Schedule 14A Information
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant []

Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12

Daleco Resources Corporation
120 North Church Street
West Chester, Pennsylvania, 19087
Telephone No.: 610-4291258
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):

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4) Proposed maximum aggregate value of transaction:

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5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:

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2) Form, Schedule or Registration Statement No.:

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3) Filing Party:
C. Warren Trainor, Esq.
Ehmann, Van Denbergh & Trainor, P.C.
Two Penn Center Plaza, Suite 725, Philadelphia, Pennsylvania 19102
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4) Date Filed:
January 18, 2002
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-1-

Preliminary Copy

DALECO RESOURCES CORPORATION
120 North Church Street
West Chester, Pennsylvania 19380

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD February 28, 2002

This PROXY STATEMENT is furnished to the Stockholders of Daleco
Resources Corporation (the "Company") in connection with the solicitation of the
accompanying proxy by the Board of Directors of the Company to be voted at the
Annual Meeting of Stockholders (the "Annual Meeting") and any adjournment
thereof. The Annual Meeting will be held on February 28, 2002, at the Holiday
Inn West Chester, 943 South High Street, West Chester, Pennsylvania 19382, at
10:00 a.m. local time.

The approximate date on which this Proxy Statement and the accompanying
proxy card are first being sent or given to stockholders is February 6, 2002.

STOCKHOLDER PROPOSALS
---------------------

Stockholders desiring to present proposals for consideration at the
Company's next annual meeting of stockholders must have their proposal received
by the Company no later than September 1, 2002 to be considered for inclusion in
the Company's Proxy Statement and proxy card for such meeting. Should any
proposal be submitted after September 1, 2002, then it may be omitted by the
Company from the proxy statement and proxy relating to that meeting.

VOTING
------

General
- -------

The securities which can be voted at the Annual Meeting consist of
shares of Common Stock, par value $0.01 per share (the "Common Stock") and the
Series A Preferred Stock, par value $0.01 per share, with each share entitling
its owner to one vote on each matter submitted to the Stockholders. The record
date for determining the holders of Common Stock who are entitled to notice of
and to vote at the Annual Meeting is January 9, 2002 (the "Record Date"). On the
Record Date, 16,337,614 shares of Common Stock were outstanding and eligible to
vote at the Annual Meeting. (Hereinafter the Common Stock and Series A Preferred
Stock are sometimes collectively referred to as the "Voting Stock").

Quorum and Vote Required
- ------------------------

The presence, in person or by proxy, of A MAJORITY of the outstanding
shares of the Voting Stock is necessary to constitute a quorum at the Annual
Meeting. The affirmative vote of a majority of the shares of the Voting Stock
represented in person or by proxy at the Annual Meeting is required to pass any
matter put to a vote at the Annual Meeting.

When voting by proxy, holders of the Voting Stock ("Stockholders")
should specify their election as to each matter to be voted upon. If no specific
instructions are given with regard to the matter to be voted upon, the shares
represented by a signed proxy card will be voted "FOR" that matter.

Any Stockholder delivering a proxy has the power to revoke same at any
time before it is voted by giving written notice to the Secretary of the
Company, by executing and delivering to the Secretary of the Company a proxy
card bearing a later date or by voting in person at the Annual Meeting.

With regard to the election of directors, votes may be cast in favor of
or withheld from any or all nominees. Votes that are withheld and abstentions
will be excluded entirely from the vote and will have no effect, other than for
purposes of determining the presence of a quorum.

Brokers who hold shares in street name for customers have the authority
under the rules of the various stock exchanges to vote on certain issues when
they have not received instructions from beneficial owners. The Company believes
that brokers that do not receive instructions are entitled to vote those shares
with respect to the election of directors but not with respect to the remaining
proposals. Shares not voted by brokers under such circumstances are referred to
as "broker non-votes". Broker non-votes will not be counted as votes cast on a
proposal and will have no effect on matters to be voted upon.

Execution of the accompanying proxy will not affect a Stockholder's
right to attend the meeting and vote in person. Any shareholder giving a proxy
has the right to revoke it by giving written notice of revocation to the
Secretary of the Company, or by delivering a subsequently executed proxy card,
at any time before the proxy is voted.

In addition to soliciting proxies through the mail, the Company may
solicit proxies through its directors, offices and employees in person and by
telephone. Brokerage firms, nominees, custodians, and fiduciaries may also be
requested to forward proxy materials to the beneficial owners of shares held of
record by them. All expenses incurred in connection with the Annual Meeting will
be borne by the Company.

PRINCIPAL HOLDERS OF VOTING SECURITIES
--------------------------------------

The following table sets forth information, as of January 9, 2002
regarding the ownership of the Company's Common Stock and Series A Preferred
Stock by each person known to the Company to be the beneficial owner of more
than five percent (5%) of the Company's Voting Stock, as set forth on such
person's filings with the Securities and Exchange Commission and the records of
the Company.

==============================================================================================================
AMOUNT OF
BENEFICIAL PERCENT
CLASS OF OWNERSHIP OF CLASS
STOCK PRINCIPAL SHAREHOLDER (SHARES) (%)
- --------------------------------------------------------------------------------------------------------------

Common Terra Silex Holdings, LLC 3,542,928 (1) 11.55%
- --------------------------------------------------------------------------------------------------------------
Common Sumitomo Corporation of America 2,880,000(2) 9.4%
- --------------------------------------------------------------------------------------------------------------
Series A Preferred Daniel Kane, as Trustee under Agreement dated 4,000(3) 50%
April 6, 1989 for the benefit of Daniel Kane
- --------------------------------------------------------------------------------------------------------------
Series A Preferred Stanley B. Kane, as Trustee under Agreement 4,000(3) 50%
dated March 14, 1989 for the benefit of Stanley
B. Kane
==============================================================================================================

-2-

(1) The common stock held by Terra Silex Holdings, LLC ("Terra Silex"), includes
2,527,928 shares of which 800,000 were acquired through the exercise of
Tranche One and Two under Terra Silex's Stock Purchase Agreement dated
September 20, 2001 ("Terra Silex SPA") with the Company, at a price of $1.25
per share. Terra Silex has until February 15, 2002 to fund Tranche Three
under the Terra Silex SPA for 1,000,000 shares at $1.25 per share. Two
individuals who are members of Terra Silex, one of whom is Leon Prince a
director of the Company (See Security Ownership of Management), acquired
1,000,000 shares from an officer of 16/6, Inc., a wholly owned subsidiary of
the Company. 225,000 shares were acquired by Terra Silex on the open market.
Terra Silex also has a warrant for 500,000 shares at $1.25 which expires the
close of business on December 31, 2006. As a result of the sale of stock to
SCOA, Terra Silex acquired the right to and did purchase on December 14,
2001 an additional 17,728 shares at $1.25 per share.

(2) Sumitomo Corporation of America ("SCOA") acquired 640,000 shares of common
stock pursuant to its Stock Purchase Agreement with the Company dated as of
November 16, 2001 ("SCOA SPA"). The common stock was purchased at a price of
$1.25 per share. Under the SCOA SPA, SCOA also received warrants for
1,701,000 shares at exercise prices ranging from $2.00 to $3.00 per share.
The warrants expire the close of business on November 15, 2006. SCOA also
received warrants for 540,000 shares, at exercise prices ranging from $2.00
to $3.00 per share under a Master Distribution and Marketing Agreement with
the Company dated as of November 16,2001.

(3) The Series A Preferred Stock owned by Daniel Kane, as Trustee under
Agreement dated April 6, 1989 for the benefit of Daniel Kane and Stanley B.
Kane, as Trustee under Agreement dated March 14, 1989 for the benefit of
Stanley B. Kane were acquired by them through a Loan Conversion Agreement
dated August 22, 1997 by which the Kanes converted an $800,000 loan to the
Company into 8,000 shares of Series A Preferred Stock. The Series A
Preferred Stock has a stated value of $50.00 per share, and is entitled to
one vote per share.

SECURITY OWNERSHIP OF MANAGEMENT
--------------------------------

The following table sets forth information as of January 9, 2002
regarding the Security Ownership of Management.(1)

==============================================================================================================
AMOUNT OF
BENEFICIAL PERCENT
CLASS OF NAME, AGE AND POSITION OWNERSHIP OF CLASS
STOCK WITH THE COMPANY (SHARES) (%)
- --------------------------------------------------------------------------------------------------------------

Common Dov Amir (77) (2)
Chairman of the Board of Directors 2,144,932 7.03%
and Chief Executive Officer
- --------------------------------------------------------------------------------------------------------------
Common Gary J. Novinskie (51) (3)
Director, President and 1,594,668 5.23%
Chief Operating Officer
- --------------------------------------------------------------------------------------------------------------
Common C. Warren Trainor (56) (4) 575,955 1.88%
Director
- --------------------------------------------------------------------------------------------------------------
Common Robert E. Martin (73) (5) 2,730,000 8.95%
Director
- --------------------------------------------------------------------------------------------------------------
Common Leone Prince (86) (6) 3,542,928 11.62%
Director
- --------------------------------------------------------------------------------------------------------------
Common Robert G. Graustein (50) (7) 2,880,000 9.4%
Director
- --------------------------------------------------------------------------------------------------------------
Common All Directors and Officers of the(8) 13,468,483 44.17%
Company as a Group
==============================================================================================================

-3-

(1) On January 7, 2002, Mr. David F. Lincoln resigned as an Officer and Director
of the Company. Mr. Lincoln had been the Vice Chairman of the Board of
Directors and a Vice President of the Company since September 1996, when the
Company acquired Deven Resources, Inc., of which Mr. Lincoln was the
President and a Director. Mr. Lincoln owns 190,500 shares of stock and holds
warrants for 18,182 shares at $.55 per share which warrants expire on
November 20, 2005.

(2) The stock ownership of Mr. Amir includes: 184,297 shares owned directly; 73
shares owned by the Amir Family Trust, dated May 13, 1991; and warrants for
45,455 shares at $.55 which expire November 20, 2005, and options for
1,000,000 shares at 25(cent) per share, which expires September 2005. On
March 27, 2000, Mr. Amir acquired 8,000 shares of Series A 8% Cumulative
Preferred Stock, face value $50.00 per share. The Series A Preferred Stock
was converted into 408,163 common stock on a dollar for dollar basis. Mr.
Amir received an additional 500,000 shares under an employment agreement
with the Company which vest over three years and a signing bonus of $50,000,
$25,000 of which is to be paid in common stock on or before June 30, 2002,
at a price equal to the average closing price for the common stock for the
five business days preceding the date of issuance. The employment agreement
with Mr. Amir was required as a condition precedent to the closing of the
SCOA SPA. (See Election of Directors--Business Experience.)

(3) The stock ownership of Mr. Novinskie includes: options to purchase 80,000 at
$2.1875 which expire on November 12, 2002,, and options for 1,000,000 shares
at $.25 which expires September 2005. Mr. Novinskie received an additional
500,000 shares under an employ agreement with the Company which vest over
three years and a signing bonus of $50,000, $25,000 of which is to be paid
in common stock on or before June 30, 2002, at a price equal to the average
closing price for the common stock for the five business days preceding the
date of issuance. The employment agreement with Mr. Novinskie was required
as a condition precedent to the closing of the SCOA SPA. (See Election of
Directors--Business Experience.)

(4) The stock ownership of Mr. Trainor consists of 500 shares owned by him
directly, options to purchase 30,000 shares at $2.1875 which expire November
12, 2002, and options for 500,000 shares at $.25 which expire September
2005. The 500,000 options were part of options for 1,000,000 shares held by
FRW, LLC, a limited liability company ("FRW") of which Mr. Trainor was a
member. The options were distributed to Mr. Trainor by FRW. The distribution
from FRW, LLC was retroactive to September 18, 2000, the date of initial
issuance. FRW, LLC distributed the remaining 500,000 shares to its other
members. Mr. Trainor has no interest in any other asset of FRW, LLC. Mr.
Trainor's wife has warrants for 45,455 shares at $.55 per share which expire
on November 20, 2005. These warrants are attached to a loan made by Mrs.
Trainor to the Company in July 1998. (See Election of Directors--Business
Experience.)

(5) The stock ownership of Mr. Martin consists of 1,680,000 shares acquired by
him through the acquisition of Clean Age Minerals, Incorporated in September
2000. Mr. Martin also received a signing bonus of 50,000 shares of stock
effective October 1, 2001 upon the execution of his Key Man Employment
Agreement. The Kay Man Agreement with Mr. Martin was required as a condition
precedent to the closing of the SCOA SPA. Under the Key Man Agreement, Mr.
Martin also received options for 1,000,000 shares, which options vest
equally over the three year life of this Key Man Agreement. (See Election of
Directors--Business Experience.)

