UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q/A
(Mark One)                       AMENDMENT No. 1

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

For the quarterly period ended March 31, 1996
                                                        OR

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

   For the transition period from ___________________ to ___________________


                         Commission file number 0-27803

                            COVOL TECHNOLOGIES, INC.
               (Exact name of registrant 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)



(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 14 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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

     Class of Stock                                    Amount Outstanding

$.001 par value Common Stock                  7,215,158 Shares of Common Stock
                                                       at March, 31, 1996


<PAGE>


                            COVOL TECHNOLOGIES, INC.

                                TABLE OF CONTENTS

                                                                Page No.

Part I - Financial Information

   Item 1.      Consolidated Financial Statements

                Consolidated Balance Sheets.......................1
                Consolidated Statements of Operations.............2
                Consolidated Statements of Cash Flows.............3
                Notes to Financial Statements.....................5


   Item 2.      Management's Discussion and Analysis of
                Financial Condition and Results of
                Operations.......................................10



Part II - Other Information

   Item 6.      Exhibits and Reports on Form 8-K.................14




<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                              --------------------
<TABLE>
<CAPTION>
                                                                                As of                      As of
                                                                              March 31,                September 30,
                                                                                1996                        1995
                                                                          ---------------          ------------------   
         ASSETS

Current assets:
<S>                                                                       <C>                      <C>              
   Cash and cash equivalents                                              $             0          $         583,757
   Receivables                                                                      1,443                     22,005
   Inventories                                                                     22,208                          0
   Notes receivable - related parties current                                       8,495                          0
   Prepaid expenses and other current assets                                        7,123                     12,525
                                                                          ----------------         ------------------

Total current assets                                                               39,269                    618,287
                                                                          ----------------         ------------------

Property, plant and equipment, net of accumulated depreciation                  2,980,548                  1,330,300
                                                                          ----------------         ------------------

Other assets:
   Restricted cash                                                                      0                    500,000
   Cash surrender value of life insurance                                         145,862                    139,612
   Deferred tax asset                                                                   0                     23,000
   Deposits and other assets                                                       82,016                     39,463
                                                                          ----------------         ------------------

Total other assets                                                                227,878                    702,075
                                                                          ----------------         ------------------

Net assets - discontinued operations                                                    0                      9,315
                                                                          ----------------         ------------------

Total assets                                                              $     3,247,695          $       2,659,977
                                                                          ================         ==================

         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Cash overdraft                                                         $        14,464          $               0
   Accounts payable                                                               966,009                    747,137
   Accrued liabilities                                                            114,894                    286,451
   Notes payable - current                                                         23,785                     26,084
   Notes payable - related parties, current                                     2,506,131                     39,035
                                                                          ----------------         ------------------

 Total current liabilities                                                      3,625,283                  1,098,707
                                                                          ----------------         ------------------

Long-term liabilities:
   Notes payable, non-current                                                     167,739                    176,601
   Deferred compensation                                                          207,188                    201,901
                                                                          ----------------         ------------------

Total long-term liabilities                                                       374,927                    378,502
                                                                          ----------------         ------------------

      Total liabilities                                                         4,000,210                  1,477,209
                                                                          ----------------         ------------------
Commitments and contingencies (notes 6, 7 and 8)

Stockholders' equity (deficit) :
   Common stock:  $0.001 par value; authorized:  25,000,000
      shares issued and outstanding:7,215,158 at March 31, 1996 and
      5,260,042 at September 30, 1995                                               7,215                      5,260
   Common stock to be issued:    0 at March 31, 1996 and
      119,334 shares at September 30, 1995                                              0                        119
   Capital in excess of par value                                              27,509,120                  9,617,512
   Capital in excess of par value - common stock to be issued                           0                    581,881
   Accumulated deficit                                                        (14,123,544)                (7,360,156)
   Notes and interest receivable - related parties from issuance of
      or collateralized by common stock (net of allowance)                    (10,473,128)                  (240,000)
   Deferred compensation from stock options                                    (3,672,178)                (1,421,848)
                                                                          ----------------         ------------------

Total stockholders' equity (deficit)                                             (752,515)                 1,182,768
                                                                          ----------------         ------------------

