Covol Technologies Inc. Addresses Capitalization Structure.

Business Editors

LEHI, Utah--(BUSINESS WIRE)--Feb. 29, 2000

Covol Technologies Inc. (NASDAQ: CVOL), Tuesday announced a clarification of its capitalization structure.

The following table illustrates the number of Covol shares outstanding as of Feb. 28, 2000 and the approximate number of shares into which the company's convertible preferred stock, warrants and options may convert at various "in the money" stock prices. The calculations were made as of Feb. 28, 2000.

The calculations do not include shares in which certain debt could be converted because the company's present intention is to redeem the debt. These calculations assume, using the treasury stock method, certain shares would be converted at the prices indicated and that proceeds from the conversion would be used to repurchase and retire shares of the company's common stock.

                                  Outstanding Share Schedule
                                     (Shares in Thousands)

Share Price               $ 1.00   $ 3.00   $ 6.00   $ 9.00   $15.00
Shares Outstanding        18,006   18,006   18,006   18,006   18,006
Convertible Preferred      3,678    3,678    3,678    4,121    4,121
Warrants                     923      923    1,996    3,598    3,850
Options                             1,220    1,830    2,220    2,972
Application of
 the Treasury
 Stock Method               (545)  (1,482)  (1,745)  (2,760) ( 2,425)
Pro Forma Fully
 Diluted Shares          22,062    22,345   23,765   25,185   26,524

Covol is considering offering to the non-employee holders of the company's warrants and options the right to accept a market-based exercise price for their warrants or options in exchange for a corresponding reduction in the number of shares into which these securities convert.

The reduction in the number of shares will be in the same proportion as the reduction in the market-based price of the warrant or option.

If this offer is accepted, which will be the individual decision of each shareholder, it will result in a reduction in the number of shares into which the warrants or options can convert with a corresponding reduction to a market rate of the exercise price. There can be no assurances that any offer will be made or accepted.

In addition, the company granted stock options to certain individuals which were exercised. The individuals issued notes to the company secured by the stock, as consideration for the exercise price.

Covol is considering an offer to these individuals to cancel the notes held by the company in exchange for the company's stock. The stock will be held as treasury stock.

If all of the individuals accept this proposal, it will result in a reduction in the number of shares outstanding by approximately 800,000, based on the price at which the options were originally exercised.

The number of shares into which the convertible preferred stock could convert is dependent upon the conversion price. For a majority of the convertible preferred stock, the conversion price is 90% of the average of the lowest three trading days in the twenty trading days prior to conversion.

Accordingly, the number of shares into which the convertible preferred stock will convert fluctuates as Covol's stock price changes.

Covol is a technology licensing company which engineers industrial waste and other by-products into value-added fuels and resources.

Statements in this news release that relate to future plans, possible transactions, or projected valuations are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including any statement with respect to anticipated products to be produced using Covol's technology and Covol's strategy.

Such statements are subject to risks and uncertainties that could cause actual results to differ materially. Although Covol believes that its expectations are based on reasonable assumptions, there are a number of business factors which singularly or combined may affect the company's future operating results.

In addition to matters affecting Covol's industry or the coal industry or the economy generally, factors which could cause actual results to differ from expectations set forth in the above identified forward-looking statements include but are not limited to: the ability to successfully negotiate terms and consummate proposed transactions, ability to sell company-owned synthetic fuel facilities on favorable terms, including the ability to negotiate settlements of contract terminations caused by facility relocations, ability to obtain necessary capital or financing, ability to comply with covenants in financing agreements, including financial performance criteria, ability to conserve capital through cost reductions until operating revenues exceed expenses, ability of licensees to market synthetic fuel produced, generating royalties for Covol, ability of licensees to achieve expected production levels at the synthetic fuel facilities, favorable IRS tax treatment, availability of natural resources and suitable raw materials, ability to locate appropriate sites for facilities, ability of Covol to complete specific research and development projects, and the commercial viability of Covol's technologies.