DELTA MUTUAL INC (Form: 10-K, Received: 04/14/2009 10:51:19)

DELTA MUTUAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2008 and 2007

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

Delta Mutual, Inc. and subsidiaries (“Delta” or the “Company”) was incorporated in Delaware on November 17, 1999. Since 2003, the principal business activities of the Company were focused on providing environmental and construction technologies and services to certain geographic reporting segments in the Far East, Middle East and the United States. During the year ended December 31, 2008, the Company discontinued all its operations in the Far East (Indonesia) and discontinued its construction technology activities that were conducted through its wholly owned U.S. subsidiary, Delta Technologies, Inc. See Notes 1, 4, 5 and 7 for further information regarding these discontinued operations.

On March 4, 2008, the Company entered into a Membership Interest Purchase Agreement (the “Agreement”) with Egani, Inc., an Arizona corporation (“Egani”). Pursuant to the Agreement, the Company acquired from Egani all of the issued and outstanding shares of stock of Altony S.A., an Uruguay Sociedad Anonima (“Altony”), which owns 100% of the issued and outstanding membership interests in South American Hedge Fund LLC, a Delaware limited liability company (“SAHF”). At the closing of the Agreement, the Company issued 130,000,000 shares of its common stock to Egani for the purchase of all of the outstanding shares of stock in Altony which constituted, following such issuance, a majority of the outstanding shares of the Company’s common stock.

Immediately following the closing of the Agreement, Altony became a wholly owned subsidiary of the Company. For accounting purposes only, the transaction was treated as a recapitalization of the Company, as of March 4, 208, with Altony as the acquirer. The financial statements prior to March 4, 2008 are those of Altony and reflect the assets and liabilities of Altony at historical carrying amounts. The financial statements show a retroactive restatement of Altony’s historical stockholders’ equity to reflect the equivalent number of shares issued to Egani.

The principal business activity of Altony is the ownership and management of its SAHF subsidiary. During the year ended December 31, 2008, SAHF shifted its focus from investments in securities of Latin American entities to investments in oil and gas concessions and exploration rights in Argentina and intends to continue its focus on the energy sector, including the development and supply of energy and alternate energy sources in Latin America and North America.

In 2007, SAHF acquired partial ownership interests in four oil and gas concessions in Argentina. The majority owners of these concessions have established joint ventures, registered in Argentina, that are in the process of obtaining the necessary government and environmental permits to begin operations at these concessions. SAHF will become a member of the joint ventures in 2009, when it receives its foreign registration in Argentina. In the first quarter of 2008, SAHF agreed to exchange half of the ownership interests it held in the concessions to a third party, that agreed to assume 50% of the SHAF’s subsequent development costs related to these four concessions. As of December 31, 2008, the Company’s ownership interests in these concessions ranged from nine to 23.5 percent.

In 2008, SAHF acquired 40% of the rights to explore for oil and gas in five geographic areas located in Northern Argentina.

Following the acquisition of Altony, the Company continued to pursue selected business opportunities in the Middle East that are conducted by its joint venture subsidiary Delta-Envirotech, Inc. (“Envirotech”), headquartered in Virginia.

BASIS OF PRESENTATION

The Company's financial statements for the year ended December 31, 2008 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 limited revenue in 2008 and as of December 31, 2008, there was a working capital deficit of approximately $2.4 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 the risks of its oil and gas investments in South America. The likelihood of success of the Company must be considered in light of the expenses, difficulties, delays and unanticipated challenges encountered in connection with the operations of the oil and gas concession in Argentina. There is no assurance the Company will ultimately achieve a profitable level of operations.

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

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 the common stock. The consolidated financial statements also include the accounts of any Variable Interest Entities ("VIEs") where the Company is deemed to be the primary beneficiary, regardless of its ownership percentage. All significant intercompany balances and transactions with consolidated subsidiaries are eliminated in the consolidated financial statements. 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 share of income (loss) of consolidated subsidiaries" in the consolidated statement 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.

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per common share are computed by dividing net earnings by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share are computed by dividing net earnings (loss) by the weighted average number of common shares and potential common shares outstanding during the period. As the Company experienced a loss during the year ended December 31, 2008, potential common shares are excluded from the loss per share calculation because the effect would be antidilutive. Potential common shares relate to the convertible debt and stock options. As of December 31, 2008, there were 2,749,920 potential common shares related to convertible debt and 3,500,000 common shares related to stock options.

REVENUE RECOGNITION

The Company recognized revenue from the results of its investment portfolio as the difference between proceeds from the sale of securities and their acquisition cost, less commissions paid to the firm that conducts the securities transactions. The Company was in the business of trading securities and gains and losses from the sale of securities are included in the Company’s consolidated statement of operations.

EVALUATION OF LONG-LIVED ASSETS

The Company reviews property and equipment, finite-lived intangible assets and investments in nonconsolidated affiliates for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with guidance in Statement of Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets." If the carrying value of the long-lived asset exceeds the present value of the related estimated future cash flows, the asset would be adjusted to its fair value and an impairment loss would be charged to operations in the period identified. Because the Company discontinued its operations in the Far East (Indonesia) as of the quarter ended June 30, 2008 and discontinued its construction technology activities as of the quarter ended December 31, 2008, the fixed assets and intangible assets related to these operations were evaluated for impairment. Based on the results of that analysis, the Company recorded a $467,995 impairment charge related to these assets during the year ended December 31, 2008.

