FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION

                                WASHINGTON, D.C.

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

                  For the quarterly period ended June 30, 2005

                                       OR

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

        For the transition period from ____________ to _________________

Commission File Number 000-30563

                               DELTA MUTUAL, INC.

             (Exact name of registrant as specified in its charter)

                   DELAWARE                               14-1818394

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

                 111 NORTH BRANCH STREET, SELLERSVILLE, PA 18960

                                 (215) 258-2800

             (Address and telephone number, including area code, of
                    registrant's principal executive office)

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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES |X| NO |_|

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

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

At August 19, 2005, there were 24,141,824 shares of Common Stock, $.0001 par
value, outstanding.


<PAGE>

                               DELTA MUTUAL, INC.

                                      INDEX

                                                                      Page

Part I.  Financial Information                                           1

      Item 1. Financial Statements                                       1

Consolidated Balance Sheets as of June 30, 2005 (unaudited)              2

Consolidated Statements of Operations for the Three and
Six Months Ended June 30, 2005 and 2004 (unaudited)                      3

Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 2005 and 2004 (unaudited)                               4-5

Notes to Unaudited Consolidated Financial Statements                     6

      Item 2. Management's Discussion and Analysis or Plan
      of Operation                                                      18

      Item 3. Controls and Procedures                                   21

Part II. Other Information                                              21

      Item 1. Legal Proceedings                                         21

      Item 6. Exhibits                                                  22

Signatures                                                              22


                                       ii
<PAGE>

PART I. FINANCIAL INFORMATION

PART I. Financial Information

      Item 1. Financial Statements

      Certain information and footnote disclosures required under accounting
principles generally accepted in the United States of America have been
condensed or omitted from the following consolidated financial statements
pursuant to the rules and regulations of the Securities and Exchange Commission.
It is suggested that the following consolidated financial statements be read in
conjunction with the year-end consolidated financial statements and notes
thereto included in the Company's Amended Annual Report on Form 10-KSB for the
year ended December 31, 2004.

      The results of operations for the six months ended June 30, 2005 and 2004
are not necessarily indicative of the results for the entire fiscal year or for
any other period.


                                       1
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                                  BALANCE SHEET

                                     ASSETS
                                                                      June 30,
                                                                        2005
                                                                   ------------
                                                                    (Unaudited)

Current Assets:
   Cash                                                            $     63,993
   Prepaid expenses                                                      12,145
   Refundable deposits                                                   60,700
                                                                   ------------
      Total Current Assets                                              136,838

   Fixed  assets - net                                                    8,930
   Investment in joint venture                                                1
   Capitalized construction costs                                       410,000
   Other assets                                                           3,869
                                                                   ------------

      TOTAL ASSETS                                                 $    559,638
                                                                   ============

                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
   Accounts payable                                                $    318,889
   Accrued expenses                                                     659,028
   Loan from stockholder                                                 47,821
   Notes payable                                                        210,655
                                                                   ------------

      Total Current Liabilities                                       1,236,393
                                                                   ------------

   Long term convertible debt                                           345,913
                                                                   ------------

      TOTAL LIABILITIES                                               1,582,306
                                                                   ------------

Minority interest in consolidated subsidiaries                          180,145
                                                                   ------------
Stockholders' Deficiency:
   Common stock $0.0001 par value - authorized
     100,000,000 shares; 22,986,824
     issued and outstanding                                               2,299
   Additional paid-in-captial                                         3,821,189
   Accumulated deficit                                               (5,026,301)
                                                                   ------------
      Total Stockholders' Deficiency                                 (1,202,813)
                                                                   ------------
   TOTAL LIABILITIES AND
   STOCKHOLDERS' DEFICIENCY                                        $    559,638
                                                                   ============

            See Notes to Unaudited Consolidated Financial Statements


                                       2
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                            Six Months Ended June 30,      Three Months Ended June 30,
                                          -----------------------------   -----------------------------
                                               2005            2004            2005            2004
                                          -------------   -------------   -------------   -------------
<S>                                       <C>             <C>             <C>             <C>

Revenue                                   $          --   $          --   $          --   $          --

Costs and Expenses
   General and administrative
     expenses                                   897,743         606,923         521,750         327,418
                                          -------------   -------------   -------------   -------------
Loss from operations                           (897,743)       (606,923)       (521,750)       (327,418)

Minority interest share of income/(loss)
  of consolidated subsidiaries                   74,689         (24,728)         26,346         (16,119)

Accretion of convertible debt                   203,713              --         105,013              --

Writedown/loss from joint ventures
                                                     --          73,939              --          38,880

Interest expense                                110,356          11,370          98,772           2,998
                                          -------------   -------------   -------------   -------------

Loss before benefit from income taxes        (1,286,501)       (667,504)       (751,881)       (353,177)

Benefit from income taxes                            --              --              --              --
                                          -------------   -------------   -------------   -------------

Net loss                                  $  (1,286,501)  $    (667,504)  $    (751,881)  $    (353,177)
                                          =============   =============   =============   =============

 Loss per common share-
   basic and diluted                      $       (0.07)  $       (0.06)  $       (0.03)  $       (0.03)
                                          =============   =============   =============   =============

 Weighted average number of
   common shares outstanding-
   basic and diluted                         19,330,944      11,437,510      21,856,808      13,160,248
                                          =============   =============   =============   =============
</TABLE>

            See Notes to Unaudited Consolidated Financial Statements


                                       3
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                     Six Months Ended June 30,
                                                   -----------------------------
                                                       2005            2004
                                                   ------------    ------------
Cash flows from operating activities:

   Net loss                                        $ (1,286,501)   $   (667,504)
   Adjustments to reconcile net loss to
     net cash used in operating activities:

   Depreciation and amortization                          2,676             879

   Non-cash employee compensation                        61,300              --
   Non-cash compensation                                134,370         188,580

   Accretion of convertible debt                        203,713              --

   Writedown/loss from joint ventures                        --          73,939
   Minority interest in losses of
     consolidated subsidiaries                           74,689         (24,727)
   Changes in operating assets
     and liabilities                                    419,695         (52,123)
                                                   ------------    ------------
   Net cash used in operating activities               (390,058)       (480,956)
                                                   ------------    ------------

   Purchase of fixed assets                              (1,500)             --

   Proceeds from minority interests                     (77,704)             --
   Increase in preconstruction costs                   (240,000)             --