Total liabilities and stockholders' equity (deficit)                      $     3,247,695          $       2,659,977
                                                                          ================         ==================
</TABLE>
                     The accompanying notes are an integral
                 part of the consolidated financial statements

                                       1
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                               -------------------
<TABLE>
<CAPTION>
                                                  Three Months           Three Months            Six Months            Six Months
                                                     Ended                  Ended                  Ended                  Ended
                                                    March 31,              March 31,              March 31,              March 31,
                                                      1996                   1995                   1996                  1995
                                                 ---------------        ---------------        ---------------       --------------

Revenues:
<S>                                              <C>                    <C>                    <C>                   <C>          
   Coal briquetting sales                        $            0         $        8,213         $        3,741        $       9,798
                                                 ---------------        ---------------        ---------------       --------------

      Total revenues                                          0                  8,213                  3,741                9,798
                                                 ---------------        ---------------        ---------------       --------------

Operating costs and expenses:
   Cost of briquetting operations                       430,326                      0                430,326                    0
   Research and development                              90,357                200,971                525,251              306,358
   Selling, general and administrative                  675,618                358,731              1,671,590              501,178
   Compensation expense on stock options              2,576,910                      0              2,889,869                    0
   Compensation expense on issuance of
    common stock                                         45,873                      0                 69,123                    0
                                                 ---------------        ---------------        ---------------       --------------

      Total operating costs and expenses              3,819,084                559,702              5,586,159              807,536
                                                 ---------------        ---------------        ---------------       --------------

         Operating income (loss)                     (3,819,084)              (551,489)            (5,582,418)            (797,738)
                                                 ---------------        ---------------        ---------------       --------------

Other income (expense):
   Interest income                                       92,861                      0                111,356                    0
   Write-down of note receivable                       (199,575)                     0               (199,575)                   0
   Interest expense                                     (29,776)               (32,944)               (44,048)             (57,685)
   Other income (loss)                                 (144,794)                     0               (144,198)                   0
                                                 ---------------        ---------------        ---------------       --------------

      Total other income                               (281,284)               (32,944)              (276,465)             (57,685)
                                                 ---------------        ---------------        ---------------       --------------

Loss from continuing operations before
  income taxes                                       (4,100,368)              (584,433)            (5,858,883)            (855,423)

Income tax benefit (provision)                          (23,000)                31,000                (23,000)              76,000
                                                 ---------------        ---------------        ---------------       --------------


Loss from continuing operations                      (4,123,368)              (553,433)            (5,881,883)            (779,423)
                                                 ---------------        ---------------        ---------------       --------------

Discontinued operations:
   Income (loss) from discontinued operations
     (less applicable income tax benefit
     (provision) of $(23,000), $31,000,
     and $76,000 respectively)                        (440,588)                 62,855               (590,480)             156,851

   Loss on disposal of discontinued operations        (291,025)                      0               (291,025)                   0
                                                 ---------------        ---------------        ---------------       --------------

Income (loss) from discontinued operations            (731,613)                 62,855               (881,505)             156,851
                                                 ---------------        ---------------        ---------------       --------------

         Net loss                                $  (4,854,981)         $     (490,578)        $   (6,763,388)       $    (622,572)
                                                 ===============        ===============        ===============       ==============

Net loss per common share:
   Loss per share from continuing operations     $       (0.58)         $        (0.13)        $        (0.90)       $       (0.19)
   Income (loss) per share from
      discontinued operations                            (0.10)                   0.01                  (0.13)                0.04
                                                 ---------------        ---------------        ---------------       --------------

Net loss per common share                        $       (0.69)         $       (0.12)         $        (1.03)       $       (0.15)
                                                 ===============        ===============        ===============       ==============

Weighted average shares outstanding                  7,084,704              4,262,609               6,546,244            4,189,613
                                                 ===============        ===============        ===============       ==============
</TABLE>
                     The accompanying notes are an integral
                  part of the consolidated financial statements