DEPRECIATION AND AMORTIZATION

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

INVESTMENTS

At acquisition, marketable debt and equity securities are designated as trading securities which are carried at estimated fair value with unrealized gains and losses reflected in results of operations.

EQUITY METHOD INVESTMENTS

The Company accounts for non-marketable investments using the equity method of accounting if the investment gives it the ability to exercise significant influence over, but not control of, an investee. Significant influence generally exists if there is an ownership interest representing between 20% and 50% of the voting stock of the investee. Under the equity method of accounting, investments are stated at initial cost and are adjusted for additional investments and their proportionate share of earnings or losses and distributions. The Company records its share of the investee’s earnings or losses in earnings (losses) from unconsolidated entities, net of income taxes, in its consolidated statement of operations. Equity investments of less than 20% are stated at cost. The cost is not adjusted for its proportionate share of earnings or losses. The Company evaluates its equity method investments for impairment when events or changes in circumstances indicate, in management’s judgment, that the carrying value of such investments may have experienced an other-than-temporary decline in value. When evidence of loss in value has occurred, the Company compares fair value of the investment to its carrying value to determine whether impairment has occurred. If the estimated fair value is less than the carrying value and management considers the decline to be other than temporary, the excess of the carrying value over the estimated fair value is recognized as impairment in the consolidated financial statements.

STOCK-BASED COMPENSATION

The Company has a stock-based compensation plan under which stock options are granted to employees. The Company accounts for stock-based compensation under Statement of Financial Accounting Standards ("SFAS") No. 123(R), "Share-Based Payment."

INCOME TAXES

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

FOREIGN CURRENCY TRANSLATION

The functional currency for some foreign operations is the local currency. Assets and liabilities of foreign operations are translated at balance sheet date rates of exchange and income, expense and cash flow items are translated at the average exchange rate for the period. The functional currency in South America is the U.S. dollar. Translation adjustments are recorded in Cumulative Other Comprehensive Income. The translation gains or losses were not material for the years ended December 31, 2008 and 2007 and there were no adjustments to Cummulative Other Comprehensive Income.

POLITICAL RISK

The Company is exposed in the inherent risks for the foreseeable future of conducting business internationally. Language barriers, foreign laws and tariffs and taxation issues all have a potential effect on he Company’s ability to transact business. Political instability may increase the difficulties and costs of doing business. Accordingly, events resulting from changes in the political climate could have a material effect on the Company.

INTANGIBLES

SFAS No. 142, "Goodwill and Other Intangible Assets," 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.

DISCONTINUED OPERATIONS

During the quarter ended June 30, 2008, the Company discontinued all its operations in the Far East (Indonesia). During the quarter ended December 31, 2008, the Company discontinued all of its construction technology activities that were carried out by its wholly owned subsidiary, Delta Technologies, Inc. and the trading of securities by its South American Hedge Fund subsidiary. These discontinued operations resulted in a gain (loss) of $(2,310,473) and $341,556 for the years December 31, 2008 and 2007, respectively.

Summarized statement of loss for discontinued operations is as follows:

	Years Ended December 31,

	2008			2007

Net sales	$	(2,077,576	)	$	341,556

Impairment		(467,994	)		—

Provision for income taxes		—			—

Loss from operations, net of tax		—			—

Gain on disposition of minority interests		230,057			—

Provision for income taxes		—			—

Loss from discontinued operations, net of tax	$	(2,310,473	)	$	341,556

FAIR VALUE OF FINANCIAL INSTRUMENTS

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

NEW FINANCIAL ACCOUNTING STANDARDS

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which enhances existing guidance for measuring assets and liabilities using fair value. This Standard provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. In February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application of SFAS No. 157 to SFAS No. 13 and its “Related Interpretive Accounting Pronouncements that Address Leasing Transactions,” (“FSP SFAS 157-1”) and FASB Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS 157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive accounting pronouncements that address leasing transactions from the requirements of SFAS No. 157, with the exception of fair value measurements of assets and liabilities recorded as a result of a lease transaction but measured pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS 157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FSP SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption of SFAS No. 157 on January 1, 2008. See Note 4 of Notes to Consolidated Financial Statements for disclosures related to the Company’s financial assets accounted for at fair value on a recurring or nonrecurring basis. The Company will provide the additional disclosure required relating to the fair value measurement of nonfinancial assets and nonfinancial liabilities when it completes its implementation of SFAS No. 157 on January 2009, as required, and does not believe they will have a significant impact on its financial statements.

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 adoption of SFAS No. 159 on January 1, 2008 did not have a material impact on the Company’s financial statements.

In June 2007, the Emerging Issues Task Force of the FASB issued EITF Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities," which is effective for calendar year companies on January 1, 2008. The Task Force concluded that nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. Such amounts should be recognized as an expense as the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided. EITF Issue No. 07-3 did not impact the Company’s financial statements.

