UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q


(Mark  One)
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934 For the quarterly period ended September 30, 1996, 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: 0-13459

                               DH Technology, Inc.
             (Exact name of registrant as specified in its charter)


California                                                       94-2917470
(State or other jurisdiction of                              (I.R.S.Employer
 incorporation or organization)                              Identification No.)



              15070 Avenue of Science, San Diego, California 92128
                     (Address of principal executive office)

       Registrant's telephone number, including area code: (619) 451-3485




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 XXX No____

As of September 30, 1996 there were 7,969,027 shares of the registrant's  Common
Stock outstanding.


<PAGE>


                      DH TECHNOLOGY, INC. AND SUBSIDIARIES

                                      INDEX

PART I.  FINANCIAL INFORMATION                                       PAGE NO.

     ITEM 1 - Financial Statements

         Condensed Consolidated Balance Sheets                          1
                  September 30, 1996, and December 31, 1995

         Condensed Consolidated Statements of Income                    2
                  Three months and nine months ended
                  September 30, 1996, and September 30, 1995
         Condensed Consolidated Statements of Cash Flows                3
                  Nine months ended September 30, 1996, and 
                  September 30, 1995

         Notes to Condensed Consolidated Financial Statements           4

     ITEM 2 -

         Management's Discussion and Analysis of                        5
                  Financial Conditions and Results of Operations


PART II.  OTHER INFORMATION
         Item 6 - Exhibits and Reports on Form 8-K                     10


SIGNATURES                                                             11


EXHIBITS INDEX                                                         12




<PAGE>

<TABLE>




                                                           
                                              PART 1 - FINANCIAL INFORMATION
                                                 ITEM 1 - Financial Statements
                                           DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                          Condensed Consolidated Balance Sheets
                                                      (In thousands)
<CAPTION>

                                                                                SEPTEMBER 30,             DECEMBER 31,
                                                                                     1996                     1995
                                                                                 (Unaudited)

                                                          ASSETS
<S>                                                                                     <C>                        <C> 

Current assets:
     Cash and cash equivalents                                                           $24,036                   $28,971
     Short-term investment securities held to maturity                                    15,080                     2,750
     Accounts receivable, net                                                             16,344                    15,785
     Inventories                                                                          14,079                    14,382
     Prepaid expenses and other current assets                                             2,564                     2,317
                                                                              -------------------      --------------------
         Total current assets                                                             72,103                    64,205
                                                                              -------------------      --------------------
     Fixed assets                                                                         21,255                    18,085
        Less accumulated depreciation and
        amortization                                                                      13,561                    11,795
                                                                              -------------------      --------------------
                                                                                           7,694                     6,290
     Intangibles                                                                          12,683                    13,312
     Other assets                                                                          1,872                     1,478
                                                                              ===================      ====================
        Total assets                                                                     $94,352                   $85,285
                                                                              ===================      ====================

                                           LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                     $4,476                    $6,383
     Current portion of long-term debt                                                       571                       980
     Accrued payroll                                                                       2,527                     2,579
     Accrued expenses                                                                      2,486                     2,524
     Income taxes payable                                                                  2,502                     2,128
     Deferred revenue                                                                      1,739                       947
                                                                              -------------------      --------------------
        Total current liabilities                                                         14,301                    15,541
                                                                              -------------------      --------------------
Non-current portion of long-term debt                                                      1,650                     2,115
Deferred tax liability                                                                       149                       149
                                                                              -------------------      --------------------
        Total liabilities                                                                 16,100                    17,805
                                                                              -------------------      --------------------
Shareholders' equity:
     Preferred shares, no par value
        Authorized: 1,000,000 shares, none issued                                        --                        --
     Common shares:
        Common stock, authorized: 28,500,000
        shares; issued and outstanding:
        7,969,027 shares in 1996 and
        7,890,090 shares in 1995                                                          12,978                    12,335
     Foreign currency translation adjustment                                                (94)                     (519)
     Retained earnings                                                                    65,368                    55,664
                                                                              -------------------      --------------------
        Total shareholders' equity                                                        78,252                    67,480
                                                                              -------------------      --------------------
        Total liabilities and shareholders' equity                                       $94,352                   $85,285
                                                                              ===================      ====================
                                                                              
                                   The accompanying  notes are an integral  part
                                       of these condensed consolidated financial
                                       statements.

