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 June 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
                     --------------------------------------
               21,464,248 shares outstanding as of August 1, 1997.
               ---------------------------------------------------

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

<PAGE>

<TABLE>
<CAPTION>

                            INDEX TO FORM 10-Q REPORT

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

<S>          <C>                                                               <C>     
Item 1.      Financial Statements (Unaudited)


                 Consolidated Balance Sheets at June 30, 1997 and                  3
                 December 31, 1996

                 Consolidated  Statements of Operations - Three months and
                 six months ended June 30, 1997 and 1996                           4

                 Consolidated Condensed Statements of Cash Flows -  Six            5
                 months ended June 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
</TABLE>
                                       2


<PAGE>
Item 1.  Financial Statements (Unaudited)

                              ICC TECHNOLOGIES, INC
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             June 30,     December 31,
                                                                              1997            1996
                                                                          ------------    ------------
<S>                                                                       <C>             <C>
                                      ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                            $  5,997,575    $  9,641,114
     Prepaid expenses and other                                                 19,681         108,161
                                                                          ------------    ------------
                   Total current assets                                      6,017,256       9,749,275

RESTRICTED CASH                                                              2,500,000       2,500,000
PROPERTY, EQUIPMENT AND SOFTWARE, net                                            6,637           1,590

                                                                          ------------    ------------
                       Total assets                                       $  8,523,893    $ 12,250,865
                                                                          ============    ============

                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Accounts payable and accrued liabilities                             $    158,380    $     70,437
     Payable to Engelhard/ICC                                                   29,471          17,035
                                                                          ------------    ------------
                   Total current liabilities                                   187,851          87,472
                                                                          ------------    ------------
LOSSES OF ENGELHARD/ICC IN EXCESS OF INVESTMENTS                             1,655,573       2,091,997
                                                                          ------------    ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
     Common stock, $.01 par value, authorized 50,000,000 shares, issued
         21,350,654 shares at June 30, 1997 and 21,282,354
         shares at December 31, 1996                                           213,507         212,824
     Additional paid-in capital                                             50,851,260      50,730,330
     Accumulated deficit                                                   (44,212,868)    (40,700,328)
     Less:  Treasury common stock, at cost, 66,227 shares                     (171,430)       (171,430)
                                                                          ------------    ------------
                   Total stockholders' equity                                6,680,469      10,071,396
                                                                          ------------    ------------
                       Total liabilities and stockholders' equity         $  8,523,893    $ 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              Six month endeded
                                                    -------------------------------------------------------------
                                                       June 30,        June 30,      June 30,          June 30,
                                                         1997            1996          1997              1996
                                                    ------------    ------------    ------------    -------------
<S>                                                 <C>             <C>             <C>             <C>
REVENUES:
     Interest  income                               $    163,928    $    225,859    $    299,072    $     308,890
EXPENSES:
     Equity interest in net loss of Engelhard/ICC      1,419,576       1,498,334       2,813,576        3,095,988
     General and administrative                          568,111         440,982         998,036          812,243
                                                    ------------    ------------    ------------    -------------
         Total expenses                                1,987,687       1,939,316       3,811,612        3,908,231
                                                    ------------    ------------    ------------    -------------

NET LOSS                                              (1,823,759)     (1,713,457)     (3,512,540)      (3,599,341)

CUMULATIVE PREFERRED STOCK
     DIVIDEND REQUIREMENTS                                     0               0               0          (49,655)
                                                    ------------    ------------    ------------    -------------
NET  LOSS  APPLICABLE TO COMMON STOCKHOLDERS        $ (1,823,759)   $(1,713,457)    $ (3,512,540)   $  (3,648,996)
                                                    ============    ============    ============    =============
NET  LOSS  PER COMMON SHARE                         $      (0.09)   $      (0.08)   $      (0.17)   $       (0.19)
                                                    ============    ============    ============    =============
WEIGHTED AVERAGE COMMON SHARES                        21,280,927      21,109,355      21,265,235       19,445,297
                                                    ============    ============    ============    =============
</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>
                                                                                         Six Months Ended
                                                                                             June 30,
                                                                                   -----------------------------
                                                                                       1997            1996
                                                                                   -----------------------------
<S>                                                                                       <C>               <C>
Cash Flows from Operating Activities:
     Net loss                                                                      $ (3,512,540)   $ (3,599,341)
     Adjustments to reconcile net loss to net cash used in operating activities:
         Depreciation and amortization                                                    1,963             795
         Equity interest in net loss of Engelhard/ICC                                 2,813,576       3,095,988
         (Increase) decrease in:
            Receivables                                                                       0         150,067
            Prepaid expenses and other                                                   88,480         107,223
         Increase (decrease) in:
            Accounts payable and accued expenses                                        100,379        (230,220)
                                                                                   ------------    ------------
                Net cash used in operating activities                                  (508,142)       (475,488)
                                                                                   ------------    ------------
Cash Flows from Investing Activities:
     Capital contributions to Engelhard/ICC                                          (3,250,000)     (5,000,000)
     Purchases of property, equipment and software                                       (7,010)              0
                                                                                   ------------    ------------
                Net cash used in investing activities                                (3,257,010)     (5,000,000)
                                                                                   ------------    ------------
Cash Flows from Financing Activities:
     Proceeds from issuance of common stock and warrants, net                           121,613      17,268,315
     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                               121,613      15,742,435
                                                                                   ------------    ------------
Net increase  in cash and cash equivalents                                           (3,643,539)     10,266,947