In December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 “Business Combinations.” This Statement is intended to improve the relevance, completeness and representational faithfulness of the information provided in financial reports about the assets acquired and the liabilities assumed in a business combination. This Statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. Under SFAS 141(R), acquisition-related costs, including restructuring costs, must be recognized separately from the acquisition and will generally be expensed as incurred. That replaces SFAS 141’s cost-allocation process, which required the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. SFAS 141(R) shall be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual report period beginning on or after December 15, 2008. The Company will implement this Statement in 2009.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 62 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. This Statement is effective sixty days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company is currently evaluating the potential impact, if any, of the adoption of SFAS No. 162 on its financial statements.

In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements - An amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of non-controlling interests (minority interest) as equity in the consolidated financial statements and separate from parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. SFAS 160 clarifies that changes in a parent’s ownership in a subsidiary that does not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the non-controlling equity investment of the deconsolidation date. SFAS 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 15, 2008. The adoption of SFAS 160 does not expect to have a material impact on the Company’s Consolidated Balance Sheet.

2. ACQUISITION

Effective March 4, 2008, the Company entered into a Membership Interest Purchase Agreement, pursuant to which the Company acquired from Egani, Inc. all the shares of stock of Altony SA, an Uruguayan Sociedad Anonima (“Altony”), which owns 100% of the issued and outstanding membership interests in South American Hedge Fund LLC, a Delaware limited liability company (sometimes referred to as “SAHF”). At the closing of the Agreement, the Company issued 130,000,000 shares of its common stock to Egani, Inc. which constituted, following such issuance, a majority of the outstanding shares of its common stock. Immediately following the closing of the Agreement, Altony became a wholly owned subsidiary of the Company. For accounting purposes, the transaction was treated as a recapitalization of the Company, as of March 4, 2008, with Altony as the acquirer.

The acquired assets and liabilities assumed of Delta Mutual from the reverse acquisition are as follows:

Cash	$	57,623
Prepaid expenses		1,914
Property and equipment		462,842
Accumulated depreciation		(94,719	)
Intangible asset-net		126,317
Other assets		650
Accounts payable		(173,370	)
Accrued expenses		(1,225,674	)
Convertible debt		(397,340	)
Notes payable		(240,655	)
Minority interests		(225,797	)
Common stock		(7,888	)
Deficit		1,716,087
	$	-0-

3. INVESTMENTS

Trading securities are comprised of public and private securities of Latin American entities. For the years ended December 31, 2008 and 2007, the Company incurred realized gains (losses) of $(2,072,536) and $342,056, respectively. Net gains for the year ended December 31, 2007, include $28,417 of unrealized gains. The fair market value of these investments as of December 31, 2008 and 2007 is indicated below:

	December 31,
	2008		2007
Public securities	$	—	$	322,463
Private securities		—		4,386,557
	$	—	$	4,709,020

4. PROPERTY AND EQUIPMENT

	December 31,
	2008		2007
Equipment	$	6,277	$	—

Leasehold improvements		7,807		—
		14,084		—
Less accumulated depreciation		13,280		—

	$	804	$	—

During 2008, the Company discontinued its operations in the Far East (Indonesia) and discontinued its construction technology activities. During the third and fourth quarters of 2008, the Company wrote off $268,127, the value of the equipment that was used in its Indonesian operations. During the fourth quarter of 2008, the Company wrote off $77,125, the value of the manufacturing equipment that was used to produce its insulating concrete form (ICF) building product.

Depreciation expense for the years ended December 31, 2008 and 2007 amounted to $22,066 and $-0-, respectively.

5. INTANGIBLE ASSETS

Intangible assets consisted of intellectual property from a patent application. The Company elected not to pursue the patent application and recorded an impairment charge of $122,742 of the unamortized amounts during the quarter ended June 30, 2008. Amortization expense was $3,575 and $-0-, for the years ended December 31, 2008 and 2007, respectively. Intangible assets consisted of the following:

	December 31,
	2008		2007
Gross Carrying Amount	$	143,000	$	—

Accumulated Amortization		143,000		—
Intellectual property costs	$	—	$	—

6. INVESTMENT IN NONCONSOLIDATED AFFILIATES

The Company has a 23.5% ownership interest in the Jollin and Tonono oil and gas concessions located in Northern Argentina. During 2007, the Company purchased a 47% ownership of these concessions and paid the purchase price by issuing a non-interest bearing note in the principal amount of $1,820,000 to Oxipetrol-Petroleros de Occidente S.A. (Oxipetrol), one of the other owners, with a maturity date of July 2008. The Company’s purchase price was based upon the price tendered by the original purchasers of the concessions that was and accepted by the Argentine government, who formerly owned these properties. The government uses a number of factors In determining the selling prices for oil and gas concession in Argentina, including the location and size of the concession and the current market prices of crude oil and natural gas. Prior to the maturity date, the Company and Oxipetrol mutually agreed to reduce the principal amount of the Company’s note primarily because of changes in oil and gas prices. Based upon the purchase price reduction, the Company repaid Oxipetrol $1,270,000 at the maturity date. Based on these circumstances, the Company recorded a one time, retroactive adjustment, reducing the value of this investment by $550,000 at December 31, 2008.

