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 September 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; 12,122,403 shares as of November 8, 1999.


<PAGE>
                               ALYN CORPORATION

                                    INDEX

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

                                                                     PAGE NUMBER

PART I.     FINANCIAL INFORMATION

      Item 1.  Financial Statements

            Condensed Balance Sheet -
                  September 30, 1999 (unaudited) and December 31, 1998         3

            Condensed Statement of Operations -                                4
                  Three  months  ended   September  30,  1999
                  (unaudited)  and
                  September 30, 1998 (unaudited) and
                  nine months ended September
                  30, 1999 (unaudited) and
                  September 30, 1998 (unaudited)

            Condensed Statement of Stockholders' Equity -                      5
                  Nine months ended September 30, 1999 (unaudited)

            Condensed Statement of Cash Flows -                                6
                  Nine months ended September 30, 1999 (unaudited) and
                  September 30, 1998 (unaudited)

            Notes to Condensed Financial Statements                          7-8
                  (unaudited)

      Item 2.     Management's Discussion and Analysis of Financial         8-17
                  Condition and Results of Operations

      Item 3.     Quantitative and Qualitative Disclosures About              17
                  Market Risk

PART II.    OTHER INFORMATION                                                 18

SIGNATURES                                                                    19


                                       2
<PAGE>

                                ALYN CORPORATION
                             CONDENSED BALANCE SHEET
                                   (Unaudited)

                                             SEPTEMBER 30,        DECEMBER 31,
                                                1999                 1998
                                          -----------------   -----------------

  ASSETS

Current assets:
     Cash and cash equivalents                   $  248,000         $  1,232,000
     Restricted cash                                      -            2,062,000
     Accounts receivable, net                       874,000              781,000
      Inventories (see Note  2)                   1,187,000              401,000
      Other current assets                          339,000              424,000
                                          ------------------  ------------------
           Total current assets                   2,648,000            4,900,000
                                          ------------------  ------------------

     Equipment, furniture and fixtures,          19,068,000           20,703,000
     Other assets, net                              720,000              626,000
      Intangibles, net                              719,000              732,000
                                          ------------------  ------------------

                                               $ 23,155,000         $ 26,961,000
                                          ==================  ==================

   LIABILITIES, MANDATORY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                           $ 1,231,000          $   663,000
     Current portion of long-term debt            1,206,000            1,842,000
     Accrued and other current liabilities          278,000              956,000
     Working capital line of credit
        (see Note 4)                                351,000                    -
     Bridge loan (see Note 3)                     1,000,000                    -
     Provision for restructuring expenses
        (see Note 5)                                669,000                    -
                                               ------------            ---------
     Total current liabilities                    4,735,000            3,461,000

Long-term debt
      Convertible debt                            2,703,000                    -
      Long-term debt                              5,137,000            7,316,000
                                          ------------------  ------------------
           Total long term debt                   7,840,000            7,316,000
                                          ------------------  ------------------
Mandatory redeemable preferred stock              1,623,000                    -
                                          ------------------  ------------------

Stockholders' equity:
     Preferred stock                                  4,000                    -
      Common stock                                   12,000               12,000
     Additional paid-in capital                  40,967,000           37,796,000
     Warrants to purchase common stock              293,000                    -
     Accumulated deficit                        (32,319,000)        (21,624,000)
                                          ------------------  ------------------
        Total stockholders' equity                8,957,000           16,184,000
                                          ------------------  ------------------
                                               $ 23,155,000         $ 26,961,000
                                          ==================  ==================

SEE NOTES TO CONDENSED FINANCIAL STATEMENTS


                                       3
<PAGE>
<TABLE>

                                                          ALYN CORPORATION
                                                  CONDENSED STATEMENT OF OPERATIONS
                                                             (Unaudited)
<CAPTION>
                                                       THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                          SEPTEMBER 30,                        SEPTEMBER 30,
                                                       1999          1998                  1999           1998
                                                   ----------------------------      ------------------------------

<S>                                                     <C>            <C>               <C>             <C>
Net sales                                               $ 721,000      $ 602,000         $ 1,886,000     $ 662,000

