UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

      [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003

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


                        Commission file number: 000-30563


                               DELTA MUTUAL, INC.
                 (Name of small business issuer 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, Pennsylvania            18960
          (Address of principal executive offices)                (Zip Code)


                  ---------------------------------------------
                                (Former Address)


                                 (215) 258-2800
                         (Registrant's telephone number)

         Securities registered under Section 12(b) of the Exchange Act: NONE

         Securities registered under Section 12(g) of the Exchange Act:
                  COMMON STOCK (par value $0.0001 per share)

      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to the filing requirements for the past 90 days. Yes [X] No [ ]

      Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]

      Issuer's revenues for its fiscal year ended December 31, 2003: $-0-

<PAGE>


         Aggregate market value of the voting and non-voting common shares held
by non-affiliates of the registrant as of March 31, 2004: $7,817,068 (See Item
5)

         Number of shares outstanding of registrant's Common Stock, par value
$.0001, as of March 31, 2004: 11,695,688 shares of Common Stock (See Item 11)

         Documents incorporated by reference: NONE

         Transitional Small Business Disclosure Format (check one): Yes__ No _X_



                                     PART I

                    NOTE REGARDING FORWARD LOOKING STATEMENTS
        CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
             OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

         This Annual Report contains historical information as well as
forward-looking statements. Statements looking forward in time are included in
this Annual Report pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements involve known and
unknown risks and uncertainties that may cause our actual results in future
periods to be materially different from any future performance suggested herein.
We wish to caution readers that in addition to the important factors described
elsewhere in this Form 10-KSB, the following forward-looking statements, among
others, sometimes have affected, and in the future could affect, our actual
results and could cause our actual consolidated results during 2004, and beyond,
to differ materially from those expressed in any forward-looking statements made
by or on our behalf.

         Forward-looking statements include, but are not limited to, statements
under the following headings; (i) "Business Plan," about the development of
certain projects and business opportunities and the Company's attempts to
convert these plans and opportunities into operating businesses that generate
revenues and profits; (ii) "Business Plan," about the intentions of the Company
to fund its businesses and operations by borrowings and the successful placement
of debt and equity financings; (iii) "Results of Operations"; (iv) "Liquidity
and Capital Resources," about the Company's plan to raise additional capital;
(v) "Liquidity and Capital Resources," about the contingent nature of the
consummation of any agreements with its contracting, joint venture and
partnership parties.

ITEM 1. DESCRIPTION OF BUSINESS

Unless the context otherwise requires, the terms "the Company," "we," "our" and
"us" refers to Delta Mutual, Inc.

GENERAL

         We were incorporated under the name Delta Mutual, Inc. on November 17,
1999, in the State of Delaware. We are planning to establish business operations
focused on providing construction and environmental technologies and services to
specific geographic areas in Puerto Rico, the Middle East, Africa and the Far
East. We have made a strategic decision to minimize our activities in Eastern
Europe and to maintain a small passive investment in the area that can be
expanded in the future should circumstances change.

<PAGE>


         Our offices are located at 111 North Branch Street, Sellersville, PA
18960. Our telephone number is (215) 258-2800.

Prior Operations

         At the time of the Company's formation, prior Company management
intended to provide mortgage services through the Internet to borrowers with
substandard credit. Prior Company management intended to offer varied levels of
mortgage and lending services by capitalizing on the popularity of
Internet-based financial services companies and secured the domain name rights
to the name deltamutual.com.

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

         From inception through December 31, 2002, prior to initiating our
current plan of operations, we raised a limited amount of capital through the
sale of our common stock. These funds were not sufficient to capitalize any of
our planned business activities in that period.

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

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

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

<PAGE>


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

Change of Control

         In November, 2002, Kelcon, Inc. sold its 450,000 shares of our common
stock to Mr. Gary T. Robinson, a New York businessman, pursuant to an agreement
providing for a total purchase price of $275,000 in a private transaction. Mr.
Robinson paid $50,000 of the purchase price in connection with the execution of
the purchase agreement. We have viewed this transaction as representing a
"Change in Control" of our Company. As part of this transaction, on March 10,
2003, Kenneth A. Martin appointed Gary T. Robinson and Mr. Peter F. Russo to
serve as members of our Board of Directors. On March 11, 2003, Mr. Robinson was
appointed Chief Executive Officer and Chairman of the Board of Directors, and
Mr. Russo was appointed as President and Secretary. Thereafter, on March 11,
2003, Mr. Martin resigned as an officer and director of the Company.


         On June 11, 2003, Mr. Robinson resigned as Chief Executive Officer and
Mr. Russo was appointed to that office. On November 28, 2003, Mr. Robinson
resigned as a director.


Business Plan

         Since the change in control, new Company management has embarked upon a
new mission and strategic direction, through the establishment of joint ventures
and a limited partnership. This structure is primarily for the establishment of
business operations focused on providing construction and environmental
technologies and services to specific geographic areas in Puerto Rico, the
Middle East, Africa 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. While the potential for significant environmental
remediation activity remains, the local government priorities for use of very
limited hard currency relegates these to a low status, requiring the Company to
devote substantial time and investment that can be deployed in other geographic
areas to achieve faster and more predictable results.

         Access to technologies has been secured primarily through strategic
alliance agreements with the manufacturers and/or patent license holders. These
agreements enable the Company, in most cases, to utilize the technology holder
as the sub-contractor for the projects thereby minimizing the need for Company
trained employees.

         On February 28, 2003, the Company entered into a Letter Of Intent with
CEVA International, Inc., a company whose primary business was providing
environmental services and technologies to public and private entities in
Central and Eastern Europe. Following the period within which the companies had
agreed to cooperate with each other in the performance of due diligence
investigations aimed at the opportunity to purchase certain assets, licenses
and/or permits, the Company decided not to pursue this opportunity. As
stipulated in the Letter Of Intent, the Company exercised its option to
terminate the activities.

<PAGE>


         On April 2, 2003, we entered into a technology license agreement with
Joseph Friedman and Sons International, Inc. ("Friedman"). The license territory
included all of the republics of the former Soviet Union where Friedman has
business experience. Based on the termination of certain technology rights
licensed to us, as well as our strategic decision to minimize our activities in
Eastern Europe, on March 30, 2004, we notified Friedman of termination of this
license agreement. Friedman has made certain demands under this license
agreement. See "Item 3. Legal Proceedings" below.

The United States

         We have entered into strategic alliance agreements with several United
States-based entities with technologies in the environmental technology field to
support the geographic activities.

         On March 18, 2003 we 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 located in the
Middle East and Africa. The joint venture agreement was concluded January 14,
2004, and the joint venture company is registered in the State of Virginia.

         On March 6, 2003 the Company entered into a consulting agreement with
M.U.R.G. LLC ("M.U.R.G.") , a Florida-based real estate consulting firm. The
consultant was to provide advisor services in connection with a proposed
construction of approximately 500 homes in Puerto Rico by the Company. We
advanced M.U.R.G. $100,000 against its future commission compensation and
M.U.R.G. delivered to us its promissory note payable on demand with interest
accruing at the rate of 5% per annum. Gary T. Robinson, Former Chief Executive
Officer and Former Chairman of the Board, loaned the Company $100,000 that
enabled us to make the advance to M.U.R.G. The project did not go forward and on
June 16, 2003 Mr. Robinson agreed to assume the promissory note from M.U.R.G.
and eliminate the loan amount due him from the Company.

         On April 25, 2003, the Company entered into a Letter Of Intent with Ms.
Jamie Burrows and Burrows Consulting, Inc., a Texas based corporation
(collectively referred to as "Burrows") to form a joint venture company to be
known as Delta Specialty Services. Delta Specialty Services was to be based in
Houston, Texas and was to engage in providing waste remediation technologies and
services on a project basis to the United States Government, foreign governments
and their respective departments, agencies, political sub-divisions as well as
to private entities around the world. As of September 30, 2003 the Company had
advanced $75,000 to Burrows. On September 4, 2003, an announcement was made
regarding the execution of the first legal contract establishing the business
relationship with Burrows. The joint venture was officially scheduled to be
consummated on October 31, 2003 and operated under the assumption that, if all
conditions were met, which included the execution and delivery of legal
documents defining the rights of the parties and requiring certain funding
commitments, the operation of the joint venture would commence. This was not
accomplished on the established timetable and the joint venture company has not
commenced operations.

<PAGE>


         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. Under the
terms of the agreement, the strategic alliance is to transition to a joint
venture as soon as possible within the formation and registration process of
Saudi Arabia.

         On January 20, 2004, the Company announced the formation of a joint
venture project to develop government sponsored, Section 124 low income housing
in the Commonwealth of Puerto Rico. The Company is the General Partner and
majority owner of a limited partnership that is the majority shareholder 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.

COMPETITION

         We will remain a development-stage company until we have commenced
business operations in accordance with our business plan and have successfully
obtained debt or equity financing to fund our projected business operations.
There are many established environmental remediation companies that have
significantly greater financial and personnel resources and technical expertise
than we do. There are well-capitalized environmental services and technology
companies as well as highly capitalized housing development companies in our
target marketplaces that will continue to retain their dominance and competitive
advantages over us.

EMPLOYEES

         Currently, we have five employees: Peter F. Russo, President and Chief
Executive Officer; Martin G. Chilek, Vice President and Chief Financial Officer;
Jerome Kindrachuk, Vice President--International; John Latza, Vice
President-Puerto Rico Operations and Judith Dallas, Corporate Office Manager.
Assuming that we obtain the necessary funding to operate our planned businesses,
we will hire several additional personnel to support our projected business
operations.

