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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                      ------------------------------------

                                  FORM 10-QSB


   [X]          Quarterly Report Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934

                    FOR THE QUARTERLY PERIOD ENDED JULY 31, 2000

                                         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 0-15673


                         INTERNATIONAL ABSORBENTS INC.
             (Exact name of registrant as specified in its charter)



   Province of British Columbia, Canada                    None
     (State of other jurisdiction of        (IRS Employer Identification Number)
      incorporation or organization)


                               1569 Dempsey Road
                       North Vancouver, British Columbia
                                 Canada V7K 1S8
                    (Address of principal executive offices)

                                 (604) 681-6181
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of August 30, 2000.


            Title of Class                                 No. of Shares
     Common Shares, no par value                             22,357,487


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                         INTERNATIONAL ABSORBENTS INC.

                          CONSOLIDATED BALANCE SHEETS

                           (US dollars, in thousands)

<TABLE>
<CAPTION>
                                                                JULY 31, 2000    JANUARY 31, 2000
<S>                                                             <C>              <C>
ASSETS
Current assets:
  Cash                                                             $ 1,745           $ 1,324
  Accounts receivable                                                  992               739
  Inventories                                                          335               310
  Prepaid expenses                                                      89                64
                                                                   -------           -------
                                                                   $ 3,161           $ 2,437
  Fixed assets                                                       1,446             1,183
  Other assets                                                         139                60
                                                                   -------           -------
                                                                   $ 4,746           $ 3,680
                                                                   =======           =======
LIABILITIES
Current liabilities:
  Accounts payable                                                 $   683           $   659
  Operating line of credit                                              --                --
  Income taxes payable                                                  10                38
  Due to related parties                                                 4                 3
                                                                   -------           -------
                                                                   $   697           $   700
  Long-term liabilities                                                 --                --
                                                                   -------           -------
                                                                   $   697           $   700
SHAREHOLDERS' EQUITY
  Share capital                                                    $ 7,192           $ 6,806
  Deficit                                                           (3,143)           (3,826)
                                                                   -------           -------
                                                                   $ 4,746           $ 3,680
                                                                   =======           =======
</TABLE>

                         INTERNATIONAL ABSORBENTS INC.

                      CONSOLIDATED STATEMENT OF OPERATIONS

                           (US dollars, in thousands)

<TABLE>
<CAPTION>
                                                                     6 MONTHS              3 MONTHS
                                                                7/31/00    7/31/99    7/31/00    7/31/99
<S>                                                             <C>        <C>        <C>        <C>
Sales revenues                                                  $4,237     $3,621     $2,058     $ 1,870
Cost of goods sold                                               2,359      2,019      1,162       1,039
                                                                ------     ------     ------     -------
                                                                 1,878      1,602        896         831
Gross margin                                                       44%        44%        44%         44%
Corporate and administrative expenses:
  Marketing and sales                                              650        492        324         235
  General and administrative                                       578        528        295         259
                                                                ------     ------     ------     -------
                                                                 1,228      1,020        619         494
Profit before undernoted item                                      650        582        277         337
Other income                                                        43         14         24           8
                                                                ------     ------     ------     -------
Profit before income taxes                                         693        596        301         345
                                                                ------     ------     ------     -------
Income tax provision                                                10         --         --          --
Profit for the period                                              683        596        301         345
                                                                ======     ======     ======     =======
Deficit at beginning of period                                  (3,826)    (5,159)    (3,444)     (4,908)
                                                                ------     ------     ------     -------
                                                                (3,143)    (4,563)    (3,143)     (4,563)
Profit per common share (in dollars)                              0.03       0.03       0.01        0.02
Weighted average number of common shares (in thousands)         22,058     19,616     22,322      19,615
</TABLE>


UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             2
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                         INTERNATIONAL ABSORBENTS INC.

            CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION

                           (US dollars, in thousands)

<TABLE>
<CAPTION>
                                                                        6 MONTHS ENDED
                                                                JULY 31, 2000    JULY 31, 1999
<S>                                                             <C>              <C>
Cash flows from operating activities                                  458             679
Cash flows used in investing activities                              (429)             --
Cash flows from financing activities                                  392            (209)
                                                                    -----            ----
Net change in cash                                                    421             470
Cash and cash equivalents, beginning of period                      1,324             195
                                                                    -----            ----
Cash and cash equivalents, end of period                            1,745             665
                                                                    =====            ====
</TABLE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENT

(US dollars except where otherwise noted)

1.   BASIS OF CONSOLIDATION AND PRESENTATION

The consolidated financial statements include the accounts of International
Absorbents Inc. ("IABS") and its wholly-owned subsidiaries Absorption Corp
("Absorption"), a Nevada company doing business in Washington State, and Total
Absorb Inc. ("TAI"), a British Columbia company.

The accompanying consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in Canada and with the
instructions to form 10-Q and Rule 10 of Regulation S-X promulgated by the
United States Securities and Exchange Commission. Differences with respect to
accounting principles generally accepted in the United States, which are not
significant, are disclosed in Note 12. Such financial statements do not include
all disclosures required by generally accepted accounting principles for annual
financial statement reporting purposes. However, there has been no material
change in the information disclosed in the Company's annual consolidated
financial statements dated January 31, 2000, except as disclosed herein.
Accordingly, the information contained in this report should be read in
conjunction with annual consolidated financial statements and related
disclosures. Certain amounts have been restated to conform to the presentation
for Fiscal Year 2000.

The accompanying interim consolidated statements reflect, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the results of the interim periods
presented. Results of operations for the period ended July 31, 2000 are not
necessarily indicative of results expected for an entire year.

2.   SHARE CAPITAL

AUTHORIZED
100,000,000 common shares without par value.

COMMON SHARES ISSUED

<TABLE>
<CAPTION>
                                                                  SHARES      AMOUNT
<S>                                                             <C>           <C>
BALANCE AS OF JANUARY 31, 1999                                  19,601,054    6,584
</TABLE>

<TABLE>
<CAPTION>
                                                                  SHARES      AMOUNT
<S>                                                             <C>           <C>
YEAR ENDED JANUARY 31, 2000
  For cash
     Exercise of options                                           737,500    $  146
     Exercise of warrants                                          432,941        76
                                                                ----------    ------
     Issued during the year                                      1,170,441       222
                                                                ----------    ------
     Balance as of January 31, 2000                             20,771,495    $6,806
                                                                ==========    ======
</TABLE>


UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             3
<PAGE>   4

<TABLE>
<S>                                                             <C>           <C>
PERIOD ENDED JULY 31, 2000
  For cash
     Exercise of options                                            90,250        18
     Exercise of warrants                                        1,495,742       374
                                                                ----------    ------
     Issued during the period                                    1,585,992       392
     Balance as of July 31, 2000                                22,357,487    $7,198
                                                                ==========    ======
</TABLE>

Share transactions (excluding exercise of options and warrants) during the
period ending July 31, 2000 and the year ending January 31, 2000

Pursuant to Regulation D, subscription agreements entered into in March of 1998,
3,013,864 common shares were issued through an employee stock purchase at a
price of $0.085 per share for total proceeds of $256,179. As part of the
subscription agreement, share purchasers were issued 1,506,930 warrants with an
exercise price of $0.25. No finder's fees were payable in respect of this
subscription.

STOCK OPTIONS

<TABLE>
<CAPTION>
                                                                NUMBER OF
                                                                UNDERLYING       EXERCISE
                                                                  SHARES          PRICES
<S>                                                             <C>           <C>
Stock options outstanding, January 31, 1999                     1,427,836     $0.20 to C$0.91
                                                                ---------     ---------------
  Granted                                                       1,023,400      $0.34 to $1.00
  Exercised                                                      (737,500)         $0.20
  Surrendered or expired                                          (32,336)     $0.20 to $0.91
                                                                ---------     ---------------
Stock options outstanding, January 31, 2000                     1,681,400      $0.20 to $1.00
  Exercised                                                       (90,250)         $0.20
Stock options outstanding, July 31, 2000                        1,591,150      $0.20 to $1.00
                                                                =========     ===============
</TABLE>

Stock options outstanding at July 31, 2000 are due to expire from October 1,
2000 to September 30, 2004. Pursuant to the vesting terms of the option
agreements, stock options to purchase 1,407,900 common shares were eligible for
exercise at July 31, 2000 (at January 31, 2000 - 658,000).

