As filed with the Securities and Exchange Commission on May 5, 1998
--------------------------------------------------------------------------------
                                  FORM 10-K/A-1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
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                  Annual Report Pursuant to Section 13 or 15(d)
                     Of the Securities Exchange Act of 1934

                   For the fiscal year ended December 31, 1997
                        Commission file number 000-21153.

                                ALYN CORPORATION
                                ----------------
             (Exact name of registrant as specified in its charter)
--------------------------------------------------------------------------------

            DELAWARE                                        33-0709359
            --------                                        ----------
  (State or other jurisdiction                 (IRS Employer Identification No.)
of incorporation or organization)


                       16761 Hale Avenue, Irvine, CA 92606
                       -----------------------------------
             (Address of principal executive offices, including zip code)

                                 (714) 475-1525
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


Securities registered pursuant to Section 12 (b) of the Act:  None

Securities registered pursuant to Section 12 (g) of the Act:


                     Common Stock, par value $.001 per share
                     ---------------------------------------
                               Title of Each Class

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes [ x ] No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     The  approximate  aggregate  market  value  of the  voting  stock  held  by
non-affiliates of the Registrant as of February 24, 1998 was $41,333,049,  based
on the closing price of $9.44 on that date.

     As of February 24, 1998,  the  aggregate  number of  outstanding  shares of
common stock of the Registrant was 10,750,000 shares.


<PAGE>


                                TABLE OF CONTENTS


SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE SECURITIES
LITIGATION REFORM ACT OF 1995 .................................................

PART I - Previously filed

PART II - Previously filed

PART III.......................................................................
         10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...............
         11.  EXECUTIVE COMPENSATION...........................................
         12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT.....................................................
         13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................

PART IV - Previously filed

SIGNATURES.....................................................................



SAFE  HARBOR FOR  FORWARD-LOOKING  STATEMENTS  UNDER THE  SECURITIES  LITIGATION
REFORM ACT OF 1995

     Except for historical information contained herein, this Amendment No. 1 to
Annual  Report on Form  10-K  (the  "Annual  Report")  contains  forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements  involve known and unknown risks and  uncertainties  that
may cause the Company's  actual  results or outcomes to be materially  different
from those anticipated and discussed herein. Further, the Company operates in an
industry sector where securities values may be volatile and may be influenced by
factors  beyond  the  Company's  control.  Important  factors  that the  Company
believes might cause such differences are discussed in the cautionary statements
accompanying the forward-looking  statements and in the risk factors detailed in
this Annual Report. In assessing  forward-looking  statements  contained herein,
readers are urged to read carefully all  cautionary  statements and risk factors
contained in this Annual Report.


<PAGE>


                                    PART III

10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

     The age (as of April 30, 1998), business experience,  principal occupations
and employment, as well as the periods of service, of each of the Company's five
incumbent  Directors  and the one nominee for  Director  at the  Company's  1998
Annual Meeting of Stockholders,  scheduled to be held on June 3, 1998, during at
least the last five years are set forth below.

     Steven S. Price,  42, has been President and Chief Executive  Officer since
April 20, 1998,  and a Director  since April 14, 1998.  Mr. Price is Chairman of
the Company's  Executive  Committee and a member of the Compensation  Committee.
From  1995  to  April  1998,  he  was  President  of   AlliedSignal   Automotive
Aftermarket,  a division of AlliedSignal,  Inc., which supplies automotive parts
and products to retail,  wholesale and installer  sales  channels.  From 1993 to
1995, he was General Manager of the Residential  Division of NIBCO Incorporated,
a privately  held  manufacturer  of plumbing  fittings and valves.  From 1989 to
1993,  he was Vice  President,  Marketing  for  Black and  Decker  Corporation's
subsidiary Kwikset  Corporation and from 1987 to 1989, he was a Director,  Sales
and Marketing for Black and Decker's Power Tool Group. From 1977 to 1987, he was
with The Procter and Gamble  Company in various brand  management  and marketing
positions.  Mr.  Price has a Bachelor  of Arts  degree in  Economics  from Brown
University.

     Robin A. Carden,  40, is the founder of the Company and has been a Director
since the Company's  formation in 1990.  Mr. Carden is a member of the Company's
Executive  Committee.  From the  Company's  formation  until April 1998,  he was
President and Chief Executive Officer. Prior to 1990, Mr. Carden was employed by
Ceradyne Inc., a company  engaged in the  development and production of advanced
ceramics  products,  as Senior  Sales  Engineer,  and was engaged in  developing
civilian  applications for advanced ceramics products  originally  developed for
military  use. Mr.  Carden  graduated  from Long Beach State  University  with a
Bachelor of Science  degree.  A number of United States patents have been issued
to Mr. Carden.

