OMB Number: 3235-0416 
Expires: April 30, 2010

UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION

FORM 10-QSB

[ X ]            Quarterly Report Under Section
13 or 15(d) of the Securities Exchange Act of 1934 FOR THE QUARTERLY PERIOD ENDED July 31, 2007

OR

[    ] Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 
For the transition period from ____ to ____

Commission File Number 000-51790

ICP SOLAR TECHNOLOGIES, INC.

|NEVADA                                                             | 20-0643604                              
|------------------------------------------------------------------ | ----------------------------------------
|(State of other jurisdiction
    of incorporation or organization) | (IRS Employer Identification
    Number)

7075 Place Robert-Joncas Montreal, Quebec, Canada H4M 2Z2(Address of principal executive offices)

(514) 270-5770
(Registrant's telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.00001 par value

Check whether the Issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.YES [ X ]         NO [     ]

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [    
]         No [ X ]

Number of shares outstanding of the
registrant's class of common stock, as ofSeptember 19,
2007 was 29,800,000.

Transitional Small Business Disclosure Format
(Check one): Yes [     ]         No [ X ]

---



|                  |                                                                                           |   
|----------------- | ----------------------------------------------------------------------------------------- | --
|TABLE OF CONTENTS
|                  |                                                                                           |   
|                  | PART I. FINANCIAL
    INFORMATION                                                         |   
|                  |                                                                                           |   
|Item 1.           | Financial Statements                                                                      | 1 
|                  |                                                                                           |   
|                  | Consolidated Balance
    Sheet                                                            | 1 
|                  |                                                                                           |   
|                  | Statement of
    Shareholders Equity                                                     | 3 
|                  |                                                                                           |   
|                  | Statement of
    Operations and Comprehensive Loss                                        | 4 
|                  |                                                                                           |   
|                  | Statement of Cash
    Flows                                                               | 5 
|                  |                                                                                           |   
|                  | Notes to Financial
    Statements                                                         | 6 
|                  |                                                                                           |   
|Item 2.           | Managements
    Discussion and Analysis of Financial Condition and Results of Operations | 16
|                  |                                                                                           |   
|Item 3.           | Controls and
    Procedures                                                               | 25
|                  |                                                                                           |   
|                  | PART II. OTHER
    INFORMATION                                                            |   
|                  |                                                                                           |   
|Item 1.           | Legal Proceedings                                                                         | 26
|                  |                                                                                           |   
|Item 2.           | Unregistered Sales of
    Equity Securities and Use of Proceeds                           | 26
|                  |                                                                                           |   
|Item 3.           | Defaults upon Senior
    Securities                                                       | 26
|                  |                                                                                           |   
|Item 4.           | Submission of Matters
    to a Vote of Security Holders                                   | 26
|                  |                                                                                           |   
|Item 5.           | Other Information                                                                         | 26
|                  |                                                                                           |   
|Item 6.           | Exhibits                                                                                  | 27
|                  |                                                                                           |   

---

PART I
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited balance
sheets of ICP Solar Technologies Inc. as at July 31, 2007 and January 31, 2007,
related unaudited statements of operations and comprehensive loss, and cash
flows for the three and six months ended July 31, 2007 and 2006 have been
prepared by management in conformity with accounting principles generally
accepted in the United States. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the period ended July 31, 2007, are not
necessarily indicative of the results that can be expected for the fiscal year
ending January 31, 2008 or any other subsequent period.







---

ICP Solar Technologies Inc.Consolidated Interim Financial Statements 
July 31, 2007 
(Expressed in U.S. Funds) 
(Unaudited)RSM Richter LLP 
Chartered AccountantsMontreal





RSM Richter LLP is an independent member firm of RSM International,
 an affiliation of independent accounting and consulting firms.

---

ICP Solar Technologies Inc.Consolidated Interim Financial Statements 
July 31, 2007 
(Expressed in U.S. Funds) 
(Unaudited)



|Contents                                           |       
|-------------------------------------------------- | ------
|                                                   |       
|Balance Sheet                                      | 1 - 2 
|                                                   |       
|Statement of
    Shareholders' Equity              | 3     
|                                                   |       
|Statement of Earnings
    and Comprehensive Income | 4     
|                                                   |       
|Statement of Cash
    Flows                        | 5     
|                                                   |       
|Notes to Financial
    Statements                  | 6 - 15



---

ICP Solar Technologies Inc.Consolidated Interim Balance Sheet 
As At 
(Unaudited) 
(Expressed in U.S. Funds)



|                                                                   |   | July
    31, |   | January
    31,
|------------------------------------------------------------------ | - | ------------ | - | ---------------
|                                                                   |   | 2007         |   | 2007           
|                                                                   |   |              |   |                
|Assets                                                             |   |              |   |                
|Current                                                            |   |              |   |                
|                                                                   |   |              |   |                
|Cash                                                               | $ | 8,303        | $ | 238,509        
|Term deposit                                                       |   | 505,240      |   | 505,301        
|Accounts receivable                                                |   | 1,808,382    |   | 1,610,884      
|Income taxes recoverable                                           |   | 80,560       |   | 573,587        
|Inventories                                                        |   | 2,665,331    |   | 2,405,386      
|Prepaid expenses                                                   |   | 25,560       |   | 228,433        
|Loan receivable                                                    |   | 500,000      |   | -              
|                                                                   |   | 5,593,376    |   | 5,562,100      
|Property and Equipment(note 4)                                     |   | 96,005       |   | 534,384        
|Investment in Epod Solar (Wales)
    Ltd. (note 8)                 |   | 1            |   | -              
|Loan Receivable,less
    unamortized discount of $528,818 (note 8) |   | 1,471,182    |   | -              
|                                                                   | $ | 7,160,564    | $ | 6,096,484      

- 1 -

---





|                                                             |   | July 31,    |   | January 31,
|------------------------------------------------------------ | - | ----------- | - | -----------
|                                                             |   | 2007        |   | 2007       
|                                                             |   |             |   |            
|Liabilities                                                  |   |             |   |            
|Current                                                      |   |             |   |            
|                                                             |   |             |   |            
|Bank indebtedness (note 5)                                   |   | 1,142,685   |   | 1,159,689  
|Accounts payable and accrued liabilities                     |   | 982,942     |   | 1,285,056  
|Current portion of long-term debt                            |   | -           |   | 61,493     
|Current portion of government grants payable                 |   | 25,344      |   | 114,480    
|Current portion of obligation under capital lease            |   | -           |   | 47,013     
|Loan payable, director                                       |   | 273,098     |   | 501,301    
|                                                             |   |             |   |            
|                                                             |   | 2,424,069   |   | 3,169,032  
|                                                             |   |             |   |            
|Long-Term Debt                                               |   | -           |   | 116,115    
|Convertible Notes,
    less unamortized discount of $659,373 |   |             |   |            
|(January 31, 2007 - $753,656) (note
    10)                  |   | 1,840,627   |   | 1,746,344  
|                                                             |   |             |   |            
|Commitment and Contingencies                                 |   |             |   |            
|                                                             |   |             |   |            
|Shareholders' Equity                                         |   |             |   |            
|                                                             |   |             |   |            
|Capital Stock(note 6)                                        |   | 290         |   | 290        
|                                                             |   |             |   |            
|Warrants Exercised, Shares Not Issued(note 7)                |   | 727,210     |   | -          
|                                                             |   |             |   |            
|Additional Paid-In Capital(note 7)                           |   | 6,958,615   |   | 6,482,923  
|                                                             |   |             |   |            
|Accumulated Other Comprehensive Loss                         |   | (798,469)   |   | (800,719)  
|                                                             |   |             |   |            
|Accumulated Deficit                                          |   | (3,991,778) |   | (4,617,501)
|                                                             |   |             |   |            
|                                                             |   | 2,895,868   |   | 1,064,993  
|                                                             |   |             |   |            
|                                                             | $ | 7,160,564   | $ | 6,096,484  

See accompanying notes

- 2 -

---

ICP Solar Technologies Inc.Consolidated Interim Statement of Shareholders' Equity 
For the Six Month Period Ended July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)

Warrants
    
    
    
    AccumulatedExercised,
    
    Additional
    
    Other
    
    
    
