<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549

                                    FORM 10-Q

[X]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period ended March 31, 2000

[ ]         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: 000-25367

                      International Fuel Technology, Inc.
                      -----------------------------------
            (Exact name of registrant as specified in its charter)

                Nevada                                     88-0357508
                ------                                     ----------
    (State or other jurisdiction of            (IRS Employer Identification No.)
     incorporation or organization)

  7777 Bonhomme, Suite 1920, St. Louis, Missouri                   63105
  -------------------------------------------------------------------------
     (Address of principal executive offices)                    (Zip Code)

                                (314) 727-3333
                                --------------
             (Registrant's telephone number, including area code)

           Blencathia Acquisition Corporation, 1504 R Street, N.W.,
           --------------------------------------------------------
                           Washington, D.C., 20009
                           -----------------------
                (Former name and former address of Registrant)

        Securities registered pursuant to Section 12(b) of the Act: None

 Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01
                                   Par Value

     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
                        ------        -----

     The aggregate market value of the voting and non-voting common stock held
by non-affiliates of the Registrant, based upon the average bid and asked price
of the common stock on April 30, 2000, as reported on the OTC Bulletin Board,
was $30,680,070.

     Number of shares of common stock outstanding as of April 30, 2000:
17,987,698

Documents Incorporated by Reference:  Registrant Form 10-K filed on May 10, 2000



                                       1
<PAGE>

                      INTERNATIONAL FUEL TECHNOLOGY, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                         FOR THE QUARTERLY PERIOD ENDED
                                 MARCH 31, 2000

                           Index to Quarterly Report
                                  on Form 10-Q

<TABLE>
<CAPTION>
Part I - FINANCIAL INFORMATION                                             Page
<S>                                                                        <C>
     Item 1 - Financial Statements

          Balance Sheets - March 31, 2000 and December 31, 1999               3

          Statements of Operations - Three Month Periods Ended March
           31, 2000 and 1999, and From Inception (April 9, 1996 to March
           31, 2000)                                                          4

          Statement of Stockholders' Deficit - Three Months Ended March
           31, 2000                                                           5

          Statements of Cash Flows - Three Months Ended March 31,
           2000 and 1999, and From Inception (April 9, 1996 to March 31,
           2000)                                                            6-7

          Notes to Financial Statements                                    8-10


     Item 2 - Management's Discussion and Analysis of Financial
               Condition and Results of Operations                        11-14


Part II - OTHER INFORMATION

     Item 6 - Exhibits and Reports on Form 8-K                               15
</TABLE>

                                       2

<PAGE>

INTERNATIONAL FUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            March 31,           December 31,
ASSETS (Note 2)                                                               2000                  1999
------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                      <C>
                                                                            (Unaudited)
Current Assets
  Cash                                                                 $            19,990            26,846
  Employee receivable                                                                  468               468
  Note receivable, stockholder                                                      15,000            15,000
  Prepaid expenses                                                                  30,088            12,719
  Prepaid loan fee (Note 4)                                                        572,813                 -
                                                                       -------------------------------------
        Total current assets                                                       638,359            55,033

  Machinery and equipment                                                           15,505            15,505
  Accumulated depreciation                                                          (3,179)           (2,374)
                                                                       -------------------------------------
                                                                       $           650,685            68,164
                                                                       =====================================

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
  Current Liabilities
  Accounts payable                                                     $           766,939           797,786
  Accrued expenses                                                                  15,549             3,406
  Accrued interest expense                                                           1,449                 -
  Note payable (Note 3)                                                             50,000                 -
  Notes payable to stockholders                                                     62,500            62,500
                                                                       -------------------------------------
        Total current liabilities                                                  896,437           863,692
                                                                       -------------------------------------

Commitments and Contingencies

Stockholders' Deficit (Notes 2 and 4)
  Common stock, $.01 par value; authorized, 150,000,000,
    17,987,698 and 16,818,339 shares issued and outstanding at
    March 31, 2000 and December 31, 1999, respectively                             179,877           168,184
  Discount on common stock                                                        (816,923)         (816,923)
  Additional paid-in capital                                                    17,584,877        14,760,243
  Deficit accumulated during the development stage                             (17,193,583)      (14,907,032)
                                                                       -------------------------------------
                                                                                  (245,752)         (795,528)
                                                                       -------------------------------------
                                                                       $           650,685            68,164
                                                                       =====================================
</TABLE>

See Notes to Financial Statements.

