As filed with the Securities and Exchange Commission on April 10, 2000
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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COVOL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 87-0547337
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
3280 North Frontage Road
Lehi, Utah 84043-9534
(801) 768-4481
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(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Kirk A. Benson
Chairman of the Board of Directors
3280 North Frontage Road
Lehi, Utah 84043-9534
(801) 768-4481
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(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copy to:
Harlan M. Hatfield
Covol Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043-9534
(801) 768-4481
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Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE:
o Title of Each Class of Securities to Be
Registered: Common Stock ($.001 par value)
o Amount to Be Registered: 4,228,689 shares (1)
o Proposed Maximum Offering Price Per
Share (2) $1.59
o Proposed Maximum Aggregate Offering
Price (2) $6,723,616
o Amount of Registration Fee (2)(3) $1,775.03
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(1) Shares which may be resold by the selling stockholders. No
consideration will be received by the Registrant for such shares being
registered hereby.
(2) Calculated in accordance with Rule 457(c) on the basis of the average
of the high and low prices as of April 7, 2000 of Registrant's Common
Stock as reported by The Nasdaq National Market(SM).
(3) Registration Fee is calculated on the basis of $264 per $1,000,000 of
the Proposed Maximum Aggregate Offering Price.
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Covol hereby amends this Form S-3 on such date or dates as may be
necessary to delay its effective date until Covol shall file a further amendment
which specifically states that this Form S-3 shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or until this Form
S-3 shall become effective on such date as the SEC, acting pursuant to said
Section 8(a), may determine.
The information contained in this prospectus is not complete and may be
changed. We may not sell these securities until the Form S-3 filed with the SEC
is effective. This prospectus is not an offer to sell these securities and is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
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Preliminary prospectus Subject to Completion dated April 10, 2000
Prospectus
4,228,689 SHARES
COVOL TECHNOLOGIES, INC.
COMMON STOCK
This is an offering of shares of common stock of Covol Technologies,
Inc. Only the selling stockholders are offering shares to be sold in the
offering. Covol is not selling any shares in the offering.
Covol's common stock is quoted on The Nasdaq Stock Market(SM) under the
symbol CVOL. On April 7, 2000, the last reported sale price for the common stock
on The Nasdaq Stock Market(SM) was $1.63 per share.
Covol's executive offices and telephone number are:
3280 North Frontage Road
Lehi, Utah 84043-9534
(801) 768-4481
This investment involves high risks. See "Risk Factors" beginning on page 3.
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The common stock offered in this prospectus has not been approved by the SEC or
any state securities commission, nor have these organizations determined that
this prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is April __, 2000
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You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. We are not making an
offer of these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any prospectus
supplement is accurate as of any date other than the date on the front of those
documents.
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TABLE OF CONTENTS
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Page
RISK FACTORS.............................................................. 3
FORWARD LOOKING STATEMENTS..................................................9
AVAILABLE INFORMATION..................................................... 10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 11
MATERIAL CHANGES.......................................................... 11
USE OF PROCEEDS........................................................... 12
SELLING STOCKHOLDERS...................................................... 12
PLAN OF DISTRIBUTION...................................................... 15
LEGAL MATTERS............................................................. 15
EXPERTS................................................................... 16
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RISK FACTORS
You should consider carefully the following risk factors and other
information in this document before investing in our common stock.
We Have a History of Losses; No Assurance of Profit
We have incurred total losses of approximately $74,000,000 from
February 1987 through December 31, 1999. All quarters have had net losses,
including a loss of approximately $1,900,000 for the quarter ended December 31,
1999. We may not be profitable in the future. We are dependent on collection of
license fees and other payments from licensees for revenue.
Ongoing Financial Viability Depends on Operations Success for License Revenues
Our existence depends on the ability of our licensees to produce and
sell synthetic fuel which will generate license fees to us. There are
twenty-four synthetic fuel plants that utilize our patented technology and from
which we intend to earn license fees. There are four additional facilities which
utilize a technology that we acquired during fiscal 1999. Collectively, these 28
facilities do not presently operate at levels needed to generate adequate
revenues to us. Improved operations at each of these plants depends on the
ability of the plant owner to produce a marketable quality of synthetic fuel,
and the ability of the plant owner to market the synthetic fuel. Licensees must
successfully address all operating issues, including but not limited to,
feedstock availability, cost, moisture content, Btu content, correct binder
formulation, operability of equipment, product durability, resistance to water
absorption and overall costs of operations, which in many cases to date have
resulted in unit costs in excess of resale prices. It is not certain what time
will be required to resolve these operating issues or whether these issues can
be resolved, and it is not certain how much time will be required for the
synthetic fuel to obtain market acceptance. These problems are in some ways
beyond our control.
Our Owned Facilities Have Not Been Sold When Expected and Have Substantial
Operating Cash Needs
We have one remaining synthetic fuel facility to be sold. Operation of
this facility and the other three facilities recently sold has required a
substantial amount of cash. From September 1999 through March 2000, we obtained
debt and equity financing which provided net proceeds of approximately
$8,000,000. These proceeds, along with proceeds from the sale of a synthetic
fuel facility in December 1999 and the sale of another synthetic fuel facility
in January 2000, are being used for operating expenses and debt service
requirements until sufficient operating revenues are generated and the remaining
facility is sold. It is not certain when or whether earned royalties from
licensees will be sufficient to meet operating and debt service requirements.
Therefore, we do not know how long the current capital will last. We are
continuing to reduce operating costs, but further potential cost reductions are
limited due to our need to work with licensees in order to increase earned
royalties. Marketing difficulties have kept us from generating sales revenues
equal to operating expenses, negatively affecting cash flows and increasing
capital requirements. We are actively trying to sell the remaining facility and
enter into license agreements under which we would be paid earned royalties
based on production. However, there can be no assurance that the facility will
be sold or that if it is sold, that it will be on favorable terms to us or that
we will be able to enter into license agreements and be paid royalties based on
production.