WARRANTS

<TABLE>
<CAPTION>
                                                                NUMBER OF
                                                                UNDERLYING       EXERCISE
                                                                  SHARES          PRICES
<S>                                                             <C>           <C>
Warrants outstanding, January 31, 1999                           2,546,930    $0.10 to $1.75
                                                                ----------    --------------
  Exercised                                                       (482,941)   $0.10 to $0.50
  Surrendered or expired                                          (380,000)   $0.50 to $1.75
                                                                ----------    --------------
Warrants outstanding, January 31, 2000                           1,683,989    $0.10 to $0.25
  Exercised                                                     (1,495,742)       $0.25
  Surrendered or expired                                           (38,247)   $0.10 to $0.25
                                                                ----------    --------------
Warrants outstanding, July 31, 2000                                150,000    $0.20 to $0.25
                                                                ==========    ==============
</TABLE>

Warrants outstanding at July 31, 2000 are due to expire from January 23, 2001 to
December 7, 2001.


UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             4
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MANAGEMENT'S DISCUSSION & ANALYSIS

OUTLOOK

International Absorbents, Inc. continues to experience record sales growth each
quarter, as compared to the same quarter in the previous fiscal year. Our
improved financial position has presented many opportunities that we are
aggressively pursuing. These include product lines that can bring us growth, are
based on proven technology, and have an established distribution network. Our
technologically superior products are now being introduced into billion dollar
markets. International Absorbents has a no debt balance sheet, which means we
have built a solid foundation to support future growth.

Currently, we anticipate that our revenues will continue to increase. The
majority of the revenue growth will occur in the Animal Care division, due to
growth in existing product lines, increased distribution, and the addition of
new product lines. For the first time in several quarters, expansion is seen in
the Industrial division, driven by increased international sales. The Company's
industrial division sales are expected to show some sales growth.

SALES REVENUE for the three months ended July 31, 2000, net of allowances and
discounts, were $2,058,000, an increase of 10% in comparison to the three months
ended July 31, 1999 total of $1,870,000. Sales revenue for the six months ended
July 31, 2000, net of allowances and discounts, were $4,237,000, an increase of
17% in comparison to the six months ended July 31, 1999 total of $3,621,000.

This increase in sales revenue was mainly due to an increase in Animal Care
products sales volumes.

For the balance of fiscal year 2001, further sales revenue growth is expected
due to expansion of the Company's Animal Care distribution. This sales growth
will result from the addition of new product lines, direct sales to national
accounts, and an increase in volume through existing distributors.

GROSS PROFIT on net sales revenues for the three months ended July 31, 2000 were
$896,000 (or 44%) versus $831,000 (or 44%) for the three months ended July 31,
1999. Gross profits on total sales for the six months ended July 31, 2000 were
$1,878,000 (or 44%) versus $1,602,000 (or 44%) for the six months ended
July 31, 1999.

These increases were primarily due to the growth in sales and the maintenance of
the Company's manufacturing efficiencies.

For the balance of fiscal year 2001, gross profits will remain at current levels
because of production efficiencies that have been achieved.

NET PROFIT for the three-month period ended July 31, 2000, were $301,000 versus
$345,000 for the three-month period ended July 31, 1999. The Company's net
profit improved for the six month period ended July 31, 2000 to $683,000 verse
$596,000 in the six month period ended July 31, 1999.

The six-month increase was due to an increase in sales and the maintenance of
the Company's gross margin.