Costs and expenses:
      Cost of goods sold                                2,100,000      1,813,000           6,076,000      3,700,000
      General and administrative expenses                 474,000        679,000           1,921,000      2,300,000
      Selling and marketing                               213,000        328,000             788,000        928,000
      Research and development                            402,000        625,000           1,198,000      2,578,000
      Restructuring expense (see Note 5)                  729,000              -             729,000              -
                                                   -----------------------------    --------------------------------
          Total costs and expenses                      3,918,000      3,445,000         10,712,000       9,576,000

          Operating loss                              (3,197,000)    (2,843,000)         (8,826,000)     (8,914,000)

Interest expense and other expense, net (see Note 6)    (824,000)      (170,000)         (1,400,000)       (354,000)
                                                   -----------------------------    --------------------------------

Loss before provision for income taxes                (4,021,000)    (3,013,000)        (10,226,000)     (9,268,000)

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

Net loss                                              (4,021,000)    (3,013,000)        (10,227,000)     (9,269,000)

Deductions for preferred stock dividends (see Note 7)    (85,000)              -           (374,000)               -
                                                   -----------------------------    --------------------------------

Net loss attributable to                             ($4,200,000)   ($3,013,000)       ($10,695,000)    ($9,269,000)
      common stockholders                          =============================    ================================

Basic and diluted net loss per share                      ($0.37)        ($0.28)             ($0.96)         ($0.86)
                                                   =============================    ================================


Common shares used in computing
      basic and diluted net loss per share             11,353,437     10,869,293          11,189,731     10,789,764

</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.


                                       4
<PAGE>

<TABLE>



                                                          ALYN CORPORATION
                                             CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
                                                             (Unaudited)
<CAPTION>
                                        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

 Issuance of common stock:
     Stock Sale                                                200,000         -         554,000
     Anti-dilution penalty (see Note 6)                        149,213         -         464,000
     Interest payment                                           38,352         -         112,000

 Accretion of Series A
 convertible
    preferred stock dividends                                                             30,000                     (30,000)


 Beneficial conversion
 feature of the
    convertible debt                                                                     555,000

 Accretion of Series B
 redeemable
    convertible preferred
    stock dividends                                                                                                  (320,000)


 Accrual of Series B
 redeemable convertible
    preferred stock cash dividends                                                                                    (24,000)


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

 Net loss                                                                                                         (10,321,000)

                                       -------    ------    ----------   -------    ------------     --------    -------------
Balance at September 30, 1999          375,000    $4,000    11,495,443   $12,000    $ 40,967,000     $293,000    ($32,319,000)
                                       =======    ======    ==========   =======    ============     ========    =============
</TABLE>
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS.



                                       5
<PAGE>
                                ALYN CORPORATION
                        CONDENSED STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                NINE MONTHS ENDED
                                                                  SEPTEMBER 30,

                                                               1999           1998
                                                            -----------    -----------
<S>                                                        <C>             <C>

Cash flows used in operating activities:                   $(7,478,000)    $(7,759,000)
                                                           ------------    -----------

Cash flows used in investing activities:
      Capital expenditures                                    (339,000)     (7,044,000)

      Decrease in restricted cash                            2,062,000          -
                                                           ------------    -----------

      Total cash flows from investing activities             1,723,000     (7,044,000)
                                                           ------------    -----------

Cash flows from financing activities:
      Dividends paid on Series B redeemable
        convertible preferred stock                            (16,000)         -
      Net payments on debt                                  (2,814,000)         -
      Proceeds from working capital line of credit
        (see Note 4)                                           351,000          -
      Proceeds from bridge loan (see Note 3)                 1,000,000
      Proceeds from long-term debt, net of issuance
        costs                                                     -         3,103,000
      Proceeds from common stock subscription, net of
        issuance costs                                         560,000      4,502,000
      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            4,771,000      7,605,000
                                                           -----------    -----------


Net decrease in cash                                         (984,000)     (7,198,000)



Cash and cash equivalents at beginning of period             1,232,000     13,126,000
                                                            -----------   -----------
Cash and cash equivalents at end of period                  $  248,000    $ 5,928,000
                                                            ===========   ===========




Non cash financing activities:



      Anti-dilution stock issuance (see Note 6)        $    466,000
      Stock issuance in lieu of cash interest payment
        (see Note 6)                                        113,000
      Beneficial conversion feature of
            the convertible debt ( see Note 7)              555,000
                                                          ----------
                                                       $  1,134,000
                                                       =============

</TABLE>

SEE NOTES TO CONDENSED FINANCIAL STATEMENTS


                                       6
<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 nine
months ended  September 30, 1999 are not  necessarily  indicative of the results
that may be expected for the year ending December 31, 1999.