-4-

(6) The shares of common stock attributed to Mr. Prince consist of 515,000
shares owned by him personally and those 2,527,928 shares held by Terra
Silex Holdings, LLC of which he is a member. (See Principal Holders of
Voting Securities.) Under the Terra Silex Stock Purchase Agreement ("Terra
Silex SPA"), Terra Silex was entitled to nominate one director upon the
execution of the Agreement. Mr. Prince was the director nominated by Terra
Silex and was appointed to the Board of Directors on September 20, 2001.
(See Election of Directors--Business Experience.)

(7) The common stock attributable to Mr. Graustein consists solely of the common
stock held by Sumitomo Corporation of America of which he is a Senior Vice
President (See Principal Holders of Voting Securities). Mr. Graustein
disclaims beneficial ownership of these shares. (See Election of
Directors--Business Experience.)

(8) This group consists of seven persons.

Section 16(a) Compliance
- ------------------------

Based solely upon a review of Forms 3 and 4 during the fiscal year
ending September 30, 2001, there were no late filing of reports by any party
required to have filed same. The Company received no Form 5's filed by any
party.

The Current Executive Officers of the Company are as follows:

==================================================================================================

NAME AND AGE OFFICE HELD
- --------------------------------------------------------------------------------------------------

Dov Amir (77) Chairman of the Board and Chief Executive Officer (1)
- --------------------------------------------------------------------------------------------------

Gary J. Novinskie (51) President and Chief Operating Officer and Director (1)
- --------------------------------------------------------------------------------------------------

Jody Spencer (57) Secretary
==================================================================================================

(1) See "SECURITY OWNERSHIP OF MANAGEMENT" and "Election of Directors--Business
Experience" for positions held and experience.

ELECTION OF DIRECTORS
---------------------

The current Board of Directors consists of six (6) directors who were
elected or appointed to serve for a period of one (1) year or until their
successors are elected and qualified. The directors elected at the Annual
Meeting and who qualify to serve will serve until their successors can be
elected at the Annual Meeting to be held in 2003. The Board of Directors has
authorized an increase in the number of authorized directors to nine (9),
although only management is nominating only six (6) persons for election to the
Board of Directors.

Under the provisions of the acquisition of Clean Age Minerals,
Incorporated ("CAMI") in September 2000, the former shareholders of CAMI are
entitled to nominate two directors for appointment to the Company's Board of
Directors. Mr. Martin was the first nominee and has served as a Director since
September 2000. The shareholders of CAMI have the right to nominate one more
director.

Under the provisions of the Terra Silex SPA, upon funding of the First
Tranche Terra Silex was entitled to nominate one person to serve as a Director
of the Company. Mr. Leon Prince was that person and he has been serving as a
director since his appointment in September 2001. Should Terra Silex fund the
Third Tranche, than it will be entitled to nominate one (1) additional Director
to the Board.

-5-

Under the SCOA SPA, SCOA was entitled to nominate one (1) person to
serve as a director of the Company. Mr. Graustein has served as SCOA's nominee
since November 30, 2001. Upon SCOA's acquisition of a total of 1,500,000 shares
under the SCOA SPA through the exercise of warrants, SCOA is entitled to
nominate another person to serve as a director of the Company.

Should each party entitled to appoint an additional director do so
(assuming compliance with all conditions precedent for Terra Silex and SCOA),
the Board would consist of nine (9) persons who would serve until their
successors are elected and qualified.

Required Vote
- -------------

The shares represented by the enclosed proxy will be voted at the
meeting as directed. If no choice is specified in the proxy, the shares
represented by the enclosed proxy will be voted "FOR" the election of the
nominees listed below. All of the nominees are now members of the Board of
Directors. If any nominee becomes unavailable for any reason or if another
vacancy should occur before the election (which events are not anticipated), the
shares represented by the enclosed proxy may be voted by the holders of such
proxy in their sole discretion. The Board of Directors recommends that the
Stockholders vote "FOR" the nominees.

SECURITY OWNERSHIP OF MANAGEMENT'S NOMINEES
-------------------------------------------

Common Dov Amir (77) (1)
Chairman of the Board of Directors 2,144,932 7.03%
and Chief Executive Officer
- --------------------------------------------------------------------------------------------------------------
Common Robert E. Martin (73) (1) 2,730,000 8.91%
Director
- --------------------------------------------------------------------------------------------------------------
Common Gary J. Novinskie (51) (1)
Director, President and 1,594,668 5.23%
Chief Operating Officer
- --------------------------------------------------------------------------------------------------------------
Common Leone Prince (86) (1) 3,542,928 11.62%
Director
- --------------------------------------------------------------------------------------------------------------
Common Robert G. Graustein (50) (1) 2,880,000 9.4%
Director
- --------------------------------------------------------------------------------------------------------------
Common C. Warren Trainor (56) (1) 575,955 1.88%
Director
==============================================================================================================

(1) See "SECURITY OWNERSHIP OF MANAGEMENT" and the footnotes thereto.

Nominees
- --------

Set forth below is certain information about each of the persons
nominated by Management to be Directors of the Company including the name, age,
principal occupation, business experience and length of service as a Director of
the Company:

-6-

Business Experience
- -------------------

Dov Amir (77)

Mr. Amir is the Chairman of the Board of Directors and Chief Executive
Officer of the Company. Mr. Amir has been an officer and director of the Company
since 1977, having previously held the position of President and Director. Mr.
Amir is the Vice President and Director of Haly Corporation. Prior to joining
the Company, Mr. Amir was involved in the development of natural resources and
economic development projects in the United States, Africa, South America and
Europe both in the capacity of a corporate executive and as a consultant. Mr.
Amir holds a B.S. degree in Petroleum Engineering, Cum Laude and M.S. degree in
Petroleum Engineering and Economics from the University of Southern California
as well as post graduate courses in management and finance at USC and UCLA.

Gary J. Novinskie (51)

Mr. Novinskie is a Director, President and Chief Operating Officer of
the Company. Mr. Novinskie was previously the Chief Operating Officer of Deven
Resources, Inc. and assumed his new duties with the Company in October 1996.
Prior to his employment with Deven Resources, Inc. Mr. Novinskie was a Vice
President of Broad Street Financial Company, a privately held holding company in
Columbus, Ohio for four (4) years. Mr. Novinskie also served as the President of
Omni Exploration, Inc., a public oil and gas company for seven (7) years. Mr.
Novinskie holds a B.S. from Penn State University in Petroleum and National Gas
Engineering, and an M.B.A from Case Western Reserve University, majoring in
Banking and Financing.

Robert E. Martin (73)

Mr. Martin was appointed as a Director in September, 2000 after the
Company acquired Clean Age Minerals, Incorporated, a Nevada corporation,
("CAMI"), on September 19, 2000, through a merger with the Company's subsidiary,
Strategic Minerals, Inc., a Nevada corporation. Mr. Martin was President of CA
Properties, Inc., a subsidiary of CAMI from 1994 until the merger. After the
merger he was appointed as the President of Strategic Minerals, Inc., Lone Star
Minerals, Inc., a Texas corporation, and Matrix-Loc, Inc., a Nevada corporation,
both of which are subsidiaries of Strategic Minerals, Inc. and continues to
served as the President of CA Properties, Inc. Mr. Martin is a graduate of Park
University, obtained a Master's degree equivalent in Electrical Engineering
through a joint program between the US Air Force and the University of Denver,
attended Tulsa University Law School at nights for 2 1/2 years and did post
graduate work at Oklahoma State University and the University of Oklahoma. Mr.
Martin previously was the a Regional Vice President for Kaiser Aluminum, Vice
President Sale and Executive Vice President for Lively Equipment Company, and
the owner of R.E. Martin Investments and R.E. Martin Sales. Mr. Martin is a
retired Brigadier General in the Air Force Reserve.

Leon Prince (86)

Mr. Prince was appointed as a Director in September 2001 as part of a
Stock Purchase Agreement with Terra Silex Holdings, LLC, ("Terra Silex") ("Terra
Silex Agreement"). Under the Terra Silex Agreement the parties are entitled to
have one representative appointed to the Company's Board of Directors. Mr.
Prince is Terra Silex's designee to the Board. Mr. Prince has been retired since
1983 and since that time has been principally engaged in managing his own
investments.

-7-

Robert E. Graustein (50)

Mr. Graustein was appointed as a Director in November 2001 in
connection with a Stock Purchase Agreement with Sumitomo Corporation of America
("SCOA") ("SCOA SPA"). Under the SCOA SPA, the parties are entitled to have one
representative appointed to the Company's Board of Directors. Mr. Graustein is
SCOA's designee to the Board. Mr. Graustein is Senior Vice President & General
Manager, Corporate Business Development, Sumitomo Corporation of America, New
York, New York 10016.

C. Warren Trainor (56)

Mr. Trainor has been a Director since October 1996. As a partner with
the law firm of Ehmann, Van Denbergh & Trainor, P.C., located in Philadelphia,
Pennsylvania, concentrating in Business, Energy and Mineral Law, Mr. Trainor is
general counsel to the Company. Previously, Mr. Trainor served as a Director of
Deven Resources, Inc. Mr. Trainor has a B.S. from the United States Military
Academy in 1967 and a J.D. from Villanova University Law School in 1972.

Committees of the Board of Directors
- ------------------------------------

Audit Committee: The following persons are currently serving as the
Audit Committee:

Gary J. Novinskie
C. Warren Trainor

There has been one meeting of the Audit Committee at which the
Company's accountants for Fiscal 2001 were recommended for consideration of the
Board of Directors and the Audited Financial Statements for Fiscal Year 2001
were reviewed with the Company's accountant Jay Shapiro, CPA. The Audit
Committee's responsibilities include; reviewing and reporting to the Board of
Directors on the appropriateness of the Company's accounting policies, the
adequacy of financial controls and the reliability of the Company's financial
information reported to the public; recommending independent accountants for
appointment by the Board; reviewing and approving audit plans, reviewing and
approving the Company's annual report on Form 10-KSB, and advising the Board
concerning the work of the Company's independent accountants. It is anticipated
that new members will be appointed at the Annual Meeting of the Board of
Directors immediately following the Annual Meeting of shareholders.

Compensation Committee: The following persons are currently serving as
the Compensation Committee:

David F. Lincoln
C. Warren Trainor

There was one meeting of the Compensation Committee in Fiscal 2001. The
Compensation Committee's responsibilities include the recommendation to the
Board of Directors on the salaries and other compensation appropriate for the
officers of the Company. It is anticipated that new members will be appointed at
the Annual Meeting of the Board of Directors immediately following the Annual
Meeting of shareholders.

-8-

Executive Committee: The following persons are currently serving as the
Executive Committee:

Dov Amir
Gary J. Novinskie
C. Warren Trainor

There have been nine (9) meetings of the Executive Committee since its
formation. The function of the Committee is to exercise the authority of the
Board of Directors in the management of the business of the Company between
regular meetings of the Board of Directors. It is anticipated that new members
will be appointed at the Annual Meeting of the Board of Directors immediately
following the Annual Meeting of shareholders.

Meetings of the Board of Directors
- ----------------------------------

During the Company's fiscal year ended September 30, 2001, the Company
held three (3) meetings of the Board of Directors. Each director other than Mr.
Lincoln attended 100% of the meetings. Mr. Lincoln attended no meetings during
Fiscal 2001.

INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
-------------------------------------------------------

Required Vote
- -------------

The shares represented by the enclosed proxy will be voted at the
meeting as directed. If no choice is specified in the proxy, the shares
represented by the enclosed proxy will be voted "FOR" the Increase in the
Authorized Shares of Common Stock. The Board of Directors recommends that the
Stockholders vote "FOR" the Increase in the Authorized Shares of Common Stock.
The vote of a majority of the shares voted at the meeting is required for the
approval of this proposal.

On February 14, 1998, the Shareholders of the Company approved a ten
for one stock split, and a resulting reduction in the number of authorized
shares of common stock, 20,000,000, and preferred stock, 10,000,000.

As a result of the acquisition of Clean Age Minerals, Incorporated
("CAMI") in September 2000, and the stock purchase agreements by and among the
Company and Terra Silex Holdings, LLC dated September 20, 2001, and the Company
and Sumitomo Corporation of America dated November 16, 2001, the Company is
quickly exhausting the authorized shares of common stock available.

As of the date of this Proxy Statement, out of the 20,000,000 shares
authorized, there are 16,778,790 shares of common stock issued and outstanding,
and 31,492,875 shares on a fully diluted basis, that is as though all options
and warrants outstanding were exercised.

