Conformed Copy
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                                    SECURITIES AND EXCHANGE COMMISSION
                                          WASHINGTON, D.C. 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 September 30, 1997,
         or

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from ____ or ____


                         Commission file number 0-13865


                             ICC TECHNOLOGIES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)



                    DELAWARE                             23-2368845
          -------------------------------          ----------------------
          (State or other jurisdiction of             (I.R.S. Employer
           incorporation or organization)          Identification Number)
  


              330 South Warminster Road
                Hatboro, Pennsylvania                         19040
      ----------------------------------------             ----------
      (Address of principal executive offices)             (Zip Code)


        Registrant's telephone number, including area code: (215) 682-6600

              Former name, former address and former fiscal year if
                    changed since last report: not applicable
                                               --------------

Indicate by check mark whether the registrant (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 periods 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
                                 -----           -----

        Indicate the number of shares outstanding of each of the issuer's
          classes of common stock, as of the latest practicable date.

                     Common Stock, par value $.01 per share
                     --------------------------------------
             21,519,999 shares outstanding as of November 10, 1997.
             ------------------------------------------------------


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


<PAGE>


                            INDEX TO FORM 10-Q REPORT
                            -------------------------

PART I. FINANCIAL INFORMATION                                          PAGE NO.
------- ---------------------                                          --------


Item 1. Financial Statements (Unaudited)


           Consolidated Balance Sheets at September 30, 1997 and           3
           December 31, 1996                                               
                                                                           
           Consolidated  Statements of Operations - Three months and       
           nine months ended September 30, 1997 and 1996                   4
                                                                           
           Consolidated Condensed Statements of Cash Flows -  Nine         5
           months ended September 30, 1997 and 1996                        
                                                                           
           Notes to Consolidated Financial Statements                      6
                                                                         

Item 2. Management's Discussion and Analysis of Financial Condition 
        and Results of Operations.                                         9

PART II OTHER INFORMATION

Item 1. Legal proceedings                                                  13

Item 2. Changes in Securities                                              13

Item 3. Defaults Upon Senior Securities                                    13

Item 4. Submission of Matters to Vote of Security Holders                  13

Item 5. Other Information                                                  13

Item 6. Exhibits and Reports on Form 8-K                                   13

        SIGNATURES                                                         14


                                        2
<PAGE>


Item 1. Financial Statements (Unaudited)
----------------------------------------

                              ICC TECHNOLOGIES, INC
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                          September 30,   December 31,
                                                                              1997            1996
                                                                          ------------    ------------
                                     ASSETS
                                     ------
<S>                                                                       <C>             <C>
CURRENT ASSETS:
     Cash and cash equivalents                                            $  4,389,474    $  9,641,114
     Prepaid expenses and other                                                159,415         108,161
                                                                          ------------    ------------
                   Total current assets                                      4,548,889       9,749,275

RESTRICTED CASH                                                              2,500,000       2,500,000
PROPERTY, EQUIPMENT AND SOFTWARE, net                                            8,596           1,590

                                                                          ------------    ------------
                       Total assets                                       $  7,057,485    $ 12,250,865
                                                                          ============    ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
                      ------------------------------------

CURRENT LIABILITIES:
     Accounts payable and accrued liabilities                             $    133,509         $70,437
     Payable to Engelhard/ICC                                                   27,394          17,035
                                                                          ------------    ------------
                   Total current liabilities                                   160,903          87,472
                                                                          ------------    ------------
LOSSES OF ENGELHARD/ICC IN EXCESS OF INVESTMENTS                             2,255,488       2,091,997
                                                                          ------------    ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value, authorized 50,000,000 shares, issued
         21,470,998 shares at September 30, 1997 and 21,282,354
         shares at December 31, 1996                                           214,711         212,824
     Additional paid-in capital                                             51,169,325      50,730,330
     Note receivable from officer/director                                    (230,467)              0
     Accumulated deficit                                                   (46,341,045)    (40,700,328)
     Less:  Treasury common stock, at cost, 66,227 shares                     (171,430)       (171,430)
                                                                          ------------    ------------
                   Total stockholders' equity                                4,641,094      10,071,396
                                                                          ------------    ------------
                       Total liabilities and stockholders' equity         $  7,057,485    $ 12,250,865
                                                                          ============    ============
</TABLE>
                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                       -3-
<PAGE>