   Advances to joint ventures                                --        (103,123)
                                                   ------------    ------------

   Net cash used in
     investing activities                              (319,204)       (103,123)
                                                   ------------    ------------

Cash flows from financing activities:
   Proceeds from sale of common stock                   371,000         142,500
   Proceeds from exercise of common
     stock warrants                                      30,000              --
   Proceeds from loan                                   282,386         363,900
   Repayment of loan                                    (23,910)             --
   Repayment for former officer
     and stockholder                                         --         (56,364)
   Repayment to related parties                              --         (10,000)
   Proceeds from minority interest                           --         148,000
                                                   ------------    ------------

   Net cash provided by
     financing activities                               659,476         588,036
                                                   ------------    ------------

   Net increase (decrease) in cash                      (49,786)          3,957
   Cash - Beginning of period                           113,780          14,057
                                                   ------------    ------------
   Cash - End of period                            $     63,994    $     18,014
                                                   ============    ============

            See Notes to Consolidated Unaudited Financial Statements


                                       4
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                                   (Continued)

                                                     Six Months Ended June 30,
                                                   -----------------------------
                                                       2005            2004
                                                   ------------    ------------
Supplementary information:
   Cash paid during year for:
      Interest                                     $      1,105    $         --
                                                   ============    ============
      Income taxes                                 $         --    $         --
                                                   ============    ============

Changes in operating assets and
  liabilities consists of:
   (Increase) in loans receivable                            --         (51,221)
   (Increase) decrease  in prepaid expenses             (12,105)          3,922
                                                         84,000              --
   Decrease in deposits
   (Increase) in other assets                            (1,052)       (120,750)
   Increase in accounts payable
     and accrued expenses                               348,852         115,926
                                                   ------------    ------------
                                                   $    419,695    $    (52,123)
                                                   ============    ============
Non-cash financing activities:

Issuance of common stock for debt                  $     73,980    $         --
                                                   ============    ============

Issuance of common stock for investment
  in unconsolidated subsidiary                     $         --    $      7,500
                                                   ============    ============

            See Notes to Unaudited Consolidated Financial Statements


                                       5
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The consolidated balance sheet as of June 30, 2005, and the consolidated
statements of operations and cash flows for the periods presented herein have
been prepared by Delta Mutual, Inc. (the "Company" or "Delta") and are
unaudited. In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly, the financial
position, results of operations and cash flows for all periods presented have
been made.

     DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements for the period ended June 30, 2005 have
been prepared on a going concern basis which contemplates the realization of
assets and settlement of liabilities and commitments in the normal course of
business. Management recognizes that the Company's continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and the commencement of its planned principal
operations.

The Company's business is subject to most of the risks inherent in the
establishment of a new business enterprise. The likelihood of success of the
Company must be considered in light of the expenses, difficulties, delays and
unanticipated challenges encountered in connection with the formation of a new
business, raising operating and development capital, and the marketing of a new
product. There is no assurance the Company will achieve a profitable level of
operations.

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

Business Plan

Since March 2004, new Company management has established joint venture
subsidiaries and two limited partnerships, primarily to establish business
operations focused on providing construction and environmental technologies and
services in Puerto Rico, the Middle East and the Far East. The Company,
simultaneously, made a strategic decision to minimize its activities in Eastern
Europe and to maintain a small passive investment in the area that can be
expanded in the future should circumstances change.

The Company has entered into strategic alliance agreements with several United
States-based entities with technologies in the environmental technology field to
support the Company's world wide activities.

On March 18, 2003 the Company entered into a Letter of Intent with Hi Tech
Consulting and Construction, Inc. to form a joint venture to provide
environmental technology services for certain business sectors in the Middle
East and Africa. The joint venture agreement was finalized January 14, 2004, and
the joint venture company, Delta-Envirotech, Inc., is based in the Commonwealth
of Virginia and incorporated in the State of Delaware.

Middle East

On January 22, 2004, the Company announced a strategic alliance agreement
between Delta-Envirotech, Inc. and ZAFF International, Ltd., a technology
company located in Saudi Arabia. The strategic alliance states that the two
companies will jointly pursue projects related to soil and water reclamation
requirements in the Middle East. On December 1, 2004, the Company announced that
ZAFF International, Ltd., Delta's strategic partner, received its operating
license from the Saudi Arabia environmental authorities to employ all soil,
refinery waste and waste water technologies held by Delta for environmental
recovery projects. ZAFF International, Ltd. is one of the first companies to be
granted a multi-technology environmental license in Saudi Arabia. On August 16,
2005, the Company announced that it had reached an agreement with SaFarCu, a
private Saudi Arabia company, to provide a turn-key factory to manufacture
insulated concrete form (ICF) products for their building industry.


                                       6
<PAGE>

Far East

In April 2004, Delta-Envirotech, Inc., executed an agreement with the Indonesian
government's technology authority, LIPI. The agreement outlines a joint
cooperation between Delta-Envirotech, Inc. and a local Indonesian technology
company to commence energy and waste recovery operations in Indonesia. A local
joint venture is being established to conduct the actual recovery and processing
activities. On March 4, 2005, the Company announced a multi-year agreement with
Pertamina, the State owned oil company in Indonesia, for the processing of oil
sludge from refineries.

Puerto Rico

The Company formed majority owned joint ventures in Puerto Rico to manage the
construction and related activities required to build low income homes in Puerto
Rico under the Section 124 low income housing program. In December 2003, the
Company secured the purchase rights to 36 acres that are designated Section 124
eligible, in the City of Aguadilla. Approximately 270 low income homes are
planned for construction on this property, in a project called "Brisas del
Atlantico." The necessary building permits were submitted for approval and a
real estate agency was hired to sell the homes planned for construction.

On June 28, 2005, the Company received notification from the Planning Board of
Puerto Rico (Junta de Planification de Puerto Rico) that the Brisas del
Atlantico project was not approved because the 36-acre tract is located in a
area zoned rural/agricultural, and that housing development is not included in
the current master development plan for that area. On July 6, 2005, we submitted
a formal request to the Planning Board to reconsider its June 28 decision. In
the absence of a formal response, we are proceeding to have the property rezoned
as residential to eliminate the basis for the Planning Board's denial of our
application. When the rezoning process has been completed, we will resubmit the
project for Planning Board approval.

