UNITED STATES
                       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

                                       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 0-27808

                            COVOL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                     87-0547337
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                     Identification No.)

          3280 North Frontage Road
                 Lehi, Utah                                84043
  (Address of principal executive offices)               (Zip Code)

                                 (801) 768-4481
              (Registrant's telephone number, including area code)

                                 Not applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

         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 number of shares  outstanding of the Registrant's  common stock as of May 8,
2000 was 23,415,200.

<PAGE>

                            COVOL TECHNOLOGIES, INC.

                                TABLE OF CONTENTS

                                                                        Page No.

PART I - FINANCIAL INFORMATION

     ITEM 1.   CONSOLIDATED FINANCIAL INFORMATION (Unaudited):
               Consolidated Balance Sheets - As of September 30, 1999
                 and March 31, 2000......................................... 3
               Consolidated Statements of Operations - For the three
                 months ended March 31, 1999 and 2000 and the six months
                 ended March 31, 1999 and 2000.............................. 5
               Consolidated Statement of Changes in Stockholders'
                 Equity (Deficit) - For the six months ended March
                 31, 2000................................................... 6
               Consolidated Statements of Cash Flows - For the six
                 months ended March 31, 1999 and 2000....................... 7
               Notes to Consolidated Financial Statements................... 8

     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS.................................. 15


PART II - OTHER INFORMATION

     ITEM 1.   LEGAL PROCEEDINGS........................................... 20

     ITEM 2.   CHANGES IN SECURITIES....................................... 20

     ITEM 3.   DEFAULTS UPON SENIOR SECURITIES............................. 20

     ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......... 20

     ITEM 5.   OTHER INFORMATION........................................... 20

     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K............................ 20


SIGNATURES................................................................. 21


Certain statements in this Report constitute  forward-looking  statements within
the meaning of the Private  Securities  Litigation  Reform Act of 1995. As such,
actual results may vary materially from current  expectations.  For a discussion
of certain  of the  factors  that  could  cause  actual  results to differ  from
expectations,  please see the information  set forth under the caption  entitled
"Forward Looking Statements" in PART I, ITEM 2 hereof. There can be no assurance
that  Covol's  results of  operations  will not be  adversely  affected  by such
factors.  Covol  undertakes  no  obligation  to revise or  publicly  release the
results  of any  revision  to  these  forward-looking  statements.  Readers  are
cautioned not to place undue reliance on these forward looking statements, which
reflect management's opinion only as of the date hereof.

                                       2
<PAGE>

ITEM 1.   CONSOLIDATED FINANCIAL INFORMATION (Unaudited)


<TABLE>
<CAPTION>
                                         COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                                 CONSOLIDATED BALANCE SHEETS
                                                         (Unaudited)

                                                                                              September 30,         March 31,
(thousands of dollars)                                                                                1999             2000
------------------------------------------------------------------------------------------- ---------------- -----------------
ASSETS

Current assets:
<S>                                                                                                   <C>             <C>
     Cash and cash equivalents                                                                        $ 461           $ 9,172
     Receivables                                                                                      3,155             8,766
     Due from related party                                                                           2,722             2,986
     Inventories                                                                                        573                --
     Facilities and equipment held for sale                                                          20,139            10,035
     Prepaid expenses and other current assets                                                           19               279
     Deferred income taxes                                                                               --             3,000
                                                                                            ---------------- -----------------
            Total current assets                                                                     27,069            34,238
                                                                                            ---------------- -----------------

Property, plant and equipment, net of accumulated depreciation                                       14,182             3,661
                                                                                            ---------------- -----------------

Other assets:
     Restricted cash and investments                                                                    843               846
     Facility-dependent note and accrued interest receivable                                          7,879             8,365
     Facility transferred under note receivable arrangement                                           2,641                --
     Intangible assets, net of accumulated amortization                                               3,647             1,305
     Deposits and other assets                                                                        1,834             1,403
                                                                                            ---------------- -----------------
            Total other assets                                                                       16,844            11,919
                                                                                            ---------------- -----------------

Total assets                                                                                        $58,095           $49,818
                                                                                            ================ =================
</TABLE>

                                   (continued)

                     The accompanying notes are an integral
                  part of the consolidated financial statements

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                         COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                           CONSOLIDATED BALANCE SHEETS, continued
                                                        (Unaudited)


                                                                                              September 30,        March 31,
(thousands of dollars and shares)                                                                    1999             2000
-------------------------------------------------------------------------------------------- --------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
<S>                                                                                                 <C>                <C>
     Accounts payable                                                                               $ 1,179            $ 945
     Due to related party                                                                             2,706            2,915
     Accrued interest payable, current                                                                1,452              256
     Accrued liabilities                                                                              2,905            3,042
     Notes payable, current                                                                          20,626           11,380
                                                                                             --------------- ----------------
            Total current liabilities                                                                28,868           18,538

Long-term liabilities:
     Notes payable, non-current                                                                      17,887           15,357
     Accrued interest payable, non-current                                                              210               --
     Deferred revenues from advance license fees                                                      7,501            7,040
     Deferred compensation                                                                              208              174
                                                                                             --------------- ----------------
            Total long-term liabilities                                                              25,806           22,571
                                                                                             --------------- ----------------
            Total liabilities                                                                        54,674           41,109
                                                                                             --------------- ----------------

Minority interest in consolidated subsidiaries                                                          117               --
                                                                                             --------------- ----------------
Commitments and contingencies (Note 8)

Redeemable convertible preferred stock, $0.001 par value, issued and outstanding 60 shares
     at September 30, 1999 and 0 shares at March 31, 2000                                             4,332               --
                                                                                             --------------- ----------------
Stockholders' equity (deficit):
     Convertible  preferred stock,  $0.001 par value;  authorized 10,000 shares,
         issued and  outstanding  17 shares at September  30, 1999 and 55 shares at
         March 31, 2000 (aggregate liquidation preference of $7,415 at March 31, 2000)                    1                1
     Common stock, $0.001 par value; authorized 50,000 shares, issued and outstanding
         12,766 shares at September 30, 1999 and 21,701 shares at March 31, 2000                         13               22
     Capital in excess of par value                                                                  78,457           83,626
     Accumulated deficit                                                                            (71,713)         (73,541)
     Notes and interest receivable - related parties, from issuance of, or collateralized
          by, common stock, net of allowance                                                         (6,564)            (269)
     Deferred compensation from stock options                                                        (1,222)          (1,130)
                                                                                             --------------- ----------------
            Total stockholders' equity (deficit)                                                     (1,028)            8,709
                                                                                             --------------- ----------------

Total liabilities and stockholders' equity (deficit)                                                 $58,095          $49,818
                                                                                             =============== ================
</TABLE>

                     The accompanying notes are an integral
                  part of the consolidated financial statements

                                        4
<PAGE>
<TABLE>
<CAPTION>
                                         COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                                        (Unaudited)

                                                                  Three Months Ended March 31,        Six Months Ended March 31,
(thousands of dollars, except per-share data)                             1999            2000            1999              2000
---------------------------------------------------------------------------------------------------------------------------------
Revenues:
<S>                                                                      <C>           <C>             <C>               <C>
     License fees                                                        $ 546         $ 4,798         $ 1,247           $ 8,833
     Binder sales                                                          423           1,883             956             3,236
     Gain on sale of facility                                               --              --              --             5,341
     Gains on non-recurring transactions                                    --           1,079              --             1,079
     Other                                                                 174             139             322               459
                                                              -------------------------------------------------------------------
          Total revenues                                                 1,143           7,899           2,525            18,948
                                                              -------------------------------------------------------------------
Operating costs and expenses:
     Cost of coal briquetting operations                                 2,553             700           6,199             2,289
     Cost of binder                                                        274           1,367             650             2,228
     Loss on sale of facilities, net                                        --             598              --               598
     Asset write-offs and other non-recurring charges                      556             841             556            11,862
     Selling, general and administrative                                 1,233           1,085           2,162             1,996
     Compensation expense from stock options                               163              46             325                92
                                                              -------------------------------------------------------------------
        Total operating costs and expenses                               4,779           4,637           9,892            19,065
                                                              -------------------------------------------------------------------
Operating income (loss)                                                (3,636)           3,262         (7,367)             (117)
                                                              -------------------------------------------------------------------

Other income (expense):
     Interest income                                                       234             310             990             1,110
     Interest expense                                                  (1,377)         (1,711)         (2,413)           (3,766)
     Write-up (write-down) of notes receivable - related
        parties,  collateralized by common stock                         (178)             161           (749)             (131)
     Other, net                                                          (100)             115            (76)               115
                                                              -------------------------------------------------------------------
          Total other income (expense)                                 (1,421)         (1,125)         (2,248)           (2,672)
                                                              -------------------------------------------------------------------

Income (loss) before income taxes and extraordinary item               (5,057)           2,137         (9,615)           (2,789)

Income tax benefit                                                          --              --              --           (3,000)
                                                              -------------------------------------------------------------------

Income (loss) before extraordinary item                                (5,057)           2,137         (9,615)               211

Extraordinary loss on early extinguishment of debt                          --         (1,823)              --           (1,823)
                                                              -------------------------------------------------------------------

Net income (loss)                                                     $(5,057)           $ 314        $(9,615)          $(1,612)
                                                              ===================================================================