RISK FACTORS

Our business is subject to numerous risk factors, including the following:

NO REVENUE AND MINIMAL ASSETS.


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

<PAGE>


OUR BUSINESS IS IN THE DEVELOPMENTAL STAGE AND WE EXPECT TO INCUR LOSSES IN THE
FUTURE.

Our operations have not generated any revenue nor are they profitable. We have
incurred net operating losses from the formation of our company through December
31, 2003, of $1,789,400, and expect that we will continue to incur operating
losses in the future. Failure to achieve or maintain profitability may
materially and adversely affect the future value of our common stock.

WE HAVE ONLY A LIMITED OPERATING HISTORY AND HAVE NOT OPERATED PROFITABLY SINCE
INCEPTION. WE WILL BE REQUIRED TO RAISE SUBSTANTIAL AMOUNTS OF CAPITAL.

         Our operations have never been profitable, and it is expected that we
will continue to incur operating losses in the future. In 2003, we generated no
revenue, incurred operating expenses of $1,209,853 and had a net loss of
$1,249,509. As of March 30, 2004, we had approximately $21,000 of cash on hand
to fund operations. There is no assurance that we will operate profitably in the
future.

         We will have to obtain significant additional capital to continue
development of our proposed business. There is no assurance that we will be able
to obtain sufficient capital to develop our proposed environmental remediation
and housing businesses and market our services successfully.

WE HAVE BEEN THE SUBJECT OT A GOING CONCERN OPINION FROM OUR INDEPENDENT
AUDITORS, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE
OBTAIN ADDITIONAL FUNDING.

         Our independent auditors have added an explanatory paragraph to their
audit opinions, issued in connection with our financial statements, which states
that our ability to continue as a going concern is uncertain due to our
continued operating losses, the excess of our liabilities over our assets and
uncertain conditions we face in our day-to-day operations. Our financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION FOR OUR PROPOSED
ENVIRONMENTAL REMEDIATION OPERATIONS.

Each aspect of our proposed environmental remediation business is subject to
significant international and U.S. federal, state and local environmental
regulations. No assurances can be given that such environmental laws or
regulations, or that future changes in environmental laws, regulations, or
interpretations currently applicable to the Company or changes in the nature of
the Company's operations, will not adversely impact our proposed operations or
have a material adverse effect on the financial condition, operations and
liquidity of the Company.

AS A HOUSING DEVELOPER WE FACE ECONOMIC AND MARKET RISKS.

Many factors which are beyond our control will affect our proposed business as a
developer of housing, including, among others, general economic and real estate
market conditions, competitive factors, the availability and cost of borrowed
funds, real estate tax rates, federal and state income tax laws, operating
expenses (including maintenance and insurance), energy costs, government
regulations, and potential liability under and changes in environmental and
other laws, as well as the successful management of the properties.

<PAGE>

Our success as a developer of housing will also be subject to certain
additional risks including, but not limited to, (i) competition for existing and
future projects from other developers in the areas of our developed properties,
(ii) adverse changes in mortgage interest or terms of governmental financing,
(iii) possible adverse changes in general economic conditions and adverse local
conditions, such as competitive over-bidding, a decrease in employment or
adverse changes in real estate zoning laws, and (iv) other circumstances over
which we may have little or no control.

OUR MARKETS ARE VERY COMPETITIVE.

Virtually all of our current and potential competitors have significantly
greater financial, marketing and technical resources than we have. As a result,
they may be able to leverage a customer base, adapt more quickly to new
technologies and changes in customer requirements, or devote greater resources
to the promotion and sale of their services and products than we can.

WE DO NOT EXPECT TO PAY DIVIDENDS.

We have never paid dividends on our common stock. Current Company management
anticipates that any earnings generated from our operations will be used to
finance our working capital requirements, develop services and products and
marketing. For the foreseeable future, cash dividends will not be paid to
holders of our common stock.

VOLATILITY OF STOCK PRICE.

The market price of our common stock, as is the case for companies without
established operations, is extremely volatile due to our future prospects and
general market and economic conditions. During the fifteen month period ended
March 1, 2004, the closing per share price of our common stock has fluctuated
from $7.21 to $0.11 per share. Our common stock currently trades in the OTC
Bulletin Board market.

"PENNY" STOCK REGULATION OF BROKER-DEALER SALES OF OUR SECURITIES.

The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in "penny stocks." Generally, penny stocks are equity
securities with a price of less than $5.00 (other than securities registered on
certain national securities exchanges or quoted on the NASDAQ system). If our
shares are traded for less than $5.00 per share, as they currently are, the
shares will be subject to the SEC's penny stock rules unless: (1) our net
tangible assets exceed $5,000,000 during our first three years of continuous
operations or $2,000,000 after our first three years of continuous operations;
or (2) we have had average revenue of at least $6,000,000 for the last three
years. The penny stock rules require a broker-dealer, prior to a transaction in
a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document prescribed by the SEC that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition, the penny
stock rules require that prior to a transaction in a penny stock not otherwise
exempt from those rules, the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
requirements may have the effect of reducing the level of trading activity in
the secondary market for a stock that becomes subject to the penny stock rules.
As long as our common stock is subject to the penny stock rules, the holders of
the common stock may find it difficult to sell our common stock.

<PAGE>

ITEM 2. DESCRIPTION OF PROPERTY.

We currently lease office space consisting of approximately 1,700 square feet in
an office building located in Sellersville, Pennsylvania. We are obligated to
pay a monthly rent of $650 as well as pay for the utilities serving the
premises. Our lease is for a period of three years from March 1, 2003 to
February 28, 2006. We anticipate that our current office space will accommodate
our operations for the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS.

We have no pending legal proceedings; however, the two claims discussed below
are currently under negotiation.

Joseph Friedman and Sons International, Inc.

In April 2003, the Company entered into a License Agreement (the "License
Agreement") with Joseph Friedman and Sons International, Inc. ("Friedman") for
the purpose of developing environmental remediation projects in the territory of
the former Soviet Union. Under the License Agreement, certain technologies that
were licensed to Delta Mutual, Inc. under an agreement with the owner of the
technologies were in turn licensed to Friedman, which was to develop the
projects, and, among other things, Friedman was issued 288,638 shares of the
Company's common stock and obtained certain rights to a seat on the Company's
board of directors. No projects were ever commenced under the License Agreement.
Due to actions taken against the technology owner by its creditors during the
latter part of 2003, the underlying agreement with respect to these technologies
was terminated. Accordingly, the Company considers the License Agreement
terminated pursuant to its force majeure clause and so notified Friedman on
March 30, 2004.

In October 2003, Friedman requested that a nominee be appointed to the board of
directors of the Company. Friedman has also made demands against the Company
seeking the payment of certain expenses and consulting fees which Friedman
claims the Company is obligated to pay under or in connection with the License
Agreement, as well as demands for the issuance to Friedman of an indeterminate
but substantial number of shares of common stock, now and in the future, in
connection with any future issuances of common stock by the Company. The Company
believes that such claims regarding the issuance of additional shares of common
stock and entitlement to a board seat are without merit and intends to
vigorously contest such claims.

<PAGE>


B. Michael Pisani

In January 2003, the Company borrowed $15,000 from B. Michael Pisani ("Pisani"),
as evidenced by a promissory note in such principal amount, which was payable
with interest on January 27, 2003. This note provided for the issuance of 25,000
shares of common stock for each month that amounts due and owing were not paid
by the Company. Although the Company's position is that the terms of the note
were amended in May 2003 to eliminate requirement of additional shares, Pisani
disputes the validity of such amendment and has made a demand for the issuance
of 350,000 shares of common stock. In March 2004, the Company repaid the
principal and interest due under the terms of the amended note, which payment
was accepted by Pisani with reservations regarding the validity of his claims
with respect to additional shares of common stock. The Company is presently
attempting to resolve this dispute. If the matter can not be resolved, the
Company intends to vigorously defend such claim.

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

None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock has been quoted on the Over-the-Counter Bulletin Board operated
by the National Association of Securities Dealers, since approximately February
1, 2001. Our shares are listed under the symbol "DLTM". The quotations in the
table below reflect inter-dealer prices, without retail mark-up, mark-down, or
commission and may not represent actual transactions.

                                         High                         Low
                                         ----                         ---
2002: 1st Quarter                         .45                          .11
         2nd Quarter                     1.01                          .03
         3rd Quarter                     5.05                          .16
         4th Quarter                     7.21                          .51
2003:    1st Quarter                     2.80                         2.10
         2nd Quarter                     2.00                          .65
         3rd Quarter                     1.35                          .63
         4th Quarter                      .95                          .17

2004:    1st Quarter                     1.09                          .49
         (through March 31, 2004)

During the last two fiscal years, no cash dividends have been declared on
Delta's common stock and current Company management does not anticipate that
dividends will be paid in the foreseeable future. As of March 31, 2004, there
were 50 record holders of our common stock.


