**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-Q**





x
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**





For
      the
      quarterly period ended June 30, 2008





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





For
      the
      transition period from _______________ to ________________





Commissions
      file number 000-31143





**DCI
      USA, INC.**


(Exact
      name of registrant as specified in its charter)





Delaware
            22-3742159(State
                or other jurisdiction of incorporation or
                organization)
            (IRS
                Employer Identification Number)





231
      Norman Ave


Brooklyn,
      NY 11222


(Address
      of principal executive offices)





(718)383-4999


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the issuer (1) has filed all reports required to be filed
      by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


Yes x No o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o     Accelerated
      filer o


Non-accelerated
      filer o     Smaller
      reporting company  x


(Do
      not
      check if a smaller reporting company)





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o No x





The
      number of shares of common stock outstanding as of August 13, 2008 was
      54,917,681.







**TABLE
      OF CONTENTS**





**Page****PART
                I**
            **FINANCIAL
                INFORMATION**Item
                1.
            Financial
                Statements
            3Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            22Item
                3.
            Quantitative
                and Qualitative Disclosure About Market Risk
            25Item
                4(T).
            Controls
                and Procedures
            25**PART
                II**
            **OTHER
                INFORMATION**Item
                1.
            Legal
                Proceedings
            25Item
                1A.
            Risk
                Factors
            25Item
                2.
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            25Item
                3.
            Defaults
                Upon Senior Securities
            25Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            26Item
                5.
            Other
                Information
            26Item
                6.
            Exhibits
            26SIGNATURES
            27CERTIFICATIONS




2




**PART
      1**


**FINANCIAL
      INFORMATION**





**Item
      1.**  **Financial
      Statements.**




**DCI
      USA, INC. AND SUBSIDIARIES**





**INDEX
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**Page(s)**Consolidated
                Balance Sheets as of June 30, 2008 (unaudited) and December 31,
                2007
            
            
            4-5Consolidated
                Statements of Operations for the six and three months ended June
                30,
                2008and
                2007 (unaudited)
            
            
            6Consolidated
                  Statements of Changes in Stockholders’ Equity (Deficit)
                  (unaudited)
            
            
            7Consolidated
                Statements of Cash Flows for the six and three months ended June
                30,
                2008
              and
                2007 (unaudited)
            
            
            8-9Notes
                to Consolidated Financial Statements
            
            
            10-21





3




**DCI
      USA, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS**





**June
                30,**
            
            **December
                31,****2008**
            
            **2007**(Unaudited)ASSETSCurrent
                Assets:Cash
            
            $
            199,736
            
            $
            21,565Interest
                receivable
            
            
            6,969
            
            
            14,812Interest
                receivable-related party
            
            
            32,539
            
            
            5,474Loan
                receivable- related party
            
            
            996,386
            
            
            217,270Loan
                receivable - Senergy
            
            
            100,000
            
            
            100,000Loan
                receivable - Gunther
            
            
            672,066Deferred
                tax asset, current portion
            
            
            -
            
            
            173,693Other
                receivables
            
            
            46,235Total
                current assets
            
            
            2,053,931
            
            
            532,814Fixed
                assets, net
            
            
            2,262
            
            
            2,559Investments
                in equity interest
            
            
            1,144,275
            
            
            3,872,513Goodwill
            
            
            -
            
            
            195,706Deferred
                tax asset, less current portion
            
            
            -
            
            
            18,328Total
                assets
            
            $
            3,200,468
            
            $
            4,621,920




See
      accompanying notes to consolidated financial
      statements.


4




**DCI
      USA, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      BALANCE SHEETS - (CONTINUED)**





**June
                30,**
            
            **December
                31,****2008**
            
            **2007**(Unaudited)LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)Current
                Liabilities:Accounts
                payable and accrued expenses
            
            $
            76,184
            
            $
            108,239Accrued
                interest
            
            
            42,663
            
            
            26,554Accrued
                interest - related parties
            
            
            1,728
            
            
            37,367Receipts
                on account of shares in a subsidiary
            
            
            427,350Loans
                payable
            
            
            1,957,784
            
            
            399,970Advance
                on account of dividend from related party
            
            
            -
            
            
            225,000Convertible
                notes
            
            
            140,000
            
            
            465,000Convertible
                debentures
            
            
            100,000
            
            
            200,000Convertible
                debentures - related parties
            
            
            -
            
            
            400,000Current
                maturities of long term bank loan
            
            
            -
            
            
            165,000Total
                current liabilities
            
            
            2,745,709
            
            
            2,027,130Commitments
                and contingenciesLong
                term bank loan
            
            
            -
            
            
            1,371,000Loan
                payable - related party
            
            
            -
            
            
            1,335,761Total
                liabilities
            
            
            2,745,709
            
            
            4,733,891Stockholders'
                equityPreferred
                Stock, par value $.001, 1,000,000 sharesSeries
                A Preferred authorized, none issuedand
                outstanding
            
            
            -
            
            
            -Common
                stock, par value $.001,100,000,000 sharesauthorized
                , 54,917,681 shares issued, and 53,464,557 sharesoutstanding
                as of June 30, 2008 and December 31, 2007
            
            
            54,917
            
            
            54,917Additional
                paid-in-capital
            
            
            2,898,802
            
            
            2,898,802Accumulated
                deficit
            
            
            (2,417,312
            )
            
            (2,984,042
            )536,407
            
            
            (30,323
            )Treasury
                stock, at cost - 1,453,124 common stock shares
            
            
            (81,648
            )
            
            (81,648
            )Total
                stockholders' equity (deficit)
            
            
            454,759
            
            
            (111,971
            )Total
                liabilities and stockholders' equity (deficit)
            
            $
            3,200,468
            
            $
            4,621,920




See
      accompanying notes to consolidated financial statements.




5




**DCI
      USA, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**





**Six
                Months Ended June 30,**
            
            **Three
                Months Ended June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**(Unaudited)
            
            (Unaudited)Operating
                Income:Revenue
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Interest
                income
            
            
            19,223
            
            
            13,083
            
            
            10,810
            
            
            6,831Total
                income
            
            
            19,223
            
            
            13,083
            
            
            10,810
            
            
            6,831Expenses:General
                and administrative expense
            
            
            47,439
            
            
            129,805
            
            
            16,679
            
            
            49,401Interest
                expense
            
            
            316,426
            
            
            112,040
            
            
            88,551
            
            
            48,223Professional
                fees
            
            
            157,467
            
            
            83,124
            
            
            115,867
            
            
            28,500Consulting
                fees
            
            
            -
            
            
            91,256
            
            
            -
            
            
            2,000Total
                expenses
            
            
            521,332
            
            
            416,225
            
            
            221,097
            
            
            128,124Loss
                from operations
            
            
            (502,109
            )
            
            (403,142
            )
            
            (210,287
            )
            
            (121,293
            )Net
                loss on investments in equity interest
            
            
            (21,238
            )
            
            (45,938
            )
            
            (83,377
            )
            
            (15,127
            )Realized
                gain on investment, net
            
            
            1,282,098
            
            
            
            
            
            1,282,098Net
                income (loss) before income taxes
            
            
            758,751
            
            
            (449,080
            )
            
            988,434
            
            
            (136,420
            )Provision
                for income taxes
            
            
            192,021
            
            
            -
            
            
            206,960
            
            
            -Net
                income (loss)
            
            $
            566,730
            
            $
            (449,080
            )
            $
            781,474
            
            $
            (136,420
            )Income
                (loss) per shareBasic
            
            $
            0.01
            
            
            ($0.01
            )
            $
            0.01
            
            
            ($0.00
            )Diluted
            
            $
            0.01
            
            
            ($0.01
            )
            $
            0.01
            
            
            ($0.00
            )Weighted
                average number ofCommon
                Stock outstandingBasic
            
            
            53,464,557
            
            
            53,373,482
            
            
            53,464,557
            
            
            53,453,395Diluted
            
            
            64,264,557
            
            
            80,673,482
            
            
            64,264,557
            
            
            80,753,395




See
      accompanying notes to consolidated financial statements.





