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,
                  2007.





o
            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.
                Employerincorporation
                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 xNo
o





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. x





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





Issuer's
      revenue for its fiscal year ended December 31, 2007: $ -0-





Aggregate
      market value of the voting and non-voting common shares held by non-affiliates
      of the registrant as of April 9, 2008: $5,379,436 (See Item 5)





Number
      of
      shares outstanding of registrant's Common Stock, par value $.0001, as of April
      9, 2008: 219,807,273 shares of Common Stock (See Item 11)





Documents
      incorporated by reference: NONE





Transitional
      Small Business Disclosure Format (check one): Yes o 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 2007, 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; and
        (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., and, as the context requires, its consolidated
        subsidiaries.




GENERAL




We
      were
      incorporated under the name Delta Mutual, Inc. on November 17, 1999, in the
      State of Delaware with the purpose of providing mortgage services through the
      Internet. Since current management joined the Company in 2003, we have
      established business operations focused on providing environmental and
      construction technologies and services to specific geographic reporting segments
      in the Far East, the Middle East, and the United States.





Our
      offices are located at 111 North Branch Street, Sellersville, PA 18960. Our
      telephone number is (215) 258-2800. Our common stock is quoted on the
      Over-the-Counter Electronic Bulletin Board under the symbol "DLTM.OB".


2


Recent
      Developments





Effective
      March 4, 2008, we entered into a Membership Interest Purchase Agreement (the
      “Agreement”) with Egani, Inc., an Arizona corporation (“Egani”), providing for
      the acquisition by the Company from Egani 100% of the issued and outstanding
      membership interests held by it in Altony SA, an Uruguay Sociedad Anonima
      (“Altony”), which owns 100% of the issued and outstanding membership interests
      in South American Hedge Fund LLC, a Delaware limited liability company
      (sometimes herein referred to as “SAHF”). At a closing held on March 4, 2008,
      pursuant to the Agreement we acquired from Egani 100% of the issued and
      outstanding membership interests held by it in Altony which owns 100% of the
      issued and outstanding membership interests in SAHF, in exchange for our
      issuance of 130,000,000 shares of our common stock. **** SAHF
      is
      seeking investments in South America. In addition, following this acquisition,
      management intends that the Company continue to pursue business opportunities
      in
      the Middle East related to environmental remediation and other projects.





The
      stockholders of Egani, Inc. are Daniel R. Peralta and Monica Laura Gallo,
      husband and wife, each a beneficial owner of 65,000,000 million shares of our
      common stock. Based on the number of our outstanding voting securities as of
      April 9, 2008, each of Mr. Peralta and Ms. Gallo own beneficially approximately
      29.67% of our issued and outstanding shares of common stock. It is the intention
      of the two controlling stockholders of Egani, Inc. to designate


a
      majority of our directors.





Business
      Plan




We
      have
      acquired South American Hedge Fund LLC, a limited liability company that intends
      to make investments in South America.





The
      Company has established a wholly-owned subsidiary and a joint venture
      subsidiary, primarily to establish business operations focused on providing
      environmental and construction technologies and services in the Far East, the
      Middle East and the United States. As of the close of the quarterly period
      ended
      September 30, 2007, we terminated all operations in Puerto Rico because the
      limited partner in our Tao Alta low-income housing project elected not to
      proceed with the project redesigned for moderate income housing.





Following
      the acquisition of South American Hedge Fund LLC, management intends that the
      Company continue to pursue business opportunities in the Middle East related
      to
      environmental remediation and other projects. Our environmental remediation
      operations are carried out through Delta-Envirotech, Inc., a joint venture
      company formed in January 2004, with Hi Tech Consulting and Construction, Inc.,
      to provide environmental technology and other services for certain business
      segments located in the Far East and the Middle East. We have operating control
      of, and a forty-five percent ownership interest in, Delta-Envirotech. We have
      entered into strategic alliance agreements with several United States-based
      entities with technologies and products in the environmental field to support
      the Company's worldwide activities.





Our
      construction technology ( *Delta* Wall)
      activities are carried out by Delta Technologies, Inc. (our wholly owned
      subsidiary), and focused on the United States construction industry but are
      equally well suited for use internationally. The Company intends to license
      the
      products and seek cooperative projects with respect to our construction
      technology.





South
      America





On
      March
      4, 2008, we acquired South American Hedge Fund LLC, which is seeking investments
      in South America.





Far
      East
      (Indonesia)





In
      Indonesia, we formed a local joint venture company to commence energy and waste
      recovery operations. The joint venture company, PT Triyudha-Envirotech, began
      operations in December 2005, pursuant to a contract with Pertamina, the
      government owned oil company. The initial contract that required us to process
      3,000 metric tons of oil sludge was successfully completed in October 2006.





In
      January 2007, we began negotiating a second contract to process oil sludge
      over
      a 12-month period at the same refinery. After delays in the contract
      negotiations, Pertamina, as required by law, issued an invitation for bids
      for
      oil sludge treatment in February 2008. We are now proceeding to submit our
      bid.


3


Middle
      East





In
      2004,
      our environmental remediation joint venture, Delta-Envirotech, Inc.
      ("Envirotech"), entered into a strategic alliance agreement with ZAFF
      International, Ltd. to jointly
      pursue environmental and other projects in the Middle East.





On
      March
      8, 2007, Envirotech received a purchase agreement to supply the equipment and
      services for a factory to manufacture insulating concrete form (ICF) products
      in
      Saudi Arabia. This is our first contract in Saudi Arabia and our largest to
      date, valued at $3,369,000. The equipment specified in the agreement consists
      of
      several ICF technologies including the machinery that produces our *Delta
      Wall* system.
      The agreement requires payment by letter of credit. The purchaser has
      conditioned the opening of the letter of credit on receipt of an award of a
      proposed housing project that is in technical review.  We
      anticipate this technical review to be concluded during the second quarter.





The
      gas-imaging product, which detects and visualizes harmful gasses produced by
      oilfield and refinery operations, for which Envirotech holds the exclusive
      Middle East distribution rights, has been approved for testing. The U.S. office
      of ARAMCO is arranging an on-site inspection at an existing installation prior
      to ordering test units.





Over
      the
      past 18 months, Envirotech has been working with the operators of oil sludge
      processing facilities in Bahrain and Kuwait to improve the processing technology
      currently in use. A test unit was put into operation in Ras Tanura, Saudi
      Arabia, to process oil sludge from Bahrain and ARAMCO. The test results showed
      good separation of the sediment from the oil sludge. A detailed technical
      proposal and a draft processing contract have been prepared and forwarded by
      Envirotech to the operator of the Bahrain facility.





Saudi
      Arabia has a network of farms that produce fruit, grains and cattle feed. During
      the second half of 2007, Envirotech, as a distributor, has introduced an organic
      supplement, designed to increase crop yield, to one of the major Saudi farming
      operations, which has placed an initial order for field trials.





United
      States





In
      August
      2005, Delta Technologies, Inc. acquired certain intellectual property and filed
      a patent application for a new insulating concrete wall forming (ICF) system,
      the technology on which our *Delta
      Wall* product
      is based.





Production
      of the *Delta
      Wall* blocks
      began in September 2006. An independent testing laboratory was hired in January
      2007 to evaluate the blocks for the purpose of applying for International
      Commercial Code (ICC) approval. The testing laboratory has issued its interim
      report. The data in the interim report provided the information necessary to
      begin the required engineering studies.





COMPETITION




Until
      we
      have successfully obtained the full amount of debt or equity financing required
      to fund our projected business operations, it is difficult to compete with
      large, well-capitalized companies for governmental or private sector
      environmental remediation contracts. Many of these contracts require significant
      up-front expenditures on behalf of the firm awarded the contract.




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
      building material companies in our target marketplaces that will continue to
      retain their dominance and competitive advantages over us.





Our *Delta
      Wall* product
      faces competition from established companies and various technologies that
      have
      been used in the construction industry for many years.


4


EMPLOYEES




Currently,
      we have three employees: Peter F. Russo, President and Chief Executive Officer;
      Martin G. Chilek, Senior Vice President and Chief Financial Officer; and Judith
      M. Dallas, Director, Administration.




RISK
      FACTORS




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




WE
      HAVE
      NOT OPERATED PROFITABLY SINCE INCEPTION, AND WE EXPECT TO INCUR LOSSES IN
      THE
      FUTURE. WE WILL BE REQUIRED TO RAISE ADDITIONAL CAPITAL.




Our
      operations have only generated limited revenue and they are not profitable.
      We
      have incurred net operating losses from the formation of our company through
      December 31, 2007, of $11,082,853.
      Our failure to achieve or maintain profitability may materially and adversely
      affect the future value of our common stock.




We
      will
      have to obtain 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 building material
      businesses, and market these services and products successfully.




WE
      HAVE
      BEEN THE SUBJECT OF 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 opinion,
      issued in connection with our consolidated 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 consolidated
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.





INVESTMENTS
      MADE BY OUR SUBSIDIARY SOUTH AMERICAN HEDGE FUND LLC MAY NOT BE
      PROFITABLE.





The
      success of our South American investment plan of operation, if we complete
      one
      or more investments, will depend to a great extent on the operations, financial
      condition and management of companies acquired or that we invest in. In the
      event we complete one or more investments, the success of our operations may
      be
      dependent upon management of the operations in which the investment is made
      and
      numerous other factors beyond our control.





SCARCITY
      OF AND COMPETITION FOR INVESTMENT OPPORTUNITIES.





We
      are
      and will continue to be an insignificant participant in the business of seeking
      investments in South America. A large number of established and well-financed
      entities, including venture capital firms, hedge funds and corporate investors,
      are active in investments in companies that may be desirable target candidates
      for us. Nearly all such entities have significantly greater financial resources,
      technical expertise and managerial capabilities than us and, consequently,
      we
      will be at a competitive disadvantage in identifying possible investments and
      successfully completing an investment.





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 environmental regulations by foreign governments. 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.


5


OUR
      BUSINESS IS SUBJECT TO RISKS ASSOCIATED WITH OUR OFFSHORE OPERATIONS.





We
      have
      engaged in energy and waste recovery operations in Indonesia for the processing
      of oil sludge from refineries. We have received all environmental approvals
      necessary to operate the permanent processing installation. Adverse changes
      in
      governmental permits, approvals, laws or regulations in Indonesia could harm
      our
      business, as could our failure to receive from Pertamina further contracts
      for
      processing sludge in our processing facility.





OUR
      INTERNATIONAL OPERATIONS EXPOSE US TO POLITICAL, ECONOMIC AND CURRENCY
      RISKS.





With
      regard to our operations outside of the United States, we are subject to the
      risks of doing business abroad, including,





·
                Currency
                    fluctuations;


·
                      Changes
                          in tariffs and taxes;
                          and


·
                      Political
                          and economic
                          instability.




Changes
      in currency exchange rates may affect the relative costs at which we are able
      to
      process sludge in Indonesia, and may affect the cost of certain items required
      in our processing operation, thus possibly adversely affecting our
      profitability.





There
      are
      inherent risks for the foreseeable future of conducting business
      internationally. Language barriers, foreign laws and tariff and taxation issues
      all have a potential negative effect on our ability to transact business.
      Changes in tariffs or taxes applicable to our joint venture in Indonesia may
      adversely affect its profitability. Political instability may increase the
      difficulties and costs of doing business. We may be subject to the jurisdiction
      of the government and/or private litigants in foreign countries where we
      transact business, and may be forced to expend funds to contest legal matters
      in
      those countries in disputes with those governments or with customers or
      suppliers.





AS
      A
      SUPPLIER OF BUILDING PRODUCTS WE FACE ECONOMIC AND TECHNOLOGY
      RISKS.





The
      market for suppliers of building materials is very competitive. Our success
      as a
      supplier of building materials will be subject to many factors that are beyond
      our control including, among others, our successful marketing of our products
      to
      construction firms in the various regions where we would operate, general
      economic conditions in the construction industry and real estate market
      conditions, technological developments by competitors, the availability and
      cost
      of borrowed funds, government building codes and regulations, and compliance
      with and potential liability under environmental and other laws.





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. Company management anticipates that
      any
      earnings generated from our operations would be used to finance our working
      capital requirements, to develop services and products and for marketing. For
      the foreseeable future, cash dividends will not be paid to holders of our common
      stock.




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 certain utilities serving the premises.
      Our current lease was for an initial term of one year from March 1, 2006 to
      February 28, 2007, with additional twelve- month renewal periods. The second
      twelve-month renewal period began on March 1, 2008. We anticipate that our
      current office space will accommodate our operations for the foreseeable future.
      We leased an apartment in San Juan, Puerto Rico of approximately 650 square
      feet
      for a monthly rental of $750. That lease expired on March 31, 2006 and was
      not
      renewed. We also lease office space in Saudi Arabia on a month-to-month
      basis.


6


ITEM
      3.
      LEGAL PROCEEDINGS.




None.





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
            
            Low2006:
            
            
            1st
                Quarter
            
            
            0.32
            
            
            0.102nd
                Quarter
            
            
            0.12
            
            
            0.063rd
                Quarter
            
            
            0.45
            
            
            0.104th
                Quarter
            
            
            0.25
            
            
            0.102007:
            
            
            1stQuarter
            
            
            0.16
            
            
            0.042ndQuarter
            
            
            0.12
            
            
            0.043rdQuarter
            
            
            0.08
            
            
            0.044thQuarter
            
            
            0.06
            
            
            0.022008:
            
            
            1stQuarter
            
            
            0.07
            
            
            0.01




During
        the last two fiscal years, no cash dividends have been declared on Delta's
        common stock and Company management does not anticipate that dividends will
        be
        paid in the foreseeable future. As of March 31, 2008, there were 77 record
        holders of our common stock.


7




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, 2007.




(a)
              
              (b)
              
              (c)Plan category
              
              Number of securities to be
                issued upon exercise of
                outstanding options,
                warrants and rights
              
              Weighted-average exercise
                price of outstanding
                options, warrants and
                rights
              
              Number of securities
                remaining available for
                future issuance under
                equity compensation plans
                (excluding securities
                reflected in column (a))Equity compensation plans approved
                  by security holders
              
              
              7,978,000
              
              $
              0.11
              
              
              2,022,000Equity
                  compensation plans not approved by security holdersTotal
              
              
              7,978,000
              
              $
              0.11
              
              
              2,022,000




RECENT
      SALES OF UNREGISTERED SECURITIES





These
      sales were not previously included on the Company’s quarterly reports on Form
      10-QSB or in a current report on Form 8-K.