Basic and diluted income (loss) per common share                        $(.41)            $.01          $(.80)            $(.12)
                                                              ===================================================================
</TABLE>

                     The accompanying notes are an integral
                  part of the consolidated financial statements

                                        5
<PAGE>
<TABLE>
<CAPTION>
                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                     For the Six Months Ended March 31, 2000
                                   (Unaudited)

                                                                                                 Notes and
                                                                                                  interest
                                                                                                 receivable-
                                                                                                  related
                                                                                                parties, from
                              Convertible                                                        issuance of,
                              Preferred            Common                                        or collater-      Deferred
                                Stock              Stock               Capital                      alized       compensation
(thousands of dollars      --------------------------------------     in excess    Accumulated    by, common      from stock
and shares)                Shares    Amount   Shares      Amount     of par value    deficit        stock           options
-----------------------------------------------------------------------------------------------------------------------------
<S>                           <C>      <C>    <C>          <C>         <C>           <C>            <C>             <C>
Balances at
 September 30, 1999           17       $1     12,766       $13         $78,457       $(71,713)      $(6,564)        $(1,222)

Preferred stock
 cash dividends                                                                          (205)

Common stock issued
 on conversion of
 redeemable convertible
 and convertible
 preferred stock and in
 payment of dividends         --       --      2,662         3           1,631           (11)

Reclassification of
 redeemable convertible
 preferred stock to
 convertible preferred
 stock                        38       --                                2,710

Common stock issued
 for cash                                      3,629         4           4,662

Common stock issued
 on conversion of
 convertible debt                              2,540         2           1,114

Common stock issued
 in connection with
 redemption of                                   214        --             256
 debt

Common stock issued
 for cash and in
 connection with
 cashless exercise
 of warrants                                     646         1             202

Value of common
 stock warrants
 issued in connection
 with convertible debt
 financing                                        --        --             468

Value of extended
 common stock warrants
 and repriced stock
 options issued in
 connection with debt
 financing                                        --        --              70

Cancellation of
 notes receivable -
 related parties and
 common stock
 collateralizing the
 notes                                          (756)       (1)         (5,944)                       6,164

Write-down of notes
 receivable - related
 parties                                                                                                131

Amortization of
 deferred compensation
 from stock options                                                                                                      92

Net loss for the
 six months ended
 March 31, 2000                                                                        (1,612)
                        -----------------------------------------------------------------------------------------------------
Balances at
 March 31, 2000               55       $1     21,701       $22         $83,626      $(73,541)         $(269)       $(1,130)
                        ====================================================================================================
</TABLE>

                     The accompanying notes are an integral
                  part of the consolidated financial statements

                                        6
<PAGE>
<TABLE>
<CAPTION>
                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                   ----------

                                                                                                      Six Months Ended March 31,
     (thousands of dollars)                                                                                   1999          2000
------------------------------------------------------------------------------------------------- ----------------- -------------
     Cash flows from operating activities:
<S>                                                                                                        <C>           <C>
     Net loss                                                                                              $(9,615)      $(1,612)
     Adjustments to reconcile net loss to net cash used in operating activities:
           Depreciation and amortization                                                                       845           749
           Recognition of deferred revenue from advance license fees                                          (453)         (461)
           Deferred income taxes                                                                                --        (3,000)
           Gain on sale of facilities, net                                                                      --        (4,743)
           Loss (gain) on disposition of equipment                                                             103           (57)
           Gains on non-recurring transactions                                                                  --        (1,079)
           Asset write-offs and other non-recurring charges                                                    556        10,631
           Amortization of deferred compensation from stock options                                            325            92
           Interest expense related to amortization of debt discount and debt issuance costs                   326         2,272
           Extraordinary loss on early extinguishment of debt                                                   --         1,823
           Write-down of notes receivable - related parties                                                    749           131
           Decrease from changes in operating assets and liabilities                                        (2,688)       (6,860)
                                                                                                  ----------------- -------------
   Net cash used in operating activities                                                                    (9,852)       (2,114)
                                                                                                  ----------------- -------------

   Cash flows from investing activities:
        Proceeds from sale of facilities and equipment                                                         170        18,089
        Purchase of property, plant and equipment and facilities held for sale                                (323)         (551)
        Purchase of rights to technology and other assets                                                     (128)          (75)
        Decrease (increase) in restricted cash and in deposits collateralizing letters of credit                50            (3)
        Proceeds from facility transferred under note receivable arrangement                                   261            --
                                                                                                  ----------------- -------------
   Net cash provided by investing activities                                                                    30        17,460
                                                                                                  ----------------- -------------

   Cash flows from financing activities:
        Proceeds from issuance of notes payable and warrants, net                                           10,498         2,980
        Payments on notes payable, including redemption premiums                                            (4,692)      (14,279)
        Proceeds from issuance of common stock and warrants, net                                             3,774         4,666
        Proceeds from issuance of preferred stock and warrants, net                                          6,394            --
        Preferred stock dividends                                                                               --          (205)
        Proceeds from exercise of warrants                                                                      --           203
                                                                                                  ----------------- -------------
   Net cash provided by (used in) financing activities                                                      15,974        (6,635)
                                                                                                  ----------------- -------------

   Net increase in cash and cash equivalents                                                                 6,152         8,711

   Cash and cash equivalents, beginning of period                                                              727           461
                                                                                                  ----------------- -------------

   Cash and cash equivalents, end of period                                                                $ 6,879       $ 9,172
                                                                                                  ================= =============


   Supplemental schedule of non-cash investing and financing activities:
        Cancellation of notes receivable - related parties and the common stock collateralizing              $  --        $6,164
           the notes
        Reclassification of redeemable convertible preferred stock to convertible preferred                     --         2,710
           stock
        Common stock issued on conversion of redeemable convertible and convertible preferred
           stock and in payment of dividends                                                                 2,159         1,634
        Common stock issued on conversion of convertible debt                                                   --         1,116
        Common stock issued to purchase minority interests in subsidiaries                                     519            --
        Common stock issued for rights to technology                                                           375            --
        Notes payable issued for equipment and rights to technology                                            640            --
</TABLE>

                     The accompanying notes are an integral
                  part of the consolidated financial statements

                                       7
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------


1.   Nature of Operations and Basis of Presentation

     Covol Technologies,  Inc. and its Subsidiaries'  ("Covol") primary business
     is to commercialize its proprietary  binder  technologies which are used to
     recycle waste  by-products  from the coal,  steel and other industries into
     marketable fuel and resources.  Through June 1998, Covol's focus was on the
     construction of facilities and the licensing of its binder  technologies to
     entities that constructed facilities that convert coal fines into synthetic
     fuel briquettes.  Currently,  Covol's licensees are operating 28 facilities
     in ten states at various levels of production.  There are 24 synthetic fuel
     plants  that  utilize  Covol's  patented  technology  and  four  additional
     facilities that use an alternative  technology that Covol acquired in early
     fiscal 1999.  During 1999 and 2000,  Covol has been  actively  pursuing the
     sale of its four owned  facilities  and the licensing of its  technology to
     the buyers,  which  sales and  licensing  were  completed  in August  1999,
     December  1999,  January  2000 and April 2000,  respectively  (see Note 5).
     Covol  has  no  current  plans  to  construct   additional  synthetic  fuel
     facilities.

     The  accompanying  unaudited  consolidated  financial  statements have been
     prepared in accordance with the rules and regulations of the Securities and
     Exchange  Commission for quarterly  reports on Form 10-Q. In the opinion of
     management,  all adjustments  considered  necessary for a fair presentation
     have been included. All adjustments, except the extraordinary loss on early
     extinguishment  of debt  (see Note 2) and the  items  described  in Note 6,
     consist of normal recurring adjustments.  The results of operations for the
     periods  presented  are not  necessarily  indicative  of the  results to be
     expected for the full year.  Certain  information and footnote  disclosures
     normally  included in  financial  statements  prepared in  accordance  with
     generally accepted accounting principles have been condensed or omitted. It
     is suggested that these  financial  statements be read in conjunction  with
     the consolidated financial statements and notes thereto included in Covol's
     Annual  Report on Form 10-K for the year ended  September  30,  1999 and in
     Covol's  Quarterly  Report on Form 10-Q for the quarter ended  December 31,
     1999.  Certain prior period amounts have been  reclassified to conform with
     the current period's  presentation.  The reclassifications had no effect on
     net loss, total assets or total liabilities.

2.   Financing and other Equity Transactions

     During and subsequent to the quarter ended March 31, 2000,  Covol completed
     several transactions, including the following.

     Convertible Debt

     In January 2000,  Covol  redeemed all of the  convertible  debt issued from
     September 1999 through  December 1999. The redemption  consideration  given
     included approximately $1,000,000 in redemption premiums plus approximately
     214,000  shares of common  stock.  The loss  recognized  as a result of the
     redemption  consideration paid plus the acceleration of amortization of the
     unamortized  debt  discount and debt issuance  costs totaled  approximately
     $1,823,000.  This  loss  is  reflected  as an  extraordinary  item  in  the
     Consolidated  Statements of  Operations  as required by generally  accepted
     accounting principles ("GAAP").