6


**DCI
      USA, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)**





**Common
                Stock**
            
            **Treasury
                Stock**
            
            **Additional
                Paid-in**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Total**Balance,
                December 31, 2007
            
            
            54,917,681
            
            $
            54,917
            
            
            (1,453,124
            )
            $
            (81,648
            )
            $
            2,898,802
            
            $
            (2,984,042
            )
            $
            (111,971
            )Net
                income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            566,730
            
            
            566,730Balance,
                June 30, 2008
            
            
            54,917,681
            
            $
            54,917
            
            
            (1,453,124
            )
            $
            (81,648
            )
            $
            2,898,802
            
            $
            (2,417,312
            )
            $
            454,759




See
      accompanying notes to consolidated financial statements.




7


**DCI
      USA, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**





**Six
                Months Ended June 30,****2008**
            
            **2007**(Unaudited)**Cash
                flows from operating Activities**Net
                income (loss)
            
            $
            566,730
            
            $
            (449,080
            )Adjustments
                required to reflect cash flows fromOperating
                ActivitiesCost
                of stock option
            
            
            -
            
            
            89,256Net
                loss (income) on equity investments
            
            
            21,238
            
            
            45,939Net
                income on sale of Gunther
            
            
            (1,709,448
            )Depreciation
            
            
            297
            
            
            444Amortization
                of note receivable discount
            
            
            -
            
            
            (7,515
            )Long
                term bank loan - currency fluctuations
            
            
            232,284
            
            
            -Changes
                in operating liabilities and assetsOther
                receivables
            
            
            (46,235
            )Prepaid
                expanse
            
            
            -
            
            
            5,702Interest
                receivable
            
            
            (19,222
            )
            
            (10,878
            )Deferred
                tax asset
            
            
            192,021
            
            
            -Receipts
                on account of shares in a subsidiary
            
            
            427,350Accounts
                payable and accrued expenses
            
            
            (16,781
            )
            
            15,226Net
                cash used in operating activities
            
            
            (351,766
            )
            
            (310,906
            )**Cash
                flows from investing activities**Proceeds
                from loan receivable
            
            
            -
            
            
            150,000Loans
                to third parties
            
            
            -
            
            
            (145,450
            )Proceeds
                from sale of Gunther
            
            
            777,499Loans
                to related parties
            
            
            (207,839
            )
            
            (416,400
            )Net
                cash provided by (used in) investing activities
            
            
            569,660
            
            
            (411,850
            )**Cash
                flows from financing activities**Proceeds
                from loans
            
            
            1,183,755
            
            
            597,384Payment
                of loan payable
            
            
            (383,194
            )
            
            (65,125
            )Issuance
                of common stock
            
            
            
            
            
            125,000Payment
                of convertible notes
            
            
            (325,000
            )Payment
                of convertible debentures
            
            
            (100,000
            )Payment
                of convertible debentures - related parties
            
            
            (400,000
            )Advance
                on account of dividend
            
            
            75,000
            
            
            -Payment
                of long term bank loan
            
            
            (90,284
            )
            
            -Net
                cash provided by (used in) financing activities
            
            
            (39,723
            )
            
            657,259Decrease
                in cash
            
            
            178,171
            
            
            (65,497
            )**Cash
                at the beginning of the period**
            
            
            21,565
            
            
            74,755**Cash
                at the end of the period**
            
            $
            199,736
            
            $
            9,258




See
      accompanying notes to consolidated financial statements.




8




**DCI
      USA, INC. AND SUBSIDIARIES**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS - (CONTINUDE)**





**Six
                Months Ended June 30,****2008**
            
            **2007****Supplemental
                disclosures:**Interest
                paid
            
            $
            129,923
            
            $
            -Cash
                paid for income taxes
            
            
            1,310
            
            
            592**Non-cash
                disclosures of investing and financing
                activities:**Repayment
                of loan
            
            $
            472,851




See
      accompanying notes to consolidated financial statements.




9




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 - DESCRIPTION OF THE COMPANY**





The
      accompanying unaudited interim consolidated financial statements of DCI USA,
      INC. (“the Company”, “We”) have been prepared in accordance with accounting
      principles generally accepted in the United States of America and the rules
      of
      the Securities and Exchange Commission (“SEC”), and should be read in
      conjunction with the audited consolidated financial statements and notes thereto
      contained in the Company’s Annual Report filed with the SEC on Form 10-K. In the
      opinion of management, all adjustments, consisting of normal recurring
      adjustments, necessary for a fair presentation of financial position and the
      results of operations for the interim periods presented have been reflected
      herein. The results of operations for interim periods are not necessarily
      indicative of the results to be expected for the full year. Notes to the
      consolidated financial statements that would substantially duplicate the
      disclosures contained in the audited financial statements for 2007 as reported
      in the 10-K have been omitted.




The
      unaudited consolidated financial statements include the accounts of the Company
      and the Company’s wholly-owned subsidiaries. All inter-company accounts and
      transactions have been eliminated. The Company operates in one business segment,
      which is the development of clean energy technologies and the renovation and
      conversion of buildings to commercial condominiums.





As
      of
      June 30, 2008, the Company had $199,736 in cash. On April 23, 2008, the Company,
      Gunther Wind Energy, Ltd. (“Gunther”), and Tobias Jewelry Ltd., an Israeli
      corporation (“Tobias”), executed a share sale agreement, pursuant to which
      Tobias agreed to purchase all of the share capital of Gunther. See note 3.
      As
      part of the agreement, Tobias also agreed to lend Gunther $672,000, the
      remaining outstanding balance of Gunther’s debts to the Company, on or before
      April 21, 2009, at which time Gunther is obligated, pursuant to the agreement,
      to repay the entire remaining outstanding balance of its debt to the Company.
      Accordingly, the Company currently has sufficient funds to fund its operation
      over the next twelve months.





During
      the second quarter of 2008 the quotation of the Company’s common stock on the
      OTC Bulletin Board was terminated as a result of our failure to timely file
      periodic reports with the SEC.





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





*Principles
      of Consolidation and Basis of Presentation.* **** The
      consolidated financial statements include the accounts of the Company and it’s
      wholly - owned subsidiaries: i. 231 Norman Avenue LLC (“Norman LLC”); and ii.
      Gunther through April 23, 2008.  . All material intercompany transactions
      have been eliminated in consolidation. Investments in entities in which the
      Company can exercise significant influence, but does not own a majority equity
      interest or otherwise control, are accounted for using the equity method and
      are
      included as investments in equity interests on the consolidated balance sheets.
      The Company has included the results of operations of acquired companies from
      the date of acquisition. Certain prior year amounts have been reclassified
      to
      conform to the current year presentation.





*Use
      of Estimates.* **** In
      preparing consolidated financial statements in accordance with accounting
      principles generally accepted in the United States of America, management makes
      certain estimates and assumptions, where applicable, that affect the reported
      amounts of assets and liabilities and disclosures of contingent assets and
      liabilities at the date of the financial statements, as well as the reported
      amounts of revenues and expenses during the reporting period. While actual
      results could differ from those estimates, management does not expect such
      variances, if any, to have a material effect on the consolidated financial
      statements.





*Revenue
      Recognition.* **** Revenues
      have been derived primarily from the lending of funds and consist primarily
      of
      investment income. Revenues are reported as the investment income is
      earned.





10




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      (CONTINUED)**





*Concentration
      of Credit Risk.* **** Financial
      instruments that potentially subject the Company to significant concentration
      of
      credit risk consist primarily of cash and loans receivables. As of June 30,
      2008, substantially all of the Company’s cash was managed by two financial
      institutions. Loan receivables are typically unsecured and are derived from
      short-term related parties loans. On an ongoing basis, the Company evaluates
      its
      estimates, including those related to the fair values of our loans receivables.
      We base our estimates on historical experience and on various other assumptions
      that are believed to be reasonable, the results of which form the basis for
      making judgments about the carrying values of assets and
      liabilities.





