7
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-Q

(Mark One)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                  OF THE  SECURITIES  EXCHANGE  ACT OF 1934  For  the  quarterly
period ended June 30, 1999.
                                                     OR
[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
 OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.

Commission file number 000-21153.

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


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


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

                                 (949) 475-1525
              (Registrant's telephone number, including area code)

                                 Not applicable
 (Former name, former address and former fiscal year, if changed since last
  report)

         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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

Common Stock, $.001 par value; 11,107,878 shares as of July 26, 1999 .


<PAGE>
<TABLE>

                                              ALYN CORPORATION

                                                   INDEX

--------------------------------------------------------------------------------------------------------
<S>     <C>                                                                                <C>
                                                                                            Page Number
PART I.  FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  Condensed Balance Sheets -
                           June 30, 1999 (unaudited) and December 31, 1998                                3

                  Condensed Statements of Operations -
                           Three months ended June 30, 1999 (unaudited) and June
                           30, 1998 (unaudited) and six months ended
                           June 30, 1999 (unaudited) and June 30, 1998 (unaudited)                        4

                  Condensed Statements of Stockholders' Equity  -
                           Six months ended June 30, 1999 (unaudited)                                     5

                  CondensedStatements  of Cash Flows Six  months  ended June 30,
                           1999 (unaudited) and
                           June 30, 1998 (unaudited)                                                      6

                  Notes to Condensed Financial Statements
                           (unaudited)                                                                  7-8

         Item 2.  Management's Discussion and Analysis of Financial

                           Condition and Results of Operations                                         8-17

         Item 3.  Quantitative and Qualitative Disclosures About

                           Market Risk                                                                   17


PART II.          OTHER INFORMATION                                                                      18


SIGNATURES                                                                                               19

</TABLE>

<PAGE>




                                                     Alyn Corporation
                                                 Condensed Balance Sheet
                                                       (Unaudited)
<TABLE>
                                                                               June 30,                 December 31,
                                                                                 1999                       1998
                                                                          --------------------      ----------------------
<S>                                                                       <C>                       <C>
  Assets

Current assets:
      Cash and cash equivalents                                                $        745,000           $      1,232,000
      Restricted cash                                                                         -                  2,062,000
      Accounts receivable, net                                                          634,000                    781,000
      Inventories                                                                     1,077,000                    401,000
      Other current assets                                                              242,000                    424,000

                                                                          ----------------------      ---------------------
            Total current assets                                                      2,698,000                  4,900,000
                                                                          ----------------------      ---------------------

      Equipment, furniture and fixtures, net                                         19,674,000                 20,703,000
      Other assets, net                                                                 790,000                    626,000
      Intangibles, net                                                                  746,000                    732,000
                                                                          ----------------------      ---------------------
                                                                                 $   23,908,000            $    26,961,000
                                                                          ======================      =====================
                                                                          ======================      =====================



                        Liabilities, Mandatory Redeemable Preferred Stock and Stockholders' Equity

Current liabilities:
      Accounts payable                                                         $        684,000          $         663,000
      Current portion of long term debt                                               1,249,000                  1,842,000
      Accrued and other current liabilities                                             449,000                    956,000
                                                                          ----------------------      ---------------------
            Total current liabilities                                                 2,382,000                  3,461,000
                                                                          ----------------------      ---------------------

Long term debt
      Convertible debt                                                                2,500,000                          -
      Long term debt                                                                  5,449,000                  7,316,000
                                                                          ----------------------      ---------------------
            Total long term debt                                                      7,949,000                  7,316,000
                                                                          ----------------------      ---------------------


Mandatory redeemable preferred stock                                                  1,559,000                          -
                                                                          ----------------------      ---------------------

Stockholders' equity:
      Preferred stock                                                                                                    -
                                                                                          4,000
      Common stock                                                                       12,000                     12,000
      Additional paid-in capital                                                     39,827,000                 37,796,000
      Warrants to purchase common stock                                                 293,000                          -
      Accumulated deficit                                                          (28,118,000)               (21,624,000)
                                                                          ----------------------      ---------------------
            Total stockholders' equity                                               12,018,000                 16,184,000
                                                                          ----------------------      ---------------------

                                                                                 $   23,908,000            $    26,961,000
                                                                          ======================      =====================
                                                                          ======================      =====================

See Notes to Condensed Financial Statements
</TABLE>

<PAGE>




                                                    Alyn Corporation
                                           Condensed Statement of Operations
                                                      (Unaudited)

<TABLE>
                                                           Three Months Ended                  Six Months Ended
                                                                June 30,                             June 30,
                                                           1999          1998                 1999            1998
                                                        ----------------------------     ------------------------------
<S>                                                     <C>           <C>                  <C>             <C>

Net sales                                                 $   339,000    $    32,000         $ 1,165,000    $    61,000

Costs and expenses:
     Cost of goods sold                                     1,924,000      1,322,000           3,976,000      1,910,000
     General and administrative expenses                      877,000      1,005,000           1,447,000      1,667,000
     Selling and marketing                                    294,000        298,000             575,000        599,000
     Research and development                                 390,000        797,000             796,000      1,953,000
                                                       -----------------------------    ------------------------------
         Total costs and expenses                           3,485,000      3,422,000           6,794,000      6,129,000
                                                        -----------------------------    ------------------------------


         Operating loss                                   (3,146,000)    (3,390,000)         (5,629,000)    (6,068,000)

Other expense                                               (338,000)      (148,000)           (576,000)      (185,000)
                                                        -----------------------------    ------------------------------

Loss before provision for income taxes                    (3,484,000)    (3,538,000)         (6,206,000)    (6,253,000)

Provision for income taxes                                          -              -               1,000          1,000
                                                        -----------------------------    ------------------------------

Net loss                                                  (3,484,000)    (3,538,000)         (6,206,000)    (6,254,000)

Deductions for preferred stock dividends                      211,000              -             289,000              -
                                                        -----------------------------    ------------------------------

Net loss attributable to
     common stockholders                                 ($3,695,000)   ($3,538,000)        ($6,495,000)   ($6,254,000)
                                                        ============================     ==============================

Basic and diluted net loss per share                          ($0.33)        ($0.33)             ($0.58)        ($0.58)
                                                        ============================     ==============================
Common shares used in computing
     basic and diluted net loss per share                  11,107,878     10,750,000          11,107,878     10,750,000


See Notes to Condensed Financial Statements.
</TABLE>


<PAGE>

<TABLE>

                                                              Alyn Corporation
                                                Condensed Statement of Stockholders' Equity
                                                                (Unaudited)

                                          Preferred Stock -
                                               Series A               Common Stock          Additional
                                        ----------------------- --------------------------    Paid-in                 Accumulated
                                          Shares      Amount       Shares       Amount        Capital      Warrants     Deficit
                                       ----------- ----------- ------------- ------------ -------------- ------------ --------------
                                       ----------- ----------- ------------- ------------ -------------- ------------ --------------

<S>                                     <C>          <C>        <C>           <C>          <C>            <C>         <C>
Balance at December 31, 1998                                     11,107,878      $12,000    $37,796,000               ($21,624,000)

Issuance of Series A convertible
  Preferred Stock                         375,000      $4,000                                 1,456,000

Accretion of Series A convertible
  Preferred stock dividends                                                                      20,000                    (20,000)

Beneficial conversion feature of the
  Convertible debt                                                                              555,000