During 2008, the Company exchanged 50% of its ownership in this investment with a third party for no cash consideration, however, the acquirer contractually agreed to assume 50% of the Company’s obligations with respect to future development expenses. The Company recorded a $635,000 loss on disposition of this investment in its consolidated statement of operations.

During the year ended December 31, 2008, majority owners of the Jollin and Tonono concessions formed an Argentine-registered joint venture and paid, in the aggregate, approximately $848,00 of development costs, all of which were capitalized. Since the Company is not currently registered as a foreign company in Argentina, it could not become a member of the joint venture in 2008. The other owners of these concessions have agreed that, upon admission of the Company as a member of the joint venture, the Company will retain its 23.5% ownership. However, the Company’s weighted average pro-rata portion of the 2008 aggregate development cost, of approximately $223,024, all of which is included in accounts payable in the Company’s consolidated balance sheet at December 31, 2008, will be repaid to the other members from its pro-rata share of the future earnings. The Company has applied for foreign registration in Argentina and expects to be admitted as a member of the joint venture during 2009.

Currently, there is a producing oil well in operation at the Tonono Concession. This well also contains natural gas and can begin production upon completion of a pipeline to a nearby refinery that is currently in the pre-construction phase. If the anticipated oil and gas revenue does not offset the development costs for these concession in 2009 and beyond, or is not sufficient to repay the Company’s obligation to the other owners, the Company’s share of the development and operating expenses will be borne by the other owners subject to the repayment method described above.

During 2008, the Company purchased 40% of the oil and gas exploration rights to five geographically defined areas in the Salta Province of Northern Argentina from Kestal, SA, a company that acquired 100% of these explorations rights from the government of Argentina in 2007. Kestal retained a 60% interest. The price Kestal paid to acquire these rights from the government was determined by the process described above. The Company paid the $697,000 purchase price in cash and incurred no additional costs or expenses related to this investment in 2008. The Company expects that in 2009 and 2010, substantially all of the exploration costs required to retain these exploration rights will be borne by the majority owner.

The Company has 9% ownership of the Tartagal and Morillo oil and gas concessions located in Northern Argentina. During 2007, the Company purchased an 18% ownership of these concessions and paid the purchase price by issuing a non-interest bearing note in the principal amount of $480,000 to Oxipetrol, one of the other owners, with a maturity date of July 2008. The purchase price for this investment was based on the original price paid to the Argentine government to acquire these concessions, following the process described above. Prior to the maturity date, the Company and Oxipetrol mutually agreed to reduce the principal amount of the Company’s note primarily because of changes in oil and gas prices. Based upon the purchase price reduction, the Company repaid Oxipetrol $450,000 at the maturity date. Based on these circumstances, the Company recorded a one time, retroactive adjustment reducing the value of this investment by $30,000 at December 31, 2008.

During 2008, the Company exchanged 50% of its ownership in this investment with a third party for no cash consideration, however, the acquirer contractually agreed to assume 50% of the Company’s obligations with respect to future development expenses. The Company recorded a $225,000 loss on disposition of this investment in its consolidated financial statements.

In March 2009, a Chinese company purchased 60% of the ownership in the Tartagal and Morillo Concessions, from the other majority owners, for total consideration of approximately $270 million. These funds will be used for development and operating expenses in 2009 and beyond.

The Company evaluated these investments for impairment and concluded that, except as described above, no loss in value occurred as of December 31, 2008. The following table summarizes the Company’s investments in these nonconsolidated affiliates.

	Concession			Exploration
	Investments			Rights		Total

At December 31, 2007	$	2,300,000		$	—	$	1,820,000

Adjustment of purchase price		(580,000	)		—		(580,000	)

Disposition of investment, net		(860,000	)		—		(860,000	)

Additional investment in 2008		223,024			697,000		920,024

Equity in net earnings (loss)		—			—		—

At December 31, 2008	$	1,083,024		$	697,000	$	1,708,024

7. INVESTMENT IN JOINT VENTURES

During 2008, the Company discontinued its operations in the Far East (Indonesia) and the operations of its Puerto Rico real estate development partnerships. For the year ended December 31, 2008, the Company wrote off all balances in connection with these joint ventures and recorded a gain on the disposal of the discontinued operations of approximately $230,057, which is included in discontinued operations on the Company’s consolidated statement of operations.

The Company continues to maintain a 45% interest in Delta-Envirotech, Inc. which meets the definition of a Variable Interest Entity as defined in Financial Accounting Standards Board Interpretation No. 46 (FIN 46),"Consolidation of Variable Interest Entities" requiring the beneficiaries of a variable interest entity to consolidate the entity. The primary beneficiary of a variable interest entity is the party that absorbs the majority of the expected losses of the entity or receives a majority of the entity's expected residual return, or both, as a result of ownership, contractual or other financial interest in the entity.