     In April 2000,  Covol and the holder of the  $20,000,000  convertible  debt
     amended the terms of the  convertible  secured note. The revised terms call
     for i) a change in the due date to September  2001,  and ii) changes in the
     provisions for early redemption, including a reduction in the amount of the
     cash  required  to  be  paid  upon  early  redemption,  and  new  mandatory
     redemption  requirements  upon the  receipt  by Covol of  certain  deferred
     payments  from the sales of synthetic  fuel  facilities  which  occurred in
     August  1999 and  January  2000  (see  Note 5).  In  connection  with  this
     amendment, Covol was required to redeem $3,000,000 of the face value of the
     debt  in  April  2000  and   $2,000,000  in  May  2000,   resulting  in  an
     extraordinary loss of approximately $2,600,000.  Also, Covol was allowed to
     redeem the preferred  stock held by this entity (see Preferred Stock on the
     following page).

     Notes Payable

     In February 2000,  Covol  restructured its outstanding debt associated with
     the  construction  of a wash plant (see Note 3). The  creditor,  which is a
     limited partner of Coaltech,  agreed to accept Covol's note receivable from
     Coaltech  (classified

                                       8
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------

     as  "Facility  transferred  under  note  receivable   arrangement"  in  the
     Consolidated Balance Sheet) as partial payment on the debt. The outstanding
     principal and accrued  interest,  totaling  approximately  $4,927,000,  was
     reduced to a remaining balance of approximately  $1,962,000  ($1,927,000 at
     March 31, 2000) and the due date of the  restructured  note was extended to
     October  2000.  A gain of  approximately  $324,000 was  recognized  on this
     transaction,  which amount  represents the interest on the note  receivable
     that, as required by GAAP, had not been previously recognized.

     In April 2000, the holder of the  $3,000,000 14% note payable  described in
     Note 3 converted  $2,000,000  of  principal  into  approximately  1,186,000
     shares of common  stock and  warrants  for the  purchase  of  approximately
     296,000 shares of common stock.  The due date for the remaining  $1,000,000
     of  principal  was extended to April 2001.  The  warrants  are  exercisable
     through April 2005 at a price of $2.10 per share.  In connection  with this
     transaction,   the  creditor  released  as  collateral  a  promissory  note
     receivable  reflected as "Note receivable - related party" in stockholders'
     equity in the March 31, 2000  Consolidated  Balance  Sheet.  The promissory
     note requires an annual payment to Covol of approximately $515,000 with the
     outstanding balance of approximately $3,700,000 due January 2005.

     Preferred Stock

     During  the  quarter  ended  March  31,  2000,  7,257  shares  of  series D
     redeemable  convertible  preferred stock were converted into  approximately
     878,000  shares of common  stock.  In March 2000,  an amendment was made to
     Covol's Series D Preferred Stock Agreement  eliminating the provisions that
     in certain  situations  allowed  the holder to require  Covol to redeem the
     preferred  stock.  Accordingly,  this  preferred  stock is  classified as a
     component  of  stockholders'  equity at March 31, 2000.  In April 2000,  an
     additional  1,910  shares  of series D  convertible  preferred  stock  were
     converted into approximately 150,000 shares of common stock.

     Also in April 2000,  an  agreement  was entered into with the holder of the
     series D preferred  stock,  which  entity also holds the  $20,000,000  face
     value convertible debt. The agreement provided for the redemption of 16,000
     shares of the outstanding  preferred stock,  which  redemption  occurred in
     April 2000.  In May 2000,  the remaining  19,631 shares of preferred  stock
     were redeemed. The total amount paid for both redemptions was approximately
     $4,454,000, including a redemption premium of approximately $891,000.

     Common Stock

     In March 2000, Covol issued approximately  3,629,000 shares of common stock
     for cash proceeds of approximately $4,666,000, net of cost of approximately
     $270,000.  Subsequent to March 31, 2000, Covol issued approximately 379,000
     shares of common  stock and  warrants  for the  purchase  of  approximately
     133,000  shares of common stock to certain  officers and  directors for net
     cash  proceeds of  approximately  $592,000.  The warrants  are  exercisable
     through March 2005 at a price of $1.56 per share.

     Notes and Interest Receivable - Related Parties

     In March 2000,  Covol  entered  into  termination  agreements  with certain
     current and former officers and employees having notes and interest payable
     to  Covol  totaling  approximately  $6,164,000.  All of  these  notes  were
     collateralized  by shares of Covol's common stock and were  classified as a
     reduction  in  stockholders'   equity.   The  agreements   called  for  the
     cancellation  of  the  outstanding  balances  under  the  notes,  including
     interest, in exchange for the surrender and cancellation of the outstanding
     shares  of common  stock  collateralizing  the  notes.  These  transactions
     resulted in the  cancellation  of  approximately  756,000  shares of common
     stock and the recognition of a loss of approximately $219,000, which amount
     represents the interest recognized on the notes in prior periods.

     Warrants

     During the quarter ended March 31, 2000, the terms of existing warrants for
     the purchase of approximately  2,750,000 shares of common stock at exercise
     prices  ranging  from $3.50 to $12.00 per share were  changed.  The revised
     terms of the warrants  reduced the shares  issuable under these warrants to
     approximately 620,000 shares of common stock with a corresponding reduction
     in the exercise price to $1.32 per share. During the quarter,  warrants for
     the purchase of approximately

                                       9
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------

     213,000  shares  of  common  stock  were  exercised  for cash  proceeds  of
     approximately  $203,000.  Also during the  quarter,  approximately  433,000
     shares of common stock were issued in a cashless  exercise of warrants.  As
     of March 31,  2000,  warrants  for the  purchase of  approximately  766,000
     shares of common stock were outstanding,  with exercise prices ranging from
     $1.32 to $3.84 per share.  Additional  warrants  were issued  subsequent to
     March 31, 2000, as described in preceding paragraphs.

3.   Notes Payable

     Notes payable consist of the following:
<TABLE>
<CAPTION>
                                                                                                 September 30,    March 31,
  (thousands of dollars)                                                                             1999            2000
  ---------------------------------------------------------------------------------------------- -------------- ---------------
<S>                                                                                                <C>             <C>
  Note payable to a corporation, bearing interest at 6%, collateralized by a coal wash plant
  in Utah, principal and interest due October 2000, as described in Note 2.                            $ 4,313         $ 1,927

  Note payable to the same corporation referred to in the preceding paragraph, bearing
  interest at prime, repaid in December 1999 (see Note 5).                                               2,900              --

  Note payable to the same corporation referred to in the preceding two paragraphs, bearing
  interest at 6%, repaid in January 2000 (see Note 5).                                                   6,500              --

  Note payable to a limited liability company, bearing interest at 10%, repaid in April 2000
  (see Note 5).                                                                                          9,191           8,994

  Convertible  secured  note  payable  to an  investment  company,  issued  at a discount,
  bearing a stated  interest rate of 2.5% on the $20,000 face amount. The note, as amended,
  is due September  2001,  but is expected to be redeemed earlier by Covol (see Note 2).
  Interest is payable  semiannually on January 1 and July 1. The note is collateralized by
  license fees payable to Covol from the production and sale of synthetic fuel from five
  synthetic fuel  facilities.                                                                           10,265          11,978

  Convertible secured note payable to a Covol shareholder, issued at a discount, bearing a
  stated interest rate of 8%. This note,  which increased in amount in October  1999,
  along with  another  convertible  note payable to an unrelated entity issued in December
  1999, were redeemed by Covol in January 2000, as described in Note 2.                                   622              --

  Note payable to a corporation, bearing interest at 14% payable monthly. $1,000 of principal
  was paid in January 2000. The remaining  principal was originally due April 2000, but in
  April 2000,  $2,000 was converted into shares of common stock and  warrants  for the
  purchase of common stock and $1,000 was extended and is now due April 2001, as described
  in Note 2. The note is  collateralized by future license fees payable to Covol from the
  production and  sale of synthetic fuel from two synthetic fuel facilities.  A member of
  Covol's Board of Directors is affiliated with this corporation.                                        4,000           3,000

  Other                                                                                                    722             838
                                                                                                 -------------- ---------------
                                                                                                        38,513          26,737
       Less: current portion                                                                           (20,626)        (11,380)
                                                                                                 -------------- ---------------
       Total non-current                                                                               $17,887         $15,357
                                                                                                 ============== ===============
</TABLE>

   A substantial  portion of facilities  and equipment held for sale and license
   fees from the production and sale of synthetic fuel from approximately 50% of
   the licensed synthetic fuel facilities are collateral for notes payable.  The
   weighted  average  interest  rate on notes  payable was 7.9% at September 30,
   1999 and March 31, 2000.