    TotalCommon Stock
    
    Shares Not
    
    Paid-In
    
    Comprehensive
    
    Accumulated
    
    Shareholders'Number
    
    Amount
    
    Issued
    
    Capital
    
    Loss
    
    Deficit
    
    EquityBalance - January 31,
    2007
    29,000,000
    $
    290
    
    -
    $
    6,482,923
    $
    (800,719)
    $
    (4,617,501)
    $
    1,064,993Warrants exercised, shares
    not issued
    -
    
    -
    $
    727,210
    
    (177,210)
    
    -
    
    -
    
    550,000Stock options
    issued
    -
    
    -
    
    -
    
    153,701
    
    -
    
    -
    
    153,701Warrants issued
    -
    
    -
    
    -
    
    499,201
    
    -
    
    -
    
    499,201Foreign currency
    translation adjustment
    -
    
    -
    
    -
    
    -
    
    2,250
    
    -
    
    2,250Net earnings
    -
    
    -
    
    -
    
    -
    
    -
    
    625,723
    
    625,723Balance - July
    31, 2007
    29,000,000
    $
    290
    $
    727,210
    $
    6,958,615
    $
    (798,469)
    $
    (3,991,778)
    $
    2,895,868See accompanying notes

- 3 -

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ICP Solar Technologies Inc.Consolidated Statement of Earnings and Comprehensive Income 
(Unaudited) 
(Expressed in U.S. Funds)

|                                                        | For the
    Three-Month Period |             | For the
    Six-Month Period
|------------------------------------------------------- | ------------------------------ | ----------- | ----------------------------
|                                                        | Ended July
    31,             |             | Ended July
    31,          
|                                                        |                                |             |                             
|                                                        |                                | 2007        |                             
|Net
    Sales                                           | $                              | 1,690,536   | $                           
|Cost of sales                                           |                                | 844,902     |                             
|Gross Margin                                            |                                | 845,634     |                             
|                                                        |                                |             |                             
|Expenses                                                |                                |             |                             
|                                                        |                                |             |                             
|Selling, general and administrative                     |                                | 1,918,998   |                             
|Depreciation                                            |                                | 10,669      |                             
|Research and development                                |                                | 10          |                             
|Foreign exchange (gain) loss                            |                                | 75,216      |                             
|                                                        |                                |             |                             
|                                                        |                                | 2,004,893   |                             
|                                                        |                                |             |                             
|Operating Loss                                          |                                | (1,159,259) |                             
|                                                        |                                |             |                             
|Interest expense                                        |                                | (142,146)   |                             
|Interest income                                         |                                | 5,827       |                             
|Discount given on loan receivable                       |                                | (618,658)   |                             
|Write-down of loan receivable                           |                                | -           |                             
|Accretion of discount on convertible notes              |                                | (16,319)    |                             
|Accretion of discount on loan receivable                |                                | 89,840      |                             
|Gain on disposition of subsidiary
    (note 8)          |                                | 2,818,207   |                             
|                                                        |                                |             |                             
|Net Earnings (Loss)                                     |                                | 977,492     |                             
|                                                        |                                |             |                             
|Other Comprehensive Income (Loss)                       |                                |             |                             
|                                                        |                                |             |                             
|Foreign currency translation
    adjustment             |                                | 12,093      |                             
|                                                        |                                |             |                             
|Comprehensive Income (Loss)                             | $                              | 989,585     | $                           
|                                                        |                                |             |                             
|Basic Weighted Average Number of
    Shares Outstanding |                                | 29,000,000  |                             
|                                                        |                                |             |                             
|Basic and Diluted Earnings (Loss)
    Per Share(note 9) |                                | 0.03        |                             

See accompanying notes

- 4 -

---

ICP Solar Technologies Inc.Consolidated Statement of Cash Flows
(Unaudited) 
(Expressed in U.S. Funds)

|                                                              | For the
    Three-Month Period |             | For the
    Six-Month Period
|------------------------------------------------------------- | ------------------------------ | ----------- | ----------------------------
|                                                              | Ended July
    31,             |             | Ended July
    31,          
|                                                              |                                |             |                             
|                                                              |                                | 2007        |                             
|Funds Provided
    (Used)                                     |                                |             |                             
|                                                              |                                |             |                             
|Operating
    Activities                                      |                                |             |                             
|                                                              |                                |             |                             
|Net earnings (loss)                                           | $                              | 977,492     | $                           
|Stock options issued                                          |                                | 153,701     |                             
|Warrants issued                                               |                                | 499,201     |                             
|Depreciation                                                  |                                | 10,669      |                             
|Discount given on loan receivable                             |                                | 618,658     |                             
|Write-down of property and equipment                          |                                | -           |                             
|Foreign exchange (gain) loss                                  |                                | 75,216      |                             
|Gain on disposal of subsidiary                                |                                | (2,818,207) |                             
|Write-down of loan receivable                                 |                                | -           |                             
|Accretion of discount on convertible notes                    |                                | 16,319      |                             
|Accretion of discount on loan receivable                      |                                | (89,840)    |                             
|                                                              |                                | (556,791)   |                             
|Changes in non-cash operating elements
    of working capital |                                | 271,611     |                             
|                                                              |                                | (285,180)   |                             
|                                                              |                                |             |                             
|Financing
    Activities                                      |                                |             |                             
|                                                              |                                |             |                             
|Bank indebtedness                                             |                                | (413,229)   |                             
|Long-term debt                                                |                                | (160,987)   |                             
|Loan payable, director                                        |                                | (270,399)   |                             
|Loan payable                                                  |                                | -           |                             
|Obligation under capital lease                                |                                | (36,228)    |                             
|Government grants payable                                     |                                | (6,209)     |                             
|Warrants exercised, shares not issued                         |                                | 550,000     |                             
|                                                              |                                | (337,052)   |                             
|                                                              |                                |             |                             
|Investing
    Activities                                      |                                |             |                             
|                                                              |                                |             |                             
|Additions to property and equipment                           |                                | (668)       |                             
|Loan receivable                                               |                                | 150,000     |                             
|Proceeds from disposition of subsidiary                       |                                | 1           |                             
|Term deposit                                                  |                                | 5,547       |                             
|                                                              | $                              | 154,880     | $                           
|                                                              |                                |             |                             
|Effect of Foreign
    Exchange on Cash Balances               |                                | 339,381     |                             
|                                                              |                                |             |                             
|Decrease in Cash                                              |                                | (127,971)   |                             
|                                                              |                                |             |                             
|Cash, Beginning of Period                                     |                                | 136,274     |                             
|                                                              |                                |             |                             
|Cash, End of Period                                           | $                              | 8,303       | $                           

See accompanying notes

- 5 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)1.
Basis of
Presentation

The accompanying unaudited financial
statements have been prepared in accordance with U.S. generally accepted
accounting principles for interim financial information and item 310(b) of
Regulation S-B and are prepared using the same accounting policies as outlined
in note 3 of ICP Solar Technologies Inc. ("ICP Solar") financial statements for
the year ended January 31, 2007 except for those discussed in note 3 below.
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.
Operating results for the three and six months ended July 31, 2007 are not
necessarily indicative of the results that may be expected for the year ended
January 31, 2008. The unaudited financial statements should be read in
conjunction with the financial statements and notes thereto included in the ICP
Solar audited financial statements for the years ended January 31, 2007 and
2006.
2.
Going Concern

The accompanying financial statements
have been prepared assuming the Company will continue as a going concern. The
Company has reported an accumulated deficit of $3,991,778 as at July 31, 2007
($4,617,501 as at January 31, 2007). To date, these losses have been financed
principally through capital stock, long-term debt and debt from related parties.
Additional capital and/or borrowings will be necessary in order for the Company
to continue in existence until attaining and sustaining profitable operations.
Management has continued to develop a
strategic plan to develop a management team, maintain reporting compliance and
establish contracts with clients. Management anticipates generating revenue
through manufacturing and commercializing its products during the next year. The
Company has commenced the process of raising additional capital. Should the
Company be unable to continue as a going concern, it may be unable to realize
the carrying value of its assets and to meet its liabilities as they become due.
3.

Summary of Significant Accounting Policies

Income Taxes

On February 1, 2007, the Company
adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) No. 48,
''Accounting for Uncertainty in Income Taxes - an Interpretation of FASB
Statement No. 109'' (FIN 48), which clarifies the accounting for uncertainty in
tax positions. This Interpretation requires that the Company recognize in its
financial statements, the impact of a tax position, if the position is more
likely than not for being sustained on audit, based on the technical merits of
the position. The adoption of FIN 48 did not have a material impact on our
consolidated financial statements. The Company is currently subject to a four
year statute of limitations by major tax jurisdictions. The Company and its
subsidiaries file income tax returns in Canada, UK, United States, Asia and
Australia.