2.    INVENTORIES
                                       September 30,     December 31,
                                           1999              1998
                                           ----              ----
      Raw materials                     $   576,000       $  237,000
      Work in process                       210,000          133,000
      Finished goods                        401,000           31,000
                                    ---------------     ------------
                                        $1,187,000        $  401,000
                                    ===============     ============

3.    ISSUANCE OF CONVERTIBLE PREFERRED STOCK AND BRIDGE NOTE

      On  October  8,  1999,  the  Company  issued  75,000  shares  of  Series C
Convertible  Preferred  Stock  ("Series C Preferred  Stock")  for  approximately
$7,300,000  cash, net of expenses.  In anticipation of the October 8 purchase of
the Series C Preferred  Stock,  the  purchasers of the Series C Preferred  Stock
provided a $1,000,000  bridge loan to the Company on  September  29, 1999 in the
form of a demand  promissory  note (the  "Note").  The bridge  loan was used for
general working capital to reduce outstanding accounts payable.  Under the terms
of the Note,  the loan was due and  payable on the earlier of (i)  December  31,
1999,  (ii) the closing of the Series C Preferred  Stock  purchase,  or (iii) an
event of default.  The Note was to be interest free through October 12, 1999 and
carried an increasing rate thereafter up to a maximum of prime plus 6%. The Note
was paid in full from the proceeds of the Series C Preferred  Stock  issuance on
October 8, 1999.

     The Series C Preferred  Stock is  convertible  into  common  stock at a set
price of $3.00,  subject to certain  anti-dilution  provisions  in the event the
Company  issues  common stock or securities  convertible  into common stock at a
price less than $3.00 per share.  The  holders of the Series C  Preferred  Stock
received  registration  rights for the common stock underlying their securities.
In  accordance  with the  provisions  of the  agreements,  the Company  filed an
amended Registration  Statement on Form S-3/A on October 29, 1999 including such
underlying common stock.

     Upon  issuance of the Series C  Preferred  Stock,  the holders  were issued
warrants to purchase up to 1,875,000  shares of common stock at a price of $3.00
per  share.  The number of shares  subject to  purchase  will be  determined  on
December 31,  2000,  based upon the Company  meeting  certain  target  levels of
revenue and earnings before interest,  depreciation  and amortization  (EBITDA),
and may vary from the full 1,875,000 to zero shares.

      The Series C Preferred Stock carries no provision for dividends.

4.    WORKING CAPITAL LINE OF CREDIT

     On August 25, 1999 the Company established a working capital line of credit
for up to $700,000  through the sale of its  accounts  receivable  to a non-bank
financial  institution.  Under the terms of the  agreement,  the Company  paid a
finance  charge of 2% plus  interest at the rate of prime plus 3%. This line was
paid in full and retired on October 14, 1999.

5.    RESTRUCTURING EXPENSE

     On  September  1, 1999,  the Company  provided a reserve for  restructuring
expenses of $729,000  for the planned  closure of the  Company's  computer  disk
research facility in Fremont,  California. This facility had been established to
develop the finishing process for Boralyn(R) computer hard-drive disk substrates
to demonstrate  the feasibility of the Company's  material in that  application.
Upon completion of the facility's planned activities,  on September 30, 1999 the
facility  was  closed.  Due to the  closure  of this  facility,  a total of five
employees  (four  production,  one  manager)  are to be  laid  off  and  receive
severance.  Of these employees,  three were laid off as of September 1, 1999 and
the last production  employee was laid off on November 5, 1999. The manager will
remain  to aid in the  facility's  closure,  and the  sale  and  removal  of the
remaining equipment. All equipment not being currently sold was removed from the
facility by October 31, 1999. The Company  expects to have completed the sale of
equipment to be sold by December 31, 1999.  At September  30, 1999,  $669,000 of
the restructuring expense reserve remained on the Company's balance sheet:

                                  Restructuring      Reduction      Remaining
                                   Reserve at           of          Reserves at
Components of Expense             Sept. 1, 1999       Reserve     Sept. 30, 1999
---------------------             -------------       -------     --------------