                                       10
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------

4.   Basic and Diluted Earnings per Share
<TABLE>
<CAPTION>

                                                             Three Months Ended March 31,     Six Months Ended March 31,
  (thousands of dollars and shares, except per-share data)            1999            2000            1999            2000
  ---------------------------------------------------------- -------------- --------------- --------------- ---------------
  Numerator:
<S>                                                               <C>              <C>            <C>                <C>
       Income (loss) before extraordinary item                    $(5,057)         $ 2,137        $(9,615)           $ 211
       Extraordinary item                                               --         (1,823)              --         (1,823)
                                                             -------------- --------------- --------------- ---------------
       Net income (loss)                                           (5,057)             314         (9,615)         (1,612)
       Preferred stock dividends (undeclared)                         (77)           (119)           (137)           (265)
       Imputed preferred stock dividends                              (40)              --            (40)            (58)
                                                             -------------- --------------- --------------- ---------------
  Numerator for basic earnings per share -- net income
  (loss) attributable to common stockholders                       (5,174)             195         (9,792)         (1,935)

  Effect of dilutive securities - preferred stock dividends             --              72              --              --
                                                             -------------- --------------- --------------- ---------------
  Numerator for diluted earnings per share -- net income
  (loss) attributable to common stockholders after assumed
  conversions                                                     $(5,174)           $ 267        $(9,792)        $(1,935)
                                                             ============== =============== =============== ===============

  Denominator:
  Denominator for basic earnings per share --
    weighted-average shares outstanding                             12,472          18,025          12,224          15,818

  Effect of dilutive securities:
       Shares issuable upon exercise of warrants                        --             337              --              --
       Shares issuable upon conversion of preferred stock               --           8,009              --              --
                                                             -------------- --------------- --------------- ---------------
  Total dilutive potential shares                                       --           8,346              --              --
                                                             -------------- --------------- --------------- ---------------
  Denominator for diluted earnings per share --
    weighted- average shares outstanding after assumed
    exercises and conversions                                      12,472          26,371          12,224          15,818
                                                             ============== =============== =============== ===============
  Basic earnings per share:
  Income (loss) before extraordinary item                           $(.41)            $.11          $(.80)          $(.01)
  Extraordinary item                                                    --           (.10)              --           (.11)
                                                             -------------- --------------- --------------- ---------------
  Net income (loss) per common share                                $(.41)            $.01          $(.80)          $(.12)
                                                             ============== =============== =============== ===============

  Diluted earnings per share:
  Income (loss) before extraordinary item                           $(.41)            $.08          $(.80)          $(.01)
  Extraordinary item                                                    --           (.07)              --           (.11)
                                                             -------------- --------------- --------------- ---------------
  Net income (loss) per common share                                $(.41)            $.01          $(.80)          $(.12)
                                                             ============== =============== =============== ===============
</TABLE>

    During the  quarter  ended  March 31,  2000,  Covol's  potentially  dilutive
    securities  consisted  of options and  warrants  for the  purchase of common
    stock,  three  convertible  debt  issues  and three  series  of  convertible
    preferred  stock.  Only the warrants and the series D convertible  preferred
    stock,  all of which was  redeemed  in April and May 2000 (see Note 2), were
    dilutive.  For the  quarter  ended  March 31,  2000,  all other  potentially
    dilutive  securities were  anti-dilutive.  For all other periods,  all other
    potentially  dilutive  securities were anti-dilutive and were not considered
    in the calculation of diluted earnings per share.

5.  Sale of Facilities

    Covol's business plan called for the construction and sale of synthetic fuel
    manufacturing facilities and the licensing of Covol's technology to facility
    purchasers to generate ongoing  royalties.  In December 1999, Covol sold one
    of the three remaining synthetic fuel facilities it owned. This facility was
    located  in  Price,  Utah.  Covol  reported  a gain on this  transaction  of
    approximately  $5,341,000.  Covol will sell proprietary binder material used
    at the facility and will receive an ongoing  royalty  based upon  production
    and sale of synthetic fuel from this  facility.  Net cash proceeds to Covol,
    after  payment of  construction  debt and certain  other  obligations,  were
    approximately $5,500,000.

    In January 2000, Covol sold a synthetic fuel facility located in North Fork,
    West  Virginia  and an option to  acquire a  licensee  facility  located  in
    Nevada, to a major U.S.  utility.  Combined net cash proceeds to Covol after
    payment of related

                                       11
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------

     debt and other obligations were approximately $1,500,000.  Covol reported a
     combined  loss  on  these  transactions  of  approximately  $598,000.  Both
     facilities are being  relocated and additional net cash proceeds,  totaling
     approximately  $6,500,000,  are due to Covol when the two facilities  reach
     commercial operation at the new location,  at which time $6,500,000 will be
     recognized as revenue.  Covol will sell proprietary binder material used at
     both facilities and will receive future royalties based upon production and
     sale of synthetic fuel at the facilities.

     In April 2000,  Covol sold its remaining  owned  synthetic  fuel  facility,
     located in Tallmansville,  West Virginia. Net cash proceeds to Covol, after
     payment of related debt and other obligations were approximately  $300,000.
     Covol will report a gain on this transaction of  approximately  $1,200,000.
     Covol will also sell  proprietary  binder material used at the facility and
     will receive an ongoing royalty based upon production and sale of synthetic
     fuel from this facility.

     In addition to the  subsequent  payments  receivable  upon  relocation  and
     commercial  operation of the  facilities  sold in January  2000,  Covol can
     receive  additional  cash payments from the August 1999 sale of a synthetic
     fuel  facility in the form of both  accelerated  and  increased  royalties.
     These payments, totaling up to approximately $9,000,000 are receivable upon
     obtaining  firm  synthetic  fuel  "off-take"   agreements  and  by  meeting
     specified operating  performance  criteria.  Covol must achieve some of the
     performance  milestones  by June 30, 2000 and others  prior to December 31,
     2001.  Covol will  recognize  revenue  under the royalty  arrangement  upon
     receipt  of the  royalty  payments  and  upon  achievement  of  performance
     milestones.

     Under the terms of the April 2000 amendment to the convertible secured note
     agreement (see Note 2), Covol is required to pay  approximately  80% of the
     cash  received  from  subsequent  payments  related to the August  1999 and
     January 2000 sales of synthetic fuel facilities to the debtholder to redeem
     any outstanding balances of convertible debt.

6.   Gains on Non-recurring Transactions and Asset Write-offs and Other
     Non-recurring Charges

     During the quarter ended March 31, 2000, Covol recorded non-recurring gains
     of  approximately  $1,079,000  related to the  satisfaction of a contingent
     contract  liability  (see Note 8) and the gain  recognized  on the Coaltech
     note receivable transaction described in Note 2.

     Covol  recorded  in the  December  1999  quarter  an  impairment  charge of
     approximately  $10,300,000  related to assets located in Price,  Utah. This
     impairment charge consisted of an approximate  $8,100,000  writedown to net
     realizable  value of certain plant and equipment  which remains on the site
     and is now idle, plus an approximate  $2,200,000  writeoff of an intangible
     asset which was no longer  considered  recoverable due to the relocation of
     the  Coaltech   facility.   Covol  recorded  other  asset   write-offs  and
     non-recurring  charges in the quarter ended  December 31, 1999 which,  when
     added to the impairment charge, totaled approximately $11,021,000.  Of this
     amount,  approximately  $10,412,000  represented a non-cash charge.  In the
     March  2000  quarter,  Covol  recorded  additional  non-recurring  employee
     severance and other settlement charges totaling approximately  $841,000, of
     which $219,000 represented a non-cash charge.

7.   Income Taxes

     In the quarter ended December 31, 1999, Covol recognized  $3,000,000 of its
     deferred  tax asset.  Covol  believes  it is more likely than not that this
     portion of its total  deferred  tax assets  will be realized as a result of
     income  resulting  from  the  sales in  January  2000 of a  synthetic  fuel
     facility and an option to acquire a synthetic fuel facility.  Covol did not
     recognize any income tax expense in the quarter ended March 31, 2000 due to
     available net operating loss carryforwards.

8.   Commitments and Contingencies

     Commitments and contingencies as of March 31, 2000 not disclosed elsewhere,
     are as follows.

     Included in accrued  liabilities at September 30, 1999 is $755,000  related
     to canceled  construction  contracts  that contained a "failure to proceed"
     liability  clause.  This  contingent  liability was satisfied at no cost in
     March 2000.

     In March 1997, Covol  transferred the Utah Synfuel #1 facility to Coaltech.
     In connection with this transaction, Covol licensed Coaltech to use Covol's
     proprietary binder technologies for a non-refundable advance license fee of
     $1,400,000,

                                       12
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------

     which is being  recognized as income through 2007, the contractual  term of
     the  license  agreement,  and a  recurring  license  fee  that  is  payable
     quarterly  and that is based upon  synthetic  fuel produced and sold at the
     Coaltech  facility.  Covol contracted with Coaltech to operate the facility
     for which  Covol  received  a  quarterly  fee,  which was also  based  upon
     synthetic fuel produced and sold. The limited  partners of Coaltech have an
     option  wherein they can require  Covol to repurchase  this facility  under
     certain  conditions.  This put  option can be  exercised  if 1) none of the
     limited  partners are able to utilize the federal  income tax credits under
     Section  29 of the  tax  code,  2) the  economic  benefits  accruing  to or
     experienced by all of the Coaltech  limited  partners differ  significantly
     from what was initially projected, or 3) there is a permanent force majeure
     or material  damage or destruction of the Utah facility.  If the put option
     is  exercised,  the  option  price is $10.  In  accordance  with  generally
     accepted accounting  principles and after discussions with the staff of the
     Securities and Exchange Commission, this transaction was not reflected as a
     sale for accounting  purposes.  The original cost of the facility less cash
     payments received from Coaltech,  was reflected in the consolidated balance
     sheet  as  of  September  30,  1999  as  facility  transferred  under  note
     receivable arrangement.  As described in Note 2, this asset was realized in
     February  2000 in  connection  with the reduction of the amount due under a
     note payable to one of the limited partners of Coaltech.