- 6 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)

3.

Summary of Significant Accounting Policies
(Contd)

Investments

The Company records its investments
in which it does not exercise significant influence using the cost method.

Change in Functional Currency

It is managements view that the
United States dollar best portrays the economic results of the worldwide
operations and thereby best achieves the objectives of foreign currency
translation. As a result, effective May 9, 2007 the functional currency was
changed from the Canadian dollar to the United States dollar to reflect the
increased exposure to the US dollar as a result of the sale of 85% of the
Companys share in its UK subsidiary. The method used to translate the results
and financial position for items and transactions denominated in non-US
currencies are as follows:

Monetary items  at exchange rates in
effect at the balance sheet date;

Non-monetary items  at exchange
rates in effect on the dates of the transactions;

Revenue and expenses  at average
exchange rates prevailing during the period, except for inventories and
amortization which are translated at rates prevailing when the related assets
were acquired.

Gains and losses arising from foreign
currency translation are included in income.

The Company applied the functional
currency change on a prospective basis as of May 9, 2007. This change in
functional currency did not have a material effect on the accounts of the
Company for the three months and six months ended July 31, 2007.

- 7 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)4.

Property and Equipment

| |                             |   | Cost    |   | Accumulated  |   | July
    31, 2007 |   | January
    31, 2007
| | --------------------------- | - | ------- | - | ------------ | - | ----------------- | - | --------------------
| |                             |   |         |   | Amortization |   | Net
    Carrying  |   | Net
    Carrying    
| |                             |   |         |   |              |   | Amount            |   | Amount              
| |                             |   |         |   |              |   |                   |   |                     
| | Machinery and
    equipment | $ | 485,423 | $ | 440,273      | $ | 45,150            | $ | 483,613             
| | Furniture and fixtures      |   | 122,690 |   | 102,402      |   | 20,288            |   | 18,240              
| | Computer equipment          |   | 221,593 |   | 191,026      |   | 30,567            |   | 32,531              
| |                             |   |         |   |              |   |                   |   |                     
| |                             | $ | 829,706 | $ | 733,701      | $ | 96,005            | $ | 534,384             

On May 9, 2007, property and
equipment with a net book value of $399,081 was disposed of as part of the
disposition of net assets of U.K. factory as disclosed in Note 8.

5.

Bank
Indebtedness

The terms of the banking agreement
require the Company to comply with certain financial covenants. At July 31,
2007, the Company was not in compliance with the debt to equity ratio and the
minimum shareholders equity and could be required to repay on demand all
amounts due under the agreement. The Company has not received any default notice
and is seeking to obtain the necessary waivers or changes to the agreement. As
security for this credit facility the Company has pledged substantially all of
its assets.

6.

Capital Stock

| | 100,000,000 shares authorized,
    $0.00001 par value |   |    
| | ----------------------------------------------------- | - | ---
| | Issued -                                              |   |    
| | 29,000,000 Class "A" shares                           | $ | 290

- 8 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)7.

Additional Paid-In Capital

Stock Options

On May 18, 2007, for the first time,
the Company granted a total of 1,832,500 options to certain of its employees and
directors to purchase common shares. The stock options are exercisable at a
range of $2.25 to $2.35 per share and have a vesting period of 24 months with
25% of the options granted becoming exercisable every six months commencing from
the date of grant. The options granted expire May 18, 2017.

As a result of the grant, the Company
recorded a compensation expense of $153,701 in the three-month period ended July
31, 2007.

The stock options were accounted for
at their fair value as determined by the Black-Scholes-Merton valuation model,
using the following assumptions:

| | Expected volatility                                      |   | 85%       
| | -------------------------------------------------------- | - | ----------
| | Expected life                                            |   | 5.75 years
| | Risk-free interest
    rate                              |   | 5%        
| | Dividend yield                                           |   | Nil       
| | Weighted average fair value of options
    at grant date | $ | 1.82      

Transactions related to outstanding stock options are detailed as follows:

| |                                        |           | Weighted Average   | Weighted Average
| | -------------------------------------- | --------- | ------------------ | ----------------
| |                                        |           | Exercise Price Per | Remaining       
| |                                        | Number    | Share              | Contractual Life
| | Granted                                | 1,832,500 | 2.25               | 10 years        
| | Expired                                | -         | -                  |                 
| | Exercised                              | -         | -                  |                 
| | Forfeited                              | (382,500) | 2.25               | 10 years        
| | Balance  as at July 31, 2007          | 1,450,000 | 2.25               | 10 years        
| | Options, exercisable, at end of period | -         | -                  |                 

- 9 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)7.Additional Paid-In Capital (Contd)

Warrants

On May 18, 2007, the Company issued,
as consulting fees, to a member of the immediate family of the President and CEO
of the Company, 100,000 stock purchase warrants exercisable into common shares
at $2.25 per share. These warrants may be exercised in whole or in part at any
time after October 3, 2007 and expire on May 18, 2012. As a result, the Company
recorded an expense of $79,872 during the three month period ending July 31,
2007.

On May 18, 2007, the Company issued,
as consulting fees, to a Director and former CFO of the Company 525,000 stock
purchase warrants exercisable into common shares at $2.25 per share. These
warrants may be exercised in whole or in part, at any time after October 3, 2007
and expire on May 18, 2012. As a result, the Company recorded an expense of
$419,329 during the three-month period ending July 31, 2007.

The stock purchase warrants were
accounted for at their fair value of $898,563. An expense of $499,201 was
recorded during the quarter ended July 31, 2007 and the balance, amounting to
$399,362, is to be recorded as an expense in the third quarter ending October
31, 2007.

The fair value of the warrants issued
was determined by the Black-Scholes-Merton valuation model, using the following
assumptions:

| | Expected volatility         |   | 85%    
| | --------------------------- | - | -------
| | Expected life               |   | 3 years
| | Risk-free interest
    rate |   | 5%     
| | Dividend yield              | $ | Nil    

A summary of the activity in the
Companys warrants during the period is presented below:

| |                                     | Number of |   | Weighted Average
| | ----------------------------------- | --------- | - | ----------------
| |                                     | Warrants  |   | Exercise Price  
| | Outstanding, as at January 31, 2007 | 5,150,000 | $ | 1.00            
| | Transactions during the period:     |           |   |                 
| | Issued                              | 625,000   | $ | 2.25            
| | Exercised                           | (550,000) | $ | 1.00            
| | Expired                             | -         |   | -               
| | Outstanding, end of period          | 5,225,000 | $ | 1.15            

- 10 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)7.
Additional
Paid-In Capital (Contd)

The following table provides
additional information with respect to outstanding warrants at July 31, 2007:Number of
    ExerciseGrant Date
    Expiry Date
    Warrants
    PriceMay 15, 2006
    November 2007
    1,950,000
    $ 1.00July 11, 2006
    January 2008
    2,500,000
    $ 1.00October 6, 2006
    October 2008
    150,000
    $ 1.00May 18, 2007
    May 2012
    625,000
    $ 2.255,225,000On July 26, 2007, the Company
received $550,000 for the exercise of 550,000 warrants granted on May 15, 2006.
As at July 31, 2007, these shares had yet to be issued from treasury and were
subsequently issued September 7, 2007.
8.
Sale of 85% of
Shares of ICP UK

On May 9, 2007, the Company signed a
Share Purchase Agreement (the "Agreement") with ISE LLC ("ISE"). Under the terms
of the Agreement, ISE acquired 85% of the Companys shares of ICP UK (name
changed to Epod Solar (Wales) Ltd. on June 26, 2007) for an aggregate amount of
$3,000,000. On May 10, 2007, the Company and ISE signed an Amendment to the
Agreement ("Amendment"), revising the modalities of payment. As per the terms of
the Amendment, ISE shall pay the Company a total of $1.00 for the shares. In
addition, ISE will pay the Company an amount equivalent to $3,000,000
representing the principal amount on a loan owed to the Company by ICP UK as
follows:
a)
$150,000 received
upon signing of the Agreement and $350,000 received in kind in the form of solar
panels;
b)
$500,000 on
November 29, 2007; and
c)
The balance shall
be repaid as monthly payments for a period of 13.94 months as of January 1,
2008. Each monthly payment shall be equal to $143,500 per month and shall be
made either in cash, or in kind in the form of solar panels, at the option of
the Company or its subsidiaries, as per the terms of the Agreement.
- 11 -
ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)8.
Sale of 85% of
Shares of ICP UK (Contd)