                                       3
<PAGE>

INTERNATIONAL FUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>

                                                                        Three Months            From Inception
                                                                            Ended               (April 9, 1996)
                                                                           March 31,                Through
                                                                  --------------------------        March 31,
                                                                      2000          1999              2000
---------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>            <C>
Revenues                                                          $         -    $         -       $         -
Cost of Revenues                                                            -              -                 -
                                                                  -----------    -----------       -----------
Gross Profit                                                                -              -                 -
                                                                  -----------    -----------       -----------

Operating Expenses:
 Acquisition expense                                                        -              -           500,000
 Advertising and marketing                                             10,728          5,671            34,747
 Board meeting expense (Note 4)                                       117,216              -           117,216
 Consulting (Note 4)                                                1,185,724          1,500         8,543,988
 Insurance                                                              8,747              -             8,747
 Office                                                                 3,185            126            58,339
 Other                                                                  7,037            989           114,536
 Payroll (Note 4)                                                     769,511         63,654         1,337,069
 Professional services                                                161,282          3,198         3,953,816
 Research and development costs                                             -        328,559         1,543,077
 Rent                                                                   5,000         28,367           280,961
 Stock transfer fees                                                      640          1,086            24,267
 Telephone                                                              1,790          1,772            45,486
 Travel                                                                14,242            844           129,117
                                                                  -----------    -----------       -----------
                  Total operating expenses                          2,285,102        435,766        16,691,366
                                                                  -----------    -----------       -----------
      Net loss from operations                                      2,285,102        435,766        16,691,366
      Interest expense                                                  1,449         19,337           502,217
                                                                  -----------    -----------       -----------
      Net loss before income taxes                                  2,286,551        455,103       $17,193,583
                                                                                                   ===========
      Provision for income taxes                                            -              -
                                                                  -----------    -----------
      Net loss                                                    $ 2,286,551    $   455,103
                                                                  ===========    ===========
                        Basic and dilutive net loss
                         per common share                         $       .13    $       .04

Weighted average common shares outstanding                         17,032,994     12,897,559
</TABLE>

See Notes to Financial Statements.

                                       4
<PAGE>

INTERNATIONAL FUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
<TABLE>
<CAPTION>
                                                                                             Accumulated
                                                                                            Deficit During
                                      Common Stock      Discount on       Additional         Development
                                         Amount        Common Stock     Paid-In Capital          Stage           Total
---------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>              <C>              <C>                  <C>               <C>
Balance, January 1, 2000                $168,184         $(816,923)       $14,760,243        $(14,907,032)     $  (795,528)
Issuances of common stock for
 services and cash (Note 4)                3,900                 -          1,141,725                   -        1,145,625
Issuances of common stock for
 cash (Note 4)                             1,018                 -            199,432                   -          200,450
Issuance of common stock (Note 4)          1,000                 -             (1,000)                  -                0
Issuances of common stock for
 services (Note 4)                           925                 -            277,726                   -          278,651
Issuances of common stock for
 compensation (Note 4)                     2,000                 -            548,000                   -          550,000
Issuances of common stock for
 compensation (Note 4)                       900                 -             29,388                   -           30,288
Issuances of common stock into
 escrow (Note 4)                           1,950                 -            570,863                   -          572,813
Accrued stock based compensation
 (Note 4)                                      -                 -             58,500                   -           58,500
Net loss                                       -                 -                  -          (2,286,551)      (2,286,551)
---------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000                 $179,877         $(816,923)       $17,584,877        $(17,193,583)     $  (245,752)
===========================================================================================================================
</TABLE>
See Notes to Financial Statements

<PAGE>

INTERNATIONAL FUEL TECHNOLOGY, INC.
(A DEVELOPMENT STAGE COMPANY)