Loss on equipment to be sold      $ (605,000)              -      $ (605,000)
Employee severance                   (53,000)       $ 16,000         (37,000)
Remaining lease payments             (26,000)              -         (26,000)
Write-Off of leasehold
    improvements and other           (45,000)         44,000          (1,000)
                                  -----------       --------      -----------

                                  $ (729,000)       $ 60,000      $ (669,000)
                                  ===========       ========      ===========

The reserve  includes  provision for the remaining four months of the facility's
lease term,  severance  payments,  and a reserve for the expected  losses on the
sale of certain assets used in the production of disk substrates by the facility
that are no longer to be used.  No  reserves  were  generated  susequent  to the
commitment date of September 1,1999.


                                       7
<PAGE>
6.    INTEREST EXPENSE

      On August 2, 1999 the Company issued 149,213 shares of common stock to the
holder of the  exchangeable  note  under  the  anti-dilution  provisions  of the
exchangeable  note  (the  exchangeable  note was  issued  on March  10,  1999 in
connection  with a $3.0  million  financing  to  provide  working  capital).  On
September 15, 1999, the Company issued 38,352 shares of common stock to the same
holder in lieu of a $90,000 cash semi-annual interest payment. The fair value of
such stock  issued was charged to  interest  expense on the date of issue at the
closing price of the Company's common stock as quoted on the Nasdaq National
Market  for that date.  The  charges  to  interest  expense  were  $466,000  and
$113,000, respectively.

7.    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 the market acceptance of our product,  our history
of losses,  our ability to  manufacture  products in sufficient  quantities  and
quality  for current and future  applications,  our ability to raise  additional
capital,  the possible issuance of a large number of additional shares of common
stock,  fluctuation in operating results, our ability to successfully expand our
sales and marketing  staff and activities,  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.

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,  a customer,  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  throughout the second and third quarters,  with completion  scheduled
for the  fourth  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


                                       8
<PAGE>

One race cars. The successful use of the Company's material 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  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  received  its first major  production
order for extruded  Boralyn to produce bicycle  components in the sporting goods
industry.   The  Company  has  also  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 with production
orders to follow for 2000. While the Company expects to achieve increasing sales
levels of Boralyn -based  products in 2000,  there can be no assurance that such
increases will be achieved.  The Company was unprofitable  through September 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  September 30, 1999 are compared to the results of  operations  for
the  three-month  period ended  September 30, 1998 and the results of operations
for  the  nine-month  period  ended  September  30,  1999  are  compared  to the
nine-month period ended September 30, 1998.

      Net  Sales.  Net sales  for the third  quarter  of 1999  increased  20% to
$721,000  from  $602,000  in the  third  quarter  of  1998.  Net  sales  for the
nine-month  period ended  September 30, 1999 increased  185% to $1,886,000  from
$662,000 in the  nine-month  period ended  September  30, 1998.  The increase in
sales from the comparable prior year quarter is not meaningful.  The increase in
sales for the nine months  resulted from the  Company's  transition in the third
quarter of 1998 from  prototyping to production.  Shipments in the third quarter
of 1999 were  primarily to companies in the nuclear,  automotive  and  aerospace
industries.

      Cost of Goods  Sold.  Cost of goods  sold for the  third  quarter  of 1999
increased 16% to $2,100,000  from  $1,813,000 in the third quarter of 1998. Cost
of goods sold for the nine-month  period ended  September 30, 1999 increased 63%
to $6,076,000 from $3,724,000 in the nine-month period ended September 30, 1998.
The absolute 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.  However,  the total cost of goods sold as a  percentage  of sales for the
third quarter  decreased  somewhat in comparison  to the  comparable  prior year
quarter.  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 third  quarter of 1999  decreased  30% to $474,000  from $679,000 in the
third quarter of 1998.  General and  administrative  expenses for the nine-month
period ended  September 30, 1999 decreased 18% to $1,921,000  from $2,347,000 in
the  nine-month  period  ended  September  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 third  quarter of 1999 should be  maintained  through the end of
the year.

      Selling and Marketing  Expenses.  Selling and  marketing  expenses for the
third  quarter of 1999  decreased  35% to  $213,000  from  $328,000 in the third
quarter of 1998.  Selling and marketing expenses for the nine-month period ended
September 30, 1999  decreased  15% to $788,000  from $927,000 in the  nine-month
period  ended  September  30,  1998.  The Company  expects  sales and  marketing
spending in the fourth quarter of 1999 to remain  relatively  flat, but begin to
increase in 2000, both in absolute terms and relative to sales.