<PAGE>


RECENT SALES OF UNREGISTERED SECURITIES

<TABLE>
<CAPTION>
-------------------- -------------------------- ------------------ ------------------- ------------------------------
       Date              Title and Amount          Purchasers          Principal              Total Offering
                                                                      Underwriter      Price/Underwriting Discounts
-------------------- -------------------------- ------------------ ------------------- ------------------------------
<S>                  <C>                        <C>                <C>                 <C>
December, 2002       300,000 shares of common   Private Investor           NA          $.10 per share/NA
                     stock
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         20,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.50 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         240,000 shares of common   Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.1667 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         100,000 shares of common   Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.25 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         100,000 shares of common   Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.25 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         288,638 shares of common   Licensee                   NA          Services under License
                     stock issued for                                                  Agreement valued at $.139
                     consulting services                                               per share/NA
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23 and           800,000 shares of common   Private Investors          NA          Purchase of $250,000
September 5, 2003    stock                                                             principal amount note,
                                                                                       valued at $.3125 per share/NA
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         50,000 shares of common    Private Investor           NA          Interest on loan valued at
                     stock, issued as payment                                          $.275 per share/NA
                     of interest on
                     outstanding debt
-------------------- -------------------------- ------------------ ------------------- ------------------------------
</TABLE>


<PAGE>

<TABLE>
<CAPTION>
-------------------- -------------------------- ------------------ ------------------- ------------------------------
       Date              Title and Amount          Purchasers          Principal              Total Offering
                                                                      Underwriter      Price/Underwriting Discounts
-------------------- -------------------------- ------------------ ------------------- ------------------------------
<S>                  <C>                        <C>                <C>                 <C>
May 23, 2003         37,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.405 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         3,000 shares of common     Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.50 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
May 23, 2003         50,000 shares of common    Private Investor           NA          Interest on loan valued at
                     stock, issued as payment                                          $.333 per share/NA
                     of interest on
                     outstanding debt
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 1, 2003       200,000 shares of common   Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.20 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 8, 2003       100,000 shares of common   Private Investor           NA          $.50 per share/NA
                     stock
-------------------- -------------------------- ------------------ ------------------- ------------------------------
July 23, 2003        37,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.405 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
July 23, 2003        3,000 shares of common     Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.50 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 11, 2003      50,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.4375 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 11, 2003      25,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.4375 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 11, 2003      15,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.4375 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 11, 2003      10,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.4375 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
August 22, 2003      250,000 shares of common   Private Investor           NA          $.20 per share/NA
                     stock
-------------------- -------------------------- ------------------ ------------------- ------------------------------
November 15, 2003    100,000 shares of common   Private Investor           NA          $.125 per share/NA
                     stock
-------------------- -------------------------- ------------------ ------------------- ------------------------------
November 15, 2003    100,000 shares of common   Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.085 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
November 21, 2003    50,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.035 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
-------------------- -------------------------- ------------------ ------------------- ------------------------------
       Date              Title and Amount          Purchasers          Principal              Total Offering
                                                                      Underwriter      Price/Underwriting Discounts
-------------------- -------------------------- ------------------ ------------------- ------------------------------
<S>                  <C>                        <C>                <C>                 <C>
November 21, 2003    50,000 shares of common    Consultant                 NA          Consulting Services valued
                     stock issued for                                                  at $.035 per share/NA
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
December 15, 2003    10,000 shares of common    Consultant                 NA          $.085 per share/NA
                     stock issued for
                     consulting services
-------------------- -------------------------- ------------------ ------------------- ------------------------------
</TABLE>



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

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

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

GENERAL

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

RESULTS OF OPERATIONS

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

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

<PAGE>


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.

2003 COMPARED TO 2002

The net loss increased from approximately $325,000 in 2002 to approximately
$1,250,000 for the twelve months ended December 31, 2003.

The items of significant increase or decrease in the twelve months ended
December 31, 2003 over the comparable period of the prior year were an increase
in general and administrative expense from approximately $322,000 in 2002 to
approximately $1,210,000 for the twelve months ended December 31, 2003, and an
increase in interest expense from approximately $3,700 in 2002 to approximately
$40,000 for the twelve months ended December 31, 2003.

PLAN OF OPERATION

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

Puerto Rico

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

Middle East, Africa and Far East

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

Central and Eastern Europe

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


<PAGE>


The U.S. Government has scheduled a program for disposal of specific military
related waste products that require not only specialized disposal facilities,
but also state of the art identification and tracking systems. The disposal
requirement is the outcome of a number of weapons destruction treaties that are
currently in effect. We had planned to establish a joint venture to address this
very specific market during the fourth quarter of 2003. However, this was not
accomplished and the joint venture has not been formed.

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

LIQUIDITY

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

At December 31, 2003 and 2002, we had working capital deficits of $623,423 and
$235,483, respectively. The increase in our working capital deficit is a result
of the net loss incurred during the year ended December 31, 2003. Since we have
no source of revenue, our working capital deficit will continue to increase as
we incur additional operating expenses. Presently, we have no external sources
of cash and we are dependent upon private placements of our stock for funding.

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

ASSETS

At December 31, 2003, we had total assets of $84,702, compared to total assets
of $2,871 at December 31, 2002. The increase in assets as of December 31, 2003
was due to an increase in cash, an increase in fixed assets and an investment in
a subsidiary.

CRITICAL ACCOUNTING ISSUES

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

<PAGE>


Other Matters

Accounting Pronouncements

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

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

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

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

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

<PAGE>


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

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

<PAGE>


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

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 7. FINANCIAL STATEMENTS.

The Company's Financial Statements and Notes to Financial Statements are
attached hereto as Exhibit A and incorporated herein by reference.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

There have been no changes in or disagreements with the Company's independent
auditors during the last two years.

ITEM 8A. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures:

Based on his evaluation as of a date within 90 days of the filing date of this
report, Peter F. Russo, our President, and Martin G. Chilek, our principal
financial officer, have concluded that our Company's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") are sufficiently effective
to ensure that the information required to be disclosed by the Company in the
reports that we file under the Exchange Act is gathered, analyzed and disclosed
with adequate timeliness, accuracy and completeness.

<PAGE>


Changes in internal controls:

There have been no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the evaluation referred to above, nor were there any significant deficiencies or
material weaknesses in the Company's internal controls. Accordingly, no
corrective actions were required or undertaken.

Limitations on the effectiveness of controls:

A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Because of inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues, if any,
within a company have been detected.


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

DIRECTORS AND EXECUTIVE OFFICERS

At March 31, 2004 the executive officers and director of Delta Mutual, Inc. were
as follows:


NAME                            AGE               TITLE(S)
----                            ---               --------
Peter F. Russo                  61                President, CEO and Director

Martin G. Chilek                53                Vice President, Chief
                                                  Financial Officer and
                                                  Assistant Secretary

Jerome Kindrachuk               59                Vice President--International


Peter F. Russo joined the Company on March 11, 2003 as President and a director,
and was elected Chief Executive Officer in June 2003. Mr. Russo had been an
independent consultant to several private businesses during the period from
August 2001 until he joined the Company. In that capacity, he developed business
and operating strategies and plans for a start-up, new concept modular housing
company focused on the affordable housing market. In that assignment, he
developed proposals for low-income housing projects under the federal Section 42
tax credit program in Philadelphia, Baltimore and Washington D.C. In another
assignment, Mr. Russo was instrumental in structuring a new U.S. holding company
with affiliated real estate service operations in Europe. From June 2000 to July
2001, Mr. Russo served as President and Chief Operating Officer for Bartram
Healthcare Financial Services, Inc., a start-up healthcare services company
providing financial systems and services. From January 1998 to June 2000, Mr.
Russo was an independent consultant for projects that included the development
of new market penetration strategies in various regions of the former
Yugoslavia, that included securing a U.S. export grant and providing
environmental technologies to Eastern European power generating stations.


<PAGE>


Martin G. Chilek joined the Company as Vice President and CFO in January 2004.
Prior to joining the Company, from June 2003 to December 2003, he was an
independent consultant providing transitional management, strategic planning and
financial management services to privately held and public companies. During the
past five years, Mr. Chilek also served as Vice President-Operations of
MicroTech Leasing Corporation from October 2000 through May 2003. From October
1999 through October 2000, Mr. Chilek was employed by Acquisitions Management
Services, Inc., King of Prussia, Pennsylvania, a merger and acquisitions
services company, as Director of Business Development. From December 1998 to
October 1999, Mr. Chilek was an independent consultant to privately held
companies. Mr. Chilek filed for personal bankruptcy in February 2000, and
discharged in July 2000, as a protective measure due to stockholder suits
following the bankruptcy of U.S. Physicians, Inc. in October 1998. Mr. Chilek
was Senior Vice President-Administration of U.S. Physicians, Inc. at the time it
filed its petition in bankruptcy and was employed by U.S. Physicians in that
capacity from July 1997 until November 1998.

Jerome Kindrachuk joined the Company in July 2003 as Vice President-Finance and
Administration and in January 2004 was appointed as Vice President-
International and an officer of the Company. Prior to joining the Company, Mr.
Kindrachuk served, from March 2002 to September 2002, as director of finance for
CEVA International, Inc., a company that provided environmental services and
technologies to countries in Central and Eastern Europe. From October 2002 to
June 2003, Mr. Kindrachuk was a consultant to the Company for market penetration
strategies in Eastern Europe. During the past five years, he also served as
Chief Executive Officer of Winner Automotive Group (from February 2000 to
February 2002) and as Chief Executive Officer for the Former Soviet Union and
the Baltics for Joseph E. Seagram & Sons (from May 1997 to January 2000). Over
the course of his career, Mr. Kindrachuk has held senior executive positions for
several multi-national companies operating in Ukraine, Tashkent, Kazakhstan and
Russia.