Cash and Cash Equivalents, Beginning of Period                                        9,641,114       1,573,475
                                                                                   ------------    ------------
Cash and Cash Equivalents, End of Period                                           $  5,997,575    $ 11,840,422
                                                                                   ============    ============
</TABLE>

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


                                       5


<PAGE>


                             ICC TECHNOLOGIES, INC.
      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) JUNE 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 six months ended June 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 six months
      ended June 30, 1997. The Company has incurred cumulative losses since
      inception of approximately $44.2 million through June 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 


                                       6
<PAGE>


      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

      The source of the cash utilized in the Company's operating and investing
      activities during the three and six months ended June 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          Six months      Six months
                                                      ended         ended              ended          ended 
                                                 June 30, 1997   June 30, 1996    June 30, 1997   June 30, 1996
                                                 -------------   -------------    -------------   -------------
<S>                                                 <C>             <C>              <C>             <C>
           Results of operations:
           Revenues                              $  3,630,840    $  2,720,649     $  6,308,939    $  4,796,748
           Cost of goods sold                       3,961,507       3,326,514        7,274,219       6,230,247
                                                    ---------       ---------        ---------       ---------
           Gross profit(loss)                        (330,667)       (605,865)        (965,280)     (1,433,499)
           Operating expenses:
             Marketing                                992,082         842,477        2,008,737       1,716,198
             Engineering                              518,430         304,991          809,787         583,846
             Research and development                 160,682         242,940          306,997         539,925
             General and administrative               722,266         890,435        1,300,547       1,704,399
                                                      -------         -------        ---------       ---------
           Loss from operations                     2,724,127       2,886,708        5,391,348       5,977,867
           Interest expense                           115,025         109,960          235,803         214,109
                                                      -------         -------          -------         -------
           Net loss                                $2,839,152      $2,996,668       $5,627,151      $6,191,976
                                                   ==========      ==========       ==========      ==========
</TABLE>


<TABLE>
<CAPTION>

                                                    As of           As of
           Balance sheet information:              June 30,       December 31,
                                                    1997            1996
                                               --------------    ------------
<S>                                            <C>             <C>
           Cash                                  $    443,923    $  1,192,997
           Receivables                              3,444,828       2,640,804
           Inventory                                4,261,993       4,570,952
           Other current assets                       310,777         278,762
           Property, plant and equipment            9,718,177       7,990,125
           Cash held in escrow                         14,248         307,476
           Other noncurrent assets                  1,994,160       1,978,115
                                                    ---------       ---------
              Total assets                       $ 20,188,106    $ 18,959,231
                                                 ============    ============

           Current liabilities                    $ 2,525,626     $ 2,248,209
           Short-term loan                          2,750,000       2,750,000
           Long-term debt                           8,720,939       8,642,330
           Partners' capital                        6,191,541       5,318,692
                                                    ---------       ---------
              Total liabilities and capital      $ 20,188,106     $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 $1,419,576 and $1,498,334 for the three months
      ended June 30, 1997 and 1996, respectively and $2,813,576 and $3,095,988
      for the six months ended June 30, 1997 and 1996, respectively. The
      Partnership has incurred cumulative losses of approximately $34.4 million
      since inception through June 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 $1,655,573 and $2,091,997 as of
      June 30, 1997 and December 31, 1996, respectively.

