As filed with the Securities and Exchange Commission on April 30, 1999
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT ON
FORM S-3
UNDER THE SECURITIES ACT OF 1933
ALYN CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 33-0709359
(State or other jurisdiction of (I.R.S. Employer
Incorporation ) Identification Number)
16761 Hale Avenue
Irvine, California 92606
(949) 475-1525
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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Richard L. Little
Vice President, Finance and Administration;
Chief Financial Officer and Secretary
Alyn Corporation
16761 Hale Avenue
Irvine, California 92606
(949) 475-1525
(Name, address, including zip code, and telephone number, including area code,
of agent for service
Copies to:
Bruce R. Hallett, Esq.
Michael A. Zuercher, Esq.
Brobeck, Phleger & Harrison LLP
38 Technology Drive
Irvine, California 92618
(949) 790-6300
----------------------------
Approximate date of commencement of proposed
sale to the public: From time to time after the
effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.|_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
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CALCULATION OF REGISTRATION FEE
- ------------------------------------------- ------------------ ----------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
Amount Proposed Maximum Proposed Maximum Amount of
Title of Shares to be Offering Price Aggregate Registration
to be Registered Registered per Share(1) Offering Price(1) Fee(1)
- ------------------------------------------- ------------------ ----------------------- ---------------------- -------------------
Common Stock, 2,554,825 shares $3.00 $7,664,475 $2,130
$0.001 par value per share
- ------------------------------------------- ------------------ ----------------------- ---------------------- ===================
(1) Estimate based upon the average of the high and low sales prices of
Alyn's Common Stock on April 28, 1999, as reported by the Nasdaq
National Market, pursuant to Rule 457(c) promulgated under the
Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
</TABLE>
<PAGE>
PROSPECTUS
(Subject to completion, dated April 29, 1999)
2,554,825 Shares
ALYN CORPORATION
Common Stock
This prospectus relates to the public offering, which is not being
underwritten, of 2,554,825 shares of the common stock of Alyn Corporation by
certain stockholders of Alyn. Certain stockholders of Alyn Corporation are
offering for resale and selling under this prospectus up to 2,554,825 shares of
Alyn common stock to be issued upon conversion of our 6% Senior Exchangeable
Promissory Note due March 10, 2002 and our Series B Exchangeable Preferred Stock
and upon exercise of warrants to purchase our common stock.
The prices at which such selling stockholders may sell the shares will
be determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our common stock is quoted on the Nasdaq National Market under the
symbol "ALYN." On April 26, 1999, the last reported sale price for the common
stock was $3.125 per share.
----------
You should carefully consider the risk factors beginning on page 1 of
this Prospectus before purchasing any of our common stock being offered by the
selling stockholders.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------
The date of this prospectus is April
29, 1999.
<PAGE>
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below when making an investment
decision. The risks and uncertainties described below are not the only ones
facing our company. If any of the following risks actually occur, our business,
financial condition or results of operations would likely suffer. In such case,
the trading price of our common stock could decline, and you may lose all or
part of your investment.
We have a limited operating history, limited revenues and prior losses
We commenced our materials development activities in 1990. However, we
only completed our manufacturing facilities in 1998 and therefore have a very
limited operating history. Our limited operating history has resulted in
extremely limited revenues through 1998, with total revenues of $1.3 million in
1998, $364,000 in 1997 and $194,000 in 1996. Due to these limited revenues and
our extensive materials and facilities development activities, we had net losses
of $12.1 million, $7.3 million and $2.3 million for the years ended December 31,
1998, 1997 and 1996, respectively. We are also expecting to incur losses in
fiscal year 1999 and may continue to incur losses thereafter. We may never
generate sufficient revenues to achieve profitability. Even if we do achieve
profitability, we may not sustain or increase profitability on a quarterly or
annual basis in the future.
Our future operating results will fluctuate significantly
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 management's 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 and 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.
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.
We must achieve significant product sales to offset substantial lease and
capital commitments we made to establish production capability
We have entered into long-term leases for our two facilities located in
Irvine, California. For our main facility, we have entered into a lease that
expires in 2008 with a five-year option. We also have a ten-year lease expiring
in 2008 for our second Irvine facility. We have committed substantial capital to
provide both facilities with significant production capability. Unless and until
we achieve a significant level of sales of our Boralyn- based products, we will
have substantial production over-capacity and under-absorbed costs that would
cause us to incur substantial operating losses.
We have limited manufacturing history and significant manufacturing risks
Our limited operating history has resulted in limited experience in
manufacturing our products in commercial quantities. While we have made
substantial lease and capital commitments to support our manufacturing
capabilities, we cannot be sure that we will fully utilize our capacity or that
our facilities will be adequate for all of our future fabrication requirements.