                              ICC TECHNOLOGIES, INC
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                         Three months ended              Nine months ended
                                                    -----------------------------   -----------------------------
                                                    September 30,   September 30,   September 30,   September 30,
                                                        1997            1996            1997            1996
                                                    ------------    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>             <C>
REVENUES:
     Interest  income                               $    112,825    $    192,100    $    411,897    $    500,990
EXPENSES:
     Equity interest in net loss of Engelhard/ICC      1,724,916       1,294,727       4,538,491       4,390,715
     General and administrative                          516,085         329,387       1,514,123       1,141,630
                                                    ------------    ------------    ------------    ------------
         Total expenses                                2,241,001       1,624,114       6,052,614       5,532,345
                                                    ------------    ------------    ------------    ------------

NET LOSS                                              (2,128,176)     (1,432,014)     (5,640,717)     (5,031,355)

CUMULATIVE PREFERRED STOCK
     DIVIDEND REQUIREMENTS                                     0               0               0         (49,655)
                                                    ------------    ------------    ------------    ------------
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS          $ (2,128,176)   $ (1,432,014)   $ (5,640,717)   $ (5,081,010)
                                                    ============    ============    ============    ============
NET LOSS PER COMMON SHARE                           $      (0.10)   $      (0.07)   $      (0.26)   $      (0.25)
                                                    ============    ============    ============    ============
WEIGHTED AVERAGE COMMON SHARES                        21,383,464      21,192,241      21,304,645      20,027,611
                                                    ============    ============    ============    ============
</TABLE>


                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                       -4-


<PAGE>

                             ICC TECHNOLOGIES, INC.
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                        Nine Months Ended
                                                                                           September 30,
                                                                                   ----------------------------
                                                                                       1997            1996
                                                                                   ----------------------------
<S>                                                                                <C>             <C>
Cash Flows from Operating Activities:
     Net loss                                                                      $ (5,640,717)   $ (5,031,355)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization                                                    2,945           1,192
         Equity interest in net loss of Engelhard/ICC                                 4,538,491       4,390,715
         (Increase) decrease in:
            Receivables                                                                       0         144,276
            Prepaid expenses and other                                                  (51,254)        136,272
         Increase (decrease) in:
            Accounts payable and accued expenses                                         73,431        (274,947)
                                                                                   ------------    ------------
                Net cash used in operating activities                                (1,077,104)       (633,847)
                                                                                   ------------    ------------

Cash Flows from Investing Activities:
     Capital contributions to Engelhard/ICC                                          (4,375,000)     (6,000,000)
     Purchases of property, equipment and software                                       (9,951)              0
                                                                                   ------------    ------------
                Net cash used in investing activities                                (4,384,951)     (6,000,000)
                                                                                   ------------    ------------

Cash Flows from Financing Activities:
     Proceeds from issuance of common stock and warrants, net                           210,415      17,249,578
     Cash redemption of Preferred Stock                                                       0        (981,270)
     Cash  dividend on Preferred Stock                                                        0        (394,610)
     Repayments of borrowings from stockholder                                                0        (150,000)
                                                                                   ------------    ------------
                Net cash provided by financing activities                               210,415      15,723,698
                                                                                   ------------    ------------

Net (decrease) increase  in cash and cash equivalents                                (5,251,640)      9,089,851

Cash and Cash Equivalents, Beginning of Period                                        9,641,114       1,573,475
                                                                                   ------------    ------------
Cash and Cash Equivalents, End of Period                                           $  4,389,474    $ 10,663,326
                                                                                   ============    ============
</TABLE>

                 The accompanying notes are an integral part of
                     the consolidated financial statements.


                                      -5-


<PAGE>


                             ICC TECHNOLOGIES, INC.
    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SEPTEMBER 30, 1997


(1)  BASIS OF PRESENTATION
     ---------------------

     The accompanying unaudited consolidated financial statements have been
     prepared in accordance with generally accepted accounting principles for
     interim financial information and with the instructions to Form 10-Q and
     Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
     information and footnotes required by generally accepted accounting
     principles for complete financial statements. In the opinion of management,
     all adjustments (consisting of normal recurring accruals) considered
     necessary for a fair presentation have been included. For further
     information, refer to the financial statements and footnotes thereto for
     the year ended December 31, 1996 included in the Company's Annual Report on
     Form 10-K for the year then ended. Results of operations for the three and
     nine months ended September 30, 1997 are not necessarily indicative of
     results of operations expected for the full year.