     Additionally,  Covol  entered  into a supply and  purchase  agreement  with
     Coaltech  wherein  Covol  agreed to  provide  to  Coaltech  coal  fines for
     processing  into  synthetic  fuel at a price equal to Covol's  cost.  Covol
     agreed to purchase from Coaltech the synthetic fuel produced, at Coaltech's
     cost plus one dollar per ton.  As a result of this  commitment  to purchase
     Coaltech's production,  Covol experienced significant losses related to the
     write-down of the synthetic  fuel purchased to the lower of cost or market.
     This write-down historically  approximated 90% of the amount Covol paid for
     the synthetic fuel.

     In  anticipation  of a  relocation  of the Utah  facility by  Coaltech,  on
     October 29, 1999 Covol received  notification  from the limited partners of
     Coaltech  that they were  effecting  a  retirement  of Covol as the general
     partner of the  partnership and were  terminating  Covol as operator of the
     Utah  facility.  The limited  partners also assert that as a consequence of
     the  retirement  of Covol as  general  partner,  Covol  is  deemed  to have
     forfeited its 1% interest in the partnership. The notification demands that
     Covol  indemnify  the limited  partners for all of their  losses,  damages,
     payments, costs and expenses. Covol disputes the limited partners' demands.
     On December 1, 1999, the parties entered into  negotiations and as a result
     an interim  standstill  agreement was reached pursuant to which the limited
     partners  and Covol have agreed not to pursue  formal  proceedings  against
     each other pending the outcome of the current settlement  negotiations.  As
     more fully described in Note 2, in February 2000,  Covol,  Coaltech and one
     of the limited partners of Coaltech reached a settlement regarding both the
     note payable due to the limited  partner from Covol and the note receivable
     due to Covol from Coaltech. It is likely that the ultimate outcome of these
     negotiations  will result in  relocation of the Utah facility to a new site
     and termination of contractual and operational activities between Covol and
     the limited partners with settlement  payments  materially  consistent with
     amounts reflected in the accompanying consolidated financial statements. It
     is also  expected  that the  limited  partners  will  continue  to purchase
     proprietary  binder materials from Covol and use Covol's  technology in the
     production of synthetic fuel when operations of the facility are resumed.

     In June 1996,  Covol  formed  Alabama  Synfuel  #1,  Ltd.  to  construct  a
     synthetic  fuel  facility.  In  connection  with the  construction  of this
     facility,  Covol entered into a supply  agreement for coal fines to be used
     at the  facility.  Covol  assigned  this  agreement to the purchaser of the
     facility and accordingly,  has no ongoing  obligation.  Covol has been paid
     for the coal fines sold to the facility  purchaser,  but has a dispute with
     the  provider  of the coal fines for a portion of the coal fines Covol paid
     for.  The  resolution  of this  dispute is not  expected to have a material
     impact on Covol.

     In September 1996, Covol entered into an agreement with Coalco  Corporation
     whereby  Coalco was to advise Covol with respect to the  financing and sale
     of certain synthetic fuel manufacturing facilities. A dispute arose between
     Covol and Coalco  about  services  rendered or to be rendered by Coalco and
     the amount and timing for  payment  for such  services.  A  settlement  was
     reached in November 1999 whereby Covol agreed to pay Coalco $1,500,000 plus
     a  royalty  based on the  synthetic  fuel  sold  from  five  licensee-owned
     facilities.  Of the  $1,500,000  to be paid,  $469,000  was  accrued  as of
     September 30, 1999 and was paid in November  1999.  An additional  $901,000
     has been paid  through  March 31, 2000  resulting  in an unpaid  balance of
     $130,000. Pelletco, an affiliate of Coalco, is a licensee of Covol.

     In March 1999,  Covol  entered into a financing  transaction  involving the
     issuance of convertible preferred stock and a convertible secured note (see
     Note 3). The  transaction  requires,  among other things,  (i)  stockholder
     approval of the

                                       13
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                   ----------

     transaction,  (ii)  registration  of common stock into which the securities
     issued  may  be  converted,  and  (iii)  achievement  of  earnings  targets
     beginning in the first quarter of Covol's fiscal year 2000. The transaction
     was approved in Covol's  stockholder  meeting held in February 2000.  Covol
     filed the  required  registration  statement on Form S-3 covering the March
     1999 financing  transaction  and such  registration  statement was declared
     effective. Also, the earnings targets have been met through March 31, 2000.
     Failure  to  comply  with the  terms  and  conditions  of  these  financing
     agreements  could  result in an increase in the  interest  rate,  immediate
     convertibility,  required escrow payments and possible immediate payment of
     outstanding amounts.

     Covol may incur costs  associated  with  relocation of the  synthetic  fuel
     facility  sold in April  2000.  The  costs to be paid by  Covol,  currently
     estimated to be  approximately  $300,000,  will reduce the net proceeds and
     the gain recognized on the sale of the facility.

     In February  1997,  Covol entered into a contract with Earthco  regarding a
     parcel of real property  located near Price,  Utah, in which Covol obtained
     certain possessory and related interests,  Covol's primary purpose being to
     obtain a source of coal fines to serve as feedstock for a nearby  synthetic
     fuel facility.  In August 1999,  Covol sent a notice of default to Earthco,
     alleging  that  Earthco had  breached a material  provision of the contract
     because  Earthco did not have title to the  property.  Covol has refused to
     tender its August 1999 payment and subsequent payments because of Earthco's
     breach.  In addition,  Covol  contends that the quantity  and/or quality of
     recoverable  coal  fines  was  substantially   less  than  what  Covol  had
     understood  when entering into the contract,  thereby  creating  grounds to
     reform  the terms of the  contract.  Earthco  subsequently  countered  with
     allegations  that Covol has breached its  obligations  under the  contract,
     including failure to make the August 1999 payment.

     In November 1999,  Covol was served with a Complaint in litigation  pending
     in the Seventh Judicial District Court of Carbon County, Utah titled Nevada
     Electric  Investment  Company v. Earthco,  et al. In the Complaint,  Nevada
     Electric  Investment  Company ("NEICO") alleges that it is the lawful owner
     of the property  near  Wellington,  Utah  described  in Covol's  lease from
     Earthco.  NEICO seeks a declaratory judgement that Covol is not entitled to
     possession  of the property  due to the lack of  ownership by Earthco.  The
     Complaint also seeks further relief from Earthco.  Covol received Earthco's
     Answer,   Counterclaims   and  Cross-claim  in  December  1999.   Earthco's
     cross-claim   against  Covol  alleged  breach  of  contract  and  requested
     substantial damages in an amount to be proven at trial but alleged to be in
     excess of $5,000,000. Covol filed its Reply and Cross-claim against Earthco
     in  January  2000  denying   Earthco's   claims  and  asserting  claims  of
     misrepresentation,  breach of lease, unjust enrichment,  and related claims
     and for  general  and  consequential  damages  in an amount to be proven at
     trial.  The disputes  among Covol,  Earthco and NEICO are at an early stage
     and  resolution is uncertain.  Covol intends to defend  against  claims and
     prosecute its own claims vigorously.

     During the six months ended March 31, 2000,  Covol  recorded  approximately
     $6,800,000  of license fee revenues  from a single  licensee that owns four
     synthetic fuel facilities that use Covol's  proprietary  binder technology.
     These  revenues  relate  to sales  of  synthetic  fuel at these  facilities
     primarily  between June 1999 and March 2000 which were recently reported by
     this  licensee.  Covol and this  licensee  agreed to amend the  license fee
     arrangements  for prior and future periods and the  Consolidated  Financial
     Statements  reflect these amended terms.  In addition,  the future interest
     rate on the $6,500,000  note  receivable from this licensee will be reduced
     from 12% to 6%  effective  on the  date of the  formal  agreement  which is
     expected to be in May 2000.

     In January 2000,  Covol received a letter from Nasdaq  informing Covol that
     it may not meet continued listing  requirements of The Nasdaq Stock Market.
     Following Covol's response, Nasdaq sent another letter notifying Covol that
     its listing would be continued subject to Covol meeting certain  conditions
     on or before March 31, 2000.  These conditions were met and Nasdaq notified
     Covol that it meets all Nasdaq listing requirements.

     Covol is also involved in several legal proceedings that have arisen out of
     the normal course of business. Covol believes that many of these claims are
     without merit and in all cases  intends to vigorously  defend its position.
     Management does not believe that the outcome of these  activities will have
     a  significant  effect upon the  operations  or the  financial  position of
     Covol.

                                       14
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following Management's Discussion and Analysis should be read in conjunction
with the  accompanying  unaudited  consolidated  financial  statements and notes
thereto.

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

Revenues.  Total  revenues for the three  months  ended March 31, 2000  ("2000")
increased by $6,756,000  to  $7,899,000 as compared to $1,143,000  for the three
months ended March 31, 1999 ("1999"). During 2000, Covol recognized license fees
totaling  $4,798,000 while $546,000 of license fees were recognized during 1999.
The  license  fees  in  2000  consisted  of the  straight-line  amortization  of
one-time,  non-refundable  initial license fees of $231,000 and recurring earned
license fees or royalty  payments of $4,567,000.  License fees in 1999 consisted
of the straight-line  amortization of one-time,  non-refundable  initial license
fees of $226,000 and  recurring  license  fees or royalty  payments of $320,000.
Initial  license  fees are not  expected to  increase in future  periods and are
recognized on a  straight-line  basis over the period covered by Covol's license
agreements with licensees.  Recurring  earned license fees or royalty  payments,
which over the long term are  expected to increase  in future  periods,  are due
quarterly  based upon  synthetic  fuel produced and sold as reported to Covol by
its  licensees.  The increase in 2000 earned  license fees was due  primarily to
significant increases from a licensee that owns and operates four synthetic fuel
facilities (see Note 8 to the Consolidated Financial Statements).