      Research and Development  Expenses.  Research and development expenses for
the third quarter of 1999  decreased 36% to $402,000 from $625,000 in the second
quarter of 1998.  Research and  development  expenses for the nine-month  period
ended  September 30, 1999  decreased 54% to  $1,198,000  from  $2,578,000 in the
nine-month  period  ended  September  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.

      Restructuring  Expense.  In  September  1999,  the Company  established  a
reserve of $729,000 for closure of its computer disk research  facility  located
in Fremont,  California.  No comparable action was taken in prior periods and no
further such actions are planned.


                                       9
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     At  September  30,  1999,  the  Company had a working  capital  deficit  of
$2,087,000.  In October 1999, the Company  completed an equity  offering of $7.3
million, net of expense. In August 1999 the Company issued 200,000 shares of its
common stock,  receiving $570,000,  net of expenses.  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.  In October, the Company received $7,300,000,  net
of expenses,  from the sale of convertible preferred stock to a large investment
fund. $1,000,000 of the proceeds was used to repay a bridge loan provided by the
fund on September  29, 1999,  in  anticipation  of the closing of the  preferred
stock sale.  The  proceeds of the bridge loan were used to reduce the  Company's
outstanding  payables.  On August 2, 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 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 could result. If the Company fails to complete its
planned  inventory  and accounts  receivable  financing,  inadequate  capital to
execute its 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.  The  Company  does not believe it is
vulnerable  to the failure of  significant  suppliers to address  their own Year
2000 issues.  It is possible  that failure to fully  address Year 2000 issues by
large customers could result in the delay of orders that could cause significant
business  interruptions.  Contingency  plans are being  developed to address any
material  consequences  the Company  could suffer if third  parties are 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 planned.

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:

WE HAVE YET TO GAIN MARKET ACCEPTANCE OF OUR MATERIALS IN COMMERCIAL QUANTITIES.


                                       10
<PAGE>

      Our materials have yet to attain significant commercial acceptance.  Other
materials,  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 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 materials 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 materials for the nine months ended  September 30, 1999 was
for  various  applications  in the nuclear and  automobile  industries,  but our
materials have not yet achieved market acceptance in these industries on a broad
scale.  We believe  that our  ability to achieve  commercial  acceptance  of our
materials will be largely dependent upon our pricing  practices,  our ability to
manufacture  and  deliver  materials  on a  timely  basis,  and our  ability  to
demonstrate  the advantages of our materials over competing  materials.  Because
the  application of our materials may entail long customer  order-related  sales
cycles, can be affected by 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 materials.

WE HAVE A HISTORY OF LOSSES  WHICH WE EXPECT  WILL  CONTINUE,  AND WE MAY NOT BE
ABLE TO ACHIEVE PROFITABILITY.

      We have had a limited  operating  history and  generated  revenues of only
$364,000  in 1997,  $1.3  million in 1998 and $1.9  million  for the nine months
ended September 30, 1999. We incurred net losses of $7.3 million in 1997,  $12.1
million in 1998 and $10.7 million for the nine months ended  September 30, 1999.
We 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. Our prior inability to generate significant revenues
and expected  continued losses has raised substantial doubt about 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 steps  taken by  management  will  result in the  removal of our
auditor's going concern modification from any future reports.


OUR  LIMITED  MANUFACTURING  HISTORY  AND THE  SIGNIFICANT  MANUFACTURING  RISKS
ASSOCIATED  WITH OUR  PRODUCTION  OF MATERIALS  MAY MAKE IT DIFFICULT  FOR US TO
ESTABLISH OR MAINTAIN PROFITABLE MANUFACTURING OPERATIONS.

      Our limited  experience  in  manufacturing  our  materials  in  commercial
quantities  has led to delays and resulted in  increased  costs that we have not
been able to offset to date with significant 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 CANNOT  RAISE  ADDITIONAL  CAPITAL,  WE MAY NOT HAVE  SUFFICIENT  FUNDS TO
FINANCE OUR CURRENT BUSINESS PLANS OVER THE NEXT TWELVE MONTHS.