For the remainder of fiscal year 2001, profits are expected to remain at levels
approximately equal to those of the previous year. This is mainly due to
marketing investments in new product lines.

GENERAL AND ADMINISTRATIVE EXPENSES increased for the three months ended July
31, 2000 to $295,000 from $259,000 for the three months ended July 31, 1999,
resulting in a 14% change. These expenses increased for the six month period
ended July 31, 2000 to $578,000 from $528,000 for the six month period ended
July 31, 1999, resulting in a 10% change. This increase was principally due to
additional operating costs resulting from the Company's increase in sales.

Total general and administrative expenses for the fiscal year are expected to
increase as the Company grows, but decrease as a percentage of sales.


UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             5
<PAGE>   6

MARKETING EXPENSES were $324,000 for the three months ended July 31, 2000 an
increase of 38% from the three-month period ended July 31, 1999 total of
$235,000. Marketing expenses were $650,000 for the six months ended July 31,
2000, an increase of 32% from the six-month period ended July 31, 1999, for a
total of $492,000. This increase reflects new marketing programs, marketing
costs related to the introduction of new products, and additional sales staff.

Marketing expenses are expected to continue near this level for the remainder of
the 2001 fiscal year, while decreasing significantly as a percentage of sales
revenue.

LIQUIDITY AND CAPITAL RESOURCES. At July 31, 2000 the Company had $2,464,000 in
working capital. This was an improvement from $1,737,000 at January 31, 2000.
The current ratio (current assets to current liabilities) at period end
increased to 4.54 from 3.48 at January 31, 2000. These changes were mainly due
to the Company's profitability and positive cash flows.

CASH FLOW from operations was $458,000 for the six months ended July 31, 2000
versus $679,000 for the six months ended July 31, 1999. The Company expects to
continue to generate cash from operations, even though it may use various credit
facilities to finance manufacturing improvements and for the introduction of new
product lines.

                                   YEAR 2000

Historically, certain computerized systems have used two digits rather than four
digits to define the applicable year, which could result in recognizing a date
using "00" as the year 1900 rather than the year 2000. This could have resulted
in major failures or miscalculations and is generally referred to as the "year
2000 issue." International Absorbents, Inc. recognized that the impact of the
year 2000 issue could extend beyond traditional computer hardware and software
to automated plant systems and instrumentation, as well as to third parties. The
year 2000 issue has been addressed within the Company by its individual
departments and progress and results have been reported periodically to
management. We committed resources to conduct risk assessments and took
corrective action where required within each of the following areas: information
technology, plant systems, and external parties.

Assessment audits of the information technology systems were completed in the
fourth quarter of fiscal year 1999. We adopted a plan to update all systems,
which may be effected by the year 2000 issue, in the first quarter of fiscal
year 2000. The plan was completed and the information systems were upgraded
during the third quarter of fiscal year 2000. We have back up systems in place
in the unlikely event the year 2000 issue effects our new information systems.
As of the filing date of this document there have been no events involving our
information technology systems, which have materially effected the operations of
the Company. In the plant systems area, 100 percent of our systems have been
assessed and will not be effected by the year 2000 issue. We have backup plans
for all plant systems, which allows us to maintain a full production schedule in
the unlikely case of a year 2000 failure. As of the filing date of this document
there have been no events involving our plant systems, which have materially
effected the operations of the Company. An assessment audit of external parties
was completed in the third quarter of fiscal year 2000. Not all companies have
demonstrated a willingness to respond to year 2000 readiness questions, even
with the new legislation on the issue. A significant number of our suppliers
have responded in the affirmative that they are prepared. No third parties have
responded in the negative. A large number have not responded at all, mainly due
to legal concerns about liability. Steps were taken to remediate the unlikely
event that a year 2000 issue would effect our ability to service our customers.
As of the filing date of this document, no third party year 2000 events have
occurred which materially effected the operations of the Company.

The total cost of our year 2000 activities did not exceed $40,000. These costs
did not materially effect our operations, liquidity, or capital resources.