*Deferred
      Income Taxes.* ****** Deferred
      tax assets and liabilities are determined based on temporary differences between
      financial reporting and the tax bases of assets and liabilities. Deferred tax
      assets are also recognized for tax net operating loss carryforwards. These
      deferred tax assets and liabilities are measured using the enacted tax rates
      and
      laws that are expected to be in effect when such amounts are expected to reverse
      or be utilized. The realization of total deferred tax assets is contingent
      upon
      the generation of future taxable income. Valuation allowances are provided
      to
      reduce such deferred tax assets to amounts more likely than not to be ultimately
      realized. See Note 10 “Income Taxes” for additional
      information.





*Cash
      and Cash Equivalents.* **** For
      purposes of reporting cash flows, the Company considers all highly liquid
      investments purchased with an original maturity of three months or less to
      be
      cash equivalents.





*Notes
      Receivable.* **** The
      allowance for loan losses on notes receivable is determined primarily on the
      basis of management's best estimate of probable losses, including specific
      allowance for troubled accounts. All accounts or portions thereof deemed to
      be
      uncollectible or to require excessive collection costs are written off to the
      allowance for loan losses. There were no allowances for loan losses at June
      30,
      2008 and December 31, 2007.




*Fixed
      Assets.* **** The
      value
      of fixed assets is at historical cost as required by generally accepted
      accounting principles. Depreciation is calculated on a straight-line over the
      expected useful life of the asset as follows:





Leasehold
                improvements
            Remaining lease term or useful lifeEquipment
            5 to 7 yearsFurniture
                and fixtures
            5 to 7 years





*Goodwill.* **** Goodwill
      is carried at cost. Goodwill is not amortized but is subject to an annual test
      for impairment and between annual tests in certain circumstances.





*Investments
      in Equity Interests.* **** Investments
      in entities in which the Company can exercise significant influence but does
      not
      own a majority equity interest or otherwise control, are accounted for using
      the
      equity method and included as investments in equity interests on the
      consolidated balance sheets. The Company monitors its investments for
      other-than-temporary impairment by considering factors including the current
      economic and market conditions and the operating performance of the companies
      and records reductions in carrying values when necessary. The fair value of
      privately held investments is estimated using the best available information
      as
      of the valuation date, including current earnings trends, undiscounted cash
      flows, quoted stock prices of comparable public companies, and other company
      specific information, including recent financing rounds.





11




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
      (CONTINUED)**





*Net
      Loss Per Share.* **** Basic
      net
      loss per share is computed on the basis of the weighted average number of shares
      outstanding each period and excludes any dilutive effects of options, warrants,
      and convertible securities. Dilutive earnings per share is computed giving
      effects to dilutive stock equivalents. There were 10,800,000 and 27,600,000
      potentially dilutive common shares outstanding on June 30, 2008 and 2007,
      respectively, which were excluded from the calculation of diluted earnings
      per
      share, consisting primarily of shares issuable upon the conversion of debt
      and
      equity and the exercise of stock options.





*Fair
      Value.* The
      Company's financial instruments consist primarily of cash, notes receivable,
      accounts payable, accrued expenses and debt. The carrying amounts of the
      Company's financial instruments, excluding debt, approximate fair value due
      to
      the short maturity of these instruments. The Company's debt approximates fair
      value based on borrowing rates currently available to the Company.





*Recently
      Issued Accounting Pronouncements:*





In
      May
      2008, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 162, The Hierarchy of Generally Accepted Accounting Principles. This
      statement identifies sources of accounting principles and the framework for
      selecting the principles to be used in the preparation of financial statements
      that are presented in conformity with generally accepted accounting principles
      (“GAAP”) in the United States. SFAS No. 162 moves the hierarchy of GAAP
      sources for non-governmental entities from the auditing literature to the
      accounting literature. This statement will become effective 60 days following
      approval by the SEC of amendments made by the Public Company Accounting
      Oversight Board to AU Section 411, “The Meaning of Present Fairly in
      Conformity with Generally Accepted Accounting Principles.” Any effect of
      applying SFAS No. 162 should be reported as a change in accounting
      principle.





In
      March,
      2008 the FASB issued SFAS No. 161, Disclosures about Derivative Instruments
      and
      Hedging Activities. SFAS No. 161 requires enhanced disclosures about an entity’s
      derivative and hedging activities and is effective for financial statements
      issued for fiscal years and interim periods beginning after November 15, 2008.
      Early application is encouraged.





**** In
      December 2007, the FASB issued SFAS No. 141 (R) (revised 2007), “Business
      Combinations,” which establishes principles and requirements for how the
      acquirer recognizes, measures, and discloses the identifiable assets acquired,
      the liabilities assumed, and any noncontrolling interest in the acquiree; and
      the goodwill acquired or a gain from a bargain purchase. SFAS No. 141(R)
      (revised 2007) is effective for business combinations for which the acquisition
      date is on or after the beginning of the first annual reporting period beginning
      on or after December 15, 2008.




In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements - An amendment of ARB No. 51,” which
      establishes accounting and reporting standards for the noncontrolling interest
      in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 is
      effective for fiscal years, and the interim periods within those fiscal years,
      beginning on or after December 15, 2008.




In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an amendment to FASB
      Statement No. 115,” which permits entities to choose to measure many financial
      instruments and certain other items at fair value. SFAS No. 159 is effective
      as
      of the beginning of an entity’s first fiscal year that begins after November 15,
      2007. We adopted the provisions of SFAS No. 159 on January 1,
      2008, and have elected not to measure any of our current eligible financial
      assets or liabilities at fair value.




Management
      believes the adoption of the preceding pronouncements will have no significant
      impact on the Company’s financial condition or results of
      operations.




12




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      3 - AQUISITIONS**





*GUNTHER
      WIND ENERGY, LTD.* On
      August
      1, 2006, the Company entered into a loan, pledge and option agreement with
      Gunther in Israel to invest in the upgrade of an existing wind farm at Tel
      Assaniya and in the development of a new site, Nimrod. On June 20,
      2007, the Company exercised its option to purchase all the outstanding
      shares of Gunther pursuant to and in accordance with the loan, pledge and option
      agreement. The aggregate exercise price of the option was $23,883 of which
      was
      paid through the cancellation of outstanding loans previously made by the
      Company to Gunther.





Gunther
      owns 25% of the outstanding share capital of ARI, Ltd., an Israeli based
      corporation formerly known as Green Wind Energy Ltd. (“ARI”), as a result of its
      acquisition, on March 5, 2006, of 334 shares of ARI’s preferred stock in
      consideration of $3,000,000. As of April 8, 2008, Gunther had paid an aggregate
      of $2,655,000 of the purchase price to ARI using funds previously loaned to
      Gunther by the Company and the proceeds from a $1,500,000 bank loan obtained
      by
      Gunther. The remaining portion of the $3,000,000 purchase price was paid by
      Gunther to ARI on April 28, 2008.





On
      December 2006 Gunther signed agreement with Nimrod Wind Energy, Ltd (“Nimrod”)
      in which Gunther received an irrevocable option to purchase 25% of Nimrod’s
      issued and fully paid for share capital. The aggregate purchase price to be
      paid
      by Gunther to the Nimrod upon exercise of such option shall be
      an amount equal to $2,750,000. As of April 23, 2008 Gunther did not
      exercise its option.





On
      April
      23, 2008, the Company, Gunther, and Tobias, executed a share sale agreement,
      pursuant to which Tobias agreed to purchase all of the share capital of Gunther.
      In consideration therefore, Tobias agreed to pay the Company $2,607,000, of
      which (i) $1,250,350 plus applicable value added taxes Tobias agreed to pay
      to
      the Company at closing (the “Cash Consideration”), and (ii) $1,356,650, the
      amount of Gunther’s pre-existing debt to the Company, Tobias agreed to lend to
      Gunther at closing. Tobias also agreed to make two additional loans to Gunther,
      one in the amount of $355,000, and a second loan in the amount of $30,000.
      The
      transactions contemplated by the agreement were consummated on April 28, 2008.
      Pursuant to the Agreement, Tobias paid $777,549 to the Company, on behalf of
      the
      Company, Tobias paid $472,801 WGS in full satisfaction of the Company’s
      pre-existing debt to WGS. Tobias also loaned $684,650 to Gunther, which funds
      were paid directly to the Company in partial satisfaction of Gunther’s
      pre-existing debts to the Company. Tobias also agreed to lend Gunther $672,000,
      the remaining outstanding balance of Gunther’s debts to the Company, on or
      before April 21, 2009, at which time Gunther is obligated, pursuant to the
      agreement, to repay the entire remaining outstanding balance of its debt to
      the
      Company. 25% of Gunther’s outstanding share capital will be held in escrow in
      order to secure repayment of the balance of Gunther’s debt to the Company. The
      remaining 75% of Gunther’s share capital was transferred to Tobias on April 28,
      2008. Pursuant to the agreement, Tobias also loaned Gunther $355,000, an amount
      equal to the outstanding portion of Gunther’s pre-existing commitment to invest
      in ARI, and $30,000, an amount equal to Gunther’s outstanding obligations to its
      suppliers.





