Covol Technologies Inc. Announces Third Quarter 1999 Financial Results.

LEHI, Utah--(BUSINESS WIRE)--Aug. 16, 1999--

Covol Technologies Inc., (Nasdaq: CVOL), Monday announced results for the third quarter ended June 30, 1999.

Revenues for the quarter were $1,385,000, with a net loss of ($6,275,000) or ($.54) per share, compared to revenues of $917,000 and a net loss of ($4,682,000) or ($.38) per share, for the quarter ended March 31, 1999.

During the quarter Covol incurred $1,553,000 in non-recurring, non-cash expenses. First, Covol terminated three executives which resulted in recognition of approximately $600,000 of unamortized deferred compensation expense from stock options. Second, Covol moved equipment from the Geneva Steel Co. site.

The unamortized costs related to the facility leasehold improvements, totaling approximately $556,000, were also written off during the quarter. Finally, the Mountaineer synthetic fuel facility recorded a negative inventory adjustment of $397,000.

The net operating loss after adjustment for the non-recurring, non-cash expenses was reduced by $310,000, when compared to the previous quarter. Also, the adjusted operating loss includes higher than expected professional expenses associated with activities related to the disposition of the company owned synthetic fuel facilities and the registration filing of the company's securities for resale.

Steven G. Stewart, Covol's chief financial officer, commented, "We are pleased with the continued reduction in ongoing operating loss realized during the third quarter, but have been disappointed with the rate of decline. We believe that the sale of company-owned facilities will result in a significant reduction in future operating costs."

The company has scheduled a conference call for Monday, Aug. 23, 1999 at 2:15 p.m. MDT (4:15 p.m. EDT). To participate in this call individuals may phone in ahead of time by dialing 212/896-6020. For those who cannot participate, they may listen to the recorded call, between Monday the 23rd and Friday the 27th of August by dialing 800/633-8625 and using the access code of 12965111.

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. -0-

Covol Technologies Inc.

Condensed Consolidated Statements of Operations (unaudited)
(thousands of dollars, except per-share amounts)
                            Three Months Ended     Nine Months Ended
                            June 30    June 30    June 30     June 30
                              1998       1999       1998        1999
Revenues:
  License fees            $  3,185   $    661    $  7,841    $  1,565
  Other                      2,550        724       4,616       1,962
Total revenues               5,735      1,385      12,457       3,527

Operating costs
 and expenses:
  Cost of briquetting
   operations                2,465      3,164       5,530       9,670
  Other                      2,573      2,797       5,139       5,627
Total operating
 expenses                    5,038      5,961      10,669      15,297

Operating income (loss)        697     (4,576)      1,788     (11,770)

Interest income
 (expense), net                224     (1,673)     (1,929)     (3,096)
Other income (expense),
 net                           677        (26)      1,487        (851)

Net income (loss)         $  1,598   ($ 6,275)   $  1,346    ($15,717)

Income (loss) per
 share -- basic           $   0.15   ($  0.54)   $   0.11    ($  1.33)

Income (loss) per
 share -- diluted         $   0.12   ($  0.54)   $   0.09    ($  1.33)

Weighted average
 shares outstanding         10,400     12,512       9,720      12,320


Condensed Consolidated Balance Sheets (unaudited)
(thousands of dollars)
                                                  Sept. 30    June 30
Assets:                                             1998        1999
Current assets:
  Cash and cash equivalents                      $    727    $  1,932
  Receivables                                       3,891       4,471
  Inventories and advances on inventories           4,167       2,618
  Facilities held for sale                         28,405      28,542
  Other                                               682         439
Total current assets                               37,872      38,002

Property, plant and equipment, net                 14,986      14,402

Notes and interest receivable, non-current         10,812      10,828
Intangible assets and other                         4,391       9,143

Total assets                                     $ 68,061    $ 72,375

Liabilities:
Current liabilities:
  Accounts payable                               $  3,036    $  1,265
  Notes payable, current                           22,049      20,359
  Other                                             4,467       5,400
Total current liabilities                          29,552      27,024

Notes and interest payable, non-current            14,643      22,950
Other non-current liabilities                       1,391       1,255
Total liabilities                                  45,586      51,229

Minority interest                                     507         109

Redeemable convertible preferred stock                  0       4,332

Stockholders' equity:
  Convertible preferred stock                           1           1
  Common stock                                         11          12
  Capital in excess of par value                   69,284      78,091
  Accumulated deficit                             (35,780)    (51,674)
  Related party receivables
   collateralized by stock                         (7,773)     (7,024)
  Deferred compensation from stock options         (3,775)     (2,701)
Total stockholders' equity                         21,968      16,705

Total liabilities and stockholders' equity       $ 68,061    $ 72,375