      We had cash on hand of only  $248,000  at  September  30,  1999.  While we
raised  approximately $7.8 million,  net of expenses,  in two private placements
between August 1999 and October 1999, we may require additional funds to finance
our operations for the next twelve months. We are currently in negotiations with
two non-bank financial institutions to provide accounts receivable and inventory
working capital financing and capital equipment  financing.  If we are unable to
raise the additional  equity,  if required,  or accounts  receivable,  inventory
working capital and equipment financing, we may not be able to fully execute our
business plan. 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.


                                       11
<PAGE>

IF WE DO NOT  INCREASE  OUR  PRODUCT  SALES,  WE MAY NOT BE ABLE TO  OFFSET  OUR
SUBSTANTIAL LEASE COMMITMENTS AND SIGNIFICANT CAPITAL  INVESTMENTS,  WHICH COULD
LEAD TO CONTINUED LOSSES.

      Unless and until we achieve a significant level of sales of our materials,
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  $27,000.  We also have a ten-year  lease expiring in 2008 for our
second  Irvine  facility,  with  monthly  lease  payments  of  $45,000.  Through
September  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.

WE MAY BE REQUIRED TO ISSUE A LARGE NUMBER OF ADDITIONAL  SHARES OF COMMON STOCK
UPON CONVERSION OF OUR PREFERRED STOCK,  EXCHANGE OF OUR EXCHANGEABLE  NOTE, AND
UPON EXERCISE OF  OUTSTANDING  WARRANTS THAT WILL BE  IMMEDIATELY  AVAILABLE FOR
RESALE.  THESE SALES COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE
SIGNIFICANTLY, EVEN IF OUR BUSINESS IS DOING WELL.

      Our Series A preferred stock, Series C preferred stock,  exchangeable note
and outstanding warrants are currently  convertible and exchangeable for 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.  A  registration
statement  was filed to register (i) the common stock  issuable upon exchange of
the exchangeable  note and exercise of related  warrants;  (ii) the common stock
issuable  upon the  conversion  of the Series A preferred  stock and exercise of
related warrants; (iii) the common stock issued and the common stock issuable as
a result of the exercise of warrants sold to AMRO International,  S.A.; (iv) the
common stock issued upon  conversion  of our Series B preferred  stock;  (v) the
common  stock  issuable  upon the  exercise of  warrants  issued to the Series B
stockholders  in March and October 1999; and (vi) the common stock issuable upon
conversion of our Series C preferred stock and exercise of related warrants.  As
a result,  upon  registration,  all of the shares of common stock  issuable upon
exchange or conversion of the preferred  stock and the  exchangeable  note,  and
upon exercise of the related warrants,  will be immediately available for resale
and the  increase  in supply of our common  stock  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, if required. Our Series A preferred stock, Series C preferred stock and
exchangeable note are subject to price protection  provisions that require us to
reduce  the  conversion  price  for  the  securities  and  ultimately  to  issue
additional   shares  of  common  stock  to  these  holders  without   additional
consideration if the Company issues additional shares of common stock at a price
below their fixed conversion prices. In addition, we have also granted piggyback
registration  rights to register up to 211,000  shares of common stock  issuable
upon exercise of an outstanding  warrant relating to our initial public offering
in October 1996.  Furthermore,  6,381,955 shares of our common stock outstanding
at October 25, 1999 are  immediately  available  for resale in the public market
under Rule 144 or Rule 701 of the Securities Act of 1933, as amended.

      The  following  table sets forth the number of shares of our common  stock
that we have issued and the maximum number of shares of our common stock that we
would be required to issue  assuming  that all of the following  securities  are
immediately exchanged, converted or exercised for common stock:

<TABLE>
<CAPTION>
                                                        NUMBER OF SHARES OF
                                         CONVERSION/    COMMON STOCK ISSUED      PERCENT OF
                                         EXCHANGE OR     AND ISSUABLE UPON      OUTSTANDING
       TYPE OF SECURITY                  ISSUE PRICE      FULL CONVERSION       COMMON STOCK
       ----------------                  -----------      ---------------       ------------
<S>                                    <C>                    <C>                  <C>
Series A preferred stock                    $2.00             750,000              3.8%

  Related warrants issued in           Not yet determined     120,000              0.6%
  January 1999

Common stock issued in                    $2.3925             626,960              3.2%
October 1999 to Series B
stockholders as a result of
conversion of the Series B
preferred stock