                                       2
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                               -------------------
<TABLE>
<CAPTION>
                                                                                             March 31,              March 31,
                                                                                                1996                   1995
                                                                                            ------------          -------------
Cash flows from operating activities:
<S>                                                                                         <C>                    <C>       
   Net loss                                                                                 $ (6,763,388)         $  (622,572)
      Adjustments to reconcile net loss to net cash provided by (used in) operating
        activities:
         Depreciation and amortization                                                            86,421               40,873
         Common stock issued for services                                                        361,456                    0
         Deferred income taxes                                                                    23,000              488,000
         Write-down of note receivable - related party, collateralized by common stock           199,575                    0
         Amortization of deferred compensation on stock options                                2,889,869                    0
         Loss on disposal of discontinued subsidiaries                                           291,025                    0
         Interest earned on notes receivable - related parties, collateralized by                (88,594)                   0
           common stock
   Increase  (decrease)  from changes in assets and  liabilities  of  continuing
     operations:
      Receivables                                                                                 20,562               (1,059)
      Inventories                                                                                (22,208)             (14,534)
      Prepaid expenses and other current assets                                                    5,402               (4,275)
      Deposits and other assets                                                                  (42,553)               2,823
      Accounts payable                                                                           218,872              113,448
      Accrued liabilities                                                                       (171,557)             (80,569)
      Deferred compensation                                                                        5,287                4,972

   Discontinued operations noncash charges and working capital changes                          (202,259)              94,303
                                                                                            ------------           ----------

         Net cash provided by (used in) operating activities                                  (3,189,090)              21,410
                                                                                            ------------          -----------

Cash flows from investing activities:
   Cash paid for property, plant and equipment                                                (1,736,669)             (67,802)
   Issuance of notes receivable - related parties                                                 (8,495)                   0
   Increase in cash surrender value of life insurance                                             (6,250)             (12,500)
   Investing activities of discontinued operations                                                     0             (188,854)
                                                                                            ------------          -----------

         Net cash provided by (used in) investing activities                                  (1,751,414)            (269,156)
                                                                                            ------------          -----------

Cash flows from financing activities:
   Proceeds from cash overdraft                                                                   14,464                   0
   Proceeds from note receivable -related parties, collateralized by common stock                164,841             522,565
   Payments on capital lease obligations                                                               0             (27,345)
   Payment on notes payable                                                                      (11,159)            (25,205)
   Payment on notes payable - related parties                                                 (2,169,339)           (311,098)
   Proceeds from issuance of common stock                                                      5,650,531                   0
   Financing activities of discontinued operations                                                     0              28,179
                                                                                            ------------          ----------
         Net cash provided by (used in) financing activities                                   3,649,338             187,096
                                                                                            ------------          ----------
Net decrease in cash                                                                          (1,291,166)            (60,650)

Total cash and cash equivalents, beginning of period:                                          1,291,166             271,883

Cash and cash equivalents, end of period
      Continuing operations                                                                            0             151,648

      Discontinued operations                                                                          0              59,585
                                                                                            ------------          ----------

      Total cash and cash equivalents, end of period                                        $          0          $  211,233
                                                                                            ============          ==========


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

                                       3
<PAGE>

<CAPTION>


                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                        --------------------------------
                    

Supplemental schedule of noncash investing and financing activities:
   Common stock issued for notes receivable                                                 $  6,159,375
   Common stock issued to repay advances                                                                          $  45,613
   Common stock issued to repay notes payable                                                                     $ 100,000


   Obligations assumed in connection with sale of subsidiaries                              $  4,636,435
   Note receivable received for subsidiaries (net of imputed interest)                      $  4,349,575


</TABLE>

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

                                       4
<PAGE>

                    COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       -----------------------------------

1.    Management Opinion

In the opinion of management,  the  accompanying  financial  statements  present
fairly the financial position of Covol Technologies,  Inc. and Subsidiaries (the
Company)  as of  September  30,  1995 and March 31,  1996,  the  results  of its
operations  for the three  months and six months  ended March 31, 1995 and March
31,  1996 and its cash flows for the six months  ended  March 31, 1995 and March
31,  1996.  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 Company's Annual Report included in Form 10 for
the year ended September 30, 1995.

2.    Loss Per Share Calculation

Primary average shares include only common shares  outstanding.  The computation
of fully diluted net loss per common share was  antidilutive  in each period for
which a net loss was presented.

3.    Inventories

Inventories  are  stated at the lower of average  cost or market and  consist of
coal fines available for sale and binder materials.