(2)  BUSINESS AND GOING CONCERN CONSIDERATIONS
     -----------------------------------------


     Business
     --------

     ICC Technologies, Inc. ("ICC" or the "Company") is a Delaware Corporation.
     ICC through its joint venture Engelhard/ICC ("the Partnership") with
     Engelhard Corporation ("Engelhard"), designs, manufactures and markets
     innovative active humidity control systems to supplement or replace
     conventional air conditioning systems. The Partnership's active humidity
     control systems are based on proprietary desiccant technology initially
     developed by the Company, licensed honeycomb rotor technology and
     Engelhard's patented titanium silicate desiccant, ETS(TM). The
     Partnership's active humidity control systems are designed to address
     indoor air quality, energy and environmental concerns and regulations
     currently affecting the air conditioning market.

     The Partnership was formed on February 7, 1994 pursuant to the terms and
     conditions under the Joint Venture Asset Transfer Agreement ("Transfer
     Agreement") whereby the Partnership succeeded to the desiccant air
     conditioning business conducted by ICC prior to the formation of the
     Partnership. Since the formation of the Partnership, the Company has become
     principally a holding company whose activities have related primarily to
     its participation in the management of the Partnership in which it owns a
     50% interest. The Company is not permitted to engage directly or indirectly
     in any activities which would conflict with the Partnership's business as
     long as the Partnership is in effect, but the Company is not precluded from
     engaging in other activities. The Company investigates from time to time
     other opportunities; however, the Company currently does not have any
     commitments to engage in other activities and, therefore, is not expected
     to generate any significant revenues, although it will continue to incur
     general and administrative expenses.


     Going Concern
     -------------

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities in the normal course of business. Revenues and the Company's
     share of results of operations of the Partnership have been insufficient to
     cover costs of operations for the three and nine months ended September 30,
     1997. The Company has incurred cumulative losses since inception of
     approximately $46 million through September 30, 1997. In order to continue
     operations, the Company has had to raise additional capital to offset cash
     consumed in operations and support of the Partnership. Until the
     Partnership generates positive cash flows from operations, it will be
     primarily dependent on the partners to provide any required working
     capital. The Company's continuation as a going concern is dependent on its
     ability to: (i) generate sufficient cash flows to meet its obligations on a
     timely basis, (ii) obtain additional financing as may be required, and
     (iii) ultimately attain profitable operations and positive cash flows from
     its operations and its investment in the Partnership. The accompanying
     financial statements do not include any adjustments that may result from
     the Company's inability to continue as a going concern.

                                       6


<PAGE>


     The source of the cash utilized in the Company's operating and investing
     activities during the three and nine months ended September 30, 1997 was
     cash on hand and proceeds from the exercise of stock options and warrants.
     Management believes the Partnership will require additional capital
     contributions. To the extent Partnership capital contributions exceed cash
     on hand, or if the Company requires additional funds to continue its
     operations, the Company would expect to satisfy such requirements by
     seeking equity financing. The Company's ability to successfully obtain
     equity financing in the future is dependent in part on market conditions
     and the performance of the Partnership. There can be no assurance that the
     Company will be able to obtain equity financing in the future.

(3)  INVESTMENT IN ENGELHARD/ICC PARTNERSHIP

     The following are the summarized unaudited financial results of the
     Partnership:


<TABLE>
<CAPTION>
                                                       Quarter        Quarter       Nine months    Nine months
                                                        ended          ended           ended          ended
                                                      September      September       September      September
                                                       30, 1997      30, 1996        30, 1997       30, 1996
                                                     -----------    -----------    ------------    -----------
<S>                                                  <C>            <C>            <C>             <C>        
Results of operations:
Revenues                                             $ 3,775,407    $ 2,891,779    $ 10,084,346    $ 7,688,527
Cost of goods sold                                     4,832,556      3,073,232      12,106,775      9,303,479
                                                     -----------    -----------    ------------    -----------
Gross profit(loss)                                    (1,057,149)      (181,453)     (2,022,429)    (1,614,952)
Operating expenses:
  Marketing                                              943,715        887,566       2,952,452      2,603,764
  Engineering                                            515,010        274,006       1,324,797        813,931
  Research and development                               142,980        215,389         449,977        799,235
  General and administrative                             690,407        934,712       1,990,954      2,639,111
                                                     -----------    -----------    ------------    -----------
Loss from operations                                   3,349,261      2,493,126       8,740,609      8,470,993
Interest expense                                         100,570         96,327         336,373        310,436
                                                     -----------    -----------    ------------    -----------
Net loss                                             $ 3,449,831    $ 2,589,453    $  9,076,982    $ 8,781,429
                                                     ===========    ===========    ============    ===========
</TABLE>


<TABLE>
<CAPTION>
                                                         As of        As of
Balance sheet information:                            September     December
                                                      30, 1997      31, 1996
                                                     -----------  -------------
<S>                                                  <C>          <C>         
Cash                                                 $    12,204  $  1,192,997
Receivables                                            3,529,147     2,640,804
Inventory                                              4,310,810     4,570,952
Other current assets                                     262,891       278,762
Property, plant and equipment                          9,784,690     7,990,125
Cash held in escrow                                       14,248       307,476
Other noncurrent assets                                1,973,818     1,978,115
                                                     -----------  ------------
   Total assets                                      $19,887,808  $ 18,959,231
                                                     ===========  ============
                                                 
Current liabilities                                  $ 3,438,474   $ 2,248,209
Short-term loan                                        2,750,000     2,750,000
Long-term debt                                         8,707,624     8,642,330
Partners' capital                                      4,991,710     5,318,692
                                                     -----------   -----------
   Total liabilities and capital                     $19,887,808   $18,959,231
                                                     ===========   ===========
</TABLE>


                                       7


<PAGE>


                                               
     The Company's investment in the Partnership is owned by a subsidiary, ICC
     Desiccant Technologies, Inc., whose principal asset is the Partnership
     investment. The investment in the Partnership is accounted for under the
     equity method of accounting. The Company's proportionate share of losses in
     the Partnership are $1,724,916 and $1,294,727 for the three months ended
     September 30, 1997 and 1996, respectively and $4,538,491 and $4,390,715 for
     the nine months ended September 30, 1997 and 1996, respectively. The
     Partnership has incurred cumulative losses of approximately $38 million
     since inception (February 7, 1994) through September 30, 1997. The
     Company's share of the cumulative losses have resulted in the recognition
     of losses in excess of the Company's investment in the amount of $2,255,488
     and $2,091,997 as of September 30, 1997 and December 31, 1996,
     respectively. Payables to the Partnership were $27,394 and $17,035 at
     September 30, 1997 and December 31, 1996, respectively. The general
     partners are guarantors of the Partnership's long term debt which totals
     approximately $ 8.7 million as of September 30, 1997.

     The Company and Engelhard made capital contributions of $1,125,000 each to
     the Partnership during the three months ended September 30, 1997 raising
     the total capital contributions contributed to the Partnership during the
     nine months ended September 30, 1997 to $4,375,000 each. Subsequent to
     September 30, 1997, additional capital contributions made by ICC and
     Engelhard were $1 million and $ 250,000, respectively.

     In August 1997, the Company reached an agreement, in principle, with
     Engelhard Corporation to restructure the Partnership (the "Restructuring").
     The Restructuring will provide that the Partnership will be split into two
     separate companies: one to manufacture and market complete, active, climate
     control equipment systems ("Box Business"); the other to manufacture and
     market the desiccant-coated rotors that are a critical component of the
     systems ("Wheel Business"). Pursuant to the Restructuring, the Company will
     receive approximately $18.6 million and own 90 percent and have full
     management control of Box Business while Engelhard will retain a 10 percent
     equity interest in Box Business. Engelhard will own 80 percent and have
     full management control of Wheel Business and the Company will own a 20%
     interest in Wheel Business. The Partnership's $8.5 million loan will be
     assumed by the Wheel Business and accordingly the Company's corresponding
     guarantee will be eliminated which will make available $2.5 million in cash
     which is currently restricted. The Box Business will purchase desiccant
     rotors exclusively from the Wheel Business and will have preferential
     pricing for such purchases. The Box Business will also maintain on an
     exclusive basis certain vertical markets and marketing relationships
     subject to certain conditions. Engelhard will continue to guarantee the
     lease commitment of the Box Business. The Restructuring is subject to
     negotiation of definitive contracts and approval by the Boards of Directors
     of the Company and Engelhard and the stockholders of the Company.