      Payables to the Partnership were $29,471 and $17,035 at June 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 June 30, 1997.

      The Company and Engelhard made capital contributions of $2.25 million each
      to the Partnership during the three months ended June 30, 1997 raising the
      total capital contributions contributed to the Partnership during the six
      months ended June 30, 1997 to $3.25 million each. Subsequent to June 30,
      1997, each partner made an additional capital contribution of $500,000 to
      the Partnership.

      In April 1997, the Company and the Partnership relocated their principal
      executive offices and related manufacturing facilities in Philadelphia to
      a 138,000 square foot facility located in Hatboro, Pennsylvania.


(4)   STOCK TRANSACTIONS:

      Equity Investments

      The Company received proceeds of approximately $9,000 and $126,000 from
      the exercise of stock options and warrants to purchase approximately 9,000
      and 67,000 shares of Common Stock in the three month periods ended June
      30, 1997 and 1996, respectively. The Company received proceeds of
      approximately $122,000 and $190,000 from the exercise of stock options and
      warrants to purchase approximately 68,300 and 103,500 shares of Common
      Stock in the six month period ended June 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 the 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.


                                       7

<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.

      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
      $127,129 to $568,111 for the three month period ended June 30, 1997,
      compared to $440,982 for the same period in 1996, and increased $185,793
      to $998,036 for the six month period ended June 30, 1997, compared to
      $812,243 for the same period in 1996. Such increase was primarily the
      result of increased consulting and professional fees. The Company's
      interest income decreased $61,931 to $163,928 for the three month period
      ended June 30, 1997, compared to $225,859 for the same period in 1996, and
      decreased $9,818 to $299,072 for the six month period ended June 30, 1997,
      compared to $308,890 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 June 30, 1997 increased
      $110,302 to $1,823,759, compared with the net loss of $1,713,457 for the
      same period in 1996. The increase in the net loss is primarily
      attributable to the increase in general and administrative expenses and
      the reduction in interest income which more than offset reductions in the
      Company's 50% share of the Partnership's loss. The Company's net loss for
      the six months ended June 30, 1996 decreased $86,801 to $3,512,540,
      compared with the net loss of $3,599,341 for the same period in 1996. This
      decrease in the net loss is primarily attributable to reductions in the
      Company's 50% share of the Partnership's loss, which more than offset
      increases in general and administrative expenses and lower interest
      income. Net loss per share of

                                       9
<PAGE>


      Common Stock increased to $.09 for the three month period ended June 30,
      1997, compared with $.08 per share for the same period of 1996. Such
      increase was attributable to the increase in net loss for the three month
      period ended June 30, 1997. Net loss per share of Common Stock decreased
      to $.17 for the six month period ended June 30, 1997, compared with $.19
      per share for the same period of 1996. Such decrease was primarily the
      result of decrease in net loss, the issuance of additional shares of
      Common Stock and elimination of preferred stock dividend requirements.

      The Partnership's revenue increased to $3,630,840 and $6,308,939 for the
      three and six months ended June 30, 1997, respectively, compared to
      $2,720,649 and $4,796,748 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 $2.1 and $3.4 million for the
      three and six months ended June 30, 1997, respectively, compared to
      approximately $1.4 and $2.6 million for the three and six months ended
      June 30, 1996, respectively. Sales of substrate increased to approximately
      $1.5 and $2.8 million for the three and six months ended June 30, 1997,
      respectively, compared to approximately $1.2 and $2.2 million for the
      three and six months ended June 30, 1996, respectively. The Partnership
      recorded a reduction in the gross loss to approximately $331,000 and
      $965,000 for the three and six months ended June 30, 1997, respectively,
      compared to a gross loss of approximately $606,000 and $1,433,000 for the
      same periods in 1996, respectively, due primarily to increased
      efficiencies in labor and material costs.

      The Partnership's operating expenses increased to $2,393,460 for the three
      months ended June 30, 1997 compared to $2,280,843 for the same periods in
      1996, respectively, due primarily to higher engineering and marketing
      costs offset by lower general and administrative costs. The Partnership's
      operating expenses increased to $4,426,068 for the six months ended June
      30, 1997 compared to $4,544,368 for the same periods in 1996 due to lower
      general and administrative and research and development costs offset by
      higher marketing and engineering 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
      reduction in gross loss offset the increase in operating expenses
      resulting in a decrease in the loss of operations to $2,724,127 for the
      three months ended June 30, 1997 as compared to $2,886,708 for the same
      period in 1996. The reduction in gross loss and in operating expenses
      resulting in a decrease in the loss of operations to $5,391,348 for the
      six months ended June 30, 1997 as compared to $5,977,867 for the same
      period in 1996.