     Walter R.  Menetrey,  64,  has been the  Executive  Vice  President,  Chief
Operating Officer and a Director of the Company since May 1996. From August 1992
to April 1996,  he worked as an  independent  management  consultant to numerous
companies engaged in, among other things, the security and software  industries.
Prior to July 1992, Mr. Menetrey was Chief Executive  Officer of Meret,  Inc., a
company  engaged  in the  manufacture  and  sale of fiber  optics  communication
equipment.  Mr. Menetrey  received a Bachelor of Science degree in Physics and a
Master of Science degree in Electrical Engineering from the California Institute
of Technology.

     Harry  Edelson,  61, has been a Director of the Company since May 1996. Mr.
Edelson is Chairman of the Company's  Audit  Committee.  Since 1984, Mr. Edelson
has been the Managing Partner of Edelson Technology  Partners,  a series of four
venture capital funds with ten large  corporations as the limited partners.  The
focus of the funds is to provide  the  corporate  partners  with  access to high
technology products and services.  One of the funds, Edelson Technology Partners
III, is a principal  stockholder of the Company.  Edelson  Technology  Partners,
through its related funds, has invested in  approximately 80 companies  involved
in a  wide  range  of  technologies,  including  telecommunications,  computers,
semiconductors,  specialty  chemicals,  environmental  and publishing.  Prior to
founding Edelson Technology Partners, Mr. Edelson was a transmission engineer at
AT&T, a senior computer  engineer for UNISYS and a technology  analyst for three
leading  investment  banking firms,  Merrill Lynch,  Drexel Burnham  Lambert and
First  Boston.  Mr.  Edelson  has a Bachelor of Science  degree in Physics  from
Brooklyn  College  and a  Masters  of  Business  Administration  from  New  York
University.

     Michael Markbreiter, 36, has been a Director of the Company since May 1996.
Mr. Markbreiter is a member of the Company's  Executive,  Audit and Compensation
Committees.  Since August 1995, Mr. Markbreiter has been a portfolio manager for
private equity  investments for Kingdon Capital  Management  Corp., a manager of
investment  funds. In April 1994, he co-founded Ram Investment  Corp., a venture
capital  company.  From  March 1993 to January  1994,  he served as a  portfolio
manager for Kingdon Capital  Management  Corp. Prior to February 1993, he worked
as an analyst at Alliance  Capital  Management  Corp.  Since  December 1997, Mr.
Markbreiter has been a Director of Global Pharmaceutical Corporation, a publicly
traded generic  pharmaceutical  manufacturing company. Mr. Markbreiter graduated
from Cambridge University with a degree in Engineering.

     Udi  Toledano,  47, has been a Director of the  Company  since May 1996 and
Chairman  of the Board  since  January  1997.  Mr.  Toledano  is Chairman of the
Company's  Compensation  Committee,  and a member of the Company's Executive and
Audit Committees.  Mr. Toledano has been the President of Andromeda Enterprises,
Inc., a private  investment  company,  since December 1993. Prior to that he was
the President of CR Capital Inc., a private  investment  company,  for more than
five years. Since May 1996, Mr. Toledano has been a Director of HumaScan Inc., a
publicly  traded  medical  device  company,  and since April 1995, he has been a
Director  of  Global  Pharmaceutical  Corporation,  a  publicly  traded  generic
pharmaceutical  manufacturing  company. Since July 1994, Mr. Toledano has been a
Director  of  Universal  Stainless & Alloy  Products,  Inc.,  a publicly  traded
specialty steel producing company. Mr. Toledano has a Bachelor of Science degree
in Physics and a Masters of Business  Administration  from the Hebrew University
of Jerusalem.

Board of Directors Committees and Meetings

     During 1997, the Board of Directors held five meetings.  All members of the
Board of Directors  attended  all  meetings.  The Board of  Directors  has three
standing  committees:  the Executive  Committee;  the Audit  Committee;  and the
Compensation Committee.

     The Executive  Committee has all the powers of the Company's  full Board of
Directors,  except that it is not authorized to amend the Company's  Certificate
of Incorporation,  declare any dividends or issue shares of capital stock of the
Company. The Executive Committee consists of Messrs.  Price (Chairman),  Carden,
Markbreiter and Toledano.  The Executive  Committee held three meetings in 1997.
Following  the Annual  Meeting,  if all nominees  for director are elected,  the
Executive Committee is expected to consist of Messrs. Price, Carden, Markbreiter
and Toledano.

     The Audit  Committee  was  established  in June 1996.  The functions of the
Audit  Committee  are to  recommend  annually  to the  Board  of  Directors  the
appointment of the  independent  public  accountants of the Company,  review the
scope of the annual audit and other services the independent  auditors are asked
to perform,  review the report on the Company's financial  statements  following
the audit,  review the  accounting  and  financial  policies  of the Company and
review  management's  procedures  and  policies  with  respect to the  Company's
internal controls.  The Audit Committee consists of Messrs.  Edelson (Chairman),
Markbreiter  and  Toledano.  The  Audit  Committee  held  one  meeting  in 1997.
Following  the Annual  Meeting,  if all nominees  for director are elected,  the
Audit  Committee  is expected  to consist of Messrs.  Edelson,  Markbreiter  and
Toledano.  The  Compensation  Committee held two meetings in 1997. Its functions
are discussed in the Report on Executive  Compensation  which starts on page 13.
The Compensation  Committee consists of Messrs.  Toledano (Chairman),  Price and
Markbreiter.  Following  the Annual  Meeting,  if all  nominees for director are
elected, the Compensation Committee is expected to consist of Messrs.  Toledano,
Price and Markbreiter.