In addition, the manufacture of our products presents several potential hazards.
For example, the manufacturing processes for Boralyn utilize high temperature
and high pressure and may be subject to volatile chemical reactions. In
addition, a mechanical or human failure or natural disasters such as
earthquakes, characteristic of Southern California, could result in interruption
of our manufacturing activities or significantly impact our manufacturing
capacity. Moreover, our manufacturing operations will use certain equipment
that, if damaged, inoperable or unavailable, could disrupt our manufacturing
operations. To address these risks, we have obtained business interruption
insurance with coverage for lost profits and out-of-pocket expenses of up to $8
million per occurrence. In addition, we maintain other property and casualty
coverage. Despite our efforts to minimize and insure against our manufacturing
risks, any extended interruption of our manufacturing operations would have a
material adverse effect on our business, operating results and financial
condition.
Our products have not yet gained market acceptance in commercial quantities
Market acceptance of our products in commercial quantities depends
upon pricing of products and our ability to manufacture and deliver products on
a timely basis. In addition, our ability to achieve commercial acceptance of our
products is dependent upon our ability to demonstrate the advantages of Boralyn
products over competing material methodologies and products. We also have
experienced, and will likely continue to experience, long sales cycles and
lengthy customer product design times prior to production orders. We must
address each of these factors effectively in order to achieve customer
acceptance in commercial quantities of Boralyn or our other current or future
products. The costs of our marketing efforts will be substantial and will be
recorded as expenses as they are incurred, notwithstanding that the benefits, if
any, from those marketing efforts (in the form of revenues) may not be
reflected, if at all, until subsequent periods.
We may be unable to obtain the additional capital required to grow our business
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. If we are able to achieve our operating plan for 1999, we believe
that our cash on hand (including debt and equity investment capital raised in
the first quarter of 1999), capital generated from our internal operations, and
planned equipment and accounts receivable financing should satisfy our
anticipated capital needs for the next 12 months. However, if we fail to reach
our planned revenue objectives, we may have inadequate working capital. Also, if
we fail to complete our planned equipment and accounts receivable financing, we
may have inadequate capital to finance our operations. Our ability to obtain
future working capital debt financing will be dependent in part on the quality
and amount of our 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 depend on our key personnel and management team
Our future success and profitability is substantially dependent upon
the performance of our executives, Arne Van Roon (our President and Chief
Executive Officer), Robin A. Carden (our Founder), Richard L. Little (our Chief
Financial Officer and Secretary) and Jon A. Knartzer (our Vice President,
Operations). We seek to retain our key personnel with competitive compensation
and each of our senior executives has a substantial potential equity interest in
the form of stock options. However, a departure by any of these individuals or
any other key employees 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. We do maintain a key-man
life insurance policy of $2.5 million on the life of Mr. Carden; however, we do
not maintain key-man life insurance policies on either Messrs. Van Roon, Little
or Knartzer.
Our future growth will be dependent upon our ability to attract and
retain additional qualified management, technical, scientific, administrative
and other personnel. Due to our location in Irvine, California and the nature of
our business, we believe we will experience significant competition for
qualified management, supervisory, engineering and other personnel.
We face rapid technological change in our industry which may necessitate
development of new products
We operate in a rapidly evolving field - advanced materials - that is
likely to be affected by future technological developments. Our ability to
anticipate changes in technologies, markets and industry trends, and to develop
and introduce new and enhanced products on a timely basis will be critical
factors in our ability to grow and remain competitive. We cannot be sure that we
will be able to develop new products or that any new products can be marketed
successfully. In addition, development schedules for new or improved products
are inherently difficult to predict and are subject to change as a result of
shifting priorities in response to customers' requirements and competitors' new
product introductions. If we fail to timely develop and introduce new products
or to enhance our current products, our business, operating results and
financial condition could be materially adversely affected. 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.
We currently depend on a limited number of customers
Due to the early stage nature of our business, we currently have only a
limited number of customers, several of whom may be material to our near-term
results of operations. Even after we mature, however, certain customers may be
material to our business, operations and future prospects. We cannot be sure
that one or more principal customers will not suffer business or financial
setbacks resulting in reduction or cancellation of product orders or our being
unable to obtain payment from such customers at any time or from time to time.
The loss of sales to one or more significant customers, or our failure to
successfully market our products to new customers, could have a material adverse
effect on our business, operating results and financial condition.