</TABLE>

<PAGE>
<TABLE>



                                                                      DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                                                   Condensed Consolidated Statements of Income
                                                                        (September 30, 1996 and 1995)
                                                                      (In thousands, except per share data)

<CAPTION>


                                                                THREE MONTHS ENDED                NINE MONTHSENDED
                                                                  SEPTEMBER 30,                     SEPTEMBER 30,
                                                                  (Unaudited)                       (Unaudited)
                                                               
                                                         ------------------------------    ------------------------------
                                                             1996            1995              1996            1995
                                                         ------------------------------    ------------------------------
<S>                                                            <C>                <C>             <C>            <C>   

Net sales                                                     $29,851          $25,278          $87,257          $72,850
Cost of net sales                                              19,230           16,438           56,671           46,729
                                                         -------------   --------------    -------------   --------------
Gross margin                                                   10,621            8,840           30,586           26,121

Operating expenses:
     Selling, general and administrative                        4,283            3,677           12,188           11,648
     Research and development                                   1,390            1,354            4,092            3,598
                                                         -------------   --------------    -------------   --------------
Total operating expenses                                        5,673            5,031           16,280           15,246

Income from operations                                          4,948            3,809           14,306           10,875

Interest income                                                   441              398            1,163              957
Interest expense                                                   68               90              160              223
                                                         -------------   --------------    -------------   --------------

Income before income taxes                                      5,321            4,117           15,309           11,609

Income taxes                                                    1,942            1,461            5,604            4,090
                                                         -------------   --------------    -------------   --------------

Net income                                                     $3,379           $2,656           $9,705           $7,519
                                                         =============   ==============    =============   ==============

Net income per share                                             $.40             $.32            $1.14             $.91
                                                         =============   ==============    =============   ==============

Weighted average number of shares outstanding
Per share (primary and fully diluted):                          8,520            8,341            8,529            8,266






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


</TABLE>

<PAGE>
<TABLE>


                    DH TECHNOLOGY, INC. AND SUBSIDIARIES
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)

                                                                                                       NINE MONTHS ENDED
<CAPTION>
                                                                                                         SEPTEMBER 30,
                                                                                                          (Unaudited)

                                                                                             --------------------------------------
                                                                                                   1996                1995
                                                                                             --------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM:

<S>                                                                                                  <C>                   <C> 

Operating activities:
   Net income                                                                                           $9,705              $7,519
   Adjustments to reconcile net income to net cash provided by operations:
     Depreciation and amortization                                                                       2,461               2,747
     Provision for loss on accounts receivable                                                              80                  52
     Undepreciated value of asset disposals                                                                 56                  47
     Changes in assets and liabilities excluding effect of acquisitions                                 (1,415)             (1,513)
                                                                                             --------------------------------------

Net cash provided by operating activities                                                               10,887               8,852

Investing activities:
   Net increase (decrease) in short-term investment securities held to maturity                        (12,330)               1,865
   Capital expenditures                                                                                 (3,674)             (1,969)
                                                                                              -------------------------------------

Net cash provided by (used in) investing activities                                                    (16,004)               (104)

Financing activities:
   Principal repayments on long-term debt                                                                 (874)             (1,325)
   Proceeds from the exercise of stock options                                                             643               1,018
                                                                                             --------------------------------------
Net cash used in financing activities                                                                     (231)               (307)

Effect of exchange rate changes on cash                                                                    413                   4

Net increase (decrease) in cash and cash equivalents                                                    (4,935)               8,445

Cash and cash equivalents at beginning of period                                                        28,971              19,587
                                                                                             --------------------------------------

Cash and cash equivalents at end of period                                                             $24,036             $28,032
                                                                                             ======================================