<PAGE>


 Compensation Committee Interlocks and Insider Participation

     The  Compensation  Committee  consists  of  Messrs.   Toledano,  Price  and
Markbreiter.  Mr. Price is President and Chief Executive Officer of the Company.
Mr. Toledano is Chairman of the Board of the Company.

Director Compensation

     Members  of the Board of  Directors  of the  Company  presently  receive no
annual  remuneration  for acting in that capacity.  The Company  compensates its
non-employee  directors at the rate of $500 (plus reasonable  expenses) for each
attended  meeting  of the Board of  Directors.  Certain  members of the Board of
Directors of the Company are also  eligible  for the grant of options  under the
1996  Stock  Incentive  Plan  that  provides  for  each  non-employee   Director
(currently,  Messrs.  Edelson,  Markbreiter  and Toledano) to receive an initial
grant of options to purchase  15,000  shares of Common Stock and an annual grant
of options to purchase 10,000 shares of Common Stock.

Executive Officers

     See section  captioned  "Directors"  above for  information  pertaining  to
Messrs. Price and Menetrey, the Company's executive officers holding the offices
of President and Chief Executive  Officer and Executive Vice President and Chief
Operating  Officer,   respectively.  In  addition  to  the  foregoing  executive
officers, Mr. Richard L. Little serves as the Company's Vice President,  Finance
and Administration and Chief Financial Officer.

     Richard  L.  Little,   53,  has  been  the  Vice  President,   Finance  and
Administration  and Chief  Financial  Officer of the Company since May 1997. Mr.
Little was Executive Vice President of d'Essence Designer Fragrances, a marketer
of fine  perfumes  and  related  products  from  1995 to 1997 and  President  of
d'essence  International  from  1996 to 1997.  From  1994 to 1995,  he was Chief
Operating Officer and Chief Financial Officer of Graphix Zone, a publicly traded
producer of CD-ROMS.  In 1989, Mr. Little  co-founded  Bainbridge  International
Holdings,  a merchant bank  specializing in acquiring  middle market  companies.
From 1986 to 1989,  Mr.  Little  was Chief  Financial  Officer,  Vice  President
Finance,  Treasurer and  Secretary of Teradata  Corporation,  a publicly  traded
manufacturer and marketer of supercomputers  for managing very large data bases.
Prior to joining  Teradata,  Mr. Little was Chief  Financial  Officer of Quotron
Systems, a publicly traded provider of on-line financial  information  services.
Mr.  Little has a Bachelor  of Science  degree in  Engineering  and a Masters of
Business  Administration  in Finance  from the  University  of  California,  Los
Angeles. He is also a CPA.

     Executive  officers of the Company  serve at the  discretion  of the Board.
There  are no  family  relationships  between  or  among  any  of the  Company's
directors or executive officers.

Employment Agreements with Key Employees

     In April 1998,  the Company  entered into a two-year  employment  agreement
with Steven S. Price,  the  Company's  President  and Chief  Executive  Officer.
Subject to the termination  provisions provided therein, the term of Mr. Price's
employment  agreement shall  automatically  be renewed for a one-year term after
the expiration of the initial two-year term. The employment  agreement  provides
that Mr.  Price's  annual base salary shall be $200,000  during the initial year
and not less than $200,000, as determined by the Compensation Committee,  during
the second year of the  initial  two-year  term.  In addition to his base salary
during the initial two-year term, Mr. Price is entitled to an annual bonus of up
to one hundred percent (100%) of his base salary,  subject to a $100,000 minimum
guarantee.  He will also receive a Company  paid  personal  term life  insurance
policy  in an  amount  of not less than $1  million,  reimbursement  of  certain
relocation  costs and a customary  benefits  package.  The employment  agreement
provides that Mr. Price shall be granted  options to purchase  400,000 shares of
the  Company's  common stock,  to be vested in the following  amounts and at the
times  indicated:  (I) 80,000 shares on the date of execution of his  employment
agreement;  (ii) 80,000 shares on the last day of the first year of  employment;
and (iii) 40,000 shares upon  completion of each  succeeding six month period of
employment for a period of three years. Under the termination  provisions of Mr.
Price's employment  agreement,  if he is not terminated for cause, he may not be
terminated  during the first year of his  employment.  If terminated  during the
second year of his  employment  other than for cause,  he would be entitled to a
twelve  (12)  month  continuation  of  salary  and  benefits,  plus the  minimum
guaranteed  bonus. If terminated in the third year and thereafter other than for
cause,  he would be  entitled  to a six (6) month  continuation  of  salary  and
benefits.  The employment  agreement prohibits Mr. Price from (i) competing with
the Company for a period of two years  following  termination of employment with
the Company and (ii) disclosing confidential information or trade secrets in any
unauthorized manner.

