional
      paid-in-capital
                        
                        
                        4,295,267
                        
                        
                        
                        3,782,797Deferred
      stock purchase
                        
                        
                        10,000
                        
                        
                        
                        -Deficit
                        
                        
                        (5,193,065
                        )
                        
                        
                        (4,430,928
                        )Total
      Delta Mutual Inc. and Subsidiaries Stockholders'
    Deficiency:
                        
                        
                        (885,559
                        )
                        
                        
                        (645,912
                        )Noncontrolling
      interest
                        
                        
                        -
                        
                        
                        
                        -Total
      Deficiency
                        
                        
                        (885,559
                        )
                        
                        
                        (645,912
                        )TOTAL
      LIABILITIES AND DEFICIENCY
                        
                        $
                        2,054,683
                        
                        
                        $
                        1,795,435
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
4
 
 DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 (UNAUDITED)
 
 Six Months Ended June 30,
                      
                      
                      Three Months Ended June 30,2009
                      
                      
                      2008
                      
                      
                      2009
                      
                      
                      2008Revenue:
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -Costs
      and expenses:General
      and administrative expenses
                      
                      
                      734,943
                      
                      
                      
                      998,132
                      
                      
                      
                      444,803
                      
                      
                      
                      396,454Loss
      on intellectual property
                      
                      
                      -
                      
                      
                      
                      122,742
                      
                      
                      
                      -
                      
                      
                      
                      122,742734,943
                      
                      
                      
                      1,120,874
                      
                      
                      
                      444,803
                      
                      
                      
                      519,196Loss
      from continuing operations
                      
                      
                      (734,943
                      )
                      
                      
                      (1,120,874
                      )
                      
                      
                      (444,803
                      )
                      
                      
                      (519,196
                      )Interest
      expense
                      
                      
                      (20,742
                      )
                      
                      
                      24,260
                      
                      
                      
                      (10,771
                      )
                      
                      
                      (7,949
                      )Loss
      from continuing operations before provision for income
    taxes
                      
                      
                      (755,685
                      )
                      
                      
                      (1,096,614
                      )
                      
                      
                      (455,574
                      )
                      
                      
                      (527,145
                      )Provision
      for income taxes
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      loss from continuing operations
                      
                      
                      (755,685
                      )
                      
                      
                      (1,096,614
                      )
                      
                      
                      (455,574
                      )
                      
                      
                      (527,145
                      )Discontinued
      operationsGain
      (loss) of disposal of Far East operations and South American Hedge
      Fund operations, and United States construction technology
      activities
                      
                      
                      (6,452
                      )
                      
                      
                      (2,034,218
                      )
                      
                      
                      61
                      
                      
                      
                      19,462Net
      loss
                      
                      
                      (762,137
                      )
                      
                      
                      (3,130,832
                      )
                      
                      
                      (455,513
                      )
                      
                      
                      (507,683
                      )Less:
      Net loss attributable to noncontrolling interest
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Net
      loss attributable to Delta Mutual Inc. and Subsidiaries
                      
                      $
                      (762,137
                      )
                      
                      $
                      (3,130,832
                      )
                      
                      $
                      (455,513
                      )
                      
                      $
                      (507,683
                      )Loss
      per common share - basic and diluted:Loss
      from continuing operations attributable to Delta Mutual Inc. and
      Subsidiaries common shareholders
                      
                      $
                      (0.03
                      )
                      
                      $
                      (0.17
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )Discontinued
      operations attributable
      to Delta Mutual Inc. and Subsidiaries common shareholders
                      
                      $
                      (0.03
                      )
                      
                      $
                      (0.17
                      )
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.02
                      )Weighted
      average common shares - basic and diluted
                      
                      
                      22,256,739
                      
                      
                      
                      18,966,039
                      
                      
                      
                      22,327,773
                      
                      
                      
                      22,131,657Amounts
      attributable to Delta Mutual Inc. and Subsidiaries common
      shareholders:Net
      loss
                      
                      $
                      (762,137
                      )
                      
                      $
                      (3,130,832
                      )
                      
                      $
                      (455,513
                      )
                      
                      $
                      (507,683
                      )
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
5
 
 DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
 (Unaudited)
 
 Number
      ofCommon
                    
                    
                    Common
                    
                    
                    Paid
      in
                    
                    
                    Retained
      Earnings
                    
                    
                    NoncontrollingShares
                    
                    
                    Stock
                    
                    
                    Capital
                    
                    
                    (Deficit)
                    
                    
                    Interest
                    
                    
                    TotalBalance,
      January 1, 2008
                    
                    
                    13,000,000
                    
                    
                    $
                    1,300
                    
                    
                    $
                    2,598,700
                    
                    
                    $
                    1,869,468
                    
                    
                    $
                    -
                    
                    
                    
                    4,469,468Effect
      of reverse acquisition
                    
                    
                    7,888,295
                    
                    
                    
                    789
                    
                    
                    
                    7,099
                    
                    
                    
                    (1,716,087
                    )
                    
                    
                    
                    
                    
                    
                    (1,708,199
                    )Issuance
      of common stock for services (valued at $0.20 - $0.50 per
      share)
                    
                    
                    1,055,000
                    
                    
                    
                    106
                    
                    
                    
                    238,394
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    238,500Issuance
      of common stock for debt (valued at $0.50 - $0.70 per
    share)
                    
                    
                    230,057
                    
                    
                    
                    23
                    
                    
                    
                    143,577
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    143,600Issuance
      of common stock for interest (valued at $0.50- $0.70 per
      share)
                    
                    
                    11,563
                    
                    
                    
                    1
                    
                    
                    
                    7,047
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    7,048Contribution
      from stockholder
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,000
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    1,000Stock
      based compensation expense
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    786,980
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    786,980Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (4,584,309
                    )
                    
                    
                    -
                    
                    
                    
                    (4,584,309
                    )Balance,
      December 31, 2008
                    
                    
                    22,184,916
                    
                    
                    
                    2,219
                    
                    
                    
                    3,782,797
                    
                    
                    
                    (4,430,928
                    )
                    
                    
                    -
                    
                    
                    
                    (645,912
                    )
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
6
 
 DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
 (Unaudited)
 
 Number
      of
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    DeferredCommon
                    
                    
                    Common
                    
                    
                    Paid
      in
                    
                    
                    Retained Earnings
                    
                    
                    Stock
                    
                    
                    NoncontrollingShares
                    
                    
                    Stock
                    
                    
                    Capital
                    
                    
                    (Deficit)
                    
                    
                    Purchase
                    
                    
                    Interest
                    
                    
                    TotalBalance,
      January 1, 2009
                    
                    
                    22,184,916
                    
                    
                    
                    2,219
                    
                    
                    
                    3,782,797
                    
                    
                    
                    (4,430,928
                    )
                    
                    
                    
                    
                    
                    -
                    
                    
                    
                    (645,912
                    )Contribution
      from stockholder
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (1,000
                    )
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (1,000
                    )Issuance
      of common stock for services (valued at $0.60 per share)
                    
                    
                    200,000
                    
                    
                    
                    20
                    
                    
                    
                    119,980
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    120,000Deposit
      on stock not yet issued
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    10,000
                    
                    
                    
                    
                    
                    
                    
                    10,000Stock
      based compensation expense
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    394,490
                    
                    
                    
                    -
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    394,490Net
      loss
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (762,137
                    )
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (762,137
                    )Balance,
      June 30, 2009
                    
                    
                    22,384,916
                    
                    
                    $
                    2,239
                    
                    
                    $
                    4,296,267
                    
                    
                    $
                    (5,193,065
                    )
                    
                    $
                    10,000
                    
                    
                    $
                    -
                    
                    
                    $
                    (884,559
                    )
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
7
 
 DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 
 Six
      Months Ended June 30,2009
                  
                  
                  2008Cash
      flows from operating activities:Net
      loss
                  
                  $
                  (762,137
                  )
                  
                  $
                  (3,130,832
                  )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
      and amortization
                  
                  
                  339
                  
                  
                  
                  25,112Non-cash
      compensation
                  
                  
                  120,000
                  
                  
                  
                  245,548Loss
      on intellectual property
                  
                  
                  
                  
                  
                  
                  122,742Noncontrolling
      interest in income (loss) of consolidated subsidiaries
                  
                  
                  -
                  
                  
                  
                  (18,815
                  )Compensatory
      element of option issuance
                  
                  
                  393,490
                  
                  
                  
                  393,490Changes
      in operating assets and liabilities
                  
                  
                  (72,184
                  )
                  