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Debt Terms and Covenants Restrict Our Activities
On March 17, 1999 we entered into debt and equity financing that
contains restrictions on business activities and covenants for future
activities. We also agreed to meet specific quarterly earnings targets beginning
with the quarter ending December 31, 1999 and for subsequent quarters. The
consolidated earnings target for the quarter ended December 31, 1999, adjusted
principally for interest, taxes, depreciation and amortization, was $5,000,000
and was met. The earnings target increases in subsequent quarters. These terms
and conditions also restrict or prohibit specific activities without debt and
equity holder approval, including for example, materially changing the business
of Covol, incurring more than $4,000,000 of additional indebtedness, entering
into a merger, reorganization, recapitalization, or similar transaction, selling
or encumbering of assets, making capital expenditures greater than $300,000 or
15 percent of EBITDA, repurchasing equity securities and issuing debt or equity
securities in a senior position. Non-compliance could result in immediate
convertibility, acceleration of repayment, increased interest charges or
assignment of royalty payments from related collateral. See our Form 8-K filed
March 24, 1999 and the 1999 Form 10-K for a discussion of these debt terms.
We or our Licensees May Not Qualify for Tax Credits Granted by Congress to
Encourage Production of Alternative Fuels
Section 29 of the Internal Revenue Code provides a tax credit for the
production and sale of qualified synthetic fuel. We received a private letter
ruling from the IRS in which the IRS agrees that synthetic fuel manufactured
using our technology qualifies for the Section 29 tax credits. At least seven
other private letter rulings have been issued by the IRS to licensees of our
technology. These rulings may be modified or revoked by the IRS if the IRS
adopts regulations that are different from these rulings. Also, a private letter
ruling may not apply if the actual practice differs from the information given
to the IRS for the ruling. Therefore, tax credits may not be available in the
future, which would materially adversely impact us. See our Form 10-K for fiscal
year 1999, "ITEM 1. BUSINESS - Tax Credits" for an explanation of qualifications
for Section 29 tax credits.
Based upon the language of Section 29 of the tax code and private
letter rulings issued by the IRS to us and our licensees, we and our licensees
believe the synthetic fuel facilities built and completed by June 30, 1998 are
eligible for Section 29 tax credits. However, the ability to claim the tax
credits is dependent upon a number of conditions including, but not limited to,
the following:
o The facilities were constructed pursuant to a binding contract
entered into on or before December 31, 1996;
o All steps were taken for the facility to be considered placed
in service;
o Manufacturing procedures are applied to produce a significant
chemical change and hence a "qualified fuel";
o The synthetic fuel is sold to an unrelated party; and
o The owner of the facility is in a tax paying position and can
therefore use the tax credits.
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The IRS may challenge us or our licensees on any one of these or other
conditions. Also, we or our licensees may not be in a financial position to
claim the tax credits if we or they are not profitable. In addition, the Section
29 credit is subject to phase out after the unregulated oil price reaches a
certain level, adjusted annually for inflation. The most recent published
information is for 1999 and based on that information, the credit would begin to
be phased out if the unregulated oil price reached a price of approximately
$47.03 per barrel and would be completely phased out if the price reached
approximately $59.04 per barrel. The 1999 unregulated oil price as published by
the IRS was $15.56 per barrel. The inability of a licensee to claim tax credits
would reduce our income from the licensees.
Our accounting and valuation procedures assume qualification for
Section 29 tax credits so that synthetic fuel production will continue to be the
highest and best use of the synthetic fuel equipment and facilities. If the
synthetic fuel facilities lose their qualification under Section 29, the
equipment and facilities could be overvalued in any alternative highest and best
use.
Synthetic Fuel Facilities May Not Be Commercially Viable After the Tax Credits
Expire
The synthetic fuel facilities that qualify for tax credits under
Section 29 of the code receive economic benefits from the tax credits in
addition to the benefits, if any, from operations. It is possible that synthetic
fuel facilities that are not eligible for tax credits cannot be built and
operated profitably.
Section 29 expires on December 31, 2007 after which tax credits will
not apply to the synthetic fuel facilities. In order to remain competitive and
commercially viable after 2007, licensees must manage their costs of production
and feedstock, and they must also develop the market for synthetic fuel with
adequate prices to cover the costs.
Other Applications of Our Technology May Not Be Commercially Viable
We have developed and patented technologies related to the briquetting
of wastes and by products from the coal, coke and steel industries. We have also
tested in the laboratory the briquetting of other materials. However, to date we
have only commercialized our coal-based synthetic fuel application. The other
applications have not been commercialized or proven out in full-scale
operations. We may not be able to employ these other applications profitably.
See our Form 10-K for fiscal year 1999, "ITEM 1. BUSINESS - Background" for a
discussion of non-coal applications of our technology.
New Technologies and Other New Business Plans May Not Be Commercially Viable
In addition to our efforts to develop our technology in non-coal
applications, Covol is investigating the commercialization of the technologies
of others. Covol is also investigating business opportunities unrelated to
technology commercialization. All of Covol's future business plans outside of
the coal-based synthetic fuel industry are at an early stage of development,
will require significant time and capital investment, and may not prove to be
profitable. Covol's implementation of new business plans will likely require the
approval of Covol's Board and the March 1999 debt and equity holder because of
covenants restricting Covol's activities.
We May Be Unable to Obtain Necessary Additional Funding
We have significant cash outflow requirements for:
o debt repayments,
o working capital, and
o implementation of our business strategy.
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The current amount of outstanding debt is approximately $26,000,000, of
which approximately $14,500,000 is due between now and December 31, 2000
Substantially all facilities and equipment held for sale and most of Covol's
property, plant and equipment and license fees payable to us from the production
and sale of synthetic fuel from owned and licensed synthetic fuel facilities are
collateral for debt.