Our directors are elected by the stockholders and our officers are appointed by
our board of directors. Our officers hold office until their successors are
elected and qualified. Vacancies in our board are filled by the board itself.
There is currently one vacancy on our board of directors.

We do not have an audit committee, although we intend to establish such a
committee, with an independent "financial expert" member as defined in the rules
of the Securities and Exchange Commission.

There are no family relationships between any of our executive officers and/or
directors.

We have a corporate code of conduct in place, which provides for internal
procedures concerning the reporting and disclosure of corporate matters that are
material to our business and to our stockholders. Our corporate code of conduct
includes a code of ethics for our officers and employees as to workplace
conduct, dealings with customers, compliance with laws, improper payments,
conflicts of interest, insider trading, company confidential information, and
behavior with honesty and integrity.


<PAGE>


LEGAL PROCEEDINGS

Except as disclosed above with respect to our officers, to the best of our
knowledge, during the past five years no director, person nominated to become a
director, executive officer, promoter or control person of the Company has: (1)
had any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time; (2) had any conviction in a
criminal proceeding or has been subject to a pending criminal proceeding
(excluding traffic violations and other minor offenses); (3) been subject to any
order, judgment, or decree, not subsequently reversed, suspended or vacated, of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or (4) been found by a court of
competent jurisdiction (in a civil action), the Securities and Exchange
Commission or the Commodity Futures Trading Commission, to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934


                                    Number      Transactions   Known Failures
                                    Of late     Not Timely     To File a
Name and principal position         Reports     Reported       Required Form
---------------------------        -----------  ------------   --------------

Peter F. Russo, President              2            2               --



ITEM 10. EXECUTIVE COMPENSATION.

<TABLE>
<CAPTION>

                  Annual  Compensation                                                 Awards                          Payouts
------------------------------------------------------------------------------------------------------------------------------------
(a)               (b)        (c)        (d)           (e)             (f)               (g)          (h)               (i)
Name                                                 Other
and                                                  Annual        Restricted        Securities                   LTIP     All Other
Principal         Year     Salary     Bonus          Comp.           Stock           Underlying   Options/        Payouts  Comp.
Position          (1)       ($)        ($)            ($)             ($)              Awards      SARs(#)          ($)     ($)
--------------    ----     ------     -----          ------       ----------        ----------     -------        ------------------
<S>               <C>      <C>      <C>             <C>           <C>               <C>           <C>             <C>       <C>
Peter F. Russo    2003     $31,800                                 $6,000                                                  $31,938
President (2)

Gary T.           2003                               $20,000      $93,625
Robinson (2)
</TABLE>

(1)   Fiscal years ended December 31, 2003 and 2002.

(2)   The other compensation for Peter F. Russo was fees for consulting work
      completed prior to his employment. The restricted stock value for Gary T.
      Robinson was for compensation earned during his tenure as CEO.


<PAGE>


None of our officers or directors received any compensation for services from
our date of inception (November 17, 1999) to December 31, 2002.

EMPLOYMENT AGREEMENTS

On March 11, 2003, we entered into a contract with Peter F. Russo to serve as
President. It provides for three years' employment from March 11, 2003, at a
salary of $10,000 per month through June 30, 2003, and $15,000 per month
thereafter, payable in bi-monthly installments, plus benefits. We also have an
employment contract with Jerome Kindrachuk, effective July 2003 prior to Mr.
Kindrachuk's appointment as an officer of the Company. It provides for three
years' employment from July 1, 2003, at a salary of $10,000 per month, payable
in bi-monthly installments, plus benefits. All other officers are employed by us
on an at will basis, and the terms and conditions of employment are subject to
change.

DIRECTORS' COMPENSATION

We do not compensate directors in their capacity as such nor do we compensate
our directors for attendance at meetings. We do reimburse our officers and
directors for reasonable expenses incurred in the performance of their duties .

COMPENSATION PLANS

2001 EMPLOYEE STOCK OPTION PLAN.

In December 2001, the Company's stockholders approved a stock option plan
entitled the 2001 Employee Stock Option Plan (the "Plan"). The Plan authorizes
the Board of Directors (the "Board"), or a committee comprised of non-employee
directors ("Committee"), to grant, over a 10-year period, options to purchase up
to 2,000,000 shares of the Company's common stock. Persons eligible to receive
options under the Plan include key employees and directors who are also
employees of the Company or any subsidiary, as determined by the Board or
Committee. The persons to be granted options under the Plan and the number and
purchase price of the shares represented by each option, the time or times at
which the options may be exercised, and the terms and provisions of each option
(which need not be uniform for all options) will be determined by the Board or
Committee. The purchase price per share may not be less than 100% of the fair
market value of the Company's stock at the time of grant. The purchase price may
be paid in cash or common stock of the Company held for at least six months with
a market value equal to that of the shares being acquired or, in the discretion
of the board or committee, any combination of these. Options granted under the
Plan may be in the form of "incentive stock options" which qualify as such under
Section 422 of the Internal Revenue Code or non-qualified stock options which do
not meet the criteria for incentive stock options under Section 422. The tax
treatment afforded stock options qualifying as incentive stock options is
generally more favorable to employees than that afforded to non-qualified stock
options, in that the exercise of an incentive stock option does not require the
optionee to recognize income for federal income tax purposes at the time of
exercise. (The difference between the exercise price of the incentive stock
option and the fair market value of the stock at the time of purchase is,
however, an item of tax preference which may require payment of an alternative
minimum tax.).


<PAGE>


         Options granted under the Plan are, generally, transferable only by
will or by the laws of descent and distribution, and may be exercised during the
lifetime of the optionee only by the optionee or by his legal representative in
the event of his disability. In its sole discretion, however, the Board or
Committee may permit an optionee to make certain transfers of non-qualified
stock options, provided that the transfers are to "family members" and are not
for value, as defined in the General Instructions to Form S-8 under the
Securities Act of 1933.

         The term of each option cannot be more than 10 years from the date of
grant, and options can be exercised only during the participant's employment
with the Company or one of its subsidiaries. If any option expires or is
terminated prior to its exercise in full and prior to the termination of the
Plan, the shares subject to such unexercised option will be available for the
grant of new options under the Plan. Further, any shares used as full or partial
payment by an optionee upon exercise of an option may subsequently be used by
the Company to satisfy other options granted under the Plan, subject to the
limitation on the total number of shares authorized to be issued under the Plan.

         The Plan permits an outstanding option to be exercised after
termination of employment only to the extent that the option was exercisable on
the date of termination but in no event beyond the original term of the option
(i) within one year by the estate or rightful heir(s) of the optionee if the
optionee's employment is terminated due to the optionee's death; (ii) within one
year after the date of such termination if the termination is due to the
optionee's Disability (as defined in the Plan); or (iii) within three months
after the date of such termination if the termination was due to the optionee's
Retirement (as defined in the Plan) or was for reasons other than death or
Disability and other than "for cause" (as defined in the Plan). Upon termination
of an optionee's employment "for cause," any unexercised options held by the
optionee will be forfeited. In the event of the dissolution, liquidation or sale
of substantially all the Company's assets, options issued under the Plan will be
deemed terminated to the extent not previously exercised. In the event the
Company merges with or into another corporation, outstanding options will be
assumed or an equivalent option substituted by the successor corporation or, if
such successor corporation does not agree to assume the option or substitute an
equivalent option, the Board will provide for the option holder to have the
right to exercise the option as to all of the optioned shares, including shares
as to which the option would not otherwise be exercisable.

         Upon termination of an optionee's employment "for cause," any
unexercised options held by the optionee will be forfeited. Unexercised options
will terminate in the event of the Company's dissolution, liquidation, or sale
of all or substantially all of its assets. In the event of our merger with
another corporation, the option would be assumed or an equivalent option
substituted by the successor corporation or, if such successor corporation does
not agree to assume the option or substitute an equivalent option, the Board can
provide for the option holder to have the right to exercise the option as to all
of the optioned shares, including shares as to which the option would not
otherwise be exercisable. The number of shares subject to options and the option
prices will be appropriately adjusted in the event of changes in our outstanding
common stock by reason of stock dividends, recapitalizations, mergers,
consolidations, stock splits and combinations of shares, and the like. The Board
may at any time terminate or modify the Plan except, that without further
approval of the stockholders, the Board may not make any changes to the Plan
which would materially increase the number of shares that may be issued under
the Plan, materially modify the eligibility requirements for participation in
the Plan, or require stockholder approval under the Delaware General Corporation
Law, the Exchange Act, or the Internal Revenue Code.

<PAGE>


         On December 1, 2003, the Plan was amended to give the Board the power
to issue a restricted stock award to an Employee representing shares of Common
Stock that are issued subject to such restrictions on transfer and other
incidents of ownership and such forfeiture conditions as the Board may determine
("Restricted Shares"). In connection with issuance of any Restricted Shares, the
Board may (but shall not be obligated to) require the payment of a specified
purchase price (which price may be less than Fair Market Value as defined in the
Plan).

         We have not adopted any other deferred compensation, pension, profit
sharing, stock option plan or programs for our officers or employees. During the
second quarter of 2003, the Company established a health insurance benefit plan
that is offered to all employees.



         There were no option/SAR grants in our last fiscal year and, at that
fiscal year end, there were no unexercised options held by officers of the
company.

         No officer or director exercised any options in the fiscal year ended
December 31, 2003.