                  
                  (128,096
                  )Net
      cash used in operating activities
                  
                  
                  (320,492
                  )
                  
                  
                  (2,490,851
                  )Cash
      flows from investing activities:Proceeds
      from sales of investments
                  
                  
                  -
                  
                  
                  
                  2,871,482Cash
      flows from financing activities:Proceeds
      from loans
                  
                  
                  311,361
                  
                  
                  
                  186,950Repayment
      of loan
                  
                  
                  -
                  
                  
                  
                  (640,000
                  )Contribution
      from stockholder
                  
                  
                  (1,000
                  )
                  
                  
                  -Proceeds
      from minority interest
                  
                  
                  -
                  
                  
                  
                  20,006Net
      cash provided by financing activities
                  
                  
                  310,361
                  
                  
                  
                  (433,044
                  )Net
      decrease in cash
                  
                  
                  (10,131
                  )
                  
                  
                  (52,413
                  )Cash
      - Beginning of period
                  
                  
                  13,957
                  
                  
                  
                  57,633Cash
      - End of period
                  
                  $
                  3,826
                  
                  
                  $
                  5,220
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
8
 
 DELTA
MUTUAL, INC. AND SUBSIDIARIES
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 (UNAUDITED)
 (Continued)
 
 Six
      Months Ended June 30,2009
                      
                      
                      2008Supplementary
      information:Changes
      in operating assets and liabilities consists of:(Increase)
      decrease in other prepaid expenses
                      
                      $
                      (5,718
                      )
                      
                      $
                      1,914Increase
      (decrease) in accounts payable and accrued expenses
                      
                      
                      (66,466
                      )
                      
                      
                      (130,010
                      )$
                      (72,184
                      )
                      
                      $
                      (128,096
                      )Issuance
      of common stock for debt
                      
                      $
                      -
                      
                      
                      $
                      143,600Issuance
      of common stock for in lieu ofpayment of accrued
      expenses
                      
                      $
                      -
                      
                      
                      $
                      7,048Issuance
      of common stock for services
                      
                      $
                      120,000
                      
                      
                      $
                      238,500
 
 See Notes
to Unaudited Consolidated Financial Statements
  Page
9
  DELTA
MUTUAL, INC. AND SUBSIDIARIES
 NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
 For the
Six Months Ended June 30, 2009 and 2008
 
 1.
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
 
 The
consolidated balance sheets as of June 30, 2009 and the consolidated statements
of operations, stockholders’ deficiency and cash flows for the periods presented
herein have been prepared by Delta Mutual, Inc. and Subsidiaries (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, changes in stockholders’
deficiency and cash flows for all periods presented have been made. The
information for the consolidated balance sheet as of December 31, 2008 was
derived from audited financial statements.
 
 Organization
 
 Delta
Mutual, Inc. and subsidiaries (“Delta” or the “Company”) was incorporated in
Delaware on November 17, 1999. Since 2003, the principal business activities of
the Company were focused on providing environmental and construction
technologies and services to certain geographic reporting segments in the Far
East, Middle East and the United States.During the year ended
December 31, 2008, all of the operations in the Far East (Indonesia) were
discontinued. In addition, the construction technology activities conducted
solely by its wholly-owned U.S. subsidiary, Delta Technologies, Inc., were
discontinued. See Notes 1, 4, 5 and 7 for further information regarding these
discontinued operations.
 
 On March
4, 2008, the Company entered into a Membership Interest Purchase Agreement (the
“Agreement”) with Egani, Inc., an Arizona corporation (“Egani”). Pursuant to the
Agreement, the Company acquired from Egani all of the issued and outstanding
shares of stock of Altony S.A., an Uruguay Sociedad Anonima (“Altony”), which
owns 100% of the issued and outstanding membership interests in South American
Hedge Fund LLC, a Delaware limited liability company (“SAHF”). At the closing of
the Agreement, the Company issued 13,000,000 shares of its common stock to Egani
for the purchase of all of the outstanding shares of stock in Altony which
constituted, following such issuance, a majority of the outstanding shares of
the Company’s common stock.
 
 Immediately
following the closing of the Agreement, Altony became a wholly owned subsidiary
of the Company. For accounting purposes only, the transaction was treated as a
recapitalization of the Company, as of March 4, 208, with Altony as the
acquirer. The financial statements prior to March 4, 2008 are those of Altony
and reflect the assets and liabilities of Altony at historical carrying amounts.
The financial statements show a retroactive restatement of Altony’s historical
stockholders’ equity to reflect the equivalent number of shares issued to
Egani.
  Page
10
  The
principal business activity of Altony is the ownership and management of its
SAHF subsidiary. During the year ended December 31, 2008, SAHF shifted its focus
from investments in securities of Latin American entities to investments in oil
and gas concessions and exploration rights in Argentina and intends to continue
its focus on the energy sector, including the development and supply of energy
and alternate energy sources in Latin America and North America.
 
 In 2007,
SAHF acquired ownershipinterests in four oil and
gas concessions in Argentina. The majority owners of these concessions have
established joint ventures, registered in Argentina, that are in the process of
obtaining the necessary government and environmental permits to begin operations
at these concessions. SAHF will become a member of the joint ventures in 2009,
when it receives its foreign registration in Argentina. In the first quarter of
2008, SAHF agreed to exchange half of the ownership interests it held in the
concessions to a third party, that agreed to assume 50% of the SHAF’s subsequent
development costs related to these four concessions. As of December 31, 2008,
the Company’s ownership interests in these concessions ranged from nine to 23.5
percent.
 
 In 2008,
SAHF acquired 40% of the rights to explore for oil and gas in five geographic
areas located in Northern Argentina.
 
 Following
the acquisition of Altony, the Company continued to pursue selected business
opportunities in the Middle East that are conducted by its joint venture
subsidiary Delta-Envirotech, Inc. (“Envirotech”), headquartered in
Virginia.
 
 BASIS OF
PRESENTATION
 
 The
consolidated financial statements for the period ended June 30, 2009 have been
prepared on a going concern basis which contemplates the realization of assets
and settlement of liabilities and commitments in the normal course of business.
Management recognizes that the Company's continued existence is dependent upon
its ability to obtain needed working capital through additional equity and/or
debt financing and revenue to cover expenses as the Company continues to incur
losses.
 
 The
Company's business is subject to the risks of its oil and gas investments in
South America. 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 operations of the oil and gas concession in
Argentina. There is no assurance the Company will ultimately achieve a
profitable level of operations.
 
 The
Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations. The Company's continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and achieve a level of oil and gas revenue adequate
to support its cost structure. Management is actively seeking additional capital
to ensure the continuation of its current activities and complete its proposed
activities. However, there is no assurance that additional capital will be
obtained or that the Company’s investments 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.
  Page
11
  PRINCIPLES
OF CONSOLIDATION
 
 The
Company's financial statements include the accounts of all majority-owned
subsidiaries where its ownership is more than 50percent of the common
stock. The consolidated financial statements also include the accounts of any
Variable Interest Entities ("VIEs") where the Company is deemed to be the
primary beneficiary, regardless of its ownership percentage. All significant
intercompany balances and transactions with consolidated subsidiaries are
eliminated in the consolidated financial statements.
 
 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.
 
 EARNINGS
(LOSS) PER SHARE
 
 Basic
earnings (loss) per common share are computed by dividing net earnings by the
weighted average number of common shares outstanding during the year. Diluted
earnings (loss) per share are computed by dividing net earnings (loss) by the
weighted average number of common shares and potential common shares outstanding
during the period. As the Company experienced a loss during the six months ended
June 30, 2009, potential common shares are excluded from the loss per share
calculation because the effect would be antidilutive. Potential common shares
relate to the convertible debt and stock options. As of June 30, 2009 and 2008,
there were 274,992 potential common shares, respectively, related to convertible
debt and 350,000 and 699,800 common shares, respectively, related to stock
options.
 
 REVENUE
RECOGNITION
 
 The
Company recognized revenue from the results of its investment portfolio as the
difference between proceeds from the sale of securities and their acquisition
cost, less commissions paid to the firm that conducts the securities
transactions. The Company was in the business of trading securities and gains
and losses from the sale of securities are included in the Company’s
consolidated statements of operations.
 