The
      Consideration amount that was paid by Tobias to WGS was in amount of $472,801
      however the Company’s liability to WGS as of the payment day was $435,584, as
      such WGS committed to transfer $37,217 to the Company.





In
      the
      second quarter of 2008 the Company recorded realized gain on investment in
      amount of $1,282,098, and $427,350 receipts on account of shares in a
      subsidiary, that will be realized as gain once the Company releases the 25%
      of
      Gunther’s outstanding share capital held in escrow.





13




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      3 - ACQUISITIONS - (CONTINUED)**





On
      May
      15, 2008 the Company resigned from Gunther’s board of directors. The investment
      in Gunther is recorded in the financial statements included herein at the
      aggregate purchase price and its results of operations from the date of
      acquisition until April 23, 2008, the date of sale. Effective April 23, 2008
      the
      investment in Gunther is recorded in the financial statements included herein
      at
      cost. The investment balance as of June 30, 2008 is $0.





*231
      NORMAN AVE, LLC.* The
      Company lent $1,370,000 to Norman LLC in part pursuant to an agreement which
      provided the Company the option of supplanting the 100% membership interest
      holder in Norman LLC. The Company exercised this option as of November 2006
      and
      now owns 100% interest in Norman LLC. As a result of the Company acquiring
      Norman LLC, the Company controls 30% of the membership interests of 231 Norman
      Avenue Property Development, LLC (“231 NAPD”). See note 4 for the investment in
      equity interest at 231 NAPD.





**NOTE
      4 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES**





**June
                30,**
            
            **December
                31,****2008**
            
            **2007**Investments
                in equity interestInvestment
                in 231 NAPD
            
            $
            1,144,275
            
            $
            1,198,513Investment
                in ARI
            
            
            -
            
            
            2,674,000Investments
                in cost methodInvestment
                in Gunther
            
            
            -
            
            
            -$
            1,144,275
            
            $
            3,872,513





The
      Company’s share of income (loss) in its equity interest, net of tax:





**Six
                Months Ended June 30,**
            
            **Three
                Months Ended June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Net
                loss on investment - 231 NAPD
            
            $
            (54,238
            )
            $
            (45,938
            )
            $
            (83,377
            )
            $
            (15,127
            )Net
                income on investment - ARI
            
            
            33,000
            
            
            -
            
            
            -
            
            
            -$
            (21,238
            )
            $
            (45,938
            )
            $
            (83,377
            )
            $
            (15,127
            )




*231
      NAPD.* 231
      NAPD
      is a New York limited liability company engaged in owning, developing and
      operating income producing real property. 231 NAPD owns fee simple title to
      the
      real property located at 231 Norman Avenue, Brooklyn, New York.





As
      a
      result of the Company acquiring Norman LLC, the Company controls 30% of the
      membership interests of 231 NAPD.





The
      Company involved in the renovation and conversion of certain buildings to
      commercial condominiums. The Company’s development at 231 Norman Avenue, in
      Brooklyn, New York is the underlying asset comprising the collateral on the
      loan
      discussed below. The construction ended at the end of 2007, and the company
      received Certificate of Occupancy on January 10, 2008. Approvals needed for
      the
      commercial condominium plan offering have been obtained and the 42 commercial
      condos are currently on the market for sale. As of the date of filing, 25
      contracts to purchase condominium units have been signed and deposits received,
      14 units of which were closed and were occupied. The Company is actively
      involved in managing the construction, financing, and sales of the 231 Norman
      Avenue Project.




14




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      4 - INVESTMENTS IN UNCONSOLIDATED AFFILIATES - (CONTINUED)**





*ARI.* Gunther
      owns 25% of the outstanding shares of capital stock of ARI. See note 3 for
      additional information with regards to the sale of Gunther and its investment
      in
      ARI on April 23, 2008.





*Gunther.* On May
      15, 2008 the Company resigned from Gunther’s board of directors. The investment
      in Gunther is recorded in the financial statements included herein at the
      aggregate purchase price and its results of operations from the date of
      acquisition until April 23, 2008, the date of sale. Effective April 23, 2008
      the
      investment in Gunther is recorded in the financial statements included herein
      at
      cost. The investment balance as of June 30, 2008 is $0.





**NOTE
      5 - NOTES PAYABLE**




**Annual**
            
            **June
                30,**
            
            **December
                31,****interest
                rate**
            
            **2008**
            
            **2007**Short-term
            
            %Loan
                payable - WGS (a)
            
            
            18
            %
            $
            -
            
            $
            399,970Loan
                payable - Tubias (b)
            
            
            8
            %
            
            299,970
            
            
            -Loan
                payable - Mr. Roberto Roda (d)
            
            
            6
            %
            
            1,657,814
            
            
            -Long-termLoan
                payable - related party (c)
            
            
            6
            %
            
            -
            
            
            1,335,761$
            1,957,784
            
            $
            1,735,731





(a) **** *WGS.* On
      December 5, 2007, the Company and 231 Norman entered into a share acquisition
      option agreement with WGS, a public company in Israel in which Mr. Ofir is
      a
      director. Pursuant to the agreement, WGS agreed to loan $1,000,000 to the
      Company and 231 Norman. The aggregate principal amount, plus interest accruing
      at a rate of 1.5% per month, shall be due and payable six months from the
      closing of the agreement. As of December 31, 2007 and February 28, 2008, WGS
      had
      transferred $399,970 of the $1,000,000 loan to the Company. While the Company
      expected the balance of the loan to be transferred by December 31, 2007, no
      such
      transfer occurred, and no additional funds are expected.





Pursuant
      to this agreement, the Company granted WGS with the following:




i.
            An
                irrevocable option to purchase 100% of the Company’s issued and fully paid
                for share capital in Gunther. The aggregate purchase price to be
                paid by
                WGS to the Company upon exercise of such option shall be
                an amount equal to $2,450,000. The option is exercisable by WGS, in
                its sole and absolute discretion, for a period ending February 28,
                2008.





ii.
            On
                December 12, 2007, Norman LLC gave WGS a promissory note evidencing
                the
                loan, as well as an option to purchase units in the Company’s 231 Norman
                Avenue project at a price equal to 20% less than the then current
                market
                price for such units. The promissory note may be repaid, in whole
                or in
                part, at any time or from time to time upon ten days prior written
                notice
                to WSG. This option expired on December 5, 2007, as a result of WGS’s
                failure to advance the full principal amount of the
                loan.





iii.
            The
                Company gave WGS an option, at WGS’s discretion, to either purchase the
                30% membership interests the Company owns, through Norman LLC, in
                231 NAPD
                for the sum of $2,000,000, or to purchase the 100% ownership interest
                the
                Company has in Norman LLC, for the sum of $2,000,000. Each of these
                options expires on the later of either six months from November 28,
                2007,
                or the date on which the loan and any accrued interest is repaid.
                In
                connection with the sale of Gunther on April 23, 2008, WGS forfeited
                this
                option without payment from the
                Company.





As
      of
      December 31, 2007 WGS only transferred $399,970 of the $1,000,000, as such
      WGS
      is not eligible for any one of the above options.