<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(Unaudited)                                                                                    From
                                                        Three Months     Three Months        Inception
                                                           Ended            Ended         (April 9, 1996)
                                                         March 31,        March 31,        to March 31,
                                                            2000             1999              2000
-------------------------------------------------------------------------------------------------------
<S>                                                     <C>              <C>              <C>
Cash Flows from Operating Activities
Net loss                                                $(2,286,551)      $(455,103)       $(17,193,583)
Adjustments to reconcile net loss to net cash
 used in operating activities:
 Depreciation                                                   804             325               3,178
 Stock issued and additional paid in capital
  recognized for services and compensation                2,059,165               -          12,009,641
 Interest expense recognized on conversion of debt                -               -             355,771
 Change in assets and liabilities:
  (Increase) decrease in prepaid expenses                   (17,369)         (6,250)            (30,088)
  Increase (decrease) in accounts payable                   (30,847)        233,208             766,939
  Increase (decrease) in accrued expenses                    13,592          87,420             159,818
                                                        -----------------------------------------------
Net cash used in operating activities                      (261,206)       (140,400)         (3,928,324)
                                                        -----------------------------------------------
Cash Flows from Investing Activities
 Acquisition of machinery and equipment                           -               -             (13,861)
 Increase in employee and stockholder receivables                 -               -             (15,468)
 Cash acquired in connection with the purchase of
  United States Fuel Technology, Inc.                             -               -                 358
                                                        -----------------------------------------------
Net cash (used in) provided by investing activities               -               -             (28,971)
                                                        -----------------------------------------------
Cash Flows from Financing Activities
 Increase (decrease) in amount due to related party               -               -              26,500
 Increase in due to United States Fuel Technology,
  Inc.                                                            -               -             372,503
 Proceeds from common stock issued                          204,350               -           2,788,028
 Proceeds from notes payable                                 50,000          72,153           1,339,425
 Payment on notes payable                                         -               -            (549,171)
                                                        -----------------------------------------------
Net cash provided by financing activities                   254,350          72,153           3,977,285
                                                        -----------------------------------------------
Net increase (decrease) in cash                              (6,856)        (68,247)             19,990
Cash, beginning                                              26,846          68,735                   -
                                                        -----------------------------------------------
Cash, ending                                            $    19,990       $     488              19,990
                                                        ===============================================
Supplemental Cash Flow Information Interest paid        $         -       $       -               2,100
                                                        ===============================================
 Taxes paid                                             $         -       $       -                   -
                                                        ===============================================
</TABLE>

See Notes to Financial Statements

                                       6
<PAGE>

Non Cash Disclosure of Cash Flow Information
--------------------------------------------

For the three month period ended March 31, 2000, IFT issued 195,000 shares of
common stock and placed them in escrow pursuant to a convertible debenture
purchase agreement.  The value of the shares, $572,813, is recorded as a prepaid
loan fee.

                                       7

<PAGE>

  INTERNATIONAL FUEL TECHNOLOGY, INC.
  (A DEVELOPMENT STAGE COMPANY)

  NOTES TO FINANCIAL STATEMENTS
  (Unaudited)

  Note 1 - Basis of Presentation

  The interim financial statements included herein have been prepared by
  International Fuel Technology, Inc. ("IFT"), without audit, pursuant to the
  rules and regulations of the Securities and Exchange Commission.  Certain
  information and footnote disclosures normally included in financial statements
  prepared in accordance with generally accepted accounting principles have been
  condensed or omitted pursuant to such rules and regulations, although IFT
  believes that the disclosures are adequate to make the information presented
  not misleading.

  These statements reflect all adjustments, consisting of normal recurring
  adjustments which, in the opinion of management, are necessary for fair
  presentation of the information contained therein.  It is suggested that these
  financial statements be read in conjunction with the financial statements and
  notes thereto included in IFT's transitional report on Form 10-K for the nine
  month period ended December 31, 1999.  IFT follows the same accounting
  policies in preparation of interim reports.

  Results of operations for the interim periods are not indicative of annual
  results.

  Primary earnings per share are based upon the weighted average number of
  common shares outstanding during each period.