Even though January 1, 2000 has passed, failure to address a year 2000 issue
could still result in business disruptions that may materially affect our
operations, liquidity, or capital resources. We have prepared contingency plans
to address year 2000 issues that may have a material affect. Typically these
contingency plans address the results of single events while the scope of year
2000 issues may cause multiple events for longer durations. It is not possible
for us to anticipate all multiples of events that may occur. We will plan for
multiple events to the best of our abilities and resources.


UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             8
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There is still uncertainty about the scope of the year 2000 issue. At this time
we cannot quantify the potential impact of these failures. Our year 2000 program
and contingency plans were developed to address issues within our control. The
program minimizes, but does not eliminate the issues of external parties.

                           FORWARD-LOOKING STATEMENTS

Statements made in this document referring to the Company's outlook, expected
sales, gross profits, net profits, future expense levels, the Company's
liquidity, and cash flows are forward-looking statements. Also statements about
the Company's future financial position are forward-looking statements. It is
important to note that the Company's actual results could differ materially from
those projected, due to various risk factors. Those risks include, but are not
limited to, the Company's ability to service and penetrate new markets, changes
in market conditions, increased labor costs due to labor shortages, unexpected
changes in utility, the abilities of suppliers, and exceptional marketing or
administrative costs needed to maintain current business levels. Additional
information concerning factors that could cause actual results to differ
materially from those in the forward-looking statements is contained from time
to time in the Company's SEC filings, including but not limited to forms 10-KSB,
10-QSB and the Proxy Statement.

PART II -- OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual General Meeting of Shareholders held on June 12, 2000, the
following proposals were adopted by the following margins indicated.

1.   The selection of PricewaterhouseCoopers to continue as the auditors for
     International Absorbents, Inc., was approved by the following vote: For --
     17,023,539; Against -- 24,859; Withheld -- 206,928.

2.   The election of the following directors who will serve until their
     successors are elected and qualified, or their earlier death or
     resignation:

 <TABLE>
 <CAPTION>
                                                            NUMBER OF SHARES
                                                         ----------------------
                                                            FOR        WITHHELD
                                                         ----------    --------
     <S>                                                 <C>           <C>
     Gordon Ellis                                        16,935,967    319,395
     Douglas E. Ellis                                    16,970,267    285,095
     Shawn M. Dooley                                     17,104,705    150,657
 </TABLE>

3.   The Company's 1993 Stock Option Plan -- US Participants, was amended to
     include U.S. Resident Directors of the Company as eligible participants
     under the Plan, by the following vote: For -- 16,224,905; Against --
     980,497; Withheld -- 49,960.

4.   The Company's 1993 Stock Option Plan -- US Participants, was amended to
     increase the number of Common Shares authorized for issuance from 1,325,000
     to 1,950,000 Common Shares, by the following vote: For -- 15,914,375;
     Against -- 1,227,367; Withheld -- 63,620.

5.   The Company's 1993 Equity Incentive Stock Option Plan, was amended to
     increase the number of authorized Common Shares from 1,000,000 to 1,425,000
     Common Shares, by the following vote: For -- 15,881,995; Against --
     1,313,547; Withheld -- 59,820.


UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             7
<PAGE>   8

ITEM 5. OTHER INFORMATION

    Directors as at July 31, 2000:

        Gordon L. Ellis

        Stephen H. Silbernagel

        John J. Sutherland, Jr.

        Douglas E. Ellis

        Shawn M. Dooley

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    Exhibit 27 Financial Data Schedule

    No reports on Form 8-K have been filed during the period ended July 31,
2000.

SIGNATURES

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

                                          INTERNATIONAL ABSORBENTS INC.
                                          (Registrant)



Date: 8/31/00                             /s/ Gordon L. Ellis
      -------                             ------------------------------
                                                  Gordon L. Ellis
                                                  President & CEO




UNAUDITED (ALL AMOUNTS IN US DOLLARS EXCEPT WHERE OTHERWISE NOTED)             8