Our cash needs will differ depending on the operations of the
licensees' synthetic fuel facilities and the timing of the sale of the remaining
facility which is currently held for sale. There can be no assurance that we
will sell the facility or be able to raise any additional funds when needed on
terms acceptable to us.
We are Dependent Upon Third Party Licensees for Commercial Application of
Technology
We depend on licensees to commercially employ our synthetic fuel
technology. The payments received by us as royalties and from sales of our
patented chemical binder to the facilities are directly related to the level of
production and sales of the synthetic fuel. There is no assurance that our
licensees will be able to operate the facilities at a sufficient level of
production to provide adequate payments to us to meet our ongoing financial
needs. See our Form 10-K for fiscal year 1999, "ITEM 1. BUSINESS - Synthetic
Fuel Manufacturing Facilities" for a list of our licensees and a discussion of
our license and royalty agreements with them.
Market Acceptance of Synthetic Fuel Products is Uncertain
We are uncertain of the market acceptance of products manufactured
using our technology. Synthetic fuel is a relatively new product and competes
with standard coal products. Industrial coal users must be satisfied that the
synthetic fuel is a suitable substitute for standard coal products. Moisture,
hardness, special handling requirements and other characteristics of the
synthetic fuel product may affect its marketability, including sales price. Our
licensees may be unable to meet the product quality requirements of all their
customers. Many industrial coal users are also limited in the amount of
synthetic fuel product they can purchase from our licensees because they have
committed a substantial portion of their coal requirements through long-term
contracts. Reliance on spot markets have generally produced lower resale prices
compared to long-term coal supply contracts in the utility industry. For these
and other possible reasons, customers may not purchase the synthetic fuel
products made with our technology. To date our licensees have secured contracts
for the sale of only a portion of their production. The suitability of synthetic
fuel as a coal substitute and particularly the quality characteristics of
synthetic fuel, the overall downward trend in coal prices, and the traditional
long-term supply contract practices of fuel buying in the utility industry have
made the identification of purchasers of synthetic fuel difficult. We do not
know if licensees will be able to secure market contracts for their synthetic
fuel products at full production levels.
Supply of Sufficient Raw Materials for Synthetic Fuel Facilities is Not Assured
Our licensees have not secured all the raw materials needed to operate
all of the facilities for the full term of the tax credit. Some of the owners of
facilities are constructing coal washing facilities to provide feedstock and
some of the facilities may have to be moved to sites with enough raw materials
for operation. See our Form 10-K for fiscal year 1999, "ITEM 1. BUSINESS -
Supply of Raw Materials" for a discussion of the principal sources of raw
materials.
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We Must Comply With Government Environmental Regulations
The synthetic fuel facilities which use our technology must satisfy
regulations regarding the discharge of pollutants into the environment. We or
the facility owners may be subject to fines for any violation of regulations due
to design flaws, construction flaws, or operation errors. A violation may
prevent a facility from operating until the violation is cured. We or our
licensees may be liable for environmental damage from facilities not operated
within environmental guidelines. See our Form 10-K for fiscal year 1999, "ITEM
1. BUSINESS - Government Regulation" for a discussion of the principal areas of
federal and state regulation which we are subject to.
We have Significant Competitors
We experience competition from:
o Other alternative fuel technology companies and their
licensees,
o Companies that specialize in the disposal and recycling of
waste products generated by coal, coke, steel and other
resource production, and
o Traditional coal, fuel, and natural resource suppliers.
Competition may come in the form of the licensing of competing
technologies or in the marketing of similar products. We currently have limited
experience in manufacturing and marketing. Many of our competitors have greater
financial, management and other resources than we have. We may not be able to
compete successfully. See our Form 10-K for fiscal year 1999, "ITEM 1. BUSINESS
- - Competition" for a discussion of the competitors in the synthetic fuel
industry that we are aware of.
Limitation on Protection of Key Intellectual Property
We rely on patent, trade secret, copyright and trademark law, as well
as confidentiality agreements and other security measures to protect our
intellectual property. These rights or future rights or security measures may
not protect our interests in present and future intellectual property.
Competitors may successfully contest our patents or may use concepts and
processes which enable them to circumvent our technology. See our Form 10-K for
fiscal year 1999, "ITEM 1. BUSINESS - Proprietary Protection" for a list of our
trade names, patents and other intellectual property and a discussion of its
value to us.
Technological Developments by Third Parties Could Increase Our Competition
Alternative fuel sources and the recycling of waste products are the
subject of extensive research and development by our competitors. If a
competitive technology were developed which greatly increased the demand for
waste products or reduced the costs of alternative fuels or other resources, the
economic viability of our technology would be adversely affected.
Furthermore, we may not be able to develop or refine our technology to
keep up with future synthetic fuel requirements or to commercialize the other
applications of our technology as discussed in our business strategy. See our
Form 10-K for fiscal year 1999, "ITEM 1. BUSINESS - Background" for a discussion
of our efforts to continue to develop and refine our technology.
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Operations Liability May Exceed Insurance Coverage
We are subject to potential operational liability, such as injuries to
employees or third parties, which are inherent in the manufacturing of
industrial products. While we have obtained casualty and property insurance in
the amount of $10,000,000, with the intent of covering these risks, there can be
no assurance that our operations will not expose us to operational liabilities
beyond our insurance coverage.
No Dividends Are Contemplated in the Foreseeable Future
We have never paid and do not intend to pay dividends on common stock
in the foreseeable future. In addition, dividends on common stock cannot be paid
until cumulative dividends on our outstanding preferred stock are fully paid.
Our ability to pay dividends without approval of the debt and equity holders is
also restricted and prohibited by covenant as long as the debt and equity issued
in our March 1999 financing is outstanding.
