INNOCAP, INC.

(a development stage company)

Statements of Cash Flows

Nine Months Ended October 31, 2006 and 2005

(Unaudited)

See accompanying notes to the financial statements.

INNOCAP, INC.

NOTE 1--BASIS OF PRESENTATION(A DEVELOPMENT STATE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q.  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 adjustments) considered necessary for a fair presentation have been included.  Operating results for the three and nine-month period ended October 31, 2006 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2007. For further information, refer to the financial statements and footnotes thereto included in the Company's Form 10-K for the fiscal year ended January 31, 2006.(Unaudited)

NOTE 21 -- ORGANIZATION

Innocap, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on January 23, 2004. In June 2004, it filed a notice with the United States Securities and Exchange Commission of its intent to elect in good faith, within 90 days from the date of such filing, to be regulated as a Business Development Company under the Investment Company Act of 1940 and be subject to Sections 54 through 65 of said Act. The Company has not generated significantany revenues from its planned principal operations and is considered a development stage company as defined in Statement of Financial Accounting Standards No. 7.

The Company will likely elect to cease being a Business Development Company by the end of Februarysometime in 2007, at which time it will become a consulting firm.

NOTE 2--BASIS OF PRESENTATION

The preparation ofaccompanying unaudited financial statements have been prepared in conformityaccordance with accounting principles generally accepted in the United States requiresof America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q.  Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, to make estimates and assumptionsall adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the three-month period ended April 30, 2007 are not necessarily indicative of the results that affectmay be expected for the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date offiscal year ending January 31, 2008. For further information, refer to the financial statements as well asand footnotes thereto included in the reported amount of revenues and expenses duringCompany's Form 10-K for the reporting period. Actual results could differ from these estimates.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.fiscal year ended January 31, 2007.

NOTE 3 -- GOING CONCERN

The accompanying financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  At October 31, 2006April 30, 2007 the Company had negative working capital of $73,500,$75,000, accumulated deficit of $143,100,$144,600, and no revenues. Management intends to attempt to raise additional funds by way of a public or private offering.  WhileThese factors, among others, indicate that the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect.   The ability of the Company to continueCompany's continuation as a going concern is dependent on the Company’supon its ability to further implement its business plan and generate revenues.achieve profitable operations or obtain adequate financing. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necess arynecessary should the Company be unable to continue in existence.

The Company intends to cease its efforts to become a Business Development Company and will become a consulting firm by the end of Februarysometime in 2007, at which time it will aggressively seek consulting engagements. It will use outside consultants to assist it to perform and complete any engagements obtained. If the Company is unable to obtain consulting engagements or financing or if the revenue from the consulting engagements or financing it does obtain are insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

ITEM 2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Certain matters discussed in this interim report on Form 10-Q are forward-looking statements. Such forward-looking statements contained in this annual report involve risks and uncertainties, including statements as to:

·

our future operating results,

·

our business prospects,

·

our contractual arrangements and relationships with third parties,

·

the dependence of our future success on the general economy and its impact on the industries in which we may be involved,

·

the adequacy of our cash resources and working capital, and

·

other factors identified in our filings with the SEC, press releases and other public communications.

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe," “anticipate,” “expect,” “estimate” or words of similar meaning.  Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements.  Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated as of the date of this Form 10-Q.  Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements included herein are only made as of the date of this report and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Operations

We are currently a development stage company.  To date, our efforts have been limited primarily to organizational activities, planning to be a Business Development Company and preparation of documents to be filed with the Securities and Exchange Commission.  We have no resources and have realized no revenues to date.  We now believe that we will be unable to raise capital through the sales of shares pursuant to Regulation E of the 1933 Act. We will, therefore, cease our efforts to become a Business Development Company and become a business consulting firm.firm sometime in 2007, at which time we will aggressively seek consulting engagements. We will start seeking consultinguse outside consultants to assist us to perform and complete any engagements in February 2007.obtained. If we are unable to obtain consulting engagements or financing or if the revenue from the consulting engagements or financing that we do obtain are insufficient to cover any operating losses we may incur, we may substantiallysub stantially curtail or terminate our operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute t hethe interests of existing stockholders.

We cannot offer any assurances that we will be successful in our efforts to become a consulting firm.

Liquidity

As a corporate policy,we will not incur any cash obligations that we cannot satisfy with known resources, of which there are currently none except to meet regulatory requirements.  We believe that the perception that many people have of a public company may make it likely that they will accept restricted securities from a public company as consideration for indebtedness to them than they would from a private company.  We have not performed any studies of this matter.  Our conclusion is based on our own observations.  However, there can be no assurances that we will be successful in being able to satisfy obligations through the issuance of restricted shares of our common stock.  Additionally, issuance of restricted shares would necessarily dilute the percentage of ownership interest of our stockholders.

We have not obtained any source of funding. Private capital, if sought, will be sought from former business associates of our founder or private investors referred to us by those business associates. To date, we have not sought any funding source and have not authorized any person or entity to seek out funding on our behalf.

Recent Accounting Pronouncements

ManagementIn June 2003, the Securities and Exchange Commission (“SEC”) adopted final rules under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Commencing with our annual report for the year ended January 31, 2008, we will be required to include a report of management on our internal control over financial reporting. The internal control report must include a statement.

