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

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

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

For the quarterly period ended June 30, 1996
                                       OR

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

For the transition period from ________________________________________________


                         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                  7,294,123 Shares of Common Stock
                                                       at June 30, 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.............................................9



Part II - Other Information

         Item 6.   Exhibits and Reports on Form 8-K......................13



<PAGE>
<TABLE>
<CAPTION>
                              COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      CONSOLIDATED BALANCE SHEETS
                                          --------------------


                                                                                 As of                    As of
                                                                                June 30,               September 30,
                                                                                  1996                     1995
                                                                         ------------------        ------------------
         ASSETS

Current assets:
<S>                                                                      <C>                       <C>               
   Cash and cash equivalents                                             $         438,699         $          583,757
   Receivables                                                                      34,381                     22,005
   Inventories                                                                      22,208                          0
   Notes receivable - related parties current                                        5,757                          0
   Prepaid expenses and other current assets                                         3,348                     12,525
                                                                         -----------------         ------------------  
Total current assets                                                               504,393                    618,287
                                                                         -----------------         ------------------
Property, plant and equipment, net of accumulated depreciation                   3,762,827                  1,330,300
                                                                         -----------------         ------------------ 
Other assets:
   Restricted cash                                                                       0                    500,000
   Cash surrender value of life insurance                                          152,112                    139,612
   Deferred tax asset                                                                    0                     23,000
   Deposits and other assets                                                        58,016                     39,463
                                                                         -----------------         ------------------
Total other assets                                                                 210,128                    702,075
                                                                         -----------------         ------------------
Net assets - discontinued operations                                                     0                      9,315
                                                                         -----------------         ------------------ 
Total assets                                                             $       4,477,348         $        2,659,977
                                                                         =================         ==================

         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:
   Accounts payable                                                      $       2,164,999         $          747,137
   Accrued liabilities                                                             164,816                    286,451
   Notes payable - current                                                          23,225                     26,084
   Notes payable - related parties, current                                      2,384,044                     39,035
                                                                         -----------------         ------------------
 Total current liabilities                                                       4,737,084                  1,098,707
                                                                         -----------------         ------------------  
Long-term liabilities:
   Notes payable, non-current                                                      154,964                    176,601
   Deferred compensation                                                           209,882                    201,901
                                                                         -----------------         ------------------
Total long-term liabilities                                                        364,846                    378,502
                                                                         -----------------         ------------------     
      Total liabilities                                                          5,101,930                  1,477,209
                                                                         -----------------         ------------------

Minority interest in consolidated subsidiaries                                     832,500                          0

Commitments and contingencies (notes 6)

Stockholders' equity (deficit) :
   Common stock:  $0.001 par value; authorized:  25,000,000
      shares issued and outstanding: 7,294,123 at June 30, 1996 and
      5,260,042 at September 30, 1995                                                7,294                      5,260
   Common stock to be issued:  0 at June 30, 1996 and
      119,334 shares at September 30, 1995                                               0                        119
   Capital in excess of par value                                               28,651,661                  9,617,512
   Capital in excess of par value - common stock to be issued                            0                    581,881
   Accumulated deficit                                                         (19,730,764)                (7,360,156)
   Notes and interest receivable - related parties from issuance of
      or collateralized by common stock (net of allowance)                      (7,617,404)                  (240,000)
   Deferred compensation from stock options                                     (2,767,869)                (1,421,848)
                                                                         -----------------         ------------------
Total stockholders' equity (deficit)                                            (1,457,082)                 1,182,768
                                                                         -----------------         ------------------  
Total liabilities and stockholders' equity (deficit)                     $       4,477,348         $        2,659,977
                                                                         =================         ==================
</TABLE>

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

                                        1
<PAGE>
<TABLE>
<CAPTION>
                             COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                      ----------------------------