8. SHORT-TERM DEBT

	December 31,

	2008		2007
Notes payable to three investors, interest at 8%, due November 6, 2008 (1)	$	150,655	$	—

Note payable to third party, interest at 6%, due April 2009		30,000		—

Note payable to Oxipetrol-Petroleres de Occidenete, S.A., non-interest bearing, paid July 2008		—		2,300,000

Notes payable to stockholders, interest at 6%, due April 2009 or		280,553		—
on demand
	$	461,208	$	2,300,000

(1)The Company did not repay the notes at the maturity date. The Company is currently negotiating amended terms with the noteholders. If the Company and the noteholders can not agree upon an amendment to the note, including an extension of the maturity date, the Company may receive a notice of default. If the Company receives a notice of default and fails to repay the notes, the lenders could initiate legal proceedings and obtain a judgement against the Company.

Interest expense for the years ended December 31, 2008 and 2007 amounted to $(21,545) and $-0-, respectively. Accrued interest at December 31, 2008 and 2007 amounted to $24,370 and $-0-, respectively and is included in accrued expenses on the Company’s consolidated balance sheet.

9. CONVERTIBLE DEBT

In connection with the March 4, 2008 merger, the Company assumed convertible debt obligations of $397,340. A note in the principal amount of $193,740 was not repaid at its maturity date. The Company is currently negotiating amended terms with the noteholder. If the Company and the noteholder can not agree upon an amendment to the note, including an extension of the maturity date, the Company may receive a notice of default. If the Company receives a notice of default and fails to repay the note, the lender could initiate legal proceedings and obtain a judgement against the Company.

In April 2008, the Company issued 2,300,571 shares of common stock in payment of the aggregate principal amount of $143,600 of convertible notes and issued 115,634 shares of common stock in payment of the accrued interest of $7,048.

At December 31, 2008, the Company's outstanding convertible notes were convertible into 2,749,920 shares of common stock.

The following table shows the maturities by year of total face amount of the convertible debt obligations at December 31, 2008:

2009		$	253,740
		$	253,740

For the year ended December 31, 2008, the Company recorded interest expense of $7,750. As of December 31, 2008, accrued interest of $42,275 is included in accrued expenses on the Company's consolidated balance sheet.

10. ACCRUED EXPENSES

Accrued expenses consists of the following:

	December 31,

	2008		2007
Professional fees	$	33,000	$	—
Interest expense		66,644		—
Payroll expense		644,508		—
Payroll expense-officers		50,296		—
Payroll tax expense		45,481		—
Accrued consulting fees		419,877		—
Other accrued expenses		103,589		—
	$	1,363,395	$	—

During the year ended December 31, 2008, pursuant to a written agreement with the former president of the Company, $117,436 of his accrued salary was eliminated.

11. STOCKHOLDERS' EQUITY

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 year ended December 31, 2008, the Company issued 2,300,571 shares of common stock upon the conversion of convertible notes in the principal amount of $143,600, valued at $0.05 - $0.07 per share; and issued 115,634 shares of common stock for payment of accrued interest in the amount of $7,048, valued at $0.05 - $0.07 per share.

b. For the year ended December 31, 2008, the Company issued 10,550,000 shares of common stock for services valued at $238,500, valued at $0.02 - $0.07 per share.

12. BUSINESS SEGMENT INFORMATION

The Company’s reporting business segments are geographic and include North America (United States) and South America. The primary criteria by which financial performance is evaluated and resources allocated are revenue and operating income.

The following is a summary of key financial data:

	Years
	Ended December 31,
	2008			2007


Total Revenue:

United States	$	43,365		$	—
South America		—			—
	$	43,365		$	—
Income (Loss) from Continuing Operations:

United Sates	$	(1,413,836	)	$	—
South America		(860,000	)		—
	$	(2,227,836)		$	—
Long-lived Assets:

United States	$	1,454		$	—
South America		1,780,024			2,300,000
	$	1,781,478		$	2,300,000
Capital Expenditures:

United States	$	—		$	—
South America		—			—

Depreciation and Amortization:

United States	$	25,066		$	—
South America		—			—
	$	25,066		$	—

13. INCOME TAXES

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

During the year ended December 31, 2008, the Company recorded a deferred tax asset associated with its net operating loss ("NOL") carryforwards of approximately $4,430,000 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 2017.

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 Ended
	December 31, 2008
	Temporary			Tax
	Difference			Effect

Gross deferred tax asset:
United States net operating loss carryforward	$	2,340,000		$	796,000

Foreign net operating loss carryforward		2,090,000			710,000

Valuation allowance		(4,430,000	)		(1,506,000	)

Net deferred income tax asset	$	—		$	—

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

	Years ended December 31,

	2008			2007
Total provision computed at the Federal statutory rate	$	(1,558,700	)	$	(116,100	)

Increase (decrease) in taxes resulting from:

Effect of unused operating losses		1,558,700			—

Permanent foreign difference		—			(116,100	)
	$	—		$	—

The Company paid no taxes in 2007 on their operating profit due to its tax exempt status in Uruguay.

14. SHARE BASED COMPENSATION

The Company records compensation expense in its consolidated statement of operations related to employee stock-based options and awards in accordance with SFAS No. 123(R) "Share-Based Payment."

The Company recognizes the cost of all employee stock options on a straight-line attribution basis over their respective contractual terms, net of estimated forfeitures. The Company has selected the modified prospective method of transition.