     In May 1996,  the Company  entered into a three-year  employment  agreement
with Robin A. Carden,  then the Company's President and Chief Executive Officer.
On April 20, 1998,  Mr.  Carden was replaced by Mr. Price as President and Chief
Executive Officer. Subject to the provisions for termination provided in his May
1996   agreement,   the  term  of  Mr.  Carden's   employment   agreement  shall
automatically be renewed for a one-year term after the expiration of the initial
three-year  term, and for successive  one-year terms thereafter for a maximum of
10 years. The employment agreement provides that Mr. Carden's annual base salary
shall be determined by the Board of Directors, but in no event shall such annual
salary be less than  $150,000,  which amount  shall be increased  annually in an
amount equal to at least the annual  Consumer  Price  Index.  In addition to his
base  salary,  Mr.  Carden is  entitled to bonus  consideration  and a customary
benefits  package.  The  employment  agreement  prohibits  Mr.  Carden  from (i)
competing  with the Company for a period of two years  following  termination of
employment  with the Company and (ii)  disclosing  confidential  information  or
trade secrets in any unauthorized manner.

     In  May  1996,  Walter  R.  Menetrey  entered  into a  two-year  employment
agreement with the Company for the position of Chief Operating Officer.  Subject
to the  termination  provisions  provided  therein,  Mr.  Menetrey's  employment
agreement  shall  automatically  be  renewed  for  a  one-year  term  after  the
expiration of the initial  two-year  term,  and for  successive  one-year  terms
thereafter.  Mr.  Menetrey's  agreement has been renewed for its first  one-year
extension.  His  employment  agreement  provides for an annual base salary to be
determined by the  Compensation  Committee of the Board of Directors,  but in no
event shall such annual salary be less than  $100,000.  In addition to an annual
base  salary,   Mr.   Menetrey's   employment   agreement   provides  for  bonus
consideration and a customary  benefits  package.  In the event that the Company
terminates  the  employment  agreement  without  cause,  Mr.  Menetrey  would be
entitled to receive his base  salary and  benefits  until the earlier of (i) the
expiration  of the then current  term of the  employment  agreement  without any
further  extensions  or (ii) the date which is six months after the  termination
date. The employment  agreement  prohibits Mr.  Menetrey from (i) competing with
the Company for a period of two years  following  termination of employment with
the Company and (ii) disclosing confidential information or trade secrets in any
unauthorized manner.

     In May 1997, Richard L. Little entered into a one-year employment agreement
with the Company for the position of Vice President,  Finance and Administration
and Chief  Financial  Officer.  Subject to the termination  provisions  provided
therein,  Mr. Little's employment agreement shall automatically be renewed for a
one-year  term after the  expiration  of the initial  term,  and for  successive
one-year terms thereafter. Mr. Little's agreement has been renewed for its first
one-year extension.  His employment agreement provides for an annual base salary
to be determined by the Compensation Committee of the Board of Directors, but in
no event  shall such  annual  salary be less than  $135,000.  In  addition to an
annual base salary,  Mr. Little's  employment  agreement  provides for a minimum
annual bonus of $20,000 and a customary benefits package.  In the event that the
Company  terminates the employment  agreement without cause, Mr. Little would be
entitled to receive his base  salary and  benefits  until the earlier of (i) the
expiration  of the then  current  term of the  respective  employment  agreement
without any further  extensions  or (ii) the date which is two months  after the
termination  date.  The  employment  agreement  prohibits  Mr.  Little  from (i)
competing  with the Company for a period of two years  following  termination of
employment  with the Company and (ii)  disclosing  confidential  information  or
trade secrets in any unauthorized manner.

Section 16(A) Beneficial Ownership Reporting Compliance

     Section  16(a) of the  Securities  Exchange  Act of 1934  requires  certain
officers of the Company and its directors, and persons who own beneficially more
than ten percent of any registered class of the Company's equity securities,  to
file  reports of  ownership  and  changes in  ownership  of Common  Stock of the
Company with the SEC, the Nasdaq National  Market and the Company.  Based solely
on a review of the  reports and  representations  provided to the Company by the
above-referenced  persons,  the Company  believes  that during 1997,  all filing
requirements  applicable to its reporting  officers,  directors and greater than
ten percent  beneficial owners were properly and timely  satisfied,  except that
Richard Little, the Company's Chief Financial  Officer,  did not timely file his
Initial  Statement  of  Beneficial  Ownership  on Form 3, which  report has been
subsequently  filed.  In making  these  statements,  the  Company  has relied on
representations  of  its  directors,  officers  and  greater  than  ten  percent
beneficial owners, and copies of reports they have filed with the SEC.