 EVALUATION
OF LONG-LIVED ASSETS
 
 The
Company reviews property and equipment, finite-lived intangible assets and
investments in non-consolidated affiliates for impairment whenever events or
changes in circumstances indicate the carrying value may not be recoverable in
accordance with guidance in Statement of Financial Accounting Standards (“SFAS”)
No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." If the
carrying value of the long-lived asset exceeds the present value of the related
estimated future cash flows, the asset would be adjusted to its fair value and
an impairment loss would be charged to operations in the period
identified.
  Page
12
  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.
 
 INVESTMENTS
 
 At
acquisition, marketable debt and equity securities are designated as trading
securities which are carried at estimated fair value with unrealized gains and
losses reflected in results of operations.
 
 EQUITY
METHOD INVESTMENTS
 
 The
Company accounts for non-marketable investments using the equity method of
accounting if the investment gives it the ability to exercise significant
influence over, but not control of, an investee. Significant influence generally
exists if there is an ownership interest representing between 20% and 50% of the
voting stock of the investee. Under the equity method of accounting, investments
are stated at initial cost and are adjusted for additional investments and their
proportionate share of earnings or losses and distributions. The Company records
its share of the investee’s earnings or losses in earnings (losses) from
unconsolidated entities, net of income taxes, in its consolidated statement of
operations. Equity investments of less than 20% are stated at cost. The cost is
not adjusted for its proportionate share of earnings or losses. The Company
evaluates its equity method investments for impairment when events or changes in
circumstances indicate, in management’s judgment, that the carrying value of
such investments may have experienced an other-than-temporary decline in value.
When evidence of loss in value has occurred, the Company compares fair value of
the investment to its carrying value to determine whether impairment has
occurred. If the estimated fair value is less than the carrying value and
management considers the decline to be other than temporary, the excess of the
carrying value over the estimated fair value is recognized as impairment in the
consolidated financial statements.
 
 STOCK-BASED
COMPENSATION
 
 The
Company has a stock-based compensation plan under which stock options are
granted to employees. The Company accounts for stock-based compensation under
Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment."
 
 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.
  Page
13
  FOREIGN
CURRENCY TRANSLATION
 
 The
functional currency for some foreign operations is the local currency. Assets
and liabilities of foreign operations are translated at balance sheet date rates
of exchange and income, expense and cash flow items are translated at the
average exchange rate for the period. The functional currency in South America
is the U.S. dollar. Translation adjustments are recorded in Cumulative Other
Comprehensive Income. The translation gains or losses were not material for the
six and three months ended June 30, 2009 and 2008, and there were no adjustments
to Cumulative Other Comprehensive Income.
 
 POLITICAL
RISK
 
 The
Company is exposed in the inherent risks for the foreseeable future of
conducting business internationally. Language barriers, foreign laws and tariffs
and taxation issues all have a potential effect on he Company’s ability to
transact business. Political instability may increase the difficulties and costs
of doing business. Accordingly, events resulting from changes in the political
climate could have a material effect on the Company.
 
 DISCONTINUED
OPERATIONS
 
 During
the quarter ended June 30, 2008,all of the operations in
the Far East (Indonesia) were discontinued. During the quarter ended December
31, 2008, the construction technology activities that were carried out solely by
the wholly-owned subsidiary, Delta Technologies, Inc., were discontinued. Also,
as of December 31, 2008, the trading of securities by its South American Hedge
Fund subsidiary were accounted for as discontinued operations. These
discontinued operations resulted in a gain (loss) of $(6,452) and $(2,034,218)
and $61 and $19,462, respectively, for the six and three months ended June 30,
2009 and 2008, respectively.
 
 Summarized
statement of loss for discontinued operations is as follows:
 
 Six Months Ended June 30,
                    
                    
                    Three Months Ended June 30,2009
                    
                    
                    2008
                    
                    
                    2009
                    
                    
                    2008Net
      sales
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —
                    
                    
                    $
                    —Impairment
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Provision
      for income taxes
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Loss
      from operations, net of taxes
                    
                    
                    (6,452
                    )
                    
                    
                    (2,034,218
                    )
                    
                    
                    61
                    
                    
                    
                    19,462Gain
      on disposition of minority interest
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Provision
      for income taxes
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Loss
      from discontinued operations, net of taxes
                    
                    $
                    (6,452
                    )
                    
                    $
                    (2,034,218
                    )
                    
                    $
                    61
                    
                    
                    $
                    19,462
  Page
14
  FAIR
VALUE OF FINANCIAL INSTRUMENTS
 
 For
financial instruments including cash, accounts payable, accrued expenses, notes
payable and convertible debt, it was assumed that the carrying amount
approximated fair value because of the short maturities of such
instruments.
 
 NEW
FINANCIAL ACCOUNTING STANDARDS
 
 In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
which enhances existing guidance for measuring assets and liabilities using fair
value.  This Standard provides a single definition of fair value,
together with a framework for measuring it, and requires additional disclosure
about the use of fair value to measure assets and liabilities. In February 2008,
the FASB issued FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to
SFAS No. 13 and its “Related Interpretive Accounting Pronouncements that Address
Leasing Transactions,” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2,
“Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes
SFAS No. 13 and its related interpretive accounting pronouncements that address
leasing transactions from the requirements of SFAS No. 157, with the exception
of fair value measurements of assets and liabilities recorded as a result of a
lease transaction but measured pursuant to other pronouncements within the scope
of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective
for the Company upon adoption of SFAS No. 157 on January 1, 2008. The Company
completed its implementation of SFAS No. 157 on January 1, 2009 and it did not
have a material impact on its financial statements.
 
 In
December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business
Combinations.” This Statement is intended to improve the relevance, completeness
and representational faithfulness of the information provided in financial
reports about the assets acquired and the liabilities assumed in a business
combination.  This Statement requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the Statement. Under SFAS 141(R),
acquisition-related costs, including restructuring costs, must be recognized
separately from the acquisition and will generally be expensed as incurred. That
replaces SFAS 141’s cost-allocation process, which required the cost of an
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values. SFAS 141(R) shall be applied
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual report period beginning on or after
December 15, 2008. The Company has adopted SFAS No. 141(R) effective January 1,
2009 and it did not have a material impact on its financial
statements.
  Page
15
  In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 62 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. The Company has adopted SFAS No. 162 effective January 1,
2009 and it did not have a material impact on its financial
statements.
 
 In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS No.
160”).  SFAS No. 160 establishes new accounting and reporting
standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. Specifically, this statement requires the
recognition of non-controlling interests (minority interest) as equity in the
consolidated financial statements and separate from parent’s equity. The amount
of net income attributable to the non-controlling interest will be included in
consolidated net income on the face of the income statement.  SFAS No.
160 clarifies that changes in a parent’s ownership in a subsidiary that does not
result in deconsolidation are equity transactions if the parent retains its
controlling financial interest. In addition, this statement requires that a
parent recognize a gain or loss in net income when a subsidiary is
deconsolidated. Such gain or loss will be measured using the fair value of the
non-controlling equity investment of the deconsolidation date. SFAS No. 160 also
includes expanded disclosure requirements regarding the interest of the parent
and its non-controlling interest. SFAS No. 160 is effective for fiscal years,
and interim periods other than fiscal years, beginning on or after December 15,
2008. The Company has adopted SFAS No. 160 effective January 1, 2009 and it did
not have a material impact on its financial statements.
 
 2.
ACQUISITION
 
 Effective
March 4, 2008, the Company entered into a Membership Interest Purchase
Agreement, pursuant to which the Company acquired from Egani, Inc. all the
shares of stock of Altony SA, an Uruguayan Sociedad Anonima (“Altony”), which
owns 100% of the issued and outstanding membership interests in South American
Hedge Fund LLC, a Delaware limited liability company (sometimes referred to as
“SAHF”). At the closing of the Agreement, the Company issued 130,000,000 shares
of its common stock to Egani, Inc. which constituted, following such issuance, a
majority of the outstanding shares of its common stock. Immediately following
the closing of the Agreement, Altony became a wholly owned subsidiary of the
Company. For accounting purposes, the transaction was treated as a
recapitalization of the Company, as of March 4, 2008, with Altony as the
acquirer.
 