Accretion of Series B redeemable
  Convertible preferred stock dividends                                                                                   (256,000)

Accrual of Series B redeemable convertible
  Preferred stock cash dividends                                                                                           (13,000)

Issuance of warrants in conjunction with
  Issuance of Series B redeemable
  Convertible preferred stock and
  Convertible debt                                                                                           293,000

Net Loss                                                                                                                (6,205,000)
                                       ----------- ----------- ------------- ------------ -------------- ------------ --------------
Balance at June 30, 1999                  375,000      $4,000    11,107,878      $12,000    $39,827,000     $293,000  ($28,118,000)
                                       =========== =========== ============= ============ ============== ============ ==============





See Notes to Condensed Financial Statements.
</TABLE>





<PAGE>





                                                   Alyn Corporation
                                          Condensed Statement of Cash Flows

<TABLE>
                                                                                             Six Months Ended
                                                                                                 June 30,
                                                                                         1999              1998
<S>                                                                                 <C>               <C>
                                                                                    ----------------  ---------------
Cash flows used in operating activities:                                             $  (5,485,000)     $ (4,645,000)
                                                                                    ----------------  ---------------

Cash flows used in investing activities:

    Capital expenditures                                                                  (291,000)       (6,004,000)
    Decrease in restricted cash                                                           2,062,000                 -
                                                                                    ----------------  ----------------
    Total cash flows from investing activities                                            1,771,000       (6,004,000)
                                                                                    ----------------  ----------------


Cash flows from financing activities:

    Dividends paid                                                                          (4,000)                 -
    Net payments on debt                                                                (2,459,000)                 -
    Proceeds from long term debt, net of issuance costs                                           -         3,541,000
    Proceeds from common stock subscription, net of issuance costs                                -         2,000,000
    Proceeds from convertible debt, net of issuance costs                                 2,634,000                 -
    Proceeds from warrants, net of issuance costs                                           293,000                 -
    Proceeds from Series A convertible preferred stock, net of issuance costs             1,460,000                 -
    Proceeds from Series B redeemable convertible preferred stock, net of
         issuance costs                                                                   1,303,000                 -
                                                                                    ----------------  ----------------
    Total cash flows from  financing activities                                           3,227,000         5,541,000
                                                                                    ----------------  ----------------

Net decrease in cash                                                                      (487,000)       (5,108,000)


Cash and cash equivalents at beginning of period                                          1,232,000        13,126,000
                                                                                    ----------------  ----------------
Cash and cash equivalents at end of period                                           $      745,000     $   8,018,000
                                                                                    ================  ================

Non cash financing activities:

    Beneficial conversion feature of
     the convertible debt                                                            $      555,000
                                                                                    ================



See Notes to Condensed Financial Statements

</TABLE>




<PAGE>


                                              ALYN CORPORATION
                                       NOTES TO FINANCIAL STATEMENTS

1.       Basis of Presentation


         The accompanying  unaudited  condensed  financial  statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included. This financial information should be read in conjunction with the
audited  financial  statements and notes thereto for the year ended December 31,
1998,  included in the Company's  Annual  Report on Form 10-K,  which is on file
with the  Securities  and  Exchange  Commission.  Operating  results for the six
months ended June 30, 1999 are not  necessarily  indicative  of the results that
may be expected for the year ending December 31, 1999.



2. Inventories
<TABLE>
<S>                                                          <C>                     <C>
                                                                   June 30,            December 31,
                                                                     1999                 1998
                                                             --------------            ------------

         Raw materials                                          $   511,000              $  237,000
         Work in process                                            508,000                 133,000
         Finished goods                                              58,000                  31,000
                                                             --------------            ------------
                                                                 $1,077,000              $  401,000


</TABLE>

3.       Issuance of Convertible Debt, Redeemable Convertible Preferred Stock
         and Convertible Preferred Stock

         During the first quarter of 1999,  the Company issued 375,000 shares of
Series A Preferred Stock ("Series A convertible preferred stock") for $1,460,000
cash,  net of expenses;  1,500 shares of Series B Exchangeable  Preferred  Stock
("Series B redeemable  convertible preferred stock") for $1,303,000 cash, net of
expenses;  and a Senior  Exchangeable  Promissory Note ("convertible  note") for
$2,634,000  cash, net of expenses.  The Series A convertible  preferred stock is
convertible into common stock beginning in January 2000 at a set price of $4.00,
while the Series B redeemable  convertible  preferred  stock and the convertible
note are  currently  convertible  into  common  stock at set prices of $3.57 and
$3.65,  respectively.  Additionally,  each of these convertible securities has a
conversion  rate  that is based on the  lesser  of the set  price or the  market
price, as defined, at the time the securities are converted and, therefore, have
beneficial  conversion  features in  accordance  with EITF Topic No.  D-60.  The
Series  B  convertible  preferred  stock  and  the  convertible  note  are  each
convertible at as much as a 15% discount to the market price, as defined, if the
market price, as defined,  at the time the securities are converted is less than
the set price.

         The Series B redeemable convertible preferred stock must be redeemed by
the  Company at 115% of its  original  issue  price per share plus  accrued  and
unpaid  dividends in the event the Company's common stock ceases to be listed or
quoted on a national  securities  exchange,  the Nasdaq  Stock Market or the OTC
Bulletin Board.

         Each of the holders of these securities  received  registration  rights
for the common stock  underlying  their  securities.  The Company is required to
register the common stock  underlying the Series A convertible  preferred  stock
within one year of issuance  and the Series B redeemable  convertible  preferred
stock and the  convertible  note are  required  to be  registered  in June 1999,
subject  to  the  timing  of SEC  review,  if  any.  The  Company  has  filed  a
registration   statement   with  the  SEC  covering  these   securities,   which
registration statement is currently being reviewed by the SEC.

         In January  2000,  the  holders of the Series A  convertible  preferred
stock may receive a warrant to purchase up to 120,000  shares of common stock at
the then market price, as defined,  of the underlying common stock if the market
price is less than $5.80 per share.  Upon issuance,  the holders of the Series B
redeemable  convertible  preferred  stock received a warrant to purchase  65,000
shares of common  stock at a price of $3.82,  and the holder of the  convertible
debt received a warrant to purchase 135,000 shares of common stock at a price of
$3.04. The common stock warrant attached to the Series B redeemable  convertible
preferred stock, which was valued by the Company at $77,000,  was reflected as a
reduction to the redeemable  preferred  stock and accreted as a preferred  stock
dividend.  The common stock warrant attached to the convertible  debt, which was
valued by the Company at $216,000,  was reflected as debt discount and amortized
as additional interest expense.  The value of the beneficial  conversion feature
of the  convertible  debt was also  reflected as debt  discount and amortized as
additional  interest  expense  based  upon the rate at  which  the debt  becomes
convertible.

         Dividends  on the  Series A  convertible  preferred  stock and Series B
redeemable convertible preferred stock are reflected as an adjustment to the net
loss  attributable  to common  stockholders.  This  adjustment for the six-month
period  ended June 30, 1999  reflects  the accrual of a cash  dividend of $9,000
based on the annual  dividend  of $30 (3%) per share on the Series B  redeemable
convertible  preferred stock and the accretion dividends of $10,000 and $192,000
related  to the  beneficial  conversion  features  of the  Series A  convertible
preferred  stock  and the  Series  B  redeemable  convertible  preferred  stock,
respectively,  based  upon  the  rate  at  which  the  preferred  stock  becomes
convertible.