  Note 2 -- Ability to Continue as a Going Concern

  IFT's financial statements are presented on the going concern basis, which
  contemplates the realization of assets and the satisfaction of liabilities in
  the normal course of business.  IFT has incurred significant losses since
  inception and has limited funds with which to operate.  Management anticipates
  receiving diploma certification in 2000 from the California Air Resources
  Board that its PEERDIESEL(R) product reduces polluting emissions from internal
  combustion engines.  Shortly thereafter, IFT expects to begin licensing its
  product which management believes will generate sufficient revenue to continue
  the IFT's operations.  However, there is no assurance that IFT will receive
  diploma certification or be able to generate sufficient revenue through the
  licensing of its product to provide sufficient working capital.  Management
  believes approximately $3 million of additional capital will be required over
  the next two years.  Management does not have an estimate of the amount of
  revenue necessary to attain positive cash flow.  In February 2000, IFT entered
  into a convertible debenture purchase agreement to raise $3,000,000 through
  the sale of convertible debentures.  In connection with the convertible
  debenture purchase agreement IFT issued a warrant to purchase 390,000 shares
  of common stock. (See Footnote 4) IFT is additionally required to issue
  195,000 shares of common stock to place in escrow pending the sale of the
  convertible debentures. (See Footnote 4)  Such financing is contingent upon
  IFT's ability to register the shares of common stock underlying the warrants
  and debentures with the Securities and Exchange Commission (the "SEC").  There
  can be no assurance that the registration will be granted effectiveness by the
  SEC, in which case IFT would be required to seek alternate sources of
  financing.  IFT's continued existence is dependent upon its ability to resolve
  its liquidity shortfall principally by obtaining this additional debt
  financing or raising equity capital.  IFT must continue to operate on limited
  cash flow generated internally.  The financial statements do not include any
  adjustments to reflect the possible future effects on the recoverability and
  classification of assets or the amounts and classification of liabilities that
  may result from the possible inability of IFT to continue as a going concern.

                                       8
<PAGE>

  INTERNATIONAL FUEL TECHNOLOGY, INC.
  (A DEVELOPMENT STAGE COMPANY)

  NOTES TO FINANCIAL STATEMENTS
  (Unaudited)

  Note 3 -- Note Payable

  During March 2000 IFT received an advance of $50,000 from ONKAR Corporation,
  Ltd., a stockholder of IFT. It is expected this advance will be repaid during
  the year ended December 31, 2000, with interest paid at an appropriate market
  rate.

  Note 4 -- Stockholders' Deficit

  On April 26, 1999 IFT offered all stockholders of record on March 31, 1999 the
  right to purchase 900 common shares at $.50 per share.  During January 2000
  IFT issued 1,800 shares and received proceeds of $450 as a result of this
  offering which expired May 28, 1999.  The $450 for 900 shares was received
  during the nine month period ended December 31, 1999.

  During January 2000 IFT issued 100,000 shares of common stock in a private
  placement for $200,000 to a company whose sole owner is a director of IFT.

  On July 13, 1999 IFT entered into employment agreements with its Chief
  Executive Officer and Chief Operating Officer which expire January 31, 2000
  with options to extend until July 31, 2000.  Under the terms of these
  agreements, these officers will each receive base pay of $1,000 per month plus
  up to a total of 60,000 and 30,000 shares of IFT's stock, respectively,
  payable at the end of the initial term of the agreements.  The shares are
  earned ratably on a monthly basis.  The 90,000 shares earned under these
  employment agreements were issued on January 31, 2000.

  At December 31, 1999, IFT owed one of its stockholders approximately $89,000
  for legal services performed.  In February 2000, the stockholder agreed to
  accept 27,559 shares of IFT's stock in lieu of cash for the amounts due to
  him.  The value of the shares issued, $99,901, was based upon the market value
  price of the common shares on February 9, 2000.