4.    Discontinued Operations

In 1995, the Company made a strategic decision to focus its efforts  exclusively
on commercializing the synthetic fuel technology (the "Briquetting  Technology")
and  to  divest  itself  of  its   construction   and   limestone   subsidiaries
("Subsidiaries").  In September 1995, the Board of Directors  approved a plan to
dispose of the Company's  construction and limestone business.  Accordingly,  on
February 1, 1996,  the Company  entered  into a Stock  Purchase  Agreement  (the
Agreement) with former principals of IME, State, CIC and Larson (Buyers) to sell
all of the common shares of the subsidiaries to the Buyers for a $5,000,000 face
value 6%  promissory  note (the  Note).  Under the terms of the  Agreement,  the
Company  agreed to pay off  $3,500,000  of accounts  payable and lines of credit
outstanding in the  subsidiaries.  One of the Buyers is the son of a director of
the  Company  at the  time of the  transaction.  The Note is  collateralized  by
100,000 shares of the Company's common stock owned by the Buyers and held by the
Company, 100,000 shares of the Company's common stock committed by the Buyers to
be provided to the Company,  and personal guarantees of the Buyers.  Because the
Note  includes  a  favorable  interest  rate for the  Buyers,  the  Company  has
calculated  the present value of the Note using a market rate of 10.25% over the
term of the Note. The effect of discounting  the Note at 10.25% is to reduce the
Note to $4,349,575 as of the date of the Agreement. The discount on the Note was
include in the estimated loss on disposal of discontinued operations.

Because the Note is  collateralized  by the Company's  common stock, the Note is
reflected  in  the   consolidated   financial   statements  as  a  reduction  to
stockholders'   equity  (or  an   increase   in  the   stockholders'   deficit).
Additionally, the Note is adjusted to reflect subsequent increase or decrease in
the fair value of the Company's stock held as collateral.  Because of a decrease
in the trading price of the Company's common stock subsequent to the date of the
Agreement,  an allowance of $199,575 is reflected in the Company's  consolidated
financial  statements as of March 31, 1996.  Subsequent  changes in the value of
the collateral will be reflected in the consolidated  statement of operations as
an increase or decrease to the Note.

                                       5

<PAGE>
                   COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

4. Discontinued Operations,   continued

The results of the construction and limestone operations have been classified as
discontinued operations for all periods presented in the Consolidated Statements
of Operations.  The assets and liabilities of the  discontinued  operations have
been classified in the Consolidated Balance Sheets as "Net assets - discontinued
operations."  Discontinued  operations have also been segregated for all periods
presented in the Consolidated Statements of Cash Flows.

                                       6

<PAGE>

                    COVOL TECHOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    ----------------------------------------

5.    Stockholders' Deficit
The table below presents the activity in  stockholders'  deficit from January 1,
1996 to March 31, 1996.


                    COVOL TECHOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    ----------------------------------------
<TABLE>
<CAPTION>



                                       Common Stock                                       Notes and interest      
                                                                                         receivable-related
                                                        Capital in                     parties from issuance      Deferred 
                                                        in excess        Accumulated   of, or collateralized    compensation
                                Shares        Amount    par value         Deficit         by common stock          options
                              ----------     -------  -------------    -------------- -----------------------  ---------------
<S>                          <C>           <C>       <C>             <C>                  <C>                 <C>         
Balance at January 1, 1996     6,979,626     $6,979    $18,935,432     ($9,268,563)         ($6,234,535)        ($1,108,888)

Common stock issued for          232,325        233      3,387,618
 cash, including exercise
 of stock options and 
 warrants

Deferred compensation                                    2,743,284                                               (2,743,284)
 related to the issuance
 of stock options at
 below market value to
 officers, directors,
 employees and
 consultants

Compensation expense                                     2,396,916
 related to the issuance
 of stock options at
 below market value

Amortization of deferred                                                                                            179,994
 compensation on stock
 options

Interest earned on notes                                                                        (88,593)
 receivable - related
 parties from issuance of
 or collateralized by
 common stock

Note receivable -                                                                            (4,349,575)
 related parties,
 collateralized by common
 stock

Write-down of note                                                                              199,575
 receivable - related
 parties, collateralized
 by common stock

Compensation expense               3,207          3         45,870
 related to the issuance
 of stock for services

Net loss for the quarter                                                (4,854,981)
 ended March 31, 1996
                          ---------------------------------------------------------------------------------------------------
Balance at March 31, 1996      7,215,158      7,215     27,509,120     (14,123,544)         (10,473,128)         (3,672,178)
                          ===================================================================================================