Date
              
              Title and Amount
              
              Purchasers
              
              Principal
                Underwriter
              
              Total Offering
                Price/Underwriting
                DiscountsFebruary 15,
                  2005
              
              45,000
                  shares of common stock
              
              Consultant
              
              NA
              
              $19,125/NADecember
                  12, 2005
              
              45,000
                  shares of common stock
              
              Consultant
              
              NA
              
              $12,870/NANovember
                  14, 2006
              
              335,000
                  shares of common stock
              
              Consultant
              
              NA
              
              $50,250/NADecember
                  15, 2006
              
              1,120,000
                  shares of common stock issued upon conversion of a promissory note
                  in
                  principal amount of $50,000 (including accrued interest)
              
              Private
                  Investor
              
              NA
              
              $56,000/NA




The
      issuances of common stock to consultants are viewed as exempt from registration
      under the Securities Act of 1933, as amended (“Securities Act”), under section
      4(2) thereof, as transactions not involving any public offering. The private
      placements of the Company’s common stock and the offerings of notes, convertible
      notes and common stock warrants to U.S. investors, are viewed as exempt under
      the provisions of Rule 506 of Regulation D under the Securities Act.





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




The
      following discussion of our consolidated financial condition and results of
      operations should be read in conjunction with the consolidated 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 will require
      additional capital to execute our current and planned business operations.


8


RESULTS
      OF OPERATIONS




During
      the fiscal year ended December 31, 2007, we incurred a net loss of $2,220,349,
      because we had no revenue to offset operating expenses. The loss in fiscal
      2007
      was primarily attributable to general and administrative expenses of
      approximately $2,213,000 that included compensatory element of stock options
      in
      the amount of $786,980. In addition, we incurred a $25,000 impairment of long
      term asset. From inception (November 17, 1999) to December 31, 2007, we had
      a
      net loss of $11,082,853 **.** The
      Independent Auditors' Report and Note 1 of the Notes to Consolidated Financial
      Statements accompanying this report state that substantial doubt has been raised
      about our ability to continue as a going concern.




2007
      COMPARED TO 2006




The
      net
      loss decreased from approximately $2,542,000 in 2006 to approximately $2,220,000
      for the twelve months ended December 31, 2007.




Cost
      of
      sales decreased approximately $239,000 from the prior year. General and
      administrative expenses also decreased from the prior year by approximately
      $136,000.





The
      items
      of significant decrease in general and administrative expenses for the year
      ended December 31, 2007 were a decrease in salaries and wages of approximately
      $35,000 and a decrease in consulting fees of approximately
      $180,000.





Accretion
      of convertible debt decreased by approximately $175,000 from approximately
      $175,000 in 2006 and interest expense decreased approximately $12,000 from
      approximately $43,000 in 2006.





PLAN
      OF
      OPERATION





We
      have
      acquired South American Hedge Fund LLC, a limited liability company that intends
      to make investments in South America. Prior to the acquisition, the Company
      established subsidiaries to conduct business operations focused on providing
      environmental and construction technologies and services in the Far East, the
      Middle East and the United States.





Following
      the acquisition of South American Hedge Fund LLC, management intends that the
      Company continue to pursue business opportunities in the Middle East related
      to
      environmental remediation and other projects. We intend to license our *Delta
      Wall* product
      and seek cooperative projects with respect to our construction technology
      business activities.





Far
      East
      (Indonesia)





In
      Indonesia, we formed a local joint venture company, PT Triyudha-Envirotech,
      to
      conduct oil sludge processing operations with Pertamina, the government owned
      oil company. After completing an initial contract in October 2006, we are
      preparing to submit our bid on a second contract at the same
      refinery.





Middle
      East





On
      March
      8, 2007, Envirotech received a purchase agreement to supply the equipment and
      services for a factory to manufacture insulating concrete form (ICF) products
      in
      Saudi Arabia. This is our first contract in Saudi Arabia and our largest to
      date, valued at $3,369,000. The equipment specified in the agreement consists
      of
      several ICF technologies including the machinery that produces our *Delta
      Wall* system.
      The agreement requires payment by letter of credit. The purchaser has
      conditioned the opening of the letter of credit on receiving approval for a
      proposed housing project.





Envirotech
      holds the exclusive Middle East distribution rights to a gas-imaging product,
      which detects and visualizes harmful gasses produced by oilfield and refinery
      operations. The U.S. office of ARAMCO is arranging an on-site inspection at
      an
      existing installation prior to ordering test units.


9


Envirotech
      has been working with the operators of oil sludge processing facilities in
      Bahrain and Kuwait to improve their current processing technology. A test unit
      was put into operation in Saudi Arabia. Based on very good test results, a
      draft
      processing contract has been prepared by Envirotech and forwarded to the
      operator of the Bahrain facility.





During
      the second half of 2007, Envirotech, as a distributor, has introduced an organic
      supplement, designed to increase crop yield, to one of the major Saudi farming
      operations, which has placed an initial order for field trials.





United
      States





Production
      of the *Delta
      Wall* blocks
      began in September 2006. An independent testing laboratory was hired in January
      2007 to evaluate the blocks for the purpose of applying for International
      Commercial Code (ICC) approval. The testing laboratory has issued its interim
      report which provided the information necessary to begin the required
      engineering studies.





FUNDING




We
      will
      require additional capital in order to continue to fund our current activities
      and to finance our planned business operations.




LIQUIDITY




Because
      we have generated no revenue from our current operations, we must rely primarily
      on private placements of Company stock or debt to pay operating expenses.




At
      December 31, 2007 we had a working capital deficit of $1,977,492, an increase
      in
      our working capital deficit of $769,444 as compared with 2006. This increase
      for
      the year ended December 31, 2007 is a result of a decrease in cash and prepaid
      expenses, an increase in accrued expenses and partially offset by a decrease
      in
      accretion of convertible debt. Since we have limited sources of revenue, we
      expect a working capital deficit until our revenue is sufficient to cover our
      operating expenses.





In
      2007,
      to provide financing for our activities, we issued $567,000 of convertible
      notes.





ASSETS




At
      December 31, 2007, we had total assets of $554,637, compared to total assets
      of
      $1,044,549 at December 31, 2006. The decrease in total assets as of December
      31,
      2007 was due to a decrease in cash, prepaid expenses and fixed
      assets.





CRITICAL
      ACCOUNTING ISSUES




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


10


Other
      Matters




Accounting
      Pronouncements





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which
      enhances existing guidance for measuring assets and liabilities using fair
      value. This Standard provides a single definition of fair value, together with
      a
      framework for measuring it, and requires additional disclosure about the use
      of
      fair value to measure assets and liabilities. SFAS No. 157, as amended by FASB
      Staff Position 157-2, is effective for financial statements issued for fiscal
      years beginning after November 15, 2008, and interim periods within those fiscal
      years. The Company does not believe that SFAS No. 157 will have a material
      impact on its consolidated financial statements.





In
      July
      2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in
      Income Taxes” (“FIN 48”). The Interpretation requires a two step approach for
      recognizing and measuring tax benefits based on a recognition threshold of
“more
      likely than not.” The FASB also requires explicit disclosure about uncertainties
      in tax positions including a detailed rollforward of tax benefits that do not
      qualify for financial statement recognition. The adoption of FIN 48 is effective
      for fiscal years beginning after December 15, 2006. The Company adopted the
      provisions of FIN 48 on January 1, 2007. As a result of he implementation of
      FIN
      48, the Company recognized no adjustment in the net liability for unrecognized
      income tax benefits.





In
      February 2007, the FASB issued SFAS No. 159 ("SFAS 159") "The Fair Value Option
      for Financial Assets and Financial Liabilities," providing companies with an
      option to report selected financial assets and liabilities at fair value. The
      Standard's objective is to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently. It also requires entities to display the fair
      value
      of those assets and liabilities for which the Company has chosen to use fair
      value on the face of the balance sheet. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact of the adoption of this Statement on its consolidated financial
      statements.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141(R)”)
“Business Combinations,” which replaces SFAS 141 “Business Combinations.” This
      Statement improves the relevance, completeness and representational faithfulness
      of the information provided in financial reports about the assets acquired
      and
      liabilities assumed in a business combination. This Statement requires an
      acquirer to recognize the assets acquired, the liabilities assumed, and any
      noncontrolling interest in the acquiree at the acquisition date, measured at
      their fair values as of that date, with limited exceptions specified in the
      Statement. Under SFAS 141 (R), the acquisition-related costs, including
      restructuring costs, must be recognized separately from the acquisition and
      will
      generally be expensed as incurred. That replaces SFAS 141’s cost-allocation
      process, which required the cost of an acquisition to be allocated to the
      individual assets acquired and liabilities assumed based on their estimated
      fair
      values. SFAS 141(R) shall be applied prospectively to business combinations
      for
      which the acquisition date is on or after the beginning of the first annual
      report period beginning on or after December 15, 2008. The Company will
      implement this Statement in 2009.





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


11







In
      January 2008, Staff Accounting Bulletin (SAB”) 110 “Share-Based Payment” (“SAB
      110”) was issued. Registrants may continue, under certain circumstances, to use
      the simplified method in developing estimates of the expected term of share
      options as initially allowed by SAB 107, “Share-Based Payments.” The adoption of
      SAB 110 should have no effect on the financial position and results of
      operations of the Company .




QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




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





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





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





Commodity
      Price Risk - The raw material for our *Delta
      Wall* system
      is a petroleum-based material. Our manufacturing costs, in the normal course
      of
      business, could be affected by increased oil prices. If we commence
      manufacturing our *Delta
      Wall* blocks
      on a larger scale, we could be subject to this risk.




ITEM
      7.
      FINANCIAL STATEMENTS.




The
      Company's Consolidated Financial Statements and Notes to Consolidated 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
      (T). CONTROLS AND PROCEDURES.





As
      supervised by our board of directors and our principal executive and principal
      financial officers, management has established a system of disclosure controls
      and procedures and has evaluated the effectiveness of that system. The system
      and its evaluations are reported on below in the Management’s Annual Report on
      Internal Control over Financial Reporting. Our principal executive and principal
      financial officer have concluded that our disclosure controls and procedures
      (as
      defined in the 1934 Securities Exchange Act Rule 13a-15(e)) as of December
      31,
      2007, are effective, based on the evaluation of these controls and procedures
      required by paragraph (b) of Rule 13a-15.




Management’s
      Annual Report on Internal Control over Financial Reporting





Management
      is responsible for establishing and maintaining adequate internal control over
      financial reporting, as such term is defined in Rule 13a-15(f) of the Securities
      Exchange Act of 1934 (the “Exchange Act”). Internal control over financial
      reporting is a process designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with U.S. generally accepted accounting
      principles.




12




Management
      assessed the effectiveness of internal control over financial reporting as
      of
      December 31, 2007. We carried out this assessment using the criteria of the
      Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
      Internal Control-Integrated Framework.





This
      annual report does not include an attestation of our registered public
      accounting firm regarding internal control over financial reporting.
      Management’s report was not subject to attestation by our registered public
      accounting firm, pursuant to temporary rules of the Securities and Exchange
      Commission that permit us to provide only management’s report in this annual
      report. Management concluded in this assessment that as of December 31, 2007,
      our internal control over financial reporting is effective.





There
      have been no significant changes in our internal control over financial
      reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
      during the fourth quarter of 2007 that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.




ITEM
      8B.
      OTHER INFORMATION.




In
      May
      2004, we issued a 4% convertible promissory note to Neil Berman, a stockholder
      of the Company, (the “Lender”) in the principal amount of $193,740, convertible
      into shares of our common stock at $0.125 per share, with a maturity date of
      May
      12, 2006 (the “Convertible Note”). The Convertible Note was subsequently amended
      during 2006 and 2007 extending the maturity date to December 1, 2007. The
      Convertible Note states that if any of the principal amount (including interest)
      has not been converted on or before the maturity date, then the Convertible
      Note
      shall be in default, provided that no repayment is made within 15 days after
      receipt of written notice from the Lender of such failure to pay when due.
      We
      did not repay the Convertible Note on the maturity date and the Lender has
      not
      provided the Company with any written notice of failure to pay. The Lender
      has
      verbally agreed to extend the maturity date and we are currently negotiating
      an
      extension of the maturity date with the Lender. If the Company and the Lender
      do
      not agree upon a mutually acceptable extension of the maturity date, then the
      Company may receive a notice of default from the Lender.




PART
      III




ITEM
      9.
      DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.




DIRECTORS
      AND EXECUTIVE OFFICERS




As
      of the
      date of this report, the executive officers and director of Delta Mutual, Inc.
      were as follows:





NAME
            
            AGE
            
            TITLE(S)Peter
                F. Russo
            
            65
            
            President,
                CEO, Assistant Secretary
              and
                DirectorMartin
                G. Chilek
            
            57
            
            Sr.
                Vice President, Chief
              Financial
                Officer, Treasurer and Secretary




Mr.
      James
      L. Weintraub resigned as a director for personal reasons on April 4,
      2008.




13




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.




Martin
      G.
      Chilek joined the Company as Vice President, CFO, Treasurer and Assistant
      Secretary in January 2004. He was promoted to Senior Vice President and elected
      Secretary in March 2006. 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.





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 are
      currently two vacancies on
      our
      board of directors.





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





AUDIT
      COMMITTEE





We
      do not
      have a separate Audit Committee. Our Board of Directors performs the
      functions  usually
      designated to an Audit Committee.





CODE
      OF
      CONDUCT




We
      have a
      corporate code of conduct and a corporate disclosure policy in place, which
      provide 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. Our corporate
      disclosure policy includes guidelines for publicly disseminating financial
      and
      other material developments to the investing public.




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




We
      believe that during 2007, all of our officers and directors complied with the
      reporting requirements of Section 16(a).