4.       Net loss per share

         Net  loss  per  share  includes  the  deductions  for  preferred  stock
dividends.   However,  the  Company  did  not  include  potential  common  stock
equivalents  from the  exercise  of common  stock  options,  the  conversion  of
preferred  stock  or debt and the  exercise  of  common  stock  warrants  in the
calculation of net loss per share as such inclusion would have an  anti-dilutive
effect.

Item 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS


Cautionary Statement

         The  following  discussion  and  other  sections  of this Form 10-Q may
contain forward-looking  statements within the meaning of the Private Securities
Litigation  Reform Act of 1995,  Section 21E of the  Securities  Exchange Act of
1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and
is subject to the safe harbors  created by those sections.  The  forward-looking
statements  within this Form 10-Q are  identified  by words such as  "believes,"
"anticipates,"  "expects,"  "intends,"  "may" and other similar  expressions and
include,  but are not limited to, statements  concerning our projected  revenue,
the market acceptance of our products, the outcome of current evaluations of our
products  by  potential   customers,   our  ability  to  achieve   manufacturing
efficiencies, our ability to reduce our costs and expenses, our need for capital
and ability to raise  additional  funding,  the impact of the Year 2000 issue on
our business and the cost of our Year 2000 compliance.  However, these words are
not the  exclusive  means of  identifying  such  statements.  In  addition,  any
statements that refer to expectations, projections or other characterizations of
future  events  or   circumstances   are   forward-looking   statements.   These
forward-looking  statements are subject to significant risks and  uncertainties,
including  without  limitation our ability to raise additional funds, the market
acceptance  of our  product,  our  ability  to expand the  applications  for our
product,  our ability to  successfully  expand our sales and marketing staff and
activities,  our ability to  manufacture  products in sufficient  quantities and
quality for current and future applications, and those other risks identified in
the  section of this Form 10-Q  entitled  "Risk  Factors"  and in the  Company's
Annual  Report on Form 10-K for the year ended  December  31, 1998 as filed with
the SEC.  Such  risks and  uncertainties  may  cause  actual  results  to differ
materially   and  adversely  from  those   discussed  in  such   forward-looking
statements.  The Company  disclaims  any  obligation  to publicly  revise  these
forward-looking   statements  to  reflect  events  or  circumstances   occurring
subsequent  to the filing of this Form 10-Q with the SEC or  otherwise to revise
or update any oral or written  forward-looking  statement  that may be made from
time to time by or on behalf of the Company.  The information  contained in this
Form 10-Q is not a complete  description of the Company's  business or the risks
associated  with an  investment  in the Company.  Readers are urged to carefully
review and consider the various  disclosures  made by the Company in this Report
and in the Company's other filings with the SEC,  including its Annual Report on
Form  10-K  for the year  ended  December  31,  1998,  that  attempt  to  advise
interested  parties of certain risks,  uncertainties  and other factors that may
affect the Company's business.




<PAGE>


Overview


         From the  Company's  inception  in 1990  through the second  quarter of
1998,  the Company was engaged in research,  development,  testing and prototype
production of advanced metal matrix composite materials,  utilizing  proprietary
technology  primarily for the  application of boron carbide in combination  with
aluminum alloys,  under the name  Boralyn(R).  In the third quarter of 1998, the
Company made the initial  transition  from prototype  development to production.
The  Company's  extrusion  facility was  completed in late 1998 and became fully
operational  in the first  quarter of 1999.  The  Company's  first major Boralyn
production  order was received from  Transnuclear  in the fourth quarter of 1998
and was for use as  shielding  material in dry storage  casks for spent  nuclear
fuel rods.  Shipments  began in the first quarter of 1999 and continued  through
the second quarter, with completion scheduled for the third quarter. The Boralyn
shielding has been well received by Transnuclear  and has generated a high level
of interest in the Company's  nuclear shielding for both the dry and wet storage
markets.  During the first quarter of 1999, the Company  received initial orders
for  Boralyn  for  use in  components  for  Formula  One  cars.  The  successful
production of these  components led to a cooperation and  development  agreement
being  executed  with  Ferrari  SpA  during the  second  quarter  of 1999.  This
agreement  provides for the development of specialized custom Boralyn alloys for
the production of components for Ferrari  Formula One and GT cars. The work with
Formula One teams has resulted in an interest  from several  leading  automotive
companies.  These  companies have started testing Boralyn for use in engines and
other automotive  components for high-performance  production  automobiles.  The
Company has expanded its manufacture of non-Boralyn components for the aerospace
industry to gain acceptance by the industry and to generate near-term  revenues.
Other application areas of Boralyn are in evaluation by different  customers and
trial orders have been executed.  The Company is anticipating  positive  results
from these  evaluations  during the second  half of the year.  While the Company
expects to achieve increasing sales levels of Boralyn -based products during the
second  half of 1999,  there can be no  assurance  that such  increases  will be
achieved. The Company was unprofitable through June 30, 1999 and incurred a loss
for the full year 1998 as a result of start-up  costs and the  ongoing  costs of
maintaining significant production capacity in anticipation of sales growth, and
will incur additional losses thereafter.


Results of Operations

         For  purposes  of  discussion,   the  results  of  operations  for  the
three-month period ended June 30, 1999 are compared to the results of operations
for the three-month period ended June 30, 1998 and the results of operations for
the six-month  period ended June 30, 1999 are compared to the  six-month  period
ended June 30, 1998.


         Net Sales.  Net sales for the second  quarter of 1999 increased 959% to
$339,000 from $32,000 in the second quarter of 1998. Net sales for the six-month
period ended June 30, 1999  increased  1,810% to $1,165,000  from $61,000 in the
six-month  period  ended June 30,  1998.  Net sales for the second  quarter were
reduced  by  $178,000  for the  return of  certain  casting  material,  which is
expected to be replaced by another grade of casting material more appropriate to
the applications being sold. The substantial increase in sales resulted from the
Company's   transition  in  the  third  quarter  of  1998  from  prototyping  to
production.  Shipments  in the second  quarter of 1999 were to  companies in the
nuclear, automotive and aerospace industries.

         Cost of Goods Sold.  Cost of goods sold for the second  quarter of 1999
increased 46% to $1,924,000  from $1,322,000 in the second quarter of 1998. Cost
of goods sold for the  six-month  period ended June 30, 1999  increased  108% to
$3,976,000  from  $1,910,000 in the six-month  period ended June 30, 1998.  This
increase was attributable to the Company's  transition from product  development
in the  first  half of 1998 to  production  in the  third  quarter  of 1998.  In
absolute  terms,  the Company  anticipates  cost of goods sold will  continue to
increase as revenues rise. As a percentage of sales, the Company expects cost of
good sold to decline as the manufacturing facilities are more fully utilized.

         General  and  Administrative   Expenses.   General  and  administrative
expenses  for  the  second  quarter  of  1999  decreased  13% to  $877,000  from
$1,005,000 in the second quarter of 1998.  General and  administrative  expenses
for the six-month  period ended June 30, 1999  decreased 13% to $1,447,000  from
$1,667,000 in the six-month period ended June 30, 1998. This continued  decrease
represents the Company's focus on reducing general and  administrative  expenses
as a percent of sales.  Overall,  the general and  administrative  expense level
incurred  in  the  second  quarter  of  1999,  excluding  severance,  should  be
maintained through the end of the year.