</TABLE>
                                       7

<PAGE>

                    COVOL TECHOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    ----------------------------------------

6. Construction Agreements                                                  

In December 1995, the Company entered into a design and  construction  agreement
with Lockwood Greene Engineers,  Inc.  ("Lockwood") to design and build the Utah
Plant.  The Company paid Lockwood an advance payment of $500,000 on the facility
on February 9, 1996. The total cost of the Utah Plant to the Company is expected
to be  $3,600,000.  Lockwood and the Company have agreed to cooperate  with each
other in future projects by either party in the field of coal  agglomeration  or
metallic  recovery.  Also in December 1995, the Company  entered into additional
contracts to design and build additional facilities with Lockwood.

7. Coal Venture
 
On January 30, 1996,  the Company  entered into a letter of  understanding  with
CoBon Energy,  L.L.C.  ("CE"), a Utah professional service company based in Salt
Lake  City,  Utah,  to form five  entities  to  commercialize  and  exploit  the
Briquetting Technology for the production of coal briquettes.

8.    Contingencies

Larson Limestone

In May of 1995 the Company's wholly owned subsidiary,  Larson Limestone Company,
Inc. ("Larson"),  filed a complaint in the Fourth Judicial District Court in and
for the County of Utah,  State of Utah against Farrell  Larson,  Larson's former
president  and director.  In January,  1996 the complaint was amended to add the
Company as a  plaintiff.  In  addition  Irene  Larson,  Gary  Birmingham  d.b.a.
Birmingham  and  Company,  and  Birmingham  Enterprises,   Inc.  were  added  as
defendants . The plaintiffs allege that defendants misrepresented facts and made
material  omissions in connection  with the sale of 50% of Larson to the Company
in 1994.  Furthermore,  plaintiffs allege that the share purchase  agreement was
breached  by  defendant  Farrell  Larson  and that  state  securities  laws were
violated.  The  complaint  seeks to enjoin  Farrell  Larson from  harassing  the
Company and seeks an order releasing all collateral  held to secure  plaintiff's
performance  including the 50% of Larson held in escrow as security for the note
given by the  Company in the  purchase  of Larson,  and damages of not less than
$325,000  treble  damages in  accordance  with Utah  securities  laws,  punitive
damages of $1,000,000 and costs. The suit is in the discovery phase.  Subject to
conducting further discovery,  the Company intends to vigorously pursue an award
of damages against the defendants in this case. In February 1996, Farrell Larson
and Irene Larson filed  counterclaims  against the Company  asserting  breach of
contract by the Company and Larson in respect to the  agreements  through  which
the Company  purchased  Farrell  Larson's 50% interest in Larson;  breach of the
covenant  of good faith and fair  dealing  with  respect to the same  contracts;
interference with contractual and economic relations;  defamation, which relates
to alleged  statements by the Company  concerning  the  litigation,  either just
prior to or during the litigation;  breach of fiduciary duty,  alleging that the
Company  owed  Farrell  Larson a fiduciary  duty with  respect to the conduct of
business of Larson; and in violation of Larson's bylaws. In their  counterclaim,
Farrell  Larson and Irene Larson ask for the  forfeiture of the shares of Larson
acquired by the Company,  for  management of Larson to be reinstated as directed
by Farrell Larson,  for reimbursement of all attorney fees and costs incurred by
Farrell Larson,  for an order allowing Farrell Larson to foreclose on collateral
held under the Share Purchase  Agreement with the Company,  for final payment of
$325,000 under other contracts between the Company and Farrell Larson, and other
unspecified  amounts of actual and punitive  damages.  The Company believes that
all payments due to Farrell  Larson have been made or have been  deposited  with
the court to be held  pending  the  resolution  of the  litigation.  The Company
intends to vigorously  defend all counterclaims  filed against it. However,  the
Company is currently conducting further discovery activities with respect to the
counterclaims.  The remaining defendants have answered the complaint and did not
assert counterclaims, but may assert counterclaims in the future.