From the signing of this Share
Purchase Agreement until the Monthly Payment Commencement Date, the Company
shall acquire 7,000 solar panels per month from the Acquirer, at a price per
solar panel (Panel Price) commencing at $24.60 and decreasing as the total cost
per solar panel decreases, the sale of the panels shall be on a C.O.D./F.O.B.
basis until such time as the Acquirer has secured an accounts receivable line of
credit in which case, payment terms shall be net 60. The Company shall have the
option to acquire up to 7,000 solar panels per month from the Acquirer at the
Panel Price for a six month period commencing from the date of the last Monthly
Payment.
The sale of the shares resulted in a
gain of $2,818,207 calculated as follows:Proceeds of disposal
    $
    1Current assets
    
    (589,874)Property and equipment
    
    (399,081)Current liabilities
    
    468,595Long-term liabilities
    
    3,338,566Gain on disposition of
    subsidiary
    $
    2,818,2079.
Basic and
Diluted Earnings Per Share

Basic and diluted earnings per share
is calculated based on the weighted average number of shares outstanding during
the period. The dilution effect of the warrants is insignificant. Share based
compensation and convertible notes have been excluded from the calculation of
diluted earnings per share since they are anti-dilutive.
10.
Segmented
Information

The distribution of the revenue of
the Company by geographic location is approximately as follows:

| |               |   | For the Three-Month        |   | For the Six-Month Period
| | ------------- | - | -------------------------- | - | ------------------------
| |               |   | Period Ended July 31, 2007 |   | Ended July 31, 2007     
| | North America | $ | 1,250,997                  | $ | 2,715,852               
| | Europe        |   | 405,728                    |   | 1,207,045               
| | Asia          |   | 33,811                     |   | 258,653                 
| | Africa        |   | -                          |   | 129,326                 

- 12 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)11.
Segmented
Information (Contd)

The distribution of the property and
equipment by geographic location is approximately as follows:July 31, 2007
    
    January 31, 2007North America
    $
    96,005
    $
    
    105,552Europe
    
    -
    
    428,83212.
Comparative
Figures

Certain reclassifications of accounts
for the three month period ended July 31, 2006 and the six month period ended
July 31, 2006 have been made to facilitate comparison with the current periods.13.
Subsequent Events
Acquisition of WES Power Technology
Inc.On August 27, 2007 the Company
announced that it had executed a Share Purchase Agreement (The "Agreement")
with Gerry Heffernan, Michael Snow, and Philip Crowley, majority shareholders of
Wes Power Technology Inc. ("WES") ("WES Shareholders"), pursuant to which the
Company has indicated its intention to purchase from the WES Shareholders all of
the issued and outstanding shares of WES, located in St. Johns, Newfoundland.
WES is a designer and manufacturer of power management systems for renewable
energy sources.
Under the terms of the Agreement, the
Company shall acquire 100% of all of the shares of WES for the following
consideration:
(a)
An amount of $1.00
shall be paid by the Company to WES;
(b)
On the closing
date, the Company will issue WES shareholders 250,000 warrants to purchase
common shares of the Company on a one for one basis. The Warrants will have a
maturity date of five (5) years from date of issuance and an exercise price
equal to the closing share price of the Company on the last trading day prior to
the date of issuance. The warrants shall be convertible within five (5) years
from date of issuance following registration with the SEC. The related
restricted shares shall become available for sale at the earliest on October 31,
2007; and
(c)
Execution of
employment agreements by the Company or one of its subsidiaries with each of the
WES shareholders, to the satisfaction of all parties.

- 13 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)13.

Subsequent Events (Contd)

Options

On August 21, 2007, the Company
granted, as consulting fees, a total of 255,000 options to purchase common
shares. The stock options are exercisable into common shares at $1.80 per share
at the date of grant. The options expire on August 21, 2009. As a result of the
grant, the Company will record a consulting fee expense of $355,521 in the three
month period ending October 31, 2007.

The stock options will be accounted
for at their fair value as determined by the Black-Scholes-Merton valuation
model, using the following assumptions:

| | Expected volatility                                      | 83%    
| | -------------------------------------------------------- | -------
| | Contractual life                                         | 2 years
| | Risk-free interest rate                                  | 4.40%  
| | Dividend yield                                           | Nil    
| | Weighted average fair value of options
    at grant date | $ 1.39 

Warrants

On August 21, 2007, the Company
granted, as consulting fees, a total of 250,000 warrants to purchase common
shares. The warrants are exercisable into common shares at $1.80 per share at
the date of grant. The warrants expire on August 21, 2009. As a result of the
grant, the Company will record a consulting fee of $348,550 in the three month
period ending October 31, 2007.

The fair value of the warrants issued
will be determined by the Black-Scholes-Merton valuation model, using the
following assumptions:

| | Expected volatility     | 83%    
| | ----------------------- | -------
| | Contractual life        | 2 years
| | Risk-free interest rate | 4.40%  
| | Dividend yield          | Nil    

- 14 -

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ICP Solar Technologies Inc.Notes to Consolidated Interim Financial Statements 
July 31, 2007 
(Unaudited) 
(Expressed in U.S. Funds)13.

Subsequent Events (Contd)

Convertible Notes

The terms of the convertible notes
require the Company to comply with certain covenants. The Company had failed to
pay the first interest payment amounting to $200,000 due on June 30, 2007 and
therefore was in default. On September 19, 2007, the Company will issue 69,445
common shares from treasury as payment of the interest as per the terms of the
convertible notes. Also, on September 19, 2007, 250,000 of the notes were
converted into common shares and a request to convert an additional 1,400,000
notes into common shares was received from the convertible note holder. The
Company has not received any other notices. The classification of the
convertible notes has remained long-term.





- 15 -

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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONSForward Looking Statements

The Managements Discussion and Analysis ("MD&A") is designed
to assist investors in understanding the nature and the importance of the
changes and trends, as well as the risks and uncertainties associated with the
Companys operations and financial position. Some sections of this report
contain forward-looking statements that, because of their nature, necessarily
involve a number of known and unknown risks and uncertainties, including
statements regarding our capital needs, business strategy and expectations, and
the factors described under "Risk Factors" contained in Item 1 of the Companys
Form 10KSB Annual Report for the period ended January 31, 2007, which are
incorporated herein by reference. Any statements contained herein that are not
statements of historical facts may be deemed to be forward-looking statements.
In some cases, forward-looking statements can be identified by terminology such
as "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe,"
"estimate," "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. The Companys actual and future results could
therefore differ materially from those indicated or underlying these
forward-looking statements.

Although the Company deems the expectations reflected in
these forward-looking statements to be reasonable, the Company cannot provide
any guarantee as to the materialization of the expectations reflected in these
forward-looking statements.

The following information should be read in conjunction with
the unaudited consolidated financial statements for the three and six month
periods ended July 31, 2007 and 2006 and notes thereto. Unless otherwise
indicated or the context otherwise requires, the "Company," "ICP," "we," "us,"
and "our" refer to ICP Solar Technologies Inc. and its subsidiaries.

Compliance with Generally Accepted Accounting Principles

Unless otherwise indicated, the financial information presented below, including
tabular amounts, is expressed in US dollars and prepared in accordance with
accounting principles generally accepted in the United States ("GAAP").

Use of Estimates 
The preparation of financial statements in conformity with GAAP requires that
management make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities as at
the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Critical items of the financial statements
that require the use of estimates include the determination of the allowance for
doubtful accounts, the determination of the allowance for inventory
obsolescence, the determination of the useful life of fixed and intangible
assets for amortization calculation purposes, the assumptions for fixed asset
impairment tests, the determination of the allowance for guarantees, the
determination of the allowance for income taxes, the assumptions used for the
purposes of calculating the stock-based compensation expense, the determination
of the fair value of financial instruments, the determination of the fair value
of the assets and liabilities acquired on business acquisitions and the implicit
fair value of goodwill.

The financial statements include estimates based on currently
available information and managements judgment as to the outcome of future
conditions and circumstances.

Changes in the status of certain facts or circumstances could
result in material changes to the estimates used in the preparation of the
financial statements and actual results could differ from the estimates and
assumptions.