In December, 2004, we secured the rights to an additional 40 acre tract located
in Guayanilla for our second Section 124 project. This tract of land is part of
a 150 acre development that will also include other residential properties,
commercial/retail buildings and a hotel. The master plan for this entire project
is currently being prepared by the project's developer. We formed a second
majority owned joint venture in Puerto Rico in December 2004, to manage
construction and related activities required to build approximately 300
additional homes on this property under the Section 124 low income housing
program.

SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF ACCOUNTING FOR OWNERSHIP INTERESTS IN PARTNER COMPANIES

Consolidation:

Partner Companies in which the Company directly or indirectly owns more than 50%
of the outstanding voting securities are generally accounted for under the
consolidation method of accounting. Under this method, a Partner Company's
balance sheet and results of operations are reflected within the Company's
Consolidated Financial Statements. All significant intercompany accounts and
transactions have been eliminated. Participation of other Partner Company
stockholders in the net assets and in the earnings or losses of a consolidated
Partner Company is reflected in the caption "Minority interest in consolidated
subsidiaries" in the Company's Consolidated Balance Sheet and "Minority interest
share of income/(loss) of consolidated subsidiaries" in the Company'
Consolidated Statements of Operations. Minority interest adjusts the Company's
consolidated results of operations to reflect only the Company's share of the
earnings or losses of the consolidated Partner Company. The results of
operations and cash flows of a consolidated Partner Company are included through
the latest interim period in which the Company owned a greater than 50% direct
or indirect voting interest for the entire interim period or otherwise exercised
control over the Partner Company. Upon dilution of control below 50%, the
accounting method is adjusted to the equity or cost method of accounting, as
appropriate, for subsequent periods.


                                       7
<PAGE>

USE OF ESTIMATES

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

LOSS PER SHARE

Basic and diluted loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during the year. Potential
common shares are excluded from the loss per share calculation, because the
effect would be antidilutive. Potential common shares relate to the convertible
debt and common stock warrants. As of June 30, 2005, there were 12,503,200
potential common shares related to convertible debt issued by the Company and
7,780,000 potential common shares related to common stock purchase warrants
issued by the Company. As of June 30, 2004 there were no potential common
shares.

REVENUE RECOGNITION ON CONSTRUCTION CONTRACTS

The Company will recognize revenue in accordance with the Guidance contained in
SEC Staff Accounting Bulletin No. 104 "Revenue Recognition Finance Statements"
(SAB No. 104).

Revenue and profits in construction contracts will be recorded under the
percentage of completion method. Progress toward completion is measured using
the cost to cost method, revenues and profits are recognized based on the ratio
that costs incurred bear to total costs. This method is subject to physical
verification of actual progress towards completion. To date the Company has
recognized no revenue as defined.

EVALUATION OF LONG-LIVED ASSETS

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

DEPRECIATION AND AMORTIZATION

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

STOCK OPTION PLAN

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

The Company grants stock options with exercise prices at fair market values at
the date of the grant. The Company will continue to account for stock-based
employee compensation under recognition and measurement principal of APB Opinion
No. 25 and related interpretations through December 15, 2005. Thereafter, the
Company will account for stock-based compensation under SFAS No. 123 (R). The
Company is currently evaluating its position and will make a determination to
account for the compensation costs either prospectively or retroactively at the
time of adoption.

The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No.123). Had compensation cost for the Company's stock option plan been
determined based on the fair market value at the date of the grant of awards in
2004 consistent with the provisions of SFAS No. 123, the Company's net loss and
loss per share would have been reduced to the pro forma amounts included below:


                                       8
<PAGE>

<TABLE>
<CAPTION>
                                           For the six months          For the three months
                                             ended June 30,               ended June 30,
                                     ---------------------------   ---------------------------
                                         2005           2004           2005            2004
                                     ------------   ------------   ------------   ------------
<S>                                  <C>            <C>            <C>            <C>

Net loss-as reported                 $ (1,286,501)  $   (667,504)  $   (751,881)  $   (353,177)

   Deduct:  Total stock-based
            employee compensation
            expense determined
            under the fair value
            based method for all
            awards, net of taxes         (293,563)            --       (192,000)            --
                                     ------------   ------------   ------------   ------------
Net loss-pro forma                   $ (1,580,064)  $   (667,504)  $ (943,881)    $   (353,177)
                                     ============   ============   ============   ============
Loss per common share
  basic and diluted -
  as reported                        $      (0.07)  $      (0.06)  $      (0.03)  $      (0.03)

Loss per common share
  basic and diluted-
  pro forma                          $      (0.08)  $      (0.06)  $      (0.04)  $      (0.03)
</TABLE>

The fair value of each option grant is estimated on the date of the grant using
Black-Scholes option-pricing model with the following weighted -average
assumptions used for grants in 2004: dividends yield of 0%, expected volatility
of 116% and expected life of 10 years. No options were granted during the six
months ended June 30, 2005 and 2004, respectively.

The Company is also authorized to issue shares of stock to its employees from
its 2001 Employee Stock Option Plan (the "2001 Plan"). The Company expenses the
issuance of stock awards in accordance with SFAS No. 123. Shares issued from the
2001 Plan were expensed at the time of issuance, as common stock issued had no
restrictions to the employees. The Company issued stock awards to five employees
totaling 613,000 shares from the 2001 Plan during the six months ended June 30,
2005 and 89,500 shares issued to one employee during the similar period of 2004.
The shares issued were at fair market value as compensation to employees. The
Company recorded compensation expense of $61,300 and $7,000 in the Company's
statement of operations for the six months ended June 30, 2005 and 2004,
respectively. No stock awards were issued for the three months ended June 30,
2005 and 2004, respectively.

STOCK-BASED COMPENSATION

The Company issues shares of its common stock to employees and non-employees as
stock based compensation. The Company accounts for the services using the fair
market value of the services rendered. For the six months ended June 30, 2005
and 2004, the Company issued 224,000 and 1,570,000 common shares, respectively,
and recorded expense of $132,890 and $260,650, respectively, in connection with
the issuance of these shares. The Company issued 174,000 and 1,285,500 common
shares for the three months ended June 30, 2005 and 2004, respectively, and
recorded expense of $29,663 and $218,400 in the Company's statement of
operations for the three months ended June 30, 2005 and 2004.