      The Partnership's net loss decreased to $2,839,152 and $5,627,151 for the
      three and six months ended June 30, 1997, respectively, compared to
      $2,996,668 and $6,191,976 for the same period in 1996, respectively, due
      to the increased revenues and reduction in operating costs.

      The Partnership's backlog for equipment amounted to approximately $2.2
      million at July 24, 1996.

      Liquidity and Capital Resources

      The Company's cash and cash equivalents decreased $3,643,539 to $5,997,575
      as of June 30, 1997 as compared to $9,641,114 as of December 31, 1996. The
      decrease in cash is primarily attributable to the $3.25 million capital
      contribution made to the Partnership in the six month period ended June
      30, 1997.

      Net cash used in operating activities by the Company was $508,142 for the
      six months ended June 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
      $697,001 offset by net working capital provided of $188,859. The Company
      and Engelhard made capital contributions of $3,250,000 each to the
      Partnership in the six months ended June 30, 1997. Subsequent to June 30,
      1997, each partner made a capital contribution of $500,000 to the
      Partnership. 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.

                                       10

<PAGE>

      The Partnership's cash and cash equivalents decreased to $443,923 at June
      30, 1997 from $1,192,997 at December 31, 1996. The decrease was due to
      cash used in operating activities of approximately $5 million, resulting
      from the Partnership's net losses and working capital requirements, and
      cash used in investing activities of approximately $2.5 million related to
      purchases of machinery and equipment related primarily to the new
      production facility in Hatboro, Pennsylvania. Financing activities
      provided approximately $6.8 million which consisted primarily of $6.5
      million 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 $9,000 and $126,000 from
      the exercise of stock options and warrants to purchase approximately 9,000
      and 67,000 shares of Common Stock in the three month period ended June 30,
      1997 and 1996, respectively. The Company received proceeds of
      approximately $122,000 and $190,000 from the exercise of stock options and
      warrants to purchase approximately 68,300 and 103,500 shares of Common
      Stock in the six month period ended June 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,
      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
      six months ended June 30, 1997. The Company has suffered recurring losses
      accumulating to approximately $44.2 million since inception through June
      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
      $34.4 million since inception through June 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, 


                                       11
<PAGE>


      (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 June 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

                  The last Annual Meeting of Stockholders of ICC was held June
                  5, 1997. The record date for the meeting was April 10, 1997.
                  At such meeting, the holders of Common Stock, voting as a
                  single class, elected a Board of Directors for the Company
                  consisting of the following six persons: Robert Aders; Charles
                  Condy; Irwin Gross; Mark Hauser; Stephen Schachman; William
                  Wilson; Andrew Shapiro and Albert Resnick. These individuals
                  will serve on the Board of Directors until the next annual
                  meeting of stockholders or until their respective successors
                  have been duly elected and qualified.

                  The votes were cast as follows for the election of Directors:

<TABLE>
<CAPTION>

                  Name                                      For                            Withheld
                  ----                                      ---                            --------
<S>                                                         <C>                            <C>
                  Robert Aders                              19,943,170                     327,524
                  Charles Condy                             19,952,180                     318,514
                  Irwin L. Gross                            19,878,178                     392,516
                  Mark S. Hauser                            19,682,089                     588,605
                  Albert Resnick                            19,885,680                     385,014
                  Stephen Schachman                         19,962,580                     308,114
                  Andrew L. Shapiro                         19,883,982                     386,712
                  William A. Wilson                         19,952,230                     318,464
</TABLE>

                  The stockholders also ratified the selection of the firm of
                  Coopers & Lybrand LLP to be the Company's auditors for 1997.
                  There were 20,057,562 votes in favor of the selection, 105,762
                  votes against, and 107,370 in abstention.

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.

                  None


                                       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:     August 1, 1997                       BY: /s/ Irwin L. Gross
     ---------------------------------------       -------------------
                                                       Irwin L. Gross, Chairman
                                                       and President




DATE:    August 1, 1997                        BY: /s/ Manfred Hanuschek
     ---------------------------------------       --------------------
                                                       Manfred Hanuschek
                                                       Chief Financial Officer


<PAGE>