Changes in Accounting Principles

Income Taxes

On February 1, 2007, the Company
adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) No. 48,
''Accounting for Uncertainty in Income Taxes - an Interpretation of FASB
Statement No. 109'' (FIN 48), which clarifies the accounting for uncertainty in
tax positions. This Interpretation requires that the Company recognize in its
financial statements, the impact of a tax position, if the position is more
likely than not for being sustained on audit, based on the technical merits of
the position. The adoption of FIN 48 did not have a material impact on our
consolidated financial statements. The Company is currently subject to a four
year statute of limitations by major tax jurisdictions. The Company and its
subsidiaries file income tax returns in Canada, UK, United States, Asia and
Australia.

-16-

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Changes in Accounting Principles

Share-Based Payments

The Company has accounted for share
based payments in accordance with the provisions of FAS 123R "Share based
payments (Revised)" and accordingly has recognized in its financial statements
share based payments at their fair value. In addition, the Company has
recognized in the financial statements an expense based on the grant date fair
value of stock options granted to employees. The expense is to be recognized on
a straight line basis over the vesting period and the offsetting credit recorded
in additional paid in capital. Upon exercise of options, the consideration paid
together with the amount previously recorded as additional paid in capital will
be recognized as capital stock. When options are forfeited because the service
requirements are not met, any expense previously recorded will be reversed in
the period of forfeiture. The Company uses the Black- Scholes-Merton option
pricing model to determine the fair value of the options.

Change in Functional Currency

It is managements view that the
United States dollar best portrays the economic results of the worldwide
operations and thereby best achieves the objectives of foreign currency
translation. As a result, effective May 9, 2007 the functional currency was
changed from the Canadian dollar to the United States dollar to reflect the
increased exposure to the US dollar as a result of the sale of 85% of the
Companys share in its UK subsidiary. The method used to translate the results
and financial position for items and transactions denominated in non-US
currencies are as follows:

Monetary items  at exchange rates
in effect at the balance sheet date;

Non-monetary items  at exchange
rates in effect on the dates of the transactions;

Revenue and expenses  at average
exchange rates prevailing during the period, except for inventories and
amortization which are translated at rates prevailing when the related assets
were acquired.

Gains and losses arising from
foreign currency translation are included in income.

The Company applied the functional
currency change on a prospective basis as of May 9, 2007. This change in
functional currency did not have a material effect on the accounts of the
Company for the three months and six months ended July 31, 2007.

No accounting changes were adopted during fiscal 2007.

Overview

Company Background

Headquartered in Montreal, Canada, ICP operates in the solar
energy industry. ICP manufactures, markets, and sells solar panel based products
to the consumer goods, Original Equipment Manufacturers ("OEM") and integrated
building materials markets through its distribution channels in over 100
countries.

We develop, manufacture and market solar power products that
provide reliable and environmentally clean electric power throughout the world.
Solar power products use interconnected photovoltaic cells to generate
electricity from sunlight. Solar power products can provide a cost-competitive,
reliable alternative for powering highway call boxes, microwave stations,
portable highway road signs, remote street or billboard lights, vacation homes,
rural homes in developed and developing countries, water pumps and battery
chargers for recreational vehicles and other consumer applications. Furthermore,
solar power products can provide on-grid customers with a clean, renewable
source of alternative or supplemental electricity.

Our plan of operation for the next twelve months is to engage
in our marketing and sales efforts. We plan to expand our current distribution
depth within the markets of North America, Europe and Japan for our consumer
goods segment through the marketing of our internal brand Sunsei TM ,
as well as licensed brand Coleman®.

-17-

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Our immediate goal is the development of our thin film
amorphous solar cell which can be seamlessly integrated into roofing lines for
homes, buildings and other structures. We are currently developing a
distribution channel and technology partnerships to launch products based on the
thin film amorphous solar cell technology in 2007. Although there can be no
assurances, we plan to deliver on a sustainable growth strategy across each of
our main targets. We also intend to increase our addressable markets, further
sales and solidify our brand through strategic partnerships with best practice
distribution partners worldwide. Strategic partnerships for both distribution
channel and technology are expected to be key drivers of our expansion plans.

Reorganization of the Corporation

On September 29, 2006, ICP Solar
Technologies Inc. ("ICP") entered into a share exchange agreement with ICP Solar
Technologies Inc. (formerly FC Financial Services Inc.) ("ICP Solar"), an
inactive public shell company, for the acquisition by ICP Solar of all the
issued and outstanding shares of ICP.

On December 12, 2006, ICP Solar
Technologies Inc. (formerly FC Financial Services Inc.) changed its year end
from November 30 to January 31.

Under accounting principles
generally accepted in the United States, the share exchange is considered to be
a capital transaction in substance, rather than a business combination. That is,
the share exchange is equivalent to the issuance of stock by ICP for the net
monetary assets of ICP Solar accompanied by a recapitalization, and is accounted
for as a change in capital structure. Accordingly, the accounting for the share
exchange is identical to that resulting from a reverse acquisition, except no
goodwill is recorded. Under reverse takeover accounting, the post reverse
acquisition comparative historical financial statements of the legal acquirer,
ICP Solar are those of the legal acquiree, ICP, which is considered to be the
accounting acquirer.

We structured the acquisition of
ICP to enable ICP Stockholders to receive tax-rollover treatment in Canada.
Under Canadian law, when a stockholder disposes of shares, the disposal is
considered to be a deemed disposition of the shares and therefore is a taxable
event unless the shares are exchanged for the shares of an equal value in
another Canadian company.

All of the ICP shares, through a
series of transaction, were exchanged for exchangeable shares of ICP Solar's
wholly-owned subsidiary (1260491 Alberta Inc.). The exchangeable shares are
exchangeable for an equivalent number of common shares of ICP Solar, common
shares transferred simultaneously to a trustee as the exchangeable shares were
issued. Until such time as the holders of the exchangeable shares wish to
exchange their shares for ICP Solar shares, the ICP Solar shares are held in
trust by a trustee on behalf of the exchangeable shareholders. The trustee shall
be entitled to the voting rights in ICP Solar as stated in the terms of the
exchange and voting agreement and shall exercise these voting rights according
to the instructions of the holders of the exchangeable shares on a basis of one
vote for every exchangeable share held.

These financial statements reflect
the accounts of the balance sheets, the results of operations and the cash flows
of ICP at their carrying amounts, since it is deemed to be the accounting
acquirer.

The results of operations, the cash
flows and the assets and liabilities of ICP Solar have been included in these
consolidated financial statements since September 29, 2006, the acquisition
date. Amounts reported for the periods prior to September 29, 2006 are those of
ICP.

The net assets of ICP Solar
acquired on September 29, 2006 are as follows:

| | Cash                                     | $ | 67,285     
| | ---------------------------------------- | - | -----------
| | Accounts receivable                      |   | 2,148      
| | Prepaid expenses                         |   | 70         
| | Loan receivable                          |   | 4,964,524  
| | Property and equipment                   |   | 4,887      
| | Accounts payable and accrued liabilities |   | (131,655)  
| | Convertible notes                        |   | (1,642,391)
| | Net Assets Acquired                      | $ | 3,264,868  

As a condition to the closing of
the transaction, ICP Solar (formerly FC Financial) committed to raising $5
million of financing. The loan receivable represents advances made pre-closing
to ICP for working capital by ICP Solar (formerly FC Financial) as funds were
received from the capital raise.

The transaction costs related to the above share
exchange amounted to $271,466 and were charged to additional paid-in capital.

-18-

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Going Concern

The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. The Company has reported
an accumulated deficit of $3,991,778 as at July 31, 2007 (January 31, 2007 -
$4,617,501). To date, these losses have been financed principally through
capital stock, long-term debt and debt from related parties. Additional capital
and/or borrowings will be necessary in order for the Company to continue in
existence and attaining profitable operations.

Management has continued to develop a strategic plan to
develop a management team, maintain reporting compliance and establish contracts
with clients. Management anticipates generating revenue through manufacturing
and commercializing its products during the next year. The Company has commenced
the process of raising additional capital. Should the Company be unable to
continue as a going concern, it may be unable to realize the carrying value of
its assets and to meet its liabilities as they become due.