 The
acquired assets and liabilities assumed of Delta Mutual from the reverse
acquisition are as follows:
 
 Cash
                      
                      $
                      57,623Prepaid
      expenses
                      
                      
                      1,914Property
      and equipment
                      
                      
                      462,842Accumulated
      depreciation
                      
                      
                      (94,719
                      )Intangible
      asset-net
                      
                      
                      126,317Other
      assets
                      
                      
                      650Accounts
      payable
                      
                      
                      (173,370
                      )Accrued
      expenses
                      
                      
                      (1,225,674
                      )Convertible
      debt
                      
                      
                      (397,340
                      )Notes
      payable
                      
                      
                      (240,655
                      )Minority
      interests
                      
                      
                      (225,797
                      )Common
      stock
                      
                      
                      (7,888
                      )Deficit
                      
                      
                      1,716,087$
                      -0-
  Page
16
  3.
INVESTMENTS
 
 Trading
securities are comprised of public and private securities of Latin American
entities. For the six and three months ended June 30, 2009 and 2008, the Company
incurred realized gains (losses) of $-0- and  $(2,053,033),
respectively, and $-0- and $19,503, respectively. There were no investments in
trading securities as of June 30, 2009 and December 31, 2008.
 
 4.
PROPERTY AND EQUIPMENT
 
 June 30,
                    
                    
                    December 31,2009
                    
                    
                    2008Equipment
                    
                    $
                    6,277
                    
                    
                    $
                    6,277Leasehold
      improvements
                    
                    
                    7,807
                    
                    
                    
                    7,80714,084
                    
                    
                    
                    14,084Less
      accumulated depreciation
                    
                    
                    13,619
                    
                    
                    
                    13,280$
                    465
                    
                    
                    $
                    804
 
 During
2008, the operations in the Far East (Indonesia) and the construction technology
activities conducted by Delta Technologies, Inc., a wholly-owned US subsidiary,
were discontinued. During the third and fourth quarters of 2008, the Company
wrote off $268,127, the value of the equipment that was used in its Indonesian
operations. During the fourth quarter of 2008, Delta Technologies, Inc. wrote
off $77,125, the value of the manufacturing equipment that was used to produce
its insulating concrete form (ICF) building product.
 
 Depreciation
expense for the six and three months ended June 30, 2009 and 2008 amounted to
$339 and $21,537, respectively, and $169 and $10,329,
respectively.
  Page
17
  5.
INTANGIBLE ASSETS
 
 Intangible
assets consisted of intellectual property from a patent application. The Company
elected not to pursue the patent application and recorded an impairment charge
of $122,742 of the unamortized amounts during the quarter ended June 30, 2008.
For the six and three months ended June 30, 2009 and 2008, amortization expense
was $-0- and $3,575, respectively, and $-0- and $1,787, respectively. There were
no intangible assets as of June 30, 2009 and December 31, 2008.
 
 6.
INVESTMENT IN NONCONSOLIDATED AFFILIATES
 
 The
Company has a 23.5% ownership interest in the Jollin and Tonono oil and gas
concessions located in Northern Argentina. During 2007, the Company purchased a
47% ownership of these concessions and paid the purchase price by issuing a
non-interest bearing note in the principal amount of $1,820,000 to
Oxipetrol-Petroleros de Occidente S.A. (Oxipetrol), one of the other owners,
with a maturity date of July 2008. The Company’s purchase price was based upon
the price tendered by the original purchasers of the concessions that was and
accepted by the Argentine government, who formerly owned these properties.
Thegovernment uses a
number of factors In determining the selling prices for oil and gas concession
in Argentina, including the location and size of the concession and the current
market prices of crude oil and natural gas. Prior to the maturity date, the
Company and Oxipetrol mutually agreed to reduce the principal amount of the
Company’s note primarily because of changes in oil and gas prices. Based upon
the purchase price reduction, the Company repaid Oxipetrol $1,270,000 at the
maturity date. Based on these circumstances, the Company recorded a one time,
retroactive adjustment, reducing the value of this investment by $550,000 at
December 31, 2008.
 
 During
2008, the Company exchanged 50% of its ownership in this investment with a third
party for no cash consideration, however, the acquirer contractually agreed to
assume 50% of the Company’s obligations with respect to future development
expenses. The Company recorded a $635,000 loss on disposition of this investment
in its consolidated statement of operations.
 
 During
the year ended December 31, 2008, majority owners of the Jollin and Tonono
concessions formed an Argentine-registered joint venture andpaid, in the aggregate,
approximately $848,00 of development costs,all of which were
capitalized. Since the Company is not currently registered as a foreign company
in Argentina, it could not become a member of the joint venture in 2008. The
other owners of these concessions have agreed that, upon admission of the
Company as a member of the joint venture, the Company will retain its 23.5%
ownership. However, the Company’s weighted average pro-rata portion of the 2008
aggregate development cost, of approximately $223,024, all of which is included
in accounts payable in the Company’s consolidated balance sheet at December 31,
2008, will be repaid to the other members from its pro-rata share of the future
earnings. The Company has applied for foreign registration in Argentina and
expects to be admitted as a member of the joint venture during
2009.
  Page
18
  Currently,
there is an oil well certified for commercial operation at the Tonono
Concession. Delivery of the commercial production from this well is expected by
the end of the third quarter of 2009. A well on the Jollin Concession contains
natural gas and can begin production upon completion of a connecting pipeline
that will connect this well to a major distribution pipeline. The connecting
pipeline is owned by the joint venture and is currently the pre-construction
phase. If the anticipated oil and gas revenue does not offset the development
costs for these concession in 2009 and beyond, or is not sufficient to repay the
Company’s obligation to the other owners, the Company’s share of the development
and operating expenses will be borne by the other owners subject to the
repayment method described above. During the first quarter of 2009, the Company
paid approximately $193,500 for development expenses at the Jollin and Tonono
concessions, all of which was capitalized, and is included in the Company’s
consolidated financial statements. During the second quarter of 2009, the
Company’s weighted average pro-rata portion of the development expenses at the
Jollin and Tonono concessions was approximately $70,500, all of which is
included in accounts payable in the Company’s consolidated balance sheets, and
will be repaid to the other owners as described above.
 
 During
2008, the Company purchased 40% of the oil and gas exploration rights to five
geographically defined areas in the Salta Province of Northern Argentina from
Kestal, SA, a company that acquired 100% of these explorations rights from the
government of Argentina in 2007. Kestal retained a 60% interest.The price Kestal paid to
acquire these rights from the government was determined by the process described
above. The Company paid the $697,000 purchase price in cash and incurred no
additional costs or expenses related to this investment in 2008. The Company
expects that in 2009 and 2010, substantially all of the exploration costs
required to retain these exploration rights will be borne by the majority
owner.
 
 The
Companyhas 9%
ownership of the Tartagal and Morillo oil and gas concessions located in
Northern Argentina. During 2007, the Company purchased an 18% ownership of these
concessions and paid the purchase price by issuing a non-interest bearing note
in the principal amount of $480,000 to Oxipetrol, one of the other owners, with
a maturity date of July 2008. The purchase price for this investment was based
on the original price paid to the Argentine government to acquire these
concessions, following the process described above. Prior to the maturity date,
the Company and Oxipetrol mutually agreed to reduce the principal amount of the
Company’s note primarily because of changes in oil and gas prices. Based upon
the purchase price reduction, the Company repaid Oxipetrol $450,000 at the
maturity date. Based on these circumstances, the Company recorded a one time,
retroactive adjustment reducing the value of this investment by $30,000 at
December 31, 2008.
 
 During
2008, the Company exchanged 50% of its ownership in this investment with a third
party for no cash consideration, however, the acquirer contractually agreed to
assume 50% of the Company’s obligations with respect to future development
expenses. The Company recorded a $225,000 loss on disposition of this investment
in its consolidated financial statements.
 
 In March
2009, a Hong Kong public company purchased 60% of the ownership in the Tartagal
and Morillo Concessions, from the other majority owners, for total consideration
of approximately $270 million. These funds will be used for development and
operating expenses in 2009 and beyond.
  Page
19
  The
Company evaluated these investments for impairment and concluded that, except as
described above, no loss in value occurred as of June
30, 2009. The following table summarizes the Company’s investments in these
nonconsolidated affiliates.
 