Supplemental Cashflow Disclosures:
   Interest paid on debt                                                                                  $151                $172
   Income taxes paid                                                                                    $3,838              $3,352

</TABLE>

                                                       
                                                    
              The accompanying notes are an integral part of these
                   condensed consolidated financial statements
<PAGE>

                      DH TECHNOLOGY, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                        (September 30, 1996 - Unaudited)

Note 1:  Basis of Presentation

The accompanying  condensed consolidated financial statements have been prepared
in  accordance  with  S.E.C.  requirements  for  interim  financial  statements.
Therefore,  they do not include all  disclosures  that would be presented in the
Company's Annual Report on Form 10-K. The financial statements should be read in
conjunction  with the financial  statements  contained in the  Company's  Annual
Report on Form 10-K for the year ended December 31, 1995.

The information  furnished  reflects all adjustments  (consisting only of normal
recurring adjustments) which are, in the opinion of management,  necessary for a
fair presentation of financial position,  results of operations,  and changes in
cash position for the interim period.  The results of operations for the periods
presented are not necessarily  indicative of results to be expected for the full
year.

The Board of Directors  authorized a three-for-two  common stock split effective
September  22,  1995.  All  share and per  share  data  have been  retroactively
restated to give effect to the stock split.

Note 2:  Inventories

The  composition  of  inventories  at September 30, 1996, and December 31, 1995,
were as follows:


                                            1996                    1995
                                           ------                  -----

         Raw Materials                  $8,582,000             $8,221,000
         Work in Process                 1,501,000                940,000
         Finished Goods                  3,996,000              5,221,000
                                        ----------             ----------

         Totals                        $14,079,000            $14,382,000

Note 3:  Operations subject to Purchase and Sale Agreements

On February 28, 1994, DH Technology,  Inc. acquired all of the outstanding stock
of Stadia  Colorado Corp.  (Stadia)  pursuant to a stock purchase  agreement for
$6.5 million in cash ($5.5 million paid at closing,  and additional  payments of
$500,000  paid on March 1, 1995,  and on March 1, 1996).  This business is being
operated as a subsidiary of DH Technology,  Inc. under the name Stadia  Colorado
Corp.  Stadia,  located in  Golden,  Colorado,  supplies  labeling  and  marking
solutions to a variety of customers in ten western states.

On August 31, 1994, DH Technology, Inc. acquired all of the outstanding stock of
Cognitive Solutions,  Inc. (Cognitive) and certain technology rights pursuant to
a stock  purchase  agreement  for $10 million in cash ($7.9 million paid through
1995, and additional  payments of $500,000 each due in 1996 through 1999). Also,
the Company is required to make additional payments,  not to exceed an aggregate
of  $3   million,   to  the  former   shareholder   of   Cognitive   based  upon
post-acquisition  net sales of a specified Cognitive product line. At the end of
each calendar  year,  the company will  calculate  the amount of the  additional
payment as defined in the stock purchase agreement. Each payment will be treated
as additional  acquisition  cost,  and will be recorded as additional  goodwill,
amortized  straight-line  over the remaining life of the asset. This business is
being operated as a subsidiary of DH  Technology,  Inc. under the name Cognitive
Solutions,  Inc. and is located in Paso Robles,  California.  Cognitive designs,
manufactures,  and markets  thermal bar code  printers and  complementary  label
media for use in automatic data collection systems.


<PAGE>


The Stadia and  Cognitive  acquisitions  were  accounted  for using the purchase
method;  accordingly,  the assets and liabilities of the acquired companies have
been recorded at their  estimated  fair values at the dates of  acquisition.  In
conjunction  with the  acquisitions  of  Stadia  and  Cognitive,  the  excess of
purchase  price over the  estimated  fair values of the net assets  acquired has
been recorded as goodwill of $4,062,000 and $5,590,000,  respectively,  which is
being amortized over 25 years using the straight-line method.