This results in the Company having little if any common stock with
which to raise capital, for the acquisition of other entities, the satisfaction
of debt or as payment for services.

Management believes that it would be in the best interest of the
Company to increase the number of authorized shares from 20,000,000 to
50,000,000. This will provide the Company with a sufficient number of shares to
meet future needs, and allow for a degree of flexibility for the use of stock to
raise additional capital for the Company, for the use in conjunction with
additional acquisitions or for other valid corporate purposes. At present,
Management of the Company has not entered into any agreement for which
additional shares would be required, other than to insure the presence of
adequate shares to meet existing outstanding warrants and options, which total
in the aggregate 9,218,987 shares.

-9-

The Amendment will be affected by means of filing the Certificate of
Amendment with the Delaware Secretary of State. The effective date ("Effective
Date") of the Increase in Number of Authorized Shares of Common Stock shall be
the date of the Annual Meeting. The Certificate of Amendment will be filed with
the Secretary of State of Delaware as of the Effective Date. This filing will
not alter or otherwise affect the number of shares owed by each Shareholder or
represented by a Shareholder's stock certificate. A copy of the Certificate of
Amendment is attached hereto as Appendix "A".

Management recommends that the Shareholders vote FOR the amendment of
the Company's Articles of Incorporation to increase the number of authorized
shares of common stock to 50,000,000 shares.

RELOCATION TO NEVADA
--------------------

Required Vote
- -------------

The shares represented by the enclosed proxy will be voted at the
meeting as directed. If no choice is specified in the proxy, the shares
represented by the enclosed proxy will be vote "FOR" the Relocation of the
Company to Nevada. The Board of Directors recommends that the Stockholders vote
"FOR" the Relocation of the Company to Nevada. The vote of a majority of the
shares voted at the meeting is required for the approval of this proposal.

Management of the Company proposes that the Company change its state of
domestication from Delaware to Nevada. The reason for this change is quite
simple--to reduce the number of states in which the Company and it subsidiaries
are operating, qualified and reduce the Company's taxes. Other than being a
"Delaware corporation" the Company is doing no business in the State of
Delaware. A number of the Company's subsidiaries (Westlands Resources
Corporation, Strategic Minerals, Inc. CA Properties and Lone Star Mineral, Inc.)
are Nevada corporations.(1) Presently, the Company is paying an annual franchise
tax in the State of Delaware of approximately $42,000 for the privilege of being
a Delaware corporation. The State of Nevada has no comparable tax. With the
approval of the increase in the authorized shares of capital stock it is
expected that the annual franchise tax will increase.

The domestication of the Company in the State of Nevada would be
accomplished through the merger of the Company with a new Nevada corporation,
Daleco Resources Corporation of Nevada ("New Daleco"). New Daleco would be the
surviving entity and would continue to do business under the name of Daleco
Resources Corporation. There would be no change in ownership of New Daleco from
the old Delaware corporation ("Old Daleco"), with the current shareholders
owning the same percentage and number of shares in New Daleco as they do in Old
Daleco.

- ---------------
(1) In addition to its Nevada subsidiaries, the Company has one subsidiary,
Matrix-Loc, Inc., that is a Texas corporation, two corporations, Deven
Resources, Inc. and DRI Operating Company, that are Pennsylvania corporations,
and one partnership, Tri-Coastal, L. P, that is a Delaware limited partnership.

-10-

The by-laws of the New Daleco shall be identical for all purposes to
those of the Old Daleco other than the reference to the laws of the State of
Nevada rather than the laws of the State of Delaware. A copy of the proposed
by-laws of New Daleco are attached hereto at Appendix "B". The Directors of the
Old Daleco, as elected by the Shareholders at this Annual Meeting, will serve as
the Directors of New Daleco until their successors are elected and qualified.

The officers of New Daleco would be the same officers as appointed by
the Board of Directors to serve as officers of Old Daleco. It is anticipated
that these would be:

Dov Amir Chief Executive Officer

Gary J. Novinskie President, Chief Operative Officer and Treasurer

Jody Spencer Secretary.

The principal office of New Daleco would remain at the current
principal office of the Company (120 North Church Street, West Chester,
Pennsylvania 19380), with additional satellite offices in Los Angeles,
California and Albuquerque, New Mexico.

There would be no need for any shareholder to exchange his/her/its
stock certificates for certificates of New Daleco. New shares would be issued
upon the sale or exchange of Old Daleco's shares as applicable.

The description of the Merger Agreement set forth below is a summary
only and does not purport to be complete and is qualified in its entirety to the
Merger Agreement, a copy of which is appended hereto at Appendix "C" to this
Proxy Statement and incorporated by reference herein.

Merger Agreement

Subject to the approval of the shareholders and conditions of the
Merger Agreement, Daleco Resources Corporation of Delaware ("Old Daleco") will
merge into Daleco Resources Corporation of Nevada ("New Daleco") on the
effective date. The effective date shall be April 1, 2002, or as soon thereafter
as the certificate of merger can be executed and filed in the appropriate
jurisdictions ("Certificate of Merger") in accordance with the Nevada Revised
Statutes and the Delaware General Corporate Law ("Effective Date"). On the
Effective Date, the separate corporate existence of Old Daleco will then cease,
and the internal corporate affairs of the combined companies will be governed by
New Daleco, as the surviving company pursuant to the laws of the State of
Nevada.

-11-

Pursuant to the Merger Agreement, the certificate of incorporation of
New Daleco in effect immediately prior to the Effective Date (a copy of which is
attached hereto at Appendix "D") will become the certificate of incorporation of
New Daleco. The bylaws of New Daleco in effect on the Effective Date will become
the bylaws of the surviving corporation (See Appendix "B" hereto). The
certificate of incorporation of New Daleco reflects the increase in the
authorized capital stock of the Company which the Shareholders are being asked
to approve at this Annual Meeting.

Representations and Warranties
- ------------------------------

The Merger Agreement contains various representations and warrants of
the parties hereto. The Merger Agreement includes representations and warranties
by Old Daleco as to (i) the corporate organization, standing and power of old
Daleco and its subsidiaries, (ii) approvals by the Old Daleco Board (iii) its
capitalization, (iv) the authorization of the Merger Agreement, (v) pending or
threatened litigation, (vi) the Merger Agreement's non-contravention of any
agreement, law, charter or bylaw provision and the absence of the need (except
as specified) for governmental or third-party consents to the Merger, (vii) the
terms, existence, operations, liabilities and compliance with any obligations of
Old Daleco, (viii) payment of taxes, (ix) ownership of assets, (x) the accuracy
of Old Daleco's financial statements, (xi) the conduct of Old Daleco's business
in the ordinary course.

The Merger Agreement also includes representations and warranties by
New Daleco as to: (i) corporate organization of New Daleco, (ii) the
authorization of the Merger Agreement, (iii) New Daleco's capitalization, (iv)
the Merger Agreement's non-contravention of any agreement, law, charter
provision or bylaws provision and the absence of the need (except as specified)
for governmental or third party consents to the merger, (v) the absence of any
business having been conducted by New Daleco, and (vi) the resignation of all of
New Daleco's officers and directors existing prior to the Effective Date.

Purpose of the Merger
- ---------------------

The purpose of the merger is to provide a means to "redomesticate" the
Company from Delaware to Nevada. There is no other purpose for the merger. There
will be no change in the conduct or business of the Company.

Conditions to Closing
- ---------------------

Other than compliance with the corporate law of the States of Delaware
and Nevada and the approval of the transaction by the Shareholders, the Merger
Agreement requires that: (i) there be no litigation pending or threatened which
seeks to enjoin or prohibit the consummation of the merger, and no temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the merger shall be in effect.

Tax Consequences of the Merger
- ------------------------------

The Company has received the advice of counsel and its accounts that
the merger will qualify as a reorganization under the Internal Revenue Code
("Code") within the meaning of Section 368(a) of the Code and no gain or loss
will be recognized by a Daleco shareholder as a result of the merger.

-12-

Financial Statements
- --------------------

The balance sheet of Old Daleco will become the balance sheet of New
Daleco.

Management recommends that the Shareholders vote FOR the proposal to
change the state of incorporation of the Company from Delaware to Nevada.

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
----------------------------------------

The Board of Directors has selected the accounting firm of Jay J.
Shapiro, CPA to be the Company's accountants to audit the books and records of
the Company and its subsidiaries for the 2002 fiscal year. This firm audited the
books and records of the Company commencing in fiscal 1998 through the present.
The Board of Directors recommends the selection of Jay J. Shapiro, CPA as the
Company's accountants for the fiscal year ending September 30, 2002. Jay J.
Shapiro, CPA has no material relationship with the Company and is considered
well qualified.

Mr. Shapiro was paid $25,000 for his services as the Company's
accountant in Fiscal Year 2001 for the preparation of the Company's audited
financial statements for Fiscal Year 2000, and was paid $30,000 for his services
in preparing the Company's audited financial reports for Fiscal Year 2001. Mr.
Shapiro has only been engaged to audit the Company's financial statements and
for no other work on behalf of the Company. Because of the exclusivity of his
engagement, the Board of Directors believes that Mr. Shapiro's retention is
consistent with maintaining Mr. Shapiro's independence.

Required Vote
- -------------

The Board of Directors recommends a vote "FOR" the proposal to ratify
the selection of Jay J. Shapiro, CPA as the Company's independent certified
public accountants.

Jay J. Shapiro, CPA, the Company's accountants for Fiscal 2001 is not
expected to be present at the Annual Meeting.

-13-

EXECUTIVE COMPENSATION

For the period ending September 30, 2001 the Company had five (5)
full-time employees. The following table sets forth the compensation paid its
three (3) highest paid officers for the past three (3) years.

Summary Compensation Table
- --------------------------

- ----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensations
- ----------------------------------------------------------------------------------------------------------------------------------
Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) 8 (d) (e) (f) (g) (h) (i)
- ----------------------------------------------------------------------------------------------------------------------------------
Restricted Securities
Name and Other Stock Underlying LTIP All other
Principal Salary Bonus Annual Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) Compensation ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------

Dov Amir 1999 95,841 0 14,100 0 0 0 0
President
- ----------------------------------------------------------------------------------------------------------------------------------
Dov Amir 2000 87,507 0 0
President
- ----------------------------------------------------------------------------------------------------------------------------------
Dov Amir 2001 95,833 0 0 1,000,000
President
- ----------------------------------------------------------------------------------------------------------------------------------
Gary J. 1999 95,841 0 0 0 80,000 0 0
Novinskie
President
- ----------------------------------------------------------------------------------------------------------------------------------
Gary J. 2000 87,507 0 0
Novinskie
President
- ----------------------------------------------------------------------------------------------------------------------------------
Gary J. 2001 95,833 0 0 1,000,000
Novinskie
President
==================================================================================================================================

COMPENSATION OF DIRECTORS
-------------------------

The Board of Directors does not pay fees to Directors, but does
reimburse Directors for actual costs of travel and lodging incurred in
connection with the Director's attendance at a meeting of the Board.

-14-

ANTI-TAKEOVER
-------------

The Board of Directors has not adopted any anti-takeover amendments,
but reserves the right to do so. There are presently 8,000 shares of Series A
Preferred Stock, par value $.01, and 713,000 shares of Series B Preferred Stock,
par value $0.01 but with a stated value of $10.00 per share outstanding, leaving
9,279,000 shares of preferred stock authorized but unissued and no shares of
Common Stock, par value $.01, available, after giving effect to reserves for the
exercise of all warrants and options unissued and which could be utilized by
existing management, which presently holds 44.17% of all of the issued and
outstanding Common Stock (See "Principal Holders of Voting Securities" and
"Security Ownership of Management"), as an anti-takeover device. Issuance of
options under the Non-Qualified Stock Option Plan ("Plan") might also be
considered an anti-takeover device, but it is not intended to be so and there is
no common stock presently available for issuance under that Plan. (For a list of
outstanding warrants and options see the Annual Report which accompanies this
Proxy Statement.) The acceleration of the vesting of the options under the Plan
and the Key Man Contracts (See Security Ownership of Management and discussion
of the Key Man Contracts below) is not intended to be a "poison pill" defense.
Rather, it is a means by which the recipients would be rewarded for their
efforts and labors on behalf of the Company. The vesting provisions of the Plan
and the Key Man Contracts was a means by which to Board of Directors wanted to
entice the recipients to remain with the Company to insure growth and
prosperity. While these are all potential mechanisms which might be considered
by the Board of Directors to frustrate a hostile takeover of the Company, the
Board of Directors has not considered such actions and none has been put into
effect. The Plan expires at this Annual Meeting.

