UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 23, 1999
-------------
Date of Report (Date of earliest event reported)
COVOL TECHNOLOGIES, INC.
------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-27808 87-0547337
- --------------------------------- ------------------------ --------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
3280 N. Frontage Road
Lehi, UT 84043
--------------
(Address of principal executive offices)
(Zip Code)
(801) 768-4481
--------------
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed
since last report.)
<PAGE>
Certain statements in this Report constitute forward looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. As such,
actual results may vary materially from current expectations. For a discussion
of certain of the factors that could cause actual results to differ from
expectations, please see the information set forth under the caption entitled
"Forward Looking Statements" in PART I, ITEM 2 of Covol's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999. There can be no assurance that
Covol's results of operations will not be adversely affected by such factors.
Covol undertakes no obligation to revise or publicly release the results of any
revision to these forward looking statements. Readers are cautioned not to place
undue reliance on these forward looking statements, which reflect management's
opinion only as of the date hereof.
Item 5. Other Events - Announcement of Proposed Transactions
Covol announced on June 23, 1999 two letters of intent for proposed
transactions. The text of the announcement follows:
Covol Technologies, Inc. announced that it has entered into two non-binding
letters of intent with an affiliate of a major U.S. electric utility company
with respect to certain proposed transactions. If fully consummated, the
transactions would result in the sale of the Company's synthetic fuel business,
including four Company-owned facilities and royalty interests from third-party
licensees, and the restructuring of the Company.
The proposed transactions would allow the Company's stockholders to realize
value above the current market price of the Company's stock by selling its
synthetic fuel business, and yet, allow its stockholders to continue to
participate in the opportunities afforded by the Company's non-Section 29
intellectual property rights.
Brent Cook, Covol's President, said "We believe that the primary challenge
facing the successful realization of the value created from Covol's synthetic
fuel facilities and its royalty interests is the marketing of the end-product.
The proposed transactions address this issue by aligning the interests of the
owners of the synthetic fuel facilities, the holders of the royalty interests
and the consumers of coal and synthetic fuels derived from coal. Electric
utilities consume approximately 900 million tons of coal annually. The capacity
of Covol's owned and licensed facilities is approximately thirteen million
tons."
Taken together, the transactions contemplated by the two letters of intent
propose the following:
(a) sale of the Commonwealth/River Hill facility in late July or early
August for $22 million, $4 million of which will be escrowed subject
to achievement of certain performance milestones;
(b) sale of the Mountaineer Synfuel, Pocahontas Synfuel, and the Carbon
Synfuel facilities in the early fall;
(c) transfer of the Company's non-Section 29 intellectual property
rights, cash and certain other assets owned by Covol to a new wholly
owned subsidiary, ownership of which would be either spun-off to
existing stockholders or made available to them in a rights or
exchange offer; and
(d) acquisition of Covol in a cash merger.
Under the letters of intent, the sale of the Company's Commonwealth/River Hill
Synfuel facility is not dependent on the successful completion of the remainder
of the transactions. In the event that the transactions described above are
consummated, the Company estimates based on tentative valuations that the
aggregate amount of cash to be received by the Company's equity holders would be
approximately $150 to $180 million. These valuations are subject to validation
studies and to further negotiation and could change. Currently, the company has
outstanding approximately 12,500,000 common shares, preferred stock convertible
into approximately 2,338,000 common shares, and options and warrants exercisable
at varying prices into an aggregate of approximately 6,554,000 common shares.
The letters of intent executed by Covol are non-binding. Among other
contingencies to consummation of each of the proposed transactions are;
2
<PAGE>
purchaser's satisfactory completion of due diligence, successful negotiation of
definitive agreements (including price), applicable governmental approvals, and,
as to other than the Commonwealth/River Hill facility sale, Covol stockholder
approval. In addition, the letter of intent covering the transactions described
in paragraphs (b) through (d) above requires the parties to select and reach
agreement with at least two additional purchasers in order for such transaction
to go forward.
Kirk A. Benson, Covol's Chief Executive Officer and Chairman of the Board,
stated, "We believe that these transactions present the opportunity for
stockholders both to receive compensation from the Company's synthetic fuel
endeavors and to invest in Covol's emerging engineered resources technologies
and applications. While we are cautiously optimistic about these transactions,
there is no assurance that any of the transactions will be consummated."
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COVOL TECHNOLOGIES, INC.
Registrant
Date: July 7, 1999 /s/ Kirk A. Benson
-----------------------------
Kirk A. Benson
Chief Executive Officer and
Principal Executive Officer