Common Stock Price May Continue to be Volatile
Our common stock is currently traded on The Nasdaq Stock Market(SM).
The market for our common stock has been volatile. Factors such as announcements
of production or marketing of synthetic fuel from the synthetic fuel facilities,
technological innovations or new products or competitors announcements,
government regulatory action, litigation, patent or proprietary rights
developments, and market conditions in general could have a significant impact
on the future market for our common stock. You may not be able to sell our
common stock at or above your purchase price.
Preferred Dividends Accumulate Until Paid and Must Be Paid Prior to Any
Dividends to Holders of Common Stock
We have issued preferred stock that has preferential dividend rights,
which dividends will accumulate if unpaid. Dividends on common stock are
prohibited until the preferential rights of the preferred stock are satisfied.
If we are liquidated, the preferred stockholders are entitled to liquidation
proceeds after creditors but before common stockholders. The preferred stock can
be converted to common stock. See our Form 8-K filed March 24, 1999 for a
discussion of rights of the preferred stock.
Conversion of Convertible Securities May Dilute Stockholders
We have issued a significant amount of securities which are convertible
into common stock. As of April 7, 2000, we had approximately 22,000,000 shares
of common stock outstanding and approximately 10,000,000 additional shares are
issuable upon conversion of convertible preferred stock and convertible debt,
and upon exercise of warrants and options. To the extent warrants, options and
other convertible securities are converted into common stock, stockholder
interests in us will be diluted. If the market value of the common stock
decreases significantly, the offering price per share in our private placements
or public offerings as well as the conversion price of the outstanding
convertible securities, may decrease causing dilution of ownership to other
stockholders.
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Dilution of Stockholders Due to Sales of Common Stock and Conversion of
Convertible Securities May Affect Our Ability to Raise Additional Capital
Sales of common stock and convertible preferred stock, and the exercise
of options, warrants and other convertible securities may have an adverse effect
on the trading price of and market for our common stock. We may sell or issue
common stock or convertible securities in the future at market prices or at
prices below the current market price, which issuance would cause dilution to
stockholders.
Registration Rights may Affect our Ability to Raise Additional Capital
A significant portion of shares we have issued in private placements
and shares underlying our outstanding convertible securities are subject to
registration rights. Potential investors may be concerned that the public resale
of the registered shares would negatively affect the market price for our common
stock. Our ability to raise additional capital may therefor be impaired. The
current registration rights also limit our ability to grant registration rights
required in the future by potential investors.
Potential Liabilities could Result from the Sale and Resulting Relocation of
Synthetic Fuel Facilities
In connection with the development and construction of the synthetic
fuel facilities held for sale, we entered into certain agreements. These
agreements call for sharing royalties received from these facilities, paying
amounts for the operation of the facilities, purchasing feedstock from certain
parties, paying marketing fees to certain parties for the sale of production
from these facilities and performing certain other commitments. Sale and
relocation of these facilities will require us to terminate most if not all of
these agreements. Termination of these agreements will result in potential
liabilities to these various parties. We do not currently know what these
liabilities will be, but they could be significant.
These settlement charges could significantly reduce future earnings
from operations or increase future losses form operations. These charges could
have a significant impact on the future price and market for our common stock.
FORWARD LOOKING STATEMENTS
Statements regarding Covol's expectations as to the financing,
development, construction, operation and sale of facilities utilizing the Covol
binder technologies, the marketing of products, the receipt of licensing fees,
the ability to extend or refinance existing obligations, and other information
about Covol that are not purely historical by nature, including those statements
regarding Covol's future business plans, the operation of facilities, the
estimated capacity of facilities, the availability of coal fines, the
marketability of the synthetic fuel and other briquettes and the financial
viability of the facilities, constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Although Covol
believes that its expectations are based on reasonable assumptions within the
bounds of its knowledge of its business and operations, there can be no
assurance that actual results will not differ materially from its expectations.
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 stated in these forward looking statements include, among others,
the following:
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(1) The commercial success of the Covol binder technologies.
(2) Successful sale of the Covol owned synthetic fuel facility.
(3) Operating issues for licensed facilities including feedstock
availability, moisture content, Btu content, correct application of
binder formulation, operability of equipment, product durability,
resistance to water absorption and overall costs of operations.
(4) Marketing issues relating to market acceptance of products manufactured
using Covol's technology, including control of moisture content,
hardness, special handling requirements and other characteristics of
the synthetic fuel product which affect its marketability and its sales
price.
(5) Securing of necessary sites, including permits and raw materials, for
relocation and operation of facilities.
(6) Maintenance of placed in service requirements under Section 29 of the
tax code by synthetic fuel manufacturing facilities.
(7) Ability to obtain needed additional capital on terms acceptable to
Covol.
(8) Changes in governmental regulations or failure to comply with existing
regulations which may result in operational shutdowns of Covol or
licensee facilities.
(9) The availability of tax credits under Section 29 of the tax code.
(10) The commercial feasibility of the Covol synthetic fuel technologies
upon the expiration of Section 29 tax credits.
(11) Ability to meet financial commitments under existing contractual
arrangements.
(12) Ability to meet non-financial commitments under existing contractual
arrangements.
(13) Ability to commercialize the non-synthetic fuel related Covol binder
technologies which have only been tested in the laboratory and not in
full-scale operations.
(14) Ability to commercialize the technology of others and implement
non-technology based business plans which are at an early stage of
investigation and which will require significant time and capital
investment.
(15) Dependence on licensees to successfully implement Covol binder
technologies and make license and other payments to Covol.
(16) The market acceptance of products manufactured with Covol binder
technologies in the face of competition from traditional products.
(17) Ability to produce products with Covol binder technologies with
acceptable hardness, moisture level, and other characteristics.
(18) Success in the face of competition by others producing synthetic fuel
and other recycled products.