15




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      5 - NOTES PAYABLE - (CONTINUED)**





On
      April
      28, 2008, on behalf of the Company, Tobias paid $472,801 to WGS in full
      satisfaction of the Company’s pre-existing debt to WGS. The Consideration amount
      that was paid by Tobias to WGS was in amount of $472,801 however the Company’s
      liability to WGS as of the payment day was $435,584, as such WGS committed
      to
      transfer $37,217 to the Company. The company recorded WGS commitment of $37,217
      in other receivables.





(b) *Tubias.* On June
      25, 2008, the Company borrowed $299,970 from Tobias; along with interest based
      on an annual rate of 8% and secured by the pre-existing debt of Tobias owed
      to
      the Corporation, being due and payable to Tobias on October 1, 2008. i. When
      and
      if the loan will not be paid back by October 1, 2008, 12.5% out of the 25%
      of
      Gunther’s outstanding share capital, held in escrow in order to secure repayment





of
      the
      balance of Gunther’s debt to the Company, will be released from the escrow
      account to Tubias. The remaining seventy-five percent of Gunther’s share capital
      was transferred to Tobias on or about April 28, 2008. ii. When and if the loan
      will not be paid back by March 31, 2009, the loan principle, interest, and
      penalty will be deducted from the loan granted to Gunther.





(c) *RUSSULL
      BROTHERS.* **** In
      March
      2005, the Company issued a promissory note totaling $100,000 to NY2K, Inc.
      The
      note was assigned by NY2K, Inc. to Russull Brothers. Such note was cancelled
      as
      of June 8, 2005 in consideration for the Company's issuance of 2,000,000 shares
      of its Common Stock to Russull Brothers, which issuance was made pursuant to
      the
      exemption from registration provided by Regulation E under the Securities Act
      of
      1933, as amended. Subsequent to the receipt by the Company of a letter from
      the
      Staff of the Securities and Exchange Commission ("SEC") in which the Staff
      raised questions with respect to the Company's compliance with the provisions
      of
      the Investment Company Act of 1940 applicable to business development companies,
      the Company and Russull Brothers rescinded the cancellation of the Company's
      $100,000 Note and issuance of 2,000,000 shares of Common Stock. In July 2006,
      the Company and Russull Brothers entered into an agreement whereby the note
      owed
      to Russull Brothers was cancelled in consideration for the Company’s issuance of
      2,000,000 shares of its restricted common stock to Russull Brothers.





On
      November 14, 2007, Mr. Ofir assigned to Russull Brothers an aggregate principal
      amount of $1,078,317 plus accrued interest of $19,868 relating to a series
      of
      loans Mr. Ofir made to the Company. In addition, Russull Brothers assumed the
      Company's obligation to Hypothecators in the amount of $249,203. On April 20,
      2008 the Company and Russull Brothers executed a loan agreement. Pursuant to
      the
      loan agreement the Company’s debt to Russull Brothers, is payable upon demand
      and will accrue interest at an annual rate of 6%. Interest may, at the Company’s
      option, be paid, no later than the tenth business day of January, or added
      to
      the principal outstanding amount of the Company’s debt to Russull Brothers.
      During the first quarter of 2008, the company obtained additional loan of
      $133,970 from Russull Brothers.





On
      July
      31, 2008 the Company, Russull Brothers and 231 NAPD signed loan assignment
      letter indicating that effective April 23, 2008: i. Russull Brothers assigned
      its outstanding loan from 231 NAPD in amount of $571,288 to the Company; ii.
      Russull Brothers assigned its outstanding loans to the Company in amounts of
      $1,469,731 and $571,288 plus interest receivable in amount of $29,032 to Mr.
      Roberto Roda.





As
      of
      June 30, 2008 and December 31, 2007, the Company owes $0 and $418, respectively,
      in accrued interest relating to the loans.





(d) *Mr.
      Roberto Roda.* On July
      31, 2008 the Company, Russull Brothers and Mr. Roberto Roda signed loan
      assignment letter indicating that effective April 30, 2008, Russull Brothers
      assigned its outstanding loans in amounts of $1,469,731 and $571,288 plus
      interest receivable in amount of $29,032. The loan is payable upon demand,
      within 21 days notice, with interest paid annually at the end of the calendar
      year, at
      an
      annual rate of 6%. During the second quarter of 2008 the Company paid Mr.
      Roberto Roda $383,205 out of the principle loan.




16




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      5 - NOTES PAYABLE - (CONTINUED)**





As
      of
      June 30, 2008 and December 31, 2007, the Company owes $39,955 and $0,
      respectively, in accrued interest relating to the loans.





**NOTE
      6 - CONVERTIBLE NOTES AND CONVERTIBLE DEBENTURES**





**Annual**
            
            **June
                30,**
            
            **December
                31,****interest
                rate**
            
            **2008**
            
            **2007**%Convertible
                notes (a)
            
            
            10
            %
            $
            140,000
            
            $
            465,000Convertible
                debentures (b)
            
            
            8
            %
            
            100,000
            
            
            200,000Convertible
                debentures - related parties (b)
            
            
            8
            %
            
            -
            
            
            400,000$
            240,000
            
            $
            1,065,000





*(a)
      CONVERTIBLE NOTES.* In
      October 2006, the Company initiated a convertible note offering whereby the
      Company would issue up to $1,300,000 of convertible notes. The notes incur
      interest at the rate of 10% per annum, payable quarterly, and are due November
      25, 2007. The notes can be converted at anytime at the option of the note holder
      at a conversion price of $.05 per share, plus an adjustment based upon the
      profitability of 231NAPD. The Company can force conversion of the notes anytime
      the shares are registered and the average computed market price is greater
      than
      250% of the conversion price. The Company measured for a beneficial conversion
      feature on the date of issuance and on December 31, 2006 and determined there
      to
      be no beneficial conversion feature on those dates. Since the conversion price
      can vary over time based on the profitability of Norman Property LLC, the
      Company is required to determine whether a beneficial conversion feature exists
      for each reporting period the notes are outstanding. The Company did not make
      the quarterly payments of December 31, 2006 and of March 31, 2007 of interest
      timely, causing a default on the notes. However, such interest payments were
      made during January and May, 2007, respectively.





None
      of
      the note holders has notified the Company of their intention to exert any of
      their rights regarding this default. Interest payments for June, September
      and
      December 2007 were made in a timely manner. Accordingly, the Company is current
      on its payments.





On
      November 25, 2007, an aggregate of $465,000 in principal and $725 in accrued
      interest became due and payable on the convertible notes. As of the date of
      this
      report, none of the noteholders has notified the Company of their intention
      to
      enforce any of their rights regarding this default. Notwithstanding, the failure
      by the Company to make such payments constitutes an event of default pursuant
      to
      the terms of the 10% Convertible Notes. As an event of default has occurred,
      the
      interest rate increases to 12% per annum on the outstanding principal and any
      overdue interest payment on each of the 10% Convertible Notes. In addition,
      any
      noteholder representing 25% or more of the aggregate principal amount of the
      note, may at their option and upon written notice, declare the principal and
      any
      accrued interest thereon be due and payable immediately.





During
      the three months ended June 30, 2008 the Company made payments of the principal
      to three of the noteholders of $325,000 plus interest of $22,159. The company
      is
      current with the interest payments to regular to all the noteholders. As of
      the
      date of this Report, none of the debentures holders and none of the noteholders
      has notified the Company of their intention to enforce any of their rights
      in
      connection with ‘this
      default. The Company is currently negotiating with the noteholders to extend
      the
      maturity date of the 10% Convertible Notes, and it is expected to be paid in
      full shortly.