ITEM
      10.
      EXECUTIVE COMPENSATION




The
      following table sets forth information for the periods indicated concerning
      the
      aggregate compensation paid by the Company and its subsidiaries to the Company’s
      Executive Officers (the “Named Executives”) and one former officer who was the
      most highly compensated employee of the Company in 2006.





14





SUMMARY
      COMPENSATION TABLE





Name
                and
              Principal
              Position
            
            Year
            
            Salary
              ($)
            
            Bonus
              ($)
            
            Stock
              Awards
              ($)
            
            Option
              Awards
              ($)
            
            Non-Equity
              Incentive
              Plan
              Compensation
              ($)
            
            Change in
              Pension
              Value and
              Nonquali-
              fied Deferred
              Compensation
              Earnings
              ($)
            
            All
              Other
              Compen-
              Sation
            
            Total
              ($)Peter
                F. Russo, President and CEO (1)
            
            
            2007
            
            $
            97,500
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            97,500Peter
                F.Russo,
            
            
            2006
            
            $
            87,750
            
            
            
            
            
            
            
            $
            41,516
            
            
            
            
            
            
            
            
            
            
            $
            129,266Martin
                G. Chilek, Chief Financial Officer
            
            
            2007
            
            $
            91,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            91,000Martin
                G. Chilek, Chief Financial Officer
            
            
            2006
            
            $
            86,500
            
            
            
            
            
            
            
            $
            28,966
            
            
            
            
            
            
            
            
            
            
            $
            115,466Jerome
                Kindrachuk, Vice President
            
            
            2006
            
            $
            54,000
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            88,262
            (2)
            $
            142,262




(1)
            Mr.
                Russo is also the sole director of the Company but receives no additional
                compensation for serving in that
                capacity.




(2)
                Upon
                    the termination of Mr. Kindrachuk’s employment with the Company in
                    December 2006,he
                    received $88,262 of his accrued salary from 2003 and
                    2004.




EXECUTIVE
      COMPENSATION NARRATIVE





On
      March
      11, 2003, we entered into a contract with Peter F. Russo to serve as President. It
      provided 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. On September 20, 2004 the contract was amended
      to
      adjust the
      salary to $6,500 per month effective January 1, 2004. Certain benefits were
      also
      eliminated effective the same dates.





On
      February 28, 2006, we entered into a new employment agreement with Mr. Russo.
      This agreement was effective March 11, 2006, for a term of three years. The
      agreement provides for
      a
      base salary of $180,000 per year, but until the Board of Directors determines
      that the
      financial condition of the Company permits the payment of that salary, the
      minimum salary to
      be
      paid to Mr. Russo is $6,500 per month. In July 2006, Mr. Russo’s minimum monthly salary
      was increased to $8,125. The agreement contains provisions for discharge for
      "cause", including disability, in which cases no further compensation or
      benefits would be payable under the agreement. If a termination is other than
      for death or "cause", the base salary is continued for six months following
      the
      termination of employment, or up to the time Mr. Russo commences other full
      time
      employment. The agreement also contains a provision for additional compensation
      to Mr. Russo if his employment is terminated without “cause” due to a
      change
      in control.




15




A
      general understanding has been reached for Mr. Russo to allow termination
      of the present employment agreement on July 15, 2008, and at which time the
      Board of Directors will determine whether a new contract is to be offered
      to Mr. Russo. As a part of the general understanding, Mr. Russo has agreed
      to
      waive any severance compensation that may have been due at termination at that
      time. All other aspects of the current employment agreement shall remain in
      effect through July 15, 2008.





On
      May
      23, 2005, we entered into an executive employment agreement with Mr. Chilek.
      This agreement was effective June 1, 2005, for an initial term of three years,
      and the term is automatically extended for additional one year periods if
      neither party gives notice of termination at least 90 days prior to the end
      of
      the initial term or any current additional one year term. The agreement provides
      for a base salary of $132,000 per year, but until the Board of Directors
      determines that the financial condition of the Company permits the payment
      of
      that salary, the minimum salary to be paid to Mr. Chilek is $6,000 per month.
      In
      July 2006, Mr. Chilek’s minimum monthly salary was increased to $7,500. The
      agreement contains provisions for discharge for "cause", including disability,
      in which cases no further compensation or benefits would be payable under the
      agreement. If a termination is other than for death or "cause", or the Company
      elects not to renew the agreement, the base salary is continued for six months
      following the termination of employment, or up to the time Mr. Chilek commences
      other full time employment. The agreement also contains a provision for
      additional compensation to Mr. Chilek if his employment is terminated without
      “cause” due


to
      a
      change in control.





On
      July
      3, 2006, the Company’s board of directors cancelled: 2,500,000 stock options
      granted to Mr. Russo in November 2004 with an exercise price of $0.25 per share;
      and 350,000 stock options granted to him in February 2006 with an exercise
      price
      of $0.17 per share. Also on July 3, 2006, the board of directors granted Mr.
      Russo 2,850,000 new stock options at an exercise price of $0.11 per share.
      These
      actions were treated as a repricing of his stock options and the $41,516
      indicated as option award compensation in 2006 represents the incremental fair
      value of the new stock options as of the date of the repricing.





On
      July
      3, 2006, the Company’s board of directors cancelled: 1,750,000 stock options
      granted to Mr. Chilek in November 2004 with an exercise price of $0.25 per
      share; and 250,000 stock options granted to him in February 2006 with an
      exercise price of $0.17 per share. Also on July 3, 2006, the board of directors
      granted Mr. Chilek 2,000,000 new stock options at an exercise price of $0.11
      per
      share. These actions were treated as a repricing of his stock options and the
      $28,966 indicated as option award compensation in 2006 represents the
      incremental fair value of the new stock options as of the date of the repricing.




We
      also
      had an employment contract with Mr. Kindrachuk effective July 2003, prior to
      his
      appointment as an officer of the Company. It provided for three years'
      employment beginning July 1, 2003, at a base salary of $10,000 per month, plus
      benefits. On September 22, 2004 the
      contract was amended to adjust salary to $6,000 per month effective January
      1,
      2004, until the Board of Directors determined that the financial condition
      of
      the Company permitted the payment of that salary. Certain benefits were also
      eliminated effective the same dates.




On
      July
      1, 2006, we did not renew Mr. Kindrachuk’s employment contract and he was
      offered and
      accepted other employment with the Company as an at will employee. His
      employment with the Company was terminated on December 28, 2006.





16




OUTSTANDING
      EQUITY AWARDS AT FISCAL YEAR-END





The
      following table sets forth information as of the end of the Company’s last
      fiscal year concerning option and stock awards to the Company’s Named
      Executives.





Option
                Awards
            
            Stock
                AwardsName
            
            Number of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Exercisable
            
            Number of
              Securities
              Underlying
              Unexercised
              Options
              (#)
              Unexercisable
            
            Equity
              Incentive
              Plan
              Awards:
              Number of
              Securities
              Underlying
              Unexercised
              Unearned
              Options
              (#)
            
            Option
              Exercise
              Price
              ($)
            
            Option
              Expiration
              Date
            
            Number
              of
              Shares
              or Units
              of
              Stock
              That
              Have
              Not
              Vested
              (#)
            
            Market
              Value
              of
              Shares
              or
              Units
              of
              Stock
              That
              Have
              Not
              Vested
              ($)
            
            Equity
              Incentive
              Plan
              Awards:
              Number
              of
              Unearned
              Shares,
              Units or
              Other
              Rights
              That
              Have Not
              Vested
              (#)
            
            Equity
              Incentive
              Plan
              Awards:
              Market
              or Payout
              Value of
              Unearned
              Shares,
              Units or
              Other
              Rights
              That
              Have Not
              Vested
              ($)Peter
                F. Russo
            
            
            2,850,000
            
            
            -0-
            
            
            -0-
            
            $
            0.11
            
            
            July 2011Martin
                G. Chilek
            
            
            2,000,000
            
            
            -0-
            
            
            -0-
            
            $
            0.11
            
            
            July 2011




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




STOCK
      OPTION PLAN




In
      August
      2004, our stockholders approved the 2004 Stock Option Plan (the "2004 Plan"),
      pursuant to which 10,000,000 shares of common stock were reserved for issuance. As
      of
      December 31, 2007, 2,022,000 shares were available for the grant of options
      under the 2004 Plan.





The
      2004
      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
      10,000,000 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, and consultants to 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.)




17




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.




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.




The
      2004
      Plan gives 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).




18




OTHER
      PLANS




We
      have
      not adopted any other deferred compensation, pension, profit sharing, stock
      option plan or programs for the benefit of our officers or employees. During
      2003, the Company established a health insurance benefit plan that is offered
      to
      all employees. During 2004, the Company made a dental insurance plan available
      to all employees.




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




The
      following table sets forth information, as of April 9, 2008, 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:




Name
                and Address of Beneficial Owner
            
            Number of Shares Owned
            
            Percentage**BeneficiallyPeter
                F. Russo (1)
            
            
            2,950,000
            
            
            1.33
            %Martin
                G. Chilek (2)
            
            
            2,050,000
            
            
            0.92
            %All
                Officers and Directors as a Group
            
            
            5,000,000
            
            
            2.25
            %Egani,
                Inc. (3)
            
            
            130,000,000
            
            
            59.14
            %GZSZ
                (4)
            
            
            11,000,000
            
            
            5.00
            %




**
      Based
      on 219,807,273 shares outstanding on April 9, 2007.





(1)
      In
      addition to 100,000 shares owned directly, Mr. Russo holds options expiring
      July
      11, 2011 to
      purchase an aggregate of 2,850,000 shares of common stock at an exercise price
      of $0.11 per share. Mr.
      Russo’s address is c/o
      Delta
      Mutual, Inc., 111 North Branch Street, Sellersville, PA 19860 .





(2)
      In
      addition to 50,000 shares owned beneficially, Mr. Chilek holds options expiring
      July 3, 2011 to
      purchase an aggregate of 2,000,000 shares of common stock at an exercise price
      of $0.11 share. Mr.
      Chilek’s address is c/o Delta Mutual, Inc., 111 North Branch Street,
      Sellersville, PA 18960.





(3)
      Egani, Inc. is owned by Daniel R. Peralta and Laura Monica Gallo, each of whom
      owns 50% of the outstanding equity interests of Egani, Inc. Mr. Peralta is
      the
      President and controls the operations of  Egani,
      Inc. The address of Egani, Inc. is 8260 East Raintree Drive, Scottsdale, AZ
      85206.





(4)
      The
      address of GZSZ Corporation is 119 Lee Avenue, Suite # 188, Brooklyn, NY
      11211.




ITEM
      12.
      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.




None.




19


ITEM
        13.
        EXHIBITS.
 Exhibit
                      No.
                  
                  Description
                      of Exhibits3.1
                  
                  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,
                      2000.3.1a
                  
                  Amendment
                      to Certificate of Incorporation, filed September 1, 2004. Incorporated
                      herein by reference to Exhibit 3.1a to the Company's Current
                      Report on
                      Form 8-K, filed with the Commission on September 3,
                      2004.3.1b
                  
                  Form
                      of Restatement of Certificate of Incorporation of Delta Mutual,
                      Inc., as
                      amended. Incorporated herein by reference to Exhibit 3.1b to
                      the Company's
                      Quarterly Report on Form 10-QSB, filed with the Commission
                      on November 15,
                      2004.3.2
                  
                  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, 2000.3.1c
                  
                  Certificate
                      of Amendment to Certificate of Incorporation, filed June 26,
                      2007.
                      Incorporated herein by reference to Exhibit 3.1c to the Company's
                      quarterly report on Form 10-QSB, filed with the Commission
                      on August 10,
                      2007.3.1d
                  
                  Form
                      of Restatement of Certificate of Incorporation of Delta Mutual,
                      Inc., as
                      amended. Incorporated herein by reference to Exhibit 3.1d to
                      the Company's
                      quarterly report on Form 10-QSB, filed with the Commission
                      on August 10,
                      2007.4.1
                  
                  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,
                      2003.4.2a
                  
                  Delta
                      Mutual, Inc. 2004 Stock Option Plan. Incorporated herein by
                      reference to
                      Exhibit B to the Company's Definitive Proxy Statement, filed
                      with the
                      Commission on June 16, 2004.4.3
                  
                  Form
                      of 6% Convertible Promissory Notes of the Company due 2006.
                      Incorporated
                      by reference to Exhibit 4.3 to the Company's Current Report
                      on Form 8-K,
                      filed with the Commission on September 24, 2004.4.4
                  
                  Form
                      of Warrants to purchase shares of Common Stock, of the Company
                      issued to
                      the purchasers of the Company's 6% Convertible Promissory Notes.
                      Incorporated by reference to Exhibit 4.4 to the Company's Current
                      Report
                      on Form 8-K, filed with the Commission on September 24,
                      2004.4.5
                  
                  4%
                      Convertible Promissory Note of the Company due May 2006 issued
                      in the
                      principal amount of $129,160 on May 12, 2004. Incorporated
                      herein by
                      reference to Exhibit 4.5 to the Company's Quarterly Report
                      on Form 10-QSB,
                      filed with the Commission on November 15,
                      2004.
  20
  4.5a
                  
                  Amendment,
                      dated as of May 2, 2006, to 4% Convertible Promissory Note
                      in the
                      principal amount of $129,160. Incorporated herein by reference
                      to Exhibit
                      4.5a to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.
 4.5b
                  
                  Amendment,
                      dated as of July 6, 2006, to 4% Convertible Promissory Note
                      in the
                      principal amount of $129,160. Incorporated herein by reference
                      to Exhibit
                      4.5b to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.5c
                  
                  Amendment,
                      dated as of October 10, 2006, to 4% Convertible Promissory
                      Note in the
                      principal amount of $100,000. Incorporated herein by reference
                      to Exhibit
                      4.5c to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.5d
                  
                  Amendment,
                      dated as of November 27, 2006, to 4% Convertible Promissory
                      Note in the
                      principal amount of $100,000. Incorporated herein by reference
                      to Exhibit
                      4.5d to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.5e
                  