Covol provides  proprietary  binder material to its licensees  either at a fixed
price or at Covol's cost plus a contracted  markup.  Covol  purchases the binder
materials under a long-term contract with a large chemical company. Binder sales
during 2000 were  $1,883,000  with a  corresponding  direct cost of  $1,367,000.
Binder  sales  during 1999 were  $423,000  with a  corresponding  direct cost of
$274,000.  The  increase in binder  sales in 2000 over 1999 was due to increased
synthetic fuel production by Covol's licensees.

Gains on Non-recurring Transactions. In 2000, Covol recorded non-recurring gains
of approximately $1,079,000 related to the satisfaction of a contingent contract
liability for $755,000 (see Note 8 to the Consolidated Financial Statements) and
the gain  recognized on the Coaltech note  receivable  transaction  described in
Note 2 to the Consolidated Financial Statements.

Operating Costs and Expenses. Operating costs and expenses decreased by $142,000
to  $4,637,000  during 2000 from  $4,779,000  during  1999.  Cost of  operations
decreased $1,853,000 from $2,553,000 during 1999 to $700,000 during 2000. During
2000, Covol incurred  significantly  lower operating expenses in connection with
the  continued   refinement  and  implementation  of  the  briquetting   process
associated  with  the 24  facilities  placed  in  service  during  1998,  and in
particular the operating  costs  associated  with the four  facilities  owned by
Covol which have now been sold.  Consistent  with its business  plan to sell the
facilities and earn royalties  from facility  buyers,  Covol sold its four owned
facilities  in  August  1999,  December  1999,  January  2000  and  April  2000,
respectively  (see Note 5 to the Consolidated  Financial  Statements).  In 1999,
cost of  operations  primarily  related to labor and  operating  expenses at the
owned  synthetic  fuel  facilities  and the wash plant  located in Utah,  losses
related  to the  writedown  of  inventory  purchased  from  Coaltech,  and costs
incurred in providing  assistance  to Covol's  licensees  in  resolving  ramp-up
issues at their synthetic fuel facilities.  Covol expects the cost of operations
to continue to decrease in 2000 as compared to 1999 levels.

Loss on Sale of Facilities. In 2000, Covol sold a synthetic fuel facility and an
option to acquire a licensee  facility.  Covol reported a combined loss on these
transactions of approximately  $598,000. Both facilities are being relocated and
additional  net cash proceeds,  totaling  approximately  $6,500,000,  are due to
Covol when the two facilities reach commercial operation at the new location, at
which  time  $6,500,000  will  be  recognized  as  revenue  (see  Note  5 to the
Consolidated Financial Statements).

Asset  write-offs  and other  non-recurring  charges.  In 2000,  Covol  recorded
non-recurring   employee   severance  and  other  settlement   charges  totaling
approximately $841,000, compared to non-recurring charges of $556,000 in 1999.

Selling,  general  and  administrative  expenses  decreased  $148,000  or 12% to
$1,085,000  during 2000 from  $1,233,000  for 1999.  The largest  components  of
selling,  general and  administrative  expenses for both  periods were  payroll,
professional services and travel expenses. Payroll costs increased approximately
$60,000;   professional  services,   primarily  legal,  increased  approximately
$120,000;  and travel  expenses  decreased  approximately  $100,000 from 1999 to
2000. There were significant decreases in most of the other selling, general and
administrative  expenses  from  1999 to 2000  which  more  than  offset  the net
increase in the three major expense categories.

Compensation  expense from stock options decreased  $117,000 to $46,000 for 2000
from $163,000 for 1999. This expense relates to options granted in prior periods
that vest over several years and the compensation value that is being recognized
as

                                       15
<PAGE>

an expense over the vesting  period.  During the fiscal year ended September 30,
1999, Covol terminated several employees to whom compensatory stock options were
granted in prior years. These stock options were not forfeited upon termination,
resulting in the write off of the unamortized  deferred  compensation related to
these individuals. As a result of the write-off, amortization expense decreased.

Other Income and  Expense.  During 2000,  Covol  reported net other  expenses of
$1,125,000 compared to $1,421,000 for 1999. This decrease of $296,000 relates to
a  negative  variance  in  interest  expense  of  $334,000,  offset by  positive
variances  between periods of $339,000 in the  mark-to-market  adjustment of the
carrying value of a related party note receivable collateralized by Covol common
stock and $291,000 in interest income and other income.

Interest expense increased in 2000 due primarily to the higher effective cost of
debt which existed in 2000 as compared to 1999,  most notably as a result of the
convertible  debt issued at a discount  during March 1999.  Interest  expense of
$1,122,000  in 2000  resulted  from the  amortization  of debt discount and debt
issuance  costs,  while only $244,000 of interest  expense in 1999  consisted of
amortization  of debt  discount and debt  issuance  costs.  Interest  expense is
expected to decrease in the future as a result of  repayment  of debt related to
the sale of company-owned facilities in late 1999 and 2000 and the redemption of
convertible debt in January 2000, as well as other debt payoffs.

During  1996,  Covol  sold  certain  construction   companies  and  received  as
consideration  a $5,000,000  note  receivable  ("Note").  The Note is "marked to
market" each quarter based upon the market value of Covol's common stock held as
collateral and is reflected in the consolidated  balance sheet at the underlying
value of this collateral,  $269,000 at March 31, 2000. This adjustment  resulted
in a write-up of $161,000  during  2000,  compared to a  write-down  of $178,000
during 1999, for a variance of $339,000.

Extraordinary  Item. In January 2000, Covol redeemed all of the convertible debt
issued from September 1999 through  December 1999. The redemption  consideration
given   included   approximately   $1,000,000   in   redemption   premiums  plus
approximately 214,000 shares of common stock. The loss recognized as a result of
the redemption  consideration  paid plus the acceleration of amortization of the
unamortized  debt  discount  and  debt  issuance  costs  totaled   approximately
$1,823,000.  This loss is reflected as an extraordinary item in the Consolidated
Statements of Operations.

Net Income.  For 2000, net income of $314,000  represents a change of $5,371,000
from the net loss of  $5,057,000  in 1999.  This is  primarily  due to increased
revenues,  especially  license fees,  and the  reduction in cost of  operations,
offset by the increase in interest  expense.  Covol did not recognize any income
tax expense in 2000 due to available net operating loss carryforwards. No income
tax benefit was  recognized  in 1999 since the  realization  of the deferred tax
asset, consisting primarily of net operating loss carryforwards, is dependent on
generation of future taxable income.

Six Months Ended March 31, 2000 Compared to Six Months Ended March 31, 1999

Revenues.  Total  revenues  for the six months  ended  March 31,  2000  ("2000")
increased by  $16,423,000  to  $18,948,000 as compared to $2,525,000 for the six
months ended March 31, 1999 ("1999"). During 2000, Covol recognized license fees
totaling  $8,833,000  while  $1,247,000 of license fees were  recognized  during
1999. The license fees in 2000 consisted of the  straight-line  amortization  of
one-time  non-refundable  initial license fees of $461,000 and recurring  earned
license fees or royalty  payments of $8,372,000.  License fees in 1999 consisted
of the  straight-line  amortization of one-time  non-refundable  initial license
fees of $453,000 and recurring license fees or royalty payments of $794,000. The
increase in 2000 earned license fees was due primarily to significant  increases
from a licensee that owns and operates four synthetic fuel  facilities (see Note
8 to the  Consolidated  Financial  Statements).  Binder  sales  during 2000 were
$3,236,000 with a corresponding  direct cost of $2,228,000.  Binder sales during
1999 were $956,000 with a corresponding direct cost of $650,000. The increase in
binder sales in 2000 over 1999 was due to increased synthetic fuel production by
Covol's licensees.

Gain on sale of  facility.  In December  1999,  Covol sold one of the  remaining
synthetic fuel  facilities it owned.  This facility was located in Price,  Utah.
Covol reported a gain on this  transaction of  approximately  $5,341,000.  There
were no sales of synthetic fuel facilities in fiscal 1999,  however Covol sold a
facility and an option to acquire a facility in January 2000 on which a combined
loss was recognized (see Note 5 to the consolidated financial statements).

Gains on Non-recurring Transactions. In 2000, Covol recorded non-recurring gains
of approximately $1,079,000 related to the satisfaction of a contingent contract
liability for $755,000 (see Note 8 to the Consolidated Financial Statements) and
the  $324,000  gain  recognized  on the  Coaltech  note  receivable  transaction
described in Note 2 to the Consolidated Financial Statements.