 Concession
                    
                    
                    ExplorationInvestments
                    
                    
                    Rights
                    
                    
                    TotalAt
      December 31, 2007
                    
                    $
                    2,300,000
                    
                    
                    $
                    —
                    
                    
                    $
                    2,300,000Adjustment
      of purchase price
                    
                    
                    (580,000
                    )
                    
                    
                    —
                    
                    
                    
                    (580,000
                    )Disposition
      of investment, net
                    
                    
                    (860,000
                    )
                    
                    
                    —
                    
                    
                    
                    (860,000
                    )Additional
      investment in 2008
                    
                    
                    223,024
                    
                    
                    
                    697,000
                    
                    
                    
                    920,024Equity
      in net earnings (loss)
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —At
      December 31, 2008
                    
                    
                    1,083,024
                    
                    
                    
                    697,000
                    
                    
                    
                    1,780,024Additional
      investments in 2009
                    
                    
                    264,000
                    
                    
                    
                    —
                    
                    
                    
                    264,000At
      June 30, 2009
                    
                    $
                    1,347,024
                    
                    
                    $
                    697,000
                    
                    
                    $
                    2,044,024
 
 7.
NONCONTROLLING INTEREST
 
 During
2008, the Company discontinued its operations in the Far East (Indonesia) and
the operations of its Puerto Rico real estate development partnerships. For the
year ended December 31, 2008, the Company wrote off all balances in connection
with these joint ventures and recorded a gain on the disposal of the
discontinued operations of approximately $230,057, which was included in
discontinued operations on the Company’s consolidated statements of operations
for the year ended December 31, 2008.
 
 The
Company continues to maintain a 45% interest in Delta-Envirotech, Inc. which
meets the definition of a Variable Interest Entity as defined in Financial
Accounting Standards Board Interpretation No. 46 (FIN 46),"Consolidation of
Variable Interest Entities" requiring the beneficiaries of a variable interest
entity to consolidate the entity. The primary beneficiary of a variable interest
entity is the party that absorbs
the majority of the expected losses of the entity or receives a majority of the
entity's expected residual return, or both, as a result of ownership,
contractual or other financial interest in the entity.
 Effective
January 1, 2009, the Company completed its implementation of SFAS No. 160,
“Noncontrolling Interests in Consolidated Financial Statements- An Amendment of
ARB No. 51.”
  Page
20
  8.
SHORT-TERM DEBT
 
 June 30,
                          
                          
                          December 31,2009
                          
                          
                          2008Notes
      payable to three investors, interest at 8%, due November 6, 2008
      (1)
                          
                          $
                          150,655
                          
                          
                          $
                          150,655Note
      payable to third party, interest at 6%, due April 2009 (1)
                          
                          
                          30,000
                          
                          
                          
                          30,000Notes
      payable to stockholders and related parties, interest at 6%, due on
      demand
                          
                          
                          381,914
                          
                          
                          
                          280,553Note
      payable to Ambika, S.A., non-interest bearing, payable on
      demand
                          
                          
                          200,000
                          
                          
                          
                          —$
                          762,569
                          
                          
                          $
                          461,208
 
 (1)The
Company did not repay these notes at the maturity dates. The Company is
currently negotiating amended terms with the noteholders. If the Company and the
noteholders can not agree upon an amendment to the note, including an extension
of the maturity dates, the Company may receive a notice of default. If the
Company receives a notice of default and fails to repay the notes, the lenders
could initiate legal proceedings and obtain a judgment against the
Company.
 
 Interest
expense for the six and three months ended June 30, 2009 and 2008 amounted to
$16,867 and $(30,051), respectively, and $8,833 and $5,750, respectively.
Accrued interest at June 30, 2009 and December 31, 2008 amounted to $41,235 and
$24,370, respectively, and is included in accrued expenses on the Company’s
consolidated balance sheets.
 
 9.
CONVERTIBLE DEBT
 
 In
connection with the March 4, 2008 merger, the Company assumed convertible debt
obligations of $397,340. A note in the principal amount of $193,740 was not
repaid at its maturity date. The Company is currently negotiating amended terms
with the noteholder. If the Company and the noteholder can not agree upon an
amendment to the note, including an extension of the maturity date, the Company
may receive a notice of default. If the Company receives a notice of default and
fails to repay the note, the lender could initiate legal proceedings and obtain
a judgment against the Company.
 
 In April
2008, the Company issued 230,058 shares of common stock in payment of the
aggregate principal amount of $143,600 of convertible notes and issued 11,564
shares of common stock in payment of the accrued interest of
$7,048.
 
 At June
30, 2009, the Company's outstanding convertible notes were convertible into
274,992 shares of common stock.
 
 The
following table shows the maturities by year of total face amount of the
convertible debt obligations at June 30, 2009:
 
 2009
                      
                      $
                      253,740$
                      253,740
  Page
21
  For the
six and three months ended June 30, 2009 and 2008, the Company recorded interest
expense of $3,875 and $5,791, respectively, and $1,938 and $2,199, respectively.
As of June 30, 2009 and December 31, 2008, accrued interest of $46,150 and
$42,275, respectively, is included in accrued expenses on the Company's
consolidated balance sheets.
 
 10.
ACCRUED EXPENSES
 
 Accrued
expenses consist of the following:
 
 June 30,
                      
                      
                      December 31,2009
                      
                      
                      2008Professional
      fees
                      
                      $
                      12,000
                      
                      
                      $
                      33,000Interest
      expense
                      
                      
                      87,385
                      
                      
                      
                      66,664Payroll
      expense
                      
                      
                      704,508
                      
                      
                      
                      644,508Payroll
      expense-officers
                      
                      
                      78,613
                      
                      
                      
                      50,296Payroll
      tax expense
                      
                      
                      53,513
                      
                      
                      
                      45,481Accrued
      consulting fees
                      
                      
                      419,867
                      
                      
                      
                      419,877Other
      accrued expenses
                      
                      
                      113,255
                      
                      
                      
                      103,589$
                      1,469,141
                      
                      
                      $
                      1,363,395
 
 During
the year ended December 31, 2008, pursuant to a written agreement with the
former president of the Company, $117,436 of his accrued salary was
eliminated.
 
 Accrued
consulting fees as of June 30, 2009 and December 31, 2008 include $218,667
pursuant to a consulting agreement that had been terminated for cause by the
Company.
 
 11.   STOCKHOLDERS'
EQUITY
  On April
22, 2009, the Company’s board of directors approved amendments to the
Certificate of Incorporation to: (1) effect a 1 for 10 reverse split of all the
outstanding common stock; and (2) authorize a new class of 10,000,000 shares of
preferred stock, par value $0.0001 per share, and to authorize the board of
directors to issue one or more series of the preferred stock with such
designations, rights, preferences and restrictions as determined by majority
vote of the directors. Thereafter on April 23, 2009, the Company received
written consent from stockholders of the Company holding a majority of the
outstanding shares of common stock approving the Amendments. The effective date
of the Amendments is the date the reverse stock split is made effective for
trading purposes by the Financial Industry Regulatory Authority (FINRA). FINRA
approved the reverse split for trading purposes effective July 6, 2009. The
number of shares in these financial statements reflect a reduced number of
shares outstanding of the Company’s common stock from 223,849, 518 to 22,384,916
as of June 30, 2009.
  Page
22
  All share
and per share data (except par value) have been adjusted to reflect the effect
of the stock split for all periods presented. As a result, there is no overall
financial effect of the reverse split, however, the number of outstanding
employee stock options has been reduced from 3,500,000 to 350,000 and the
exercise price for the respective options has increased by a factor of
10.
  As of
June 30, 2009, the board of directors had not authorized the issuance of any
series of preferred stock.
  The
Company issues shares of common stock for services and repayment of debt and
interest valued at fair market value at time of issuance.
 
 For the
six months ended June 30, 2009 and 2008, the Company issued 200,000 and
1,055,000 shares of common stock, respectively, valued at $0.60 and $0.20 -
$0.70 per share, respectively, for services valued at $120,000 and $238,500,
respectively.
 
 For the
three months ended June 30, 2009 and 2008, the Company issued 200,000 and 55,000
shares, respectively, valued at $0.60 and $0.70 per share, respectively, for
services valued at, and $120,000 and $38,500, respectively,
 
 For the
six months ended June 30, 2009 and 2008, the Company issued –0- and 230,058
shares of common stock, respectively, for the repayment of $-0- and $143,600
principal amount of convertible notes, respectively and issued –0- and 11,564
shares, respectively, as payment of $-0- and $7,048, respectively, of accrued
interest. The shares were valued at $0.50 - $0.70 per share.
 
 For the
three months ended June 30, 2009 and 2008, the Company issued –0- and
230,058 shares of common stock, respectively, for the repayment of $143,600
principal amount of convertible notes, respectively, and issued –0- and 11,564
shares, respectively, as payment of $-0- and $7,048, respectively, of accrued
interest. The shares were valued at $0.50 - $0.70 per share.
 
 During
the second quarter of 2009, the Company received $10,000 pursuant to
subscription agreements to purchase 33,334 shares of common stock. As of June
30, 2009, the Company had not issued these shares.
 