                  Amendment,
                      dated as of February 21, 2007, to 4% Convertible Promissory
                      Note in the
                      principal amount of $100,000. Incorporated herein by reference
                      to Exhibit
                      4.5e to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.5f
                  
                  Amendment,
                      dated as of February 14, 2008 to 4% Convertible Promissory
                      Note in the
                      principal amount of $100,000, filed herewith.4.6
                  
                  4%
                      Convertible Promissory Note of the Company due May 2006 issued
                      in the
                      principal amount of $193,740 on May 12, 2004. Incorporated
                      herein by
                      reference to Exhibit 4.6 to the Company's Quarterly Report
                      on Form 10-QSB,
                      filed with the Commission on November 15, 2004.4.6a
                  
                  Amendment,
                      dated as of May 2, 2006, to 4% Convertible Promissory Note
                      in the
                      principal amount of $193,740. Incorporated herein by reference
                      to Exhibit
                      4.6a to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.6b
                  
                  Amendment,
                      dated as of July 6, 2006, to 4% Convertible Promissory Note
                      in the
                      principal amount of $193,740. Incorporated herein by reference
                      to Exhibit
                      4.6b to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.6c
                  
                  Amendment,
                      dated as of September 8, 2006, to 4% Convertible Promissory
                      Note in the
                      principal amount of $193,740. Incorporated herein by reference
                      to Exhibit
                      4.6c to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.6d
                  
                  Amendment,
                      dated as of November 21, 2006, to 4% Convertible Promissory
                      Note in the
                      principal amount of $193,740. Incorporated herein by reference
                      to Exhibit
                      4.6d to the Company’s Annual Report on Form 10-KSB, filed with the
                      Commission on April 2, 2007.4.6e
                  
                  Amendment,
                      dated April 4, 2007, to 4% Convertible Promissory Note in the
                      Principal
                      Amount of $193,740. Incorporated herein by reference to Exhibit
                      4.6e to
                      the Company's quarterly report on Form 10-QSB, filed with the
                      Commission
                      on August 10, 2007.
  21
  4.6f
                  
                  Amendment,
                      dated September 7, 2007 to Convertible Promissory Note in the
                      principal
                      amount of $193,740. Incorporated herein by reference to Exhibit
                      4.6f to
                      the Company's quarterly report on Form 10-QSB, filed with the
                      Commission
                      on November 9, 2007.4.7
                  
                  4%
                      Convertible Promissory Note "A" of the Company due December
                      2006 issued in
                      the principal amount of $157,000 on July 1, 2004. Incorporated
                      herein by
                      reference to Exhibit 4.7 to the Company's Quarterly Report
                      on Form 10-QSB,
                      filed with the Commission on November 15,
                      2004.
 4.8
                    
                    4%
                        Convertible Promissory Note "B" of the Company due January
                        2007 issued in
                        the principal amount of $37,500 on July 16, 2004. Incorporated
                        herein by
                        reference to Exhibit 4.8 to the Company's Quarterly Report
                        on Form 10-QSB,
                        filed with the Commission on November 15, 2004.4.9
                    
                    6%
                        Promissory note of the Company due December 2005 issued in
                        the principal
                        amount of $71,731.29 on March 22, 2005. Incorporated herein
                        by reference
                        to Exhibit 4.9 to the Company's current report on Form 8K
                        filed with the
                        Commission on March 25, 2005.4.10
                    
                    8%
                        Promissory note of the Company due October 2, 2005 issued
                        in the principal
                        amount of $210,655.04 on April 5, 2004. Incorporated herein
                        by reference
                        to Exhibit 4.10 to the Company's current report on Form 8K
                        filed with the
                        Commission on April 11, 2005.4.11
                    
                    6%
                        Convertible Promissory Note due September 6, 2007, issued
                        in the aggregate
                        principal amount of $266,000 on April 5, 2007. Incorporated
                        herein by
                        reference to Exhibit 4.7 to the Company's current report
                        on Form 8K filed
                        with the Commission on April 11, 2007.4.11a
                    
                    Amended
                        and Restated 6% Convertible Promissory Note due April 5,
                        2008, issued in
                        the aggregate principal amount of $266,000 on April 30, 2007.
                        Incorporated
                        herein by reference to Exhibit 4.7a to theCompany's
                        current report on Form 8K filed with the Commission on May
                        2,
                        2007.4.12
                    
                    10%
                        Convertible Promissory Note due June 2008, issued in the
                        aggregate
                        principal amount of $550,000 on May 1, 2007. Incorporated
                        herein by
                        referenceto
                        Exhibit 4.12 to the Company's current report on Form 8K filed
                        with the
                        Commission May 5, 2007.10.1
                    
                    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
                        herein by
                        reference 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.
  22
  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.
  23
  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, 2003.10.8
                    
                    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,
                        dated August 29, 2003, between the Company and Burrows Consulting
                        Inc.
                        Incorporated herein reference to Exhibit 10.10 to the Company's
                        current
                        report on Form 8-K, filed with the Commission on September
                        4, 2003.
 
 24
  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. Incorporated herein by
                        reference to
                        Exhibit 10.16 to the Company's Annual Report on Form 10-KSB,
                        filed with
                        the Commission on April 6, 2004.10.17
                    
                    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. Incorporated herein by reference to Exhibit 10.17
                        to the
                        Company's Annual Report on Form 10-KSB, filed with the Commission
                        on April
                        6, 2004.10.18
                    
                    Consulting
                        Agreement, dated as of March 21, 2004, between Delta Mutual,
                        Inc. and
                        Clark Street Capital. Incorporated herein by reference to
                        Exhibit 10.18 to
                        the Company's Quarterly Report on Form 10-QSB, filed May
                        19, 2004.10.19
                    
                    Consulting
                        Services Agreement, dated as of April 16, 2004, between Delta
                        Mutual, Inc.
                        and Basic Investors, Inc. Incorporated herein by reference
                        to Exhibit
                        10.19 to the Company's Quarterly Report on Form 10-QSB, filed
                        May 19,
                        2004.10.20
                    
                    Memorandum
                        of Understanding, dated as of March 17, 2004, by and between
                        Delta-Envirotech, Inc., PT Faryan Nusantara and Crescent
                        Aeronautical
                        Technology. Incorporated herein by reference to Exhibit 10.20
                        to the
                        Company's Quarterly Report on Form 10-QSB, filed May 19,
                        2004.10.21
                    
                    Agreement,
                        dated April 5, 2004, Trans Indies Realty Investment Corporation
                        and Delta
                        Developers Corp. Incorporated herein by reference to Exhibit
                        10.21 to the
                        Company's Quarterly Report on Form 10-QSB, filed August 12,
                        2004.
  25
  10.22
                    
                    Term
                        Sheet, dated May 12, 2004, among Delta Mutual, Inc., Neil
                        Berman and Ivano
                        Angelastri. Incorporated herein by reference to Exhibit 10.22
                        to the
                        Company's Quarterly Report on Form 10-QSB, filed August 12,
                        2004.10.23
                    
                    Term
                        Sheet, dated July 1, 2004, between Delta Mutual, Inc. and
                        Neil Berman.
                        Incorporated herein by reference to Exhibit 10.23 to the
                        Company's
                        Quarterly Report on Form 10-QSB, filed August 12, 2004.10.24
                    
                    Settlement
                        Agreement and Mutual General Releases, dated November 26,
                        2004, between
                        the Company and Joseph Friedman and Sons International, Inc.
                        Incorporated
                        herein by reference to Exhibit 10.24 to the Company's Current
                        Report on
                        Form 8-K, filed with the Commission on December 2, 2004.10.26
                    
                    Executive
                        Employment Agreement, dated May 23, 2005, between DeltaMutual,
                        Inc. and Martin G. Chilek. Incorporated herein by reference
                        to Exhibit
                        10.26 to the Company's Current Report on Form 8-K, filed
                        with the
                        Commission on May 25, 2005.10.27
                    
                    Investment
                        Banking Agreement, dated June 17, 2005, between Delta Mutual,
                        Inc. and
                        T&T Vermoegensverwaltungs AG. Incorporated herein by reference
                        to
                        Exhibit 10.27 to the Company's Current Report on Form 8-K,
                        filed with the
                        Commission on June 30, 2005.10.27a
                    
                    Addendum,
                        dated August 3, 2005, to Investment Banking Agreement, dated
                        June 17,
                        2005, by and between Delta Mutual, Inc. and T&T Vermoegensverwaltungs
                        AG. Incorporated herein by reference to Exhibit 10.27a to
                        the Company's
                        Amended Current Report on Form 8-K, filed with the Commission
                        on August
                        18, 2005.10.28
                    
                    Purchase
                        Agreement, dated August 26, 2005, by and between Delta Technologies,
                        Inc.,
                        as Buyer, and Richard F. Straub, Jr. and John M. Latza, as
                        Sellers.
                        Incorporated herein by reference to Exhibit 10.28 to the
                        Company's Current
                        Report on Form 8-K, filed with the Commission on August 31,
                        2005.10.29
                    
                    Consulting
                        Services Agreement, dated August 26, 2005, by and between
                        Delta Mutual,
                        Inc. and Juan Bautista Rodriguez Pagan. Incorporated herein
                        by reference
                        to Exhibit 10.29 to the Company's Current Report on Form
                        8-K, filed with
                        the Commission on August 31, 2005.10.30
                    
                    Consulting
                        Services Agreement, dated August 26, 2005, by and between
                        Delta
                        Technologies, Inc. and Richard F. Straub, Jr. Incorporated
                        herein by
                        reference to Exhibit 10.30 to the Company's Current Report
                        on Form 8-K,
                        filed with the Commission on August 31, 2005.10.31
                    
                    Service
                        Order, dated February 6, 2006, between Pertamina and PT.
                        Triyudha.
                        Incorporated herein by reference to Exhibit 10.31to
                        the Company's Current Report on Form 8-K, filed with the
                        Commission on
                        February 27, 2006.10.32
                    
                    Executive
                        Employment Agreement, dated February 28, 2006, between Delta
                        Mutual, Inc.
                        and Peter F. Russo. Incorporated herein by reference to Exhibit
                        10.32 to
                        the Company's Current Report on Form 8-K, filed with the
                        Commission on
                        March 1, 2006.10.33
                    
                    Form
                        of 8% Term Notes issued April 5, 2005 by Delta Mutual, Inc.,
                        in the
                        aggregate principal amount of $210,655. Incorporated herein
                        by reference
                        to Exhibit 10.33 to the Company’s Annual Report on Form 10-KSB, filed with
                        the Commission on April 3, 2006.
  26
  10.33a
                    
                    Form
                        of Amendment, dated September 30, 2005, to Delta Mutual,
                        Inc. 8% Term
                        Notes issued April 5, 2005. Incorporated herein by reference
                        to Exhibit
                        10.33a to the Company’s Annual Report on Form 10-KSB, filed with the
                        Commission on April 3, 2006.
 
 10.33b
                    
                    Form
                        of Second Amendment, dated December 19, 2005, to Delta Mutual,
                        Inc. 8%
                        Term Notes issued April 5, 2005. Incorporated herein by reference
                        to
                        Exhibit 10.33b to the Company’s Annual Report on Form 10-KSB, filed with
                        the Commission on April 3, 2006.10.33c
                    
                    Form
                        of Third Amendment, dated March 20, 2006, to Delta Mutual,
                        Inc. 8% Term
                        Notes issued April 5, 2005. Incorporated herein by reference
                        to Exhibit
                        10.33c to the Company’s Annual Report on Form 10-KSB, filed with the
                        Commission on April 3, 2006.10.33d
                    
                    Form
                        of Fourth Amendment, dated as of June 2, 2006, to 8% Term
                        Notes issued
                        April 5, 2005. Incorporated herein by reference to Exhibit
                        10.33d to the
                        Company’s Annual Report on Form 10-KSB, filed with the Commission
                        on April
                        2, 2007.10.33e
                    
                    Form
                      of Amended and Restated 8% Term Notes issued March 6, 2008
                      by Delta
                      Mutual, Inc. in the aggregate principal amount of $150,655,
                      filed
                      herewith.10.34
                    
                    Placement
                        Agent Agreement, dated June 6, 2006, between Delta Mutual,
                        Inc. And SDM
                        Consultant Corporation. Incorporated herein by reference
                        to Exhibit 10.34
                        to the Company’s Annual Report on Form 10-KSB, filed with the Commission
                        on April 2, 2007.10.35
                    
                    Membership
                        Interest Purchase Agreement, dated March 4, 2008, betweenDelta
                        Mutual, Inc. and Egani, Inc. Incorporated herein by reference
                        to Exhibit
                        10.35 to the Company’s Current Report on Form 8-K, filed with the
                        Commission on March 11, 2008.10.36
                    
                    Consulting
                        Services Agreement, dated September 10, 2007, between DeltaMutual,
                        Inc. and Security Systems International, Inc. Incorporated
                        herein by
                        reference to Exhibit 10.36 to the Company’s Current Report on Form 8-K,
                        filed with the Commission on March 11, 2008.10.37
                    
                    Form
                        of 6% Promissory Notes issued March 6, 2008 by Delta Mutual,
                        Inc. in the
                        aggregate principal amount of $121,000, filed herewith.14.
                    
                    Delta
                        Mutual, Inc. Code of Conduct and Business Ethics. Incorporated
                        herein by
                        reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-KSB,
                        filed with the Commission on April 14, 2005.31.1
                    
                    Certification
                        of Chief Executive Officer Pursuant to Section 302 of the
                        Sarbanes-Oxley
                        Act of 2002, filed herewith.31.2
                    
                    Certification
                        of Chief Financial Officer Pursuant to Section 302 of the
                        Sarbanes-Oxley
                        Act of 2002, filed herewith.32.1
                    
                    Certification
                        of Chief Executive Officer Pursuant to 18 U.S.C. Section
                        1350, as Adopted
                        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
                        filed herewith.32.2
                    
                    Certification
                        of Chief Financial Officer Pursuant to 18 U.S.C. Section
                        1350, as Adopted
                        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
                        filed herewith.