INCOME TAXES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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


                                       9
<PAGE>

RECLASSIFICATIONS

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

NEW FINANCIAL ACCOUNTING STANDARDS

In December 2004, the FASB issued No. 123(R), that will require compensation
costs related to share-based payment transactions to be recognized in the
financial statements. With limited exceptions, the amount of compensation cost
will be measured based on the grant-date fair value of the equity or liability
instruments issued. In addition, liability awards will be remeasured each
reporting period. Compensation cost will be recognized over the period that an
employee provides service in exchange for the reward. SFAS 123(R) is effective
to the Company as of the beginning of the Company's 2006 fiscal year. The
Company is currently evaluating its position and will make its determination to
account for the compensation costs either prospectively or retroactively at the
time of adoption. The adoption of SFAS 123(R) is expected to have a material
effect on the Company's results of operations.

In December 2004, the FASB staff issued FSP No. FAS 109-2, "Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision Within the
American Jobs Creation Act of 2004" to provide accounting and disclosure
guidance for the repatriation provisions included in the Act. The Act introduced
a special limited-time dividends received deduction on the repatriation of
certain foreign earnings to a U.S. taxpayer. The FSP is effective upon issuance.
The adoption of FAS 109-2 could have a material effect on the Company's results
of operations and financial position.

In December 2004, the FASB staff issued FASB Staff Position ("FSP") FAS 109-1,
"Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004" to provide guidance on the application of Statement 109 to
the provision within the American Jobs Creations Act of 2004 (the "Act") that
provides tax relief to U.S. domestic manufacturers. The FSP states that the
deduction provided for under the Act should be accounted for as a special
deduction in accordance with FASB Statement No. 109 and not as a tax rate
reduction. The FSP is effective upon issuance. The adoption of FAS 109-1 could
have a material effect on the Company's results of operations or financial
position.

In December 2004, the FASB issued SFAS No. 153 an amendment of APB Opinion No.
29 "Exchanges of Nonmonetary Assets". SFAS No. 153 amends APB Opinion No. 29 by
eliminating the exception under APB No. 29 for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
periods beginning after June 15, 2005. The adoption of SFAS No. 153 is not
expected to have a material effect on the Company's financial position or
results of operations.

In November 2004 the FASB issued SFAS No. 151, an amendment to ARB No. 43
chapter 4 "Inventory Costs". SFAS No. 151 requires that abnormal costs of idle
facility expenses, freight, handling costs and wasted material (spoilage) be
recognized as current-period charges. SFAS No. 151 is effective for fiscal years
beginning after June 15, 2005. Adoption of SFAS No. 151 is not expected to have
a material impact on the Company's results of operations or financial position.


                                       10
<PAGE>

2. REFUNDABLE DEPOSITS
                                                                   June 30, 2005
                                                                  --------------

      Deposits on land                                               $ 60,700
                                                                     --------
3. PROPERTY AND EQUIPMENT
                                                                   June 30, 2005
                                                                  --------------

      Equipment                                                      $  6,278
      Leasehold improvements                                            7,807
                                                                     --------
                                                                       14,085
      Less accumulated
      Depreciation                                                     (5,155)
                                                                     --------

                                                                     $  8,930
                                                                     ========

Depreciation expense for the six and the three months ended June 30, 2005 and
2004, amounted to $2,676 and $879; and $2,057 and $440, respectively.

4. INVESTMENT IN JOINT VENTURES

a)    In December 2003, the Company formed a joint venture project to develop
      government sponsored, Section 124, low income housing in the Commonwealth
      of Puerto Rico. The Company became the general partner and the 75%
      majority owner of a limited partnership, Delta Development Partners, LP,
      that holds the 85% majority share of Delta Developers Corp., a Puerto Rico
      corporation, formed to manage the construction and related activities
      required to build approximately 270 low income homes under Section 124.
      The operations of the joint venture have been consolidated with the
      Company for the six months ended June 30, 2005 and 2004, respectively.

      During the year ended December 31, 2004, Neil Berman, an investor,
      purchased a 25% interest in Delta Development Partners, LP for $148,000.

      On October 6, 2004, the Company entered into a second joint venture
      agreement to develop government sponsored, Section 124 low income housing
      in the Commonwealth of Puerto Rico. The Company became the general partner
      and majority owner of a limited partnership, Delta Development Partners
      II, LP, that holds the 85% majority share of Delta Developers Guayanilla
      Corp., a Puerto Rico corporation formed to manage the construction and
      related activities required to build approximately 300 low income homes
      under Section 124. The operations of the joint venture have been
      consolidated with the Company since October 6, 2004.

      During the period October 6, 2004 through December 31, 2004, Ebony
      Finance, Ltd. and T & T Asset Management, investors, purchased a 4%
      interest from the existing partners in Delta Development Partners II, LP
      for $40,000.

      See Notes 1 and 9 of Notes to Unaudited Consolidated Financial Statements
      for information regarding accounting for minority interests.

b)    On March 18, 2003, the Company entered into a letter of intent with
      Hi-Tech Consulting and Construction, Inc. ("Hi-Tech") to form a joint
      venture to provide environmental technology services primarily to markets
      in the Middle East and Africa. The joint venture company, named
      Delta-Envirotech, Inc., is based in Virginia and focuses on participating
      in foreign government sponsored pollution remediation projects. The joint
      venture agreement was concluded January 14, 2004 and Delta-Envirotech,
      Inc., a Delaware Corporation, was formed. On January 22, 2004, the Company
      announced the conclusion of a strategic alliance agreement between
      Delta-Envirotech, Inc. and ZAFF International, Ltd., an advanced
      technology company located in Saudi Arabia. The strategic alliance states
      that the two companies will jointly pursue projects related to soil and
      water reclamation requirements in the Middle East.

      On July 14, 2004, Delta and Hi-Tech, pursuant to an agreement to purchase
      stock dated January 14, 2004, each sold 75 shares of the joint venture to
      Ali Razmara, representing a ten (10%) percent interest for $2. Delta and
      Hi-Tech each own forty-five (45%) percent of the joint venture.


                                       11
<PAGE>

      The operations of the joint venture have been consolidated with the
      Company for the six months ended June 30, 2005 (they were not consolidated
      for the six months ended June 30, 2004 because the Company had made
      certain payments to the venture's capital but less than the committed
      amount for the period ended June 30, 2004, and as a consequence, the
      Company was not able to exercise control. These circumstances changed
      during the latter part of 2004 as the Company contributed the total amount
      of required capital of $375,000 and all project funding), as the Company
      maintains effective control over the operations.