(19) Sufficiency of intellectual property protections.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file at the SEC's public reference rooms in Washington,
D.C., New York, New York, and Chicago, Illinois. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
also read and copy these documents at the offices of The Nasdaq Stock Market(SM)
in Washington, D.C.
This prospectus is part of a Form S-3 registration statement that we
filed with the SEC. This prospectus provides you with a general description of
the securities that may be offered for sale, but does not contain all of the
information that is in the registration statement. To see more detail, you
should read the entire registration statement and the exhibits filed with the
registration statement.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until all of the securities are sold. Our file number with the SEC is 0-27808.
o Current report on Form 8-K filed March 24, 1999,
o Current report on Form 8-K filed November 10, 1999,
o Annual report on Form 10-K filed January 13, 2000, for the fiscal year
ended September 30, 1999,
o Proxy statement dated January 19, 2000 and filed January 20, 2000,
o Current report on Form 8-K filed January 24, 2000, as amended on Form
8-K/A filed March 16, 2000,
o Quarterly report on Form 10-Q filed February 14, 2000, for the
quarterly period ended December 31, 2000,
o Current report on Form 8-K filed February 22, 2000,
o Current report on Form 8-K filed March 2, 2000,
o Current report on Form 8-K filed March 22, 2000,
o Current report on Form 8-K filed March 30, 2000, and
o Description of securities contained in Item 11 of Covol's Registration
Statement on Form 10/A, Amendment No. 2 filed April 24, 1996.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations Department
Covol Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043-9534
Telephone Number: (801) 768-4481
MATERIAL CHANGES
The Company has experienced the following material events since the
date of filing of its last Quarterly Report on Form 10-Q:
Nasdaq Stock Market(SM) Listing
On January 18, 2000, we received a letter from Nasdaq informing us that
Covol may not meet continued listing requirements of The Nasdaq Stock
Market(SM). We submitted our response, and on February 11, 2000, we received a
letter from Nasdaq notifying us that our listing would be continued subject to
Covol meeting certain conditions on or before March 31, 2000. These conditions
were met and we have been notified by Nasdaq that Covol meets all Nasdaq listing
requirements.
11
<PAGE>
Sale of Common Stock
On March 23, 2000, we sold approximately 3,630,000 shares of common
stock in a private placement at a price of $1.36 per share. Total net proceeds
from this sale approximated $4,700,000.
On April 5, 2000, we sold approximately 380,000 shares of common stock
in a private placement with certain officers and directors of Covol at a price
of $1.56 per share. Total net proceeds from this sale approximated $600,000. In
connection with this placement, warrants for the purchase of approximately
130,000 shares of common stock were issued. The warrants have an exercise price
of $1.56 and are exercisable through March 2005.
USE OF PROCEEDS
The net proceeds from the sale of common stock will be received by the
selling stockholders. Covol will not receive any of the proceeds from any sale
of the shares by the selling stockholders.
SELLING STOCKHOLDERS
The information in the table below is taken as of April 7, 2000. The
selling stockholders listed in the table do not necessarily intend to sell any
of their shares. Covol filed the registration statement which includes this
prospectus due to registration rights granted to the selling stockholders, not
because the stockholders had expressed an intent to immediately sell their
shares.
<TABLE>
<CAPTION>
Shares Beneficially Owned After
Number of Shares the Offering,
Beneficially Owned Prior Shares to be Assuming All Registered
Name of to the Offering, Registered for Shares Are Sold
Beneficial Owner Including Convertible Sale in the ---------------------------
Securities Offering(1) Number Percent(2)
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
Ron Alford 11,250 11,250 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Tony Alford 153,750 153,750 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Alpine Securities Corporation (3)
(broker) 181,436 181,436 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Assarion, Inc. (3) 10,000 10,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Banyan Investment Co. (3)
(former limited partner) 283,496 225,000 58,496 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Kirk A. Benson (Officer and Director) 665,948 159,283 506,665
w364,661 w55,749 w308,912 3.7%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Doreen Brades 3,500 3,500 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
12
<PAGE>
<CAPTION>
Shares Beneficially Owned After
Number of Shares the Offering,
Beneficially Owned Prior Shares to be Assuming All Registered
Name of to the Offering, Registered for Shares Are Sold
Beneficial Owner Including Convertible Sale in the ---------------------------
Securities Offering(1) Number Percent(2)
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
Kathy Carter (broker) 25,400 25,000 400 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Alex Chaffetz 50,000 50,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
John Chaffetz 15,000 15,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
William R. Crismon 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Kara C. D'Ambrosio 36,000 35,000 1,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Louis J. (former limited partner)
& Christianne D'Ambrosio 24,700 23,500 1,200 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Louis J. D'Ambrosio IRA 153,939 128,000 25,939 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Sue D'Ambrosio 36,000 35,000 1,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Don Danks (finder) 300,000 300,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
35,000 35,000
The Davids' Goliath Fund, LP w20,000 w20,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Don De Cristo 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Devor-Aft Associates 75,000 75,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
David Dorton 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
James R. Fliege IRA 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Frank J. Gillen 25,000 25,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
25,500 20,000 5,500
GT Investments, Inc. w5,500 w5,500 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Lloyd A. Hardcastle 36,500 35,000 1,500 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Randy Henderson 110,000 110,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Holman Associates Pension Plan 36,800 36,800 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Larry C. Holman 13,200 13,200 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Jadijo, Inc. 300,000 300,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
W. Reed Jensen 72,000 55,000 17,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
13
<PAGE>
<CAPTION>
Shares Beneficially Owned After
Number of Shares the Offering,
Beneficially Owned Prior Shares to be Assuming All Registered
Name of to the Offering, Registered for Shares Are Sold
Beneficial Owner Including Convertible Sale in the ---------------------------
Securities Offering(1) Number Percent(2)
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
Michael Khaled 185,000 185,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Dennis D. Leonard 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