                                                   Three Months           Three Months         Nine Months        Nine Months
                                                      Ended                  Ended               Ended               Ended
                                                     June 30,               June 30,            June 30,            June 30,
                                                       1996                  1995                 1996                1995
                                                 -------------         -------------         ------------       --------------
Revenues:
<S>                                              <C>                   <C>                   <C>                <C>           
   License fees                                  $           0         $     100,000         $          0       $      100,000
   Coal briquetting sales                               33,431                 2,760               37,172               12,558
                                                 -------------         -------------         ------------       --------------
      Total revenues                                    33,431               102,760               37,172              112,558
                                                 -------------         -------------         ------------       --------------
Operating costs and expenses:
   Cost of briquetting operations                      258,197                     0              688,523                    0
                                                       -------
   Research and development                            420,050               185,139              945,301              491,497
   Selling, general and administrative               1,368,951               387,310            3,040,541              888,488
   Compensation expense on stock options             1,425,929                     0            4,315,798                    0
   Compensation expense on issuance of
    common stock                                         4,500                     0               73,623                    0
                                                 -------------         -------------         ------------       --------------  
      Total operating costs and expenses             3,477,627               572,449            9,063,786            1,379,985
                                                 -------------         -------------         ------------       -------------- 
         Operating loss                             (3,444,196)             (469,689)          (9,026,614)          (1,267,427)
                                                 -------------         -------------         ------------       -------------- 
Other income (expense):
   Interest income                                      88,594                     0              199,950                    0
   Write-down of note receivable                    (2,250,000)                    0          (2,449,575)                    0
   Interest expense                                     (1,558)              (30,672)            (45,606)              (88,356)
   Other income (loss)                                     (60)                    0            (144,258)                    0
                                                 -------------         -------------         -----------        --------------
      Total other income (expense)                  (2,163,024)              (30,672)         (2,439,489)              (88,356)
                                                 -------------         -------------         -----------        -------------- 
Loss from continuing operations before
  income taxes                                      (5,607,220)             (500,361)        (11,466,103)           (1,355,783)

Income tax benefit (provision)                               0                     0             (23,000)               14,000
                                                 -------------         -------------         -----------        --------------

Loss from continuing operations                     (5,607,220)             (500,361)        (11,489,103)           (1,341,783)
                                                 -------------         -------------         -----------        --------------

Discontinued operations:

   Income (loss) from discontinued operations
     (less applicable income tax benefit
     (provision) of $0, $0, $(23,000)
     and $14,000 respectively)                               0              (114,318)           (590,480)               28,533

   Loss on disposal of discontinued operations
$562,000 in 1996 and 1995  respectively)                     0                     0            (291,025)                    0

Income (loss) from discontinued operations                   0              (114,318)           (881,505)               28,533

         Net loss                                $  (5,607,220)        $    (614,679)        $12,370,608)       $   (1,313,250)
                                                 =============         =============         ============       ==============




Net loss per common share:

   Loss per share from continuing operations     $       (0.77)        $      (0.11)         $     (1.72)       $        (0.31)
   Income (loss) per share from
      discontinued operations                             0.00                (0.03)               (0.13)       $         0.01
                                                 -------------         ------------          -----------        --------------

Net loss per common share                        $       (0.77)        $      (0.14)         $     (1.85)       $        (0.30)
                                                 =============         ============          ===========        ==============

Weighted average shares outstanding                  7,258,406            4,572,361            6,699,062             4,319,668
                                                 =============         ============          ===========        ==============
</TABLE>



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

                                       2
<PAGE>
<TABLE>
<CAPTION>
                             COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES 
                                CONSOLIDATED STATEMENT OF CASH FLOWS 
                                -------------------------------------




                                                                                         Nine Months                Nine Months
                                                                                            Ended                      Ended
                                                                                           June 30,                   June 30,
                                                                                             1996                       1995
                                                                                     ----------------           ----------------- 
Cash flows from operating activities:
<S>                                                                                  <C>                        <C>               
   Net loss                                                                          $    (12,370,608)          $      (1,313,250)
      Adjustments to reconcile net loss to net cash provided by (used in)
       operating activities:
         Depreciation and amortization                                                        137,003                      58,899
         Common stock issued for services                                                     365,956                           0
         Deferred income taxes                                                                 23,000                     488,000
         Write-down of note receivable - related party, collateralized by 
          common stock                                                                      2,449,575                           0
         Amortization of deferred compensation on stock options                             4,315,798                           0
         Loss on disposal of discontinued subsidiaries                                        291,025                           0
         Interest earned on notes receivable - related parties, collateralized 
          by common stock                                                                    (177,189)                          0
   Increase (decrease) from changes in assets and liabilities of continuing
     operations:
      Receivables                                                                             (12,376)                    (25,216)
      Inventories                                                                             (22,208)                    (14,534)
      Prepaid expenses and other current assets                                                 9,177                      (3,054)
      Deposits and other assets                                                               (18,553)                     17,823
      Accounts payable                                                                      1,417,862                     193,445
      Accrued liabilities                                                                    (121,635)                   (112,138)
      Deferred compensation                                                                     7,981                       7,458