(4)  STOCK TRANSACTIONS:
     -------------------

     The Company received proceeds of approximately $89,000 and $64,000 from the
     exercise of stock options and warrants to purchase approximately 37,600 and
     14,000 shares of Common Stock in the three month periods ended September
     30, 1997 and 1996, respectively. The Company received proceeds of
     approximately $210,000 and $254,000 from the exercise of stock options and
     warrants to purchase approximately 105,900 and 117,000 shares of Common
     Stock in the nine month period ended September 30, 1997 and 1996,
     respectively.

     In February 1996, the Company issued 2,500,000 shares of Common Stock in a
     secondary offering at $7 per share less underwriting discounts and
     commissions of $.49 per share. Proceeds of approximately $16.3 million were
     offset by costs of approximately $600,000 incurred in the offering. In
     April 1996, the underwriters of the secondary offering exercised their
     overallotment option and purchased 186,813 shares of Common Stock for
     proceeds of approximately $1.2 million after underwriting discounts and
     commissions.

     The Company loaned $230,467 to its chairman in July 1997 in connection with
     the exercise of an option to acquire 82,753 shares of Common Stock. The
     loan was in the form of a full recourse note which matures in five years.
     Such note bears a market rate of interest equal to the prime rate of 8.5%
     with such rate to be adjusted to the current prime rate at each annual
     anniversary date.


                                       8


<PAGE>


     Item 2. Management's Discussion and Analysis of Financial Condition and
             ---------------------------------------------------------------
             Results of Operations
             ---------------------

     Overview

     The Company, through the Partnership, designs, manufactures and markets
     innovative active humidity control systems to supplement or replace
     conventional air conditioning systems. The Partnership's active humidity
     control systems are based on proprietary desiccant technology initially
     developed by the Company, a licensed honeycomb rotor technology and
     Engelhard's patented titanium silicate desiccant, ETS(TM).

     Pursuant to the formation of the Partnership on February 7, 1994, the
     Company transferred its assets related to its desiccant active humidity
     control business, subject to certain liabilities, to the Partnership in
     exchange for a 50% interest in the Partnership through its wholly-owned
     subsidiary, ICC Desiccant Technologies, Inc. Engelhard, in exchange for a
     50% interest in the Partnership, contributed capital to the Partnership,
     entered into a supply agreement to sell ETS(TM) to the Partnership and
     entered into a license agreement granting the Partnership an exclusive
     royalty-free license to use ETS(TM) in the Partnership's business,
     including heating, ventilation and air conditioning. The desiccant active
     humidity control business conducted by the Company prior to the formation
     of the Partnership is now being conducted by the Partnership, and the
     Company is principally a holding company.

     Since the formation of the Partnership, the Company's activities have
     related primarily to its participation in the management of the Partnership
     in which it owns a 50% interest. The Company is not permitted to engage
     directly or indirectly in any activities which would conflict with the
     Partnership's business as long as the Partnership is in effect, but the
     Company is not precluded from engaging in other activities. The Company
     investigates from time to time other opportunities; however, the Company
     currently does not have any commitments to engage in other activities and,
     therefore, is not expected to generate any significant revenues, although
     it will continue to incur general and administrative expenses.

     The Company accounts for its interest in the Partnership under the equity
     method of accounting for investments. Although the Company has no
     obligation to provide additional financing to the Partnership, because the
     Company has, and expects to continue to fund its share of the Partnership's
     activities, the Company recognizes its share of the losses of the
     Partnership.