17


**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      6 - CONVERTIBLE NOTES AND CONVERTIBLE DEBENTURES -
      (CONTINUED)**





(b) *CONVERTIBLE
      DEBENTURES* .
      On
      December 6, 2004, the Company entered into a Securities Purchase Agreement
      whereby the Company issued a $250,000 principal amount convertible debenture
      to
      Cornell Capital Partners, L.P. and the Company agreed to issue a second $250,000
      principal amount convertible debenture to Cornell Capital Partners, L.P. within
      five business days of filing a registration statement with the Securities and
      Exchange Commission. The outstanding $250,000 principal amount convertible
      debenture bears interest at 8%, matures two years from the date of issuance,
      and
      is convertible into our common stock, at the holder's option, at the lower
      of:
      (a) $.074 or (b) 77% of the lowest daily volume weighted average price for
      the
      five days immediately prior to conversion. The Company has the right to redeem
      a
      portion or the entire outstanding debenture at a price equal to $0.072. The
      Company granted Cornell Capital Partners, L.P. a security interest in all our
      assets. In addition, Apros and Chay, Ltd. pledged to Cornell Capital Partners
      all of its shares (a total of 48,500,000 shares) in Technoprises Ltd., an
      Israeli company. The Company has recorded a cost for the beneficial conversion
      feature granted to Cornell totaling $74,675. The beneficial conversion feature
      is reflected as a discount on the debentures and is being amortized as
      additional interest expense over the term of the debenture.





As
      of
      April 20, 2006, Cornell had elected to convert $13,500 principal amount of
      the
      $250,000 Debenture which the Company issued to Cornell in December 2004. As
      a
      result, on or about June 2, 2006, the Company issued to Cornell 350,649
      restricted shares of Common Stock. The Company believes such issuance was exempt
      from registration under Section 4(2) of the Securities Act of 1933, as
      amended.





On
      March
      1, 2005, the Company issued a second 8% Secured Convertible Debenture in the
      original principal amount of $250,000 to Cornell. The debenture has a term
      of
      two years, accrues interest at 8% and is convertible into common stock at a
      price per share equal to the lesser of (a) $0.36 per share, or (b) 77% of the
      lowest daily volume weighted average price for the five days immediately prior
      to conversion. The Company has the right to redeem a portion or the entire
      outstanding debenture at a price equal to $0.35 per share. The Company has
      recorded a cost for the beneficial conversion feature granted to Cornell
      totaling $74,675. The beneficial conversion feature is reflected as a discount
      on the debentures and is being amortized as additional interest expense over
      the
      term of the debenture.





On
      November 1, 2006, four parties acquired the debentures in the principal amount
      of $250,000 and $236,500, with interest accrued to that date, (the “Debentures”)
      previously held by Cornell Capital Partners LP (“Cornell”). Concurrently with
      such acquisitions the Company and such individuals entered into a Debenture
      Modification Agreement wherein the parties modified certain terms of the
      Debentures. Specifically, the parties agreed that the Debentures will no longer
      be secured by a lien on any of the Company’s assets, that the due date of the
      Debentures shall be June 4, 2007, and that the interest rate on the Debentures
      shall be eight percent (8%) per annum until the due date, and paid at the due
      date, increasing to fourteen (14%) per annum until such time as the Debentures
      are paid in full. At September 30, 2007, there was $600,000 outstanding on
      the
      Debentures. The agreement was amended to extend the due date to December 31,
      2007.





As
      of
      March 31, 2008, four outstanding convertible debentures, amounting in the
      aggregate to $600,000, plus accrued interest of approximately $64,734 thereon,
      became due and payable. As of December 31, 2007, two of the Debentures,
      amounting in the aggregate to $200,000, were amended to extend the maturity
      date
      to April 15, 2008, of which on April 29, 2008 the two individual were paid
      the
      aggregate principal amount of $100,000 plus the accrued interest thru April
      30,
      2008 of $29,934. These Debentures are currently in default, but it is expected
      that they will be paid in full shortly. The other two Debentures, amounting
      in
      the aggregate to $400,000, which were assigned to Russull Brothers, were fully
      paid during the three months ended June 30, 2008.




18




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      7 - LONG-TERM BANK LOAN**





On
      March
      5, 2007, Gunther obtained a $1,500,000 bank loan from Bank Hapoalim, Ltd.,
      which
      matured on January 3, 2015. The bank loan bears interest at the Israeli prime
      rate plus 2% per annum. Principal and interest payments on the bank loan are
      due
      quarterly. Classified by linkage terms and interest rates, the total amount
      of
      the loan is as follows:




**Annual**
            
            **June
                30,**
            
            **December
                31,****interest
                rate**
            
            **2008**
            
            **2007****%
                (*)**Bank
                Loan
            
            
            Israeli
                Prime + 2%
            
            $
            -
            
            $
            1,536,000Less-
                current maturities
            
            
            
            
            
            -
            
            
            (165,000
            )Long-Term
                portion
            
            
            
            
            $
            -
            
            $
            1,371,000





See
      note
      3 for additional information with regards to the sale of Gunther and its bank
      loan on April 23, 2008.





**NOTE
      8 - EQUITY**





On
      February 27, 2008, Russull Brothers purchased all 3,150,000 shares of the
      Company’s common stock owned by Direct Capital, for an aggregate purchase price
      of $130,000. The transaction was effected pursuant to a verbal agreement between
      Direct Capital and Russull Brothers. As of April 8, 2008, Russull Brothers
      owned
      an aggregate of 40,687,997 shares representing 76.10% of the Company’s issued
      and outstanding common stock.





**NOTE
      9 - BASIC AND DILUTED EARNING PER SHARE**





The
      following is a reconciliation of the denominator of the basic and diluted
      earnings per share for the six and three months ended June 30, 2008 and
      2007:





**Six
                Months Ended June 30,**
            
            **Three
                Months Ended June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Weighted
                average number of common shares outstanding:
            
            
            53,464,557
            
            
            53,373,482
            
            
            53,464,557
            
            
            53,453,395Dilutive
                potential common shares outstanding from:Convertible
                notes
            
            
            2,800,000
            
            
            9,300,000
            
            
            2,800,000
            
            
            9,300,000Convertible
                debentures
            
            
            2,000,000
            
            
            12,000,000
            
            
            2,000,000
            
            
            12,000,000Options
            
            
            6,000,000
            
            
            6,000,000
            
            
            6,000,000
            
            
            6,000,000Diluted
                weighted average shares
            
            
            64,264,557
            
            
            80,673,482
            
            
            64,264,557
            
            
            80,753,395





19




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      10 - RELATED PARTY TRANSACTIONS**





Interest
      income for the six and three months ended June 30, 2008 in amounts of
      approximately $16,000 and $9,000, respectively, and for the six and three months
      ended June 30, 2007 in amounts of $13,000 and $7,000, respectively, earned
      from
      notes receivable from related parties. Interest expenses for the six and three
      months ended June 30, 2008 in amounts of approximately $46,000, and $17,000,
      respectively, and for the six and three months ended June 30, 2007 in amounts
      of
      $29,000 and $14,000, respectively.





During
      the first quarter of 2008 and the second quarter of 2008 the Company granted
      231
      NAPD an additional loan of $89,400 and $118,428, respectively, for its current
      operation. On July 31, 2008, the Company, Russull Brothers and 231 NAPD signed
      loan assignment letter indicating that effective April 23, 2008, Russull
      Brothers assigned its outstanding loan in amount of $571,288 to the Company.
      $571,288 out of the $996,386 231 NAPD loan receivable balances as of June 30,
      2008 bears annuam interest rate of 6% and the remaining balance of $425,098
      bears annuam interest rate of 10%.





See
      note
      5 (c) with regards to the repayment of Russull Brother loans.





The
      Company believes that the transactions set forth above were made on terms no
      less favorable to us than could have been obtained from unaffiliated third
      parties. In addition, we intend that all such transactions be on terms no less
      favorable to us than could be obtained from unaffiliated third
      parties.





**NOTE
      11 - INCOME TAXES**





Based
      on
      the Company's history of recurring losses, there is uncertainty as to the
      realization of the net operating loss carryforwards. Accordingly, a valuation
      allowance has been provided for those deferred tax assets which management
      believes it is more likely than not that the tax benefit will not be realized.
      At June 30, 2008, the Company had approximately $1,158,000 of net operating
      loss
      carryforwards to offset future taxable income for both federal and state income
      tax purposes, expiring in various years through 2028 for federal purposes and
      2013 for state purposes. The Company has reported a valuation allowance of
      approximately $498,000. The valuation allowance account increased during the
      six
      months ended June 30, 2008 by $219,000.