Effective as of November 16, 2001, the Company entered into a Master
Distribution and Marketing Agreement with Sumitomo Corporation of America
("SCOA") ("Marketing Agreement"). The Marketing Agreement provides for a
"Termination Fee" should there be a "change of control" of the Company during
the Term or any Renewal Term of the Marketing Agreement or if Daleco should
enter into a contract to sell or otherwise transfer all or substantially all of
the Company's mineral assets, mineral leases or any rights to the Company's
Patent ("Relevant Assets") or shall sell or transfer the Relevant Assets to a
third party, and in the case of such sale, or transfer, or change of control the
Marketing Agreement is not assigned, transferred to, assumed in all of its
respects, and/or affirmed by such third party. (See the Master Distribution and
Marketing Agreement attached to the Company's Annual Report on Form 10-KSB a
copy of which was submitted to you along with this Proxy Statement.) Upon the
occurrence of the change of control or sale, transfer or assignment of the
Relevant Assets, the term of the Marketing Agreement shall immediately increase
to 30 years without further action on the part of any party to the Marketing
Agreement, and SCOA shall be entitled to be compensated for the loss of its
expected profits from the distribution and sale of the Company's minerals,
Patented Products and timber.

While the Marketing Agreement is not intended to be an
anti-takeover device, it may be deemed or viewed to be by a third party.

On November 16, 2001, the Company also entered into a Stock
Purchase Agreement with SCOA ("SCOA SPA"). As a condition to the closing of the
SCOA SPA, SCOA required that the Company enter into Key Man Employment Contracts
("Key Man Contracts") with Messrs. Robert E. Martin, Gary J. Novinskie and Dov
Amir. The Key Man Contracts are for an initial three (3) year term. The Key Man
Contracts provide for acceleration of the vesting of incentive warrants should
the Key Man be terminated prior to the expiration of the term of the Key Man
Contracts. Each of Messrs. Martin, Novinskie and Amir are granted options for
500,000 shares of Company Common Stock. There are like provisions for the
acceleration of the salary due each employee over the life of the Contract.
While any employment contract may be deemed to be an anti-takeover device, the
Key Man Contracts were not entered into for that purpose. Rather SCOA wanted to
insure that the key personnel within the Company with whom SCOA had been
negotiating for almost nine (9) months prior to its entering into the Marketing
Agreement would remain with the Company during the critical start-up phases of
the Marketing Agreement.

-15-

CERTAIN RELATIONSHIP
--------------------

Mr. C. Warren Trainor, Esquire, is a partner in the firm of Ehmann, Van
Denbergh & Trainor, P.C., which acts as general counsel to the Company. In
Fiscal 2001, no compensation was paid to Ehmann, Van Denbergh & Trainor, P.C. As
of September 30, 2001 charges for services rendered and the reimbursement of
costs were owed to Ehmann, Van Denbergh & Trainor, P.C. of $478,989.19.

OTHER MATTERS
-------------

The Board of Directors knows of no other matter to be brought before
the Annual Meeting of the Stockholders. Should any other matter be properly
issued at the meeting, however, it is the intention of each of the persons named
in the proxy to vote in accordance with his judgment as to each such matter
raised.

INCORPORATION BY REFERENCE
--------------------------

The Company incorporates herein by reference the audited financial
statements of the Company as set forth in the Annual Report distributed to each
shareholder with this Proxy Statement.

EXPENSES OF SOLICITATION
------------------------

The expenses associated with the preparation, assembling, printing and
mailing of the Notice of Annual Meeting, Proxy Statement and Proxy will be borne
by the Company.

Dated: February ______, 2002 By Order of the Board of Directors

/s/ Gary J. Novinskie
------------------------------------
Gary J. Novinskie, President

-16-

Appendix A

CERTIFICATE OF AMENDMENT TO
THE CERTIFICATE OF INCORPORATION OF
DALECO RESOURCES CORPORATION

DALECO RESOURCES CORPORATION, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),

DOES HEREBY CERTIFY:

FIRST: That on January 3, 2002 the Board of Directors of the Corporation duly
adopted by unanimous vote in accordance with the provisions of Section 141 of
the Delaware General Corporation Law ("DGCL"), resolutions proposing and
declaring the following amendment of the Certificate of Incorporation of the
Corporation to be advisable and recommending the adoption of such amendment by
the stockholders of the Corporation.

SECOND: That at a meeting and by majority vote of the stockholders of the
Corporation, the requisite stockholder approval was given to the following
amendment in accordance with the provisions of Section 242 of the DGCL at a
meeting called pursuant to Section 222 of the DGCL.

THIRD: The Certificate of Incorporation of the Corporation is amended by (i)
deleting paragraph (a) of Article Fourth thereof and replacing in lieu and
instead thereof the following:

"(a) 50,000,000 common shares with a par value of $0.01 per share, the
rights of the holders thereof being equal in all respects including the
rights, among other things:"

FOURTH: That the amendment was duly adopted in accordance with the provisions of
Sections 242 of the DGCL.

FIFTH: This Certificate of Amendment shall become effective as of the date of
the annual meeting or such other date as specified at the time of filing in the
office of the Secretary of State of the State of Delaware.

IN WITNESS WHEREOF, said Daleco Resources Corporation has caused this
certificate to be signed by Gary J. Novinskie, its President this 28th day of
February, 2002.

DALECO RESOURCES CORPORATION

By:
------------------------------------
Gary J. Novinskie, President

Appendix B

BY-LAWS

DALECO RESOURCES CORPORATION OF NEVADA, INC.

- --------------------------------------------------------------------------------

A NEVADA CORPORATION

ARTICLE ONE
-----------

OFFICES
-------

Section 1.1. Registered Office - The registered office of this
corporation shall be in the County of Carson City, State of Nevada.

Section 1.2. Other Offices - The corporation may also have offices at
such other places both within and without the State of Nevada as the Board of
Directors may from time to time determine or the business of the corporation may
require.

ARTICLE TWO
-----------

MEETINGS OF STOCKHOLDERS
------------------------

Section 2.1. Place - All annual meetings of the stockholders shall be
held at the registered office of the corporation or at such other place within
or without the State of Nevada as the directors shall determine. Special
meetings of the stockholders may be held at such time and place within or
without the State of Nevada as shall be stated in the notice of the meeting, or
in a duly executed waiver of notice thereof.

Section 2.2. Annual Meetings - Annual meetings of the stockholders,
commencing with the year 2002 shall be held on the 15th day of March each year
if not a legal holiday and, if a legal holiday, then on the next secular day
following, or at such other time as may be set by the Board of Directors from
time to time, at which the stockholders shall elect by vote a Board of Directors
and transact such other business as may properly be brought before the meeting.

Section 2.3. Special Meetings - Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the President or the Secretary by
resolution of the Board of Directors or at the request in writing of
stockholders owning a majority in amount of the entire capital stock of the
corporation issued and outstanding and entitled to vote. Such request shall
state the purpose of the proposed meeting.

Section 2.4. Notices of Meetings - Notices of meetings shall be in
writing and signed by the President or a Vice-President or the Secretary or an
Assistant Secretary or by such other person or persons as the directors shall
designate. Such notice shall state the purpose or purposes for which the meeting
is called and the time and the place, which may be within or without this State,
where it is to be held. A copy of such notice shall be either delivered
personally to or shall be mailed, postage prepaid, to each stockholder of record
entitled to vote at such meeting not less than ten nor more than sixty days
before such meeting. If mailed, it shall be directed to a stockholder at his
address as it appears upon the records of the corporation and upon such mailing
of any such notice, the service thereof shall be complete and the time of the
notice shall being to run from the date upon which such notice is deposited in
the mail for transmission to such stockholder. Personal delivery of any such
notice to any officer of a corporation or association or to any member of a
partnership shall constitute delivery of such notice to such corporation,
association or partnership. In the event of the transfer of stock after delivery
of such notice of and prior to the holding of the meeting it shall not be
necessary to deliver or mail notice of the meeting to the transferee.

Section 2.5. Purpose of Meetings - Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.

Section 2.6. Quorum - The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
Articles of Incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.

Section 2.7. Voting - When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock having voting power
present in person or represented by proxy shall be sufficient to elect directors
or to decide any questions brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the Articles of
incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.

Section 2.8. Share Voting - Each stockholder of record of the
corporation shall be entitled at each meeting of stockholders to one vote for
each share of stock standing in his name on the books of the corporation. Upon
the demand of any stockholder, the vote for directors and the vote upon any
question before the meeting shall be by ballot.

Section 2.9. Proxy - At any meeting of the stockholders any stockholder
may be represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No proxy or
power of attorney to vote shall be used to vote at a meeting of the stockholders
unless it shall have been filed with the secretary of the meeting when required
by the inspectors of election. All questions regarding the qualification of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by the inspectors of election who shall be appointed by the Board of
Directors, or if not so appointed, then by the presiding officer of the meeting.

Section 2.10. Written Consent in Lieu of Meeting - Any action which may
be taken by the vote of the stockholders at a meeting may be taken without a
meeting if authorized by the written consent of stockholders holding at least a
majority of the voting power, unless the provisions of the statutes or of the
Articles of Incorporation require a greater proportion of voting power to
authorize such action in which case such greater proportion of written consents
shall be required.

-2-

ARTICLE TWO
-----------

DIRECTORS
---------

Section 3.1. Powers - The business of the corporation shall be managed
by its Board of Directors which may exercise all such powers of the corporation
and do all such lawful acts and things as are not by statute or by the Articles
of Incorporation or by these Bylaws directed or required to be exercised or done
by the stockholders.

Section 3.2. Number of Directors - The number of directors which shall
constitute the whole board shall be one. The number of directors may from time
to time be increased or decreased to not less than one nor more than fifteen by
action of the Board of Directors. The directors shall be elected at the annual
meeting of the stockholders and except as provided in Section 2 of this Article,
each director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.

Section 3.3. Vacancies - Vacancies in the Board of Directors including
those caused by an increase in the number of directors, may be filled by a
majority of the remaining directors,, though less than a quorum, or by a sole
remaining director, and each director so elected shall hold office until his
successor is elected at an annual or a special meeting of the stockholders. The
holders of a two-thirds of the outstanding shares of stock entitled to vote may
at any time peremptorily terminate the term of office of all or any of the
directors by vote at a meeting called for such purpose or by a written statement
filed with the secretary or, in his absence, with any other officer. Such
removal shall be effective immediately, even if successors are not elected
simultaneously and the vacancies on the Board of Directors resulting therefrom
shall be filled only by the stockholders.

A vacancy or vacancies in the Board of Directors shall be deemed to
exist in case of the death, resignation or removal of any directors, or if the
authorized number of directors be increased, or if the stockholders fail at any
annual or special meeting of stockholders at which any director or directors are
elected to elect the full authorized number of directors to be voted for at that
meeting.

The stockholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors. If the Board of Directors
accepts the resignation of a director tendered to take effect at a future time,
the Board or the stockholders shall have power to elect a successor to take
office when the resignation is to become effective.

No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.

ARTICLE FOUR
------------

MEETINGS OF THE BOARD OF DIRECTORS
----------------------------------

Section 4.1. Place - Regular meetings of the Board of Directors shall
be held at any place within or without the State which has been designated from
time to time by resolution of the Board or by written consent of all members of
the Board. In the absence of such designation regular meetings shall be held at
the registered office of the corporation. Special meetings of the Board may be
held either at a place so designated or at the registered office.

Section 4.2. First Meeting.- The first meeting of each newly elected
Board of Directors shall be held immediately following the adjournment of the
meeting of stockholders and at the place thereof. No notice of such meeting
shall be necessary to the directors in order legally to constitute the meeting,
provided a quorum be present. In the event such meeting is not so held, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors.

-3-

Section 4.3. Regular Meetings - Regular meetings of the Board of
Directors may be held without call or notice at such time and at such place as
shall from time to time be fixed and determined by the Board of Directors.

Section 4.4. Special Meetings - Special Meetings of the Board of
Directors may be called by the Chairman or the President or by any
Vice-President or by any two directors.

Written notice of the time and place of special meetings shall be
delivered personally to each director, or sent to each director by mail or by
other form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records or is not readily ascertainable, at the
place in which the meetings of the directors are regularly held. In case such
notice is mailed or telegraphed, it shall be deposited in the United States mail
or delivered to the telegraph company at lease forty-eight (48) hours prior to
the time of the holding of the meeting. In case such notice is delivered as
above provided, it shall be so delivered at lease twenty-four (24) hours prior
to.. the time of the holding of the meeting. Such mailing, telegraphing or
delivery as above provided shall be due, legal and personal notice to such
director.