   Discontinued operations noncash charges and working capital changes                       (202,259)                    236,648
                                                                                     ----------------           -----------------  
         Net cash provided by (used in) operating activities                               (3,907,451)                   (465,919)
                                                                                     ----------------           ----------------- 
Cash flows from investing activities:
   Cash paid for property, plant and equipment                                             (2,569,530)                   (114,526)
   Purchase of subsidiaries                                                                         0                     (10,000)
   Issuance of notes receivable - related parties                                              (8,495)                          0
   Increase in cash surrender value of life insurance                                         (12,500)                    (18,750)
   Investing activities of discontinued operations                                                  0                      42,244
                                                                                     ----------------           -----------------
         Net cash provided by (used in) investing activities                               (2,590,525)                   (101,032)
                                                                                     ----------------           -----------------
Cash flows from financing activities:
   Proceeds from note receivable - related parties, collateralized by 
    common stock                                                                              859,160                           0
   Proceeds from notes receivable - related party                                               2,738                           0
   Payments on capital lease obligations                                                            0                     (27,345)
   Payment on notes payable                                                                   (24,494)                    (46,976)
   Payment on notes payable - related parties                                              (2,291,426)                 (1,178,098)
   Proceeds from issuance of common stock                                                   6,267,031                   1,103,339
   Proceeds from notes payable                                                                      0                     525,000
   Proceeds from issuance of limited partnership interests in subsidiaries                    832,500                           0
   Financing activities of discontinued operations                                                  0                     782,165
                                                                                     ----------------           ----------------- 
         Net cash provided by (used in) financing activities                                5,645,509                   1,158,085
                                                                                     ----------------           -----------------

Net increase (decrease) in cash                                                              (852,467)                    591,134

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

Cash and cash equivalents, end of period
      Continuing operations                                                                   438,699                     681,839

      Discontinued operations                                                                       0                     181,178
                                                                                     ----------------           -----------------
      Total cash and cash equivalents, end of period                                 $        438,699          $          863,017
                                                                                     ================          ==================
</TABLE>


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

                                        3
<PAGE>
<TABLE>
                            COVOL TECHNOLOGIES, INC. AND SUBSIDIARIES 
                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                             ---------------------------------------

Supplemental schedule of noncash investing and financing activities:
<S>                                                                                  <C>             
   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  June 30,  1996,  the  results  of its
operations for the three months and nine months ended June 30, 1995 and June 30,
1996 and its cash flows for the nine  months  ended  June 30,  1995 and June 30,
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

Weighted 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.

                                        5

<PAGE>
<TABLE>
<CAPTION>

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



4.    Stockholders' Deficit

The table below  presents  the activity in  stockholders'  deficit from April 1,
1996 to June 30, 1996.
                                                                                             Notes and interest 
                                                                                                 receivable-
                                          Common Stock                                         related parties 
                                      -------------------                                       from issuance     Deferred     
                                                              Capital in                           of, or        compensation 
                                                              excess of       Accumulated      collateralized      on stock 
                                      Shares       Amount      par value        Deficit        by common stock     options
                                     ---------    -------    ------------    --------------  ------------------  -------------
<S>                                  <C>           <C>        <C>             <C>               <C>              <C>         
Balance at April 1, 1996             7,215,158     $7,215     $27,509,120     ($14,123,544)     ($10,473,128)    ($3,672,178)

Common stock issued for cash,           77,215         77         616,423
 including exercise of stock 
 options and warrants

Common stock issued for                  1,750          2           4,498
 services

Deferred compensation related                                     521,620                                           (521,620)
 to the issuance of stock 
 options at below market
 value to officers, directors,
 employees and consultants

Amortization of deferred                                                                                           1,425,929
 compensation on stock options

Service issued in lieu of                                                                            587,766
 payments on notes receivable - 
 related parties from issuance of
 common stock 

Cash received in payment on                                                                            6,553
 notes receivable - related 
 parties from issuance of
 common stock

Interest earned on notes                                                                             (88,595)
 receivable - related
 parties from issuance of or
 collateralized by
 common stock

Write-down of note receivable                                                                      2,350,000
 - related parties, collateralized 
 by common stock

Net loss for the quarter ended                                                  (5,607,220)
 June 30, 1996

                                    ----------------------------------------------------------------------------------------
Balance at June 30, 1996             7,294,123      7,294      28,651,661      (19,730,764)       (7,617,404)     (2,767,869)
                                    ========================================================================================
</TABLE>

                                       6

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

5.    Stock Options and Warrants

On June 3, 1996 the Company granted options to purchase 100,000 shares of common
stock for $1.50 per share to an officer of the  Company as part of  compensation
related to an employment agreement.