      See Notes 1 and 9 of Notes to Unaudited Consolidated Financial Statements
      for information regarding accounting for minority interests.

c)    On May 1, 2003, the Company entered into a joint venture in Romania,
      forming a new Company, Delta TP Mediu, SRL. The joint venture, of which
      the Company owns 10%, was organized to primarily pursue the sourcing,
      treatment and processing of hydrocarbon based and other industrial
      residuals and, where possible, to create alternative fuels and raw
      materials for industrial use primarily in Romania. The Company invested
      $33,800 in the joint venture, consisting of $18,800 in cash and issuance
      of 100,000 shares of the Company's common stock valued at $15,000. The
      Company made a strategic decision to minimize its activities in Eastern
      Europe and the investment has been written down to $1 and a charge taken
      against operations during the six months ended June 30, 2004.

5. NOTES PAYABLE

      On April 5, 2005, the Company issued 8% Promissory Notes to private
      investors in the amount of $210,655, with the principal and interest due
      at maturity on October 2, 2005. Interest expense for the six months ended
      June 30, 2005 amounted to $3,971.

6. CONVERTIBLE DEBT

a)    On May 12, 2004, the Company issued two convertible notes in the principal
      amounts of $193,740 and $129,160, respectively, to a related party and the
      spouse of a related party. Each note is due May 12, 2006. Both notes bear
      interest at 4% per annum and are convertible into common stock at an
      initial conversion price of $0.125 per share. Interest expense for the six
      months and the three months ended June 30, 2005 and 2004, amounted to
      $6,458 and $159; and $3,229 and $ 159, respectively. As of June 30, 2005,
      the balance of $13,075 is included in accrued expenses on the Company's
      balance sheet.

b)    On July 1, 2004, the Company issued a convertible note to a related party
      for $157,000 due December 31, 2006. The note bears interest at 4% per
      annum and is convertible into common stock at an initial conversion price
      of $0.05 per share. On January 7, 2005 the Company issued 500,000 shares
      of common stock as partial conversion of $25,000 of the principal amount
      of the note. Interest expense for the six months and the three months
      ended June 30, 2005 and 2004, amounted to $2,659 and $-0-; and $1,320 and
      $-0-, respectively. As of June 30, 2005, the balance of $5,825 is included
      in accrued expenses on the Company's balance sheet.

c)    On July 16, 2004, the Company issued a convertible note to a related party
      for $37,500 due January 16, 2007. The note bears interest at 4% per annum
      and is convertible into common stock at an initial conversion price of
      $0.05 per share. Interest expense for the six months and the three months
      ended June 30, 2005 and 2004, amounted to $750 and $-0-; and $325 and
      $-0-, respectively. As of June 30, 2005, the balance of $1,432 is included
      in accrued expenses on the Company's balance sheet.

d)    On September 20, 2004, the Company issued a series of convertible notes to
      various lenders in the aggregate amount of $301,500 with a maturity date
      of September 16, 2006. Of the aggregate principal amount, $71,500 was
      issued to three related parties. The notes bear interest at 6% per annum
      and are convertible into common stock at an initial conversion price of
      $0.05 per share. On November 19, 2004, the Company issued 400,000 shares
      of common stock to one of the lenders as conversion of the principal
      amount of $20,000. The Company paid the interest on the note of $198 by
      issuing the lender an additional 3,951 shares of common stock. On April
      20, 2005, the Company issued 200,000 shares of common stock to one of the
      lenders as conversion of the principal amount of $10,000. The Company paid
      the interest on the note of $348 by issuing the lender an additional 6,954
      shares of common stock. On May 23, 2005, the Company issued 500,000 shares
      of common stock to one of the lenders as conversion of the principal
      amount of $25,000. The Company paid the interest on the note of $1,005 by
      issuing the lender an additional 20,090 shares of common stock. Interest
      expense for the six months and the three months ended June 30, 2005 and
      2004, amounted to $8,162 and $-0-; and $3,939 and $-0-,respectively. As of
      June 30, 2005, the balance of $11,528 is included in accrued expenses on
      the Company's balance sheet.

e)    On September 23 and September 27, 2004, the Company issued two convertible
      notes in the principal amounts of $10,000 and $20,000, respectively, to
      two related parties. The notes are due September 22, 2006 and September
      26, 2006, respectively. Each note bears interest at 6% per annum and is
      convertible into common stock at an initial conversion price of $0.05 per
      share. Interest expense for the six months and the three months ended June
      30, 2005 and 2004, amounted to$900 and $-0-; and $450 and
      $-0-,respectively. As of June 30, 2005, the balance of $1,375 is included
      in accrued expenses on the Company's balance sheet.

f)    On November 2 and November 5, 2004, the Company issued two convertible
      notes in the principal amounts of $12,5000 and $25,000, respectively, to
      two lenders, one of whom was a related party. The notes are due November
      1, 2006 and November 4, 2006, respectively. Each note bears interest at 6%
      per annum and is convertible into common stock at an initial conversion
      price of $0.05 per share. On November 8, 2004, the Company converted the
      $25,000 note into 500,000 shares of common stock with interest paid in
      cash. On January 3, 2005, the Company converted the $12,500 note by
      issuing 250,000 shares of common stock. The Company paid the interest of
      $127 by issuing the lender an additional 2,542 shares of common stock.