Section 4.5. Notice - Notice of the time and place of holding an
adjourned meeting need not be given to the absent directors if the time and
place be fixed at the meeting adjourned.

Section 4.6. Waiver - The transactions of any meeting of the Board -of
Directors, however called and noticed or wherever held, shall be as valid as
though had at a meeting duly held after regular call and notice, if a quorum be
present, and if. either before or after the meeting, each of the directors not
present signs a written waiver of notice, or a consent to holding such meeting,
or an approval of the minutes thereof. All such waivers, consents or approvals
shall be filed with the corporate records or made a part of the minutes of the
meeting.

Section 4.7. Quorum - A majority of the authorized number of directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or made by
a majority of the directors present at a meeting duly held at which a quorum is
present shall be regarded as the act of the Board of Directors, un1ess a
greater number be required by law or by the Articles of Incorporation. Any
action of a majority, although not at a regularly called meeting, and the record
thereof, if assented to in writing by all of the other members of the Board
shall be as valid and effective in all respects as if passed by the Board in
regular meeting.

Section 4.8. Adjournment - A quorum of the directors may adjourn any
directors meeting to meet again at a stated day and hour; provided, however,
that in the absence of a quorum, a majority of the directors present at any
directors meeting, either regular or special, may adjourn from time to time
until the time fixed for the next regular meeting of the Board.

ARTICLE FIVE
------------

COMMITTEES OF DIRECTORS
-----------------------

Section 5.1. Power to Designate - The Board of Directors may, by
resolution adopted by a majority of the whole Board, designate one or more
committees of the Board of Directors, each committee to consist of one or more
of the directors of the corporation which, to the extent provided in the
resolution, shall have and may exercise the power of the Board of Directors in
the management of the business and affairs of the corporation and may have power
to authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
determined from time to time by the Board of Directors. The members of any such
committee present at any meeting and not disqualified from voting may, whether
or not they constitute a quorum, unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any absent or disqualified
member. At meetings of such committees, a majority of the members or alternate
members shall constitute a quorum for the transaction of business, and the act
of a majority of the members or alternate members at any meeting at which there
is a quorum shall be the act of the committee.

-4-

Section 5.2. Regular Minutes - The committees shall keep regular
minutes of their proceedings and report the same to the Board of Directors.

Section 5.3. Written Consent - Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent thereto is signed by all members
of the Board of Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.

ARTICLE SIX
-----------

COMPENSATION OF DIRECTORS
-------------------------

Section 6.1. Compensation - The directors may be paid their expenses of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.

ARTICLE SEVEN
-------------

NOTICES
-------

Section 7.1. Notice - Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.

Section 7.2. Consent - Whenever all parties entitled to vote at any
meeting, whether of directors or stockholders, consent, either by a writing on
the records of the meeting or filed with the secretary, or by presence at such
meeting and oral consent entered on the minutes, or by taking part in the
deliberations at such meeting without objection, the doings of such meetings
shall be as valid as if had at a meeting regularly called and noticed, and at
such meeting any business may be transacted which is not excepted from the
written consent or to the consideration of which no objection for want of notice
is made at the time, and if any meeting be irregular for want of notice or of
such consent, provided a quorum was present at such meeting, the proceedings of
said meeting may be ratified and approved and rendered likewise valid and the
irregularity or defect therein waived by a writing signed by all parties having
the right to vote at such meeting; and such consent or approval of stockholders
may be by proxy or attorney, but all such proxies and powers of attorney must be
in writing.

Section 7.3. Waiver of Notice - Whenever any notice whatever is
required to be given under the provisions of the statutes, of the Articles of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.

-5-

ARTICLE EIGHT
-------------

OFFICERS
--------

Section 8.1. Appointment of Officers - The officers of the corporation
shall be chosen by the Board of Directors and shall be a President, a Secretary
and a Treasurer. Any person may hold two or more offices.

Section 8.2. Time of Appointment - The Board of Directors at its first
meeting after each annual meeting of stockholders shall choose a Chairman of the
Board who shall be a director. and shall choose a President, a Secretary and a
Treasurer, none of whom need be directors.

Section 8.3. Additional Officers - The Board of Directors may appoint a
Vice-Chairman of the Board, Vice-Presidents and one or more Assistant
Secretaries and Assistant Treasurers and such other officers and agents as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors.

Section 8.4. Salaries - The salaries and compensation of all officers
of the corporation shall be fixed by the Board of Directors.

Section 8.5. Vacancies - The officers of the corporation shall hold
office at the pleasure of the Board of Directors. Any officer elected or
appointed by the Board of Directors may be removed at any time by the Board of
Directors. Any vacancy occurring in any office of the corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.

Section 8.6. Chairman of the Board - The Chairman of the Board shall
preside at meetings of the stockholders and the Board of Directors, and shall
see that all orders and resolutions of the Board of Directors are carried into
effect.

Section 8.7. Vice-Chairman - The Vice-Chairman shall, in the absence or
disability of the Chairman of the Board, perform the duties and exercise the
powers of the Chairman of the Board and shall perform such other duties as the
Board of Directors may from time to time prescribe.

Section 8.8. President - The President shall be the chief executive
officer of the corporation and shall have active management of the business of
the corporation. He shall execute on behalf of the corporation all instruments
requiring such execution except to the extent the signing and execution thereof
shall be expressly designated by the Board of Directors to some other officer or
agent of the corporation.

Section 8.9. Vice-President - The Vice-President shall act under the
direction of the President and in the absence or disability of the President
shall perform the duties and exercise the powers of the President. They shall
perform such other duties and have such other powers as the President or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more Executive Vice-Presidents or may otherwise specify the
order of seniority of the Vice-Presidents. The duties and powers of the
President shall descend to the Vice-Presidents in such specified order of
seniority.

Section 8.10. Secretary - The Secretary shall act under the direction
of the President. Subject to the direction of the President he shall attend all
meetings of the Board of Directors and all meetings of the stockholders and
record the proceedings. He shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the President or the Board of
Directors.

-6-

Section 8.11. Assistant Secretaries - The Assistant Secretaries shall
act under the direction of the President. In order of their seniority, unless
otherwise determined by the President or the Board of Directors, they shall, in
the absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary. They shall perform such other duties and have such
other powers as the President or the Board of Directors may from time to time
prescribe.

Section 8.12. Treasurer - The Treasurer shall act under the direction
of the President. Subject to the direction of the President he shall have
custody of the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as may be designated by the Board
of Directors. He shall disburse the funds of the corporation as may be ordered
by the President or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as Treasurer and of the financial condition of the
corporation.

Section 8.13. Surety - If required by the Board of Directors, he shall
give the corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of his office and for the restoration to the corporation, in case of
his death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.

Section 8.14. Assistant Treasurer - The Assistant Treasurer in the
order of their seniority, unless otherwise determined by the President or the
Board of Directors, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the powers of the Treasurer. They shall perform
such other duties and have such other powers as the President or the Board of
Directors may from time to time prescribe.

ARTICLE NINE
------------

CERTIFICATES OF STOCK
---------------------

Section 9.1. Share Certificates - Every stockholder shall be entitled
to have a certificate signed by the President or a Vice-President and the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
of the corporation, certifying the number of shares owned by him in the
corporation. If the corporation shall be authorized to issue more than once
class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of the
various classes of stock or series thereof and the qualifications, limitations
or restrictions of such rights, shall be set forth in full or summarized on the
face or back of the certificate which the corporation shall issue to represent
such stock.

Section 9.2. Transfer Agents - If a certificate is signed (a) by a
transfer agent other than the corporation or its employees or (b) by a registrar
other than the corporation or its employees, the signatures of the officers of
the corporation may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, such certificate may be issued with
the same effect as though the person had not ceased to be such officer. The seal
of the corporation, or a facsimile thereof, may, but need not be, affixed to
certificates of stock.

-7-

Section 9.3. Lost or Stolen Certificates - The Board of Directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation alleged to
have been lost or destroyed upon the making of an affidavit o that fact by the
person claiming the certificate of stock to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.

Section 9.4. Share Transfers - Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation, if it is satisfied that all
provisions of the laws and regulations applicable to the corporation regarding
transfer and ownership of shares have been complied with, to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.

Section 9.5. Voting Shareholder - The Board of Directors may fix in
advance a date not exceeding sixty (60) days nor less than ten (10) days
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining the consent of stockholders for any purpose,
as a record date for the determination of the stockholders entitled to notice of
and to vote at any such meeting, and any adjournment thereof, or entitled to
receive payment of any such dividend, or to give such consent, and in such case,
such stockholders, and only such stockholders as shall be stockholder of record
on the date so fixed, shall be entitled to notice of and to vote at such
meeting, or any adjournment thereof, or to receive payment of such dividend, or
to receive such allotment of rights, or to exercise such rights, or to give such
consent, as the case may be, notwithstanding any transfer of any stock on the
books of the corporation after any such record date fixed as aforesaid.

Section 9.6. Shareholders Record - The corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends, and the
corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as other wise provided by
the laws of Nevada.

ARTICLE TEN
-----------

GENERAL PROVISIONS
------------------

Section 10.1. Dividends - Dividends upon the capital stock of the
corporation, subject to the provisions of the Articles of Incorporation, if any,
may be declared by the Board of Directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash. in property or in shares of the
capital stock, subject to the provisions of the Articles of Incorporation.

Section 10.2. Reserves - Before payment of any dividend, there may be
set aside out of any funds of the corporation available for dividends such sum
or sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends or for repairing or maintaining any property of the corporation or for
such other purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.

Section 10.3. Checks - All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

-8-

Section 10.4. Fiscal Year - The fiscal year of the corporation shall be
fixed by resolution of the Board of Directors.

Section 10.5. Corporate Seal - The corporation may or may not have a
corporate seal, as may from time to time be determined by resolution of the
Board of Directors. If a corporate seal is adopted, it shall have inscribed
thereon the name of the Corporation and the words "Corporate Seals" and
"Nevada". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.

ARTICLE ELEVEN
--------------

INDEMNIFICATION
---------------

Every person who was or is a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or a person of
whom he is the legal representative is or was a director or officer of the
corporation or is or was serving at the request of the corporation or for its
benefit as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless to the fullest extent legally permissible under
the General Corporation Law of the State of Nevada from time to time against all
expenses, liability and loss (including attorneys' fees, judgments, fines and
amounts paid or to be paid in settlement) reasonably incurred or suffered by him
in connection therewith. The expenses of officers and directors incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by the
corporation. Such right of indemnification shall be a contract right which may
be enforced in any manner desired by such person. Such right of indemnification
shall not be exclusive of any other right which such directors, officers or
representatives may have or hereafter acquire and, without limiting the
generality of such statement, they shall be entitled to their respective rights
of indemnification under any bylaw, agreement, vote of stockholders, provision
of law or otherwise, as well as their rights under this Article.

The Board of Directors may cause the corporation to purchase and
maintain insurance on behalf of any person who is or was a director or officer
of the corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, or as its representative in a
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred in any such capacity or arising out of
such status, whether or not the corporation would have the power to indemnify
such person.

The Board of Directors may from time to time adopt further Bylaws with
respect to indemnification and may amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.

ARTICLE TWELVE
--------------

AMENDMENTS
----------

Section 12.1. By Shareholder - The Bylaws may be amended by a majority
vote of all the stock issued and outstanding and entitled to vote at any annual
or special meeting of the stockholders, provided notice of intention to amend
shall have been contained in the notice of the meeting.

-9-

Section 12.2. By Board of Directors - The Board of Directors by a
majority vote of the whole Board at any meeting may amend these Bylaws,
including Bylaws adopted by the stockholders, but the stockholders may from time
to time specify particular provisions of the Bylaws which shall not be amended
by the Board of Directors.

-10-

Appendix C
Preliminary Copy

Agreement and Plan of Reorganization

by and among

Daleco Resources Corporation
A Delaware Corporation

and

Daleco Resources Corporation of Nevada
A Nevada Corporation

Dated _________, 2002

AGREEMENT AND PLAN OF REORGANIZATION
------------------------------------

This Agreement and Plan of Reorganization is entered into as
of _________, 2002 (hereafter "Agreement") by and among Daleco Resources
Corporation, a Delaware corporation (hereafter "Old Daleco") and Daleco
Resources Corporation of Nevada, a Nevada Corporation (hereafter "New Daleco")
with respect to the following:

RECITALS:

WHEREAS, New Daleco is a newly formed Nevada corporation which
has conducted no business and has no assets; and

WHEREAS, New Daleco's Articles of Incorporation provide for
50,000,000 shares of common stock, par value $0.01 per share and 20,000,000
shares of preferred stock, par value $0.01; and

WHEREAS, Old Daleco's Articles of Incorporation provide for
50,000,000 shares of common stock, par value $0.01 per share and 20,000,000
shares of preferred stock, par value $0.01; and;

WHEREAS, the parties desire that Old Daleco merge with and
into New Daleco in accordance with the provisions of the Nevada Revised Statutes
and the Delaware General Business Corporation Law, with New Daleco being the
surviving entity; and

WHEREAS, the parties desire and intend for all of the issued
and outstanding capital stock of Old Daleco to become outstanding capital stock
of New Daleco upon the effective date of the merger; and

WHEREAS, for Federal Income Tax purposes, the parties intend
that the merger contemplated by this Agreement shall qualify as a reorganization
pursuant to Section 368(a) of the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations promulgated thereunder.

NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, agree as follows:

ARTICLE I.
INCORPORATION BY REFERENCE
--------------------------

1.1. The parties incorporate the recital paragraphs for all purposes as
though same were set forth at length herein.

ARTICLE II.
DEFINITIONS
-----------

2.1. Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:

"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such other Person.

"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banks in Philadelphia, Pennsylvania are authorized
or required by law to close.

-2-

"Directors" means the directors of Old Daleco, and who will
upon consummation of the merger contemplated hereby become the directors of New
Daleco.
"Effective Date" means the date when the Articles of Merger,
prepared pursuant to this Agreement and Plan of Reorganization, have been filed
with the Nevada Secretary of State and the Secretary of State of Delaware, which
is anticipated to be on or before April 1, 2002.

"ERISA" means the Employee Retirement Income Security Act of
1974, and the applicable regulations promulgated thereunder.

"Governmental Authority" means any foreign, Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality.

"IRS" means the United States Internal Revenue Service.

"Material Adverse Effect" means, with respect to any Person or
Persons, any change, occurrence, or effect that is materially adverse to the
assets, business, results of operations or condition (financial or otherwise) of
such party.

"Material Adverse Event" shall mean, an event the consequences
of which would have a Material Adverse Effect.

"Person" means an individual, corporation, partnership, trust
or unincorporated organization, or other type of legal entity or a government or
any agency or political subdivision thereof.

-3-

"SEC" means the Securities and Exchange Commission.

"Shareholder", shall mean the holder of one or more shares of
Stock.

"Stock" shall mean all of the issued and outstanding capital
stock of Old Daleco, which consists of 17,778,790, shares of common stock, par
value $0.01, 8,000 shares of Series A Preferred Stock and 721,000 shares of
Series B Preferred Stock.

"Subsidiary" means, with respect to any Person: (i) each
corporation, partnership, joint venture, limited liability company or other
legal entity of which such Person owns, either directly or indirectly, 50% or
more of the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or similar governing
body of such corporation, partnership, joint venture or other legal entity and
(ii) each partnership or limited liability company in which such Person or
another Subsidiary of such Person is the general partner, managing partner or
otherwise controls.

"Third Party" means a party or parties unaffiliated with any
of Old Daleco, New Daleco or any subsidiary of Old Daleco.

"Threatened" means a claim, proceeding, dispute, action or
other matter for which a demand or adverse statement has been made in writing or
any written notice of default or nonperformance has been given.

-4-

2.2. Other Terms. Other terms may be defined elsewhere in the text of
this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.

2.3. Other Definitional Provisions.

2.3.1. The words "hereof," "herein," and "hereunder" and words
of similar import, when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.

2.3.2. The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.

ARTICLE III.
CLOSING
-------

3.1. The Closing. At the closing of the merger contemplated by this
Agreement (the "Closing"), Old Daleco shall merge with and into New Daleco, with
New Daleco being the survivor and all of the issued and outstanding Stock of Old
Daleco will become stock of New Daleco.

3.2. Closing Date. The Closing shall take place on the day on which the
Articles of Merger consummating the transactions contemplated by this Agreement
are filed with the Nevada Secretary of State and the Secretary of State of
Delaware, which date is anticipated to be on or before April 1, 2002, (the
"Closing Date").

3.3. Place of Closing. The Closing shall take place at the offices of
Old Daleco's Counsel, Ehmann, Van Denbergh & Trainor, P. C., Suite 725, Two Penn
Center, Philadelphia, Pennsylvania 19102, or such other place as the parties may
mutually agree.

-5-

ARTICLE IV.
ASSUMPTION OF LIABILITIES, CLAIMS AND ASSETS
--------------------------------------------

4.1. Assumption of Liabilities. The liabilities of Old Daleco
immediately prior to the Closing shall become the liabilities of New Daleco upon
consummation of the merger, in every manner without offset, compromise or
defalcation.

4.2. Assets. The assets of Old Daleco immediately prior to the Closing
shall become the assets of New Daleco upon consummation of the merger, in every
manner without amendment, alteration to include any and all Encumbrances thereon
and attributable thereto.

4.3. Claims. All manner of claims and causes of action whether owed by
or against Old Daleco existing immediately prior to the Closing shall become the
claims and causes of action New Daleco upon consummation of the merger.

ARTICLE V.
THE MERGER
----------

5.1. Effect of Merger. Effective upon filing the Articles of Merger
pursuant to this Agreement with the Nevada Secretary of State and the Secretary
of State of Delaware, Old Daleco shall be merged with and into New Daleco and
the separate existence of Old Daleco shall thereupon cease, in accordance with
the applicable provisions of Chapters 78 and 92A of the Nevada Revised Statutes
and Section 252 of the Delaware Corporation Law. New Daleco will be the
surviving corporation in the merger with all of its rights, privileges, duties
and obligations as a corporation organized under the laws of the State of Nevada
will continue unaffected by the merger. Upon the merger of Old Daleco with and
into New Daleco, Old Daleco shall cease to exist for all purposes.

-6-

5.2. Articles of Incorporation and Bylaws. The Articles of
Incorporation New Daleco in effect immediately prior to Closing shall be the
Articles of Incorporation New Daleco and the Bylaws of Old Daleco in effect
immediately prior to the Closing shall be adopted by and become the Bylaws of
New Daleco. Except as otherwise provided in this Agreement, from and after
Closing, the Board of Directors of Old Daleco, immediately prior to Closing,
shall constitute the Board of Directors of New Daleco as the surviving
corporation.

5.3. Stock Ownership. The ownership of the capital stock of New Daleco
subsequent to the Closing shall be identical to the ownership of the capital
stock of Old Daleco immediately prior to the Closing.

ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
------------------------------

6.1. Representations and Warranties of New Daleco. New Daleco hereby
Represents and Warrants to Old Daleco and the Shareholders that:

6.1.1. New Daleco is a corporation duly ongoing, validly
existing and in good standing under the laws of the State of Nevada and in each
jurisdiction in which such qualification is necessary for the conduct of its
business.

-7-

6.1.2. The execution, delivery and performance of this
Agreement by New Daleco and the consummation of the transactions contemplated
hereby will not constitute a breach or violation of or default under its
Articles of Incorporation or By-Laws or under any judgment, decree, or order to
which New Daleco is subject. The consummation by New Daleco of the transactions
contemplated hereby will not require the consent or approval of any other party
to any of the above or affect the validity or effectiveness of any of the above.

6.1.3. New Daleco has not conducted any business since its
incorporation other than its qualification as a foreign corporation in the
states in which Old Daleco conducted its business immediately prior to the
merger.

6.1.4. The execution of this Agreement and the consummation of
the transaction have been duly authorized by all necessary corporate action and
this Agreement is a legal, valid and binding obligation of New Daleco.

6.1.5. The authorized capital stock of New Daleco consists of
50,000,000 shares of common stock, par value $0.01, of which, as of the date of
this Agreement, one share is issued and outstanding and 20,000,000 shares of
preferred stock, par value $0.01, of which no shares are issued and outstanding.
Other than as required by this Agreement, New Daleco is not obligated to issue
any of its capital stock to any person.

-8-

6.1.6. New Daleco has no liabilities or obligations of any
nature.

6.1.7. No written statement, certificate, schedule, list or
other written information furnished by New Daleco in connection with this
Agreement contains any untrue statements of a material fact or omits to state
any material facts necessary in order to make the statements contained herein
not misleading in light of the circumstances under which they were made.

6.1.8. Plans. New Daleco does not have any "Plan" as that term
is defined under ERISA either qualified or pending qualification under ERISA.

6.1.9. Subsidiary. New Daleco has no subsidiaries.

6.2. Representations and Warranties of Old Daleco. Old Daleco
Represents and Warrants to New Daleco and the Shareholders that:

6.2.1. Organization, Standing and Corporate Power. Old Daleco
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority to carry on its business as now being conducted. Old Daleco is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the current conduct of its business or the ownership or
leasing of its properties makes such qualifications or licensing necessary,
other than in such jurisdictions where the failure to be so qualified or
licensed (individually or in the aggregate) would not have a Material Adverse
Effect. Old Daleco has delivered to New Daleco complete and correct copies of
the Articles of Incorporation and Bylaws of Old Daleco, as amended to the date
of this Agreement.

-9-

6.2.2. Subsidiaries. At the date of this Agreement, other than
as set forth on Schedule 6.2.2, there are no subsidiaries or affiliates of Old
Daleco.

6.2.3. Capitalization. The authorized capital stock of Old
Daleco, along with the issued and outstanding shares of capital stock for Old
Daleco and outstanding shares of capital stock, are set forth in Schedule 6.2.3.
Except as set forth in Schedule 6.2.3, as of the date of this Agreement, (i) no
additional shares of common stock or other voting or equity securities of Old
Daleco are issued, reserved for issuance or outstanding, and (ii) there are no
outstanding stock appreciation rights and/or other outstanding contractual
rights the value of which is derived from the financial performance of Old
Daleco. All outstanding shares of capital stock of Old Daleco are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights. Except as set forth on Schedule 6.2.3, (i) there are no
bonds, debentures, notes or other indebtedness of Old Daleco having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which the shareholders of Old Daleco may vote, (ii)
there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which Old
Daleco is a party or by which it is bound, obligating Old Daleco to issue,
deliver or sell or cause to be issued, delivered or sold, additional shares of
capital stock or other voting or equity securities of Old Daleco or obligating
Old Daleco to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking, and
(iii) there are no outstanding contractual obligations of Old Daleco to
repurchase, redeem or otherwise acquire any shares of Stock.

-10-

6.3. Authority; Enforceability; No Conflicts; and Consents.

6.3.1. Old Daleco has the requisite power to enter into this
Agreement and to consummate the acquisition transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly authorized by all
necessary organizational on the part of Old Daleco. This Agreement has been duly
executed and delivered by Old Daleco after a duly called meeting of the
Shareholders at which this transaction was approved in accordance with the
Bylaws of Old Daleco and applicable law, and constitutes the valid and binding
obligation of Old Daleco, enforceable against Old Daleco in accordance with the
terms of this Agreement and the Schedules thereof.

-11-

6.3.2. Except as set forth on Schedule 6.3.2 hereof, the
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
cause loss of a material benefit under, or result in the creation or maturation
of any lien or purchase right upon any of the properties or assets of any of Old
Daleco under, (i) the organizational documents, Bylaws of Old Daleco, (ii)
except as set forth in Schedule 6.3.2 hereof, and subject to the governmental
filings and other matters referred to in Section 6.3.3, any loan or credit
agreement, note, bond, mortgage, indenture, real property lease or other
material agreement or instrument applicable to Old Daleco or any of its
properties or assets, or (iii) subject to the governmental filings and other
matters referred to in Section 6.3.3, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Old Daleco or any of its properties
or assets, other than, in the case of clauses (ii) or (iii), any such conflicts,
violations, defaults, rights or liens that individually or in the aggregate
would not have a Material Adverse Effect, or impair, in any material respect,
the ability of Old Daleco or any of the Shareholders to perform their
obligations under this Agreement.

-12-

6.3.3. Except as set forth in Schedule 6.3.3 hereof, no
consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Authority is required by any of the Shareholders
or Old Daleco in connection with the execution and delivery of this Agreement or
the consummation of the acquisition transactions contemplated by this Agreement,
except (i) in connection with any state or local tax which is attributable to
the beneficial ownership of real property of Old Daleco, (ii) those as set forth
in Schedule 6.3.3 hereof, and (iii) for such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, have a Material
Adverse Effect, or impair, in any material respect, the ability of the Sellers
to perform their obligations under this Agreement.