<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information, as of March 31, 2004, with respect
to the beneficial ownership of the Company's Common Stock by each person known
by the Company to be the beneficial owner of more than five percent (5%) of the
outstanding Common Stock and by directors and officers of the Company, both
individually and as a group:

                                                    Number       Percentage(1)
                                                    ------       -------------

BENEFICIAL OWNER

Officers, Directors and 5%
Beneficial Owners

Peter F. Russo                                       100,000          *
Jerome Kindrachuk                                    100,000          *
Ivano Angelastri                                   1,250,000        10.69%
Neil Berman                                        1,710,000        14.62%
All officers and directors as a group                200,000         1.71%

----------------
*Less than 1%.

----------------
(1) Based on 11,695,688 shares outstanding on March 31, 2004.

Securities Authorized for Issuance under Equity Compensation Plans

         The following table sets forth information with respect to our common
stock issued and available to be issued under outstanding options, warrants and
rights as of December 31, 2003.

<TABLE>
<CAPTION>
------------------------------- ---------------------------- ---------------------------- ----------------------------
                                (a)                          (b)                          (c)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Plan category                   Number of securities to be   Weighted-average exercise    Number of securities
                                issued upon exercise of      price of outstanding         remaining available for
                                outstanding options,         options, warrants and        future issuance under
                                warrants and rights          rights                       equity compensation plans
                                                                                          (excluding securities
                                                                                          reflected in column (a))
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                             <C>                          <C>                          <C>
Equity compensation plans
approved by security holders                                                                       1,642,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
Equity compensation plans not
approved by security holders
------------------------------- ---------------------------- ---------------------------- ----------------------------
Total                                                                                              1,642,000
------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>



<PAGE>


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On March 6, 2003, Gary T. Robinson, our Former Chief Executive Officer, loaned
the Company $100,000 for payment to a consultant. On June 30, 2003, Mr. Robinson
agreed to release the Company from the note and assume the responsibility for
recovering the amount paid to the consultant.

On March 11, 2003, we entered into a contract with Peter F. Russo to serve as
President. It provides for three years' employment from March 11, 2003, at a
salary of $10,000 per month through June 30, 2003, and $15,000 per month
thereafter, payable in bi-monthly installments, plus benefits. We also have an
employment contract with Jerome Kindrachuk, effective July 2003 prior to Mr.
Kindrachuk's appointment as an officer of the Company. It provides for three
years' employment from July 1, 2003, at a salary of $10,000 per month, payable
in bi-monthly installments, plus benefits.

During the first and second quarters, the Company paid consulting fees of
$31,938 owed to Peter F. Russo for services rendered prior to his employment.


ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.


(a) Exhibits:

Exhibit No.                       Description of Exhibits
------------        ------------------------------------------------------------

3.1                 Articles of Incorporation of the Company, as currently in
                    effect, incorporated herein by reference to Exhibit 3.1 to
                    Amendment No. 1 to the Company's Registration Statement on
                    Form 10-SB filed with the Commission on June 15, 2000.

3.2                 By-Laws of the Company. Incorporated herein by reference to
                    Exhibit 3.2 to Amendment No. 1 to the Company's Registration
                    Statement on Form 10-SB filed with the Commission on June
                    15, 2000.

3.2a                Amendment to Article III, Section I of the By-Laws.
                    Incorporated herein by reference to the Company's quarterly
                    report on Form 10-QSB, filed with the Commission on November
                    21, 2000.


<PAGE>


4.1                 Delta Mutual, Inc. 2001 Employee Stock Option Plan,
                    incorporated herein by reference to Appendix B to the
                    Company's definitive Information Statement pursuant to
                    Section 14C of the Exchange Act, filed with the Commission
                    on November 9, 2001.

4.2                 Delta Mutual, Inc. 2001 Employee Stock Option Plan, as
                    amended December 1, 2003, filed herewith.

10.1                Agreement of Sale with Enterprises Solutions, Inc. dated May
                    11, 2001, and amendments. Incorporated herein by reference
                    to Exhibit 10.2 to the Company's current report on Form 8-K,
                    filed with the Commission on May 23, 2001.

10.2                Promissory note from Enterprises Solutions, Inc. dated
                    October 31, 2001. Incorporated by reference to Exhibit 10.3
                    to the Company's annual report on Form 10-KSB, filed with
                    the Commission on April 16, 2002.

10.3                Promissory Note to Rosanne Solomon dated November 27, 2001.
                    Incorporated herereference to Exhibit 10.1 to Amendment No.
                    3 to the Company's registration statement on Form S-4,filed
                    with the Commission on November 30, 2001.

10.4                License Agreement with Enterprises Solutions, Inc. dated
                    December 11, 2001. Incorporated by reference to Exhibit 10.5
                    to the Company's annual report on Form 10-KSB, filed with
                    the Commission on April 16, 2002.

10.5                Employment Agreement between Kenneth A. Martin and the
                    Company. Incorporated by reference to Exhibit 10.6 to the
                    Company's annual report on Form 10-KSB, filed with the
                    Commission on April 16, 2002.

10.6                Agreement, dated January 13, 2003, between the Company and
                    Kenneth A. Martin. Incorporated by reference to Exhibit 10.7
                    to the Company's registration statement on Form S-8, filed
                    with the Commission on February 13, 2003.

10.7                Agreement, dated February 3, 2003, between the Company and
                    Peter F. Russo. Incorporated by reference to Exhibit 10.8 to
                    the Company's registration statement on Form S-8, filed with
                    the Commission on February 13, 2003.

<PAGE>


10.8                Agreement, dated February 4, 2003, between the Company and
                    J. Dapray Muir. Incorporated by reference to Exhibit 10.9 to
                    the Company's registration statement on Form S-8, filed with
                    the Commission on February 13, 2003.

10.9                Executive Employment Agreement, effective March 11, 2003, by
                    and between the Company and Peter F. Russo. Incorporated
                    herein by reference to Exhibit 10.8 to the Company's Annual
                    Report on Form 10-KSB, filed with the Commission on April
                    14, 2003.

10.10               Consulting Agreement, effective February 28, 2003, between
                    M.U.R.G., LLC and Delta Mutual, Inc. Incorporated herein by
                    reference to Exhibit 10.9 to the Company's Annual Report on
                    Form 10-KSB, filed with the Commission on April 14, 2003.

10.11               Agreement, March 31, 2003, between the Company and Burrows
                    Consulting Inc. Incorporated herein by reference to Exhibit
                    10.3 to the Company's current report on Form 8-K, filed with
                    the Commission on April 25, 2003.

10.12               License Agreement with Joseph Friedman and Sons,
                    International, Inc., dated April 2, 2003. Incorporated
                    herein by reference to Exhibit 10.7 to the Company's Annual
                    Report on Form 10-KSB, filed with the Commission on April
                    14, 2003.

10.13               Agreement, dated July 1, 2003, between the Company and Gary
                    T. Robinson. Incorporated herein by reference to Exhibit
                    10.10 to the Company's registration statement on Form S-8,
                    filed with the Commission on August 20, 2003.

10.14               Agreement, August 29, 2003, between the Company an Burrows
                    Consulting Inc. Incorporated herein reference to the
                    Company's current report on Form 10.15 8-K, filed with the
                    Commission on September 4, 2003.

10.15               Strategic Alliance Agreement, dated September 10, 2003,
                    between Delta-Envirotech, Inc. and ZAFF International Ltd.
                    Incorporated herein by reference to Exhibit 99.2 to the
                    Company's current report on Form 8-K, filed with the
                    Commission on January 22, 2004.

10.16               Agreement, dated January 14, 2004, by and between Delta
                    Mutual, Inc. and Hi Tech Consulting and Construction, Inc.,
                    filed herewith.

<PAGE>


10.17               Agreement to Purchase Stock, dated January 14, 2004, between
                    Delta Mutual, Inc. and Hi Tech Consulting and Construction,
                    Inc., as sellers, and Ali Razmara, as purchaser, filed
                    herewith.

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

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

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

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



(b) Reports on Form 8-K.

         No current reports on Form 8-K were filed in the Company's fiscal
quarter ended December 31, 2003.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(1) Aggregate fees for the last two years: $95,546

(2) Audit related fees: $91,546

(3) Tax fees: $4,000

(4) All other fees: NA

(5) Audit committee pre-approval processes, percentages of services approved by
audit committee, percentage of hours spent on audit engagement by persons other
than principal accountant's full time employees: NA


<PAGE>


                                   SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the Company caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


DELTA MUTUAL, INC.

Dated: April 6, 2004

By: /s/ Peter F. Russo
   ----------------------------
Peter F. Russo
President, Chief Executive Officer and Director


By: /s/ Martin G. Chilek
   ----------------------------
Martin G. Chilek
Vice President and Chief Financial Officer
Principal Financial Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.


