During the first quarter, preliminary testing demonstrated the ability of ultrasonically enhanced comminution to increase fraction of -200 mesh particles by 100 to 500% over mechanical grinding alone. Modification of the preliminary ultrasonic comminution process to include cycles of ultrasonic activation followed by removal of fines has shown a significant increase in the production of -325 mesh particles (-44 microns) with substantial fractions in the -20 micron and -10 micron ranges. Efforts to characterize coal samples have yielded a correlation between Hardgrove Grindability Index (HGI) and susceptibility to ultrasonic comminution. This information, along with other considerations and data relating to the cost effectiveness of industrial ultrasonic comminution, will be used to select coal samples for the Phase II experiments. While several preliminary equipment configurations have been used, their purpose has been mainly to verify the mechanism of ultrasonic comminution and to secure information for the design and fabrication of optimized laboratory apparatus for Phase II testing. On this basis a nip configuration has been selected to insure contact throughout the ultrasonic activation period and prevent coal particle compaction.