On October 30, 1995 the Company  acquired  certain assets and liabilities of Mos
Magnetics, a privately held company in San Diego, California, for $752,000 cash.
Mos Magnetics designs,  manufactures,  and markets magnetic read and write heads
and modules for credit card and debit card readers,  check readers,  and airline
ticket  readers.  The Company is required to make  additional  payments,  not to
exceed  an   aggregate   of  $1.3   million,   to  Mos   Magnetics   based  upon
post-acquisition net sales by the Company of a specific Mos product line. At the
end of each  calendar  year,  the  company  will  calculate  the  amount  of the
additional payment as defined in the asset purchase agreement. Each payment will
be treated as additional  acquisition  cost,  and will be recorded as additional
goodwill, amortized straight-line over the remaining life of the asset.

The  consolidated  statements of income  include the operations of the Magnetics
Division from October 30, 1995.


ITEM 2 -

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

The following  discussion  and analysis  should be read in  conjunction  with DH
Technology,  Inc.'s condensed  consolidated  financial  statements and the notes
related thereto included herein.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO THREE MONTHS ENDED 
SEPTEMBER 30, 1995

Net sales of $29.9 million for the quarter ended  September 30, 1996,  increased
18.1% over net sales of $25.3 million for the same period last year.  The growth
was  primarily  attributable  to the  increased  unit  shipments of  transaction
printers for the third quarter of 1996. A significant  percentage of this growth
was  attributable  to a single  customer.  See "Certain  Factors That May Affect
Future Results - Future Operating Results Subject to Fluctuation."


Cost of net sales  decreased to 64.4% of net sales for the third quarter of 1996
compared  to 65.0% of net sales for the same  period  of 1995  primarily  due to
relatively fixed overhead costs applied to increased  revenue in the transaction
printer business.

Selling, general, and administrative expenses decreased to 14.3% of net sales in
the third quarter of 1996 from 14.5% in the same period in 1995 due to net sales
increasing at a faster rate than selling,  general, and administrative expenses.
These  expenses  increased  in  absolute  dollars  to $4.3  million in the third
quarter of 1996 from $3.7 million in the third  quarter of 1995.  This  increase
was primarily due to three factors: the addition of resources and the broadening
of sales and marketing efforts in the barcode business;  the expenses associated
with  patent   litigation;   and  the   inclusion  of  selling,   general,   and
administrative  expenses for the  Magnetics  division  for the third  quarter of
1996.


<PAGE>


Research and development  expenses as a percentage of sales decreased to 4.7% in
the third quarter of 1996  compared to 5.4% in the third quarter of 1995.  Total
dollars expended for research and development  remained constant at $1.4 million
in the third  quarter  of 1996 and in the third  quarter  of 1995.  The  Company
believes that the continued timely  development of new products and enhancements
to its existing products are essential to maintaining the Company's  competitive
position.  Accordingly, the Company anticipates that such expenses will increase
in absolute dollars.

Income from  operations as a percentage of net sales  increased to 16.6% for the
quarter ended September 30, 1996,  compared to 15.1% for the same period in 1995
due to lower cost of goods sold and lower operating  expenses as a percentage of
revenue as discussed above.

Interest income increased to $441,000 in the third quarter of 1996 from $398,000
in the third  quarter of 1995 as a result of higher  cash  balances in the third
quarter of 1996.

Interest expense  decreased to $68,000 in the third quarter of 1996 from $90,000
for the same  period  in 1995 due to a  $500,000  payment  of debt in the  first
quarter of 1996 related to the Stadia  acquisition as well as a $500,000 payment
in August 1996 related to the Cognitive acquisition.

Income taxes as a percentage of income  before  income taxes  increased to 36.5%
for the third  quarter  of 1996 from 35.5% for the same  period in 1995,  due in
part to an increase in the  Australian  tax rate to 39%,  and in part to reduced
benefit  from the  partially  suspended  federal  research and  development  tax
credit.