27




ITEM
                14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.(1)
                Aggregate fees for the last two
                years:


2007
              
              2006$
              41,071
              
              $
              84,453
  (2)
                    Audit related fees:
  2007
              
              2006$
              41,071
              
              $
              76,953
  (3)
                        Tax fees:
  2007
              
              2006$
              -0-
              
              $
              7,500
  (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
  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 11, 2008
  By:
                      /s/
                          Peter F. Russo
 Peter
                F.
                Russo
 President,
                Chief Executive Officer and Sole Director
  By:
                      /s/
                          Martin G. Chilek
 Martin
                G.
                Chilek
 Senior
                Vice President and Chief Financial Officer
 Principal
                Financial Officer
  Pursuant
                to the requirements of the Securities Exchange Act of 1934, this
                report has been
                signed below by the following person on behalf of the Registrant
                in the
                capacities indicated, on April 11, 2008.
  /s/
                            Peter F. Russo
 Peter
                F.
                Russo, President, Chief Executive Officer and Sole Director
  28
  EXHIBIT
                A
  DELTA
                MUTUAL, INC. AND CONSOLIDATED SUBSIDIARIES
 
 INDEX
                TO
                FINANCIAL STATEMENTS
 
 PAGEReport
                          of Independent Registered Public Accounting Firm
                      
                      F-1Financial
                          Statements:Consolidated
                          Balance Sheet as of December 31, 2007 and 2006
                      
                      F-2Consolidated
                          Statements of Operations for the years endedDecember
                          31, 2007 and 2006
                      
                      F-3Consolidated
                          Statements of Stockholders' Deficiency as ofDecember
                          31, 2007 and 2006
                      
                      F-4Consolidated
                          Statements of Cash Flows for the years endedDecember
                          31, 2007 and 2006
                      
                      F-6Notes
                          to Consolidated Financial Statements
                      
                      F-8
 
 29
  [LETTERHEAD
                  OF WIENER, GOODMAN & COMPANY, P.C.]
   REPORT
                  OF
                  INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
 To
                  the
                  Board of Directors and Stockholders of
 Delta
                  Mutual Inc.
 
 
 We
                  have
                  audited the accompanying consolidated balance sheets of Delta Mutual,
                  Inc. and
                  subsidiaries (“Delta” or the “Company”) as of December 31, 2007 and 2006 and the
                  related consolidated statements of operations, stockholders’ deficiency and cash
                  flows for each of the two years in the period ended December 31,
                  2007. 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 audits in accordance with the standards of the Public
                  Company
                  Accounting Oversight Board (United States). 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 audits provide
                  a
                  reasonable basis for our opinion.
 
 In
                  our
                  opinion, such consolidated financial statements present fairly,
                  in all material
                  respects, the financial position of Delta Mutual, Inc. and subsidiaries
                  as of
                  December 31, 2007 and 2006, and the results of their operations
                  and their cash
                  flows for each of the two years in the period ended December 31,
                  2007, in
                  conformity with accounting principles generally accepted in the
                  United States of
                  America.
 
 The
                  accompanying consolidated financial statements have been prepared
                  assuming the
                  Company will continue as a going concern. Since 2003, Company management
                  has
                  embarked upon a new mission and strategic direction, by establishing
                  a series of
                  subsidiaries and joint ventures, primarily engaged in providing
                  environmental
                  and construction technologies and services to certain geographic
                  reporting
                  segments. As more fully explained in Note 1 to the financial statements,
                  the
                  Company has a deficiency in working capital at December 31, 2007,
                  incurred
                  losses from operations since inception, needs to obtain additional
                  financing to
                  meet its obligations on a timely basis and to fulfill its proposed
                  activities
                  and ultimately 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.
 
 Eatontown,
                  New Jersey
 March
                  27,
                  2008
 F-1


**DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        BALANCE SHEET**
  December
                  31,2007
              
              2006ASSETSCurrent
                  Assets:Cash
              
              $
              57,633
              
              $
              211,147Prepaid
                  expenses
              
              
              1,914
              
              
              249,954Total
                  Current Assets
              
              
              59,547
              
              
              461,101Property
                  and equipment - net
              
              
              368,123
              
              
              448,581Intangible
                  asset
              
              
              126,317
              
              
              133,467Other
                  assets
              
              
              650
              
              
              1,400TOTAL
                  ASSETS
              
              $
              554,637
              
              $
              1,044,549LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCYCurrent
                  Liabilities:Accounts
                  payable
              
              $
              173,370
              
              $
              168,403Accrued
                  expenses
              
              
              1,225,674
              
              
              890,351Convertible
                  debt
              
              
              397,340
              
              
              369,740Notes
                  payable
              
              
              240,655
              
              
              240,655TOTAL
                  LIABILITIES
              
              
              2,037,039
              
              
              1,669,149Minority
                  interest in consolidated subsidiaries
              
              
              225,797
              
              
              241,550Stockholders'
                  Deficiency:Common
                  stock $0.0001 par value - authorized 250,000,000 shares; 78,882,953
                  and
                  62,161,246 outstanding, respectively
              
              
              7,888
              
              
              6,216Additional
                  paid-in-capital
              
              
              9,366,766
              
              
              7,734,138Accumulated
                  deficit
              
              
              (11,082,853
              )
              
              (8,862,504
              )Deferred
                  Stock Purchase
              
              
              -
              
              
              266,000Subscription
                  Receivable
              
              
              -
              
              
              (10,000
              )Total
                  Stockholders' Deficiency
              
              
              (1,708,199
              )
              
              (866,150
              )TOTAL
                  LIABILITIES AND STOCKHOLDERS' DEFICIENCY
              
              $
              554,637
              
              $
              1,044,549
 
 See
        Notes
        to Consolidated Financial Statements
  F-2
 
 **DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 
 Years
                  Ended December 31,2007
              
              2006Revenue
              
              
              -
              
              $
              279,870Costs
                  and Expenses:Cost
                  of Sales
              
              
              -
              
              
              238,897General
                  and administrative expenses
              
              
              2,213,030
              
              
              2,349,438Impairment
                  of long term assets
              
              
              25,000
              
              
              35,2002,238,030
              
              
              2,623,535Loss
                  from operations
              
              
              (2,238,030
              )
              
              (2,343,665
              )Accretion
                  of convertible debt
              
              
              -
              
              
              (175,385
              )Interest
                  expense
              
              
              (31,041
              )
              
              (42,876
              )Loss
                  before minority interest
              
              
              2,269,071
              
              
              (2,561,926
              )Minority
                  interest share of loss of consolidated subsidiaries
              
              
              48,722
              
              
              19,661Loss
                  before benefit from income taxes
              
              
              (2,220,349
              )
              
              (2,542,265
              )Provision
                  for income taxes
              
              
              -
              
              
              -Net
                  loss
              
              $
              (2,220,349
              )
              $
              (2,542,265
              )Loss
                  per common share- basic and diluted
              
              $
              (0.03
              )
              $
              (0.05
              )Weighted
                  average number of common shares outstanding- basic and
                  diluted
              
              
              66,169,646
              
              
              48,419,689
 
 See
        Notes
        to Consolidated Financial Statements
  F-3
 
 **DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' DEFICIENCY**
 
 Number
                  of
              
              
              
              
              
              
              
              
              
              DeferredCommon
              
              Common
              
              Paid
                  in
              
              Accumulated
              
              Subscription
              
              StockShares
              
              Stock
              
              Capital
              
              Deficit
              
              Receivable
              
              Purchase
              
              TotalBalance,
                  January 1, 2007
              
              
              62,161,246
              
              
              6,216
              
              
              7,734,138
              
              
              (8,862,504
              )
              
              (10,000
              )
              
              266,000
              
              
              (866,150
              )Issuance
                  of common stock for interest expense (valued at $0.06 - $0.125
                  per
                  share)
              
              
              135,040
              
              
              13
              
              
              15,307
              
              
              -
              
              
              -
              
              
              -
              
              
              15,320Issuance
                  of common stock for convertible debt (valued at $0.05 - $.125 per
                  share)
              
              
              16,586,667
              
              
              1,659
              
              
              830,341
              
              
              -
              
              
              -
              
              
              -
              
              
              832,000Conversion
                  to convertible notes
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (266,000
              )
              
              (266,000
              )Receipt
                  of subscribed stock
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              10,000
              
              
              -
              
              
              10,000Stock
                  based compensation expense
              
              
              -
              
              
              -
              
              
              786,980
              
              
              -
              
              
              -
              
              
              -
              
              
              786,980Net
                  (loss)
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,220,349
              )
              
              -
              
              
              -
              
              
              (2,220,349
              )Balance,
                  December 31, 2007
              
              
              78,882,953
              
              $
              7,888
              
              $
              9,366,766
              
              $
              (11,082,853
              )
              $
              -
              
              $
              -
              
              $
              (1,708,199
              )
 
 See
        Notes
        to Consolidated Financial Statements
  F-4
 
 **DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF STOCKHOLDERS' DEFICIENCY**
 
 Number
                  of
              
              
              
              
              
              
              
              
              
              Deferred
              
              DeferredCommon
              
              Common
              
              Paid
                  in
              
              Accumulated
              
              Subscription
              
              Stock
              
              CompensationShares
              
              Stock
              
              Capital
              
              Deficit
              
              Receivable
              
              Purchase
              
              Expense
              
              TotalBalance,
                  January 1, 2006
              
              
              35,321,598
              
              $
              3,532
              
              $
              5,441,047
              
              $
              (6,320,239
              )
              $
              (10,000
              )
              $
              -
              
              $
              (300,000
              )
              $
              (1,185,660
              )Issuance
                  of common stock for interest expense (valued at $0.05 per
                  share)
              
              
              517,426
              
              
              52
              
              
              25,819
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              25,871Issuance
                  of common stock for convertible debt (valued at $0.05 - $.125 per
                  share)
              
              
              5,753,280
              
              
              575
              
              
              386,628
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              387,203Sales
                  of common stock (valued at $0.05 - $.12 per share)
              
              
              17,182,212
              
              
              1,718
              
              
              832,782
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              834,500Issuance
                  of common stock for services (valued at $0.09 - $.38 per
                  share)
              
              
              2,431,730
              
              
              243
              
              
              462,398
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              462,641Issuance
                  of common stock upon exercise of warrants (valued at $0.10 per
                  share)
              
              
              730,000
              
              
              73
              
              
              72,927
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              73,000Issuance
                  of common stock for settlement (valued at $0.19 per share)
              
              
              225,000
              
              
              23
              
              
              42,727
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              42,750Adoption
                  of SFAS No. 123 [R]
              
              
              -
              
              
              -
              
              
              (300,000
              )
              
              -
              
              
              -
              
              
              -
              
              
              300,000
              
              
              -Deposit
                  on common stock not yet issued
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              266,000
              
              
              -
              
              
              266,000Stock
                  based compensation expense
              
              
              -
              
              
              -
              
              
              769,810
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              769,810Net
                  (loss)
              
              
              -
              
              
              -
              
              
              -
              
              
              (2,542,265
              )
              
              -
              
              
              -
              
              
              -
              
              
              (2,542,265
              )Balance,
                  December 31, 2006
              
              
              62,161,246
              
              
              6,216
              
              
              7,734,138
              
              
              (8,862,504
              )
              
              (10,000
              )
              
              266,000
              
              
              -
              
              
              (866,150
              )
 
 See
        Notes
        to Consolidated Financial Statements
  F-5
 
 **DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 
 Years
                  Ended December 31,2007
              
              2006Cash
                  flows from operating activities:Net
                  loss
              
              $
              (2,220,349
              )
              $
              (2,542,265
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              52,108
              
              
              48,825Non-cash
                  compensation
              
              
              15,320
              
              
              427,512Accretion
                  of convertible debt
              
              
              -
              
              
              175,385Compensatory
                  element of option issuance
              
              
              786,980
              
              
              769,810Impairment
                  of long term asset
              
              
              25,000
              
              
              35,200Minority
                  interest in losses of consolidated subsidiaries
              
              
              (48,722
              )
              
              (19,661
              )Changes
                  in operating assets and liabilities
              
              
              615,680
              
              
              139,153Net
                  cash used in operating activities
              
              
              (773,983
              )
              
              (966,041
              )Cash
                  flows from investing activities:Deposit
                  on land
              
              
              (25,000
              )
              
              -Purchase
                  of fixed assets
              
              
              -
              
              
              (89,258
              )Refund
                  of land deposit
              
              
              35,500
              
              
              -Net
                  cash provided by investing activities
              
              
              10,500
              
              
              (89,258
              )Cash
                  flows from financing activities:Proceeds
                  from sale of common stock and deferred stock purchase
              
              
              10,000
              
              
              1,100,500Proceeds
                  from exercise of warrants
              
              
              -
              
              
              73,000Proceeds
                  from loans
              
              
              -
              
              
              30,000Proceeds
                  from convertible debt financing
              
              
              567,000
              
              
              16,000Repayment
                  of loan
              
              
              -
              
              
              (23,910
              )Payments
                  to minority interests
              
              
              (60,376
              )
              
              (311,261
              )Proceeds
                  from minority interest
              
              
              93,345
              
              
              315,074Net
                  cash provided by financing activities
              
              
              609,969
              
              
              1,199,403Net
                  increase (decrease) in cash
              
              
              (153,514
              )
              
              144,104Cash
                  - Beginning of year
              
              
              211,147
              
              
              67,042Cash
                  - End of year
              
              $
              57,633
              
              $
              211,146
 
 See
        Notes
        to Consolidated Financial Statements
  F-6
 
 **DELTA
        MUTUAL, INC. AND SUBSIDIARIES**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 (Continued)
 
 Years
                  Ended December 31,2007
              
              2006Supplementary
                  information:Cash
                  paid during year for:Interest
              
              $
              -
              
              $
              1,564Income
                  taxes
              
              $
              -
              
              $
              -Changes
                  in operating assets and liabilities consists of:Increase
                  in accounts receivable
              
              
              -
              
              
              20,000Decrease
                  in prepaid expenses
              
              
              248,040
              
              
              15,895Decrease
                  in other assets
              
              
              750
              
              
              -Increase
                  in accounts payable and accrued expenses
              
              
              366,890
              
              
              103,258$
              615,680
              
              $
              139,153Non-cash
                  financing activities:Issuance
                  of common stock for convertible debt
              
              $
              832,000
              
              $
              387,202Issuance
                  of convertible notes for deferred stock purchase
              
              $
              266,000
              
              $
              -Issuance
                  of common stock in lieu of payment of accrued expenses
              
              $
              15,320
              
              $
              -Issuance
                  of common stock for services
              
              $
              -
              
              $
              462,641Issuance
                  of common stock for settlement
              
              $
              -
              
              $
              42,750
 
 See
        Notes
        to Consolidated Financial Statements
  F-7




DELTA
      MUTUAL, INC. AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


For
      the
      Years Ended December 31, 2007 and 2006





1.
      DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
      POLICIES





Organization





Delta
      Mutual, Inc. and its subsidiaries ("Delta" or the "Company") are engaged in
      providing environmental and construction technologies and services to certain
      geographic reporting segments in the Far East, the Middle East and the United
      States. The Company formerly operated in a fourth reportable segment, Puerto
      Rico. As of the close of the quarterly reporting period ended September 30,
      2007, the Company discontinued all operations in Puerto Rico. See Note
      4 **** and
      Note
      12 for further information regarding these discontinued operations.