11.  EXECUTIVE COMPENSATION(1)

     The  following  table  sets  forth  information  for  the  years  indicated
concerning the compensation awarded to, earned by or paid to the Chief Executive
Officer of the Company and the two most highly paid  executive  officers,  other
than the Chief Executive Officer (collectively,  the "Named Executive Officers")
for services rendered in all capacities to the Company during such period.


                                            Salary Compensation Table
                                            -------------------------
<TABLE>
<CAPTION>


                                     Annual Compensation                  Number of
                                                                          Securities
Name and Principal                                       Other Annual     Underlying        All Other
     Position           Year      Salary       Bonus     Compensation      Options       Compensation(1)
------------------      ----      ------       -----     ------------     ----------     ---------------
<S>                     <C>      <C>          <C>        <C>              <C>            <C>

Robing A. Carden        1997     $156,667       --            --              --            $  6,900
  President and         1996      100,000     $28,500         --              --             310,895
  Chief Executive       1995       29,975       --            --              --               --
  Officer

Walter R. Menetrey      1997     $117,708       --            --              --               --
  Executive Vice        1996        5,000     $27,500         --            50,000             --
  President and         1995        --          --            --              --               --
  Chief Operating
  Officer

Richard L. Little       1997     $  84,375     $20,000        --            60,000          $  1,500
  Vice President,       1996        --           --           --              --               --
  Finance and           1995        --           --           --              --               --
  Administration
  and Chief
  Financial Officer

</TABLE>

(1)   For 1997,  represents  car  allowances  for Mr.  Carden of $6,900  and Mr.
      Little of $1,500. For 1996,  represents Mr. Carden's $4,800 car allowance,
      $283,100 in deferred  compensation and $22,995 interest on his loan to the
      Company.


<PAGE>


REPORT ON EXECUTIVE COMPENSATION(1)

--------------------
1.   Pursuant  to Item  402(a)(9)  of  Regulation  S-K  promulgated  by the SEC,
     neither the "Report on Executive  Compensation"  nor the material under the
     caption  "Performance  Measurement  Comparison" shall be deemed to be filed
     with the SEC for  purposes  of the  Securities  Exchange  Act of  1934,  as
     amended,   nor  shall  such  report  or  such  material  be  deemed  to  be
     incorporated by reference in any past or future filing by the Company under
     the Exchange Act or the Securities Act of 1933, as amended.

Introduction

     Three  of  Alyn's  directors,   Messrs.  Toledano  (Chairman),   Price  and
Markbreiter,  constitute the Compensation Committee,  which, among other things,
is responsible  for (1) reviewing and approving  salaries,  benefits and bonuses
for all executive  officers of the Company;  (2)  reviewing and approving  stock
option grants to employees of the Company; and (3) reviewing and recommending to
the Board of Directors  matters  relating to employee  compensation and employee
benefit  plans.  The Board of  Directors  did not modify or reject any action or
recommendation of the Compensation Committee regarding compensation for the 1997
fiscal year.

     This report sets out the Company's  executive  compensation  philosophy and
objectives,  describes the components of its executive  compensation program and
describes the bases on which 1997  executive  compensation  determinations  were
made with  respect to the  executive  officers of the Company,  including  those
named  in the  Summary  Compensation  Table  preceding  this  report.

Executive Compensation Philosophy and Objectives

     In establishing and evaluating the  effectiveness of compensation  programs
for  executive  officers,  as  well  as  other  employees  of the  Company,  the
Compensation Committee is guided by three basic principles:

         -    The Company must offer competitive salaries to  be able to attract
              and retain  highly-qualified and experienced  executives and other
              management personnel;

         -    Executive  cash compensation in excess of base salaries  should be
              tied to Company and  individual performance; and

         -    The  financial  interests of the  Company's  executives  should be
              aligned  with  the  financial   interests  of  the   stockholders,
              primarily through stock option grants and incentive compensation.

Compensation Program Components

     Consistent   with  the   Company's   executive   compensation   objectives,
compensation  for its senior  executives  consists of three elements:  an annual
base salary, annual incentive compensation and long-term incentive compensation.

     Annual Base  Salary.  The  Compensation  Committee  annually  reviews  each
executive's base salary.  Salary levels are generally targeted at and correspond
to the median of the range of compensation paid by similarly situated companies.
Actual  salaries  are based on  individual  performance  contributions  within a
competitive  salary  range for each  position  that is  established  through job
evaluation and market  comparisons.  Base pay levels for the executive  officers
are competitive within a range that the Compensation  Committee  considers to be
reasonable and necessary to attract and retain qualified  executives.  Increases
in base  salary  are  primarily  the  result of  individual  performance,  which
includes meeting specific goals established by the Compensation  Committee.  The
criteria  used in  evaluating  individual  performance  varies  depending on the
executive's  function,  but generally include  leadership inside and outside the
Company; advancing the Company's interests with customers,  vendors and in other
business  relationships;  product  quality and  development;  and advancement in
skills and responsibility.