                                       16
<PAGE>

Operating  Costs  and  Expenses.  Operating  costs  and  expenses  increased  by
$9,173,000 to $19,065,000 during 2000 from $9,892,000 during 1999, primarily due
to  non-recurring  charges  of  approximately   $11,862,000  in  2000.  Cost  of
operations decreased $3,910,000 from $6,199,000 during 1999 to $2,289,000 during
2000.  During 2000,  Covol incurred  significantly  lower operating  expenses in
connection with the continued  refinement and  implementation of the briquetting
process  associated with the 24 facilities placed in service during 1998, and in
particular the operating  costs  associated  with the four  facilities  owned by
Covol which have now been sold. In 1999, cost of operations primarily related to
labor and operating expenses at the owned synthetic fuel facilities and the wash
plant located in Utah,  losses  related to the writedown of inventory  purchased
from Coaltech,  and costs incurred in providing  assistance to Covol's licensees
in resolving  ramp-up issues at their synthetic fuel  facilities.  Covol expects
the cost of  operations  to  continue  to  decrease  in 2000 as compared to 1999
levels.

Loss on Sale of Facilities. In 2000, Covol sold a synthetic fuel facility and an
option to acquire a licensee  facility.  Covol reported a combined loss on these
transactions of approximately $598,000 (see Note 5 to the Consolidated Financial
Statements).

Asset write-offs and other non-recurring charges. Coaltech owns a synthetic fuel
facility  which is located on the same property as the facility that was sold by
Covol  in  December  1999.  As a result  of the  anticipated  relocation  of the
facility  owned by Coaltech,  combined  with the sale and  relocation of Covol's
owned  facility,  all of which relate to the same property  site in Price,  Utah
(see Notes 5 and 8 to the Consolidated Financial Statements),  Covol recorded in
the December 1999 quarter an  impairment  charge of  approximately  $10,300,000.
This impairment charge consisted of an approximate  $8,100,000  writedown to net
realizable value of certain plant and equipment which remains on the site and is
now idle, plus an approximate  $2,200,000 write-off of an intangible asset which
was no longer  considered  recoverable  due to the  relocation  of the  Coaltech
facility.

Covol recorded additional  non-recurring employee severance and other settlement
charges in 2000 which,  when added to the  charges  described  in the  preceding
paragraph,  totaled  approximately  $11,862,000.  Of this amount,  approximately
$10,631,000 represented a non-cash charge. In 1999, Covol recorded non-recurring
charges of approximately $556,000.

Selling,  general  and  administrative  expenses  decreased  $166,000  or  8% to
$1,996,000  during 2000 from  $2,162,000  for 1999.  The largest  components  of
selling,  general and  administrative  expenses for both  periods were  payroll,
professional services and travel expenses. Payroll costs increased approximately
$130,000;   professional  services,  primarily  legal,  increased  approximately
$80,000; and travel expenses decreased approximately $160,000 from 1999 to 2000.
There were  significant  decreases  in most of the other  selling,  general  and
administrative  expenses  from  1999 to 2000  which  more  than  offset  the net
increase in the three major expense categories.

Compensation  expense from stock options decreased  $233,000 to $92,000 for 2000
from $325,000 for 1999.  During the fiscal year ended September 30, 1999,  Covol
terminated  several employees to whom compensatory stock options were granted in
prior years. These stock options were not forfeited upon termination,  resulting
in the write  off of the  unamortized  deferred  compensation  related  to these
individuals. As a result of the write-off, amortization expense decreased.

Other Income and  Expense.  During 2000,  Covol  reported net other  expenses of
$2,672,000  compared to $2,248,000 for 1999.  This increase of $424,000  relates
primarily to a negative  variance in interest  expense of $1,353,000,  offset by
positive variances between periods of $618,000 in the mark-to-market  adjustment
of the carrying value of a related party note receivable collateralized by Covol
common stock and $311,000 in interest income and other income.

Interest expense increased in 2000 due primarily to the higher effective cost of
debt which existed in 2000 as compared to 1999,  most notably as a result of the
convertible  debt issued at a discount  during March 1999.  Interest  expense of
$2,272,000  in 2000  resulted  from the  amortization  of debt discount and debt
issuance  costs,  while only $326,000 of interest  expense in 1999  consisted of
amortization  of debt  discount and debt  issuance  costs.  Interest  expense is
expected to decrease in the future as a result of  repayment  of debt related to
the sale of facilities in late 1999 and 2000 and the  redemption of  convertible
debt in January 2000, as well as other debt payoffs.

Income  Taxes.  In  the  quarter  ended  December  31,  1999,  Covol  recognized
$3,000,000 of its deferred tax asset.  Covol believes it is more likely than not
that this portion of its total  deferred tax assets will be realized as a result
of income  resulting  from the sale in January 2000 of a synthetic fuel facility
and an option to acquire a synthetic fuel facility.  Covol did not recognize any
income tax benefit in fiscal 1999.

Extraordinary  Item. In January 2000, Covol redeemed all of the convertible debt
issued from September 1999 through  December 1999. The redemption  consideration
given   included   approximately   $1,000,000   in   redemption   premiums  plus

                                       17

<PAGE>

approximately 214,000 shares of common stock. The loss recognized as a result of
the redemption  consideration  paid plus the acceleration of amortization of the
unamortized  debt  discount  and  debt  issuance  costs  totaled   approximately
$1,823,000.  This loss is reflected as an extraordinary item in the Consolidated
Statements of Operations.

Net Loss. For 2000, the net loss of $1,612,000 represents a change of $8,003,000
from the net loss of  $9,615,000  in 1999.  This is  primarily  due to increased
revenues,  especially  license  fees and the gain on sale of  facility,  and the
reduction  in cost of  operations,  offset  by the  increases  in  non-recurring
charges and interest expense.

Liquidity and Capital Resources

During 1998,  Covol and its licensees  completed the  construction  of and began
operations at 24 synthetic fuel facilities. Covol owned four facilities which it
held  for  sale  and  sold  during  1999  and  2000.  Proceeds  from the sale of
facilities have been used primarily to retire debt that was incurred principally
in connection  with the  construction  and operation of the  facilities  and for
working capital needs.

Net cash used in operating activities during the six months ended March 31, 2000
("2000")  was  $2,114,000  compared  to  $9,852,000  of cash used during the six
months  ended  March 31,  1999  ("1999").  Most of this change in cash flow from
operations is attributable to the 2000 net loss of $1,612,000 as compared to the
1999  net  loss of  $9,615,000.  Covol  has  been  able to  fund  its  operating
activities,  including the continued  refinement  and  commercialization  of its
patented binder technologies, through the issuance of debt and equity securities
and the sale of  facilities.  During 2000,  proceeds from the sale of facilities
were approximately $18,089,000,  net proceeds from the issuance of notes payable
and common stock warrants  totaled  approximately  $2,980,000,  and net proceeds
from  the   issuance  of  common   stock   totaled   approximately   $4,666,000.
Approximately $14,279,000 of notes payable were repaid during 2000.

With  the  exception  of the  sale of  facilities  in  2000,  Covol's  investing
activities in both 2000 and 1999 were not significant. Covol believes that funds
required for investing  activities will continue to be relatively low during the
remainder of fiscal  2000.  Covol has no current  plans to construct  additional
synthetic fuel  facilities or to incur  significant  costs to acquire  property,
plant and equipment.

Covol's working capital improved from a working capital deficit of approximately
$1,799,000  at  September  30, 1999 to a positive  working  capital  position of
approximately  $15,700,000  as of March 31, 2000.  Several  factors  caused this
change,  most  notably  an  increase  in cash  from the sale of  facilities  and
increased  royalty  revenues  and  from  the  sale  of  common  stock.  Accounts
receivable  has  increased as a result of growth in revenues  during the period.
Also, the balance due under notes payable has decreased as facility-related debt
has been repaid.  Covol expects its future  operations to produce  positive cash
flows due to the  increases in synthetic  fuel  production  by its licensees and
expects its working capital position to continue to improve during the remainder
of fiscal 2000.

In addition to expected positive cash flows from operations,  Covol will receive
additional funds,  totaling more than  $15,000,000,  when three facilities which
have been sold reach certain levels of commercial operation. For two facilities,
the requirements relate to reaching commercial  operation at their new location,
and for the third facility,  obtaining firm synthetic fuel "off-take" agreements
and by  meeting  specified  operating  performance  criteria  (see Note 5 to the
Consolidated  Financial  Statements).  Covol  expects to  receive  some of these
proceeds before  September 30, 2000 and the balance before December 31, 2000, if
all  milestones  are  accomplished.  In addition to cash  provided by  operating
activities  and  deferred  proceeds  from  the  sale of  facilities,  Covol  has
initiated negotiations with two financial institutions in order to secure a line
of  credit.  Negotiations  are in the early  stages  and it is not  possible  to
project their ultimate outcome.

In April 2000, Covol sold its remaining owned synthetic fuel facility.  Net cash
proceeds  to  Covol,  after  payment  of  related  debt  totaling  approximately
$9,000,000 and other obligations,  were approximately  $300,000.  Also, in April
2000, the creditor for the  $3,000,000  14% note payable  described in Note 3 to
the Consolidated  Financial  Statements  converted  $2,000,000 of principal into
shares of common stock and warrants  for the purchase of common  stock.  The due
date for the  remaining  $1,000,000  of  principal  was  extended to April 2001.
Following   this   transaction,   Covol's  notes  payable  total   approximately
$16,000,000,  of which  approximately  $2,400,000  is due  within  the 12 months
ending March 31, 2001. Most of the long-term  notes payable  balance  represents
the carrying value of the  $20,000,000  long-term debt issued at a discount (see
Note 3 to the Consolidated Financial Statements).