The
      Company's environmental activities are conducted by its joint venture
      subsidiary, Delta-Envirotech, Inc. ("Envirotech") headquartered in Virginia.
      Envirotech has established a strategic alliance with ZAFF International, Ltd.,
      a
      technology company in Saudi Arabia, to pursue environmental and other projects
      in Saudi Arabia and other areas of the Middle East. Envirotech also formed
      a
      local joint venture company in Indonesia, PT Triyudha-Envirotech, to perform
      energy and waste recovery operations in that country.





The
      Company's construction technology activities are conducted through its wholly
      owned U.S. subsidiary, Delta Technologies, Inc. ("Technologies"). Technologies
      acquired the intellectual property rights and filed a patent for a new
      insulating concrete wall forming (ICF) system known as *Delta
      Wall* .





BASIS
      OF
      PRESENTATION





The
      Company's financial statements for the year ended December 31, 2007 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.
      The Company had no revenue in 2007 and as of December 31, 2007, there was a
      working capital deficit of approximately $2 million. Management recognizes
      that
      the Company's continued existence is dependent upon its ability to obtain needed
      working capital through additional equity and/or debt financing and revenue
      to
      cover expenses as the Company continues to incur losses.





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




F-8


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





SIGNIFICANT
      ACCOUNTING POLICIES





PRINCIPLES
      OF CONSOLIDATION





The
      Company's financial statements include the accounts of all majority-owned
      subsidiaries where its ownership is more than 50 percent of common stock. The
      consolidated financial statements also include the accounts of any Variable
      Interest Entities ("VIEs") where the Company is deemed to be the primary
      beneficiary, regardless of its ownership percentage. All significant
      intercompany balances and transactions with consolidated subsidiaries are
      eliminated in the consolidated financial statements. Where the Company's
      ownership interest is less than 100 percent, the minority ownership interests
      are reported in the consolidated balance sheets as a liability. The minority
      ownership interest of the Company's earnings or loss, net of tax, is classified
      as "Minority interest in earnings of consolidated subsidiaries" in the
      consolidated statements of operations.





USE
      OF
      ESTIMATES





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





LOSS
      PER
      SHARE





Basic
      and
      diluted loss per common share is computed by dividing net loss by the weighted
      average number of common shares outstanding during the year. Potential common
      shares are excluded from the loss per share calculation because the effect
      would
      be antidilutive. Potential common shares relate to the convertible debt, stock
      options and common stock purchase warrants. As of December 31, 2007 and 2006,
      there were 4,421,920 and 3,816,587 potential common shares related to
      convertible debt, respectively, and 7,978,000 and 7,978,000, potential common
      shares related to stock options, respectively.





REVENUE
      RECOGNITION





The
      Company recognizes revenue in accordance with the guidance contained in SEC
      Staff Accounting Bulletin No. 104 "Revenue Recognition Financial Statements"
      (SAB No. 104). Revenue is recognized from the Company's environmental
      remediation operation as the services are performed over the life of the
      remediation contracts.




F-9


PREACQUISITION
      COSTS





The
      Company accounts for costs incurred prior to the date of an acquisition of
      real
      property as preacquisition costs. Preacquisition costs are capitalized if the
      property was acquired or the acquisition of the property is probable.
      Capitalized preacquisition costs in excess of recoverable amounts are charged
      to
      expense.





EVALUATION
      OF LONG-LIVED ASSETS





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





DEPRECIATION
      AND AMORTIZATION





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





STOCK-BASED
      COMPENSATION





The
      Company has a stock-based compensation plan under which stock options are
      granted to employees. Effective January 1, 2006, the Company accounts for stock
      based compensation under Statement of Financial Accounting Standards ("SFAS")
      No. 123(R), "Share-Based Payment." The Company adopted SFAS 123(R) using the
      modified prospective method. Under modified prospective application, this SFAS
      applies to new awards and to awards for which the requisite service has not
      been
      rendered that are outstanding as of the required effective date shall be
      recognized as the requisite service is rendered on or after the required
      effective date. The compensation cost for the portion of awards shall be based
      on the grant-date fair value of those awards as calculated for either
      recognition or pro forma disclosures under SFAS 123. Changes to the grant-date
      fair value of equity awards granted before the required effective date of this
      Statement are precluded. The compensation cost for those earlier awards shall
      be
      attributed to periods beginning on or after the required effective date of
      this
      SFAS using the attribution method that was used under SFAS 123, except that
      the
      method of recognizing forfeitures only as they occur shall not be continued.




INCOME
      TAXES





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





F-10




FOREIGN
      CURRENCY TRANSLATION





The
      functional currency for some foreign operations is the local currency. Assets
      and liabilities of foreign operations are translated at balance sheet date
      rates
      of exchange and income, expense and cash flow items are translated at the
      average exchange rate for the period. Translation adjustments in future periods
      will be recorded in Cumulative Other Comprehensive Income. The translation
      gains
      or losses were not material for the years ended December 31, 2007 and
      2006.





INTANGIBLES





Effective
      January 1, 2002, the Company adopted SFAS No. 142, "Goodwill and Other
      Intangible Assets." SFAS No. 142 specifies the financial accounting and
      reporting for acquired goodwill and other intangible assets. Goodwill and
      intangible assets deemed to have indefinite useful lives are not amortized
      but
      are subject to, at a minimum, an annual impairment test. If the carrying value
      of goodwill or intangible assets exceeds its fair market value, an impairment
      loss would be recorded.





FAIR
      VALUE OF FINANCIAL INSTRUMENTS





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





RECLASSIFICATIONS





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





NEW
      FINANCIAL ACCOUNTING STANDARDS





In
      September 2006, the Finanacial Acounting Standards Board (“FASB”) issued SFAS
      No. 157, "Fair Value Measurements," (“SFAS 157”) which enhances existing
      guidance for measuring assets and liabilities using fair value. This Standard
      provides a single definition of fair value, together with a framework for
      measuring it, and requires additional disclosure about the use of fair value
      to
      measure assets and liabilities. SFAS 157, as amended by FASB Staff Position
      157-2, is effective for financial statements issued for fiscal years beginning
      after November 15, 2008, and interim periods within those fiscal years. The
      Company does not believe that SFAS No. 157 will have a material impact on its
      consolidated financial statements.





In
      July
      2006, the FASB issued Interpretation No. 48 “Accounting for Uncertainty in
      Income Taxes” (“FIN 48”). The Interpretation requires a two step approach for
      recognizing and measuring tax benefits based on a recognition threshold of
“more
      likely than not.” The FASB also requires explicit disclosure about uncertainties
      in tax positions including a detailed rollforward of tax benefits that do not
      qualify for financial statement recognition. The adoption of FIN 48 is effective
      for fiscal years beginning after December 15, 2006. The Company adopted the
      provisions of FIN 48 on January 1, 2007. As a result of the implementation
      of
      FIN 48, the Company recognized no adjustment in the net liability for
      unrecognized income tax benefits.





F-11




In
      February 2007, the FASB issued SFAS No. 159 ("SFAS 159") "The Fair Value Option
      for Financial Assets and Financial Liabilities," providing companies with an
      option to report selected financial assets and liabilities at fair value. The
      Standard's objective is to reduce both complexity in accounting for financial
      instruments and the volatility in earnings caused by measuring related assets
      and liabilities differently. It also requires entities to display the fair
      value
      of those assets and liabilities for which the Company has chosen to use fair
      value on the face of the balance sheet. SFAS 159 is effective for fiscal years
      beginning after November 15, 2007. The Company is currently evaluating the
      impact of the adoption of this Statement on its consolidated financial
      statements.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007) (“SFAS 141(R)”)
“Business Combinations,” which replaces SFAS 141 “Business Combinations.” This
      Statement improves the relevance, completeness and representational faithfulness
      of the information provided in financial reports about the assets acquired
      and
      liabilities assumed in a business combination. This Statement requires an
      acquirer to recognize the assets acquired, the liabilities assumed, and any
      noncontrolling interest in the acquiree at the acquisition date, measured at
      their fair values as of that date, with limited exceptions specified in the
      Statement. Under SFAS 141 (R), the acquisition-related costs, including
      restructuring costs, must be recognized separately from the acquisition and
      will
      generally be expensed as incurred. That replaces SFAS 141’s cost-allocation
      process, which required the cost of an acquisition to be allocated to the
      individual assets acquired and liabilities assumed based on their estimated
      fair
      values. SFAS 141(R) shall be applied prospectively to business combinations
      for
      which the acquisition date is on or after the beginning of the first annual
      report period beginning on or after December 15, 2008. The Company will
      implement this Statement in 2009.





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





F-12




In
      January 2008, Staff Accounting Bulletin (SAB”) 110 “Share-Based Payment” (“SAB
      110”) was issued. Registrants may continue, under certain circumstances, to use
      the simplified method in developing estimates of the expected term of share
      options as initially allowed by SAB 107, “Share-Based Payments.” The adoption of
      SAB 110 should have no effect on the financial position and results of
      operations of the Company.





2.
      PROPERTY AND EQUIPMENT





December
                31,2007
            
            2006Equipment
            
            $
            455,035
            
            $
            455,035Deposits
                on land
            
            
            0
            
            
            35,500Leasehold
                improvements
            
            
            7,807
            
            
            7,807462,842
            
            
            498,342Less
                  accumulated depreciation
            
            
            94,719
            
            
            49,761$
            368,123
            
            $
            448,581





Depreciation
      expense for the years ended December 31, 2007 and 2006, amounted to $44,958
      and
      $41,675 respectively.





3.
      INTANGIBLE ASSETS





Intangible
      assets are intellectual property included in a patent application. If the patent
      is not issued, the Company will write-off the unamortized amounts immediately.
      Amortization expense was $7,150 and $7,150 for the years ended December 31,
      2007
      and 2006, respectively. Other intangible assets consist of the
      following:





December
                31,2007
            
            2006Gross
                Carrying Amount
            
            $
            143,000
            
            $
            143,000Accumulated
                Amortization
            
            
            16,683
            
            
            9,533Intellectual
                property costs
            
            $
            126,317
            
            $
            133,467




Estimated
      amortization expense for intangible assets for the next five years is as
      follows:




F-13




EstimatedYear
                Ending
            
            AmortizationDecember
                31,
            
            Expense2008
            
            
            7,1502009
            
            
            7,1502010
            
            
            7,1502011
            
            
            7,1502012
            
            
            7,150




4.
      IMPAIRMENT LOSS





During
      the years ended December 31, 2007 and 2006, the Company wrote off $25,000 and
      $35,200; respectively, of land deposits related to low income housing projects
      in Puerto Rico.




5.
      INVESTMENT IN JOINT VENTURES





a.
            In
                December 2003, the Company formed a joint venture to develop Section
                124,
                low income housing in the Commonwealth of Puerto Rico. The Company
                became
                the general partner and 75% majority owner of a limited partnership,
                Delta
                Development Partners, LP that owns the 85% majority share of Delta
                Developers Corp., a Puerto Rico corporation, formed to manage the
                construction and related activities required to build approximately
                270
                homes under Section 124. During the year ended December 31, 2006,
                the
                activities associated with this joint venture were
                discontinued.





In
      October 2004, the Company formed a second joint venture to develop Section
      124
      low income housing in Puerto Rico. The Company became the general partner and
      majority owner of a limited partnership, Delta Development Partners II, LP
      that
      owns the 85% majority share of Delta Developers Guayanilla Corp., a Puerto
      Rico
      corporation formed to manage the construction and related activities required
      to
      build approximately 300 homes under Section 124. During the first quarter of
      2007, the activities associated with this joint venture were discontinued and
      the land deposit was returned to the joint venture.





In
      November 2006, the Company entered into a new joint venture to develop Section
      124 housing in Puerto Rico. The Company became the general partner and 35%
      minority owner of limited partnership, Delta TA, LP formed to manage the
      construction and related activities to build approximately 338 residential
      units
      under the Section 124 program. As of the quarter ended September 30, 2007,
      the
      activities associated with this partnership have been discontinued.





b.
            On
                January 14, 2004, the Company entered into a joint venture agreement
                with
                Hi tech Consulting and Construction, Inc. (“Hi Tech”) forming
                Delta-Envirotech, Inc. for the purpose of providing environmental
                technologies and services to markets in the Middle East. The joint
                venture
                company is based in Virginia and focuses on participating in foreign
                government sponsored pollution remediation and other projects.





F-14




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





Delta-Envirotech,
      Inc. meets the definition of a Variable Interest Entity as defined in Financial
      Accounting Standards Board Interpretation No. 46 (FIN 46),"Consolidation of
      Variable Interest Entities" requiring the primary beneficiaries of a variable
      interest entity to consolidate that entity. The primary beneficiary of a
      variable interest entity is the party that absorbs the majority of the expected
      losses of the entity or receives a majority of the entity's expected residual
      return, or both, as a result of ownership, contractual or other financial
      interest in the entity.





c.
            Minority
                interests primarily consist of outside investors ownership interest
                in
                Delta Development Partners, L.P.; Delta Development Partners II,
                L.P.;
                Delta TA, LP; Delta Developers Corp.; Delta Developers Guayanilla
                Corp.;
                Delta-Envirotech, Inc. and PT Triyudha–
                Envirotech.