     Annual  Incentive   Compensation.   The  Compensation   Committee  annually
considers the  performance  of the Company and of each  executive in determining
the  amount of cash  compensation  to be paid in excess  of base  salaries.  The
Compensation Committee also considers Management recommendations regarding bonus
compensation  for all other  employees,  which are also based upon  Company  and
individual performance.

     Long-Term Incentive Compensation.  The 1996 Stock Incentive Plan authorizes
the  Compensation  Committee  to make grants and awards of stock  options to the
Company's employees.  The stock options are granted with an exercise price equal
to the market price of the Company's  Common Stock on the date of grant,  have a
duration  of ten years,  and vest over three or four  years.  This  approach  is
designed to motivate management to increase stockholder value over the long-term
since,  the full benefit of the  compensation  package cannot be realized unless
stock price  appreciation  occurs  over a number of years.  In  determining  the
number of options awarded,  the  Compensation  Committee  considers  competitive
practices,  the duties and scope of  responsibilities of each officer's position
and the amount and terms of options already held by management.

     Chief Executive Officer's Compensation. Mr. Carden's base salary was raised
from  $150,000  to  $160,000  effective  May 1,  1997.  Due  to his  significant
participation  in the  ownership  of the Company,  Mr.  Carden did not receive a
grant of stock options in 1997.  Mr. Price,  who was appointed  Chief  Executive
Officer on April 20, 1998,  has a base annual  salary of $200,000,  a guaranteed
minimum  bonus  compensation  of  $100,000  per year and in April 1998  received
options to purchase 80,000 shares of the Company's Common Stock.

Summary

     The Compensation  Committee believes that the compensation  program for the
executives of the Company is comparable with the compensation  programs provided
by comparable companies and serves the best interests of the stockholders of the
Company. The Compensation Committee also believes that annual performance pay is
appropriately linked to individual performance,  annual financial performance of
the Company and stockholder value.

                                                     The Compensation Committee

                                                     Udi Toledano (Chairman)
                                                     Steven Price
                                                     Michael Markbreiter


<PAGE>


Stock Option Grants in Last Fiscal Year

     The following table sets forth information  regarding stock options granted
to each  Named  Executive  Officer  during  fiscal  year  1997  pursuant  to the
Company's 1996 Stock Option Plan.

<TABLE>
<CAPTION>

                                        % of Total
                                          Awards         Exercise or                    Grant Date
                        Options         Granted to          Base                         Present
                       Granted(1)      Employees in       Price(3)       Expiration      Value(4)
         Name             (#)         Fiscal Year(2)       ($/Sh)           Date          ($/Sh)
         ----          ----------     --------------     -----------     ----------     ----------
<S>                    <C>            <C>                <C>             <C>            <C>
Robin A. Carden           --               --               --              --             --
Walter R. Menetrey        --               --               --              --             --
Richard L. Little       60,000            26.1%            8.38          04/28/07         $5.44

--------------------

(1)  Options  are  granted  at  fair  market  value  at date  of  grant  and are
     exercisable  in  a  series  of  three  (3)  equal  and  successive   annual
     installments  over the  optionee's  period  of  service  with the  Company,
     measured from the grant date,  with the first  installment  exercisable one
     year from the grant date. Each option must be exercised  within 10 years of
     the  grant  date,  subject  to  earlier  termination  in the  event  of the
     optionee's  termination of employment with the Company.  An incentive stock
     option  granted  to a person  owning  more than 10% of the  total  combined
     voting  power of all  classes  of stock of the  Company or of any parent or
     subsidiary of the Company (a "Ten Percent  Stockholder")  must be exercised
     within five years of the grant date. For incentive stock options granted to
     a Ten Percent  Stockholder,  the exercise price shall not be less than 110%
     of the Fair Value per share of Common Stock.

(2)  A total of 260,500  options were granted for the fiscal year ended December
     31, 1997. At December 31, 1997 524,500  shares were  outstanding.  Of these
     138,894 options were  exercisable.  At December 31, 1997 there were 475,500
     shares of common  stock  reserved  under the plan for future  stock  option
     grants.  In October 1996, the Company  granted  options for the purchase of
     383,000 shares of common stock at the initial public offering price, all of
     which were outstanding at December 31, 1996. Of the options  outstanding at
     December 31,  1996,  25,000  options with an exercise  price of $13.50 were
     exercisable.