In April 2000, Covol and the holder of the $20,000,000  convertible debt amended
the terms of the  convertible  secured  note.  The  revised  terms call for i) a
change in the due date to September  2001, and ii) changes in the provisions for
early  redemption,  including a reduction  in the amount of cash  required to be
paid upon early redemption, and mandatory

                                       18
<PAGE>

redemption  requirements  upon the receipt by Covol of certain deferred payments
from the sales of synthetic  fuel  facilities  which occurred in August 1999 and
January 2000. In connection  with this amendment,  Covol redeemed  $3,000,000 of
the face value of debt in April 2000 and  $2,000,000 in May 2000.  Covol intends
to redeem the balance of the outstanding  convertible  debt as soon as possible,
depending  on the  timing of  receipt  of cash from  operations,  deferred  cash
proceeds from the sale of facilities,  and cash proceeds, if any, from a line of
credit currently being negotiated.

Also in April 2000,  an agreement was entered into with the holder of the series
D  preferred  stock,   which  entity  also  holds  the  $20,000,000  face  value
convertible debt. The agreement  provided for the redemption of 16,000 shares of
the outstanding  preferred stock,  which redemption  occurred in April 2000. The
total redemption price paid of $2,000,000 included a $400,000 premium calculated
at 25%  of the  carrying  amount  of the  preferred  stock.  The  holder  of the
preferred  stock also agreed that it would not  exercise its  conversion  rights
under the preferred  stock  agreement  prior to May 15, 2000.  In May 2000,  the
remaining  19,631 shares of preferred stock were redeemed for a total redemption
price  of   approximately   $2,454,000,   including  a  redemption   premium  of
approximately $491,000.

Forward Looking Statements

Statements in this Report  regarding  Covol's  expectations as to the financing,
development,  construction, operation and sale of facilities utilizing the Covol
binder technologies,  the marketing of products,  the receipt of licensing fees,
the ability to extend or refinance existing  obligations,  and other information
about Covol that are not purely historical by nature, including those statements
regarding  Covol's  future  business  plans,  the operation of  facilities,  the
estimated   capacity  of  facilities,   the  availability  of  coal  fines,  the
marketability  of the  synthetic  fuel and other  briquettes  and the  financial
viability of the facilities,  constitute  forward-looking  statements within the
meaning of the Private Securities  Litigation Reform Act of 1995. Although Covol
believes that its  expectations are based on reasonable  assumptions  within the
bounds  of its  knowledge  of  its  business  and  operations,  there  can be no
assurance that actual results will not differ  materially from its expectations.
In addition to matters  affecting  Covol's  industry or the coal industry or the
economy  generally,  factors  which  could cause  actual  results to differ from
expectations stated in these forward looking statements  include,  among others,
the following:

(1)  The commercial success of the Covol binder technologies.
(2)  Operating issues for licensed facilities including feedstock  availability,
     moisture content,  Btu content,  correct application of binder formulation,
     operability  of  equipment,   product   durability,   resistance  to  water
     absorption and overall costs of operations.
(3)  Marketing  issues  relating to market  acceptance of products  manufactured
     using Covol's technology,  including control of moisture content, hardness,
     special handling  requirements and other  characteristics  of the synthetic
     fuel product which affect its marketability and its sales price.
(4)  Securing of  necessary  sites,  including  permits and raw  materials,  for
     relocation and operation of facilities.
(5)  Maintenance of placed in service  requirements  under Section 29 of the tax
     code by synthetic fuel manufacturing facilities.
(6)  Ability to obtain needed additional capital on terms acceptable to Covol.
(7)  Changes in  governmental  regulations  or failure to comply  with  existing
     regulations   which  may  result  in  operational   shutdowns  of  licensee
     facilities.
(8)  The availability of tax credits under Section 29 of the tax code.
(9)  The commercial  feasibility of the Covol synthetic fuel  technologies  upon
     the  expiration of Section 29 tax credits.
(10) Ability  to  meet  financial   commitments   under   existing   contractual
     arrangements.
(11) Ability  to  meet  non-financial  commitments  under  existing  contractual
     arrangements.
(12) Ability to  commercialize  the  non-synthetic  fuel  related  Covol  binder
     technologies  which  have only been  tested  in the  laboratory  and not in
     full-scale operations.
(13) Ability  to   commercialize   the   technology   of  others  and  implement
     non-technology  based  business  plans  which  are  at an  early  stage  of
     investigation   and  which  will  require   significant  time  and  capital
     investment.
(14) Dependence on licensees to successfully implement Covol binder technologies
     and make license and other payments to Covol.
(15) The  market   acceptance  of  products   manufactured   with  Covol  binder
     technologies in the face of competition from traditional products.
(16) Success in the face of competition by others  producing  synthetic fuel and
     other recycled products.
(17) Sufficiency of intellectual property protections.

See "ITEM 1.  BUSINESS--Forward  Looking Statements" in Covol's Annual Report on
Form 10-K for the year ended  September 30, 1999 for a description of additional
factors which could cause actual results to differ from expectations.

                                       19
<PAGE>

Other Items

Covol  has  reviewed  all  recently  issued,  but  not yet  adopted,  accounting
standards  in order to  determine  their  effects,  if any,  on the  results  of
operations or financial position of Covol. Based on that review,  Covol believes
that none of these  pronouncements  will have any significant effects on current
or future financial position or results of operations.

                          PART II -- OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

See "ITEM 3: LEGAL  PROCEEDINGS"  in Covol's  Annual Report on Form 10-K for the
year ended September 30, 1999 for descriptions of current legal proceedings.  No
material changes have occurred since that report was filed.

ITEM 2.     CHANGES IN SECURITIES

Recent Sales of Unregistered Securities

The following sets forth all  securities  issued by Covol within the past fiscal
quarter without  registering the securities under the Securities Act of 1933, as
amended. No underwriters were involved in any stock issuances.

Covol  believes  that the  following  issuances  of shares of common  stock,  or
securities  exercisable  for or  convertible  into shares of common stock,  were
exempt from the  registration  requirements  of the  Securities  Act of 1933, as
amended,  pursuant to the exemptions set forth in Sections 3(a)(9), 4(2) or 4(6)
thereof or  Regulation D promulgated  thereunder  and the  certificate  for each
security bears a restrictive legend. Each investor made representations to Covol
that it was  accredited  as that term is  defined in  Regulation  D and that the
security was acquired for investment purposes.

Reference  is  made to the  redemptions  of  certain  convertible  debt;  to the
conversions  of series D preferred  stock;  to the  issuance of common stock for
cash;  to the  issuance of warrants  and common  stock  issued upon  exercise of
warrants;  and to the changes in the terms of certain notes and warrants for the
purchase  of  common  stock,  all as  described  in  Note 2 to the  consolidated
financial statements.

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES

None.

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

Reference  is made to Covol's  Form 8-K filed on March 2, 2000  which  describes
both the matters  voted on by  stockholders  at Covol's  annual  meeting held on
February 29, 2000 and the results of that voting.

ITEM 5.     OTHER INFORMATION

None.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

         (a)        The following exhibits are included herein:

         10.58.1.1  Amendment  No. 1 dated as of April 24,  2000 to  Convertible
                    Secured  Note  executed by Covol in favor of OZ Master Fund,
                    Ltd.

         10.59.3    Modification  and Extension  Agreement  dated April 30, 2000
                    between Covol and Cherokee  Associates LLC 10.67 Mountaineer
                    Fuels Asset Purchase  Agreement dated April 17, 2000 between
                    DTE Kentucky, LLC and Covol

         10.67.1    Mountaineer  License and Binder Purchase  Agreement  between
                    DTE Kentucky, LLC and Covol *

         27.1       Financial Data Schedule

                                       20
<PAGE>

             *        This exhibit contains confidential material which has been
                      omitted pursuant to a Confidential  Treatment Request. The
                      omitted  information  has been filed  separately  with the
                      Securities and Exchange Commission.

         (b)      The  following  reports  on Form 8-K  were  filed  during  the
                  quarter ended March 31, 2000:

         o        Form 8-K filed on January 24,  2000,  as amended on Form 8-K/A
                  filed on March 16, 2000,  for events  dated  December 31, 1999
                  and January 18, 2000 (Sales of two synthetic fuel facilities),

         o        Form 8-K filed on February 22, 2000,  for event dated February
                  16, 2000 (Letter sent to stockholders),

         o        Form 8-K filed on March 2, 2000,  for event dated February 29,
                  2000 (Results of annual meeting of stockholders),

         o        Form 8-K filed on March 22,  2000,  for event  dated March 15,
                  2000 (Sale of common stock),

         o        Form 8-K filed on March 30,  2000,  for event  dated March 15,
                  2000  (Response  to Nasdaq  requirement,  including  pro forma
                  condensed  consolidated  statement of  operations  for the two
                  months  ended  February  29,  2000  and  pro  forma  condensed
                  consolidated balance sheet as of February 29, 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.

                                          COVOL TECHNOLOGIES, INC.

Date:  May 8, 2000                        By: /s/ Kirk A. Benson
                                              ------------------
                                              Kirk A. Benson, Chief Executive
                                              Officer and Principal Executive
                                              Officer

Date:  May 8, 2000                        By: /s/ Steven G. Stewart
                                              -------------------------------
                                              Steven G. Stewart, Chief Financial
                                              Officer and Principal Financial
                                              Officer

                                       21