6.    Agreements:

Geneva Plant

In May 1995,  the Company  entered into a  collaborative  agreement  with Geneva
Steel Company ("Geneva") to build and operate a commercial  briquetting plant in
Vineyard, Utah defined above as the Geneva Plant. That agreement was amended and
restated in May, 1996. Pursuant to the Amended and Restated Briquetting Services
Agreement  and  Lease   Agreement   with  Geneva   (collectively,   the  "Geneva
Agreements")  Geneva  has  provided  the  Company  with  a  building  containing
approximately 9,000 square feet. The Company equipped the building to serve as a
coal, coke and revert material briquetting plant. The Company estimated that the
Geneva  Plant's  initial  capacity  was  15  tons  of  briquettes  per  hour  or
approximately  100,000  tons per year.  Geneva  provided the Company with revert
materials  and the  Company  was  obligated  to  produce  and  deliver to Geneva
briquettes conforming to agreed-upon specifications and in agreed to quantities.
Geneva  bears all  transportation  costs  with  respect  to  delivery  of revert
materials to the Geneva Plant and the  shipment of  briquettes.  Pursuant to the
Geneva Agreements, the Company began producing briquettes in May 1996.

Limited Partnerships

In June 1996, the Company  formed Utah Synfuel #1, Ltd.  ("Utah Synfuel #1") and
Alabama  Synfuel  #1,  Ltd.  (Alabama  Synfuel  #1"),  each a  Delaware  limited
partnership  (collectively the "Partnerships").  The respective Partnerships are
intended  to (I)  purchase  a  nonexclusive  license  from the  Company  for the
Briquetting  Technology,  (ii)  purchase a coal  briquetting  facility  from the
Company and (iii) sell such facility to a third party purchaser. Utah Synfuel #1
intends to  purchase  the coal  briquetting  Utah Plant and  Alabama  Synfuel #1
intends to purchase the coal briquetting Birmingham, Alabama plant (the "Alabama
Plant").  The Company  will grant to each of the  Partnerships  a  non-exclusive
license  to use the  Briquetting  Technology  with  respect to coal for a fee of
$500,000  (totaling  $1,000,000).  The Company  intends to retain at least a 60%
interest in Utah Synfuel #1 and up to an 83% interest in Alabama Synfuel #1. The
Company  has  privately  placed  the  remaining  partnership  interests  in  the
Partnerships.  Specifically,  the Company received $3,277,500  ($3,080,000 as of
September 30, 1996) for the remaining  partnership  interests in Utah Synfuel #1
and  $1,762,500  ($1,305,000  as  of  September  30,  1996)  for  the  remaining
partnership  interest in Alabama Synfuel #1.  Notably,  the Company is currently
analyzing  whether  the  original  disclosure  provided to  investors  should be
supplemented.  The Company may decide to revise the  information in the original
private  placement  memorandums  for  those  offerings,  and may  offer  to such
investors the  opportunity  to rescind their  purchases.  If all such  investors
rescind,  the Company would be required to pay up to $5,040,000  ($4,385,000  at
September 30, 1996) plus applicable  interest less the amount of income received
thereon.   Management  believes  the  amount  rescinded  by  investors  will  be
immaterial.

                                       7

<PAGE>

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

Limited Partnerships (Continued)

The Company, as a general partner for the Partnerships, is currently negotiating
transactions with potential buyers of the Utah Plant and Alabama Plant, which is
yet to be  constructed  or acquired.  The Company  believes that the sale of the
Utah Plant and Alabama  Plant  would  include  (I) a $500,000  sublicensing  fee
(which would be paid by the buyer to the Partnership in exchange for the license
of the Briquetting Technology),  (ii) a royalty payment to the Partnership based
on per ton amount to be agreed on with the buyer,  and (iii) a  promissory  note
delivered by the buyer in payment of the purchase price,  which would be payable
to the  Partnership  from the cash flow of such  plant.  The Company and Alabama
Synfuel #1 have entered into a letter of intent with an  unregulated  subsidiary
of PacifiCorp,  a large  low-cost  electric and telephone  utility,  to sell the
Alabama  Plant  to  be  constructed  or  acquired  by  Alabama  Synfuel  #1,  on
substantially  the terms listed above. The PacifiCorp  transaction is subject to
various  conditions  and no  definitive  agreement  has been entered  into.  The
Company  and Utah  Synfuel  #1 have also  entered  into a letter of intent  with
Arthur  J.  Gallagher  & Co.,  an  international  insurance  brokerage  and risk
management services firm, to sell the Utah Plant, to be acquired by Utah Synfuel
#1. The sale is subject to various  conditions  and no definitive  agreement has
been  entered  into.  No  assurances  can be made that any of the  plants  being
constructed or acquired by the partnerships will be sold.