Sale of 85% of Shares of ICP UK

On May 9, 2007, the Company signed
a Share Purchase Agreement (the "Agreement") with ISE LLC ("ISE"). Under the
terms of the Agreement, ISE acquired 85% of all of the Companys shares of ICP
UK (name changed to EPOD Solar (Wales) Ltd. on June 26, 2007) for an aggregate
amount of US $3 million. On May 10, 2007, the Company and ISE signed an
Amendment to the Agreement ("Amendment"), revising the modalities of payment. As
per the terms of the Amendment, ISE shall pay the Company a total of $1.00 for
the shares. In addition, ISE will pay the Company an amount equivalent to
$3,000,000 representing the principal amount on a loan owed to the Company by
ICP UK as follows:

a)

US $150,000
received upon signing of the Agreement and $350,000 received in kind in the form
of solar panels;

b)

US $500,000 on
November 29, 2007;

c)

The balance
shall be repaid as monthly payments for a period of 13.94 months as of January
1, 2008. Each monthly payment shall be equal to US $143,500 per month and shall
be made either in cash, or in kind in the form of solar panels, at the option of
the Company or its subsidiaries, as per the terms of the Agreement.



From the signing
of this Share Purchase Agreement until the Monthly Payment Commencement Date,
the Company shall acquire 7,000 solar panels per month from the Acquirer, at the
price per solar panel commencing at $24.60 and decreasing down to the Panel
Price as the total cost per solar panel decreases, the sale of the panels shall
be on a C.O.D./F.O.B. basis until such time as the Acquirer has secured an
accounts receivable line of credit in which case, payment terms shall be net 60.
The Company shall have the option to acquire up to 7,000 solar panels per month
from the Acquirer at the Panel Price for a six month period commencing from the
date of the last Monthly Payment.



The sale
resulted in a gain of $2,818,207 from the disposition of the net assets of the
UK factory as follows:

| | Proceeds of Disposal                  |   | 1         | 
| | ------------------------------------- | - | --------- | 
| | Current assets                        | $ | (589,874) | 
| | Property & Equipment                  |   | (399,081) | 
| | Current liabilities                   |   | 468,595   | 
| | Long-term liabilities                 |   | 3,338,566 | 
| |                                       |   |           | 
| | Gain on Disposition of
    Subsidiary | $ | 2,818,207 | 

-19-

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Selected Consolidated Quarterly Information(in thousands of $, except per-share amounts) (unaudited)
Period Ended July 31,Three Months
    Six Months2007
    2006
    2007
    2006Revenues
    1,691
    2,174
    4,311
    4,843Gross margin
    846
    530
    2,049
    1,791Expenses
    2,005
    988
    3,216
    2,043Operating Earnings
    (Loss)
    (1,159)
    (458)
    (1,167)
    (251)Net
    earnings (Loss)
    977
    (522)
    626
    (363)Earnings (loss) per
    Class A share-basic and diluted
    .03
    (.03)
    .02
    (.02)Weighted average number ofClass A shares outstanding basic (in
    thousands)
    29,000,000
    20,000,000
    29,000,000
    20,000,000Cash dividends paid on Class A shares
    -
    -
    -
    -Balance Sheet Data
July 31,
    January 31,2007
    2007Total assets
    7,161
    6,096Shareholders equity
    2,896
    1,065Total
    interest-bearing debt (1) 
    3,256
    3,631Cash and short-term investments
    513
    744(1)
Including long-term debt and its
current portion, bank advances and loans, interest bearing portion of directors
loan payable, capital lease obligations and their current portion as well as
convertible notes.
Seasonality

ICPs business is subject to certain seasonal cycles,
especially during the summer period corresponding to the part of the second
quarter and part of the third quarter, traditionally the slowest of the
Companys fiscal year, and the month of December as a result of the end-of-year
holidays.
-20-
Operating Results for the Three Month Period Ended July
31, 2007

Net Sales
During the second quarter ended July 31, 2007, ICPs consolidated net sales posted a decrease of 22% or $483 thousand to $1.69
million, down from $2.17 million for the three month period ended July 31, 2006.
The reduction in sales in the second quarter of 2007 is due to several factors.
Firstly, strong demand during the second quarter of fiscal 2006 was due to, and
made up for, the shortage of supply experienced by our customers in the first
quarter of 2006. Secondly, during part of the second quarter of 2007 we
experienced some downtime as we reorganized and increased the size of our North
American sales division as part of our continuing plan to expand the depth of
our OEM and consumer markets. Lastly we undertook this initiative during the
summer months, a traditionally slow period, particularly in Europe, where our
customer base has expanded this year to date compared to last year.
By geographic location, sales in North America accounted for
approximately 74% of total sales, Europe 24%, and Asia 2%.
Gross Margin
The gross margin increased by 60% or $316 thousand to $846
thousand for the quarter. The gross profit margin as a percentage of sales
worked out to 50%, compared to 24.4% the previous year. This significant
increase reflects initiatives implemented since the beginning of the fiscal year
to tighten controls, streamline operational procedures and reduce operational
costs.
Operating expenses
Selling and general and administrative expenses
increased to $1.9 million from $843 thousand a year earlier. During the quarter,
for the first time, the company granted stock options and warrants to employees,
directors and certain consultants as described in further detail in Note 7,
Additional Paid-In Capital in the accompanying Financial Statements. A total of
1,832,500 stock options and 625,000 warrants were issued. The compensation
expenses related to these issues recognized in the second quarter amounted to
$653 thousand and accounts for approximately 60% of the increase of $1.1 million
in selling, general, and administrative expenses. The greater part of the
balance of the increase, amounting to $256 thousand, represents increased
professional fees of $160 thousand related to compliance, disclosure and
governance as a public company. Increased sales initiatives including investment
in new key personnel amounted to $96 thousand. Research and development expenses
were nil in the first quarter compared to $13 thousand in the corresponding
period a year earlier as the Company continued to concentrate its efforts on
commercializing the results of prior R&D efforts.
Including depreciation of $11 thousand and the loss on
foreign exchange of $75 thousand, operating losses amounted to $1.16
million compared to losses of $458 thousand for the three month period ended
July 31, 2006.
At the beginning of the quarter ended July 31, 2007, ICP sold
85% of its factory located in the UK as further described in note 8, Sale of 85%
of shares of ICP UK in the accompanying Financial Statements. The sale resulted
in a net gain of $2.82 million and was recorded in the period. An amount of $619
thousand has been recorded in the period as a discount on the corresponding loan
receivable. Revenue of $90 thousand representing the accretion of the discount
for the period is also reflected. After giving effect to these items and net
interest expense of $136 thousand as well as the accretion expense of discount
on convertible notes of $16 thousand, the net earnings for the three month
period ended July 31, 2007 amounted to $977 thousand compared to a net loss of
$522 thousand for the corresponding period a year earlier.
The earnings per Class A share - basic and diluted amounted
to $0.03 on a weighted average of 29,000,000 outstanding shares, compared with a
loss per share (basic and diluted) of $0.03 on 20,000,000 shares the previous
year.
Principal Cash Flows for the Three Month Period Ended July
31, 2007
Operating activities before net change in non-cash
working capital items used cash flows of $557 thousand during the period
compared to $389 thousand a year earlier. Net change in non-cash working capital
items related to operations generated cash flows of $272 thousand for the three
months ended July 31, 2007 compared to a use of cash of $163 thousand for the
first quarter ended July 31, 2006. After net changes in non-cash working capital
balances, operating activities used net cash flows of $285 thousand, compared
with a use of cash of $552 thousand for the corresponding period the previous
year.
Financing activities used cash flows of $337 thousand,
primarily as a result of repayment of bank indebtedness of $413 thousand,
repayment of long-term debt of $161 thousand, repayment of directors loan of
$270 thousand and receipt of $550 thousand from the exercise of warrants. For
the period ended July 31, 2006, financing activities from continuing operations
provided cash flows of $561 thousand primarily as a result loans contracted in
the amount of $1.3 million offset by repayment of bank indebtedness of $756
thousand.
-21-
Investing activities generated cash flows of $155
thousand principally from the repayment of the first installment of the loan
related to the disposition of the UK factory. Of the initial payment of $500
thousand called for in the agreement, $150 thousand was received in cash and the
balance amounting to $350 thousand was received in inventory.
After also adding the $339 thousand exchange gain on cash
denominated in foreign currency, the aggregate cash inflows and outflows for the
three month period ended July 31, 2007 used net cash flows of $128 thousand
compared to nil for the same period last year. ICP ended the period with cash
of $8.3 thousand, up from $nil as at July 31, 2006.
Operating Results for the fist Six Months Ended July 31,
2007