David Mock 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Melvin D. & Darlene B. Peterson 25,000 25,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
104,448 104,448
DJ Priano (Officer) w161,557 w36,557 w125,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Eric Richardson 75,000 75,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
15,000 15,000
September Corporation (3) w30,000 w30,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Ned P. Siegfried 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Richard B. Smidt 25,000 25,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
SI Real Estate Employee Profit
Sharing Trust 150,000 150,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Max E. Sorenson
(Former Officer) w88,750 w88,750 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
19,200 19,200
Steven G. Stewart (Officer) w6,720 w6,720 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Gary Stratiner 25,000 25,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Ronald S. Tanner 50,000 50,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
TI Venture Capital AG 35,000 35,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Kelly Trimble 14,705 14,705 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Cory Turnbow IRA 45,000 45,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Lynn Turnbow
(former limited partner) 110,000 110,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Stephen B. Utley 55,000 55,000
(former consultant) w60,000 w60,000 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Vanderhoof Family Trust
(former limited partner) 37,820 35,000 2,820 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Michael D. Vanderhoof
(finder, former limited partner) 577,105 535,823 41,282 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
14
<PAGE>
Shares Beneficially Owned After
Number of Shares the Offering,
Beneficially Owned Prior Shares to be Assuming All Registered
Name of to the Offering, Registered for Shares Are Sold
Beneficial Owner Including Convertible Sale in the ---------------------------
Securities Offering(1) Number Percent(2)
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
<S> <C> <C> <C> <C>
Michael Vetere 15,000 15,000 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
390,832 95,744 295,088
Raymond J. Weller (Director) w155,260 w33,510 w121,750 1.9%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Whisper Investment Company (3)
(finder, former limited partner) 62,904 50,000 12,904 Less than 1%
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
Douglas A. Wilson 36,764 36,764 0 0
- -------------------------------------- --------------------------- ------------------ ------------------ --------------
</TABLE>
(1) This column indicates shares of common stock. The letter "w" indicates
shares issuable upon exercise of warrants and options.
(2) Indicates the percentage of Covol's common stock outstanding, assuming
exercise of warrants and options by the indicated selling stockholders.
(3) Indicates entities in which Mark V. Peterson, a broker and finder for
Covol, holds a beneficial interest. Mr. Peterson holds a majority
interest in Alpine Securities Corporation, Assarion, Inc., September
Corporation, and Whisper Investment Company and holds a minority
interest in Banyan Investment Co.
This prospectus applies to the offer and sale by the selling
stockholders of common stock of Covol. The shares being offered for sale include
4,007,403 shares currently owned by the selling stockholders and 221,286 shares
obtainable by exercising warrants and options which they owned as of the date of
this prospectus.
PLAN OF DISTRIBUTION
The selling stockholders may sell some or all of their shares at any time
and in any of the following ways. They may sell their shares:
o To underwriters who buy the shares for their own account and resell
them in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the
time of sale. Any public offering price and any discount or concessions
allowed or reallowed or paid to dealers may be changed from time to
time;
o Through brokers, acting as principal or agent, in transactions, which
may involve block transactions, on The Nasdaq Stock Market(SM) or on
other exchanges on which the shares are then listed, in special
offerings, exchange distributions pursuant to the rules of the
applicable exchanges or in the over-the-counter market, or otherwise,
at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices or at fixed prices;
o Directly or through brokers or agents in private sales at negotiated
prices; or
o In open market transactions in reliance upon rule 144 under the
Securities Act, provided the selling stockholders comply with the
requirements of the rule; or
15
<PAGE>
o By any other legally available means.
The selling stockholders may pay part of the proceeds from the sale of
shares in commissions and other compensation to underwriters, dealers, brokers
or agents who participate in the sales.
To the knowledge of Covol, the sellers purchased in the ordinary course
of investment.
At the time the sellers purchased the securities to be resold, they
represented to Covol that they had purchased the securities for their own
account and not with a view to distribution or resale.
Some states may require shares to be sold only through registered or
licensed brokers or dealers. In addition, some states may require the shares to
be registered or qualified for sale unless an exemption from registration or
qualification is available and complied with.
We have agreed to indemnify the selling stockholders against
liabilities under the Securities Act, or to contribute to payments the selling
stockholders may be required to make under the Securities Act.
LEGAL MATTERS
Harlan M. Hatfield, Vice President and General Counsel of Covol, has
rendered an opinion as to the validity of the shares offered under this
prospectus.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference to the Annual Report on Form 10-K of Covol Technologies, Inc. for
the fiscal year ended September 30, 1999, have been so incorporated in reliance
upon the report of PricewaterhouseCoopers LLP, independent accountants, given
upon the authority of said firm as experts in auditing and accounting.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is a list of the estimated expenses to be incurred by the
Registrant in connection with the issuance and distribution of the Shares being
registered hereby.
SEC Registration Fee................................ $ 1,775.03
Accountants' Fees and Expenses...................... $ 2,000.00
Legal Fees and Expenses............................. $ 2,000.00
Miscellaneous....................................... $ 1,000.00
----------
TOTAL.......................................... $ 6,775.03
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
allows us to indemnify our officers, directors, employees and agents, as well as
persons who have served in these capacities for other corporations at our
request, for reasonable costs and expenses associated with civil and criminal
suits related to their services in these capacities. The indemnification applies
to civil cases arising from acts made in good faith, reasonably believing that
they were in the best interests of the corporation. It may also apply to
criminal cases if the person had no reason to believe his conduct was unlawful.
In some cases, the availability of indemnification may be up to the discretion
of the court in which the suit was brought.
The Registrant's Certificate of Incorporation, as amended, has the
following indemnification provisions:
This Corporation shall indemnify and shall advance expenses on
behalf of its officers and directors to the fullest extent not
prohibited by law in existence either now or hereafter.
