Covol Technologies Inc. Announces Fiscal 1999 Financial Results.

Business Editors

LEHI, Utah--(BUSINESS WIRE)--Jan. 20, 2000

Covol Technologies Inc. (NASDAQ: CVOL), Thursday announced results for the fourth quarter and fiscal year ended Sept. 30, 1999.

Revenues for the quarter were $2,617,000, with a net loss of ($13,251,000) or ($1.09) per share, compared to revenues of $1,103,000 and a net loss of ($5,241,000) or ($.52) per share, for the quarter ended Sept. 30, 1998.

Revenues for the fiscal year ended September 30, 1999 were $6,719,000, with a net loss of ($28,393,000) or ($2.39) per share, compared to revenues of $3,074,000 and a net loss of ($11,308,000) or ($1.17) per share, for the year ended Sept. 30, 1998.

During fiscal 1999, the company recorded non-recurring, non-cash restructuring charges associated with the following items:

Sale and relocation of synthetic fuel facilities    $ 8,620,000
Deferred compensation for terminated employees        2,370,000
Note receivable market adjustment                     1,210,000
    Total                                           $12,200,000

Additionally, losses related to the operation of four synthetic fuel facilities held for sale during fiscal 1999 totaled approximately $5,700,000 in addition to $2,200,000 of interest incurred on indebtedness related to the facilities.

Three of these facilities have now been sold and negotiations are under way for the sale of the fourth facility. As the facilities are sold, operating costs will be eliminated, as will interest expense, as the related debt is paid off.

During the quarter ended Dec. 31, 1999, Covol expects to incur an additional restructuring charge of approximately $12 million related to the writedown of certain plant and equipment and an intangible asset, all related to the sale or relocation of the two synthetic fuel facilities located at the Price, Utah site.

The restructuring charges and relocation of the facilities will have the effect of reducing ongoing operating costs, depreciation and amortization by approximately $4 million annually.

Steven G. Stewart, Covol's Chief Financial Officer, commented, &uot;We are pleased with the continued increase in revenues realized during fiscal 1999. With the sale of all Covol-owned facilities and the repayment of the related debt, future costs of briquetting operations will decrease significantly and we will be able to focus more of our efforts on increasing earned royalties and binder profits.

&uot;The restructuring charges allow the company to remove unproductive assets, concentrating on assets that will generate future revenues.&uot;

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.