     In August 1997, the Company reached an agreement, in principle, with
     Engelhard Corporation to restructure the Partnership interests (the
     "Restructuring"). The Restructuring will provide that the Partnership be
     split into two separate companies: one to manufacture and market complete,
     active, climate control equipment systems ("Box Business"); the other to
     manufacture and market the desiccant-coated rotors that are a critical
     component of the systems ("Wheel Business"). Pursuant to the Restructuring,
     the Company will receive approximately $18.6 million and own 90 percent and
     have full management control of Box Business while Engelhard will retain a
     10 percent equity interest in Box Business. Engelhard will own 80 percent
     and have full management control of Wheel Business and the Company will own
     a 20% interest in Wheel Business. The Partnership's $8.5 million loan will
     be assumed by the Wheel Business and accordingly the Company's
     corresponding guarantee will be eliminated which will make available $2.5
     million in cash which is currently restricted. The Box Business will
     purchase desiccant rotors exclusively from the Wheel Business and will have
     preferential pricing for such purchases. The Box Business will also
     maintain on an exclusive basis certain vertical markets and marketing
     relationships subject to certain conditions. Engelhard will continue to
     guarantee the lease commitment on the systems business. The Restructuring
     is subject to negotiation of definitive contracts and approval by the
     Boards of Directors of the Company and Engelhard and the stockholders of
     the Company.

                                       9


<PAGE>

Results of Operations

     As described above, since the formation of the Partnership, the Company's
     sole activities have related to its participation in the management of the
     Partnership. The Company's general and administrative expenses increased
     $186,698 to $516,085 for the three month period ended September 30, 1997,
     compared to $329,387 for the same period in 1996, and increased $372,493 to
     $1,514,123 for the nine month period ended September 30, 1997, compared to
     $1,141,630 for the same period in 1996. Such increase was primarily related
     to increased professional and consulting fees. The Company's interest
     income decreased $79,275 to $112,825 for the three month period ended
     September 30, 1997, compared to $192,100 for the same period in 1996, and
     decreased $89,093 to $411,897 for the nine month period ended September 30,
     1997, compared to $500,990 for the same period in 1996. The decrease in
     interest income is the result of a decrease in average cash and cash
     equivalents balances in 1997 as compared to 1996.

     The Company's net loss for the three months ended September 30, 1997
     increased $696,162 to $2,128,176, compared with the net loss of $1,432,014
     for the same period in 1996, and increased $609,362 to $5,640,717 for the
     nine month period ended September 30, 1997, compared to $5,031,355 for the
     same period in 1996. The increase in the net loss is primarily attributable
     to the increase in the Company's 50% share of the Partnership's loss,
     general and administrative expenses and the reduction in interest income.
     Net loss per share of Common Stock increased to $.10 and $.26 for the three
     and nine month periods ended September 30, 1997, respectively, as compared
     with $.07 and $.25 per share for the same periods in 1996. Such increase
     was attributable to the increase in net loss for the three and nine month
     periods ended September 30, 1997.

     The Partnership's revenue increased to $3,775,407 and $10,084,346 for the
     three and nine months ended September 30, 1997, respectively, compared to
     $2,891,779 and $7,688,527 for the same periods in 1996 respectively. The
     increase in revenue was attributable to increased equipment sales and the
     sale of substrate from the Miami plant pursuant to a supply contract.
     Equipment sales increased to approximately $2.2 and $5.6 million for the
     three and nine months ended September 30, 1997, respectively, compared to
     approximately $2.0 and $4.5 million for the three and nine months ended
     September 30, 1996, respectively. Sales of substrate increased to
     approximately $1.5 and $4.4 million for the three and nine months ended
     September 30, 1997, respectively, as compared to approximately $900,000 and
     $3.1 million for the three and nine months ended September 30, 1996,
     respectively. The Partnership recorded an increase in the gross loss to
     approximately $1,057,000 and $2,022,000 for the three and nine months ended
     September 30, 1997, respectively, as compared to a gross loss of
     approximately $181,000 and $1,615,000 for the same period in 1996 due to
     increased warranty costs. During the quarter ended September 30, 1997 a
     provision of approximately $900,000 was recorded for a special warranty
     program. In order to ensure high quality standards the Partnership
     developed a special warranty program. The special warranty program is
     designed to repair or replace certain equipment components in the field to
     conform to current high quality design standards. The special warranty
     program relates to certain components that have failed or potentially could
     fail to meet such current quality standards.