   SIGNATURE                         TITLE                     DATE
-----------------                  ------------               --------

/s/ Peter F. Russo
------------------------
Peter F. Russo                     President                     April 6, 2004
                                   And Director


<PAGE>


                      DELTA MUTUAL, INC. AND SUBSIDIARIES

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                                                                                              <C>
Accountants' Report                                                                              1 - 2

Financial Statements:

  Consolidated Balance Sheet as of December 31, 2003                                               3

  Consolidated Statement of Operations for the years ended December 31, 2003 and
   2002 and for the period November 17, 1999 (Date of Formation) through
   December 31, 2003                                                                               4

  Consolidated Statement of Stockholders' Deficiency for the period
   November 17, 1999 (Date of Formation) through December 31, 2003                                 5

  Consolidated Statement of Cash Flows for the years ended December 31, 2003 and
   2002 and for the period November 17, 1999 (Date of Formation) through December 31, 2003       6 - 7

 Notes to Consolidated Financial Statements                                                      8 - 26
</TABLE>

<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Delta Mutual, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheet of Delta Mutual,
Inc. and Subsidiaries (a development stage company) (the "Company") as of
December 31, 2003, and the related consolidated statements of operations,
stockholders' deficiency and cash flows for each of the two years in the period
ended December 31, 2003 and for the period November 17, 1999 (Date of Formation)
through December 31, 2003. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of Delta Mutual Inc. and Subsidiaries
at December 31, 2003, and the results of its operations and their cash flows for
each of the two years ended December 31, 2003 and for the period November 17,
1999 (Date of Formation) through December 31, 2003, in conformity with
accounting principles generally accepted in the United States of America.


                                       -1-

<PAGE>


The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company is a development stage
enterprise. Since a change in control, new Company management has embarked upon
a new mission and strategic direction intending to establish a series of
subsidiaries and joint ventures, primarily for the establishment of business
operation focusing upon providing technologies and services in the environmental
remediation industry and utilizing certain construction technologies to
participate in selected housing development projects. As more fully explained in
Note 1, to the financial statements the Company needs to obtain additional
financing to fulfill its proposed activities and achieve a level of sales
adequate to support its cost structure.

These uncertainties raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans are also described in Note 1.
The accompanying consolidated 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.


WIENER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
Eatontown, New Jersey

March 13, 2004


                                       -2-

<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET


                                     ASSETS

                                                                    December 31,
                                                                        2003
                                                                    ------------
Current Assets:
    Cash                                                            $    14,057
    Prepaid expenses                                                      3,962
      Total Current Assets                                               18,019
                                                                    -----------

    Fixed  assets - net                                                  32,233
    Investment in joint venture                                          33,800
    Other assets                                                            650
                                                                    -----------

         TOTAL ASSETS                                               $    84,702
                                                                    ===========


                    LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current Liabilities:
    Accounts payable                                                $   186,592
    Accrued expenses                                                    265,286
    Loan from former officer/stockholder                                 56,364
    Loan to related parties                                             122,000
    Due to related party                                                 11,200
                                                                    -----------
         Total Current Liabilities                                      641,442
                                                                    -----------

    Minority interest                                                       150
                                                                    -----------

Commitments and Contingencies

Stockholders' Deficiency:
    Common stock $0.0001 par value - authorized
        20,000,000 shares, 9,361,688 and 857,000
        shares outstanding at December 31, 2003
        and 2002, respectively                                              936
     Additional paid-in-captial                                       1,231,574
     Deficit accumulated during the
     development state                                               (1,789,400)
                                                                    -----------
           Total Stockholders' Deficiency                              (556,890)
                                                                    -----------
      TOTAL LIABILITIES AND
    STOCKHOLDERS' DEFICIENCY                                        $    84,702
                                                                    ===========

                       See notes to financial statements.

                                      -3-
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                Period from
                                                                             November 17, 1999
                                            Years Ended December 31,        (Date of Formation)
                                        -------------------------------          through
                                           2003                2002          December 31, 2003
                                        -----------         -----------      -----------------
<S>                                     <C>                 <C>                 <C>
Costs and Expenses
    General and administrative
      expenses                          $ 1,209,853         $   321,732         $ 1,746,092
    Interest expense                         39,656               3,652              43,308
                                        -----------         -----------         -----------
    Net loss                            $ 1,249,509         $   325,384         $ 1,789,400
                                        -----------         -----------         -----------

    Loss per common share-
      basic and diluted                 $     (0.19)        $     (0.57)
                                        ===========         ===========

    Weighted average number of
      common shares outstanding-
      basic and diluted                   6,734,384             569,329
                                        ===========         ===========
</TABLE>

                       See notes to financial statements.

                                      -4-
<PAGE>

                       DELTA MUTUAL, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                     STATEMENTS OF STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
                                                                                              Deficit
                                          Number of                                         Accumulated
                                           Common            Common           Paid in    During Development
                                           Shares            Stock            Capital          Stage              Total
                                         ---------         ---------         ---------       ----------         ---------
<S>                                      <C>               <C>               <C>             <C>                <C>
Balance at formation
   (November 17, 1999)                          --                --         $      --        $      --         $      --
Sale of common stock
   (at $0.0001 - $0.10 per share)          485,000                49             3,501               --             3,550
Deficit for the period from
   November 17, 1999
   (Date of formation) through
   December 31, 1999                            --                --                --           (5,831)           (5,831)
                                         ---------         ---------         ---------       ----------         ---------
Balance, December 31, 1999                 485,000                49             3,501           (5,831)           (2,281)
Sale of common stock
   (at $0.10 per share)                     72,000                 7             7,193                              7,200
Net (loss)                                                                                      (32,986)          (32,986)
                                         ---------         ---------         ---------       ----------         ---------

Balance, December 31, 2000                 557,000                56            10,694          (38,817)          (28,067)
Forgiveness of debt to former
   shareholder                                  --                --            37,528               --            37,528
Net (loss)                                      --                --                --         (175,690)         (175,690)
                                         ---------         ---------         ---------       ----------         ---------

Balance, December 31, 2001                 557,000                56            48,222         (214,507)         (166,229)
Sale of common stock
  (at $0.10per share)                      300,000                30            29,970               --            30,000
Forgiveness of debt by former                   --                --                --
   shareholder                                  --                --            17,500                             17,500
Contribution of note receivable
   in connection with termination               --                --                                 --
   agreement                                                                   208,630                            208,630
Net (loss)                                                                                     (325,384)         (325,384)
                                         ---------         ---------         ---------       ----------         ---------

Balance, December 31, 2002                 857,000                86           304,322         (539,891)         (235,483)
</TABLE>

                       See notes to financial statements.

                                      -5-

<PAGE>

                       DELTA MUTUAL, INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                     STATEMENTS OF STOCKHOLDERS' DEFICIENCY

<TABLE>
<CAPTION>
                                                                                                 Deficit
                                              Number of                                         Accumulated
                                               Common           Common           Paid in    During Development
                                               Shares           Stock            Capital           Stage            Total
                                             -----------      -----------      -----------      -----------      -----------
<S>                                          <C>              <C>              <C>              <C>              <C>
Issuance of common stock
   for interest
   (valued at $0.275 - $0.30 per share)          100,000               10           28,740               --           28,750

Issuance of common stock
   for services
   (valued at $0.09 - $0.50 per share)           950,000               95          244,499               --          244,594

Issuance of common stock in lieu
   of payment of officer loan
   (valued at $0.33 per share)                   280,000               28           93,597               --           93,625

Sale of common stock
   (at $0.13 - $0.50 per share)                  450,000               45          112,455               --          112,500

Issuance of common stock for
   investment in joint venture
   (valued at $0.15 per share)                    50,000                5            7,495               --            7,500

Issuance of common stock
   for debt
   (valued at $0.10 - $0.693
   per share                                     520,000               52          127,074               --          127,126

Stock split February 24, 2003
   (five for one)                              4,708,050              471             (471)              --               --

Issuance of common stock
   for license agreement
   (valued at $0.14 per share)                   288,638               28           39,972                            40,000

Issuance of common stock
   for promissory note
   (valued at $0.31 per share)                   800,000               80          249,920               --          250,000

Issuance of common stock awards from the
   Company's stock option plan
   (valued at $.07 per share)                    358,000               36           23,964               --           24,000

Net (loss)                                                                                       (1,249,509)      (1,249,509)
                                             -----------      -----------      -----------      -----------      -----------
Balance, December 31, 2003                     9,361,688      $       936      $ 1,231,567      $(1,789,400)     $  (556,897)
                                             ===========      ===========      ===========      ===========      ===========
</TABLE>

                       See notes to financial statements.

                                      -6-
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                              Period
                                                                                         November 17, 1999
                                                      Years Ended December 31,          (Date of Formation)
                                                  -------------------------------             through
                                                      2003               2002            December 31, 2003
                                                  -----------         -----------        -----------------
<S>                                               <C>                 <C>                <C>
Cash flows from operating activities:
   Net loss                                       $(1,249,509)        $  (325,384)        $(1,789,400)
   Adjustments to reconcile net loss to
    net cash used in operating activities:
   Depreciation                                         1,759                  --               1,759
   Non-cash compensation                              337,344              89,669             427,012
   Bad debt                                                --              96,625              96,625
   Changes in operating assets
   and liabilities                                    429,666              87,820             440,357
                                                  -----------         -----------         -----------
Net cash used in operating activities                (480,740)            (51,270)           (823,647)
                                                  -----------         -----------         -----------

Cash flows from investing activities:
   Purchase of fixed assets                           (33,992)                 --             (33,992)
   Minority interest                                      150                  --                 150
   Advances to joint ventures                        (115,100)                 --            (115,100)
   Advances to ESI                                         --             (30,000)                 --
                                                  -----------         -----------         -----------
Net cash used in
    investing activities                             (148,942)            (30,000)           (148,942)
                                                  -----------         -----------         -----------

Cash flows from financing activities:
   Proceeds from sale of common stock                 112,500              30,000             153,250
   Proceeds from loan                                      --                  --             540,744
   Repayment of loan                                       --                  --            (540,744)
   Proceeds from former officer
     and stockholder                                  515,383              17,500             570,411
   Repayment for former officer
     and stockholder                                 (109,015)                 --            (109,015)
   Proceeds from related party                        187,000                  --             187,000
   Repayment to related parties                       (65,000)                 --             (65,000)
   Proceeds from convertible debt                          --                  --             250,000
                                                  -----------         -----------         -----------

   Net cash provided by
     financing activities                             640,868              47,500             986,646
                                                  -----------         -----------         -----------

   Net increase (decrease) in cash                     11,186             (33,770)             14,057
   Cash - Beginning of year                             2,871              36,641                  --
                                                  -----------         -----------         -----------
   Cash - End of year                             $    14,057         $     2,871         $    14,057
                                                  ===========         ===========         ===========
</TABLE>

                       See notes to financial statements.