The Registrant's By-laws similarly provide that the Registrant shall
indemnify its officers and directors to the fullest extent permitted by the
Delaware Law.
17
<PAGE>
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description Location
- ------ ----------- --------
<S> <C> <C>
2.1 Agreement and Plan of Reorganization, dated July 1, 1993 between the (1)
Registrant and the Stockholders of R1001
2.2 Agreement and Plan of Merger dated August 14, 1995 between the (1)
Registrant and Covol Technologies, Inc., a Delaware corporation
2.3 Stock Purchase Agreement, dated July 1, 1993, among the Registrant, (1)
Lloyd C. McEwan, Michael McEwan, Dale F. Minnig and Ted C. Strong
regarding the purchase of Industrial Management & Engineering, Inc. and
Central Industrial Construction, Inc.
2.4 Stock Sale Transaction Documentation, effective as of September 30, (1)
1994, between the Registrant and Farrell F. Larson regarding Larson
Limestone Company, Inc.
2.5 Stock Purchase Agreement dated February 1, 1996 by and among the (1)
Registrant, Michael McEwan and Gerald Larson regarding the sale of
State, Inc., Industrial Engineering & Management, Inc., Central
Industrial Construction, Inc., and Larson Limestone Company, Inc.
2.5.1 Amendment to Share Purchase Agreement regarding the sale of the (1)
Construction Companies
2.5.2 Amendment No. 2 to Share Purchase Agreement regarding the sale of the (2)
Construction Companies
3.1 Certificate of Incorporation of the Registrant (1)
3.1.1 Certificate of Amendment of the Certificate of Incorporation of the (1)
Registrant dated January 22, 1996
3.1.2 Certificate of Amendment of the Certificate of Incorporation dated June (3)
25, 1997
3.1.3 Certificate of Designation, Number, Voting Powers, Preferences and (4)
Rights of the Registrant's Series A 6% Convertible Preferred Stock
(Originally designated as Exhibit No. 3.1.2)
3.1.4 Certificate of Designation, Number, Voting Powers, Preferences and (5)
Rights of the Registrant's Series B Convertible Preferred Stock
(Originally designated as Exhibit No. 3.1.3)
18
<PAGE>
3.1.5 Certificate of Designation, Number, Voting Powers, Preferences and (8)
Rights of Covol's Series C 7% Convertible Preferred Stock.
3.1.6 Certificate of Designations, Number, Voting Powers, Preferences and (9)
Rights of the Series of the Preferred Stock of Covol Technologies, Inc.
to be Designated Series D 7% Cumulative Convertible Preferred Stock.
3.1.6.1 Amendment and Waiver to Certificate of Designations Preferences and (11)
Rights of the Series of the Preferred Stock of Covol Technologies, Inc.
to be Designated Series D Cumulative Convertible Preferred Stock.
3.1.7 Certificate of Amendment of the Certificate of Incorporation dated (10)
March 1, 2000
3.2 By-Laws of the Registrant (1)
3.2.1 Certificate of Amendment to Bylaws of the Registrant dated January 31, (1)
1996
3.2.2 Certificate of Amendment to the Bylaws dated May 20, 1997 (Originally (3)
designated as Exhibit No. 3.2.1)
3.2.3 Certificate of Amendment to the Bylaws dated June 25, 1997 (Originally (3)
designated as Exhibit No. 3.2.2)
4.1 Promissory Note between Covol and Mountaineer Synfuel, L.L.C. dated May (6)
5, 1998 (filed as Exhibit 10.52.2 to the filing referenced in the next
column)
4.2 Promissory Note dated December 8, 1998 of Covol to Mountaineer Synfuel, (7)
L.L.C. (filed as Exhibit 10.52.4 to the filing referenced in the next
column)
4.3 Security Agreement dated December 8, 1998 between Mountaineer Synfuel, (7)
L.L.C. and Covol (filed as Exhibit 10.52.5 to the filing referenced in
the next column)
4.4 Convertible Secured Note executed by Covol in favor of OZ Master Fund, (9)
Ltd., dated as of March 17, 1999 (filed as exhibit 10.58.1 to the
filing referenced in the next column)
5.1 Opinion of Harlan M. Hatfield regarding legality of shares *
23.1 Consent of PricewaterhouseCoopers LLP *
19
<PAGE>
24.1 Power of Attorney (included in Part II of this Registration Statement)
- ------------------------
</TABLE>
* Attached hereto.
Unless another exhibit number is indicated as the exhibit number for the exhibit
as "originally filed," the exhibit number in the filing in which any exhibit was
originally filed and to which reference is made hereby is the same as the
exhibit number assigned herein to the exhibit.
(1) Incorporated by reference to the indicated exhibit filed with the
Registrant's Registration Statement on Form 10, filed February 26,
1996.
(2) Incorporated herein by reference to the indicated exhibit filed with
the Registrant's Registration Statement on Form 10/A, Amendment No. 2,
dated April 24, 1996.
(3) Incorporated by reference to the indicated exhibit filed with the
Registrant's Quarterly Report on Form 10-Q, for the quarterly period
ended June 30, 1997.
(4) Incorporated by reference to the indicated exhibit filed with the
Registrant's Current Report on Form 8-K, dated August 19, 1997.
(5) Incorporated by reference to the indicated exhibit filed with the
Registrant's Current Report on Form 8-K, for event dated September 18,
1997, filed October 28, 1997.
(6) Incorporated by reference to the indicated exhibit filed with the
Registrant's Quarterly Report on Form 10-Q, for the quarterly period
ended June 30, 1998.
(7) Incorporated by reference to the indicated exhibit filed with the
Registrant's Annual Report on Form 10-K, for the fiscal year ended
September 30, 1998.
(8) Incorporated by reference to the indicated exhibit filed with the
Registrant's Quarterly Report on Form 10-Q, for the quarterly period
ended December 31, 1998.