                                       12
<PAGE>

g)    On November 26, 2004, the Company entered into a settlement agreement and
      mutual release with a stockholder. As part of the settlement, the Company
      issued a convertible note for $50,000 due on November 24, 2006. The note
      bears interest at 6% per annum and is convertible into common stock at an
      initial conversion price of $0.05 per share. The Company expensed the
      settlement amount at the time of issuance. Interest expense for the six
      months and the three months ended June 30, 2005 and 2004, amounted to
      $1,500 and $-0-; and $750 and $-0-, respectively. As of June 30, 2005,the
      balance of $1,796 is included in accrued expenses on the Company's balance
      sheet.

h)    In accordance with Emerging Issues Task Force 00-27, the Company performed
      calculations allocating the proceeds from the issuance of convertible debt
      with detachable warrants to each respective security at their fair values.
      The Company used the conversion value of the convertible debt and the
      calculated fair value of the warrants using the Black-Scholes valuation
      model as its estimate of fair value. The Company compared the allocated
      proceeds of the convertible debt to the difference between its conversion
      value and face amount. The calculated fair value of convertible debt of
      $725,855 was recorded as the value of the Beneficial Conversion Feature
      and accordingly credited to Additional Paid-In Capital. The value of the
      warrants of $235,545 was recorded as a reduction of the convertible debt.
      The convertible debt was recorded at zero. The convertible debt will be
      accreted to its face value of $818,900 under the interest method until it
      is either converted or matures. As of June 30, 2005 the accretion amounted
      to $345,913.

i)    During the second quarter of 2005, the Company issued 200,000 shares of
      common stock to the holder of a 6% convertible note due September 16, 2006
      as conversion of the entire principal amount of $10,000 and paid the
      interest on the note of $348 by issuing the lender an additional 6,954
      shares of common stock. Also during the second quarter, the Company issued
      500,000 shares of common stock to the holder of a 6% convertible note due
      September 16, 2006 as partial conversion of $25,000 of the principal
      amount and paid the $1,005 interest on the converted principal amount by
      issuing the lender an additional 20,090 shares of common stock.

j)    At June 30, 2005, the Company's outstanding convertible notes were
      convertible into 12,503,200 shares of common stock.

      The following table shows the maturities by year of total face amount of
      the long-term convertible debt obligations at June 30:

                                2006       $ 781,400
                                2007          37,500
                                            --------
                                            $818,900
                                            ========


                                       13
<PAGE>

7. ACCRUED EXPENSES

      Accrued expenses consist of the following:

                                    Ended June
                                     30, 2005
                                   ------------
Professional fees                  $     32,752
Interest expense                         40,372
Payroll Expense                         149,310
Payroll expense officers                291,199
Payroll tax expense                      46,004
Rent                                      2,200
Office                                   14,400
Travel                                   13,791
Marketing                                69,000
                                   ------------
                                   $    659,028
                                   ============

8. LOANS FROM RELATED PARTIES

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

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

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

      For the six months and the three months ended June 30, 2005 and 2004,the
      Company recorded interest expense of $-0- and $-0-; and $1,599 and $1,599,
      respectively.

b)    On May 15, 2003, the Company borrowed $12,000 from Michael Fasci ("Fasci")
      a stockholder of the Company. Fasci received 50,000 common shares (valued
      at fair market value) of the Company's common stock which represented the
      payment of interest through May 26, 2003, the maturity date. The Company
      recorded interest expense of $13,750 for the three months ended March 31,
      2004. On February 27, 2004 the Company issued 140,000 shares of common
      stock (valued at fair market value) in repayment of the loan, interest,
      penalty and expenses amounting to $19,100.

c)    On December 30, 2003, the Company borrowed $50,000 from Edward Tuccio
      ("Tuccio"), a shareholder of the Company. The note was due December 29,
      2004, with interest at six percent (6%) per annum. On February 11, 2004,
      the Company issued Tuccio 400,000 common shares of common stock (valued at
      fair market value) which represented the full payment of this loan plus
      interest amounting to $168 for the six months ended June 30, 2004.

d)    On December 11, 2003, the Company borrowed $50,000 from Neil Jones
      ("Jones"), a shareholder of the Company. The note was due December 16,
      2004 with interest at six percent (6%) per annum. On January 24, 2004, the
      Company issued Jones 400,000 shares of common stock (valued at fair market
      value) which represented the full payment of this loan plus interest. The
      Company recorded interest expense of $63 for the six months ended June 30,
      2004.

e)    On March 22, 2005, the Company borrowed $71,731 from Neil Berman, a
      shareholder of the Company. The loan bears interest at six percent (6%)
      per annum with the principal and interest due in three equal installments
      on June 21, September 19, and December 20, 2005. On May 6, 2005, the
      Company paid the first installment consisting of $23,910 principal and
      $1,105 interest. Interest expense for the six months and the three ended
      June 30,2005 amounted to $1,192 and $118, respectively. As of June 30,
      2005, $86 is included in accrued expenses on the Company's balance sheet.


                                       14
<PAGE>

9.    MINORITY INTERESTS

Minority interests primarily consist of ownership interest in Delta-Envirotech,
Inc.; Delta Development Partners, L.P.; Delta Development Partners II, L.P.;
Delta Developers Corp. and Delta Developers Guayanilla Corp. The income and
losses from operations of these entities and their respective minority interests
have been reflected in the Company's statement of operations for the six months
ended June 30, 2005. There are losses for the minority interests in excess of
the $74,689 attributed to the minority interests due to basis limitations. In
future periods, the profits first attributable to the minority interests will be
first absorbed against any unused losses until the losses are fully absorbed.
The amount on the Company's balance sheet represents the minority interests as
of June 30, 2005.

The following represents a schedule of minority interests as of June 30,

                                              2005
                                          ------------
Delta Development Partners L.P.           $    140,265
Delta Development Partners II, L.P.             39,880
Delta Developers Guayanilla, Corp.                  --
Delta-Envirotech, Inc.                              --
Delta Developers Corp.                              --
                                          ------------
                                          $    180,145
                                          ------------

On January 1, 2005, the Company reclassified $78,018 due to Hi-Tech Consulting
and Construction, Inc. and $18,486 due to David Razmara from its
Delta-Envirotech subsidiary from accounts payable to loans payable with an
imputed interest rate of 5% per annum. Interest expense for the six months and
the three months ended June 30, 2005 amounted to $1,183 and $100, respectively.

10. STOCKHOLDER'S DEFICIENCY

The Company issues shares of common stock for services or repayment of debt
valued at fair market value at time of issuance.

a)    On January 25, 2005, the Company issued 300,000 shares of common stock
      through the exercise of the Company's common stock warrants, held by a
      warrant holder, at an exercise price of $0.10 per share, valued at
      $30,000.

b)    On April 27, April 28, May 4 and June 24, 2005, the Company sold 1,236,667
      shares of common stock for $371,000, valued at $0.30 per share.