6.4. Compliance with Applicable Laws.

6.4.1. Except as set forth in Schedule 6.4.1, (i) Old Daleco
has in effect all Federal, state and local governmental approvals,
authorizations, certificates, filings, licenses, permits and rights ("Permits"),
including all authorizations under Environmental Laws (as hereinafter defined)
necessary for it to own or lease its properties and assets and to carry on its
business as now being conducted other than such Permits the absence of which
would not, individually or in the aggregate, have a Material Adverse Effect with
respect to Old Daleco, and there has occurred no default under any such Permit
other than such defaults which, individually or in the aggregate, would not have
a Material Adverse Effect, and (ii) Old Daleco is in compliance with all
applicable laws, statutes, ordinances, rules, orders and regulations of any
Governmental Authority ("Applicable Laws"), except for such noncompliance which,
individually or in the aggregate, would not have a Material Adverse Effect.

-13-

6.4.2. Old Daleco is and has been in compliance with all
applicable Environmental Laws, except as set forth in Schedule 6.4.2 hereof and
except for such noncompliance which, would not have a Material Adverse Effect.
The term "Environmental Laws" means any applicable Federal, state or local
statute, ordinance, rule, regulation, permit, judgment, order, decree,
injunction or other legally binding authorization, relating to: (A) Releases (as
defined in 42 U.S.C. Section 9601(22)) or Threatened Releases of Hazardous
Material (as hereinafter defined) into the environment, or (B) the generation,
treatment, storage, disposal, use, handling, manufacturing, transportation or
shipment of, or exposure to, a Hazardous Material.

6.5. Financial Statements.

6.5.1. Old Daleco has delivered to New Daleco its financial
statements as filed with the Securities and Exchange Commission for all
reporting periods prior to the Closing Date (the "Old Daleco Financial
Statements"). Old Daleco Financial Statements have been prepared from, and are
in accordance with, the books and records of Old Daleco and, present fairly, in
all material respects, the financial position, the results of operations and
cash flows of Old Daleco as of the dates and for the periods indicated, in each
case in substantial conformance with GAAP consistently applied throughout the
periods involved, save and except as otherwise stated in any of said financial
statements.

-14-

6.6. Absence of Changes or Events. Except as set forth in this Section
6.6 or Schedule 6.6 or any other Schedule hereof or as permitted elsewhere in
this Agreement, since December 31, 2001, Old Daleco has conducted its business
only in the ordinary course, and there has not been (i) any change or occurrence
(other than those which relate to Old Daleco's industry generally or the economy
in general) which will have a Material Adverse Effect, (ii) any declaration,
setting aside or payment of any dividend or other distribution with respect to
any shares of capital stock issued by Old Daleco, (iii) any issuance of any
additional shares of capital stock of Old Daleco or any securities convertible
into or exchangeable or exercisable for capital stock of Old Daleco, (iv) any
split, combination or reclassification of any of the capital stock of Old Daleco
or any issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of capital stock of Old
Daleco, (v) any granting by Old Daleco to any director or officer of Old Daleco
of any increase in compensation, except in the ordinary course of business
consistent with prior practice, (vi) any granting by Old Daleco to any such
Person of any increase in severance or termination pay, except as part of a
standard employment package to any Person promoted or hired, or except for
employment, severance or termination arrangements in the ordinary course of
business consistent with past practice with employees other than any executive
officer of Old Daleco, any entry by Old Daleco into any employment, severance or
termination agreement with any such Person, (vii) any damage, destruction or
loss not covered by insurance that will have a Material Adverse Effect on Old
Daleco, or (viii) any change in accounting methods, principles or practices of
Old Daleco materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in GAAP.

-15-

6.7. Litigation. Except as disclosed in Schedule 6.7 hereof, there are
no judicial, administrative, or arbitral actions, suits, proceedings (public of
private) or governmental proceedings (collectively, "Legal Proceedings") pending
against Old Daleco or Old Daleco's officers and/or directors, or Threatened
that, individually or in the aggregate, could have a Material Adverse Effect.
Except as disclosed in Schedule 6.7, there is no judgment, order, injunction or
decree of any Governmental Authority outstanding against Old Daleco that,
individually or in the aggregate, could have a Material Adverse Effect.

6.8. Contracts. All material contracts, agreements, leases, mortgages
and commitments ("Contracts"), to which Old Daleco is a party or may be bound,
have been provided to New Daleco, receipt of which is hereby acknowledged. All
Contracts are valid and in full force and effect on the date hereof and Old
Daleco has not violated any provision of, or committed or failed to perform any
act, which with notice, lapse of time or both would constitute a default under
the provisions of any Contract, the termination of which would have a Material
Adverse Effect.

-16-

6.9. Taxes.

6.9.1. Old Daleco has timely filed (including extensions) all
Federal and state income tax returns required to be so filed with respect to all
years or periods ending on or before the date of this Agreement. Old Daleco has
paid all taxes (including interest, penalties and additions to tax) shown to be
due on such tax returns.

6.9.2. No material deficiencies for any Federal or state
income taxes, have been proposed, asserted or assessed against Old Daleco that
has not been fully paid or adequately provided for in the appropriate financial
statements of Old Daleco, and no requests for waivers of the time to assess any
Federal or state income taxes of Old Daleco are pending.

6.9.3. No material liens for taxes exist with respect to any
assets or properties of Old Daleco, except for Permitted Encumbrances or liens
that Old Daleco is contesting in good faith by appropriate proceeding.

6.9.4. Old Daleco is not a party to or bound by any tax
sharing agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Federal or state income or franchise taxes (including
any advance pricing agreement, closing agreement or other agreement relating to
Federal or state income or franchise taxes with any taxing authority).

-17-

6.9.5. No Federal or state audits or other administrative
proceedings or court proceedings are presently pending with regard to any
Federal or material state income taxes on tax returns of Old Daleco and Old
Daleco has not received a written notice of any material pending audit or
proceeding.

6.9.6. Old Daleco has made available to New Daleco for
inspection complete, correct and amended copies of all Federal and state income
tax returns filed by Old Daleco for each of its taxable years ending after
September 30, 1996.

6.10. Title to Properties. Old Daleco has good and valid title to, or a
valid leasehold interest in, the real property and leasehold interests held by
it. The consummation of the transactions contemplated by this Agreement will not
create any Encumbrance on any of the real property which, individually or in the
aggregate, would have a Material Adverse Effect. Old Daleco enjoys peaceful and
undisturbed possession under all of its real property leases, except for such
breaches of the right to peaceful and undisturbed possession that do not
materially interfere with the ability of Old Daleco to conduct its business.
There is no party with a prior right, right of first refusal, preferential right
to acquire the real property ("Property Rights"). To the extent that such
property Rights exist, the transaction contemplated hereby will not be an event,
which would give the holder of such Property Rights the right to exercise same.

-18-

6.11. Insurance. Old Daleco has insurance coverage with insurance
companies or associations in such amounts as set forth in Schedule 6.11 hereof.

6.12. Intellectual Property. Old Daleco does not own any intellectual
property, although its subsidiaries do.

6.13. Plans. Old Daleco has no "plan" as that term is defined under
ERISA either qualified or pending qualification under ERISA. Old Daleco does
have a non-qualified plans as listed on Schedule 6.13.

6.14. Undisclosed Liabilities. There are no undisclosed liabilities,
the identification of which are reasonably ascertainable through the conduct of
prudent inquiry and investigation.

ARTICLE VII.
COVENANTS
---------

7.1. Access and Information. Old Daleco and New Daleco shall afford the
other and their respective representatives such access during normal business
hours throughout the period prior to the Closing to such information as the
other party shall reasonably request. Subject to the requirements of law, each
of New Daleco and Old Daleco shall hold in confidence all such non-public
information regarding the other until such time as such information is otherwise
publicly available.

7.2. Expenses. Except as otherwise agreed in writing, all costs and
expenses incurred in connection with this Agreement shall be paid Old
Daleco.

-19-

7.3. Certain Filings, Consents. New Daleco and Old Daleco shall
cooperate with one another (i) in promptly determining whether any filings are
required to be made or any consents, approvals, permits or authorizations are
required to be obtained under any federal, state or foreign law or regulation or
any consents, approvals or waivers are required to be obtained from parties to
loan agreements or other contracts material to New Daleco's or Old Daleco's
business in connection with the consummation of the transaction contemplated by
this Agreement, and (ii) in promptly making any such filings, furnishing
information required in connection wherewith and seeking timely to obtain any
such consents, permits, authorizations, approvals or waivers.

7.4. Directors. The Directors of New Daleco shall be the directors of
Old Daleco immediately prior to the Closing.

7.5. Additional Agreements. Each of the parties hereto agrees to use
all reasonable efforts to take promptly, or cause to be taken, all actions and
to do promptly, or to cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including using its best
efforts to obtain all necessary waivers, consents and approvals and effecting
all necessary registrations and filings. New Daleco expressly agree to cooperate
fully with Old Daleco and its Shareholders and to make any and all information,
reports and/or filings and take any and all other actions necessary and
appropriate in order for this transaction to constitute a reorganization
pursuant to Section 368(a) of the Internal Revenue Code such that this
transaction will qualify as a tax free exchange for Old Daleco's Shareholders.

-20-

7.6. Issuance of Shares. New Daleco shall, and when required by the
provisions of this Agreement, issue and deliver certificates representing shares
of New Daleco's capital stock to Old Daleco's Shareholders in the amounts and
type as such Shareholders held in Old Daleco immediately prior to the Closing.

ARTICLE VIII.
CONDITIONS AND CLOSING
----------------------

8.1. Conditions to the Obligations of New Daleco and Old Daleco. The
obligations of New Daleco to consummate the transactions described in this
Agreement are subject to the occurrence of the following on or before Closing:

8.1.1. Except as set forth in Schedules hereto, the
representations and warranties contained in Paragraph 6.2 hereof and in all
certificates and other documents delivered and to be delivered by the
Shareholders and/or Old Daleco to New Daleco or its representatives pursuant to
this Agreement shall be true, complete and accurate as of the Closing Date.

8.1.2. Old Daleco shall have performed and completed in all
material respects with all agreements, obligations and conditions required in
accordance with this Agreement and the Schedules hereof to be performed or
complied with on or prior to the Closing Date and shall have delivered the
respective Lists of Old Daleco shareholders pursuant to Article IV hereof at
least five days prior thereto.

-21-

8.1.3. No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated by this Agreement.

8.1.4. The merger contemplated by this Agreement shall not be
precluded by any order or injunction of any court of competent jurisdiction.

8.1.5. New Daleco shall have received a certificate of the
President or Secretary of Old Daleco indicating that a meeting of the
Shareholders had been properly convened in accordance with its Bylaws, at which
this Agreement and the transaction contemplated hereby were duly approved.

8.1.6. All filings, whether Federal or state, to include any
IRS filings, have been completed and there are no outstanding objections or
administrative filings remaining for the receipt of the approval to proceed
forward with this transaction.

8.1.7. New Daleco shall have received from the holders of any
Property Rights an agreement in form and substance satisfactory to New Daleco
and its counsel that the Property Rights will not be exercised for a period of
not less than three (3) years after the consummation of the transaction
contemplated hereby.

-22-

8.1.8. New Daleco shall have received from any officer,
director or employee of Old Daleco who holds or is the named holder of a patent
or license utilized by Old Daleco in its business an agreement in form and
substance satisfactory to New Daleco and its counsel that the holder of such
patent or license will not try to remove or renegotiate the terms under which
Old Daleco is utilizing such patent or license for a period of not less than
five (5) years after the consummation of the transaction contemplated hereby.

8.1.9. New Daleco shall have received from the officers and
directors of Old Daleco (i) executed Non-Competition and Non-Circumvention
Agreements in accordance with Article IX hereof and (ii) resignations of all
members of Old Daleco's Board of Directors.

8.2. Conditions to the Obligations of Old Daleco. The obligations of
Old Daleco to consummate the transactions described in this Agreement are
subject to the occurrence of the following on or before Closing:

8.2.1. The representations and warranties contained in Section
6.1 hereof and in all certificates and other documents delivered and to be
delivered by New Daleco to Sellers or their representatives pursuant to this
Agreement shall be true, complete and accurate as of the date when made and at
and as of the Closing Date as though such representations and warranties were
made at and as of such date, except for changes expressly permitted or
contemplated by the terms of this Agreement.

-23-

8.2.2. New Daleco shall have performed and completed in all
material respects with all agreements, obligations and conditions required by
this Agreement to be performed or complied with by New Daleco on or prior to the
Closing.

8.2.3. No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or administrative
proceeding shall have been instituted or threatened which questions the validity
or legality of the transactions contemplated hereby.

8.2.4. The merger contemplated by this Agreement shall not
have been precluded by any order or injunction of any consent of competent
jurisdiction.

8.2.5. All filings, whether Federal or state, to include any
IRS filings, have been completed and there are no outstanding objections or
administrative filings remaining for the receipt of the approval to proceed
forward with this transaction.