The Company also issues shares of its common stock to non-employees as stock-based compensation. The Company accounts for the services using the fair market value of the services rendered. For the year ended December 31, 2008, the Company issued and 10,550,000 shares, and recorded compensation expense of $238,500 in conjunction with the issuance of these shares.

Stock Option Plan

In conjunction with the March 4, 2008 merger, the Company assumed the obligation of 7,978,000 outstanding stock options at their fair value. As of December 31, 2008, 6,500,000 shares of common stock remain available for issuance under the stock option plan.

A summary of the status of the Company's options and stock awards under its stock option plan as of December 31, 2008 and changes during the year then ended, is presented below.

	2008					2007
	Shares			Weighted-Average Exercise Share Price		Shares		Weighted-Average Exercise Share Price

Options outstanding beginning of year		-		$	-		-	$	-
Options granted		-		$	-		-	$	-
Optionsassumed from acquisition		7,978,000		$	0.11
Options exercised		-		$	-		-	$	-
Options cancelled/expired		(4,478,000	)	$	0.11		-	$	-

Options outstanding - end of year		3,500,000		$	0.11		-	$	-

Option Price Range at End of Year	$	0.11

Option price range for exercised shares		-					-

Options available for grant at end of year		3,500,000					-

Weighted - average fair value of options granted during the year	$	—				$	—

Stock compensation expense applicable to stock options for the year ended December 31, 2008 was approximately $787,000. The aggregate intrinsic value of options outstanding as of December 31, 2008 was $(245).

The following table summarizes information about fixed price stock options outstanding at December 31, 2008.

R ange of

Number

Weighted-Average

Weighted-

Number

Weighted-

Exercise

Outstanding

Remaining

Average

Exercisable

Average

Price

December 31,

Contractual

Exercise Price

December 31,

Exercise

2008

Life

2008

Price

$0.11

3,500,000

2.5

0.11

7,978,000

0.11

All of the Company’s outstanding options were exercisable as of December 31, 2008.

At December 31, 2008, there was $622,290 of total unrecognized compensation cost related to share-based compensation arrangements granted under the stock option plan. The cost is expected to be recognized over a weighted average period of 2.5 years.

15. COMMITMENTS AND CONTINGENCIES

a. Executive Employment Agreements

The Company has an employment agreement with its chief financial officer and had an employment agreement with its former president and CEO.

Peter F. Russo, the Company’s former president and CEO, resigned effective July 25, 2008. In conjunction with his resignation, Mr. Russo agreed to waive all of his accrued salary for the period prior to July 2004 in exchange for a cash payment from a stockholder. As of December 31, 2008, the Company had accrued salary liability to Mr. Russo of $48,750, which is included in accrued expenses on the Company's consolidated balance sheet.

The Company has an employment agreement with Martin G. Chilek, its chief financial officer. This agreement was renewed for an addition 12-month period on March 3, 2009. 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. As of December 31, 2008, there was $50,296 of accrued salary liability to Mr. Chilek, which is included in accrued expenses on the Company’s consolidated balance sheet.

b. Consulting Agreements

The Company had two consulting agreements that had been terminated or expired during the year ended December 31, 2008.

As of December 31, 2008, consulting fees of $419,877 are included in accrued expenses on the Company's consolidated balance sheet.

c. Leases

The Company’s lease for its principal office space in Arizona became effective in February 2009 for a period of 24 months. The Company’s Pennsylvania office lease was amended in 2008 and is currently on a month-to-month basis. Delta-Envirotech has a month-to-month lease for office space in Virginia.

Future minimum lease payments are as follows:

Year ending December 31,
2009	$	28,590
2010		5,718
	$	34,308

For the year ended December 31, 2008, rent expense was $31,800.

16. LEGAL PROCEEDINGS

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

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

17. SUBSEQUENT EVENTS

During the first quarter of 2009, the Company borrowed $61,980 from a stockholder, a related party, and an officer of the Company, pursuant to 6% promissory notes, payable upon written demand by the lenders.

During April 2009, the Company borrowed $14,987 from a related party pursuant to a 6% promissory note, payable upon written demand by the lender.

	Delaware		14-1818394

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

14301 North 87 th Street, #310, Scottsdale, AZ	85260
(Address of principal executive offices)	(Zip Code)

Large accelerated filer ¨	Accelerated filer ¨

Non-accelerated filer ¨	Smaller reporting company x
(Do not check if a smaller reporting company)

PART I	1
Item 1. Business.	1
Item 1A. Risk Factors.	5
Item 1B. Unresolved Staff Comments.	8
Item 2. Properties.	8
Item 4. Submission of Matters to a Vote of Security Holders.	8
PART II	9
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.	9
Item 6. Selected Financial Data.	9
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.	10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.	13
Item 8. Financial Statements and Supplementary Data.	15
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	44
Item 9A (T). Controls and Procedures.	44
Item 9B. Other Information.	44
PART III	45
Item 10. Directors, Executive Officers, and Corporate Governance.	45
Item 11. Executive Compensation.	46
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	50
Item 13. Certain Relationships and Related Transactions, and Director Independence.	50
Item 14. Principal Accountant Fees and Services	51
Item 15. Exhibits and Financial Statement Schedules.	52
SIGNATURES	57