Warrants issued in March                    $3.82              65,000              0.3%
1999 to Series B stockholders

Warrants issued in October 1999             $3.25             150,000              0.8%
</TABLE>


                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                      NUMBER OF SHARES OF
                                       CONVERSION/    COMMON STOCK ISSUED     PERCENT OF
                                       EXCHANGE OR     AND ISSUABLE UPON     OUTSTANDING
TYPE OF SECURITY                      ISSUE PRICE       FULL CONVERSION      COMMON STOCK
----------------                      -----------       ---------------      ------------
<S>                                     <C>             <C>                    <C>
to Series B stockholders

Common stock issued in                   $  3.00            200,000              1.0%
August 1999 to AMRO
International, S.A

Warrants issued in August                $  3.50             50,000              0.3%
1999 to AMRO International,S.A

Exchangeable note                        $  2.00          1,500,000              7.7%

  Related warrants issued in             $3.0375            135,000              0.7%
  March 1999

  Related warrants issued in             $  3.00            300,000              1.5%
  October 1999

  Common stock issued in                 $  3.125            149,213              0.8%
  August 1999

  Common stock issued in                 $  2.938             38,352              0.2%
  September 1999 as interest
  payment

Series C preferred stock                 $  3.00          2,500,000             12.8%

  Related warrants issued in             $  3.00          1,875,000              9.6%
  October 1999

Total                                          `          8,459,525             43.2%
</TABLE>


      Because we cannot  determine  the exact  conversion  price of the Series A
preferred stock, the Series C preferred stock, the warrants and the exchangeable
note  due to the  price  protection  provisions,  we  have  made  the  following
assumptions in computing the calculations in this table:

      o     Because the  conversion  price for the Series A preferred  stock and
            the  exchangeable  note  cannot be less than  $2.00 per  share,  the
            foregoing  table  reflects  the  maximum  number of shares of common
            stock that we would be required to issue to these  holders.  We may,
            however,  be required to issue additional  shares of common stock to
            the holder of our  exchangeable  note in the event we do not pay the
            accrued interest or penalty, if any, on this note in cash.

      o     The  warrants  associated  with the Series A preferred  stock (up to
            120,000  shares)  and their  exercise  price will be  determined  on
            January 8, 2000,  based upon the average  stock price for our common
            stock for the 25 consecutive  trading days prior to January 8, 2000.
            Since,  for purposes of the above table, we have assumed the maximum
            number  of shares of common  stock  that  could be issued  under the
            warrants, the exercise price is not relevant.

      o     Calculation  of the number of shares of common stock  issuable  upon
            conversion of the Series C preferred stock  (2,500,000) was based on
            its fixed  conversion price of $3.00 per share. The actual number of
            shares  may  increase  in the  event of the  occurrence  of  certain
            dilutive  events  relating to the issuance of common stock at prices
            lower than its fixed conversion price.

      o     The percentage  calculation  has been derived using the total number
            of shares of our common  stock  outstanding  as of October 25, 1999,
            plus  the  shares  underlying  the   exchangeable,   exercisable  or
            convertible  securities  included  in the  above  table  (19,567,403
            shares, of which 12,122,403  shares were issued and outstanding.  Of
            the 12,122,403,  11,495,443 shares were issued and outstanding as of
            September 30, 1999 and 626,960 shares were issued as a result of the
            conversion of the Series B preferred stock in October 1999.)


                                       13
<PAGE>

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 may  experience  long
customer  order-related  sales cycle times and are affected by lengthy  customer
design  processes  for new  product  introductions  and market  trends  that may
significantly limit our ability to forecast accurately our production  schedules
and 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 materials, personnel and the
size and actual  delivery  dates of orders for our materials.  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 of 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  and  retain  additional  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.

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 nine months ended September 30, 1999 and their respective  percentage of our
net sales were as follows:  Transnuclear  (30%),  Marvin  Engineering  (26%) and
Parker  Hannifin (8%).  Sales to our largest three  customers for the year ended
December 31, 1998 and their  respective  percentage of net sales for that period
were as follows: General Motors (22%), Taylor Made Golf (15%) and MacGregor Golf
(12%). Sales to our largest three customers for the year ended December 31, 1997
and their  respective  percentage  of net sales for that period were as follows:
Taylor Made Golf (47%),  Defense Logistics Company (14%) and Mersey (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 of our principal raw  materials,  boron carbide,
primarily  from two  suppliers.  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.