  Effective January 14, 2000 IFT adopted a Consultant and Employee Stock
  Compensation Plan. This plan provides that the Board of Directors may award
  shares of IFT's stock to officers, directors, consultants and employees as
  compensation for services. The maximum number of shares of common stock, which
  may be awarded under this plan, is 500,000 shares. During March 2000 IFT
  issued a total of 65,000 shares of common stock to five directors as
  reimbursement for directors' expenses. The value of these shares, reflected in
  these financial statements as payroll expenses for Jonathan Burst and William
  J. Lindenmayer in the amount of $55,000 and as board meeting and travel
  expenses in the amount of $117,216 and $6,534, respectively, for the remaining
  directors, has been calculated based on the trading price of IFT's stock at
  February 23, 2000.

  During January 2000, IFT entered into an employment agreement with Jonathan R.
  Burst to serve as Chief Executive Officer of IFT until December 31, 2000 at a
  base annual salary of $180,000.  In addition, Mr. Burst is to receive 6,000
  shares of common stock each month.  During January 2000, IFT entered into an
  employment agreement with William J. Lindenmayer to serve as Chief Operating
  Officer of IFT until December 31, 2000 at a base annual salary of $125,000.
  In addition, Mr. Lindenmayer is to receive 3,000 shares of common stock each
  month.  The shares are earned ratably on a monthly basis.  The stock based
  compensation earned through March 31, 2000, reflected in these financial
  statements as payroll expense and as additional paid in capital, has been
  calculated based on the trading price of IFT's stock at February 1, 2000 in
  the amount of $58,500.

  On February 23, 2000 the Board of Directors granted Jonathan Burst 100,000
  shares of IFT's common stock for his appointment as Chief Executive Officer.
  The value of these shares, reflected in these financial statements as payroll
  expense, has been calculated based on the trading price of IFT's stock at
  February 23, 2000. On February 23, 2000 the Board of Directors awarded an
  initial grant of 100,000 shares of IFT's common stock to William Lindenmayer
  for his appointment as President and Chief Operating Officer. The value of
  these shares, reflected in these financial statements as payroll expense, has
  been calculated based on the trading price of IFT's stock at February 23,
  2000. The total charged to payroll expense for the transactions was $550,000.

  During February 2000 a warrant for 390,000 shares of common stock was
  exercised by GEM Global Yield Fund Limited at a cost of $.01 per share.  The
  value of these shares, reflected in these financial

                                       9

<PAGE>

  INTERNATIONAL FUEL TECHNOLOGY, INC.
  (A DEVELOPMENT STAGE COMPANY)

  NOTES TO FINANCIAL STATEMENTS
  (Unaudited)

  statements as consulting expense, has been calculated based on the trading
  price of IFT's stock at February 18, 2000 in the amount of $1,145,625.

  During February 2000 IFT issued 195,000 shares of common stock and placed them
  in escrow in accordance with the convertible debenture purchase agreement
  entered into in February 2000.  The value of these shares, reflected in these
  financial statements as a prepaid loan fee, has been calculated based on the
  trading price of IFT's stock at February 18, 2000 in the amount of $572,813.

  On February 9, 2000 IFT issued 100,000 common shares related to a consulting
  agreement in effect at that time.  Subsequent to March 31, 2000 the consulting
  agreement has been amended and the 100,000 common shares were recalled and
  canceled.  The 100,000 common shares are outstanding as of March 31, 2000 and
  the par value of these shares is reflected in these financial statements as a
  deduction from additional paid in capital.

  Note 5 -- Related Party Transactions

  At March 31, 2000, IFT was owed $15,000 by one of its stockholders for a short
  term advance with interest at 6%.  The amount was due December 31, 1999.  The
  amount has not been paid pending resolution of amounts included in accounts
  payable to this stockholder.  In addition, the $10,000 rent for the months of
  February and March has not been recorded or paid pending resolution of these
  amounts.  The total amount due to this stockholder included in accounts
  payable at March 31, 2000 was $100,000.  As of May 5, 2000 IFT is no longer
  occupying the office space previously rented from this stockholder.

