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
November 1, 1999
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Date of Report (Date of earliest event reported)
COVOL TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 0-27808 87-0547337
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(State or other jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
3280 N. Frontage Road
Lehi, UT 84043
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(Address of principal executive offices)
(Zip Code)
(801) 768-4481
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(Registrant's telephone number, including area code)
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Item 5. Other Events
In February 1997, Covol entered into a contract with Earthco to acquire
coal fines and to lease certain real property near Wellington, Utah allowing
Covol to conduct fines recovery and preparation activities near the Utah Synfuel
plant site. The terms of the contract included an initial payment to Earthco
upon execution of the contract and an agreement to acquire the fines and make
quarterly payments through May 2000, with options to extend the contract or
purchase the property. Covol has previously made payments under the contract
totaling $3,916,664 and the contract called for future quarterly payments
totaling $1,583,732 through May 2000.
Covol entered into the contract based on the understanding that Earthco
was the fee owner of the property and that there were in excess of 2 million
tons of recoverable coal fines on the property. Subsequently, Covol learned that
NEICO disputed Earthco's ownership of the property, and that there may be
substantially less than 2 million tons of recoverable fines on the property.
Consequently, in August 1999, Covol notified Earthco that unless Earthco could
procure and provide evidence that it could warrant title to the property and
adjust contract payments to reflect the actual recoverable fines at the
property, Covol may elect to terminate the contract and seek appropriate
damages. On this basis, Covol has refused to make further quarterly payments to
Earthco under the contract. Earthco responded to Covol's notice by denying
Covol's claims and alleging various damages caused it by Covol.
Covol denies these allegations.
On November 1, 1999, Covol was served with a Complaint in litigation
pending in the Seventh Judicial District Court of Carbon County, Utah styled
Nevada Electric Investment Company v. Earthco, et al. In the Complaint, and
consistent with Covol's position, Nevada Electric Investment Company ("NEICO")
alleges that it is the lawful owner of the property near Wellington, Utah
described in Covol's lease from Earthco. NEICO seeks a declaratory judgement
that Covol is not entitled to possession of the property due to the lack of
ownership by Earthco. The Complaint also seeks further relief from Earthco.
The disputes among Covol, Earthco and NEICO are at an early stage and
resolution is uncertain. Covol's carrying value of inventory and advances on
inventory with respect to the disputed property are up to $3,700,000.
2
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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.
Date: November 10, 1999 /s/ Kirk A. Benson
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Kirk A. Benson
Chief Executive Officer and
Principal Executive Officer