                                      -7-
<PAGE>

                       DELTA MUTUAL INC. AND SUBSIDIARIES
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF CASH FLOWS
                                   (Continued)

<TABLE>
<CAPTION>
                                                                                                     Period
                                                                                                November 17, 1999
                                                                  Years Ended December 31,     (Date of Formation)
                                                               ----------------------------          through
                                                                  2003              2002        December 31, 2003
                                                                ---------         ---------     -----------------
<S>                                                             <C>               <C>           <C>
Supplementary information:
  Cash paid during year for:
     Interest                                                   $      --         $      --
                                                                =========         =========
     Income taxes                                               $      --         $      --
                                                                =========         =========
Changes in operating assets and liabilities consists of:
 (Increase) decrease  in prepaid expenses                          (3,962)            8,000           (3,962)
  Increase in other assets                                           (650)               --             (650)
  Increase in accounts payable
     and accrued expenses                                         434,278            79,820          444,969
                                                                ---------         ---------        ---------
                                                                $ 429,666         $  87,820        $ 440,357
                                                                =========         =========        =========

Non-cash financing activities:

Issuance of common stock for
 promissory note                                                $ 250,000         $ 208,630        $ 458,630
                                                                =========         =========        =========

Offset of note receivable and convertible
   debt in connection with termination
   agreement                                                    $      --         $ 253,630        $ 253,630
                                                                =========         =========        =========

Forgiveness of debt to former
  shareholders                                                  $      --         $  17,500        $ 398,653
                                                                =========         =========        =========

Offset of note receivable to
  liquidate loan to officer                                     $ 350,000         $      --        $ 350,000
                                                                =========         =========        =========

Issuance of common stock for debt                               $ 127,126         $      --        $ 414,497
                                                                =========         =========        =========

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

Issuance of common stock in lieu of
   payment of accrued expenses                                  $  93,625         $      --        $  93,625
                                                                =========         =========        =========
</TABLE>

                       See notes to financial statements.

                                      -8-
<PAGE>

                                DELTA MUTUAL INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis Of Presentation

         The Company's financial statements for the year ended December 31, 2003
have been prepared on a going concern basis which contemplates the realization
of assets and settlement of liabilities and commitments in the normal course of
business. Management recognizes that the Company's continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and the commencement of its planned principal
operations. At December 31, 2003 operations had not yet commenced and no revenue
has been derived; accordingly the Company is considered a development stage
enterprise. There is no assurance the Company will achieve a profitable level of
operations.

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

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

Organization

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


                                      -9-
<PAGE>


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

         From inception through December 31, 2003, the Company raised a limited
amount of capital through the sale of common stock: during the period from
inception through December 31, 2001, it raised $10,750 through such private
placements, and raised $30,000 in December, 2002 and raised $112,500 in 2003
through investments. These funds were not sufficient to capitalize any of the
Company's business plans.

         Prior Operations

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

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

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


                                      -10-

<PAGE>


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

         Change of Control

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

Business Plan

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

Puerto Rico

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

Middle East, Africa and Far East

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

Central and Eastern Europe

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


                                      -11-


<PAGE>


United States

         The U.S. Government has scheduled a program for disposal of specific
military related waste products that require not only specialized disposal
facilities, but also state of the art identification and tracking systems. The
disposal requirement is the outcome of a number of weapons destruction treaties
that are currently in effect. The Company had planned to establish a joint
venture to address this very specific market during the fourth quarter of 2003.
However, this was not accomplished and the joint venture has not been formed.

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

PRINCIPLES OF CONSOLIDATION

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

INVESTMENTS

     The Company has investments of less than 20% in associated companies that
are accounted for under the equity method and are included in Investment in
Joint Ventures on the Company's balance sheet at December 31, 2003. Investments
in associated companies where the Company has a controlling interest are
consolidated with the Company's operations unless otherwise disclosed.

USE OF ESTIMATES

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

LOSS PER SHARE

         Basic and diluted loss per common share is computed by dividing net
loss by the weighted average number of common shares outstanding during the
year. Potential common shares are excluded from the loss per share calculation,
because the effect would be antidilutive. Potential common shares relate to the
convertible debt. There were no potential common shares outstanding as of
December 31, 2003 and 2002.


                                      -12-

<PAGE>


EVALUATION OF LONG-LIVED ASSETS

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

DEPRECIATION AND AMORTIZATION

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

STOCK OPTION PLAN

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

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

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

         The Company is also authorized to make stock awards to its employees
from the Plan. The Company has adopted the expense provisions of SFAS No. 123 in
the issuance of stock awards. Stock awards are expensed at the time of issuance
as the common stock issued has no restrictions to the employees. The Company
issued stock awards to four employees totaling 358,000 shares from the Plan. The
shares were issued at fair market value for past compensation due to the
employees. The Company recorded compensation expense of $24,000 and is included
in the Company's statement of operations for the year ended December 31, 2003.


                                      -13-

<PAGE>


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 years ended
December 31, 2003 and 2002 the Company issued 950,000 and -0- common shares,
respectively, and recorded compensation expense of $244,594 and $-0-,
respectively, in connection with the issuance of these shares.

INCOME TAXES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

RECLASSIFICATIONS

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

NEW FINANCIAL ACCOUNTING STANDARDS

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


                                      -14-

<PAGE>

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

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

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

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


                                      -15-

<PAGE>


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

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

2.       PROPERTY AND EQUIPMENT

     Property and equipment consists of:


                                                 December 31,
                                                    2003
                                                    ----

                     Equipment                     $   985
                     Leasehold improvements          7,807
                     Deposit on land                25,200
                                                   -------
                                                    33,992

                     Less accumulated
                       depreciation                  1,759
                                                   -------
                                                   $32,233
                                                   =======


         Depreciation expense for the years ended December 31, 2003 and 2002
amounted to $1,759 and $-0-, respectively.

3.       DUE FROM CEVA INTERNATIONAL INC.

         On June 17, 2003, the Company and Dr. Louis Rose entered into an
agreement whereby Dr. Rose assigned all of his rights, title and interest in a
promissory note from CEVA International, Inc. ("CEVA") in the amount of $250,000
to the Company in exchange for an aggregate of 800,000 shares of the Company's
common stock. The note was guaranteed by Gary Robinson, formerly the Company's
largest shareholder. CEVA did not pay the note and the Company exercised its
right against the guarantor by reducing the amount owed on the revolving line of
credit with Gary Robinson in the amount of $250,000. See Note 6 of Notes to
Consolidated Financial Statements.


                                      -16-

<PAGE>


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
         majority owner of a limited partnership, Delta Development Partners,
         LP, that holds the majority share of Delta Developers Corp, a Puerto
         Rico corporation, formed to manage the construction and related
         activities required to build approximately 270 low income homes under
         Section 124. The operations of the joint venture have been consolidated
         with the Company for the year ended December 31, 2003.

         From January 12, 2004 through March 26, 2004, Neil Berman, an investor,
         purchased a 25% interest in Delta Development Partners, LP for
         $148,000.

b)       On March 18, 2003, the Company entered into a letter of intent with
         Hi-Tech Consulting and Construction, Inc. ("Hi-Tech") to form a joint
         venture to provide environmental technology services primarily to
         markets in the Middle East and Africa. The joint venture company, named
         Delta-Envirotech, Inc., is based in Virginia and focuses on
         participating in foreign government sponsored pollution remediation
         projects. The joint venture agreement was concluded May 15, 2003 and
         Delta-Envirotech, Inc., a Delaware corporation, was formed. As of
         December 31, 2003 the Company expensed $35,000 that was advanced to the
         joint venture and is included in the Company's statement of operations
         for the year ended December 31, 2003. The operations for the joint
         venture for 2003 were minimal and have not been consolidated with the
         Company's financial statements. In 2004, the Company was unable to make
         payments due per the agreement but Hi-Tech has indefinitely extended
         the date of the payments. On January 14, 2004, Delta and Hi-Tech agreed
         to each sell 75 shares of the joint venture to Ali Razmara,
         representing a ten (10%) percent interest, for $2.

         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.

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


                                      -17-

<PAGE>


d)       On February 28, 2003, the Company entered into a letter of Intent with
         CEVA International, Inc., a company whose primary business is to
         provide environmental services and technologies to public and private
         entities in Central and Eastern Europe. After the period within which
         the companies had agreed to cooperate with each other in the
         performance of due diligence investigations aimed at the opportunity to
         purchase certain assets, licenses and/or permits, the Company decided
         not to pursue this opportunity. As stipulated in the Letter of Intent,
         the Company exercised the option to terminate the activities.