		High		Low

2007:	1st Quarter		0.16		0.04
	2nd Quarter		0.12		0.04
	3rd Quarter		0.08		0.04
	4th Quarter		0.06		0.02

2008:	1 st Quarter		0.07		0.01
	2 nd Quarter		0.07		0.04
	3 rd Quarter		0.08		0.04
	4 th Quarter		0.08		0.03

2009:	1 st Quarter		0.06		0.03
	2 nd Quarter		0.07		0.07
	(through April 6, 2009)

Concession	% Participation			Date Acquired	# Wells		Type of Production
Tartagal		9	%	August 2007		21	oil and gas

Morillo		9	%	August 2007		1	oil and gas

Jollin		23.5	%	August 2007		3	oil and gas

Tonono		23.5	%	August 2007		10	oil and gas

	(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		3,500,000	$	0.11		6,500,000
Equity compensation plans not approved by security holders
Total		3,500,000	$	0.11		6,500,000

	Page

Report of Independent Registered Public Accounting Firm

Consolidated balance sheets as of December 31, 2008 and 2007	18

Consolidated statements of operations for the years ended
December 31, 2008 and 2007	19

Consolidated statements of stockholders’ equity (deficiency)
as of December 31, 2008 and 2007	20

Consolidated statements of cash flows for the years ended
December 31, 2008 and 2007	22

Notes to consolidated financial statements	24

	Number of
	Common		Common		Paid in		Retained Earnings
	Shares		Stock		Capital		(Deficit)		Total

Balance, January 1, 2007		130,000,000	$	13,000	$	2,587,000	$	1,527,912	$	4,127,912

Net earnings		-		-		-		341,556		341,556

Balance, December 31, 2007		130,000,000		13,000		2,587,000		1,869,468		4,469,468

NAME	AGE	TITLE(S)
Daniel R. Peralta	55	President, CEO and Director

Malcolm W. Sherman	73	Executive Vice President and Director

Martin G. Chilek	58	Sr. Vice President, Chief
		Financial Officer, Treasurer and Secretary

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)	2008	$	8,125							$	8,125
Peter F. Russo, President and CEO	2007	$	97,500							$	97,500

Martin G. Chilek, Chief Financial Officer	2008	$	39,704							$	39,704
Martin G. Chilek, Chief Financial Officer	2007	$	91,000							$	91,000

Malcolm W. Sherman, Executive Vice President (2)	2008	$	-0-							$	-0-

Name and Address of Beneficial Owner	Number of Shares Owned		Percentage**
	Beneficially

Daniel R. Peralta (1)		132,691,000		59.81	%

Malcolm W. Sherman (2)		10,000,000		4.51	%

Martin G. Chilek (3)		2,050,000		0.92	%

All Officers and Directors as a Group		144,741,000		65.24	%

Date of Note	Principal Amount		Interest Rate			Maturity Date
March 6, 2008	$	21,000		6	%	April 16, 2009
April 28, 2008		9,550		6	%	April 16, 2009
September 18, 2008		13,350		6	%	April 16, 2009
Total	$	43,900

Date of Note	Principal Amount		Interest Rate			Maturity Date
March 6, 2008	$	100,000		6	%	April 17, 2009
April 15, 2008		20,000		6	%	April 17, 2009
May 14, 2008		16,900		6	%	April 17, 2009
July 7, 2008		22,413		6	%	On Demand
September 19, 2008		16,650		6	%	On Demand
October 22, 2008		28,500		6	%	On Demand
December 15, 2008		8,190		6	%	On Demand
Total	$	212,653

	2008		2007

	$	37,240	$	41,071

(2) Audit related fees:	2008		2007

	$	37,240	$	41,071

(3) Tax fees:
	2008		2007

	$	-0-	$	-0-

(4) All other fees: NA

Exhibit No.		Description of Exhibits

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

3.1a		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.

4.2a		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.

4.6		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.

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.

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.

10.26		Executive Employment Agreement, dated May 23, 2005, between Delta Mutual, 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.

10.33e		Form of Amended and Restated 8% Term Notes issued March 6, 2008 by Delta Mutual, Inc. in the aggregate principal amount of $150,655. Incorporated herein by reference to Exhibit 10.33e to the Company’s Annual Report on Form 10-KSB, filed with the Commission on April 15, 2008.

10.35		Membership Interest Purchase Agreement, dated March 4, 2008, between Delta 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 Delta Mutual, 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 the Company in the aggregate principal amount of $121,000. Incorporated herein by reference to Exhibit 10.37 to the Company’s Current Report on Form 8-K, filed with the Commission on March 11, 2008.

10.37a		Amendment, dated as of September 2, 2008, to 6% Promissory Note in the principal amount of $21,000. Incorporated herein by reference to Exhibit 10.37a to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.37b		Amendment, dated as of September 18, 2008, to 6% Promissory Note in the principal amount of $100,000. Incorporated herein by reference to Exhibit 10.37b to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.38		6% Promissory Note of the Company issued in the principal amount of $20,000 on April 15, 2008. Incorporated herein by reference to Exhibit 10.38 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on July 3, 2008.