                                       8
<PAGE>

                   COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

8.    Contingencies, continued

In connection  with the facts at issue in the Company's  action against  Farrell
Larson,  in January 1996 Farrell Larson and his wife, Irene Larson,  filed a new
lawsuit in the Fourth Judicial  District Court in and for Utah County,  State of
Utah  against  among other  defendants,  Michael  Midgley  (the Chief  Financial
Officer of the Company and  President  and Director of Larson),  Mark Hardman (a
Vice-President  and  Director  of Larson),  and Kenneth M. Young (the  Company's
Chairman  of the Board and former  President).  This  complaint  includes  three
causes of  action:  (1)  interference  with  Larson's  business  relations,  (2)
defamation, and (3) breach of fiduciary duty. The factual basis for these claims
for relief  are  substantially  the same as the facts at issue in the  Company's
action against Farrell Larson. Accordingly, the Court has consolidated these two
cases  at the  Company's  request  so that  all of the  related  issues  will be
resolved  together.  The  Company  believes  that all acts  alleged as basis for
liability against Messrs. Midgley,  Hardman, and Young were performed by them in
the course and scope of their employment for the Company and Larson.

                                       9 
<PAGE>


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

Explanation of Amendment

The financial statements of the Company for the period ended March 31, 1996 have
been restated to be consistent with certain  adjustments made in connection with
the audit of the fiscal  year ended  September  30, 1996 and to provide a proper
basis of comparison with future financial statements.

Results of Operations

Three months ended March 31, 1996 compared to three months ended March 31, 1995

Revenues

Total revenues  decreased by $8,213 during the three months ended March 31, 1996
from the  $8,213  reported  in the  comparable  period in 1995.  During the 1995
period,  the  Company  was  in the  process  of  liquidating  its  "Clean  Coal"
inventory,  which  accounted  for the revenue in 1995.  No revenue was generated
during the 1996 period since  production had not begun nor were any assets sold.
As described in "Liquidity and Capital Resources" below, the Company has entered
into  an  agreement  to  sell  its   construction   and   limestone   businesses
("Subsidiaries"). The revenues for the construction and limestone businesses are
included in the line item "Income (loss) from discontinued operations".

Margins, Costs and Expenses

The  Company's  operating  loss  increased  in the 1996 period from  $551,489 to
$3,819,084 from the comparable  period in 1995 due in part to the recognition of
compensation  expense of $2,576,910 on stock options and compensation expense on
issuance of common stock of $45,873. Selling, general and administrative expense
increased  by  $316,887  or  approximately  88% from the  $358,731  ended in the
comparable  period in 1995 . This increase is due to the  Company's  increase in
staff,   the  related  costs   associated  with  licensing  and  exploiting  the
Briquetting  Technology and the administration  costs associated with the Geneva
briquetting plant. The Company incurred $430,326 for briquetting operations that
did not occur in the comparable 1995 period because the Geneva plant was not yet
operational.  Research and development  expenses decreased $110,614  principally
due to a reduction in activity in the development of the Briquetting  Technology
in the three month 1996 period relative to the 1995 period.

Net Loss

Net loss  increased  for the three months ended March 31, 1996 by  $4,364,403 as
compared to the three months ended March 31, 1995.  The loss is primarily due to
the differences as explained above. Additionally, in the 1996 period the Company
recognized a write down on the note receivable from the sale of its subsidiaries
of $199,575.  Discontinued operations contributed a net loss of $440,588 and the
company recognized a loss on the disposal of discontinued operations of $291,025
for the three month period ended March 31, 1995.

                                       10
<PAGE>

Results of Operations

Six months ended March 31, 1996 compared to six months ended March 31, 1995

Revenues

Total  revenues  from the sale of "Clean  Coal" and the  testing  of other  coal
products  decreased  to $3,741 in 1996 from the $9,798  reported in the previous
year. As described in "Liquidity and Capital  Resources"  below, the Company has
entered into an agreement to sell its construction and limestone businesses. The
revenues for the construction and limestone  businesses are included in the line
item "Income (loss) from discontinued operations".