         Selling and Marketing Expenses.  Selling and marketing expenses for the
second  quarter of 1999  decreased  1% to $294,000  from  $298,000 in the second
quarter of 1998.  Selling and marketing  expenses for the six-month period ended
June 30, 1999  decreased 4% to $575,000 from  $599,000 in the  six-month  period
ended June 30,  1998.  Although  1999  selling and  marketing  expense have been
relatively  unchanged from 1998 levels, the Company expects an increase in sales
and  marketing  spending in the second half of 1999  relative  to  increases  in
sales.

         Research and Development  Expenses.  Research and development  expenses
for the second  quarter of 1999  decreased  51% to $390,000 from $797,000 in the
second  quarter of 1998.  Research and  development  expenses for the  six-month
period ended June 30, 1999  decreased  59% to $796,000  from  $1,953,000  in the
six-month  period ended June 30, 1998. This decrease was primarily  attributable
to the  Company's  transition  from a primary  focus of product  development  to
production in the third  quarter of 1998.  The Company still expects to continue
investing in research and development for new Boralyn materials and improvements
in existing materials and processes.


Liquidity and Capital Resources


         At June 30, 1999, the Company had working capital of $316,000. In March
1999, the Company completed an equity offering of $1.4 million, net of expenses,
and an exchangeable debt offering of $2.8 million,  net of expenses.  In January
1999,  the  Company  completed  an  equity  offering  of $1.45  million,  net of
expenses.  The Company received $4.5 million,  net of expenses,  from its common
stock  rights  offering  completed in August  1998.  Prior to August  1998,  the
Company funded its operations  through proceeds from its initial public offering
in October 1996 of $33.3 million, net of expenses, and through debt financing of
$10.5  million,  of which $6.5 million was  completed in December  1997 and $4.0
million was completed in the second quarter of 1998.  Cash balances in excess of
those required to fund operations are invested in interest-bearing  high quality
short-term  investment  grade corporate and government  securities in accordance
with investment guidelines approved by the Company's Board of Directors.

         The Company's  future liquidity and capital funding  requirements  will
depend on numerous  factors,  including  results of  marketing  its metal matrix
composite  materials,  their acceptance in the market,  the timing of production
orders  and  their  delivery,  and the  costs  and  timing  of  growth in sales,
marketing and manufacturing activities. The Company's working capital needs will
rise as the Company increases production. On August 10, 1999, the Company raised
$570,000,  net of expenses,  from an existing shareholder in a private placement
of 200,000  shares of common stock at $3.00 per share.  The Company is currently
in negotiations  with a large investment fund to place an additional $10 million
in  convertible  preferred  stock in a private  placement  to fund  existing and
future  working  capital  needs.  The Company is also in  negotiations  with two
non-bank  financial  institutions to provide  accounts  receivable and inventory
working  capital  financing.  The  Company's  ability to obtain  future  working
capital  financing  will be  dependent  in part on the quality and amount of the
Company's trade receivables,  inventory and unsecured capital equipment.  If the
Company  achieves its operating  plan for 1999 and 2000 and completes its equity
funding program, it believes that internally  generated funds, cash on hand, and
equipment,  inventory  and  accounts  receivable  financing  should  satisfy the
Company's  anticipated  capital  needs for the next 12 months.  However,  if the
Company fails to complete its planned equity funding program, inadequate working
capital to finance  operations will result. If the Company fails to complete its
debt  financing  or its planned  inventory  and accounts  receivable  financing,
inadequate capital to execute it business plan may result.  Also, if the Company
fails to reach its planned revenue levels,  additional  funding may be required.
It is possible  that the Company may not be able to ever  achieve a  significant
level  of  sales or  profitability  or that  such  additional  funding  would be
available or available upon terms acceptable to the Company.

Year 2000 Compliance

         The Company is currently  evaluating our Year 2000  readiness,  both in
terms of the  compliance of our internal  information  systems and compliance of
applications  which  monitor all aspects of our  business,  including  financial
systems,  manufacturing  equipment,  customer services,  marketing  information,
infrastructure and  telecommunications  equipment.  We have tested and evaluated
our internal  information systems and, based upon these tests, believe that they
are substantially Year 2000 compliant.  The Company is in the process of testing
and  evaluating the  computerized  elements of our  manufacturing  equipment and
expects  to  complete  this  evaluation  in  sufficient  time to make  necessary
upgrades,  if any. At this  point,  based in part upon the timing of purchase of
much of the Company's  equipment,  the Company  believes that its  manufacturing
equipment will be Year 2000 compliant on a timely basis. The Company believes it
has no  exposure  related  to its  products.  Formal  communications  have  been
initiated with all  significant  suppliers and large  customers to determine the
extent to which the Company is vulnerable  to such  parties'  failure to address
their own Year 2000 issue. The Company expects to have analyzed and accessed the
possible  risk of  significant  business  interruptions  as a result of any such
party's noncompliance by September 1999. At that time, any necessary contingency
plans will be developed to address any material  consequences  the Company could
suffer if such party is not Year 2000 compliant.  However,  the failure of other
companies to adequately address their own Year 2000 issues could have a material
adverse  effect on the  Company.  The Company  expects to complete its Year 2000
compliance  efforts in 1999. We believe that the total estimated project cost is
not  material  and includes the  estimated  costs and time  associated  with the
impact of third party compliance.  However,  it is possible that the actual cost
of compliance  and the impact of Year 2000 issues could differ  materially  from
those plannned.

Risk Factors


                  In future periods the Company's business,  financial condition
and results of  operations  may be affected in a material and adverse  manner by
many factors, including, but not limited to, the following:


Our future  success  depends upon our ability to gain market  acceptance  of our
products in commercial quantities.

         Our  products  have yet to attain  significant  commercial  acceptance.
Other products,  such as aluminum, and to a lesser extent,  titanium,  magnesium
and  beryllium,  have become the standard  materials in the automotive and other
target industries for our materials. Boral and borated stainless steel have been
the  standard  materials  in the  nuclear  industry.  We  may  not  be  able  to
demonstrate  the  price-performance  advantages of our materials  over existing,
more  traditional  materials,  which  could  make  it  difficult  for  us to win
substantial  contracts in various  industries.  If we are not able to market our
products in commercial  quantities,  our business and results of operations will
suffer dramatically.  Initially, we directed our resources to the manufacture of
final products, particularly golf club heads. We have recently changed our focus
to  marketing  our advanced  materials  as raw  materials to be used in products
manufactured  by others.  The  principal  use of our products for the six months
ended June 30, 1999 was for various  applications in the nuclear,  aerospace and
automobile industries, but our materials have not yet achieved market acceptance
in these  industries  on a broad  scale.  Market  acceptance  of our products in
commercial  quantities will also depend upon the pricing of our products and our
ability to  manufacture  and  deliver  products on a timely  basis.  Because our
products  typically  entail long sales cycles,  lengthy  customer product design
times  and,  in  nuclear  applications,   certification  requirements  prior  to
production  orders,  we may  not  realize  the  benefits  of our  marketing  and
development costs, if at all, until subsequent  periods. We must address each of
these factors  effectively in order to achieve  market  acceptance in commercial
quantities of Boralyn or our other current or future products.

We have  insufficient  cash on hand to sustain our  operations  without  raising
additional debt or equity capital.