                                       10

<PAGE>

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

  Forward Looking Statements and Associated Risks

  This Quarterly Report on Form 10-Q contains forward-looking statements made
  pursuant to the safe harbor provisions of the Securities Litigation Reform Act
  of 1995. These forward looking statements are based largely on IFT's
  expectations and are subject to a number of risks and uncertainties, many of
  which are beyond IFT's control, including, but not limited to, economic,
  competitive and other factors affecting IFT's operations, markets, products
  and services, expansion strategies and other factors discussed elsewhere in
  this report and the documents filed by IFT with the Securities and Exchange
  Commission. Actual results could differ materially from these forward-looking
  statements. In light of these risks and uncertainties, there can be no
  assurance that the forward-looking information contained in this report will
  in fact prove accurate. IFT does not undertake any obligation to revise these
  forward-looking statements to reflect future events or circumstances.

  Overview

  IFT was incorporated under the laws of the State of Nevada in April 1996, to
  develop and commercialize a proprietary scientific process, "Performance
  Enhanced Emissions Reduced" ("PEER"), that reformulates various refined fuels,
  including #2 diesel fuel, home heating oil, #6 (Bunker) fuel, jet engine fuel
  and gasoline to improve combustion efficiency and reduce the amounts of
  harmful exhaust emissions from internal combustion engines.  The resulting
  reprocessed fuels are known as PEERFUEL.  IFT is a development stage company,
  has had no revenues to date and has raised capital for initial development
  through the issuance of its securities and promissory notes.

  Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
  1999

  Total operating expenses from development stage operations were $2,285,102 for
  the three months ended March 31, 2000, as compared to the development stage
  operating expenses of $435,766 for the three month period ended March 31,
  1999.  This represents a 424.4% increase from the prior period.  Increased
  development stage operating expenses in the current period compared to the
  prior period are a result of increased payroll expenses, consultant fees,
  advertising and marketing expenses, board meeting expenses, travel expenses,
  and other expenses related to product development.

  Board meeting expense for the three months ended March 31, 2000 were $117,216
  representing an increase of $117,216 over the corresponding period of 1999.
  On February 23, 2000 the Board of Directors adopted the Director's Stock
  Compensation Plan, which provides for an annual award of 10,000 shares of
  IFT's common stock to IFT's Board members as reimbursement for their
  attendance at the Board meetings and an additional 1,000 shares of IFT's
  common stock for any three-telehpone conference call Board meetings attended.
  During March 2000, 45,000 shares of IFT's common stock were issued to three,
  non-employee, Board members, calculated based on the trading price of IFT's
  stock at February 23, 2000 which was $2.75 per share, and are reflected in
  these financial statements as Board meeting expense of $117,216 and travel
  expense $6,534.

  Consulting expenses during the three months ended March 31, 2000 were
  $1,185,724 representing an increase of $1,184,224 from the corresponding
  period for 1999.  This represents an increase of 78,948.3% from the prior
  period. IFT entered into a convertible debenture purchase agreement with GEM
  Global Yield Fund Limited ("GEM") to raise $3 million through the sale of
  convertible debentures.  During February 2000 GEM exercised a warrant for
  390,000 shares of common stock in connection with the convertible debenture
  purchase agreement.  The 390,000 shares are reflected in

                                       11
<PAGE>

  these financial statements as consulting expense and additional paid in
  capital, calculated based on the trading price of IFT's stock at February 18,
  2000 which was $2.93 per share.

  Research and development costs during the three months ended March 31, 2000
  were $0 representing a decrease of $328,559 from the corresponding period for
  1999.  This represents a decrease of 100% from the prior period.  The decrease
  is primarily due to the reduction of the purchase of testing supplies, rental
  equipment and decreased testing and laboratory fees.