 12.   BUSINESS
SEGMENT INFORMATION
 
 The
Company’s reporting business segments are geographic and
include   North America (United States) and South America. The
primary criteria by which financial performance is evaluated and resources
allocated are revenue and operating income.
  Page
23
  The
following is a summary of key financial data:
 
 Six
      Months Ended
                                  
                                  
                                  Three
      months EndedJune
      30,
                                  
                                  
                                  June
      30,2009
                                  
                                  
                                  2008
                                  
                                  
                                  2009
                                  
                                  
                                  2008Total
      Revenue:North
      America
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —South
      America
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —$
                                  —
                                  
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —
                                  
                                  
                                  $
                                  —Income
      (Loss) from Continuing Operations:North
      America
                                  
                                  $
                                  (755,685
                                  )
                                  
                                  $
                                  (1,096,614
                                  )
                                  
                                  $
                                  (455,574
                                  )
                                  
                                  $
                                  (527,145
                                  )South
      America
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —
                                  
                                  
                                  
                                  —$
                                  (755,685
                                  )
                                  
                                  $
                                  (1,096,614
                                  )
                                  
                                  $
                                  (455,574
                                  )
                                  
                                  $
                                  (527,145
                                  )
 
 13.   INCOME
TAXES
 
 The
Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the
implementation of FIN 48, the Company recognized no adjustment in the net
liability for unrecognized income tax benefits.
 
 14. SHARE
BASED COMPENSATION
 
 The
Company records compensation expense in its consolidated statements of
operations related to employee stock-based options and awards in accordance with
SFAS No. 123(R) "Share-Based Payment."
 
 The
Company recognizes the cost of all employee stock options on a straight-line
attribution basis over their respective contractual terms, net of estimated
forfeitures. The Company has selected the modified prospective method of
transition.
 
 The
Company also issues shares of its common stock to non-employees as stock-based
compensation. The Company accounts for the services using the fair market value
of the services rendered. For the six months ended June 30, 2009 and 2008, the
Company issued and 200,000 and 1,055,000 shares, respectively, and recorded
compensation expense of $120,000
and $238,500, respectively, in conjunction with the issuance of these shares.
For the three months ended June 30, 2009 and 2008, the Company issued 200,000
and 55,000 shares, respectively, and recorded compensation expense of $120,000
and $38,500, respectively, in conjunction with the issuance of these
shares.
 
 Stock
Option Plan
 
 In
conjunction with the March 4, 2008 merger, the Company assumed the obligation of
797,800 outstanding stock options at their fair value. As of June 30, 2009,
650,000 shares of common stock remain available for issuance under the stock
option plan.
  Page
24
  
 A summary
of the option activity under the Company’s stock option plan as of December 31,
2008 and changes during the six months ended June 30, 2009, is presented
below.
 
 Options
                          
                          Shares
                          
                          
                          Weighted-Average
                            Exercise SharePrice
                          
                          
                          Weighted-
                            Average
                            Remaining
                            Contractual
                            Term
                          
                          
                          Aggregate
                            Intrinsic
                            ValueOutstanding
      at January 1, 2009
                          
                          
                          350,000
                          
                          
                          $
                          1.10Options
      granted
                          
                          
                          -
                          
                          
                          $
                          -Options
      exercised
                          
                          
                          -
                          
                          
                          $
                          -Options
      cancelled/expired
                          
                          
                          -
                          
                          
                          $
                          -Outstanding
      at June 30, 2009
                          
                          
                          350,000
                          
                          
                          $
                          1.10
                          
                          
                          
                          1.9
                          
                          
                          $
                          (245,000
                          )Exercisable
      at June 30, 2009
                          
                          
                          350,000
                          
                          
                          $
                          1.10
                          
                          
                          
                          1.9
                          
                          
                          
                          —
 
 Stock
compensation expense applicable to stock options for the six and three months
ended June 30, 2009 and 2008 was approximately $393,490 and $196,745,
respectively. The aggregate intrinsic value of options outstanding as of June
30, 2009 was $(245,000).
 
 All of
the Company’s outstanding options were exercisable as of June 30,
2009.
 
 At June
30 2009, there was $228,800 of total unrecognized compensation cost related to
share-based compensation arrangements granted under the stock option plan. The
cost is expected to be recognized over a weighted average period of 1.9
years.
 
 15.
COMMITMENTS AND CONTINGENCIES
 
 Consulting
Agreements
 
 The
Company had a consulting agreement that expired during the year ended December
31, 2008. As of June 30, 2009 and December 31, 2008, consulting fees of $201,200
associated with this agreement are included in accrued expenses on the Company's
consolidated balance sheets.
  Page
25
 
 16. LEGAL
PROCEEDINGS
 
 On
September 16, 2008, the Company was notified of a complaint filed with the
Pennsylvania Department of Labor & Industry by its former President and CEO
alleging non-payment of wages in the amount of $53,271. The Company also
received notice of a similar complaint filed by a former employee alleging
non-payment of wages in the amount of $17,782. In October 2008, the Company
entered into repayment agreements with both of the former employees. The Company
has not made any payments to these two former employees pursuant to the
agreements. The Company believes the resolution of this matter will not have a
material effect on the Company or its operations.
 
 On
February 5, 2009, the Company was notified that it was named as a co-defendant
in a citation corporate filed in the District Court in Harris County, Texas in
November 2007, by Equisource Ventures. The suit alleges breach of contract and
unjust enrichment, and the plaintiff seeks actual and exemplary damages for
unpaid consulting fees, attorneys’ fees, other costs and interest. The Company
denies any wrongdoing and will contest vigorously the claims asserted against
it. The Company also believes that the resolution of this matter will have no
material effect upon the Company or its operations.
 
 One June
3, 2009, Delta Technologies, Inc., a wholly owned subsidiary of the Company and
a discontinued operation (“Delta Technologies”), was notified by a law firm
engaged by Wolf Block LLP (“Wolf Block”), a law firm that had provided
intellectually property legal services to Delta Technologies, that it had been
retained in an attempt to collect a past due amount of approximately $41,000. If
Delta Technologies does not make payment arrangements or cannot otherwise
resolve this matter, Wolf Block has authorized a lawsuit to be filed against
Delta Technologies and/or the Company. Delta Technologies has contacted the law
firm retained by Wolf Block to dispute the amount of the past due legal services
provided by Wolf Block, and is attempting to establish the correct amount past
due prior to making repayment arrangements, if any. The Company believes that
the resolution of this matter will have no material effect on the Company or its
operations.
  Page
26


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




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





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





GENERAL





We were
incorporated in the State of Delaware on November 17, 1999. In 2003, we
established business operations focused on providing environmental and
construction technologies andservices in the Far East, the Middle East,
and the United States. As of December 31, 2008, the construction technology
activities and our business in the Far East (Indonesia) were
discontinued.





On March
4, 2008, we entered into a Membership Interest Purchase Agreement (the
“Agreement”) with Egani, Inc., an Arizona corporation (“Egani”). Pursuant to the
Agreement, we acquired from Egani 100% of the shares of stock held by Egani in
Altony S.A., an Uruguay Sociedad Anonima, (“Altony”) which owns 100% of the
issued and outstanding membership interests in South American Hedge Fund LLC, a
Delaware limited liability company (sometimes herein referred to as “SAHF”). At
the closing of the Agreement, we issued 13,000,000 shares of our Common stock to
Egani for the purchase of Altony which constituted, following such issuance, a
majority of the outstanding shares of our common stock. Immediately following
the closing of the Agreement, Altony became a wholly owned subsidiary of the
Company. For accounting purposes, the transaction was treated as a
recapitalization of the Company with Altony as the acquirer.





The
Company’s principal business at this time is conducted by our subsidiary, South
American Hedge Fund, which has investments in oil and gas concessions in
Argentina and intends to focus its investments in the energy sector, including
development of energy producing investments and alternative energy production in
Latin America and North America. Following the acquisition of SAHF, management
has continued to pursue selected business opportunities in the Middle East These
activities are conducted by our joint venture subsidiary, Delta-Envirotech, Inc.
(“Envirotech”). We have operating control of Envirotech and hold a 45% percent
ownership interest.





Reverse
Stock Split





Effective
July 6, 2009, we effected a 1:10 reverse split (the “Reverse Split”) of our
outstanding common stock, pursuant to a definitive information statement filed
with the Securities and Exchange Commission. Following effectiveness of the
Reverse Split, each ten (10) shares of our common stock outstanding immediately
prior to the effective date was automatically converted into one (1) share of
our common stock. By reason of the Reverse Split, the number of outstanding
shares of our common stock was reduced from 223,849,158 sharesto 22,384,916
shares.