(3)  The exercise price for each option granted under the 1996 Stock Option Plan
     shall not be less than 100% of the fair market value (the "Fair Value") per
     share of  Common  Stock on the date  such  option is  granted,  which  with
     respect to the options  granted to Mr. Little was equal to $8.38 per share.
     The exercise price may be paid in cash (by check),  by transferring  shares
     of Common  Stock owned by the option  holder and having a Fair Value on the
     date of surrender  equal to the aggregate  exercise price of the option or,
     solely with  respect to options  other than those  granted to  non-employee
     Directors,  by cash payments in installments or pursuant to a full recourse
     promissory  note,  in either  case,  upon the terms and  conditions  as the
     Compensation  Committee shall  determine.  Upon the exercise of any option,
     the  Company is  required to comply  with all  applicable  withholding  tax
     requirements.

(4)  Represents  grant date valuation  computed under the  Black-Scholes  option
     pricing model adapted for use in valuing stock  options.  The actual value,
     if any,  that may be realized  will depend on the excess of the stock price
     over the exercise  price on the date the option is exercised,  so there can
     be no  assurance  that the  value  realized  will be at or near  the  value
     estimated by the  Black-Scholes  model.  Grant date values were  determined
     based in part on the  following  assumptions  for 1997:  risk-free  rate of
     return  of  6.28%,  no  dividend  yield,  expected  life  of 5  years,  and
     historical volatility of 56.92%.

</TABLE>


<PAGE>


Option Exercises and Holdings as of December 31, 1997

     No stock  options  were  exercised  in fiscal year 1997 by any of the Named
Executive Officers. The following table sets forth, as of December 31, 1997, the
number of unexercised options held by each Named Executive Officer and the value
thereof based on the closing price of the Common Stock of $10.50 on December 31,
1997.


             Aggregated Option/Warrant Exercises in Last Fiscal Year
                    and Fiscal Year-End Option/Warrant Values

<TABLE>
<CAPTION>

                       Number of Unexercised Options/Warrants at     Value of Unexercised In-the-Money
                                      FY-End (#)                     Options/Warrants at FY-End ($)(1)
       Name                    Exercisable/Unexercisable                 Exercisable/Unexercisable
       ----            -----------------------------------------     ---------------------------------
<S>                    <C>                                           <C>
Robin A. Carden                           0/0                                    0/0
Walter R. Menetrey                   16,650/50,000                               0/0
Richard L. Little                         0/60,000                               0/127,200

--------------------

(1)   Represents  (i) the number of shares of Common  Stock  underlying  options
      (including  options the  exercise  price of which was more than the market
      value of the underlying  securities)  multiplied by (ii) the closing price
      at December 31, 1997 of $10.50 minus the exercise price.
</TABLE>



12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT

     The  following  table  sets  forth the  number  of  shares of Common  Stock
beneficially  owned, as of April 4, 1998, by (i) each  stockholder  known to the
Company to be a beneficial owner of more than 5% of the Common Stock,  (ii) each
director and nominee for director  and (iii) the  directors  and officers of the
Company as a group.  Unless  otherwise noted, all shares are owned directly with
sole voting and dispositive powers.



                                            Beneficial Ownership
                                            --------------------
              Name(1)                   No. of Shares     % of Total
              ------                    -------------     ----------

Robin A. Carden                           3,044,500         27.84%
Kingdon Capital Management Corp.(2)       2,488,000         22.76%
Udi Toledano(3)                             577,667          5.28%
Herbert V. Turk(4)                          560,000          5.12%
Harry Edelson(5)                            541,667          4.95%
Walter R. Menetrey(6)                       242,650          2.22%
Steven S. Price(7)                           80,000              *
Richard Little(8)                            20,000              *
Michael Markbreiter(9)                       21,667              *
All executive officers and directors      3,940,150         36.04%
  of the Company as a group
  (seven persons)(10)

--------------------

*Less than 1%.

(1)  The  address  for  each of the  persons  in the  table  below  is c/o  Alyn
     Corporation, 16761 Hale Avenue, Irvine, California 92606.

(2)  Includes  shares of Common  Stock held by M. Kingdon  Offshore NV,  Kingdon
     Associates,  L.P. and Kingdon Partners, L.P. Does not include the shares of
     Common Stock underlying immediately  exercisable options that appear in the
     table above  opposite  the name of Michael  Markbreiter,  a Director of the
     Company  and an  employee  of Kingdon  Capital  Management  Corp.  Mr. Mark
     Kingdon is the sole shareholder,  director and executive officer of Kingdon
     Capital Management Corp.

(3)  Includes options immediately exercisable for 21,667 shares of Common Stock.
     Also includes  276,000 shares of Common Stock held by Mr.  Toledano's  wife
     and 80,000  shares of Common Stock held by a certain  trust for the benefit
     of their minor  children.  Also  includes an aggregate of 48,000  shares of
     Common Stock owned by certain other members of Mr. Toledano's family,  with
     respect to which Mr. Toledano disclaims beneficial ownership.