                                       14
<PAGE>

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 BE 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 FROM LESS EXPENSIVE
MATERIALS AND FROM  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
comparable or 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 applying for the quality  certification,  but we cannot be
sure that we will ever be able to obtain this certification.

THE PRINCIPAL  APPLICATIONS  FOR OUR MATERIALS  COULD SUBJECT US TO  SIGNIFICANT
PRODUCT LIABILITY ACTIONS, IN EXCESS OF OUR INSURANCE COVERAGE LIMITS.

      The  principal  uses  of  our  materials   currently  include   automotive
applications,  including engines and structural  members, as well as application
for use in 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
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.


                                       15
<PAGE>

IF OUR COMMON  STOCK IS DELISTED  FROM THE NASDAQ  NATIONAL  MARKET,  OUR COMMON
STOCK WILL BECOME LESS EASILY TRADABLE 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.  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 Small Cap 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. Also,
the terms of our Series B and Series C preferred  stock purchase  agreements and
our  exchangeable  note,  require that we maintain a listing of our common stock
with Nasdaq or other nationally recognized market. Failure to do so could result
in unspecified consequences.

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 sure
of the effect of the Year 2000 issue until the Year 2000 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 believe the worst case scenario of the Year 2000
impact  on our  business  would be a decline  in our sales due to our  customers
inability to order or purchase  products and our  inability to interact with our
suppliers  and other third  party  providers.  While we do plan to increase  our
stock of certain  production  materials  and  supplies in the fourth  quarter of
1999,  we do not plan to develop 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  October  25,  1999,  Kingdon  Capital  Management  Corp.  and  its
affiliates, Robin A. Carden and Harry Edelson beneficially owned an aggregate of
52.6% of our  outstanding  common stock. In addition,  in October 1999,  Fleming
U.S. Discovery Fund III, L.P. and Fleming U.S. Discovery Offshore Fund III, L.P.
purchased the Series C Convertible  Preferred  Stock,  which is convertible into
2,500,000  shares of common  stock.  Under  the  terms of the  related  purchase
agreements,  they  have the right to vote the  2,500,000  shares as if they were
issued and outstanding at the time of such  stockholder  vote. At such time, our
principal  stockholders  would vote 60.7% of the shares then  available to vote.
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  holders of the  Series C  preferred  stock have  significant
influence on key decisions of the company and have exercised  their rights under
the  Series C  purchase  agreements  to  appoint  two  members  to our  Board of
Directors. In October 1999, Mr. Robert Burr and Mr. David Edwards were appointed
to the Board of Directors,  and Mr. Burr was subsequently  elected its chairman.


                                       16
<PAGE>

The terms of our  Series A  preferred  stock and Series C  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 acquiring 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 135% 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 unless we have their approval.

      We have also agreed to grant the holders of our Series A preferred stock a
right of first refusal and our Series C preferred  stock,  and 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 beyond  defined  limits  without the written  consent of the
holder  of  the  exchangeable  note,  unless  the  indebtedness  junior  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, 1998,  the price of our
common  stock  has  declined  from a high of $10 in  February  1998 to  $1.50 in
February  1999 and to $3.375 on September  23, 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


                                       17
<PAGE>

                                ALYN CORPORATION

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      None.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      On August 2, 1999 the Company issued 200,000 shares of its common stock
            for cash at $3.00 per share - the use of  proceeds  was for  general
            working capital.

      On August 2, 1999 the Company issued 149,113 shares of its common stock to
            the holder of the Company's  exchangeable  note as an  anti-dilution
            penalty.  The  penalty  resulted  from the  issuance  of the 200,000
            shares  of  common  stock  identified  above  at a price  below  the
            applicable exchange price of the exchangeable note.

      On September 15, 1999 the Company issued 38,352 shares of its common stock
            to the  holder  of the  Company's  exchangeable  note in lieu of the
            semi-annual  interest payment due under the note.

      On October 8, 1999 the Company issued 75,000 shares of Series Cconvertible
            preferred stock for  approximately  $7,300,000 net of expenses - the
            use of proceeds was for general working capital.

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


                                       18
<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:  November 15, 1999

                                       19
<PAGE>