The
      income and losses from operations of these entities and their respective
      minority interests have been reflected in the Company's statement of operations
      for the years ended December 31, 2007 and 2006. There are excess losses not
      absorbed by the minority interests due to limitations of their capital
      contributions. In future periods, the profits first attributable to the minority
      interests will be first absorbed against any unused losses until the losses
      are
      fully absorbed. The amount on the Company's consolidated balance sheet
      represents the minority interests as of December 31, 2007 and 2006.




The
      following represents a schedule of minority interests as of December
      31,





2007
            
            2006Delta
                Development Partners L.P.
            
            $
            82,087
            
            $
            145,092Delta
                Development Partners II, L.P.
            
            
            36,808
            
            
            39,741Delta
                TA L.P.
            
            
            106,902
            
            
            110,891Delta
                Developers Corp.
            
            
            —
            
            
            —Delta
                Developers Guayanilla Corp.
            
            
            —
            
            
            —Delta-Envirotech,
                Inc.
            
            
            —
            
            
            —PT
                Triyudha – Envirotech
            
            
            —
            
            
            (54,174
            )$
            225,797
            
            $
            241,550





F-15





6.
      NOTES
      PAYABLE





In
      April
      2005, the Company issued 8% term notes to private investors in the amount of
      $210,655, with the principal and interest due at maturity on October 2, 2005.
      Pursuant to note modification agreements, the maturity dates of these notes
      were
      extended and in June 2006 these notes became payable on written demand by the
      lenders. Interest expense for the years ended December 31, 2007 and 2006
      amounted to $16,852 and $16,852, respectively. As of December 31, 2007 and
      2006,
      accrued interest of $37,860 and $21,008, respectively, is included in accrued
      expenses on the Company's consolidated balance sheet.





In
      May
      2006, the Company borrowed $30,000 from an investor (formerly a related party)
      at interest of 6% per annum with the principal and interest due on May 17,
      2008.
      Interest expense for the years ended December 31, 2007 and 2006 amounted to
      $1,800 and $1,122, respectively. As of December 31, 2007 and 2006 accrued
      interest of $2,922 and $1,122, respectively, is included in accrued expenses
      on
      the Company's consolidated balance sheet.





7.
      CONVERTIBLE DEBT





During
      the year ended December 31, 2004, the Company issued convertible notes in the
      principal amounts of $961,400. The convertible notes had interest rates from
      4%
      to 6% and matured at various dates between May 12, 2006 and January 16, 2007.
      These notes are convertible into common stock at a conversion price of $0.05
      to
      $0.125 per share. One note, in the original principal amount of $129,160 that
      originally matured in May 2006 was amended during 2006 and 2007 extending the
      maturity date until June 2008. Another note, in the principal amount of $193,740
      that originally matured in May 2006 was amended during 2006 and 2007 extending
      the maturity date to December 1, 2007. The holder of this note has verbally
      agreed to extend the maturity date and has not made a written demand for
      payment. The Company is currently negotiating an extension with the noteholder.
      If the Company and the noteholder can not agree upon an extended maturity date,
      the Company may receive a notice of default. One note issued by the Company
      in
      the principal amount of $60,000, became payable upon written demand by the
      lender in September 2006. The balance of the convertible notes were converted
      into 12,923,280 shares of common stock through December 31, 2007.





In
      connection with the issuance of the convertible notes, the Company issued
      8,880,000 common stock purchase warrants at an exercise price of $0.10 per
      share. The warrants expired March 31, 2006.





The
      Company accounted for the warrants and the convertible debt with detachable
      warrants in accordance with Emerging Issues Task Force 00-27 and 00-19 and
      SFAS
      No. 33. The Company performed calculations allocating the proceeds of
      convertible debt with detachable warrants to each respective security at their
      fair values. The Company used the conversion value of the convertible debt
      and
      calculated fair value of the warrants using the Black-Scholes valuation model
      for its estimate of fair value. The Company compared the allocated proceeds
      of
      the convertible debt to the difference between its conversion value and face
      amount. The calculated fair value of the convertible debt of $722,855 was
      recorded as the value of the Beneficial Conversion Feature and accordingly
      credited to Additional Paid-in Capital. The value of the warrants of $235,545
      was recorded as a reduction of the convertible debt. The convertible debt was
      recorded at zero. The convertible debt was accreted to its face value after
      2004, 2005 and 2006 conversions, under the interest method per APB 21, until
      it
      either converted or matured.





F-16




In
      May
      2006, the Company issued a convertible note to a related party in the principal
      amount of $16,000, bearing interest at 6% per annum. The note was convertible
      into common stock at a conversion price of $0.06 per share, the fair value
      at
      the date of issuance. The note matured on November 3, 2007 and upon maturity
      the
      Company issued 266,667 shares of common stock in payment of the principal amount
      and 24,000 shares of common stock in payment of $1,440 of accrued
      interest .





During
      the first quarter of 2007, the Company issued a convertible note to a related
      party in the principal amount of $17,000, and a convertible note to an investor
      in the principal amount of $266,000. Both notes bear interest of 6% per annum
      and are convertible into common stock at an initial conversion price of $0.05
      per share, the fair value at the date of issuance. The notes mature in April
      2008. In conjunction with the issuance of these two notes, the Company
      reclassified $266,000 recorded as deferred stock purchase, on its consolidated
      balance sheet as of December 31, 2006, to convertible notes at March 31, 2007.
      On October 30, 2007, the holder of the $266,000 note converted the principal
      amount of the note into 5,320,000 shares of common stock and waived all accrued
      interest.





In
      April
      2007, the Company issued a convertible note to a related party in the principal
      amount of $26,600 bearing interest of 6% per annum and convertible into common
      stock at the conversion price of $0.05 per share, the fair value at the date
      of
      issuance. The note matures in April 2008.





During
      the second and third quarters of 2007, the Company borrowed $550,000 from an
      investor pursuant to the terms of a convertible promissory note with a maturity
      date of May 2008; interest of 10% per annum; and convertible into common stock
      at the conversion price of $0.05 per share, the fair value at the date of
      issuance. In September 2007, the investor converted the principal amount of
      the
      note into 11,000,000 shares of common stock and waived all accrued interest.





During
      the years ended December 31, 2007 and 2006, the noteholders converted $832,000
      and $305,160 principal amount into 16,586,667 and 5,753,280 shares of common
      stock, respectively.




At
      December 31, 2007, the Company's outstanding convertible notes were convertible
      into 4,421,920 shares of common stock.





The
      following table shows the maturities by year of total face amount of the
      convertible debt obligations at December 31, 2007:





2008
            
            $
            397,340$
            397,340




F-17




For
      the
      years ended December 31, 2007 and 2006, the Company recorded interest expense
      of
      $22,931 and $26,094, respectively. As of December 31, 2007 and 2006, accrued
      interest of $39,657 and $42,271; respectively, is included in accrued expenses
      on the Company's consolidated balance sheet.




8.
      ACCRUED EXPENSES





Accrued
      expenses consists of the following:





December
                31,2007
            
            2006Professional
                fees
            
            $
            34,703
            
            $
            61,500Interest
                expense
            
            
            80,439
            
            
            63,278Payroll
                expense
            
            
            462,195
            
            
            353,320Payroll
                expense-officers
            
            
            117,436
            
            
            117,436Payroll
                tax expense
            
            
            34,742
            
            
            36,445Accrued
                consulting fees
            
            
            144,000
            
            
            30,000Other
                accrued expenses
            
            
            352,159
            
            
            228,352$
            1,225,674
            
            $
            890,351




9.
      LOAN
      FROM RELATED PARTY





In
      March
      2005, the Company borrowed $71,731 from a shareholder of the Company, with
      interest at 6% per annum and the principal and interest due in three equal
      installments on June 21, September 19, and December 20, 2005. The note was
      amended on December 16, 2005 to extend the final installment payment to February
      20, 2006. On February 3, 2006, the Company made the final payment consisting
      of
      $23,910 of principal and $1,563 of accrued interest. Interest expense for the
      year ended December 31, 2006 amounted to $349.





10.
      OTHER
      RELATED PARTY TRANSACTIONS





a.
            The
                Company's subsidiary, Delta-Envirotech, Inc. ("Envirotech") pays
                monthly
                office rent to David Razmara, the president of Envirotech and a
                shareholder of the Company, in the current amount of $2,000. The
                rent
                expense for the years ended December 31, 2007 and 2006 amounted to
                $24,000
                and $12,000, respectively.





b.
            As
                of December 31, 2006, Delta Developers Corp., a majority-owned subsidiary
                of the Company, eliminated $203,000 of management fees payable to
                a
                related party, because the Company's initial low income housing project
                in
                Puerto Rico was disapproved and all activities associated with that
                project were discontinued. The elimination of the management fee
                expense
                is included in the Company's consolidated statements of operations
                for the
                year ended December 31, 2006.




F-18





11.
      STOCKHOLDERS' DEFICIENCY





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





a.  
      For the years ended December 31, 2007 and 2006, the Company issued 16,586,667
      and 5,753,280 shares of common stock respectively upon the conversion of
      convertible notes in the original principal amounts of $832,000 and $387,203,
      respectively, valued at $0.05 - $0.125 per share, and issued 135,040 and 517,426
      shares of common stock respectively for payment of accrued interest in the
      amount of $15,320 and $25,871, respectively, valued at $0.05 - $0.125 per share.





b.  
      For the year ended December 31, 2006, the Company issued 2,431,730 shares of
      common stock for services valued at $462,641 at a price per share of $0.09
      -
      $0.38.





c.  
      For the year ended December 31, 2006, the Company sold 17,182,212 shares of
      common stock for net proceeds of $834,500, valued at $0.05 - $0.12 per share.





d.  
      For the year ended December 31, 2006, the Company issued 730,000 shares of
      common stock upon the exercise of the Company's common stock purchase warrants
      at a conversion price of $73,000, valued at $0.10 per share.





f.  
      For the year ended December 31, 2006, the Company issued 225,000 shares of
      common stock in settlement of a lawsuit for $42,750, valued at $0.19 per share,
      which expense was included in the Company's consolidated statements of
      operations for the year ended December 31, 2005.





12.
      DISCONTINUED OPERATIONS





As
      of
      September 30, 2007, the Company adopted a formal plan to discontinue all its
      operations in Puerto Rico. As a result of the Company’s decision, the operations
      of Delta Development Partners, LP; Delta Developers Corp.; Delta Development
      Partners II, LP; Delta Developers Guayanilla Corp., and Delta TA, LP have been
      classified as discontinued operations. The assets and liabilities, results
      of
      operations, and cash flows of these discontinued operations have been included
      with the operations of the Company in its consolidated financial statements
      due
      to the immaterial nature of the transactions.





13.
      BUSINESS SEGMENT INFORMATION





The
      Company’s reporting business segments are geographic and include the Far East
      (Indonesia), the Middle East, North America (United States) and Puerto Rico.
      The
      primary criteria by which financial performance is evaluated and resources
      allocated are revenue and operating income.




F-19




The
      following is a summary of key financial data:





YearsEnded December 312007
            
            2006Total
                Revenue:North
                America
            
            $
            —
            
            $
            —Indonesia
            
            
            —
            
            
            279,870Middle
                East
            
            
            —
            
            
            —Puerto
                Rico
            
            
            —
            
            
            —$
            —
            
            $
            279,870Loss
                from Operations:North
                America
            
            $
            (2,165,830
            )
            $
            (2,330,053
            )Indonesia
            
            
            (36,950
            )
            
            —Middle
                East
            
            
            (20,000
            )
            
            (1,100
            )Puerto
                Rico
            
            
            (15,250
            )
            
            (12,512
            )$
            (2,238,030
            )
            $
            (2,343,665
            )Long-lived
                Assets:North
                America
            
            $
            208,988
            
            $
            225,896Indonesia
            
            
            286,102
            
            
            322,052Middle
                East
            
            
            —
            
            
            —Puerto
                Rico
            
            
            —
            
            
            35,500$
            495,090
            
            $
            583,448Capital
                Expenditures:North
                America
            
            $
            —
            
            $
            89,258Indonesia
            
            
            —
            
            
            —Middle
                East
            
            
            —
            
            
            —Puerto
                Rico
            
            
            —
            
            
            —$
            —
            
            $
            89,258Depreciation
                and Amortization:North
                America
            
            $
            16,158
            
            $
            12,875Indonesia
            
            
            35,950
            
            
            35,950Middle
                East
            
            
            —
            
            
            —Puerto
                Rico
            
            
            —
            
            
            —$
            52,108
            
            $
            48,826





14.
      INCOME TAXES





The
      Company adopted the provisions of FIN 48 on January 1, 2007. As a result of
      the
      implementation of FIN 48, the Company recognized no adjustment in the net
      liability for unrecognized income tax benefits.




F-20




During
      the years ended December 31, 2007 and 2006, the Company recorded a deferred
      tax
      asset associated with its net operating loss ("NOL") carryforwards of
      approximately $8,734,479 that was fully offset by a valuation allowance due
      to
      the determination that it was more likely than not that the Company would be
      unable to utilize these benefits in the foreseeable future. The Company's NOL
      carryforward expires beginning in 2010 through 2022.





There
      is
      no provision for income taxes for the years ended December 31, 2007 and 2006
      as
      there was no taxable income in either year.