Net Sales
During the six months ended July 31, 2007, ICPs consolidated net sales posted a decrease of 11% or $532 thousand to $4.31
million, down from $4.84 million for the six month period ended July 31, 2006.
The reduction in sales reflects principally events of the second quarter of
2007. Strong demand during the second quarter of fiscal 2006 was due to, and
made up for, the shortage of supply experienced by our customers in the first
quarter of 2006. Secondly, during part of the second quarter of 2007 we
experienced some downtime as we reorganized and increased the size of our North
American sales division as part of our continuing plan to expand the depth of
our OEM and consumer markets. Lastly we undertook this initiative during the
summer months, a traditionally slow period, particularly in Europe, where our
customer base has expanded this year to date compared to last year.
By geographic location for the first six months ended July
31, 2007, sales in North America accounted for approximately 63% of total sales,
Europe 28%, Asia 6% and Africa 3%.
Gross Margin
The gross margin increased by 14.4% or $258 thousand to $2.0
million during the first six months of fiscal 2007. The gross profit margin as a
percentage of sales worked out to 47.5%, compared to 37% for the first six
months of the previous year. This significant increase reflects initiatives
implemented since the beginning of the fiscal year to tighten controls,
streamline operational procedures and reduce operational costs.
Operating expenses
Selling and general and administrative expenses increased
by approximately 79% to $3.1 million from $1.76 million for the first six months
a year earlier. During the quarter ending July 31, 2007, for the first time, the
company granted stock options and warrants to employees, directors and certain
consultants as described in further detail in Note 7, Additional Paid-In Capital
in the accompanying Financial Statements. A total of 1,832,500 stock options and
625,000 warrants were issued. The compensation expenses related to these issues
recognized in the second quarter amounted to $653 thousand and accounts for
approximately 47% of the increase during the six months ended July 31, 2007 in
selling, general, and administrative expenses. The greater part of the balance
of the increase, amounting to $562 thousand, represents increased professional
fees of $292 thousand related to compliance, disclosure and governance as a
public company. Increased sales initiatives, including investment in new key
personnel amounted to $270 thousand. Research and development expenses were
practically nil in the first six months compared to $26 thousand for the
corresponding period a year earlier as the Company continued to concentrate its
efforts on commercializing the results of prior R&D efforts.
Including depreciation of $89 thousand and the gain on
foreign exchange of $13 thousand, operating losses amounted to $1.17
million compared to losses of $251 thousand for the six month period ended July
31, 2006.
As mentioned previously, at the beginning of the quarter
ended July 31, 2007, ICP sold 85% of its factory located in the UK as further
described in note 8, Sale of 85% of shares of ICP UK in the accompanying
Financial Statements. The sale resulted in a net gain of $2.82 million and was
recorded in the period. Terms of the sale also called for a repayment by the
purchaser in the amount of $3 million of the loans owing to the other related
entities in the ICP group. As the total of these loans amounted to $3.2 million
as of April 30, 2007, a write down of loan receivable of $229 thousand relating
to the sale of the UK factory was recorded and is reflected in the six month
period ended July 31, 2007. An amount of $619 thousand has been recorded in the
period as a discount on the loan receivable. Revenue of $90 thousand
representing the accretion of the discount for the period is also reflected.
After giving effect to these items and net interest expense of $174 thousand as
well as the accretion of discount on convertible notes of $94 thousand, the net
earnings for the six month period ended July 31, 2007 amounted to $626 thousand
compared to a net loss of $363 thousand for the corresponding period a year
earlier.
The earnings per Class A share - basic and diluted amounted
to $0.02 on a weighted average of 29,000,000 outstanding shares compared with a
loss per share (basic and diluted) of $0.02 on 20,000,000 shares the previous
year.
-22-
Principal Cash Flows for the Six Month Period Ended July
31, 2007
Operating activities before net change in non-cash
working capital items used cash flows of $607 thousand during the period
compared to $44 thousand a year earlier. Net change in non-cash working capital
items related to operations generated cash flows of $211 thousand for the six
months ended July 31, 2007 compared to a use of cash of $1.26 million for the
first six months ended July 31, 2006. After net changes in non-cash working
capital balances, operating activities used net cash flows of $396 thousand,
compared with a use of cash of $1.3 million for the corresponding period the
previous year.
Financing activities for the six months ended July 31,
2007 used cash flows of $71 thousand, primarily as a result of repayment of bank
indebtedness of $17 thousand, repayment of long-term debt of $188 thousand,
repayment of directors loan of $269 thousand, repayment of government grants of
$97 thousand, repayments of obligations under capital lease of $50 thousand and
receipt of $550 thousand from the exercise of warrants. For the six months ended
July 31, 2006, financing activities from continuing operations provided cash
flows of $1.43 million primarily as a result loans contracted in the amount of
$1.5 million offset by repayment of bank indebtedness of $79 thousand.
Investing activities generated cash flows of $132
thousand principally from the receipt of $150 thousand, representing a portion
of the first installment of $500 thousand on the loan related to the disposition
of the UK factory (the balance amounting to $350 thousand was received in
inventory) and purchases of fixed assets of $18 thousand during the first three
months of fiscal 2007.
After also adding the $104 thousand exchange gain on cash
denominated in foreign currency, the aggregate cash inflows and outflows for the
six month period ended July 31, 2007 used net cash flows of $230 thousand
compared to nil for the same period last year. ICP ended the period with cash
of $8.3 thousand, up from $nil as at July 31, 2006.
Financial Position as at July 31, 2007

Total assets amounted to $7.2 million as at July 31, 2007,
compared to $6.1 million as at January 31, 2007. Reflected in this increase are
items related to the sale of the factory in the UK, notably, an increase of $2.0
million in loans receivable (net of the unamortized portion of the discount on
the loan of $529 thousand) and a decrease of $438 thousand in property and
equipment. The balance of this $1.1 million increase is explained by the
decrease in cash of $231 thousand and income taxes recoverable of $493 thousand
and an increase of $197 thousand in trade receivables and $260 thousand in
inventories.
Working capital totaled $3.2 million as at July 31, 2007
for a current ratio of 2.3:1 compared with working capital of $2.4 million as at
January 31, 2007 for a current ratio of 1.76:1.
The liability component of the convertible notes amounted to
$1.8 million as at July 31, 2007, compared with $1.7 million at the end of
January 31, 2007. Interest-bearing debt (consisting of long-term debt and
its current portion, convertible notes, bank indebtedness, and obligations under
capital lease) totaled approximately $3.3 million as at July 31, 2007.
Considering the accumulated losses to date and the level of total debt, the
Company is not in compliance with certain ratios contained in the covenants
related to banking agreements and could be required to repay on demand all
amounts due ($1.1 Million as of July 31, 2007) under these agreements. The
Company has not received any default notice from its lenders thus far. The
Company is seeing to obtaining the necessary waivers or changes to these credit
agreements from its lenders.
Shareholders equity amounted to $2.9 million, compared
to $1.1 million as at January 31, 2007. The increase is attributable to the net
earnings for the period of $626 thousand, the exercise of warrants for $550
thousand, and the increase in paid-in capital of $653 thousand related to
issuance of stock options and warrants.
-23-Subsequent Events
Acquisition of WES Power Technology
Inc.