     The Partnership's operating expenses decreased to $2,292,112 and $6,718,180
     for the three and nine months ended September 30, 1997, respectively,
     compared to $2,311,673 and $6,856,041 for the same periods in 1996,
     respectively, due primarily to lower general and administrative and
     research and development costs offset by higher engineering and marketing
     costs. Marketing and engineering costs increased due to increases in
     related staff levels and activities. General and administrative expenses
     have decreased primarily as the result of decreased inventory obsolescence
     and severance costs. Research and development expenses decreased as the
     result of decreased staff size. The increase in gross loss, primarily
     related to increased warranty costs, more than offset the decrease in
     operating expenses resulting in a increase in the loss from operations to
     $3,349,261 and $8,740,609 for the three and nine months ended September 30,
     1997, respectively, as compared to $2,493,126 and $8,470,993 for the same
     periods in 1996, respectively. As a result of the aforementioned factors,
     the Partnership's net loss increased to $3,449,831 and $9,076,982 for the
     three and nine months ended September 30, 1997, respectively, compared to
     $2,589,453 and $8,396,204 the same periods in 1996, respectively.

                                       10


<PAGE>


     The Partnership's backlog for equipment amounted to approximately $1.4
     million at November 10, 1997.


     Liquidity and Capital Resources

     The Company's cash and cash equivalents decreased $5,251,640 to $4,389,474
     as of September 30, 1997 as compared to $9,641,114 as of December 31, 1996.
     The decrease in cash is primarily attributable to the $4,375,000 capital
     contribution made to the Partnership in the nine month period ended
     September 30, 1997.

     Net cash used in operating activities by the Company was $1,077,104 for the
     nine months ended September 30, 1997 due to the net loss, before non-cash
     charges and the Company's 50% share of the net loss of the Partnership, of
     $1,099,281 offset by net working capital provided of $22,177. The Company
     and Engelhard made capital contributions of $4,375,000 each to the
     Partnership in the nine months ended September 30, 1997. Subsequent to
     September 30, 1997, the Company and Engelhard made capital contributions of
     $1,000,000 and $250,000 to the Partnership, respectively. Net cash used in
     operating activities and for investments in the Partnership by the Company
     were financed by existing cash and proceeds from the issuance of Common
     Stock and exercise of stock options and warrants.

     The Partnership's cash and cash equivalents decreased to $12,204 at
     September 30, 1997 from $1,192,997 at December 31, 1996. The decrease was
     due to cash used in operating activities of approximately $7.3 million,
     resulting from the Partnership's net losses and working capital
     requirements, and cash used in investing activities of approximately $2.8
     million related to purchases of machinery and equipment related primarily
     to the new production facility in Hatboro, Pennsylvania. Financing
     activities provided approximately $9 million which consisted primarily of
     $8,750,000 in capital contributions from the Company and Engelhard. The
     Partnership is expected to require and will be dependent on the Company and
     Engelhard to provide additional financing to support its current operations
     and any future expansion. There can be no assurance that the Company or
     Engelhard will be willing, or able, to provide such additional financing.

     Management believes the Partnership will require additional capital
     contributions. To the extent Partnership capital contributions in excess of
     available cash of the Company are required or if the Company requires
     additional funds to continue its operations, the Company would expect to
     satisfy such requirements by seeking equity financing. The Company's
     ability to successfully obtain equity financing in the future is dependent
     in part on market conditions and the performance of the Partnership. There
     can be no assurance that the Company will be able to obtain equity
     financing in the future.

     In February 1996, the Company issued 2,500,000 shares in a secondary
     offering at $7 per share less underwriting discounts and commissions of
     $.49 per share. Proceeds of approximately $16.3 million were offset by
     costs of approximately $600,000 incurred in connection with the offering.
     In April 1996, the underwriters of the secondary offering exercised their
     overallotment option and purchased 186,813 of Common Stock for proceeds of
     approximately $1.2 million after underwriting discounts and commissions.