The
      types
      of temporary differences between tax basis of assets and liabilities and their
      financial reporting amounts that give rise to the deferred tax liability and
      deferred tax asset and their approximate tax effects are as
      follows:





For the Year EndedDecember 31, 2007Temporary
            
            TaxDifference
            
            EffectGross
                deferred tax asset resulting from net operating loss
                carryforward
            
            $
            11,050,000
            
            $
            3,757,000Valuation
                allowance
            
            
            (11,050,000
            )
            
            (3,757,000
            )Net
                deferred income tax asset
            
            $
            —
            
            $
            —





For the Year EndedDecember 31, 2006Temporary
            
            TaxDifference
            
            EffectGross
                deferred tax asset resulting from net operating loss
                carryforward
            
            $
            8,850,000
            
            $
            3,009,000Valuation
                allowance
            
            
            (8,850,000
            )
            
            (3,009,000
            )Net
                deferred income tax asset
            
            $
            —
            
            $
            —




F-21




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





For the Year EndedDecember 31,2007
            
            2006Federal
                income tax rate
            
            
            (34
            )%
            
            (34
            )%Effect
                of unused operating losses
            
            
            34
            %
            
            34
            %Effective
                income tax rate
            
            
            0
            %
            
            0
            %





15.
      SHARE
      BASED COMPENSATION





On
      January 1, 2006, the Company adopted SFAS No. 123(R) "Share-Based Payment,"
      requiring the recognition of compensation expense in the Consolidated Statements
      of Operations related to the fair value of its employee share-based options
      and
      awards. SFAS No. 123(R) revises SFAS No. 123 "Accounting for Stock-Based
      Compensation" and supercedes APB Opinion No. 25 "Accounting for Stock Issued
      to
      Employees." SFAS No. 123(R) is supplemented by SEC Staff Accounting Bulletin
      ("SAB") No.107 "Share-Based Payment." SAB No.107 expresses the SEC staff's
      views
      regarding the interaction between SFAS No. 123(R) and certain SEC rules and
      regulations including the valuation of share-based payment
      arrangements.





The
      Company recognizes the cost of all employee stock options on a straight-line
      attribution basis over their respective contractual terms, net of estimated
      forfeitures. The Company has selected the modified prospective method of
      transition; accordingly, prior periods have not been restated. Prior to adopting
      SFAS No. 123(R), the Company applied APB Opinion No. 25, and related
      interpretation in accounting for its stock-based compensation plans. All
      employee stock options were granted at or above the grant date market price.
      Accordingly, no compensation cost was recognized for fixed stock option
      grants.





At
      December 31, 2007 and 2006, the Company had one share-based compensation plan,
      which is described below. During fiscal years 2007 and 2006, the adoption of
      SFAS No.123(R) resulted in an aggregate pretax compensation expense recognized
      in net loss for stock based compensation of $786,980 and  $769,810,
      respectively. For the years ended December 31, 2007 and 2006, the aggregate
      pretax compensation expense caused basic and diluted earnings per common share
      to decrease by $0.01 per share, respectively.





Under
      the
      provisions of SFAS 123(R), the recognition of deferred compensation,
      representing the amount of unrecognized restricted stock expense that is reduced
      as expense is recognized, at the date restricted stock is granted, is not longer
      required. Therefore, in the quarter ended March 31, 2006, the amount that had
      been in "Deferred compensation" in the consolidated balance sheet was reversed
      to zero.




F-22




The
      Company also issues shares of its common stock to non-employees as stock-based
      compensation. The Company accounts for the services using the fair market value
      of the services rendered. For the years ended December 31, 2007 and 2006, the
      Company issued -0- and 2,431,730 shares, respectively, and recorded compensation
      expense of $-0- and $462,641, respectively, in conjunction with the issuance
      of
      these shares.





Stock
      Option Plan





In
      December 2001, the Company's stockholders approved the 2001 Employee Stock
      Option Plan (the "2001 Plan"), pursuant to which 2,000,000 shares of common
      stock were reserved for issuance. In August 2004, the Company's stockholders
      approved the 2004 Stock Option Plan (the "2004 Plan"), pursuant to which
      10,000,000 shares of common stock were reserved for issuance. As of December
      31,
      2006, all shares under the 2001 Plan had been issued and 2,022,000 shares of
      common stock remained available for issuance under the 2004 Plan.





The
      Company was also authorized to issue shares of stock to its employees from
      its
      2001 Plan. The Company expensed the issuance of stock awards in accordance
      with
      SFAS No. 123. Shares issued from the 2001 Plan were expensed at the time of
      issuance, as the stock issued had no restrictions to the employees. There were
      no stock awards to employees from the 2001 Plan during the years ended December
      31, 2007 or 2006.




On
      February 17, 2006, the Company issued 778,000 stock options to five employees.
      The Company recorded an expense of $22,050 which is included in the consolidated
      statements of operations for the year ended December 31, 2006.





On
      July
      3, 2006, the Company cancelled incentive stock options to purchase a total
      of
      6,478,000 shares of common stock granted in November 2004 and February 2006
      to
      four employees; and 1,500,000 non statutory options granted in December 2005
      to
      an employee of a subsidiary, all from the Company's 2004 Plan. Exercise prices
      for these options ranged from $0.17 to $0.25 per share. In accordance with
      SFAS
      No. 123(R), the Company expensed $75,000 and eliminated $225,000 of deferred
      compensation expense related to the cancellation of the 1,500,000 non-statutory
      options, which is included in the consolidated statements of operations for
      the
      year ended December 31, 2006.





On
      July
      3, 2006, the Company replaced the cancelled options by granting 7,978,000
      new stock options with an exercise price of $0.11 per share and recorded an
      expense of $87,760 associated with the new option grants which is included
      in
      the consolidated statements of operations for the year ended December 31,
      2006.





The
      Company did not issue any stock options to its employees in 2007.





The
      fair
      value of each option grant is estimated on the date of the grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions used for grants in 2006: dividends yield of 0%, expected volatility
      of 116% and expected life of 5 years.




F-23




A
      summary
      of the status of the Company's options and stock awards under its stock option
      plans as of December 31, 2007 and 2006 and changes during the years then ended,
      is presented below.





2007
            
            2006Shares
            
            Weighted-Average
              Exercise Share Price
            
            Shares
            
            Weighted-Average
              Exercise Share
              PriceOptions
                outstanding beginning of year
            
            
            7,978,000
            
            $
            0.11
            
            
            8,000,000
            
            $
            0.25Options
                granted
            
            
            -
            
            $
            -
            
            
            8,756,000
            
            $
            0.12Options
                exercised
            
            
            -
            
            $
            -
            
            
            -
            
            $
            -Options
                cancelled/expired
            
            
            -
            
            $
            -
            
            
            (8,778,000
            )
            $
            0.24Options
                outstanding - end of year
            
            
            7,978,000
            
            $
            0.11
            
            
            7,978,000
            
            $
            0.11Option
                Price Range at End of Year
            
            
            
            
            $
            0.11
            
            
            
            
            $
            0.11Option
                price range for exercised shares
            
            
            -
            
            
            
            
            
            -Options
                available for grant at end of year
            
            
            2,022,000
            
            
            
            
            
            2,022,000Weighted
                - average fair value of options granted during the year
            
            
            
            
            $
            —
            
            
            
            
            $
            0.12




Stock
      compensation expense applicable to stock options for the years ended December
      31, 2007 and 2006 was approximately $786,980 and $769,810, respectively. The
      aggregate intrinsic value of options outstanding as of December 31, 2007 and
      2006 was ($718,020) and $319,120, respectively.




The
      following table summarizes information about fixed price stock options
      outstanding at December 31, 2007.





Number
            
            Weighted-Average
            
            
            
            Number
            
            Weighted-Range of
            
            Outstanding
            
            Remaining
            
            Weighted-
            
            Exercisable
            
            AverageExercise
            
            December 31,
            
            Contractual
            
            Average
            
            December 31,
            
            ExercisePrice
            
            2007
            
            Life
            
            Exercise Price
            
            2007
            
            Price$0.11
            
            
            
            7,978,000
            
            
            3.5
            
            $
            0.11
            
            
            7,978,000
            
            $
            0.11




F-24




A
      summary
      of the Company's non-vested options as of December 31, 2007, and changes during
      the year ended December 31, 2007 is presented below.




Weighted-AverageGrant-DateNon-vested Options
            
            Options
            
            Fair ValueNon-vested
                at December 31, 2006:
            
            
            4,069,060
            
            $
            0.11Granted
            
            
            —
            
            
            —Vested
            
            
            (4,069,060
            )
            
            0.11Forfeited,
                expired or cancelled:
            
            
            —
            
            
            —Non-vested
                at December 31, 2007
            
            
            —
            
            
            0.11





At
      December 31, 2007, there was $1,409,270 of total unrecognized compensation
      cost
      related to share-based compensation arrangements granted under the 2004 Plan.
      The cost is expected to be recognized over a weighted average period of
      3.5  years.
      The total fair value of shares vested during 2007 was $447,597. The aggregate
      intrinsic value of options vested during 2007 was ($122,072). Currently, the
      Company believes that substantially all options will vest.




A
      summary
      of the status of the Company's stock purchase warrants as of December 31, 2007
      and 2006, and changes during the years then ended, is presented
      below.


2007
              
              2006Weighted-Average
              
              
              
              Weighted-AverageShares
              
              Exercise Share Price
              
              Shares
              
              Exercise Share PriceWarrants
                  outstanding, beginning of year
              
              
              —
              
              
              
              
              
              7,580,000
              
              $
              0.10Warrants
                  granted
              
              
              —
              
              
              
              
              
              —Warrants
                  exercised
              
              
              —
              
              
              
              
              
              (730,000
              )
              $
              0.10Warrants
                  cancelled/expired
              
              
              
              
              
              
              
              
              (6,850,000
              )
              $
              0.10Warrants
                  outstanding, end of year
              
              
              —
              
              
              
              
              
              —
              
              $
              —


There
      were no fixed price warrants outstanding at December 31, 2007.




F-25




16.
      COMMITMENTS AND CONTINGENCIES





a. 
      Executive Employment Agreements





The
      Company has employment agreements with both of its principal executive
      officers.





In
      February 2006, the Company entered into a new three-year employment agreement
      with Peter F. Russo, its president and CEO, effective March 11, 2006. If Mr.
      Russo's employment is terminated other than for "cause," his base salary is
      continued for six months following his termination. The agreement also contains
      a provision for additional compensation if his employment is terminated without
      "cause" following a change in control. For the years ended December 31, 2007
      and
      2006, the Company had accrued salary liability to Mr. Russo of $117,436 and
      $117,436, respectively, which is included in accrued expenses on the Company's
      consolidated balance sheet.





In
      2005,
      the Company entered into a three-year employment agreement with Martin G.
      Chilek, its chief financial officer, effective June 1, 2005. This agreement
      was
      automatically renewed for an addition 12-month period on March 3, 2008. If
      Mr.
      Chilek's employment is terminated other than for "cause," or his employment
      agreement is not renewed by the Company, his base salary is continued for six
      months following his termination. The agreement also contains a provision for
      additional compensation if his employment is terminated without "cause"
      following a change in control. For the years ended December 31, 2007 and 2006,
      there was no accrued salary liability to Mr. Chilek.





b. 
      Consulting Agreements





In
      August
      2005, the Company entered into a consulting agreement with Juan B. Rodriguez
      Pagan ("Rodriguez") to provide certain services and assistance to the Company
      in
      developing its construction and building materials businesses. By written notice
      the Company terminated this agreement effective June 2, 2007, and informed
      Rodriguez that the reason for termination was because he violated certain
      provisions of the agreement.





For
      the
      years ended December 31, 2007 and 2006, consulting fees of $144,000 and $72,000,
      respectively, are included in accrued expenses on the Company's consolidated
      balance sheet. For the year ended December 31, 2006, the Company expensed
      $189,000 in consulting fees in conjunction with the issuance of common stock
      to
      Rodriguez. The remainder of the stock value of $248,000 was included as a
      prepaid expense on the Company's consolidated balance sheet. In conjunction
      with
      the termination of the consulting agreement, the Company recorded a one-time
      charge of $248,000.





In
      August
      2005, Delta Technologies, Inc. entered into a consulting agreement with Richard
      F. Straub, Jr. ("Straub") for a period of three years, to provide ongoing
      technical assistance and support in the production of Technologies' insulating
      concrete wall forming products.





For
      the
      years ended December 31, 2007 and 2006, consulting fees of $52,800 and $52,800,
      respectively have been expensed and $66,667 and $16,667 respectively of the
      stock value is included in accrued expenses on the Company's consolidated
      statements of operations.




F-26




c. 
      Leases





The
      Company leases its office space in Pennsylvania. The Company entered into a
      new
      12-month lease on March 1, 2006 that contained a year-to-year renewal provision.
      The first and second renewal periods became effective March 1, 2007 and 2008,
      respectively.





Delta-Envirotech
      has a month-to-month lease for office space in Virginia at a cost of $2,000
      per
      month and also
      has a month-to-month lease for a business office in Saudi Arabia at a cost
      of
      $1,000 per month.





The
      Company's apartment lease in San Juan Puerto Rico expired on March 31, 2006
      and
      was not renewed.





Future
      minimum lease payments are as follows:





Year endingDecember 31,2008
            
            
            7,8002009
            
            
            1,300$
            9,100





For
      the
      years ended December 31, 2007 and 2006, rent expense was $43,800 and $31,800,
      respectively.




17.
      SUBSEQUENT EVENTS





a.
            On
                March 4, 2008, the Company acquired from Egani, Inc., an Arizona
                corporation (“Egani”), 100% of the issued and outstanding membership
                interests held by it in Altony SA, an Uruguay Sociedad Anonima (“Altony”),
                which owns 100% of the issued and outstanding membership interests
                in
                South American Hedge Fund LLC, a Delaware limited liability company
                (“SAHF”) in exchange for the issuance of 130,000,000 shares of common
                stock. The purchase price for the membership interest was $ 2.6 million,
                valued at $0.02 per share, the fair value on the date of issuance.
                SAHF is
                a hedge fund seeking to make investments in South America.





b.
            On
                March 4, 2008, the Company issued 10,000,000 shares of common stock
                to
                Security Systems International, Inc. pursuant to a consulting service
                agreement dated September 10, 2007. The shares were valued at $0.02,
                fair
                value at the date ofissuance.





c.
            During
                March 2008,the
                Company borrowed $121,000 from two stockholders of the Company pursuant
                to
                promissory notes, bearing interest of 6% per annum with maturity
                dates of
                September 6, 2008.





d.
            In
                2008, the Company issued 924,320 shares of common stock as payment
                of
                $43,600 principal amount and accrued interest due as of April 9,
                2008,
                pursuant to two convertible notes issued by the Company in April
                2007.




F-27