(4)  Includes  344,000  shares of Common Stock held by Mr. Turk jointly with his
     wife.  Also includes  216,000 shares of Common Stock held by Mr. Turk's two
     adult  daughters,  with  respect  to which Mr.  Turk  disclaims  beneficial
     ownership.

(5)  Includes options immediately  exercisable for 21,667 shares of Common Stock
     held by Mr. Edelson.  Also includes  520,000 shares of Common Stock held by
     Edelson  Technology  Partners  III,  with  respect  to  which  Mr.  Edelson
     disclaims beneficial ownership.

(6)  Includes options immediately exercisable for 16,650 shares of Common Stock.

(7)  Includes options immediately exercisable for 80,000 shares of Common Stock.

(8)  Includes options immediately exercisable for 20,000 shares of Common Stock.

(9)  Represents  options  immediately  exercisable  for 21,667  shares of Common
     Stock.  Does not  include  420,800  shares of Common  Stock held by Kingdon
     Partners,  L.P. 420,800 shares of Common Stock held by Kingdon  Associates,
     L.P., and 1,246,400  shares of Common Stock held by M. Kingdon Offshore NV,
     with respect to which Mr. Markbreiter disclaims beneficial ownership.

(10) Includes  options  immediately  exercisable  for  161,650  shares of Common
     Stock.  Does not include (i) 520,000 shares of Common Stock held by Edelson
     Technology  Partners  III, with respect to which Mr.  Edelson,  a Director,
     disclaims beneficial ownership, (ii) shares of Common Stock held by Kingdon
     Partners,  L.P., Kingdon Associates,  L.P. and M. Kingdon Offshore NV, with
     respect  to  which  Mr.  Markbreiter,  a  Director,   disclaims  beneficial
     ownership and (iii) 48,000 shares of Common Stock owned by certain  members
     of Mr. Toledano's family,  with respect to which Mr. Toledano,  a Director,
     disclaims beneficial ownership.


<PAGE>


                       Performance Measurement Comparison

     The  following  graph  provides  a  comparison  of  the  cumulative   total
shareholder  return for the period from  October 22, 1996 (the date on which the
Common Stock was issued in the Company's  initial public  offering at $13.50 per
share) through December 31, 1997 (assuming  reinvestment of any dividends) among
the Company, the NASDAQ Stock Market - U.S. Index and the Russell 2000 Index.

                 COMPARISON OF 12 MONTH CUMULATIVE TOTAL RETURN
           AMONG ALYN CORPORATION, THE NASDAQ STOCK MARKET-U.S. INDEX
         AND THE RUSSELL 2000 INDEX FOR PERIOD ENDING DECEMBER 31, 1997*


[OBJECT OMITTED]


* Assumes that the value of the investment in Alyn Corporation  Common Stock and
each index was $100 on December 31, 1996 and that all dividends were reinvested.

     The foregoing graph is based upon the following data:

<TABLE>
<CAPTION>

                                           Cumulative Total Return
                          12/31/96     3/31/97     6/30/97     9/30/97     12/31/97
                          --------     -------     -------     -------     --------
<S>                       <C>          <C>         <C>         <C>         <C>

ALYN CORPORATION            100           86         110         124          97
NASDAQ STOCK MARKET -       100          100         108         125         124
 U.S. INDEX
RUSSELL 2000 INDEX          100           94         109         125         121
</TABLE>


13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Andromeda Enterprises, Inc.

     Andromeda Enterprises, Inc., a Delaware corporation ("Andromeda"), received
$60,000 from the Company in 1997 for sales,  marketing and  consulting  services
performed by Andromeda on behalf of the Company.  Mr. Udi Toledano,  a Director,
principal stockholder and Chairman of the Board of the Company, is the President
of  Andromeda  and,  together  with  his  wife,  beneficially  owns  all  of its
outstanding capital stock.


<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        ALYN CORPORATION

                                        By: /s/ Steven S. Price
                                            -------------------
                                        Steven S. Price
                                        President and Chief Executive Officer


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

       Signature                                   Title                                   Date
       ---------                                   -----                                   ----
<S>                          <C>                                                        <C>
/s/ Steven S. Price          President, Chief Executive Officer and a Director          May 5, 1998
-------------------          (principal executive officer)
Steven S. Price

/s/ Richard L. Little        Vice President, Finance and Administration and             May 5, 1998
---------------------        Chief Financial Officer
Richard L. Little            (principal financial and accounting officer)

/s/ Robin A. Carden          Director                                                   May 5, 1998
-------------------
Robin A. Carden

/s/ Walter R. Menetrey       Executive Vice President, Chief Operating Officer          May 5, 1998
----------------------       and Director
Walter R. Menetrey

                             Director                                                   May  , 1998
-----------------
Harry Edelson

/s/ Michael Markbreiter      Director                                                   May 5, 1998
----------------------
Michael Markbreiter

/s/ Udi Toledano             Chairman of the Board and a Director                       May 5, 1998
----------------
Udi Toledano
</TABLE>