Under the organizational documents of the partnerships,  the Company is entitled
to  distributions  from the Partnerships  according to the company's  percentage
interest in the net distributable cash flow of the Partnerships. The Company may
also enter into loading agreements and operating and maintenance agreements that
would  provide  for  payments  directly  from the buyer of a plant.  The  binder
materials used to produce the  briquettes  will likely be sold to the buyer of a
plant by the Company based on the Company's cost plus an agreed upon  percentage
profit.

                                        8
<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 June 30, 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 June 30, 1996 compared to three months ended June 30, 1995

Revenues

Total  revenues  decreased by $69,329 to $33,431 for the three months ended June
30, 1996 from the  $102,760  reported  in the  comparable  period in 1995.  Coal
briquetting  sales  increased  $30,671  from $2,760 to $33,431 and license  fees
decreased from $100,000 to $0 for this three month period.

Margins, Costs and Expenses

The  Company's  operating  loss  increased  in the 1996 period from  $469,689 to
$3,444,196 from the comparable  period in 1995 due in part to the recognition of
compensation  expense on stock  options of  $1,425,929  and the  recognition  of
compensation expense on issuance of common stock of $4,500. Selling and, general
and  administrative  expense  increased by $981,641 to $1,368,951  from $387,310
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  $258,197  for  briquetting
operations  that did not occur in the comparable  1995 period because the Geneva
plant was not yet  operational.  Research  and  development  expenses  increased
$234,911 from $185,139 to $420,050.

Net Loss

Net loss  increased  for the three months ended June 30, 1996 by  $4,992,541  as
compared to the three months ended June 30, 1995. In addition to the differences
described above,  during the three month period ended June 30,1996,  the Company
recognized a write down on the note receivable from the sale of its subsidiaries
of  $2,250,000.  Discontinued  operations was $0 for the three months ended June
30, 1996 compared to a loss of $114,318 for the same period in 1995.

                                        9
<PAGE>

Results of Operations

Nine  months  ended June 30, 1996  compared  to nine months  ended June 30, 1995
Revenues

Total  revenues  decreased  $75,386 from $112,558 for the nine months ended June
30, 1995 to $37,172 for the comparable period ended June 30, 1996. Revenues from
the sale of Coal Briquettes  increased  $24,614 to  $37,172  compared to $12,558
for the same period ended in 1995.  License fees  decrease from $100,000 in 1995
to $0 for the comparable period reported in 1996.

Margins, Costs and Expenses

The Company's operating costs increased by $7,683,801 to $9,063,786 for the nine
months ended June 30, 1996 compared to $1,379,985 for the  comparable  period in
1995.  This  is due in  part  to the  recognition  of  compensation  expense  of
$4,315,798 on stock options and compensation expense on issuance of common stock
of $73,623.  The Company incurred  $688,523 for briquetting  operations that did
not occur in the comparable 1995 period.  The Company's research and development
expenditures  increased $453,804 or approximately 92% for the nine month's ended
June 30, 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 $2,152,053 or 242% during the period ended
June 30,  1996  from  the  comparable  period  ended  June  30,  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 $1,313,250 in 1995 to $12,370,608 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  $2,449,575.   The  construction  companies
contributed  a net profit of $28,533  in 1995 and a net loss,  including  losses
from disposal, of $881,505 in 1996.

Liquidity and Capital Resources

During the nine months  ended June 30,  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 $3,907,451 of cash compared to cash used of $465,919
for the nine months ended June 30, 1995.  Expenditures  for new property,  plant
and equipment  increased in the 1996 period to  $2,569,530  from $114,526 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.

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<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  $2,449,575 is reflected in
the Company's  consolidated financial statements as of June 30, 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 in the process of restarting  its Geneva plant 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 licensing of Briquetting  Technology 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 nor  solicitations of
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

                                       11
<PAGE>

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.

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<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.

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<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: August 14, 1997


COVOL TECHNOLOGIES, INC.




                              By: /s/ Brent M. Cook
                                 --------------------------------------
                              Brent M. Cook, Chief Executive Officer
                              and President


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


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