         We had cash on hand of $745,000 at June 30,  1999.  On August 10, 1999,
the Company raised $570,000, net of expenses,  from an existing shareholder in a
private  placement of 200,000 shares of common stock at $3.00 per share.  We are
currently in  negotiations  with a large  investment fund to place an additional
$10  million  in  convertible  preferred  stock in a private  placement  to fund
existing and future working capital needs. We are also currently in negotiations
with two non-bank  financial  institutions  to provide  accounts  receivable and
inventory  working capital  financing.  If we are not successful in raising this
additional  equity  capital,  we will not have  sufficient  working  capital  to
finance our operations.  If we are unable to raise the debt or planned  accounts
receivable  and  inventory  working  capital  financing,  we may  not be able to
execute our business plan.

We have a history of losses  which we expect  will  continue,  and we may not be
able to achieve profitability.

         We incurred net losses of $7.3 million in 1997,  $12.1  million in 1998
and $6.5 million for the six months ended June 30, 1999.  We expect to expect to
continue to incur losses in 1999 and may never generate  sufficient  revenues to
achieve profitability in the future. Even if we do achieve profitability, we may
not sustain or increase  profitability  on a  quarterly  or annual  basis in the
future. While we commenced our materials development activities in 1990, we only
completed our manufacturing facilities at the end of 1998. Accordingly,  we have
had a limited operating history and only generated revenues of $364,000 in 1997,
$1.3 million in 1998 and $1.2 million for the six months ended June 30, 1999. If
we continue to be unable to generate  significant revenues and continue to incur
losses , we could  impair  our  ability  to  continue  as a going  concern.  Our
auditors have included a going concern modification in their report for the year
ended  December 31, 1998.  We cannot assure you that this  modification  will be
removed from any future reports, and any going concern modification may preclude
us from completing any additional debt or equity financings.

The terms of our  preferred  stock,  exchangeable  promissory  note and warrants
could adversely affect our stock price.

         We may be  required  to issue a large  number of  additional  shares of
common stock upon conversion of our preferred stock and exchangeable  promissory
note that will be immediately  available for resale. During the first quarter of
1999, we issued shares of Series B preferred  stock, an exchangeable  promissory
note and  related  warrants  that are  currently  convertible,  exchangeable  or
exercisable  into a large  number of shares of our common  stock.  Beginning  in
January 2000, our Series A preferred stock will also be convertible  into shares
of our common stock.  All of the holders of these  securities have  registration
rights, and we have filed a registration  statement to register the common stock
issuable  upon  exchange  or  conversion  of the  Series B  preferred  stock and
exchangeable  promissory note. As a result, all of these shares, when converted,
exchanged or exercised, will be immediately available for resale and could cause
the  price of our  common  stock to  decline.  The  sale by these  holders  of a
significant  amount of common stock,  could also encourage short selling,  which
could cause our stock price to decline further. Furthermore, any negative impact
to our stock price caused by these  securities could impair our ability to raise
additional equity capital

         While the conversion prices for these securities provide a fixed price,
the terms also  contain  price  protection  provisions  that require us to issue
additional   shares  of  common  stock  to  these  holders  without   additional
consideration  if the  price  of our  common  stock  declines  below  the  fixed
conversion prices. The following table sets forth the aggregate number of shares
of our common stock that we would be required to issue  assuming that all of the
securities are immediately exchanged for common stock:
<TABLE>
<S>                               <C>              <C>                          <C>
                                                   Number of Shares of Common   % of Outstanding
                                  Conversion       Stock Issuable Upon Full     Common Stock
Type of Security                  Price            Conversion                   Assuming Full Conversion
----------------                  -----            ----------                   ------------------------
Series A preferred stock          $2.00               750,000 shares              6.8%
Series B preferred stock          $3.125              480,000 shares              4.3%
Exchangeable note                 $3.125              960,000 shares              8.6%
Warrants                          Various             320,000 shares              3.0%
Total                                               2,510,000 shares             22.7%
</TABLE>

         Because we cannot determine the exact conversion price of the foregoing
securities,  due to the  price  protection  provisions,  which  are based on the
market  price of our  common  stock for a number of  trading  days  prior to the
actual  conversion,  we have made the  following  assumptions  in computing  the
calculations  in this table:
o    The conversion  prices for the Series B preferred
     stock and the exchangeable note have no floor, and
     accordingly, for the purposes of this table, we have used the closing price
     of our common stock as of June 30, 1999 as the conversion price.
o    The conversion  price for the Series A preferred  stock cannot be less than
     $2.00 per share (i.e.,  50% of its fixed conversion  price),  the foregoing
     table  reflects the maximum  number of shares of common stock that we would
     be required to issue to this holder using this minimum conversion price.
o    The  warrants  associated  with  the  Series  B  preferred  stock  and  the
     exchangeable note each have set conversion prices, and do not provide for a
     variable number or price protection.  Accordingly, the warrants provided by
     the  agreements  have been  included  in the table.  The number of warrants
     associated  with the Series A preferred  stock  varies  depending  upon the
     stock  price on January 10,  2000.  For  purposes  of this  table,  we have
     assumed the maximum  number  must be issued.  The Series A preferred  stock
     does not provide exercise price protection.
o    The  percentage  calculation  has been  derived  using the total  number of
     shares of our common  stock  outstanding  as of June 30,  1999  (11,107,878
     shares).

         It is possible  that the holders of our  convertible  preferred  stock,
exchangeable note and warrants would be able to gain control of Alyn Corporation
upon full  conversion  of these  securities.  In the event that the price of our
common stock declines below $0.45 per share,  the issuance of additional  shares
of common stock to the holders of our  preferred  stock,  exchangeable  note and
warrants  would enable these  holders to elect the majority of our directors and
control many corporate decisions and transactions.  As such, these holders could
prevent  or  delay a change  in  control  that  might  otherwise  be in the best
interests of our other stockholders.

         We may be required to make  significant cash payments to holders of our
preferred stock and exchangeable  note. We may be required to make cash payments
to  holders of our  preferred  stock and  exchangeable  note if we do not timely
deliver  common stock upon exchange or  conversion of these  securities or if we
fail to keep a registration  statement  effective for the  underlying  shares of
common  stock.  These cash  payments  could be as much as  $52,500  per week for
failure to register or keep a registration  statement  effective and could reach
as high as $330,000  per day for  failure to timely  deliver  common  stock upon
exchange. A delay to timely deliver would be the result of our failure to direct
our stock  transfer  agent to issue the  shares  or our stock  transfer  agent's
failure to act in accordance with their instructions from us. Accordingly, if we
are required to make these cash  payments,  even for a short period of time,  it
would adversely affect our financial  condition and our ability to implement our
business  plans. In addition,  because the rules of the National  Association of
Securities Dealers,  Inc. require  stockholder  approval for issuances of 20% or
more of a company's outstanding securities, the terms of our preferred stock and
exchange  note  limit  the  number of shares  that we may be  required  to issue
without  stockholder  approval to 19.9% of our outstanding common stock. We plan
to seek this stockholder  approval in accordance with NASD Rule 4460 at our 1999
Annual Meeting.  However, if we do not obtain stockholder approval to remove the
19.9% limit,  we will be required to make cash payments in the event the holders
of the  exchangeable  securities  attempted to convert over the 19.9% limit. The
cash  payments  would be equal to the  number of shares of common  stock that we
could not issue because of the 19.9% limit multiplied by the market price of our
common  stock at the  time of the  attempted  conversion.  For  example,  if the
Company's  stock  price  was  $1.00  per  share  at the time of  receipt  of the
conversion  notices for all of the preferred stock and the exchangeable note and
all warrants were exercised at the same time, the 5,570,000 shares that we would
be  required  to be issued  would be limited to  2,210,000  by the 19.9%  limit.
Accordingly,  if this event were to occur, the Company would be required to make
a cash payment of $3,360,000. In this event, we would likely have to raise funds
to  finance  these  payments  elsewhere,  which  funds may not be  available  on
acceptable terms, if at all.