Margins, Costs and Expenses

The Company's  operating  costs  increased to $5,586,159 in the 1996 period from
$807,536  in  the  comparable  period  in  1995.  This  is due  in  part  to the
recognition  of  compensation   expense  of  $2,889,869  on  stock  options  and
compensation  expense  on  issuance  of common  stock of  $69,123.  The  Company
incurred  $430,326  for  briquetting  operations  that  did  not  occur  in  the
comparable  1995 period.  The Company's  research and  development  expenditures
increased $218,893 or approximately 71% for the six month's ended March 31, 1996
as a result of increased  expenses  relating to the coal and revert  Briquetting
Technology,   primarily   during  the  first  quarter.   Selling,   general  and
administrative  expenses increased by $1,170,412 or 234% during the period ended
March 31,  1996  from the  comparable  period  ended  March 31,  1995 due to the
Company's  increase in staff,  the related costs  associated  with licensing and
exploiting the Briquetting  Technology and the  administrative  costs associated
with the Geneva briquetting plant.

Net Loss

Net loss  increased  from $622,572 in 1995 to $6,763,388 in 1996.  The increased
loss is primarily due to the differences as explained  above.  Additionally,  in
the 1996 period the Company  recognized a write down on the note receivable from
the sale of its subsidiaries of $199,575. The construction companies contributed
a net profit of $156,851 in 1995 and a net loss, including losses from disposal,
of $881,505 in 1996.

Liquidity and Capital Resources

During the six months  ended March 31,  1996,  the Company  was  increasing  its
research and  development  expenditures,  increasing its staff and their related
costs,  as well as  starting  up its Geneva  plant.  As a result  the  Company's
operating  activities  used  $3,189,090  of cash  compared to a cash  surplus of
$21,410 for the six months ended March 31, 1995.  Expenditures for new property,
plant and equipment  increased in the 1996 period to $1,736,669  from $67,802 in
the 1995 period.  During the 1996 period the Company was making down payments on
equipment  to be used in its coal  briquetting  plants as well as paying for the
onsite  engineering costs associated with these plants.  The Company was able to
fund this growth through the issuance of common stock.

                                       11
<PAGE>

In 1995, the Company made a strategic decision to focus its efforts  exclusively
on  commercializing  the  Briquetting  Technology  and to  divest  itself of its
construction and limestone subsidiaries ("Subsidiaries"). In September 1995, the
Board of Directors approved a plan to dispose of the Company's  construction and
limestone businesses. Accordingly, on February 1, 1996, the Company entered into
a Stock Purchase Agreement (the Agreement) with former principals of IME, State,
CIC and Larson (Buyers) to sell all of the common shares of the  subsidiaries to
the Buyers for a $5,000,000 face value 6% promissory note (the Note).  Under the
terms of the  Agreement,  the Company  agreed to pay off  $3,500,000 of accounts
payable and lines of credit  outstanding in the subsidiaries.  One of the Buyers
is the son of a director of the Company at the time of the transaction. The Note
is  collateralized  by 100,000 shares of the Company's common stock owned by the
Buyers and held by the Company,  100,000  shares of the  Company's  common stock
committed by the Buyers to be provided to the Company,  and personal  guarantees
of the Buyers.  Because  the Note  includes a  favorable  interest  rate for the
Buyers,  the Company has calculated the present value of the Note using a market
rate of 10.25% over the term of the Note. The effect of discounting  the Note at
10.25% is to reduce the Note to $4,349,575 as of the date of the Agreement.  The
discount  on the  Note  was  included  in the  estimated  loss  on  disposal  of
discontinued operations.

Because the Note is  collateralized  by the Company's  common stock, the Note is
reflected  in  the   consolidated   financial   statements  as  a  reduction  to
stockholders'   equity  (or  an   increase   in  the   stockholders'   deficit).
Additionally,  the Note is adjusted to reflect subsequent increases or decreases
in the fair  value of the  Company's  stock  held as  collateral.  Because  of a
decrease in the trading  price of the Company's  common stock  subsequent to the
date of the Agreement,  an allowance of  approximately  $199,575 is reflected in
the Company's consolidated financial statements as of March 31, 1996. Subsequent
changes in the value of the  collateral  will be reflected  in the  consolidated
statement of operations and as an increase or decrease to the Note.

The result of the construction and limestone  operations have been classified as
discontinued operations for all periods presented in the Consolidated Statements
of Operations.  The assets and liabilities of the  discontinued  operations have
been classified in the Consolidated Balance Sheets as "Net assets - discontinued
operations."  Discontinued  operations have also been segregated for all periods
presented in the Consolidated Statements of Cash Flows.