10.38a		Amendment, dated as of October 8, 2008, to 6% Promissory Note in the principal amount of $20,000. Incorporated herein by reference to Exhibit 10.38a to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.39		6% Promissory Note of the Company issued in the principal amount of $9,550 on April 28, 2008. Incorporated herein by reference to Exhibit 10.39 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on July 3, 2008.

10.39a		Amendment, dated as of October 10, 2008, to 6% Promissory Note in the principal amount of $9,550. Incorporated herein by reference to Exhibit 10.39a to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.40		6 % Promissory Note of the Company issued in the principal amount of $16,900 on May 14, 2008. Incorporated herein by reference to Exhibit 10.40 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on July 3, 2008.

10.40a		Amendment, dated as of November 4, 2008, to 6% Promissory Note in the principal amount of $16,900. Incorporated herein by reference to Exhibit 10.40a to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.42		6% Promissory Note of the Company issued in the principal amount of $22,413 on July 7, 2008. Incorporated herein by reference to Exhibit 10.42 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.43		6% Promissory Note of the Company issued in the principal amount of $13,350 on September 18,2008. Incorporated herein by reference to Exhibit 10.43 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.44		6% Promissory Note of the Company issued in the principal amount of $16,650 on September 19,2008. Incorporated herein by reference to Exhibit 10.44 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.45		6% Promissory Note of the Company issued in the principal amount of $10,000 on October 3, 2008. Incorporated herein by reference to Exhibit 10.45 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.46		6% Promissory Note of the Company issued in the principal amount of $28,500 on October 22, 2008. Incorporated herein by reference to Exhibit 10.46 to the Company’s Quarterly Report on Form 10-Q, filed with the Commission on November 18, 2008.

10.47		6% Promissory Note dated as of November 20, 2008 by Delta Mutual, Inc. to Santiago Peralta in the principal amount of $14,000, filed herewith.

10.48		Amendment dated as of November 24, 2008 to 6% promissory notes issued to Egani, Inc. in the aggregate principal amount of $43,900, filed herewith.

10.49		Amendment dated as of December 14, 2008 t 6% promissory notes issued to Security Systems International, Inc. in the aggregate principal amount of $136,900, filed herewith.

10.50		6% Promissory Note dated as of December 15, 2008 to Security Systems International, Inc. in the principal amount of $8,190, filed herewith.

10.51		6% Promissory Note dated as of January 22, 2009 to Security Systems International, Inc. in the principal amount of $7,686, filed herewith.

10.52		6% Promissory Note dated as of February 10, 2009 to Security Systems International, Inc. in the principal amount of $15,950, filed herewith.

10.53		6% Promissory Note dated as of February 18, 2009 to Security Systems International, Inc. in the principal amount of $5,000, filed herewith.

10.54		6% Promissory Note dated as of February 19, 2009 to Malcolm W. Sherman in the principal amount of $5,000, filed herewith.

10.55		6% Promissory Note dated as of March 20, 2009 to Security Systems International, Inc. in the principal amount of $19,767, filed herewith.

10.56		6% Promissory Note dated as of March 25, 2009 to Security Systems International, LLC in the principal amount of $8,577, filed herewith.

10.57		6% Promissory Note dated as of April 2, 2009 to Security Systems International, LLC in the principal amount of $14,987, 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.

	DELTA MUTUAL, INC.

Dated: April 14, 2009

	By:/s/ Daniel R. Peralta
	Daniel R. Peralta
	President, Chief Executive Officer and Director

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

DELTA MUTUAL, INC.
a Delaware corporation

By:	/s/ Malcolm W. Sherman
Name:	Malcolm W. Sherman
Title:	Executive Vice President &
	Principal Executive Officer

	DELTA MUTUAL, INC.	EGANI, INC.
	( COMPANY)	(LENDER)

By:	/s/ Martin G. Chilek	/s/ Daniel Peralta
	Martin G. Chilek	Daniel Peralta
	Sr. Vice President	President

DELTA MUTUAL, INC.		SECURITY SYSTEMS INTERNATIONAL, INC.
(COMPANY)		(LENDER)

By:	/s/ Martin G. Chilek	By:	/s/ Malcolm W. Sherman
	Martin G. Chilek		Malcolm W. Sherman
	Sr. Vice President		President

DELTA MUTUAL, INC.
a Delaware corporation

By:	/s/ Martin G. Chilek_
Name:	Martin G. Chilek
Title:	Sr. Vice President & CFO

DELTA MUTUAL, INC .
a Delaware corporation

By:	/s/ Martin G. Chilek
Name:	Martin G. Chilek
Title:	Sr. Vice President & CFO

DELTA MUTUAL, INC.
a Delaware corporation

By:	/s/ Martin G.. Chilek
Name:	Martin G. Chilek
Title:	Sr. Vice President & CFO

DATE: April 14, 2009		/s/ Daniel R. Peralta
		Daniel R. Peralta, Chief Executive Officer

DATE: April 14, 2009		/s/ Martin G. Chilek
		Martin G. Chilek (Chief Financial Officer)