§

of management’s responsibility for establishing and maintaining adequate internal control over our financial reporting;

§

of management’s assessment of the effectiveness of our internal control over financial reporting as of year end;

§

of the framework used by management to evaluate the effectiveness of our internal control over financial reporting; and

§

that our independent accounting firm has issued an attestation report on management’s assessment of our internal control over financial reporting, which report is also required to be filed.

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurement (“SFAS 157”). SFAS 157 defines fair value and establishes a framework for measuring fair value in accordance with generally accepted accounting principles. SFAS 157 also expands the disclosures related to the fair value measurements used to value assets and liabilities. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. We are currently evaluating whether the adoption of SFAS 157 will have a material impact on our financial statements.

In September 2006, FASB issued SFAS No. 158, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No 87, 88, 106 and 132(R) (“SFAS 158”).  SFAS 158 requires the recognition of the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in the statement of financial position and the recognition of changes in that funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires the measurement of the funded status of a plan as of the date of the year-end statement of financial position. The Company does not believeanticipate that any recently issued, but not yet effective accounting pronouncements, if adopted, wouldthe adoption of this statement will have a material effect on the accompanyingCompany’s financial condition and results of operations.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 permits entities to choose to measure, on an item-by-item basis, specified financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been elected are required to be reported in earnings at each reporting date. SFAS 159 is effective for fiscal years beginning after November 15, 2007, the provisions of which are required to be applied prospectively.

In September 2006, the SEC staff issued Accounting Bulletin No. 108,Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”). SAB 108 was issued in order to eliminate the diversity in practice surrounding how public companies quantify financial statement misstatements. SAB 108 requires that registrants quantify errors using both a balance sheet and income statement approach and evaluate whether either approach results in a misstated amount that, when all relevant quantitative factors are considered, is material.

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48,Accounting for Uncertainties in Income Taxes(“FIN 48”).  FIN 48 clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN 48 is effective for financial statements as of January 1, 2007.  The application of FIN 48 did not have a material impact on our financial position and results of operations.

The Financial Accounting Standards Board, the Emerging Issues Task Force (the “EITF”) and the Securities and Exchange Commission have issued certain other accounting pronouncements and regulations that will become effective in subsequent periods; however, management of the Company does not believe that any of those pronouncements would have significantly affected the Company’s financial accounting measurements or disclosures had they been in effect prior to April 30, 2007, and it does not believe that any of those pronouncements will have a significant impact on the Company’s financial statements at the time they become effective.

Critical Accounting Policies

The preparation of financial statements and related notes requires us to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the financial statements.

Financial Reporting Release No. 60 requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements.  There are no critical policies or decisions that rely on judgments that are based on assumptions about matters that are highly uncertain at the time the estimate is made.  

EmployeesSeasonality

Other than our current sole officer, weWe do not yet have any employees, and do not anticipate having any other employees other than administrative personnela basis to determine whether our business will be seasonal.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements, as defined in the future.Regulation S-B Section 303.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Since we have no assets and do not have any investments, there is no quantitative information or market risk that has any impact on our present business.

ITEM 4

CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation of the effectiveness of the design and operation of the Company’sWe maintain disclosure controls and procedures was carried out by the Company under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer. Based on(as defined in Exchange Act Rule 13a-15(e)) that evaluation, the Chief Executive Officer and Chief Financial Officer concludedare designed to assure that the Company’s disclosure controls and procedures have been designed and are being operated in a manner that provides reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securitiesour Exchange Act of 1934, as amended,reports is recorded, processed, summarized and reported within the time periods specified in the SEC’sSecurities and Exchange Commission’s rules and forms. A system of controls, no matter how well designedforms, and operated, cannot provide absolute assurance that the objectivessuch information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer (one person, our President), as appropriate, to allow timely decisions regarding required disclosures.

As required by Exchange Act Rule 13a-15(b), as of the systemend of the period covered by this report, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls are met, and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of that date.

There was no evaluation of controls can provide absolute assurance that allchange in our internal control issues and instances of fraud, if any, within a company have been detected. There have been no changes in the Company’s internal controls over financial reporting that occurred during theour most recentrecently completed fiscal quarter that havehas materially affected, or areis reasonably likely to materially affect, the Company’sour internal controlscontrol over financial reporting.

PART II – OTHER INFORMATION

ITEMItem 1

LEGAL PROCEEDINGSLegal Proceedings

None

ITEMItem 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSUnregistered Sales of Equity Securities and Use of Proceeds

There have been no events that are required to be reported under this Item.

ITEM 3

DEFAULTS UPON SENIOR SECURITIES

Item 3

Defaults upon Senior Securities

None

ITEMItem 4

SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERSSubmission of Matters to a Vote of Security holders

None

Item 5

Other Information

ITEM 5

OTHER INFORMATION

None

ITEMItem 6

EXHIBITSExhibits

None

SIGNATURE

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

INNOCAP, INC.Innocap, Inc.

(Registrant)

By:

/s/ B. Alva Schoomer                        

By:

B. Alva Schoomer

President

February 13,September 27, 2007

12

13