Our  limited  manufacturing  history  and the  significant  manufacturing  risks
associated  with our  products  may make it  difficult  for us to  establish  or
maintain profitable manufacturing operations.

         Our limited  experience  in  manufacturing  our products in  commercial
quantities has led to delays in the release of new products or applications  for
our products,  and has resulted in increased costs that we have not been able to
offset to date with significant  product sales. The manufacturing  processes for
Boralyn,  for example,  utilize high  temperature  and high  pressure and may be
subject to  volatile  chemical  reactions.  We  initially  experienced  improper
temperature  settings,  difficulties in dealing with inconsistent  materials and
problems establishing standard and repeatable  manufacturing  procedures.  If we
fail to  effectively  manage and maintain our  manufacturing  capabilities,  our
business will suffer and we may never generate  significant  revenues or achieve
profitability.  In addition,  natural  disasters such as earthquakes,  which are
characteristic  of  Southern  California,  the  location  of  our  manufacturing
facilities,  could result in the interruption of our manufacturing activities or
could  significantly  impact  our  manufacturing   operations  or  capacity.  We
currently do not maintain  earthquake  insurance and any significant  earthquake
could  suspend our  manufacturing  capabilities.  Our  manufacturing  operations
currently  use  specially-designed  equipment  that,  if damaged,  inoperable or
unavailable,  could disrupt our manufacturing  operations and may not be able to
be repaired or replaced on a timely basis or at reasonable costs.

If we do not  increase  our  product  sales,  we may not be able to  offset  our
substantial lease  commitments and operating cost commitments,  which could lead
to continued losses.

         Unless  and  until  we  achieve  a  significant  level  of sales of our
products, we will have substantial  production  over-capacity and under-absorbed
costs that will continue to cause us to incur  substantial  operating losses. In
order to establish  manufacturing capacity, we entered into long-term leases for
our two facilities located in Irvine, California. The lease for our headquarters
in Irvine,  California  expires in 2008 and requires  monthly lease  payments of
approximately  $25,000.  We also have a ten-year  lease expiring in 2008 for our
second Irvine facility, with monthly lease payments of $45,000. Through June 30,
1999,  we have  invested  more  than $20  million  to equip  and  implement  our
manufacturing operations in these facilities. If we fail to generate significant
revenues from these manufacturing  facilities, we will not be able to offset the
costs of those facilities and our business and operating results will suffer.

If we do not generate  significant working capital from our operations,  we will
need additional capital which may not be available on terms favorable to us.

         Our ability to grow our business is highly  dependent  upon our ability
to  generate  capital  from our  operations  and to raise  needed debt or equity
financing.  Without additional  financing within the next twelve months, we will
not be able to  achieve  our  market  objectives.  Our  ability  to obtain  debt
financing  will be dependent in part on the quality and amount of our  revenues,
trade receivables,  inventory and unsecured capital equipment.  If we are unable
to  receive  adequate  debt  financing,  we may have to seek  additional  equity
financing which may not be available on favorable  terms, if at all. Our ability
to achieve  future  liquidity  and  capital  funding  requirements  through  our
operations will depend on numerous  factors,  including:
o results of marketing
  our metal matrix composite capabilities;
o market acceptance of our products;
o the timing of production orders and our ability to make delivery of products;
o our  costs of sales  and  timing  of  growth  in  sales;  and
o our ability to effectively manage our marketing and manufacturing activities.

We expect  fluctuations in our operating results to continue,  which could cause
our stock price to decline.

         Fluctuations caused by variations in quarterly operating results or our
failure to meet market analysts'  projections or public expectations could cause
the  market  price  of  our  common   stock  to  decline  and  perhaps   decline
significantly.  Due to the nature of our business, we have experienced, and will
likely continue to experience,  long sales cycle times,  lengthy customer design
processes for new product introductions and market trends that may significantly
limit our ability to forecast accurately  time-to-market schedules or short-term
results of  operations.  We cannot  predict  our  operating  results  due to the
uncertainty of these factors and our limited  operating  history.  Our operating
results may vary significantly  from quarter to quarter,  in part because of the
costs associated with changes in our products, personnel and the size and actual
delivery dates of orders for our products.  As a result,  our operating  results
for any  particular  quarter  should not be considered  indicative of any future
results and  period-to-period  comparisons  of our  operating  results  will not
necessarily be meaningful.

If we lose any of our key managers, our business could be seriously harmed.

         We rely  on a  relatively  new  management  team  and  need  additional
personnel  to expand our  business.  Our future  success  and  profitability  is
substantially  dependent  upon the  personal  efforts and  abilities  of our key
executives,  Arne Van Roon (our President and Chief Executive Officer who joined
Alyn in April  1999),  Robin A. Carden (our  founder) and Richard L. Little (our
Chief Financial  Officer and  Secretary).  None our key managers has a long-term
employment  agreement  with Alyn,  and  accordingly,  they may  terminate  their
association  with us with little or no notice.  We also do not  maintain key man
life insurance on Messrs. Van Roon or Little. If any of these individuals or any
other key  employees  were to leave  Alyn  Corporation,  their  departure  could
significantly diminish our level of management,  technical,  marketing and sales
expertise,  and  we  would  have  the  difficult  task  of  finding  and  hiring
replacements  who have these  skills.  Furthermore,  the departure of any of our
manufacturing personnel may interrupt our manufacturing  operations and lengthen
the time necessary to deliver products to market.

         We believe  that our future  growth will be  dependent in large part on
our ability to attract or retain qualified management, technical, manufacturing,
administrative  and other personnel.  Due to our location in Irvine,  California
and the nature of our business,  we believe that we will experience  significant
competition for qualified personnel.

We must keep pace with rapid  technological  changes in the  advanced  materials
industry in order to remain competitive.

         In  the  advanced   materials  market,  new  materials  are  frequently
introduced to address a variety of existing applications. If competing materials
become  available  to  address  these  applications,  our  materials  may become
obsolete for key applications and our sales could decline  dramatically.  Due to
our lengthy  product  development  cycle,  it may be difficult for us to quickly
change our development plans in response to the introduction of new materials by
our competitors.  Our ability to anticipate and address changes in technologies,
markets and  industry  trends,  and to develop and  introduce  new and  enhanced
materials on a timely basis will be important factors in our ability to grow and
remain  competitive.  We  cannot  be sure  that we will be able to  develop  new
materials or that any new materials can be marketed  successfully.  In addition,
development  schedules for new or improved materials are inherently difficult to
predict and are subject to change as a result of shifting priorities in response
to customers'  requirements and competitors' new material  introductions.  If we
fail to timely  develop and  introduce  new  materials or to enhance our current
materials,  our business,  operating  results and financial  condition  could be
materially  adversely  affected  in the  future.  Moreover,  we expect to devote
substantial   resources  to  technology   development  efforts.  For  accounting
purposes,  the costs of those  efforts  will be recorded as expenses as they are
incurred,  notwithstanding  that  the  benefits,  if any,  from  our  technology
development  efforts (in the form of  increased  revenues or  decreased  product
costs) may not be reflected,  if at all, until subsequent  periods. As a result,
our period-to-period operating results could be adversely impacted and difficult
to predict.