NINE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO NINE MONTHS ENDED 
SEPTEMBER 30, 1995

Net  sales of $87.3  million  for the nine  months  ended  September  30,  1996,
increased  19.8% over net sales of $72.9  million for the same period last year.
Growth was primarily attributable to the increased unit shipments of transaction
printers for the first nine months of 1996.  A  significant  percentage  of this
growth was  attributable  to a single  customer.  See "Certain  Factors That May
Affect Future Results - Future Operating Results Subject to Fluctuation."

Cost of net sales  increased  to 64.9% of net sales  for the nine  months  ended
September  30, 1996  compared to 64.1% of net sales for the same period of 1995.
Two factors primarily  contributed to the increase: a mix shift in the printhead
business to products with higher material  content as a percentage of net sales;
and a  price  decrease  initiated  at  Cognitive  where  efforts  to  lower  the
associated costs continue.

Selling, general, and administrative expenses decreased to 14.0% of net sales in
the nine months ended  September  30, 1996 from 16.0% in the same period in 1995
due to net  sales  increasing  at a  faster  rate  than  selling,  general,  and
administrative  expenses.  These expenses increased in absolute dollars to $12.2
million in the nine month ended  September  30,  1996 from $11.6  million in the
same period of 1995.  This  increase was primarily due the inclusion of selling,
general,  and  administrative  expenses for the Magnetics  division for the nine
months ended September 30, 1996; and the addition of resources and broadening of
sales and marketing efforts in the barcode business.

Research and development  expenses decreased as a percentage of sales to 4.7% in
the nine months period ended  September 30, 1996 from 4.9% in the same period in
1995.  Total  dollars  expended for research and  development  increased to $4.1
million in the nine months  ended  September  30, 1996 from $3.6  million in the
same period in 1995. The Company believes that the continued timely  development
of  new  products  and  enhancements  to  existing  products  are  essential  to
maintaining  the  Company's  competitive  position.   Accordingly,  the  Company
anticipates that such expenses will continue to increase in absolute dollars.
<PAGE>

Income from  operations as a percentage of net sales  increased to 16.4% for the
nine months ended  September 30, 1996,  compared to 14.9% for the same period in
1995  primarily  due to lower  operating  expenses as a percentage of revenue as
discussed above.

Interest  income  increased to $1,163,000 in the nine months ended September 30,
1996 from  $957,000  in the same  period of 1995 as a result of higher  interest
bearing cash balances in the first nine months of 1996.

Interest  expense  decreased to $160,000 in the nine months ended  September 30,
1996  from  $223,000  for the same  period  in 1995 due to the  payment  of debt
related to the Cognitive and Stadia acquisitions.

Income taxes as a percentage of income  before  income taxes  increased to 36.6%
for the nine months ended  September  30, 1996 from 35.2% for the same period in
1995,  due in part to an increase in the Australian tax rate to 39%, and in part
to  the  reduced  impact  of  the  partially   suspended  federal  research  and
development tax credit.

Certain Factors That May Affect Future Results
----------------------------------------------

The Company's  representatives  may from time to time make oral forward  looking
statements. The factors set forth below are certain important factors that could
cause  actual  results to differ  materially  from those  projected  in any such
forward looking statements.

Future Operating Results Subject to Fluctuation. The Company's operating results
may  fluctuate in the future as a result of a number of factors,  including  the
timing of customer orders,  timing of completion of existing customer contracts,
variations  in the  Company's  sales  channels  or the mix of products it sells,
changes  in  pricing  policies  by  the  Company's  suppliers,  fluctuations  in
manufacturing  yields, the market acceptance of new and enhanced versions of the
Company's products and the timing of acquisitions of other businesses,  products
and technologies and any associated charges to earnings.  Further, the Company's
expense levels are based in part on  expectations  of future  revenues,  and the
Company has been  increasing  and  expects to  continue  to  increase  operating
expenditures and inventory as it expands its operations.  The rate of new orders
may vary significantly from month to month;  consequently,  if anticipated sales
and shipments in any quarter do not occur when expected,  operating expenses and
inventory levels could be  disproportionately  high and the Company's  operating
results  for  that  quarter,  and  potentially  for  future  quarters,  would be
adversely  affected.  A significant  percentage of revenue growth in the quarter
and nine months  ended  September  30, 1996 was  attributable  to  purchases  of
transaction  printers by a single customer.  Shipments to this customer are made
against purchase orders received from the customer from time to time and are not
pursuant to a contract  requiring a specified amount of purchases.  Although the
Company  presently  expects to generate  additional  revenue from this  customer
during the fourth  quarter of 1996,  the company  expects that revenue from this
customer in 1997 will decline compared to the total revenue  generated from this
customer in 1996.  To the extent that sales to this or other  customers  decline
and are not replaced with sales to other  customers,  the  Company's  results of
operations  could be affected by general  economic  conditions.  Fluctuations in
operating  results may cause  volatility  in the price of the  Company's  Common
Stock.