The Company is currently in negotiations to produce revert briquettes for Geneva
according  to  specifications  supplied by Geneva.  Cash flows from  operations,
principally  the gross profit from sales to Geneva  under the Geneva  agreement,
the sale of the Section 29 tax credits to third parties and cash payments  under
the  Greystone  agreement,  are  expected  to fund  working  capital  needs  for
approximately  eighteen  months,  excluding the capital  required to exploit the
Briquetting Technology.

The  Company  is  presently  offering  units of the  Company's  common  stock to
accredited  investors  at a  purchase  price of $71.50  per unit in  amounts  of
$100,000 or greater.  A unit consists of five shares of restricted  common stock
and one A warrant  with an  exercise  price of  $25.00,  one B  warrant  with an
exercise  price of $30.00 and one C warrant  with an  exercise  price of $35.00.
Such  offering is only made by means of an offering  memorandum  and  statements
related to such offering herein are neither offers to sell or  solicitations  of

                                       12


<PAGE>

offers to buy.  During the three month period ended March 31, 1996,  the Company
raised  $3,244,237  in  this  private  placement  of  common  stock  and is also
exploring  various  sources of working  capital to fund the  exploitation of the
Briquetting Technology over the next 18 months,  including additional private or
public  offerings of equity or debt securities and the outright sale of the coal
agglomeration plants to third parties.

In May, 1995, the Company  secured  financing in the form of an $825,000  master
equipment  lease  funded by a commercial  bank to equip its initial  briquetting
plant at Geneva's facilities and simultaneously entered into a lease with Geneva
wherein the Company has the right to operate the  facility.  The Company has the
option to purchase the equipment from the bank at the end of the lease term.

The Company will be required to obtain significant financing to establish future
commercial  briquetting  plants,  whether  directly  or  through  joint  venture
partners or licenses.

On  December  28,  1995,  the  Company  entered  into  Design  and  Construction
Agreements   ("Agreements")  with  an  engineering  firm  to  design  and  build
twenty-two coal fines agglomeration  facilities  ("Facilities").  As required by
the Agreements the Company has given notice to proceed on the first contract for
a Facility to be located in Utah. The Company has paid the  engineering  firm an
advance payment of $500,000 on the first  Facility.  The total cost of the first
Facility  is  contractually  limited  to  $17,000,000.  In the  event  that  the
Agreement is terminated by the Company on the first Facility, a penalty of 6% of
the total cost of the  Facility  will be payable to the  engineering  firm.  The
terms of the remaining twenty-one Agreements are similar to the first Agreement;
however,  the  Company  did  not  provide  notice  to the  engineering  firm  in
accordance  with those  Agreements.  On  February  5, 1996,  the Company and the
engineering  firm  amended the  remaining  Agreements  to allow for notice to be
provided  to the  engineering  firm  by May  31,  1996.  Essentially,  for  each
Agreement which the Company  provides the required  notice,  the Company will be
obligated  for  either the total  cost of the  Facility  if built (not to exceed
$17,000,000),  or 6% of the total cost if the  Agreement  is  terminated  by the
Company.

As of May 3,  1996,  the  Company  does not have  sufficient  capital  resources
available to implement the Agreements, including the 6% of the total cost of the
facility.

Forward Looking Statements

Statements  regarding the Company's  expectations  as to its liquidity,  capital
resources and certain other  information  presented in this Form 10-Q constitute
forward  looking  statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform  Act  of  1995.   Although  the  company  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.

                                       13

<PAGE>

PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits
Those exhibits  previously field with the Securities and Exchange  Commission as
required by Item 601 of Regulation S-K, are incorporated  herein by reference in
accordance with the provisions of Rule 12b-32.

Exhibit 27        Financial Data Schedule

(b)   Reports on Form 8-K
There have been no reports on Form 8-K filed  during the  quarter for which this
report is filed.


                                       14

<PAGE>




SIGNATURE


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

Date: May 16, 1997


COVOL TECHNOLOGIES, INC.




                              By:/s/ Brent M. Cook
                              -------------------------------------
                              Brent M. Cook, Chairman of the Board
                              Chief Executive Officer and Principal
                              Executive Officer


                              By: /s/ Stanley M. Kimball
                              --------------------------------------
                              Stanley M. Kimball,
                              Principal Financial Officer