Because we depend on a few  significant  customers for a substantial  portion of
our  revenues,  the loss of a key customer  could  seriously  harm our operating
results.

         Since inception,  we have derived a substantial portion of our revenues
from sales to a relatively small number of customers.  As a result,  the loss of
any  significant  customer could  materially and adversely  affect our financial
condition and results of  operations.  Sales to our largest three  customers for
the six months ended June 30, 1999 and their  respective  percentage  of our net
sales for this period were:
     o Transnuclear  (38%)
     o Marvin  Engineering  (12%)
     o Quantum Technologies (9%)
         Sales to our largest three  customers  for the year ended  December 31,
1998 and their  respective  percentage  of our net sales for this period were:
     o General Motors (22%)
     o Taylor Made Golf (15%)
     o MacGregor Golf (12%)
         It is possible that one or more key customers  could suffer business or
financial  setbacks resulting in the reduction or cancellation of product orders
or our being unable to obtain  payment  from such  customers at any time or from
time to time.  We expect that our key  customers  will continue to account for a
substantial portion of our revenues for 1999 and in the future. Accordingly, our
future  operating  results will continue to depend on the success of our largest
customers and on our ability to sell products to these  customers in significant
quantities.

We depend on two suppliers for one of our principal raw  materials.  Any failure
to obtain these raw materials could result in significant  delays in our ability
to ship product and could  adversely  affect our revenues and our  relationships
with our customers.

         We presently  purchase one our principal raw materials,  boron carbide,
primarily  from two  suppliers,  ESK  Engineered  Ceramics  Division  of  Wacker
Chemicals (USA), Inc. and P&W  International  Tech. We currently do not have any
long-term supply  agreements with either of these suppliers.  Our business would
be materially  and adversely  affected if we were unable to continue to purchase
our required  quantities of boron  carbide at prices and on terms  comparable to
those presently available from our principal suppliers.

In the event we are not able to  enforce  our  patents,  our  competitors  could
introduce  similar  materials or  technologies,  which could  seriously harm our
business.

         We believe our United States patent that contains  claims  covering the
manufacture  of our Boralyn  material is critical to our success and our ability
to prevent competitors from introducing similar materials.  We have been granted
additional  patents  and  have  other  patent  applications  pending,  including
divisional (extension) patents and  continuation-in-part  patents, many of which
stem from our originally  issued  patent.  We cannot be sure that any additional
patents will be granted or that our existing or future patents will be valid and
enforceable, or will provide us with meaningful protection from our competitors.
If our present or future patent rights are  ineffective in protecting us against
infringement,  our marketing efforts and future revenues could be materially and
adversely  affected.  Moreover,  if a  competitor  were to  infringe  any of our
patents,  the costs of enforcing  our patent rights may be  substantial  or even
prohibitive.  We also cannot be sure that our future materials will not infringe
the patent rights of others or that we will not be forced to expend  substantial
funds to defend  against  infringement  claims of, or to obtain  licenses  from,
third  parties.  We  currently  have  only  limited  patent  protection  for our
technology  outside  the  United  States,  and we may be unable  to obtain  even
limited protection for our proprietary technology in certain foreign countries.

We may not able to adequately  protect or enforce our trademarks or trade names,
which could harm our goodwill and dilute our brand recognition.

         The market for our  products is and will remain  dependent in part upon
the goodwill engendered by our trademarks and trade names.  Trademark protection
is  therefore  material  to  our  business.  Although  Boralyn  is a  registered
trademark in the United  States,  we cannot be certain that we can  successfully
assert trademark or trade name protection for our significant marks and names in
the  United  States or other  markets,  and the costs of such  efforts  could be
substantial.

We face intense competition in the advanced materials market with less expensive
materials and with  competitors  who have greater  resources  and  manufacturing
experience than we have.

         The  advanced  materials  industry  is  highly  competitive,  and other
materials such as  specialized  aluminum  alloys,  borated  stainless  steel for
nuclear shielding applications, and to a much lesser extent, titanium, magnesium
and beryllium, are readily available for similar applications generally at lower
prices than our materials.  We believe  additional  competitive  pressures could
require us to reduce our product prices to remain competitive,  and accordingly,
could adversely affect our results of operations.

         We compete in our target  markets  with  several  larger  domestic  and
multinational  companies,  all of which are well established in their respective
markets and have substantially  more manufacturing  experience and substantially
greater  financial  and  other  resources  than us.  We  compete  with  material
producers,  i.e.  companies  that produce and market a choice of  materials  for
specific  applications.  In this area, the Company  competes with: (i) titanium,
supplied by companies such as RMI Titanium Company,  Tremont  Industries,  Inc.,
and Titanium  Metals  Corporation  of America  (Timet);  (ii)  aluminum  alloys,
supplied by  companies  such as the  Aluminum  Corporation  of America  (Alcoa),
Reynolds Metals Co., and Oregon Metallurgical Corporation; and (iii) other metal
matrix  composites,  such  as  those  supplied  by  Duralcan  Inc.  For  nuclear
containment,  current storage containers often use Boral(R), a boron carbide and
aluminum  material supplied by AAR Brook & Perkins and borated aluminum supplied
by Eagle Pitcher. Certain of our competitors who provide competing materials for
the nuclear industry have already obtained quality certification (similar to ISO
certification) from the Nuclear Regulatory Commission,  which can enable them to
qualify for certain  nuclear  projects  much quicker and cheaper than we can. We
are in the process of qualifying for this quality  certification,  but we cannot
be sure that we will ever be able to obtain this certification.

The principal  applications  for our products  could  subject us to  significant
product liability actions, in excess of our insurance coverage limits.

         The  principal  uses  of  our  products  currently  include  automotive
applications, including engines and structural members, as well as products used
to store nuclear  waste.  Both the  automotive  and nuclear  industries  involve
significant  risks of personal injury and have  historically been the subject of
many product  liability  actions.  We cannot be sure that our product  liability
insurance will be sufficient to adequately cover any potential  claims,  or that
this insurance will continue to be available on acceptable terms in the future.

If our common  stock is delisted  from the Nasdaq  National  Market,  our common
stock will become less easily tradeable and our stock price could decline.

         Holders of our common stock currently enjoy the substantial  benefit of
being able to easily buy or sell our common  stock  because our common  stock is
listed on the Nasdaq National Market.  For continued listing of our common stock
on the Nasdaq National Market,  we must, among other things,  maintain a minimum
bid  price of at least  $1.00 per  share.  In  February  1998,  our stock  price
declined to $1.50 per share.  In addition,  in April 1999,  we received a letter
from the Nasdaq National Market  requesting that we provide further  information
concerning our recent losses and the going concern qualification included in the
report  of our  independent  auditors.  If our  stock  price  declines  or if we
continue  to  experience  losses  from  our  operations,  we may  not be able to
maintain the standards for continued  listing on the Nasdaq National Market.  In
the event our common  stock is  removed  from the Nasdaq  National  Market,  any
trading  in our common  stock  might then be  conducted  on the Nasdaq  SmallCap
Market,  which is a  significantly  less active market than the Nasdaq  National
Market.  As a result,  you could find it more difficult to dispose of our common
stock.  Furthermore,  if we did not qualify  for listing on the Nasdaq  SmallCap
Market or if our common stock was subsequently delisted from the Nasdaq SmallCap
Market,  our common  stock could be subject to what are known as the penny stock
rules, which place additional  requirements on broker-dealers who sell or make a
market in such securities.  Consequently,  if we fail to qualify for listing on,
or if we  were  removed  from,  the  Nasdaq  SmallCap  Market,  the  ability  or
willingness of broker-dealers to sell or make a market in our common stock could
decline.