  Payroll expenses during the three months ended March 31, 2000 were $769,511
  representing an increase of $705,857 from the corresponding period of 1999.
  This represents a 1,108.9% increase from the prior period.  The increase was
  primarily due to the Board of Director's adoption of a Stock Incentive Plan on
  February 23, 2000 that consisted of an initial stock award of 100,000 shares
  of IFT's common stock paid to each of IFT's President/COO and to its Chief
  Executive Officer.  Additionally, on February 23, 2000 the Board of Directors
  adopted the Director's Stock Compensation Plan, which provided for an annual
  award of 10,000 shares of IFT's common stock to Board members as reimbursement
  for their attendance at the Board meetings.  The President/COO and the Chief
  Executive Officer were awarded 10,000 shares of IFT's common stock as Board
  members, and these shares have been reflected in these financial statements as
  payroll expense of $55,000.  The stock-award shares value was calculated based
  on the trading price of IFT's stock at February 23, 2000 which was $2.75 per
  share.  Additionally, on January 31, 2000 IFT extended the employment
  agreements with its President/COO and Chief Executive Officer through December
  31, 2000.  Under these agreements, the President/COO will receive an annual
  base salary of $180,000, 3,000 shares of IFT's common stock per month and a
  bonus award as deemed appropriate by the Board of Directors of IFT.  The Chief
  Executive Officer will receive an annual base salary of $180,0000, 6,000
  shares of IFT's common stock per month and a bonus award as deemed appropriate
  by the Board of Directors of IFT.  The employment agreement shares in the
  amount of 9,000 are reflected in these financial statements as payroll expense
  and additional paid in capital, and the shares value was calculated based on
  the trading price of IFT's stock at February 1, 2000 which was $3.25 per
  share.

  Professional services during the three months ended March 31, 2000 were
  $161,282 representing an increase of $158,084 over the corresponding period
  for 1999.  This represents a 4,943.2% increase from the corresponding period
  for 1999.  The increase is primarily due to the increased expenses for legal,
  accounting, SEC Edgar filings, research professionals, and the use of a
  temporary employment service

  Interest expense for the three months ended March 31, 2000 was $1,449
  representing a decrease of $17,888 over the corresponding period for 1999.
  This represents a decrease of 92.5% from the prior period.  The decrease is
  primarily due to IFT's agreement entered into with certain promissory note
  holders on November 1, 1999 to issue 423,537 shares of its common stock by
  December 31, 1999 in exchange for the balance of the promissory notes due in
  the amount of $704,255 and interest on the notes due in the amount of $142,820
  at $2.00 per share.  The exchange shares were issued on December 31, 1999 that
  reduced interest expense for the three months period ending March 31, 2000.

  The net loss for the three months ended March 31, 2000 was $2,286,551 as
  compared to the net loss of $455,103 for the three months ended March 31,
  1999.  This represents a 402.4% increase from the prior period.  The net loss
  per common share for the three months ended March 31, 2000 was $.13 as
  compared to the net loss per common share of $.04 for the three months ended
  March 31, 1999.

  New Accounting Pronouncements

  In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivatives and
  Hedging Activities," which establishes accounting and reporting standards for
  derivative instruments, including certain derivative instruments embedded in
  other contracts, (collectively referred to as derivatives) and for hedging
  activities.  SFAS No. 133 is effective for years beginning after June 15, 2000
  and requires

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<PAGE>

  comparative information for all fiscal quarters of fiscal years beginning
  after June 15, 2000. IFT does not expect the adoption of this statement to
  have significant impact on its results of operations, financial position or
  cash flows.

  Year 2000 Matters

  The "Year 2000" problem refers to the potential for computational errors or
  system malfunctions by computer hardware or software that fail to properly
  recognize dates beginning with January 1, 2000, or which fail to recognize
  2000 as a leap year.  In anticipation of this problem, we implemented a Year
  2000 readiness program intended to identify, evaluate and address our Year
  2000 exposure.

  At the time that this report was prepared, we had not experienced any material
  Year 2000 problems with our internal systems and were not aware of any such
  problems experienced by our vendors and other service providers.  As a result,
  no material adverse impact of the Year 2000 problem on our business and
  operations was expected at the time of this report, based upon the information
  available to us.  Although we believe that it is unlikely at the time of this
  report, there can be no assurance that any Year 2000 problems will not result
  in material cost to us or have a material, adverse impact on our business,
  financial condition or results of operations.

  Liquidity and Capital Resources

  A critical component of IFT's operating plan impacting the continued existence
  of IFT is the ability to obtain additional capital through additional debt
  and/or equity financing.  We do not anticipate IFT will generate a positive
  internal cash flow until such time as IFT can generate revenues from license
  fees from its PEERFUEL process and/or direct sales of its PEERFUEL products,
  either or both of which may take the next few years to realize.  In the event
  we cannot obtain the necessary capital to pursue our strategic plan, IFT may
  have to cease or significantly curtail its operations.  This would materially
  impact our ability to continue as a going concern.