On August 27, 2007 the Company
announced that it had executed a Share Purchase Agreement with Gerry Heffernan,
Michael Snow, and Philip Crowley, majority shareholders of Wes Power Technology
Inc. ("WES") ("WES Shareholders"), pursuant to which the Company has indicated
its intention to purchase from the WES Shareholders all of the issued and
outstanding shares of WES, located in St. Johns, Newfoundland. Wes Power
Technology Inc. is a designer and manufacturer of power management systems for
renewable energy sources.
On August 27, 2007, the Company and
the WES Shareholders signed a share purchase agreement (the "Agreement"). Under
the terms of the Agreement, the Company shall acquire 100% of all of the shares
of WES for the following consideration
(a) An amount of $1.00 shall be
paid by the Company to WES;
(b) Issuance to WES Shareholders,
on the Closing Date, by the Company of 250,000 warrants to purchase common
shares of the Company. The Warrants will have a maturity date of five (5) years
from date of issuance and an exercise price equal to the closing share price of
the Company on the last trading day prior to the date of issuance. The warrants
shall be convertible within five (5) years from date of issuance following
registration with the SEC. The related restricted shares shall become available
for sale at the earliest on October 31, 2007;
(c) Execution of employment
agreements by the Company or one of its subsidiaries with each of the WES
Shareholders, to the satisfaction of all parties.
Options

On August 21, 2007, the Company
granted, as consulting fees, a total of 255,000 options to purchase common
shares. The stock options are exercisable into common shares at $1.80 per share
at the date of grant. The options expire on August 21, 2009. As a result of the
grant, the Company will record a consulting fee expense of $355,521 in the three
month period ending October 31, 2007.
Warrants

On August 21, 2007, the Company
granted, as consulting fees, a total of 250,000 warrants to purchase common
shares. The warrants are exercisable into common shares at $1.80 per share at
the date of grant. The warrants expire on August 21, 2009. As a result of the
grant, the Company will record a consulting fee of $348,550 in the three month
period ending October 31, 2007.
Convertible Notes

The terms of the convertible notes
require the Company to comply with certain covenants. The Company had failed to
pay the first interest payment amounting to $200,000 due on June 30, 2007 and
therefore was in default. On September 19, 2007, the Company will issue 69,445
common shares from treasury as payment of the interest as per the terms of the
convertible notes. Also, on September 19, 2007, 250,000 of the notes were
converted into common shares and a request to convert an additional 1,400,000
notes into common shares was received from the convertible note holder. The
Company has not received any other notices. The classification of the
convertible notes has remained long-term.
-24-ITEM 3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and ProceduresOur management, with the participation of our principal
executive officer and principal financial officer, has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of the end of the
period covered by this quarterly report on Form 10-QSB. Based on that
evaluation, our principal executive officer and principal financial officer have
concluded that, as of that date, our disclosure controls and procedures were
designed to ensure that the information required to be disclosed in reports that
we file or submit under the Securities Exchange Act is recorded, processed,
summarized and reported within the time periods specified in applicable SEC
rules and forms were effective.
Changes in Internal Controls over Financial Reporting

There have been no significant changes in our internal
controls over financial reporting identified in connection with the evaluation
required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Securities
Exchange Act that occurred during the period covered by this report that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
-25-PART II
OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSICP had been named defendant in a legal action by a former
employee for an approximate amount of $263,000. On June 15, 2007 this claim has
been resolved for an amount of CAD $25,000.
ICP is being audited by governmental authorities for
corporate tax return previously filed for fiscal year 2003 and 2004. Management
believes that in the event that the Canadian subsidiary would be reassessed,
there are sufficient tax losses carry-forwards to offset any amounts payable.
The Company is unable to estimate the liability relating to interests and
penalties from these reassessments. Accordingly, no amount has been recorded in
the books and records.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS

This Item is not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

This Item is not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

No matter was submitted during the first six months ended
July 31, 2007, to a vote of security holders, through the solicitation of
proxies or otherwise.ITEM 5. OTHER INFORMATIONThis Item is not applicable.
-26-ITEM 6. EXHIBITS
Exhibit
    Description of ExhibitsNumber3.1
    Amended Articles of Incorporation. (2)3.2
    Bylaws, as amended. (7)4.1
    Form of Share Certificate. (1)10.1
    Term Sheet between FC
    Financial Services Inc. ("FC") and the stockholders of ICP Solar
    Technologies Inc. (4)10.2
    Loan Agreement between FC and ICP Solar
    Technologies Inc. (4)10.3
    Share Pledge Agreement
    dated May 16, 2006 among FC, Sass Peress, Peress Family Trust, Arlene Ades
    and Joel Cohen. (4)10.4
    Limited Recourse Guarantee dated May 16, 2006
    between Sass Peress, Arlene Ades, Joel Cohen and Peress Family Trust in
    favor of FC. (4)10.5
    Promissory Note dated May
    16, 2006 of ICP Solar Technologies Inc. in favor of FC. (4)10.6
    Amendment 1 to Loan Agreement between FC and
    ICP Solar Technologies Inc dated July 4, 2006. (5)10.7
    Limited Recourse Guarantee
    dated July 4, 2006 between Sass Peress, Arlene Ades, Joel Cohen and Peress
    Family Trust in favorof FC. (5)10.8
    Promissory Note dated July 4, 2006 of ICP
    Solar Technologies Inc. in favor of FC. (5)10.9
    Form of 8% Convertible
    Note. (6)10.10
    Share Purchase Agreement dated September 29,
    2006 among FC Financial Services Inc., ICP Solar Technologies Inc., Sass
    Peress, the Peress Family Trust, Arlene Ades,
    Joel Cohen, the Sass Peress Family Trust, Eastern Liquidity Partners Ltd.,
    Taras Chebountchak, Orit Stolyar, and 1260491 Alberta Inc. (8)10.11
    Exchangeable Share Support
    Agreement dated September 29, 2006 among FC Financial Services Inc., 1260491
    Alberta Inc.,Equity Transfer & Trust
    Company, Sass Peress, the Peress Family Trust, Arlene Ades, Joel Cohen, the
    Sass Peress Family Trust, and Eastern Liquidity
    Partners. (8)10.12
    Exchange and Trust Voting Agreement dated
    September 29, 2006 among FC Financial Services Inc., 1260491 Alberta Inc.,
    Equity Transfer & Trust Company, Sass Peress,
    Joel Cohen, Arlene Ades, the Sass Peress Family Trust, the Peress Family
    Trust, Eastern Liquidity Partners Ltd., Taras
    Chebountchak, and Orit Stolyar. (8)10.13
    Lease Agreement dated March
    22, 2006 between 2631-1746 Quebec Inc. and ICP Global Technologies Inc.10.14
    Lease Agreement dated October 10, 2003 among
    Mardan (Norwich) Limited, ICP Solar Technologies UK Limited and ICP
    Global Technologies Inc.10.15
    Employment Agreement dated
    November 6, 2005 between ICP Global Technologies Inc. and Arlene Ades.10.16
    Consulting Agreement dated November 24, 2004
    between ICP Solar Technologies Inc. and Michael Di Domenico.10.17
    Consulting Agreement dated
    March 1, 2006 between ICP Solar Technologies Inc. and 6100864 Canada Inc.10.18
    Management Agreement dated May 23, 2006
    between ICP Solar Technologies Inc. and Les Enterprises Guy Lever Inc and
    Management Agreement Addendum dated August
    23, 2006 between ICP Solar Technologies Inc. and Les Enterprises Guy Lever Inc.10.19
    Fixed Rate Asset Loan dated
    July 28, 2006 between ICP Solar Technologies Inc. and HSBC Equipment Finance
    (UK) Limited.10.20
    Line of Credit between ICP Global
    Technologies Inc. and Royal Bank of Canada dated May 6, 200510.21
    Binding letter of intent
    between ICP Global Technologies Inc. and Tejas Solares . (9)10.22
    Binding letter of intent between ICP Solar
    Technologies Inc. and Discover Power Inc. (10)10.23
    Share Purchase Agreement
    dated May 9, 2007 between ICP Solar Technologies Inc. and ISE Solar LLC.
    (11)10.24
    Amendment dated May 10, 2007 to Share
    Purchase Agreement dated May 9, 2007 between ICP Solar Technologies Inc. and
    ISESolar LLC. (12)10.25
    Share Purchase
    Agreement, dated August 27, 2007, between ICP Solar Technologies Inc. and
    WES Power Technologies Inc.(13)31.1
    Certification of Principal Executive
    Officer and Principal Financial Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of2002.32.1
    Certification of
    Principal Executive Officer and Principal Financial Officer pursuant to 18
    U.S.C. Section 1350, as adopted
    pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.99.1
    Audit Committee Charter. (3)99.2
    Disclosure Committee
    Charter. (3)

-27-

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Notes

(1)
Filed with the SEC as an exhibit
to our Registration Statement on Form SB-2 originally filed on March 11, 2004,
as amended.
(2)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on December 1, 2005.
(3)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on February 7, 2006.
(4)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on May 22, 2006.
(5)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on July 11, 2006.
(6)
Filed with the SEC as an exhibit
to our Quarterly Report on Form 10-QSB filed on July 17, 2006.
(7)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on September 5, 2006.
(8)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on October 5, 2006.
(9)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on December 20, 2006.
(10)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on January 18, 2007.
(11)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on May 10, 2007.
(12)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on May 16, 2007.
(13)
Filed with the SEC as an exhibit
to our Current Report on Form 8-K filed on August 28, 2007

-28-

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