Covol Technologies Inc. Announces Sale of Its Commonwealth/River Hill Facility to Major U.S. Electric Utility Company.

LEHI, Utah--(BUSINESS WIRE)--Aug. 30, 1999--

Covol Technologies Inc. (Nasdaq:CVOL), Monday announced that it has sold the Commonwealth/River Hill synthetic fuel facility to an affiliate of a major U.S. electric utility company.

The sales price consisted of a cash payment to Covol of $1,250,000, assumption and satisfaction of the facility debt, completion of capital improvements to the facility, along with an eight-year royalty arrangement with both Covol and the construction lender.

The estimated total aggregate value of the transaction under this initial arrangement, including the present value of the projected royalty streams and the cost of expected improvements to the facility which are part of the transaction, is approximately $16 million.

Covol can both accelerate and increase its royalty interests upon obtaining firm synthetic fuel "off-take" agreements in excess of 100,000 tons per year and operating the facility at rated capacity for a 10-day period. Covol must achieve these performance milestones by June 30, 2000.

The maximum amount under these provisions is achieved if "off-take" agreements to sell 360,000 tons per year are put in place for the synthetic fuel production of the facility. Further, Covol can receive an additional $4 million payment if the facility operates at 115 percent of capacity for a three-month period in any consecutive three months prior to Dec. 31, 2001.

If the company achieves all of these potential performance milestones, the estimated total value of the transaction would be approximately $23 million.

Kirk A. Benson, chief executive officer and chairman of the board, commented, "We are extremely pleased to be able to announce the sale of the first of the four Company owned facilities. We are aggressively pursuing a strategy of marketing our remaining three facilities and maximizing the value of our royalty interests."

The company has entered into an agreement in which it will operate the Commonwealth/River Hill facility on behalf of the buyer. Covol has also entered into its standard supply agreements.

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, 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.