(9) Incorporated by reference to the indicated exhibit filed with the
Registrant's Current Report on Form 8-K, for event dated March 17,
1999, filed on March 24, 1999.
(10) Incorporated by reference to the indicated exhibit filed with the
Registrant's Current Report on Form 8-K, for event dated February 29,
2000, filed on March 2, 2000.
(11) Incorporated by reference to the indicated exhibit filed with the
Registrant's Current Report on Form 8-K, for event dated March 15,
2000, filed on March 30, 2000.
Item 17. Undertakings.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement.
20
<PAGE>
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission (the "Commission") by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
D. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to rule 424(b)(1) or (4) or 497(h)
under the Act shall be deemed to be part of this Registration Statement as of
the time it was declared effective.
21
<PAGE>
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Salt Lake City, State of Utah on April 10, 2000.
COVOL TECHNOLOGIES, INC.
By: /s/ Kirk A. Benson
---------------------------------
Chief Executive Officer, Chairman
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below in so signing also makes, constitutes and appoints Harlan M.
Hatfield as true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities to execute and cause to be filed with the Securities and
Exchange Commission any and all amendments (including pre-effective and
post-effective amendments) to this Registration Statement, with exhibits thereto
and other documents in connection therewith, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully as
to all intents and purposes as he might or could do in person, and hereby
ratifies and confirms said attorney-in-fact and agent or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ Kirk A. Benson Chief Executive Officer and April 10, 2000
- ------------------------- Director
Name
/s/ Brent M. Cook President and Director April 10, 2000
- -------------------------
Name
/s/ Steven G. Stewart Chief Financial and Accounting April 10, 2000
- ------------------------- Officer
Name
/s/ DeLance W. Squire Director April 10, 2000
- -------------------------
Name
/s/ James A. Herickhoff Director April 10, 2000
- -------------------------
Name
/s/ Raymond J. Weller Director April 10, 2000
- -------------------------
Name
/s/ John P. Hill, Jr. Director April 10, 2000
- -------------------------
Name
23
April 10, 2000
Covol Technologies, Inc.
3280 North Frontage Road
Lehi, Utah 84043
Re: Registration Statement on Form S-3 of Covol Technologies, Inc.
Ladies and Gentlemen:
I have acted as counsel to Covol Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-3 of the Company, SEC File No. 333-_____ filed on April 10, 2000, to
which this opinion is attached as Exhibit 5.1 (the "Registration Statement"),
with the Securities and Exchange Commission (the "Commission"). The Registration
Statement relates to 4,228,689 shares (the "Shares") of common stock of the
Company, par value $.001 per share (the "Common Stock"), including i) 4,007,403
shares of Common Stock owned by the persons listed in the Registration Statement
as the selling stockholders (the "Selling Stockholders"), and ii) 221,286 shares
of Common Stock issuable to the Selling Stockholders upon exercise of Common
Stock purchase warrants and options for purchase of Common Stock ("Warrants")
issued by the Company, to be offered for sale by the Selling Stockholders of the
Company as described in the prospectus included in the Registration Statement.
This opinion is an exhibit to the Registration Statement, and is being
furnished to you in accordance with the requirements of Item 601(b)(5) of
Regulation S-K under the Securities Act of 1933, as amended (the "1933 Act").
In that capacity, I have reviewed the Registration Statement and other
documents, corporate records, certificates, and other instruments for purposes
of this opinion.
In such examination, I have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to me as originals, the conformity of all documents submitted to me as
certified, conformed or photostatic copies and the authenticity of the originals
of such documents. In making my examination of documents executed by parties
other than the Company, I have assumed that such parties had the power,
corporate or other, to enter into and perform all obligations thereunder and
have also assumed the due authorization by all requisite action, corporate or
other, and execution and delivery by such parties of such documents and the
validity, binding effect and enforceability thereof. As to any facts material to
the opinions expressed herein, I have, to the extent I deemed appropriate,
relied upon statements and representations of officers and other representatives
of the Company and others.
This opinion only relates to the Shares included in the Registration
Statement and no opinion is expressed with respect to additional shares of
Common Stock which may be issuable under the Warrants pursuant to anti-dilution
or price adjustment provisions.
My opinions expressed herein are limited to the corporate law of the
State of Delaware, and I do not express any opinion herein concerning any other
law.
<PAGE>
Based upon and subject to the foregoing, and to the limitations,
qualifications, exceptions and assumptions set forth herein, I am of the opinion
that i) the shares of Common Stock currently outstanding and owned by the
Selling Stockholders and being registered on the Registration Statement have
been authorized and legally issued, and are fully paid and non-assessable, and
ii) the shares of Common Stock being registered on the Registration Statement to
be issued by the Company to the Selling Stockholders upon exercise of the
Warrants have been duly authorized and, when sold to the Selling Stockholders
and paid for in the manner provided in the Registration Statement and the
various agreements and instruments governing the Warrants of the Selling
Stockholders and the Company, will be legally issued, fully paid and
non-assessable.
In rendering this opinion, I have assumed that
i) the certificates representing the Shares will conform to the
form of specimen examined by me and such certificates will be duly
executed and delivered by the Company; and
ii) the consideration for Shares as provided in the applicable
resolutions of the Board of Directors of the Company, including
the consideration paid or to be paid for the Warrants, has been
actually received by the Company as provided therein.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the Prospectus. In giving this consent, I do not thereby admit that
I am in the category of persons whose consent is required under Section 7 of the
1933 Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Harlan M. Hatfield
Harlan M. Hatfield
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated January 13, 2000, relating to the
consolidated financial statements, which appears in Covol Technologies, Inc.'s
Annual Report on Form 10-K for the year ended September 30, 1999. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers LLP
Salt Lake City, Utah
April 10, 2000