11. SUBSEQUENT EVENTS

a)    On July 1, 2005, the Company was served with a summons and complaint filed
      in the United States District Court for the Southern District of New York
      by Charter Capital Resources, Inc. and Beryl Zyskind. The complaint lists
      as defendants the Company; Peter F. Russo, our President and Chief
      Executive Officer; Neil Berman, a stockholder and noteholder of the
      Company; and Standard Registrar & Transfer Agency, the Company's transfer
      agent. The suit alleges that the plaintiffs own 300,000 shares of the
      Company's common stock and that the defendants have interfered with the
      plaintiffs' right to transfer 232,134 of their shares. The plaintiffs seek
      alleged compensatory damages of $200,000, punitive damages, costs and
      reasonable attorneys' fees, and an order requiring the defendants to take
      the necessary steps to transfer the 232,134 shares to the street name of
      the plaintiffs' broker for immediate sale in the public market. On July
      20, 2005, the Company filed an answer to the complaint which denies the
      allegations and filed a motion to disqualify plaintiffs' attorneys.

      The Company believes that this matter will have no material effect upon
      the Company or its operations.

b)    On August 17, 2005, the Company sold 1,616,667 shares of its common stock
      for $485,000, valued at $0.30 per share.


                                       15
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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

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

OVERVIEW

GENERAL

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

RESULTS OF OPERATIONS

During the six months ended June 30, 2005 we incurred a net loss of $1,286,501,
because we had no revenue to offset operating and other expenses. During the six
months ended June 30, 2004 we incurred a net loss of $667,504, for the same
reasons.

SECOND QUARTER

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

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

SIX MONTHS ENDED JUNE 30, 2005 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2004.

The net loss increased from approximately $668,000 for the six months ended June
30, 2004 to approximately $1,287,000 for the six months ended June 30, 2005.

The items of significant increase in the six months ended June 30, 2005 over the
comparable period of the prior year were an increase in general and
administrative expense from approximately $607,000 in 2004 to approximately
$898,000 in 2005, attributable primarily to consolidation in 2005 of general and
administrative expenses of Delta Envirotech, Inc. of approximately, $240,000.
Also contributing to the net loss for the period ended June 30, 2005, were: the
accretion of convertible debt of approximately $204,000; an increase in interest
expense from approximately $11,400 in 2004 to approximately $110,400 in 2005,
partially offset by a gain of about $74,700 from the minority interest share in
subsidiaries compared to a loss of approximately $24,700 in 2004. There was a
writedown in a joint venture of about $73,900 in 2004 and no corresponding loss
in the current period.


                                       16
<PAGE>

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, operation of joint ventures,
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.

PLAN OF OPERATION

Since March 2004, the Company has established joint venture subsidiaries and two
limited partnerships, primarily to establish business operations focused on
providing environmental and construction technologies and services in the Middle
East, the Far East and Puerto Rico. The Company, simultaneously, made a
strategic decision to minimize its activities in Eastern Europe and to maintain
a small passive investment in the area that can be expanded in the future should
circumstances change.

The Company has entered into strategic alliance agreements with several United
States-based entities with technologies in the environmental technology field to
support the Company's world wide activities.

On March 18, 2003 the Company entered into a Letter of Intent with Hi Tech
Consulting and Construction, Inc. to form a joint venture to provide
environmental technology services for certain business sectors in the Middle
East and Africa. The joint venture agreement was finalized January 14, 2004, and
the joint venture company, Delta-Envirotech, Inc., is based in the Commonwealth
of Virginia and incorporated in the State of Delaware.

Middle East

On January 22, 2004, the Company announced a strategic alliance agreement
between Delta-Envirotech, Inc. and ZAFF International, Ltd., a technology
company located in Saudi Arabia. The strategic alliance states that the two
companies will jointly pursue projects related to soil and water reclamation
requirements in the Middle East. On December 1, 2004, the Company announced that
ZAFF International, Ltd., Delta's strategic partner, received its operating
license fro the Saudi Arabia environmental authorities to employ all soil,
refinery waste and waste water technologies held by Delta for environmental
recovery projects. ZAFF International, Ltd. is one of the first companies to be
granted a multi-technology environmental license in Saudi Arabia. On August 16,
2005, the Company announced that it had reached an agreement with SaFarCu, a
private Saudi Arabia company, to provide a turn-key factory to manufacture
insulated concrete form (ICF) products for their building industry.

Far East

In April 2004, Delta-Envirotech, Inc., executed an agreement with the Indonesian
government's technology authority, LIPI. The agreement outlines a joint
cooperation between Delta-Envirotech, Inc. and a local Indonesian technology
company to commence energy and waste recovery operations in Indonesia. A local
joint venture is being established to conduct the actual recovery and processing
activities. On March 4, 2005, the Company announced a multi-year agreement with
Pertamina, the State owned oil company in Indonesia, for the processing of oil
sludge from refineries.


                                       17
<PAGE>

Puerto Rico

The Company formed majority owned joint ventures in Puerto Rico to manage the
construction and related activities required to build low income homes in Puerto
Rico under the Section 124 low income housing program. In December 2003, the
Company secured the purchase rights to 36 acres that are designated Section 124
eligible, in the City of Aguadilla. Approximately 270 low income homes are
planned for construction on this property, in a project called "Brisas del
Atlantico." The necessary building permits were submitted for approval and a
real estate agency was hired to sell the homes planned for construction.

On June 28, 2005, the Company received notification from the Planning Board of
Puerto Rico (Junta de Planification de Puerto Rico) that the Brisas del
Atlantico project was not approved because the 36-acre tract is located in a
area zoned rural/agricultural, and that housing development is not included in
the current master development plan for that area. On July 6, 2005, we submitted
a formal request to the Planning Board to reconsider its June 28 decision. In
the absence of a formal response, we are proceeding to have the property rezoned
as residential to eliminate the basis for the Planning Board's denial of our
application. When the rezoning process has been completed, we will resubmit the
project for Planning Board approval.

In December, 2004, we secured the rights to an additional 40 acre tract located
in Guayanilla for our second Section 124 project. This tract of land is part of
a 150 acre development that will also include other residential properties,
commercial/retail buildings and a hotel. The master plan for this entire project
is currently being prepared by the project's developer. We formed a second
majority owned joint venture in Puerto Rico in December 2004, to manage
construction and related activities required to build approximately 300
additional homes on this property under the Section 124 low income housing
program.