We currently depend on a limited number of suppliers
We presently purchase our principal ceramic raw material, boron
carbide, from a limited number of suppliers, including one supplier that
provides approximately 50% of our present requirements. Our business would be
materially and adversely affected if we are unable to continue to purchase boron
carbide at prices and on terms comparable to those presently available from our
principal suppliers. Although we believe that boron carbide is available from
other suppliers, we project that to take full advantage of the potential
opportunity, we must develop additional boron carbide supplies. There can be no
assurance that we will be able to continue to obtain desired quantities of boron
carbide on a timely basis or at prices and terms we consider reasonable.
We depend on the protection of our patents
We have been granted one United States patent that contains claims that
cover the use of Boralyn. We believe this patent provides protection for our
proprietary Boralyn technology. We have been granted additional patents,
including divisional (extension) patents and continuation-in-part patents that
stem from our original patent application. We have also applied for additional
patents. We cannot be sure that our existing patents, or any other patents that
may be granted, will be valid and enforceable or provide us with meaningful
protection from competitors. Further, we cannot be sure that any pending patent
application will issue or that any claim under pending patents will provide us
protection against infringement. 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 cannot be sure that our
future products 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 depend on our trademarks for current and future markets
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.
Our industry is very competitive
The materials industry is highly competitive. We compete in our chosen
markets against several larger domestic and multi-national companies, all of
which are well established in their respective markets and have substantially
greater financial and other resources than us. There are also several competing,
small advanced materials companies, similar to Alyn. Competitive market
conditions could adversely affect our results of operations and financial
condition if we were required to reduce product prices to remain competitive,
were unable to achieve significant sales of our products or unable to
successfully develop and sell new or enhanced products.
We face product liability risks
As a participant in the materials industry, we face an inherent
business risk of exposure to product liability claims in the event that any of
our products are alleged to be defective or cause harmful effects. The cost of
defending or settling product liability claims may be substantial. We currently
maintain, and intend to continue to maintain, product liability insurance
coverage. However, we cannot be sure that we will be able to obtain such
insurance on acceptable terms in the future or that such insurance will
adequately cover any claims.
Our stock price could be adversely affected by the sale of shares
issuable to holders of our recently issued preferred stock and Exchangeable Note
During the first quarter of 1999, we raised an aggregate of $6.0
million ($5.65 million, net of expenses) in financing through the issuance of
Series A Preferred Stock, Exchangeable Preferred Stock and a 6% Senior
Exchangeable Promissory Note ("Exchangeable Note") due March 10, 2002. The
Series A Preferred Stock is exchangeable for common stock beginning in January
2000, while the Series B Exchangeable Preferred Stock and the Exchangeable Note
are currently exchangeable for common stock at set prices of $3.57 and $3.645
("Set Prices"), respectively. Each of the holders of these securities received
registration rights for the common stock underlying their securities and we are
required to file a registration statement for the holders of Series B
Exchangeable Preferred Stock ("Exchangeable Preferred Stock") and the
Exchangeable Note in April 1999. Additionally, each of these exchangeable
securities has an exchange rate that is based on the lesser of the Set Price or
the market price at the time the securities are exchanged. The Exchangeable
Preferred Stock and the Exchangeable Note are each exchangeable at up to as much
as a 15% discount to the market price if the market price at the time the
securities are exchanged is less than the Set Price. At a minimum, the number of
shares of common stock issuable upon exchange of all of these securities is
1,617,086. In addition, we will be required to issue 200,000 shares, up to a
maximum of 320,000 shares, of common stock pursuant to warrants granted in
connection with these financings. Any decrease in the price of our stock could
result in the issuance of a substantial number of additional common stock shares
that would be immediately available for resale on the public market for the
Exchangeable Preferred Stock and the Exchangeable Note. Depending upon the
trading volume of our stock, any significant block sales of these shares
issuable in exchange for these newly issued securities could have an adverse
effect on the market price of our stock. Additionally, any perception by the
public that these shares might be resold immediately and are not to be held as
long term investments could materially and adversely affect our stock price. Any
adverse impact on our stock price resulting from these recently issued
exchangeable securities would cause these securities to become exchangeable for
even more shares of common stock. Also, any negative impact to our stock price
caused by these exchangeable securities could impair our ability to raise
additional equity capital.
We may be required to issue significant numbers of common stock upon a market
price decline
We do not know the exact number of shares of our common stock that we
will issue upon conversion of our newly issued exchangeable securities because
they potentially have floating conversion prices based on the average market
prices of the common stock for a number of trading days immediately prior to
conversion. The floating conversion price feature of the Exchangeable Note due
March 10, 2002 and the Exchangeable Preferred Stock begin in August 1999.