  We have met our capital needs since inception primarily through the issuance
  of common stock as compensation for services rendered, which have totaled
  $12,009,641 since inception in April 1996, and for the three month period
  ended March 31, 2000, totaled $2,059,165.  In addition to these amounts, we
  have raised $2,788,028 in cash from the issuance of common stock since the
  IFT's inception, with $204,350 of this total raised during the three month
  period ended March 31, 2000.  Most of these funds have been raised through
  private placement transactions.  Finally, since IFT's inception, financing
  totaling $1,081,425 was raised privately through notes payable to various
  sources, of which $291,171 was repaid, $677,754 was converted to common stock,
  and $112,500 is recorded as a liability on the March 31, 2000, balance sheet.
  For the three months ended March 31, 2000 proceeds from notes payable totaled
  $50,000.

  The cash used in operating activities for the three months ended March 31,
  2000 was $261,206 as compared to $140,400 used in operating activities for the
  three months ended March 31, 1999.  The cash provided by financing activities
  was $254,350 for the three months ended March 31, 2000 as compared to $72,153
  provided by financing activities for the three months ended March 31, 1999.
  Net cash decreased by $6,856 for the three months ended March 31, 2000 as
  compared to net cash decreasing by $68,247 for the three months ended March
  31, 1999.

  While management can not make any assurance as to the accuracy of our
  projections of future capital needs, it is anticipated that a total of
  approximately $3 million over the next two-year period will be necessary in
  order to enable us to meet our capital needs.  We believe the $3 million will
  be used as follows: $1.2 million for specific testing as part of required
  regulatory procedures as set by the Air Resources Board of California
  ("CARB"), $300,000 for commercial fleet testing programs, $300,000 for initial
  sales and marketing efforts, and $1.2 million for salary and related
  administrative expenses (rent, telephone, etc.).  In February 2000, IFT
  entered into a convertible debenture purchase agreement to raise $3,000,000
  through the sale of convertible debentures.  In connection with the
  convertible debenture purchase agreement IFT issued a warrant to purchase
  390,000 shares

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<PAGE>

  of common stock. IFT is additionally required to issue 195,000 shares of
  common stock to place in escrow pending the sale of the convertible
  debentures. Such financing is contingent upon IFT's ability to register the
  shares of common stock underlying the warrants and debentures with the
  Securities and Exchange Commission (the "SEC"). There can be no assurance that
  the registration will be granted effectiveness by the SEC, in which case IFT
  would be required to seek alternate sources of financing.

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<PAGE>

Item 6. Exhibits and Reports of Form 8-K

     (a) The following exhibits are filed as part of this report:

     Exhibit
     Number    Description
     ------    -----------
       27      Financial Data Schedule

     (b) Reports on Form 8-K

          .  IFT filed a report on Form 8-K dated January 12, 2000 filing IFT
             audited financial statements for March 31, 1999, unaudited
             financial statements as of September 30, 1999 and Pro forma
             condensed financial statements for the six months ended September
             30, 1999 and 1998 as exhibits to the Blencathia merger agreement
          .  IFT filed a report on Form 8-K dated February 10, 2000 reporting
             that their client-auditor relationship with McGladrey & Pullen, LLP
             had ceased
          .  IFT filed a report on Form 8-K dated March 9, 2000 reporting that
             they had engaged the services of BDO Seidman, LLP as their new
             independent auditors

    All other items of this report are inapplicable.

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<PAGE>

                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


INTERNATIONAL FUEL TECHNOLOGY, INC.
(Registrant)



By: /s/ William J. Lindenmayer     Date:  May 15, 2000
   ---------------------------           ---------------
   William J. Lindenmayer
   President

By: /s/ Patty Foltz                Date:  May 15, 2000
   ---------------------------           ---------------
   Patty Foltz
   Secretary/Treasurer

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