If our  internal  systems  and the  systems  of the third  parties  with whom we
interact are not Year 2000 compliant,  we may suffer business  interruptions and
our business could be seriously harmed.

         Many  existing  computer  systems and  applications  and other  control
devices use only two digits to identify a year in the date field.  These systems
and software  applications will need to accept four digit entries to distinguish
21st  century  dates from 20th century  dates.  As a result,  these  systems and
applications  will need to be upgraded to comply with the Year 2000 requirements
or risk system failure,  miscalculations or other disruptions to normal business
activities.

         We are currently  evaluating our Year 2000 readiness,  both in terms of
the   compliance  of  our  internal   information   systems  and  compliance  of
applications  which  monitor all aspects of our  business,  including  financial
systems,  manufacturing  equipment,  customer services,  marketing  information,
infrastructure and telecommunications  equipment.  While we believe our internal
information  systems  will  adequately  function in the Year 2000,  we cannot be
certain of the effect of the Year 2000 until it  ultimately  arrives.  We are in
the  process  of  testing  and  evaluating  the  computerized  elements  of  our
manufacturing  equipment  and expect to complete  this  evaluation in sufficient
time to make  necessary  upgrades,  but we may  not be  able to  complete  these
upgrades in a timely manner or at reasonable  costs.  We also may not be able to
anticipate the extent of the Year 2000 impact until the Year 2000 arrives due to
the  interaction  between  our own  systems  and  products  and the  systems and
products of third parties.  We believe our greatest  exposure to Year 2000 risks
relates to the  readiness of our third party  suppliers  who provide us with raw
materials,  our customers who  incorporate  our products into their own products
and other  parties  who  provide  services  for us. Any  failure of these  third
parties to resolve  their own Year 2000 issues in a timely  manner could cause a
material  disruption in our business.  We have not yet developed any contingency
plans to address any  material  consequences  that we could suffer if we are not
able to  resolve  our Year 2000  issues or those  issues  faced by the key third
parties with whom we regularly interact. We also cannot be sure that our present
estimates of the cost to remedy the Year 2000 problem are not understated.

Our principal  stockholders  control Alyn Corporation and could prevent a change
in control or financing  that might  otherwise  be in the best  interests of the
stockholders.

         As  of  June  30,  1999,  Kingdon  Capital  Management  Corp.  and  its
affiliates, Robin A. Carden and Harry Edelson beneficially owned an aggregate of
57.2% of our outstanding common stock. Accordingly,  these stockholders have the
ability to elect a majority of our  directors  and to control the outcome of all
other issues submitted to our stockholders.  The terms of our Series A preferred
stock and Series B preferred  stock also  prohibit us from  amending our charter
documents,  liquidating,  merging,  selling  substantially all of our assets, or
issuing additional  securities without the consent of these  stockholders.  As a
result,  this concentration of ownership and our contractual  consent rights may
discourage a potential  acquirer from making an offer to buy Alyn Corporation or
may  prohibit  us from  completing  a major  corporate  transaction  or  raising
additional  capital,  which  might  otherwise  be in the  best  interest  of our
stockholders.

         In addition,  the following  provisions of our exchangeable  note could
also  discourage  some potential  purchasers  from making an acquisition of Alyn
Corporation  or  make  an  asset  sale  more  difficult  and  expensive:
o  the requirement that upon a change of control, we must offer to buy the
   exchangeable note at the greater of 150% of the principal plus accrued and
   unpaid  interest and penalties or the product of the number of shares into
   which the exchangeable note can be exchanged and the market price on the
   applicable date and
o  the prohibition against selling or transferring all or substantially all of
   our  assets  to any  subsidiary  or  affiliate  except  for  cash  or  cash
   equivalent consideration, unless with their approval; and

         We have  also  agreed to grant the  holder of the  exchangeable  note a
right of first  offer  with  respect  to  certain  issuances  of  equity or debt
securities,  and we are prohibited from obtaining additional senior indebtedness
for borrowed  money without  written  consent of the holder of the  exchangeable
note,  unless the  indebtedness  is not on par with or senior or superior to the
exchangeable  note or that the  borrowed  money is for  equipment  financing  or
customary working capital lines of credit.

Our stock price has been, and may continue to be volatile.

         Trading volume and prices for our common stock could be subject to wide
fluctuations in response to quarterly  variations in our operations and results,
announcements  with  respect  to sales and  earnings,  as well as  technological
innovations,  and new product  developments  and other events or factors,  which
cannot be foreseen or predicted by us. Since  January 1, 1999,  the price of our
common  stock  has  declined  from a high of $10 in  February  1998 to  $1.50 in
February  1999 and to  $3.125  at June  30,  1999.  The  factors  causing  these
variations include the low average daily trading volume of our common stock, the
sale or attempted sale of a relatively  large amount of securities in the public
market,  the  registration  for  resale  of any  shares  of  common  stock,  the
antidilution provisions in our preferred stock,  exchangeable note and warrants,
manufacturing  and product  development  delays and our  earnings  to date.  The
market price of our common stock could also be  influenced  by  developments  or
matters not related to our  performance,  such as the general  volatility of the
stock market.

Our charter  documents  and  Delaware law could  adversely  affect the rights of
common stock and could prohibit certain changes in control that may otherwise be
beneficial to our stockholders.

         Under our Certificate of Incorporation,  our Board of Directors has the
authority to issue shares of preferred stock and to determine the price, rights,
preferences  and  privileges  of those  shares  without any further  vote of, or
action by,  our  stockholders.  The  rights of  holders of common  stock will be
subject  to,  and may be  adversely  affected  by,  the rights of holders of any
preferred stock that has been issued or may be issued in the future. Issuance of
preferred stock, while potentially providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have an effect of
making  it more  difficult  for a third  party  to  acquire  a  majority  of our
outstanding  voting stock.  Certain  provisions of Delaware law applicable to us
may also discourage third-party attempts to acquire control.


Item 3.           Quantitative and Qualitative Disclosures About Market Risk

                  Not Applicable



<PAGE>


                                              ALYN CORPORATION

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                           None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits. The following exhibit is filed as part of this report:

          EXHIBIT

          NO.                                   DESCRIPTION
          -----                                 ------------------------
          27.1                                  Financial Data Schedule

     (b) Reports on Form 8-K

                  None




<PAGE>


                                   SIGNATURES

 Pursuant  to the  requirements  of the  Securities  Exchange  Act of 1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                        ALYN CORPORATION

                                        (Registrant)






                                By: /S/Arne van Roon
                                   --------------------------
                                     Arne van Roon
                                     President and
                                     Chief Executive Officer





                                By: /s/ Richard L. Little
                                   --------------------------
                                     Richard L. Little
                                     Vice President, Finance and Administration
                                     and Chief Accounting and Financial Officer



Dated:  August 16, 1999