LIQUIDITY

We are currently dependent on equity investments or borrowing from private
investors to pay our operating expenses. There are no assurances that such
investors will continue to advance funds or invest in the Company's securities.
In the event we are unable to obtain additional capital or funding we may be
unable to pursue our business plans. We anticipate that we will be required to
raise capital in the approximate amount of $2,000,000 in the next 12 months in
order to continue to fund our limited operations and to finance our planned
business operations.

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

At June 30, 2004, we had a working capital deficit of $820,624, and at June 30,
2005 we had a working capital deficit of $1,099,555. The increase in our working
capital deficit is primarily a result of the net loss incurred during the six
months ended June 30, 2005. Since we have no source of revenue, our working
capital deficit will continue to increase as we incur additional operating
expenses. Presently, we have no external sources of cash and we are dependent
upon private placements of our stock or debt for funding.

For the six months ended June 30, 2005, we raised $401,000 of equity capital
through the sale of 1,536,667 shares of common stock. In addition, we borrowed
$282,386 to provide financing for our activities. On August 17, 2005, we raised
an additional $485,000 of equity capital through the sale of 1,616,667 shares of
common stock.


                                       18
<PAGE>

ASSETS

At June 30, 2004, we had total assets of $391,889, and at June 30, 2005, we
had total assets of $559,638. The increase in assets as of June 30, 2005, was
due to an increase in cash, offset by the elimination of a loan receivable from
a former officer, the writedown of an investment in joint ventures, a decrease
in fixed assets, offset by an increase in prepaid expenses, refundable deposits
and capitalized construction costs.

Other Matters

Accounting Pronouncements

In December 2004, the Financial Accounting Standard Board ("FASB") issued
Statement on Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based
Payment" (revised), that will require compensation costs related to share-based
payment transactions to be recognized in the financial statements. With limited
exceptions, the amount of compensation cost will be measured based on the
grant-date fair value of the equity or liability instruments issued. In
addition, liability awards will be remeasured each reporting period.
Compensation cost will be recognized over the period that an employee provides
service in exchange for the reward. The statement also amends SFAS No. 95,
"Statement of Cash Flows", to require that excess tax benefits be reported as a
financing cash inflow rather than as a reduction of taxes paid. SFAS No. 123(R)
is effective as to the Company as of the beginning of the first interim period
that begins after June 15, 2005. The Company is currently evaluating its
position and will make its determination to account for the compensation costs
either prospectively or retroactively at the time of adoption. The adoption of
SFAS 123(R) is expected to have a material effect on the Company's results of
operations.

In December 2004, the FASB staff issued FSP No. FAS 109-2, "Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provision Within the
American Jobs Creation Act of 2004" to provide accounting and disclosure
guidance for the repatriation provisions included in the Act. The Act introduced
a special limited-time dividends received deduction on the repatriation of
certain foreign earnings to a U.S. taxpayer as more fully described in Note 8 of
Notes to Consolidated Financial Statements. The FSP is effective upon issuance.
The adoption of FAS 109-2 could have a material effect on the Company's results
of operations and financial position.

In December 2004, the FASB staff issued FASB Staff Position ("FSP") FAS 109-1,
"Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004" to provide guidance on the application of Statement 109 to
the provision within the American Jobs Creations Act of 2004 (the "Act") that
provides tax relief to U.S. domestic manufacturers. The FSP states that the
manufacturers, deduction provided for under the Act should be accounted for as a
special deduction in accordance with Statement 109 and not as a tax rate
reduction. The FSP is effective upon issuance. The adoption of FAS 109-1 could
have a material effect on the Company's results of operations or financial
position.


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<PAGE>

In December 2004, the FASB issued SFAS No. 153 an amendment of APB Opinion No.
29 "Exchanges of Nonmonetary Assets". SFAS No. 153 amends APB Opinion No. 29 by
eliminating the exception under APB No. 29 for nonmonetary exchanges of similar
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
periods beginning after June 15, 2005. The adoption of SFAS No. 153 is not
expected to have a material effect on the Company's financial position or
results of operations.

In November 2004 the FASB issued SFAS No. 151, an amendment to ARB No. 43
chapter 4 "Inventory Costs". SFAS No. 151 requires that abnormal costs of idle
facility expenses, freight, handling costs and wasted material (spoilage) be
recognized as current-period charges. SFAS No. 151 is effective for fiscal years
beginning after June 15, 2005. Adoption of SFAS No. 151 is not expected to have
a material impact on the Company's results of operations or financial position.

Quantitative and Qualitative Disclosures About Market Risk

Fair Value of Financial Instruments - The following disclosure of the estimated
fair value of financial instruments is made in accordance with the requirements
of Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments". The estimated fair values of financial
instruments have been determined by the Company using available market
information and appropriate valuation methodologies.

However, considerable judgment is required in interpreting market data to
develop the estimates of fair value. Accordingly, the estimates presented herein
are not necessarily indicative of the amounts that the Company could realize in
a current market exchange.

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

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

Item 3. Controls and Procedures

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

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On July 1, 2005, the Company was served with a summons and complaint filed in
the United States District Court for the Southern District of New York by
Charter Capital Resources, Inc. and Beryl Zyskind. The complaint lists as
defendants the Company; Peter F. Russo, our President and Chief Executive
Officer; Neil Berman, a stockholder and noteholder of the Company; and Standard
Registrar & Transfer Agency, the Company's transfer agent. The suit alleges that
the plaintiffs own 300,000 shares of the Company's common stock and that the
defendants have interfered with the plaintiffs' right to transfer 232,134 of
their shares. The plaintiffs seek alleged compensatory damages of $200,000,
punitive damages, costs and reasonable attorneys' fees, and an order requiring
the defendants to take the necessary steps to transfer the 232,134 shares to the
street name of the plaintiffs' broker for immediate sale in the public market.
On July 20, 2005, the Company filed an answer to the complaint which denies the
allegations and filed a motion to disqualify plaintiffs' attorneys.

The Company disputes any wrongdoing by the Company or Mr. Russo and will contest
vigorously the claims asserted against them. The Company will also vigorously
defend its transfer agent pursuant to an indemnity agreement.

The Company believes that this matter will have no material effect upon the
Company or its operations.


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<PAGE>

ITEM 6.  Exhibits
-------  --------
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.

                                   SIGNATURES

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

                                       DELTA MUTUAL, INC.

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

Dated: August 22, 2005

                                  EXHIBIT INDEX

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, filed herewith.

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

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


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