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

5.       ACCRUED EXPENSES

     Accrued expenses consist of the following:

                                               December 31,
                                                   2003
                                               ------------
                      Professional fees          $ 20,000
                      Consulting fees              61,500
                      Interest expense             10,598
                      Payroll expense             158,224
                      Payroll tax expense          14,964
                                                 --------

                                                 $265,286
                                                 ========



6.       LOAN FROM FORMER OFFICER

During 2003, the Company entered into a revolving credit agreement with Gary
Robinson ("Robinson"), the former Chairman and Chief Executive Officer of the
Company, in the amount of $300,000. The credit agreement bears interest at the
prime rate (4% at December 31, 2003). Robinson advanced the Company $515,383 and
the Company repaid Robinson $109,015 during 2003.

Robinson was a guarantor on note receivable due the Company from CEVA. See Note
3 of Notes to Consolidated Financial Statements. CEVA did not pay the note and
the Company exercised its right by reducing the amount owed on the revolving
line of credit with Robinson in the amount of $250,000.


                                      -18-

<PAGE>


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

The amount due Robinson at December 31, 2003 was $56,364. The Company recorded
interest expense of $7,968 for the year ended December 31, 2003 and $7,968 for
the period November 17, 1999 (date of formation) through December 31, 2003.

7.    LOANS TO RELATED PARTIES

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

      The Company did not pay the outstanding balance on the maturity date and
      was required to pay monthly interest of one (1%) percent to Pisani. On
      April 7, 2003, the Company repaid Pisani $5,000 against the outstanding
      balance. The balance due Pisani at December 31, 2003 was $10,000. In May
      2003, the note was amended. Subsequently, a dispute arose between the
      parties about the validity of the amendment.

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

      The Company recorded interest expense of $1,500 for the year ended
      December 31, 2003 and $1,500 for the period November 17, 1999 (date of
      formation) through December 31, 2003.

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

      The Company did not pay the outstanding balance on the maturity date and
      the amount of $12,000 was due as of December 31, 2003. In accordance with
      the agreement the Company must pay monthly interest of one (1%) to Fasci.
      The Company recorded interest expense in the amount of $840 and $840 for
      the year ended December 31, 2003, and November 17, 1999 (date of
      formation) through December 31, 2003. On February 27, 2004 the Company
      issued 140,000 common shares in repayment of the loan plus interest and
      penalty amounting to $18,705.


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<PAGE>

c.    On October 17, 2003 the Company borrowed $60,000 from Mitchell Rosenthal,
      a shareholder of the Company, with interest at six (6%) percent per annum.
      The note was repaid in December 2003. The Company recorded interest
      expense of $156 for the year ended December 31, 2003 and for the period
      November 17, 1999 (date of formation) through December 31, 2003.

d.    On December 30, 2003 the Company borrowed $50,000 from Edward Tuccio, a
      shareholder of the Company. The note is due December 29, 2004, interest at
      6 (6%) per annum. No interest expense was recorded for the year ended
      December 31, 2003.

e.    On December 11, 2003 the Company borrowed $50,000 from Neil Jones, a
      shareholder of the Company. The note is due December 16, 2004 with
      interest at six (6%) per annum. The Company recorded interest expense of
      $132 for the year ended December 31, 2003 and for the period November 17,
      1999 (date of formation) through December 31, 2003.

8.       STOCKHOLDER'S DEFICIENCY

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

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

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

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

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

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


                                      -20-

<PAGE>

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

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

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

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

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

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

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

n.    On June 30, and July 23, 2003, the Company and Michael Kahn, entered into
      an agreements to compensate him for past services rendered to the Company
      in the amount of $15,000 and $15,000 respectively. The Company issued
      74,000 shares of the Company stock in full payment of this debt.

o.    On June 30 and July 23, 2003, the Company and Jeffrey Miller, entered into
      an agreements to compensate him for past services rendered to the Company
      in the amount of $1,500 and $1,500, respectively. The Company issued 6,000
      shares of the Company stock in full payment of this debt.


                                      -21-

<PAGE>

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

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

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

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

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

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

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

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

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

9.       INCOME TAXES

         At December 31, 2003, the Company has net operating loss carryforwards
of approximately $1,789,400 for financial reporting and for tax purposes, which
expire in various years through 2004. The difference between financial and tax
purposes results from temporary differences caused by capitalization of start-up
expenditures as required by Internal Revenue Code Section 195.

         The utilization of the net loss carryforward may be limited as a result
of cumulative changes in the Company's stock ownership.


                                      -22-

<PAGE>

         Deferred income taxes reflect the impact of net operating loss
carryforwards. In recognition of the uncertainty regarding the ultimate amount
of income tax benefits to be derived from the Company's net operating loss
carryforwards, the Company has recorded a valuation allowance for the entire
amount of the deferred tax asset. The deferred income tax asset is comprised of
the following at December 31, 2003 and 2002:


                                                    December 31,
                                               2003              2002
                                               ----              ----
       Gross deferred tax asset             $ 608,000         $ 184,000
        resulting from net operating
        loss carryforward
       Valuation allowance                   (608,000)         (184,000)
                                            ---------         ---------
       Net deferred income tax asset        $      --         $      --
                                            =========         =========


         The reconciliation of the effective income tax rate to the federal
statutory rate is as follows:


                                            For the Year Ended
                                                December 31,
                                         2003               2002
                                         ----               ----

Federal income tax rate                    34%                 34%

Valuation allowance on net
 operating loss carryforward              (34)%               (34)%
                                        -----               -----

Effective income tax rate                  --%                 --%
                                        =====               =====


10.      STOCK OPTION PLAN

In December 2001, the Company's Board of Directors approved the 2001 Employee
Stock Option Plan (the "Plan"). The Plan authorizes the Board of Directors to
grant, over a ten year period, options to purchase up to 2,000,000 shares of the
Company's common stock. On February 1, 2003, the Company registered the
2,000,000 shares. The purchase price per share may not be less than 100% of the
fair market value of the Company's common stock at the date of grant. Options
granted under the Plan maybe in the form of incentive stock options or
non-qualified stock options which do not meet the criteria for incentive stock
options under Section 122 of the Internal Revenue Code. Compensation expense,
representing the difference between the exercise price and the fair market price
at the date of grant, is recognized in the year of grant. No options were
granted for the years ended December 31, 2003 and 2002.

The term of each option cannot be more than 10 years from the date of grant, and
options can be exercised only during the participant's employment with the
Company. The options vest immediately on the date of grant.


                                      -23-


<PAGE>

On December 1, 2003, the Plan was amended to give the Board of Directors the
power to issue a restricted stock award to an employee representing shares of
common stock that are issued subject to such restrictions on transfer and other
incidents of ownership and such forfeiture conditions as the Board may determine
("Restricted Shares"). In connection with issuance of any Restricted Shares, the
Board may (but shall not be obligated to) require the payment of a specified
purchase price (which price may be less than Fair Market Value as defined in the
Plan).

The Plan also authorizes the Board of Directors to grant and issue stock awards
to employees of the Company. The Board of Directors may (but shall not be
obligated to) require the stock award to be at a specified price (which price
may be less than fair market value). On December 11, 2003, the Board of
Directors granted and issued 358,000 shares as stock awards to four employees
for past compensation. The stock award totaled $24,000 (issued at $.067 per
share), the market price of the Company's common stock at the date of grant and
issuance. The compensation expense is included in the Company's statement of
operations for the year ending December 31, 2003.

A summary of the status of the Company's options and stock awards under the Plan
as of December 31, 2003, and changes during the year then ended, is presented
below:


                                                       2003
                                        ---------------------------------
                                                             Weighted-
                                                              Average
                                                              Exercise
                                             Shares            Price
                                        ----------------    -------------
Options out-
          standing, begin-
          ning of year                           --         $       --
        Options granted                          --         $       --
        Options exercised                        --         $       --
        Stock awards granted                358,000         $    0.067
        Stock awards issued                (358,000)        $   (0.067)
        Options cancelled/expired                --         $       --
                                        ---------------
        Options out-
          standing, end
          of year                                --         $       --
                                        ===============
        Options price
          range at end
          of year
        Options price
          range for
          exercised
          shares                                 --
        Options available
          for grant at end
          of year                         1,642,000
        Weighted-
          average fair
          value of options
          granted during
          the year


                                      -24-
<PAGE>

9.       COMMITMENTS AND CONTINGENCIES

a.    Executive Employment Agreement

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

b.    License Agreements

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

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

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

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

As of December 31, 2003, the Company expensed the $40,000 in connection with the
terminated license agreement and the expense included in the Company's statement
of operations.


                                      -25-


<PAGE>

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

c.    Financing Agreement

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

d.    Investor Relations Agreement

      On November 6, 2001 the Company entered into an agreement with Direct
Development Group, LLC ("Direct") for a period of four months, as its investor
relations and strategic communication consultant. Direct received a fee of
$8,000 for each of the years ended December 31, 2002 and 2001.

e.    Leases

      The Company entered in to a lease March 1, 2003 for a business office
space. The lease will require the Company to pay certain executory costs (such
as insurance and maintenance).

      Future minimum lease payments for the operating lease is as follows:


                          Years Ending
                          December 31
                          -----------
                              2004        $ 7,800
                              2005          7,800
                              2006          1,300
                              2007             --
                                          -------
                                           16,900
                                          =======


      The rent expense for 2003 was $6,662. There was no rent expense for the
year ended December 31, 2002.

10.   Subsequent Events

In January and February 2004, the Company sold 1,100,000 shares of restricted
common stock for $137,500, valued at $.13 per share, which was below the fair
market value at the time of issuance.


                                      -26-