ARTICLE IX.
MISCELLANEOUS
-------------

9.1. Termination. Notwithstanding anything to the contrary in this
Agreement, this Agreement may be terminated at any time prior to the Closing:

9.1.1. By mutual written consent of Old Daleco, on the one
hand, and New Daleco, on the other hand;

-24-

9.1.2. By New Daleco, in the event that the closing conditions
precedent set forth in Section 8.1 are not satisfied at the time of Closing;

9.1.3. By Old Daleco, in the event that the Closing conditions
as set forth in Section 8.2 are not satisfied at the time of Closing; and

9.1.4. By either the Sellers or Buyer:

9.1.4.1. if any Governmental Authority shall have
issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties shall use their best efforts to
lift), in each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree, ruling
or other action has not been reversed or withdrawn within fifteen (15) days;

9.1.4.2. in the event of a material breach by the
other party of any representation or warranty contained in this Agreement or any
agreement executed and delivered in connection herewith which cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach;

9.1.4.3. in the event of a material breach by the
other party of any covenant or agreement contained in this Agreement or any
agreement executed and delivered in connection herewith which cannot be or has
not been cured within 30 days after the giving of written notice to the
breaching party of such breach; or

-25-

9.1.4.4. if the Closing shall not have been
consummated on or before July 1, 2000 (the "Termination Date"), and said
Termination Date has not been extended by the mutual written consent and
agreement of both parties.

9.2. Effect of Termination In the event of Termination, no party hereto
(or any of its directors officers or shareholders) shall have any liability or
further obligation to any other party to this Agreement.

9.3. Entire Agreement . This Agreement contains the entire Agreement
between the parties hereto and this Agreement supersedes all prior agreements
among the parties with respect to such matters.

9.4. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada, without giving effect to
conflicts of laws provisions.

9.5. Descriptive Headings. The headings are for convenience and
reference only and shall not affect in any way the meaning or interpretation of
the Agreement.

9.6. Invalidity Of Certain Provisions. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any terms or provisions hereof.

-26-

9.7. Notice. All notices or other communications hereunder shall be in
writing, shall be effective upon receipt and shall be made by hand delivery,
certified mail return receipt requested, or by overnight courier, postage
prepaid addressed as follows:

To New Daleco:

Daleco Resources Corporation of Nevada, Inc
120 North Church Street
West Chester, Pa 19380
Attn. Gary J. Novinskie, President

To Old Daleco and/or Shareholders:

Daleco Resources Corporation
120 North Church Street
West Chester, Pa 19380
Attn. Gary J. Novinskie, President

Either party may change its address for Notice by giving the other
party not less than ten (10) days notice of its new address in accordance with
this Paragraph 9.7.

9.8. Multiple Counterparts. This agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one Agreement.

9.9. Neither Party Drafter. The parties hereto agree that this
Agreement is the product of negotiation, that each has been represented by
counsel during its negotiation and that neither party shall be deemed the
drafter hereof.

-27-

9.10. Costs Each party agrees to pay its legal, accounting and other
fees incurred in the negotiation of the transaction contemplated hereby, the
conduct of its due diligence and the preparation of the documents, exhibits and
schedules addressed and referenced herein.

9.11. Survival of Representation and Warranties. All representations,
warranties, covenants and claims with respect to this Agreement shall survive
the Closing.

IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to
be executed as of the Effective Date.

Daleco Resources Corporation of Nevada,
a Nevada corporation

By:
-------------------------------------

Title:
----------------------------------

Daleco Resources Corporation,
a Delaware corporation,

By:
-------------------------------------

Title:
----------------------------------

-28-

APPENDIX D

DEAN HELLER Office Use Only:
Secretary of State

[ARTWORK 202 North Carson Street [ARTWORK OMITTED]
OMITTED] Carson City, Nevada 89701-4201
(775) 684 5708
------------------------------------------------------------------
Important: Read attached instructions before completing form.

- ------------------------------- ----------------------------------------------------------------------------------------------------
1. Name of Corporation: DALECO RESOURCES CORPORATION OF NEVADA, INC.
- ------------------------------- ----------------------------------------------------------------------------------------------------
2. Resident Agent Name and JAMES G. SANFORD
Street Address: ----------------------------------------------------------------------------------------------------
(must be a Nevada address Name
where process may be
served) 100 WEST LIBERTY STREET, SUITE 900, RENO, NEVADA 89501
--------------------------------------------------- --------- --------------------------------------
Physical Street Address City Zip Code

---------------------------------------------------, --------- -------------------------------------
Additional Mailing Address City State Zip Code
- ------------------------------- ----------------------------------------------------------------------------------------------------
3. Shares:
(number of shares 50,000,000 COMMON STOCK $.01
corporation Number of shares 10,000,000 Number of shares
authorized to issue) with par value: PREFERRED STOCK Par value: $.01 without par value:___________________
- ------------------------------- ----------------------------------------------------------------------------------------------------
4. Names, Addresses, The First Board of Directors/Trustees shall consist of one(1) members whose names and addresses are
Number of Board of as follows:
Directors/Trustees:
1. Gary J. Novinskie
----------------------------------------------------------------------------------------------------
Name

120 NORTH CHURCH STREET WEST CHESTER, PA 19380
--------------------------------------------------------------, ------------- ---------------------
Street Address City State Zip Code

2.
----------------------------------------------------------------------------------------------------
Name

--------------------------------------------------------------, ------------- ---------------------
Street Address City State Zip Code

3.
----------------------------------------------------------------------------------------------------
Name

--------------------------------------------------------------, ------------- ---------------------
Street Address City State Zip Code

4.
----------------------------------------------------------------------------------------------------
Name

--------------------------------------------------------------, ------------- ---------------------
Street Address City State Zip Code
- ------------------------------- ----------------------------------------------------------------------------------------------------
5. Purpose: The purpose of this Corporation shall be:
(optional--see instructions)
- ------------------------------- ----------------------------------------------------------------------------------------------------
6. Other Matters:
(see instructions) Number of additional pages attached: __________
- ------------------------------- ----------------------------------------------------------------------------------------------------
7. Names, Addresses and Darcy J. Hamlin
Signatures of ------------------------------------------------- -------------------------------------------------
Incorporators: Name Signature
(attach additional pages c/o Ehmann, Van Denbergh & Trainor
if there are more than 2 Suite 725, Two Penn Center Philadelphia PA 19102
incorporators) --------------------------------------------------------------, ------------- ---------------------
Address City State Zip Code

------------------------------------------------- -------------------------------------------------
Name Signature

--------------------------------------------------------------, ------------- ---------------------
Address City State Zip Code
- ------------------------------- ----------------------------------------------------------------------------------------------------
8. Certificate of
Acceptance of I, James G. Sanford hereby accept appointment as Resident Agent for the above
Appointment of -------------------------------- named corporation.
Resident Agent:
------------------------------------------------------------ -------------------------------
Authorized Signature of R.A. or On Behalf of R.A. Company Date
----------------------------------------------------------------------------------------------------

This form must be accompanied by appropriate fees. See attached fee schedule. Nevada Secretary of State Form CORPART1999.01
Revised on: 08/20/01

PRELIMINARY COPY

DALECO RESOURCES CORPORATION
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS

February ___, 2002

NOTICE IS HEREBY given that the Annual Meeting of the Shareholders of
DALECO RESOURCES CORPORATION (the "Corporation") will be held on February 28,
2002, at the Holiday Inn West Chester, 943 South High Street, West Chester,
Pennsylvania 19382, at 10:00 a.m. local time, to consider and take action upon
the following matters:

(1) election of Directors of the Corporation;

(2) the increase the authorized shares of Common Stock of the Company from
20,000,000 to 50,000,000 shares, par value $0.01;

(3) the change of the State of incorporation of the Company from the State of
Delaware to the State of Nevada;

(4) ratification of Jay J. Shapiro as the Company's independent accountant for
Fiscal Year 2002; and

(5) such other matters as may properly come before the meeting.

Stockholders of record at the close of business on January 9, 2002
("Record Date"), will be entitled to vote at the meeting. On the Record Date
there were 16,337,614 shares of Common Stock and 8,000 shares of Series A
Preferred Stock issued, outstanding and entitled to vote at the Annual Meeting.

A complete list of Stockholders entitled to vote at the meeting will be
kept at the offices of the Company, 120 North Church Street, West Chester,
Pennsylvania 19380 and Suite 290, 10350 Santa Monica Blvd. Los Angeles, CA
90025, for examination by any Stockholder, during ordinary business hours, for a
period of not less than ten (10) days prior to the meeting.

Attached to this Notice is a form of such Proxy which should be
returned, if you elect to use it, not later than 10:00 A.M., Eastern Time on
February 26, 2002 to the stock transfer agent of the Company, StockTrans, Inc.,
44 West Lancaster Avenue, Ardmore, PA 19003.

By Order of the Board of Directors

/s/ Gary J. Novinskie
-------------------------------
President

IMPORTANT: PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
SELF-ADDRESSED RETURN ENVELOPE FURNISHED FOR THAT PURPOSE AS PROMPTLY
AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. IF
LATER YOU DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO
IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT.

Preliminary Copy

PROXY
DALECO RESOURCES CORPORATION

THIS PROXY IS SOLICITED ON BEHALF OF The undersigned hereby appoints Dov Amir and Gary
THE BOARD OF DIRECTORS. Novinskie, and each of them, jointly and severally,
proxies with full power of substitution to vote, as
designated below, all shares of Stock which the
undersigned is entitled to vote at the Annual
Meeting of Stockholders of Daleco Resources
PLEASE CHECK HERE IF YOU PLAN TO Corporation to be held on February 28, 2002, or any
ATTEND THE ANNUAL MEETING. / / adjournment thereof.

PLEASE MARK, SIGN, DATE AND RETURN DATED: , 2002
THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. -------------------------------------------

-------------------------------------------------------

-------------------------------------------------------
NAME AND ADDRESS
(PLACE LABEL HERE) -------------------------------------------------------
(SIGNATURE)

IMPORTANT: Please sign on the signature line exactly as your name is printed on
this Proxy. When shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please
sign in full corporate name by authorized officer. If a partnership,
please sign in partnership name by authorized partner.

If instructions are not given in the spaces provided, the shares represented by
this Proxy, duly executed, will be voted (i) in favor of Management's Proposal
for the election of Directors named in Proposal No. 1; (ii) in favor of
Management's Proposal to increase the authorized shares of Common Stock of the
Company from 20,000,000 to 50,000,000, par value $.01; (iii) in favor of
Management's Proposals to change the State of incorporation of the Company from
the State of Delaware to the State of Nevada through the merge of the Company
with a newly formed Nevada Company; (iv) in favor of the appointment of Jay
Shapiro, CPA or such other accounting firm as recommended by the Audit Committee
of the Board of Directors as the Company's independent accountants and (v) in
the discretion of the persons appointed proxies hereby as to any other business
that may properly come before the meeting and any adjournment thereof in
Proposal 5, all as set forth on the reverse side hereof.

MANAGEMENT RECOMMENDS A VOTE FOR THE FOLLOWING MANAGEMENT PROPOSALS
-------------------------------------------------------------------

1. Election of DIRECTORS:

FOR ALL NOMINEES /__/ AGAINST ALL NOMINEES /__/; or

Dov Amir FOR /__/ AGAINST /__/ ABSTAIN /__/

Gary J. Novinskie FOR /__/ AGAINST /__/ ABSTAIN /__/

C. Warren Trainor FOR /__/ AGAINST /__/ ABSTAIN /__/

Robert E. Martin FOR /__/ AGAINST /__/ ABSTAIN /__/

Leon Prince FOR /__/ AGAINST /__/ ABSTAIN /__/

Robert Graustein FOR /__/ AGAINST /__/ ABSTAIN /__/

2. Increase in the authorized shares of Common Stock of the Company from
20,000,000 to 50,000,000, par value $.01.

FOR /__/ AGAINST /__/ ABSTAIN /__/

3. To change the State of Incorporation of the Company from the State of
Delaware to the State of Nevada through the merger of the Company with a
newly formed Nevada company.

FOR /__/ AGAINST /__/ ABSTAIN /__/

4. The ratification of Jay J. Shapiro, CPA or such other accounting firm as
recommended by the Audit Committee of the Board of Directors as the Company's
Independent accountants.

FOR /__/ AGAINST /__/ ABSTAIN /__/

5. In their discretion, the Proxies are authorized to vote upon such other
business so may properly come before the meeting or any adjournment thereof.

FOR /__/ AGAINST /__/ ABSTAIN /__/