     The Company received proceeds of approximately $89,000 and $64,000 from the
     exercise of stock options and warrants to purchase approximately 37,600 and
     14,000 shares of Common Stock in the three month period ended September 30,
     1997 and 1996, respectively. The Company received proceeds of approximately
     $210,000 and $254,000 from the exercise of stock options and warrants to
     purchase approximately 105,900 and 117,000 shares of Common Stock in the
     nine month period ended September 30, 1997 and 1996, respectively.

     ICC has not declared any dividends on Common Stock and does not expect to
     declare dividends in the foreseeable future. Payment of future dividends
     will rest within the discretion of the Board of Directors and will depend,


                                       11
<PAGE>

     among other things, on ICC's earnings, capital requirements and financial
     condition.

     The independent accountants report on the audit of the Company's 1996
     financial statements includes an explanatory paragraph regarding
     substantial doubts about the Company's ability to continue as a going
     concern. The Company's accompanying financial statements have been prepared
     on a going concern basis, which contemplates the realization of assets and
     the satisfaction of liabilities in the normal course of business. Revenues
     and the Company's share of results of operations of the Partnership have
     been insufficient to cover costs of operations for the nine months ended
     September 30, 1997. The Company has suffered recurring losses accumulating
     to approximately $46 million since inception through September 30, 1997. In
     order to continue operations, the Company has had to raise additional
     capital to offset cash consumed in operations and in support of the
     Partnership. The Company's continuation as a going concern is dependent
     upon its ability to: (i) generate sufficient cash flows to meet its
     obligations on a timely basis, (ii) obtain additional financing as may be
     required and (iii) ultimately, attain profitable operations and positive
     cash flow from its operations and its investment in the Partnership. The
     accompanying financial statements do not include any adjustments that may
     result from the Company's inability to continue as a going concern.

     The independent accountants report on the audit of the Partnership's 1996
     financial statements also includes an explanatory paragraph regarding
     substantial doubts about the Partnership's ability to continue as a going
     concern. The Partnership has incurred cumulative losses of approximately
     $38 million since inception through September 30, 1997. The Partnership's
     continuation as a going concern will remain dependent upon its ability to:
     (i) generate sufficient cash flows to meet its obligations on a timely
     basis, (ii) obtain additional financing or refinancing as may be required
     and (iii) ultimately, attain profitable operations and positive cash flow
     from operations.


     Safe Harbor for Forward-Looking Statements

     Except for historical matters contained herein, the matters discussed in
     this Form 10-Q are forward-looking and are made pursuant to the safe harbor
     provisions of the Private Securities Litigation Reform Act of 1995. Readers
     are cautioned that these forward-looking statements reflect numerous
     assumptions and involve risks and uncertainties which may affect the
     Company's or the Partnership's business, financial position and prospects
     and cause actual results to differ materially from these forward-looking
     statements. The assumptions and risks include sufficient funds to finance
     working capital and other financing requirements of the Company and the
     Partnership, market acceptance of the Partnership's products, dependence on
     proprietary technology, competition in the air conditioning industry and
     others set forth in the Company's filings with the Securities and Exchange
     Commission.

                                       12


<PAGE>


                                     PART II

                                OTHER INFORMATION

Item 1.    Legal Proceedings

           No legal proceedings by, or against, the Company were
           initiated in the quarter ended September 30, 1997.

Item 2.    Changes in Securities.

           None

Item 3.    Defaults Upon Senior Securities

           Not Applicable

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

           Not Applicable    .

Item 5.    Other Information

           Not Applicable

Item 6.    Exhibits and Reports on Form 8-K

      (a)  Exhibits:        27  Financial Data Schedule

      (b)  The following reports have been filed with the Securities and
           Exchange Commission.

           Current report on Form 8-K dated August 27, 1997 relating to
           the Company's announcement of an agreement, in principle, with
           Engelhard Corporation to restructure the Partnership.

                                       13


<PAGE>


                                   SIGNATURES


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



DATE:      November 10, 1997                      BY: /s/ Irwin L. Gross
     ---------------------------------------          -------------------------
                                                       Irwin L. Gross, Chairman





DATE:      November 10, 1997                      BY: /s/ Manfred Hanuschek
     ---------------------------------------          -------------------------
                                                       Manfred Hanuschek,
                                                       Chief Financial Officer

                                       14