Management of Acquisitions.  Historically, the Company has achieved a portion of
its growth  through  acquisitions  of other  businesses  and continues to pursue
additional  acquisitions as part of its growth  strategy.  There are a number of
risks  associated  with any  acquisition,  including  the  substantial  time and
attention  required  from  management  of the  Company in  connection  with such
transactions,  the difficulty of predicting  whether the operations will perform
as expected and other  problems  inherent  with any  transition  of one business
organization  into  another.  There  can be no  assurance  that the  anticipated
benefits of any acquisition will be realized. A failure by the Company to manage
any such  acquisitions  effectively  could  materially and adversely  affect the
Company's  business and operating  results.  Additionally,  future  acquisitions
could  result  in  potentially  dilutive  issuances  of equity  securities,  the
incurrence of debt and contingent  liabilities and amortization expenses related
to goodwill and other intangible assets, any of which could materially adversely
affect the Company's operating results and financial condition.

Technological Change;  Competition;  Dependence on New Products. The markets for
some of the  Company's  products  are  characterized  by  frequent  new  product
introductions and declining average selling prices over product life cycles. The
Company's  future  success is highly  dependent  upon the timely  completion and
introduction  of  new  products  at  competitive  price/performance  levels.  In
addition,  the Company  must respond to current  competitors,  who may choose to

<PAGE>

increase their presence in the Company's  markets,  and to new competitors,  who
may choose to enter  those  markets.  If the  Company  is unable to make  timely
introduction of new products or respond to competitive threats, its business and
operating results could be materially adversely affected.

Fluctuation in Demand. The Company's  customers encounter uncertain and changing
demand for their products.  They typically order products from the Company based
on their forecasts.  If demand falls below customers' forecasts, or if customers
do not control  their  inventories  effectively,  they may cancel or  reschedule
shipments  previously  ordered  from the  Company.  The  Company has in the past
experienced,  and  may at  any  time  and  with  minimal  notice  in the  future
experience, cancellations and postponements of orders.


FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

The  Company's  primary  source of liquidity has been cash flow  generated  from
operations. Cash, cash equivalents, and short-term investment securities held to
maturity totaled  approximately $39.1 million on September 30, 1996, compared to
$31.7 million on December 31, 1995.

OPERATING ACTIVITIES

For  the  nine  months  ended   September  30,  1996,   the  Company   generated
approximately $10.9 million in net cash from operating activities primarily as a
result of approximately $9.7 million in net income, $2.5 million in depreciation
and amortization, and an increase in net operating assets of $1.3 million.

INVESTING ACTIVITIES

The Company's principal investing  activities in the nine months ended September
30, 1996 were the purchase of property and equipment for product development and
production and the  investment in short-term  securities  held to maturity.  The
average life of securities held has been extended to secure higher  returns.  As
of  September  30, 1996 the Company  anticipates  capital  expenditures  in 1996
between $3 and $5 million,  principally for new product  tooling,  manufacturing
equipment, the new MIS system, and the required payments for Cognitive described
below

The  Company is also  required  to make  additional  payments,  not to exceed an
aggregate of $3 million,  to the former  shareholder of Cognitive based upon the
attainment of specified net sales by a particular  Cognitive  product line.  The
Company  does not expect the payment to be material  for the  remainder of 1996.
See Note 3 of notes to condensed consolidated financial statements.