Deferred
      income taxes (benefit) reflect the tax effects of temporary differences between
      the carrying amounts of assets and liabilities for financial reporting purposes
      and the amounts used for income tax purposes, and the tax effects of net
      operating losses that are available to offset future taxable
      income.





A
      reconciliation of the difference between the expected income tax rate using
      the
      statutory federal tax rate and the Company’s effective rate is as
      follows:




Six
                Months Ended June 30,2008
            
            2007U.S.
                Statutory Rate
            
            
            34
            %
            
            34
            %State
                income taxes
            
            
            9
            %
            
            9
            %Valuation
                allowance
            
            
            -43
            %
            
            -43
            %0
            %
            
            0
            %





20




**DCI
      USA, INC. AND SUBSIDIARIES**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      11 - INCOME TAXES - (CONTINUED)**





Significant
      components of the Company’s net deferred tax assets are as follows:





**June
                30,**
            
            **December
                31,****2008**
            
            **2007**Deferred
                tax assets:Net
                operating loss carryforwards
            
            $
            498,012
            
            $
            908,985Total
                deferred tax assets
            
            
            498,012
            
            $
            908,985Deferred
                liabilities
            
            
            -Total
                deferred tax liabilities
            
            
            -
            
            
            -Valuation
                allowance for net deferred tax assets
            
            
            (498,012
            )
            
            (716,964
            )Net
                deferred tax assets
            
            $
            -
            
            $
            192,021Current
                asset
            
            
            -
            
            
            173,693Long
                term asset
            
            
            -
            
            
            18,328Net
                deferred tax assets
            
            $
            -
            
            $
            192,021





21




**Item
      2.****Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.**





As
      used
      throughout this report, the terms "DCI," the "Company," "we," "us," and "our"
      refer to DCI USA, Inc., and unless indicated otherwise, include our
      subsidiaries.





This
      Management’s Discussion and Analysis or Financial Condition and Results of
      Operations should be read in conjunction with the financial statements and
      the
      notes thereto.





**Forward
      Looking Statements**





This
      report on Form 10-Q (the “Report”) contains a number of forward-looking
      statements that reflect management's current views and expectations with respect
      to our business, strategies, future results and events and financial
      performance. All statements made in this Report other than statements of
      historical fact, including statements that address operating performance, events
      or developments that management expects or anticipates will or may occur in
      the
      future, and statements related to distributor channels, volume growth, revenues,
      profitability, adequacy of funds from operations, statements expressing general
      optimism about future operating results and non-historical information, are
      forward looking statements. In particular, the words "believe," "expect,"
      "intend," " anticipate," "estimate," "may," "will," variations of such words,
      and similar expressions identify forward-looking statements, but are not the
      exclusive means of identifying such statements and their absence does not mean
      that the statement is not forward-looking. These forward-looking statements
      are
      subject to certain risks and uncertainties, including those discussed below.
      Our
      actual results, performance or achievements could differ materially from
      historical results as well as those expressed in, anticipated or implied by
      these forward-looking statements. We do not undertake any obligation to revise
      these forward-looking statements to reflect any future events or
      circumstances.





Readers
      should not place undue reliance on these forward-looking statements, which
      are
      based on management's current expectations and projections about future events,
      are not guarantees of future performance, are subject to risks, uncertainties
      and assumptions (including those described below) and apply only as of the
      date
      of this Report. Our actual results, performance or achievements could differ
      materially from the results expressed in, or implied by, these forward-looking
      statements. Factors that could cause or contribute to such differences include,
      but are not limited to, those discussed under "Risk Factors" in the Company’s
      Annual Report of Form 10-K filed with the Securities and Exchange Commission
      on
      May 12, 2008, as well as those discussed elsewhere in this Report, and the
      risks
      discussed in our press releases and other communications to shareholders issued
      by us from time to time which attempt to advise interested parties of the risks
      and factors that may affect our business. We undertake no obligation to publicly
      update or revise any forward-looking statements, whether as a result of new
      information, future events or otherwise.





**Overview**





We
      are
      presently engaged in the renovation and conversion of buildings to commercial
      condominiums.




22





The
      quotation of our common stock on the OTC Bulletin Board was terminated during
      the three months ended June 30, 2008 as a result of our failure to timely file
      periodic reports with the Securities and Exchange Commission.




**231
      Norman Avenue**





The
      Company remains involved in the renovation and conversion of certain buildings,
      located at 231 Norman Avenue, Brooklyn, New York, to commercial condominiums.
      Construction has been completed and a Certificate of Occupancy was obtained
      on
      January 10, 2008. Approvals needed for the commercial condominium plan offering
      have been obtained and 42 commercial condos are currently on the market for
      sale. The Company is actively involved in managing the construction, financing,
      and sales of the 231 Norman Avenue project. As of the date of filing, 26
      contracts to purchase condominium units have been signed and deposits received,
      14 units of which were closed and occupied.





**Material
      Changes in Financial Condition**





On
      June
      30, 2008 we had cash in the amount of $199,736, an increase of approximately
      826% as compared to cash in the amount of $21,565 on December 31, 2007. Total
      current assets increased from $532,814 on December 31, 2007 to $2,053,931 on
      June 30, 2008. These increases reflect receipts in connection with the sale
      of Gunther
      Wind Energy Ltd. to Tobias Jewelry Ltd., including $777,499 paid by Tobias
      to
      the Company at closing, $472,801
      paid by Tobias to World Group Capital (58) Ltd. in satisfaction of the Company’s
      pre-existing debt to World Group Capital, and $672,000 that will be paid by
      Tobias to the Company in April 2009 in satisfaction of Gunther’s pre-existing
      debt to the Company.





Current
      assets on June 30, 2008 included loans receivable from related parties in the
      aggregate amount of $996,386, an increase of approximately 359% as compared
      to
      loans receivable from related parties in the aggregate amount of $217,270 on
      December 31, 2007. This increase reflects our assumption during the quarter
      of a
      $571,277 loan from Russull Brothers, Inc., a major shareholder of the Company,
      to 231 Norman Avenue Property Development, LLC, and new loans that we made
      to 231
      Norman Avenue Property Development, LLC in the aggregate amount of $207,828. Current
      assets on June 30, 2008 also included a loan receivable from Gunther Wind Energy
      in the amount of $672,066, which was not recorded as an asset on December 31,
      2007. Current
      assets on December 31, 2007 also included the current portion of certain
      deferred tax assets, in the amount $173,693, which was recorded in anticipation
      of projected profits from the sale of Gunther Wind Energy. Following the sale
      of
      Gunther Wind Energy this asset was eliminated.




Total
      assets on June 30, 2008 amounted to $3,200,468, a decrease of approximately
      31%
      from total assets of $4,621,920 on December 31, 2007. The decrease resulted
      primarily from the sale of Gunther Wind Energy on April 23, 2008, and the
      associated reduction in our indirect investments in equity interests as a result
      of Gunther’s 25% ownership of ARI, Ltd., from $3,872,513 on December 31, 2007 to
      $1,144,275 on June 30, 2008.





Our
      current and long term liabilities have been reduced since December 31, 2007
      as a
      result, among other things, of (i) repayment of $325,000 in principal and
      $22,159 in accrued interest due pursuant to our outstanding 10% convertible
      notes, (ii) repayment of $500,000 in principal and $77,802 in accrued interest
      due pursuant to our outstanding 8% convertible debentures, and (iii) the sale
      of
      Gunther Wind Energy and the resulting elimination of our liabilities for (a)
      Gunther’s long term bank loan, in the amount of $1,536,000, and (b) dividends
      payable by ARI, Ltd. to Gunther, which amounted to $225,000 on December 31,
      2007.