RESULTS
OF OPERATIONS





During
the six months ended June 30, 2009, we incurred a net loss of $762,137 primarily
due to a loss from continuing operations of approximately $756,000. Our ability
to continue as a going concern is dependent upon our ability to obtain funds to
meet our obligations on a timely basis, obtain additional financing or
refinancing as may be required, and ultimately to attain profitability. There
are no assurances that we will be able to obtain additional financing or that
such financing will be on terms favorable to us. The inability to obtain
additional financing when needed would have a material adverse effect on our
operating results.


Page
27





SIX
MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30,
2008





During
the six months ended June 30, 2009, we incurred a net loss from continuing
operations of
approximately $756,000 compared to approximately $1,100,000 for the six months
ended June 30, 2008. The decrease in our loss from continuing operations for the
six months ended June 30, 2009 over the comparable period of the prior year was
primarily due to a decrease in general and administrative expenses of
approximately $263,000 and the elimination of a loss on intellectual property
that occurred during the prior year period of approximately
$123,000.





Our net
loss for the six months ended June 30, 2009 was approximately $762,000 compared
to a net loss of approximately $3,131,000 for the comparable prior year period.
The net loss for the six months ended June 30, 2008 included a loss from
discontinued operations of approximately $2,034,000 primarily associated with
the liquidation of the investment portfolio.




THREE
MONTHS ENDED JUNE 30, 2009 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
2008





During
the three months ended June 30, 2009, we incurred a net loss from continuing
operations of
$455,574 compared to $527,145 for the three months ended June 30, 2008. The
decrease in our loss from continuing operations for the three months ended June
30, 2009 over the comparable period of the prior year was primarily due the
decrease of a loss on intellectual property of approximately $123,000 offset by
an increase in general and administrative expenses of approximately
$48,000.





Our net
loss for the three months ended June 30, 2009 was approximately $456,000
compared to a net loss
of approximately $508,000 for the comparable prior year period. The net loss for
the three months ended June 30, 2008 included a loss on intellectual property of
$122,742 and a gain from discontinued operations of approximately
$19,500.




PLAN OF
OPERATION





The
primary focus of the Company’s business is its South American Hedge Fund
subsidiary that has investments in oil and gas exploration and production in
Argentina and will continue to focus on the energy sector, including the
development and supply of energy and alternative energy sources in Latin America
and North America. As of December 31, 2008, the securities trading activities of
South American Hedge Fund were accounted for as discontinued
operations.





Oil and
Gas Investments





Our main
source of revenue will derive from the sale of crude oil and natural gas
produced form the four oil and gas concessions in which we have made
investments. While we are not the operators of these concessions, we expect to
have representation on the operating committees that are responsible for
managing the business affairs of these concessions. Our ownership interests in
these concessions range from nine to 23.5%.





Jollin
and Tonono Concessions





In 2008,
the majority owners of these concessions formed an Argentine-registered joint
venture to operate these concessions. Since SAHF is not currently registered in
Argentina, it could not become an official member of the joint venture. The
other owners of the joint venture have agreed that SAHF will be admitted as a
member of the joint venture, upon the registration of SAHF as a foreign company
in Argentina. SAHF has applied for foreign registration and expects to become a
member of the joint venture in 2009.





A well
located in the Tonono Concession became operational for the commercial
production of oil in the
first quarter of 2009. Delivery of the commercial production is currently
expected by the end of the third quarter.  A well located in the
Jollin Concession contains commercial quantities of natural gas. A natural gas
pipeline connecting the Jollin Concession to a major distribution pipeline is in
the pre-construction phase. The connecting pipeline when completed will be owned
by the joint venture. It is expected to be completed during the third quarter of
2009. Upon completion, it will permit the joint venture to commence deriving
additional revenue from the sale of natural gas.





Tartagal
and Morillo Concessions





In 2008,
the majority owners of the Tartagal and Morillo Concessions agreed to form an
Argentine-registered joint venture and applied for government approval of the
license to operate the concessions. SAHF expects to receive its foreign
corporation registration in 2009 and join the joint venture when it formed and
is registered with the government.


Page
28




In March
2009, a Hong Kong public company, following approval by its shareholders, agreed
to acquire a 60% participation interest in these concessions for approximately
$280 million. The Company expects that the funds from this acquisition will be
used for development and operating expenses in 2009 and beyond. Deliveries of
crude oil from these concession are expected to begin in 2009.





Exploration
Rights





SAHF
holds a 40% interest in the oil and gas exploration rights to five
geographically defined areas in the Salta Province of Northern Argentina.
Provided certain development activities are under taken by the majority owner,
these exploration rights will remain in effect until the year 2010.





Middle
East





Envirotech
is the Middle East distributor of an organic supplement designed to increase
crop yield. During the second half of 2008, a Saudi Arabian farm operator
purchased sample quantities of the organic supplement for crop testing.
Subsequent purchases in commercial quantities will depend upon the evaluation of
the crop yield that began in the second quarter of 2009 and is currently in
process.




FUNDING





Our
current business plan for 2009 and beyond anticipates a substantial increase in
revenue primarily from our investments in oil and gas concessions in Argentina.
If we do not achieve the expected levels of revenue, we may be required to raise
additional capital through equity and/or debt financing.




LIQUIDITY





At June
30, 2009, we had a working capital deficit of approximately $2.9 million,
compared with a working
capital deficit of approximately $2.4 million at December 31, 2008. The increase
as of June 30, 2009 was due primarily to increases in accounts payable of
approximately $92,000; accrued expenses of approximately $$106,999; and notes
payable of approximately $301,000.





At June
30, 2009, we had total assets of approximately $2.0 million compared to total
assets of approximately $1.8 million at December 31, 2008. The increase is
primarily attributable to additional investments in the amount of approximately
$264,000 made in our oil and gas concessions in Argentina.





Cash
decreased approximately $10,000 for the six months ended June 30, 2009. The
decrease is primarily attributable to additional investments in our oil and gas
concessions of approximately $264,000 and cash used in operations activities
(primarily a net loss of $762,137 offset by the non-cash option issuance of
$393,940) offset by proceeds from loans of approximately $311,000.




CRITICAL
ACCOUNTING ISSUES





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


Page
29


Other
Matters





Accounting
Pronouncements





In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
enhances existing guidance for measuring assets and liabilities using fair
value.  This Standard provides a single definition of fair value,
together with a framework for measuring it, and requires additional disclosure
about the use of fair value to measure assets and liabilities. In February 2008,
the FASB issued FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to
SFAS No. 13 and its “Related Interpretive Accounting Pronouncements that Address
Leasing Transactions,” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2,
“Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes
SFAS No. 13 and its related interpretive accounting pronouncements that address
leasing transactions from the requirements of SFAS No. 157, with the exception
of fair value measurements of assets and liabilities recorded as a result of a
lease transaction but measured pursuant to other pronouncements within the scope
of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for
all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective
for the Company upon adoption of SFAS No. 157 on January 1, 2008. The Company
completed its implementation of SFAS No. 157 effective January 1, 2009 and it
did not have a material impact on its financial statements.





In
December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business
Combinations.” This Statement is intended to improve the relevance, completeness
and representational faithfulness of the information provided in financial
reports about the assets acquired and the liabilities assumed in a business
combination.  This Statement requires an acquirer to recognize the
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree at the acquisition date, measured at their fair values as of that date,
with limited exceptions specified in the Statement. Under SFAS 141(R),
acquisition-related costs, including restructuring costs, must be recognized
separately from the acquisition and will generally be expensed as incurred. That
replaces SFAS 141’s cost-allocation process, which required the cost of an
acquisition to be allocated to the individual assets acquired and liabilities
assumed based on their estimated fair values. SFAS 141(R) shall be applied
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual report period beginning on or after
December 15, 2008. The Company has adopted SFAS No. 141(R) effective January 1,
2009 and it did not have a material impact on its financial
statements.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS No. 162”). SFAS No. 62 identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. The Company has adopted SFAS No. 162 effective January 1,
2009 and it did not have a material impact on its financial
statements.