The Company  continues to evaluate  potential  acquisitions  of businesses  that
would  complement the Company's  existing  businesses and product lines, and any
such  acquisitions  could require the use of the Company's cash resources and/or
additional borrowings.

FINANCING ACTIVITIES

The Company's major financing  activities for the first nine months of 1996 were
the principal repayment of debt, including the notes payable associated with the
Stadia and Cognitive  acquisitions.  As of September  30, 1996,  the Company had
$2.2 million in debt outstanding of which the current portion was  approximately
$600,000.  This debt  includes  $1.5  million  payable  to the  former  owner of
Cognitive in annual installments of $500,000 each due in 1997 through 1999.

On August 15, 1996, the Company renewed a $6.5 million line of credit  agreement
originally  signed on August 15, 1994. The line of credit  includes a subfeature
to issue standby and/or commercial letters of credit not to exceed $1.5 million.
Borrowings  under the line bear  interest at a rate per annum equal to the prime
rate in effect from time to time.  As of September 30, 1996, no amounts had been
drawn against this line of credit.
<PAGE>

The Company currently expects that current cash balances and cash generated from
operations  will adequately  fund the Company's  anticipated  cash needs for the
next  12  months.   However,   the  Company  continues  to  evaluate   potential
acquisitions  of  businesses  that  would  complement  the  Company's   existing
businesses and product lines, and any such acquisitions could require the use of
the Company's cash resources and/or additional borrowings.

The Company reviews  potential foreign currency risks on an ongoing basis and to
date has been able to  effectively  manage this risk  without the use of hedging
instruments. In the second quarter of 1996 a $186,000 net gain was realized as a
result of favorable  exchange  rates  prevailing  when the foreign  subsidiaries
reduced intercompany obligations.


<PAGE>



Item 6 -   Exhibits and reports on Form 8-K

                  (a)      Exhibits:

                           Exhibit 11     Computation of Net Income Per Share.

                           Exhibit 27     Financial Data Schedule.

                  (b)      Reports on Form 8-K
                           No report on Form 8-K was filed  during  the  quarter
                           ended September 30, 1996.


<PAGE>



                                   SIGNATURES

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


DH Technology, Inc. by:


     November 14, 1996                             /s/Janet W. Shanks
     -----------------                             ------------------
         Date                        Janet W. Shanks, Chief Accounting Officer
                                            (Chief Accounting Officer)


<PAGE>



                               DH TECHNOLOGY, INC.
                    EXHIBITS TO QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1996



                                                                  SEQUENTIALLY
EXHIBIT                     DESCRIPTION                           NUMBERED PAGE
-------------------------------------------------------------------------------

         11           Computation of Net Income Per Share              13
       
         27           Financial Data Schedule                          14  

<PAGE>



<TABLE>
<CAPTION>


                                                       EXHIBIT 11

                                          DH TECHNOLOGY, INC. AND SUBSIDIARIES
                                          Computation of Net Income Per Share
                                         (In thousands, except per share data)



                                                                  THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                  SEPTEMBER 30,

                                                        
                                                         --------------------------------    --------------------------------
                                                             1996               1995             1996              1995
                                                         --------------------------------    --------------------------------
<S>                                                           <C>                <C>              <C>              <C>  

Primary and fully diluted:*

Average shares outstanding                                      7,977              7,830            7,984              7,785

Net effect of dilutive stock
options and warrants based on
the treasury stock method using
average market price                                              543                511              545                481
                                                         -------------      -------------    -------------     --------------

Average common and common
equivalent shares outstanding                                   8,520              8,341            8,529              8,266

Net income                                                     $3,379             $2,656           $9,705             $7,519

Per share (primary and fully diluted)
                                                         =============      =============    =============     ==============
Net income per share                                             $.40               $.32            $1.14               $.91
                                                         =============      =============    =============     ==============







* There is no significant  difference between primary and fully diluted earnings
  per share.
</TABLE>