Generally, decreases in the market price of the common stock below their initial
conversion prices would result in more shares of common stock being issued upon
their conversion. See "Description of Certain Provisions of Our 6% Senior
Exchangeable Promissory Note Due March 10, 2002" and "Description of Certain
Provisions of Our Series B Exchangeable Preferred Stock".
The ownership limitations of our preferred stock and Exchangeable Note may not
protect against dilution
We may not issue shares of our common stock to holders of our preferred
stock if such issuance would result in such holders beneficially owning more
than 9.9% of our outstanding common stock. The 9.9% ownership limitation does
not prevent the holders from converting into common stock and then selling such
common stock to stay below the limitation, and the limitation may be waived by
each holder of the Exchangeable Preferred Stock with 75 days prior notice to us.
Also, under the rules of the National Association of Securities
Dealers, Inc., the holders of our Series A Preferred Stock, our Exchangeable
Preferred Stock and our Exchangeable Note may not exchange their securities for
common stock if such exchange would lead to the issuance of more than 19.9% of
our outstanding common stock as of the respective issue dates of the
exchangeable securities. However, the 19.9% limitation will cease to exist if we
receive stockholder approval for issuances in excess of 19.9%. We are seeking
such stockholder approval in accordance with NASD Rule 4460 at our 1999 Annual
Meeting.
We may be required to make 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 of the securities or if we fail to keep a registration statement
effective for the underlying shares of common stock. Such cash payments would
adversely affect our financial condition and ability to implement our business
plans. In addition, if we do not obtain stockholder approval to remove the 19.9%
limit, we would 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 at the time
of the attempted conversion. In such an event, we will be required to raise
funds elsewhere, which could be difficult. If we do not receive stockholder
approval as we are required, there can be no assurance that we would be able to
obtain adequate sources of additional capital.
<PAGE>
Our stock price could be adversely affected by the perception that
certain stockholders could require us to sell their shares of our stock by
exercising their registration rights
Future sales of our common stock by existing stockholders under Rule
144 could have an adverse effect on the price of our stock. In addition, certain
of our stockholders of common stock have contractual registration rights. No
prediction can be made as to the effect that future sales of common stock, or
the availability of shares of common stock for future sales, will have on the
market price of our stock prevailing from time to time. Sales of substantial
amounts of common stock, or the perception that such sales could occur, could
adversely affect prevailing market prices for our stock.
We are subject to risks associated with year 2000 compliance
We are in the process of upgrading or replacing our accounting and
management information systems to be Year 2000 compliant and believe we will be
Year 2000 compliant on a timely basis. We will use both internal and external
resources to reprogram and/or replace any deficiencies. We are not currently
aware of any other incompatibility and believe that no material expenditures
will be required. We do not believe that the Year 2000 issue will have any
material effect on our operations and we have determined there is no exposure
related to our products. Formal communications have been initiated with all
significant suppliers and large customers to determine the extent to which we
are vulnerable to such parties' failure to address their own Year 2000 issues.
We expect to have analyzed and accessed the possible risk of significant
business interruptions as a result of any such party's noncompliance by June
1999. At that time, any necessary contingency plans will be developed to address
any material consequences that we could suffer if such party is not Year 2000
compliant. Despite our efforts to assess Year 2000 compliance, we cannot be sure
that the failure of other companies to adequately address the Year 2000 issue
will not have a material adverse effect on our business, operating results or
financial condition. Overall, we expect to complete our Year 2000 compliance
efforts in 1999. The total estimated project cost, which is not considered
material, includes the estimated costs and time associated with the impact of
third party compliance. However, there can be no guarantee that these estimates
will be achieved and actual results could differ materially from those plans.
Certain of our stockholders retain substantial influence
Certain of our present holders of common stock own a substantial
majority of the outstanding shares of common stock. Consequently, those
stockholders have the ability to elect all of our directors and to control the
outcome of all other issues submitted to our stockholders. Additionally, those
stockholders would be able to influence significantly a proposed amendment to
our charter, a merger proposal, a proposed sale of assets or other major
corporate transaction or a non-negotiated takeover attempt. Such concentration
of ownership may discourage a potential acquirer from making an offer to buy our
company, which, in turn, could adversely affect the market price of our common
stock.
In addition, under the terms of our recently completed financings,
certain holders of the newly issued exchangeable securities must approve certain
actions, including future financings or issuance of senior securities. These
restrictions could affect our ability to raise capital or effect certain
corporate changes which could adversely affect our business, results of
operations and financial condition.