In
December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS No.
160”).  SFAS No. 160 establishes new accounting and reporting
standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. Specifically, this statement requires the
recognition of non-controlling interests (minority interest) as equity in the
consolidated financial statements and separate from parent’s equity. The amount
of net income attributable to the non-controlling interest will be included in
consolidated net income on the face of the income statement.  SFAS No.
160 clarifies that changes in a parent’s ownership in a subsidiary that does not
result in deconsolidation are equity transactions if the parent retains its
controlling financial interest. In addition, this statement requires that a
parent recognize a gain or loss in net income when a subsidiary is
deconsolidated. Such gain or loss will be measured using the fair value of the
non-controlling equity investment of the deconsolidation date. SFAS No. 160 also
includes expanded disclosure requirements regarding the interest of the parent
and its non-controlling interest. SFAS No. 160 is effective for fiscal years,
and interim periods other than fiscal years, beginning on or after December 15,
2008. The Company has adopted SFAS No. 160 effective January 1, 2009 and it did
not have a material impact on its financial statements.





Critical
Accounting Policies





The
Securities and Exchange Commission recently issued “Financial Reporting Release
No. 60 Cautionary Advice About Critical Accounting Policies” (“FRR 60”),
suggesting companies provide additional disclosures, discussion and commentary
on their accounting policies considered most critical to its business and
financial reporting requirements. FRR 60 considers an accounting policy to be
critical if it is important to the Company’s financial condition and results of
operations, and requires significant judgment and estimates on the part of
management in the application of the policy. For a summary of the Company’s
significant accounting policies, including the critical accounting policies
discussed below, please refer to the accompanying


Page
30





notes to
the financial statements.Foreign currency risk - The functional currency for
some foreign operations is the local currency. Assets and liabilities of foreign
operations are translated at balance sheet date rates of exchange and income,
expense and cash flow items are translated at the average exchange rate for the
period. The functional currency in South America is the U.S. dollar. Translation
adjustments are recorded in Cumulative Other Comprehensive Income.





The
Company assesses potential impairment of its long-lived assets, which include
its property and
equipment, investments, and its identifiable intangibles such as deferred
charges under the guidance of SFAS 144 “Accounting for the Impairment or
Disposal of Long-Lived Assets.” The Company must continually determine if a
permanent impairment of its long-lived assets has occurred and write down the
assets to their fair values and charge current operations for the measured
impairment.





Investments
in non-consolidated affiliates – These investments consist of the Company’s
ownership interests in oil and gas development and exploration rights in
Argentina, net of impairment losses if any.





We
evaluate these investments for impairment when indicators of potential
impairment are present. Indicators of impairment include, but are not limited
to, levels of oil and gas reserves, availability of pipeline (or other
transportation) capacity and infrastructure and management of the operations in
which the investments were made.





ITEM
3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.





Commodity
Price Risk – We are exposed to market risks related to price volatility of crude
oil and natural gas. The price of crude oil and natural gas affect our revenues,
since sales of crude oil and natural gas from our South American investments
comprise nearly all of our revenue. A decline in crude oil and natural gas
prices will likely effect our revenues, unless there are offsetting production
increases. We do not use derivative commodity instruments for trading
purposes.





ITEM
4T. CONTROLS AND PROCEEDURES





a.
Disclosure controls and procedures.





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





b.
Changes in internal controls over financial reporting.





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





PART
II—OTHER INFORMATION





Item
1.          LEGAL
PROCEEDINGS.


On
September 16, 2008, the Company was notified of a complaint filed with the
Pennsylvania Department of Labor & Industry by its former President and CEO
alleging non-payment of wages in the amount of $53,271. The Company also
received notice of a similar complaint filed by a former employee alleging
non-payment of wages in the amount of $17,782. In October 2008, the Company
entered into repayment agreements with both of the former employees. As of the
date of this report, the Company has not made any payments to these two former
employees pursuant to these agreements.


Page
31




On
February 5, 2009, the Company was notified that it was named as a co-defendant
in a citation corporate filed in the District Court in Harris County, Texas in
November 2007, by Equisource Ventures. The suit alleges breach of contract and
unjust enrichment, and the plaintiff seeks actual and exemplary damages for
unpaid consulting fees, attorneys’ fees, other costs and interest. The Company
denies any wrongdoing and will contest vigorously the claims asserted against
it. The Company also believes that the resolution of this matter will have no
material effect upon the Company or its operations.





One June
3, 2009, Delta Technologies, Inc., a wholly-owned subsidiary of the Company and
a discontinued operation (“Delta Technologies”), was notified by a law firm
engaged by Wolf Block LLP (“Wolf Block”), a law firm that had provided
intellectually property legal services to Delta Technologies, that it had been
retained in an attempt to collect a past due amount of approximately $41,000. If
Delta Technologies does not make payment arrangements or cannot otherwise
resolve this matter, Wolf Block has authorized a lawsuit to be filed against
Delta Technologies and/or the Company. Delta Technologies has contacted the law
firm retained by Wolf Block to dispute the amount of the past due legal services
provided by Wolf Block, and is attempting to establish the correct amount past
due prior to making repayment arrangements, if any. The Company believes that
the resolution of this matter will have no material effect on the Company or its
operations.





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





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




Date
                      
                      Title and Amount
                      
                      
                      Purchaser
                      
                      
                      Principal
                        Underwriter
                      
                      Total
      Offering Price/ Underwriting DiscountsApril
      27, 2009
                      
                      200,000
      shares of common stock.
                      
                      
                      Consultant
                      
                      
                      NA
                      
                      $
                      120,000/NA





ITEM
3.        DEFAULTS UPON SENIOR
SECURITIES.





Not
applicable.





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




On April
22, 2009, our board of directors approved amendments to our Certificate of
Incorporation (1) to effect a one for ten reverse stock split of our outstanding
common stock, and (2) to authorize a new class of 10,000,000 shares of preferred
stock, par value $.0001 per share, and to authorize the Board of Directors to
issue one or more series of the preferred stock with such designations, rights,
preferences, limitations and/or restrictions as it should determine by vote of a
majority of such directors. Stockholder approval for these amendments to our
Certificate of Incorporation was obtained by written consent on April 23, 2009,
from stockholders holding a majority of the issued and outstanding
shares.




Stockholders holding 140,191,000 shares
of our common stock, or 63.07%, of the 223,849,158 then issued and outstanding
shares of our common stock approved the proposal to amend the Certificate of
Incorporation to effect the one for ten reverse split of our common stock and
the authorization of a new class of preferred stock:




Abstentions/Proposal
                
                Shares in Favor
                
                
                Shares Against
                
                
                Broker Nonvotes1
      for 10 reverse split of outstanding common stock
                
                
                32,965,811
                
                
                
                —
                
                
                
                —Authorization
      of new class of preferred stock
                
                
                32,965,811
                
                
                
                —
                
                
                
                —




Page
32





ITEM
5.       OTHER INFORMATION.





Not
applicable.





ITEM
6.  EXHIBITS.





3.1e
                  Certificate
      of Amendment to Certificate of Incorporation, filed May 13,
      2009.3.1f
                  Form
      of Restatement of Certificate of Incorporation of Delta Mutual, Inc., as
      amended.10.57a
                  Amended
      and restated 6% Promissory Note dated as of April 15, 2009 to Security
      Systems International, LLC in the principal amount of
    $15,487.31.1
                  Certification
      of Chief Executive Officer Pursuant to Section 302 of The Sarbanes Oxley
      Act of 2002.31.2
                  Certification
      of Chief Financial Officer Pursuant to Section 302 of The Sarbanes Oxley
      Act of 2002.32.1
                  Certification
      of Chief Executive Officer Pursuant to 18  U.S.C. Section 1350
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of
      2002.32.2
                  Certification
      of Chief Financial Officer Pursuant to 18  U.S.C. Section 1350
      as adopted pursuant to Section 906 of the Sarbanes-Oxley Oxley Act of
      2002.




SIGNATURES





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





DELTA
      MUTUAL, INC.BY:
              /s/ Daniel R. PeraltaDaniel
      R. PeraltaPresident
      and Chief Executive Officer




Dated:
August 6, 2009


Page
33


EXHIBIT
INDEX





3.1e
              Certificate
      of Amendment to Certificate of Incorporation, filed May 13, 2009, filed
      herewith.3.1f
              Form
      of Restatement of Certificate of Incorporation of Delta Mutual, Inc., as
      amended, filed herewith.10.57a
              Amended
      and restated 6% Promissory Note dated as of April 15, 2009 to Security
      Systems International, LLC in the principal amount of $15,487, filed
      herewith.31.1
              Certification
      of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002, filed herewith.31.2
              Certification
      of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002, filed herewith.32.1
              Certification
      of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
      herewith.32.2
              Certification
      of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed
      herewith.




Page
34