The
      reduction in current liabilities was partially offset by the recognition in
      the
      three months ended June 30, 2008 of a liability in the amount of $427,350,
      representing a portion of our receipts
      in connection with the sale of Gunther
      Wind Energy. This portion of the consideration for Gunther Wind Energy has
      been
      deferred because a portion of the shares of Gunther Wind Energy have been
      escrowed and will not be transferred to Gunther’s buyer, Tobias Jewelry Ltd.,
      until repayment in full of
      Gunther’s pre-existing debt to the Company. The
      reduction in current liabilities was also partially offset by an increase in
      loans payable, from $399,970 on December 31, 2008 to $1,957,784 on June 30,
      2008, resulting from a new loan in the amount of $299,970 that we obtained
      from
      Tobias Jewelry on June 25, 2008, and the assignment by Russull Brothers of
      its
      long term loans to the Company to a new creditor, Mr. Roberto Roda, and the
      revision of the terms of those loans which are now payable upon 21 days
      notice.




23




**Material
      Changes in Results of Operations**





Our
      total
      income for the six and three month periods ended June 30, 2008 was $19,223
      and
      $10,810, respectively, as compared to $13,083 and $6,831, respectively, for
      the
      six and three month periods ended June 30, 2007. Income for the six and three
      month periods ended June 30, 2008 and June 30, 2007 consisted entirely of
      interest income generated from the loans the Company made to 321 Norman Avenue
      Property Development LLC and Senergy, Ltd.





Our
      general and administrative expenses decreased to $47,439 and $16,679,
      respectively, for the six and three month periods ended June 30, 2008, as
      compared to $129,805 and $49,401, respectively, for the six and three month
      periods ended June 30, 2007. The decrease in general and administrative expenses
      reflects unusually high general and administrative expenses in the first six
      months of 2007, incurred in connection with the acquisition of Gunther Wind
      Energy, which did not recur in 2008. Interest expense increased to $316,426
      and
      $88,551, respectively, for the six and three month periods ended June 30, 2008,
      from $112,040 and $48,223, respectively, for the six and three month periods
      ended June 30, 2007. The increase in interest expense resulted primarily from
      the interest expenses of Gunther Wind Energy, which was reflected in our
      consolidated financial statement as of June 20, 2007, and an increase in the
      principal amount of our outstanding loans payable, incurred in order to fund
      the
      operations of 231 Norman Avenue Property Development.





Professional
      fees increased, from $83,124 and $28,500, respectively, for the six and three
      month periods ended June 30, 2007, to $157,467 and $115,867, respectively,
      for
      the six and three month periods ended June 30, 2008. The increase in
      professional fees reflects increased compensation to the Company’s chief
      financial officer, costs incurred in connection with the Company’s special audit
      in compliance with the requirements of the Sarbanes-Oxley Act of 2002, and
      legal
      fees incurred in connection with the sale of Gunther Wind Energy. We did not
      incur any consulting fees in the six and three month periods ended June 30,
      2008, as compared to consulting fees of $91,256 and $2,000, respectively, for
      the six and three month periods ended June 30, 2007.





Our
      net
      losses on investments in equity interests increased by approximately 451% in
      the
      quarter, from $15,127 for the three months ended June 30, 2007 to $83,377 for
      the three months ended June 30, 2008. The increase resulted primarily from
      the
      capitalization of certain interest expenses, in the three months ended June
      30,
      2007 during the renovation of buildings located at 231 Norman Avenue, Brooklyn,
      New York. The renovation of the buildings was completed in January 2008, and
      thereafter those interest expenses were expensed.





For
      the
      six month period ended June 30, 2008 net losses on investments in equity
      interests decreased to $21,238, a drop of approximately 54% from losses on
      investments in equity interests of $45,938 for the six month period ended June
      30, 2007. The decreased losses resulted primarily from revenues generated by
      ARI, Ltd., which we acquired through the acquisition of Gunther Wind Energy
      on
      June 20, 2007.





In
      the
      second quarter of 2008 the Company recorded realized net gains on investments
      in
      the amount of $1,282,098, and a liability in the amount of $427,350 reflecting
      deferred receipts on account of escrowed shares of Gunther Wind Energy, that
      will be realized as gain once the Company releases the escrow
      shares.





Total
      loss from operations during the six and three month periods ended June 30,
      2008
      was $502,109 and $210,287, respectively, as compared to a total loss from
      operations of $403,142 and $121,293, respectively, for the six and three month
      periods ended June 30, 2007. The loss resulted primarily from the increase
      in
      our interest expenses during the period.





Net
      income was $566,730 and $ 781,474, respectively, for the six and three month
      periods ended June 30, 2008, as compared to losses of $449,080 and $136,420,
      respectively, for the six and three month periods ended June 30,
      2007.




24





**Item****3.****Quantitative
      and Qualitative Disclosures About Market Risk**





Smaller
      reporting companies are not required to provide the information required by
      this
      Item 3.





**Item
      4.**  **Controls
      and Procedures.**





**Evaluation
      of Disclosure Controls and Procedures**




Our
      disclosure controls and procedures are designed to ensure that information
      required to be disclosed in reports that we file or submit under the Securities
      Exchange Act of 1934 is recorded, processed, summarized and reported within the
      time periods specified in the rules and forms of the United States Securities
      and Exchange Commission. Our principal executive and financial officers have
      reviewed the effectiveness of our “disclosure controls and procedures” (as
      defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e))
      as
      of the end of the period covered by this report and have concluded that our
      disclosure controls and procedures are effective to ensure that material
      information relating to the Company is recorded, processed, summarized, and
      reported in a timely manner.





**Changes
      in Internal Controls**





There
      have been no changes in the Company’s internal control over financial reporting
      during the last quarterly period covered by this report that have materially
      affected, or are reasonably likely to materially affect, the Company’s internal
      control over financial reporting.





**PART
      II**


**OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings.**





There
      are
      no pending legal proceedings to which the Company is a party or in which any
      director, officer or affiliate of the Company, any owner of record or
      beneficially of more than 5% of any class of voting securities of the Company,
      or security holder is a party adverse to the Company or has a material interest
      adverse to the Company. The Company’s property is not the subject of any pending
      legal proceedings.





**Item
      1A. Risk Factors.**





There
      have been no material changes to the risks to our business described in our
      Annual Report on Form 10-K for the year ended December 31, 2007 filed
      with the Securities and Exchange Commission on May 12, 2008.





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds.**





None.





**Item
      3.**  **Defaults
      Upon Senior Securities.**





As
      of the
      date of this report, the following outstanding notes and debentures are in
      default. Neither
      the debentures holders nor any of the note holders has notified the Company
      of
      their intention to enforce any of their rights in connection with this
      default.




Debentures - As of
      March 31, 2008, four outstanding convertible debentures, amounting in the
      aggregate to $600,000, plus accrued interest of approximately $64,734, became
      due and payable. On April 29, 2008, payments of $100,000 in principal and
      $29,934 in interest accrued through April 30, 2008 were made to the holders
      of
      $200,000 principal amount of the convertible debentures. The remaining $400,000
      principal amount of the convertible debentures was repaid during the three
      months ended June 30, 2008.




25





10%
      Convertible Notes - On
      November 25, 2007, an aggregate of $465,000 in principal and $725 in accrued
      interest became due and payable on the convertible notes, which were issued
      by
      the Company in October 2006. During the three months ended June 30, 2008 the
      Company made payments of principal to three of the note holders in the aggregate
      amount of $325,000 plus interest of $22,159. The Company is negotiating with
      the
      remaining note holders to extend the terms of the notes. The Company is current
      in its interest payments to all the note holders.





**Item
      4.**  **Submission
      of Matters to a Vote of Security Holders.**





None.





**Item
      5.**  **Other
      Information.**





None.





**Item
      6.**  **Exhibits.**




The
      following exhibits are filed as part of this report:




Exhibit
                No.
            
            Description
                of Exhibit31.1
            
            Section
                302(a) Certifications32.1
            
            Section
                906 Certifications




26


**SIGNATURES**





In
      accordance with the requirements of the Securities Exchange Act of 1934, the
      Registrant has caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.




Dated:
                August 14, 2008
            
            By:
            /s/
                Ofer ArbibOfer
                Arbib
              Chief
                Executive Officer
              (Principal
                Executive Officer)





Dated:
                August 14, 2008
            
            By:
            /s/
                Jonathan RigbiJonathan
                Rigbi
              Chief
                Financial Officer
              (Principal
                Financial and Accounting Officer)





27