<PAGE>
Certain provisions of our Exchangeable Note could discourage some
potential purchasers by making an acquisition of our Company or an asset sale
more difficult and expensive, including:
o adjustments to the exchange price of the Exchangeable Note
upon merger or consolidation events, reflecting adjustments
made to the underlying common stock;
o requirement that upon a change of control, we make an 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 such
Exchangeable Note can be exchanged and the market price on the
applicable date; and
o prohibition against selling or transferring all or
substantially all of our assets to any subsidiary or affiliate
except for cash or cash equivalent consideration.
We have also agreed to grant the holders 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 holders of the Exchangeable
Note unless such indebtedness is not on par with or senior or superior to the
Exchangeable Note or that such borrowed money is for equipment financing or
customary working capital lines of credit.
Moreover, the terms of our Exchangeable Preferred Stock prohibit any
merger or consolidation unless the resulting entity assumes obligations to the
holders of the Exchangeable Preferred Stock.
Certain of our charter provisions could adversely affect the rights of
common stock and we are subject to Delaware anti-takeover provisions
Under our charter, the 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.
Our stock price may 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. These factors include the sale or
attempted sale of a large amount of securities in the public market, the
registration for resale of any shares of common stock, and the effect on our
earnings on existing or future equity-based compensation awards to management.
The market price of our common stock could also be influenced by developments or
matters not related to us such as the general volatility of the stock market.
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange
Act of 1934, as amended, until our offering is completed.
(a) Our Annual Report on Form 10-K for the year ended December 31, 1998,
filed March 31, 1999;
(b) Our Current Report on Form 8-K filed on April 28, 1999; and
(c) The description of our common stock contained in its
registration statement on Form 8-A filed October 21, 1996,
including any amendments or reports filed for the purpose of
updating such description.
You may request a copy of any or all of the documents incorporated by
reference by writing or telephoning us, and we will provide the documents you
requested at no cost. However, we will not send exhibits to such documents,
unless such exhibits are specifically incorporated by reference in such
documents. You should direct all requests for such copies to the following
address:
Richard L. Little
Vice President, Finance and Administration,
Chief Financial Officer and Secretary
Alyn Corporation
16761 Hale Avenue
Irvine, California 92606
(949) 475-1525
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of our
common stock being offered by the selling stockholders under this prospectus.
SELLING STOCKHOLDERS
The selling stockholders acquired or will acquire the shares offered by
this prospectus upon their exchange of our 6% senior Exchangeable Note and our
Exchangeable Preferred Stock, both of which were issued in March 1999, and upon
their exercise of warrants that were issued in connection with those
transactions. In connection with those transactions, we have agreed to effect a
shelf registration, of which this prospectus is a part, of the shares issued or
to be issued under the Exchangeable Note, the preferred stock and the warrants
in order to permit the selling stockholders to sell these shares from time to
time in the public market or in privately-negotiated transactions. We are
initially registering 2,554,825 shares of our common stock that we may be
required to issue to the selling stockholders upon exchange of the Exchangeable
Note or the preferred stock or upon exercise of the warrants. We may be required
to register additional shares of our common stock if:
o the market price of our common stock falls and results in additional
shares being issuable upon exchange of our Exchangeable Note and our
Exchangeable Preferred Stock ; or
o certain dilutive events occur with respect to the common stock
underlying our Exchangeable Note, our Exchangeable Preferred Stock
and warrants.
We cannot determine the actual number of shares of our common stock
that we will issue because the conversion prices of our exchangeable securities
will fluctuate with the market price of our common stock beginning in August
1999. The number of shares underlying our Exchangeable Note due March 10, 2002
and our Exchangeable Preferred Stock would increase if the conversion price
decreased. See "Risk Factors -- Our stock price could be adversely affected by
the sale of shares issuable to holders of our recently issued preferred stock
and Exchangeable Note," "Description of Certain Provisions of Our 6% Senior
Exchangeable Promissory Note Due March 10, 2002 -- Conversion Price" and
"Description of Certain Provisions of Our Series B Exchangeable Preferred Stock
- -- Conversion Price."
The following table sets forth for each selling stockholder, and for
all selling stockholders in the aggregate, the number of shares of our common
stock underlying our Exchangeable Note, our Exchangeable Preferred Stock and
warrants to purchase our common stock, the number of shares of our common stock
that may be offered under this prospectus, and the total shares of common stock
beneficially owned by such selling stockholders. The shares of common stock
underlying our Exchangeable Note and our Exchangeable Preferred Stock presented
on the table assume that the exchange for common stock occurred on April 26,
1999, at which time the set exchange prices of $3.645 and $3.57, respectively,
would have been applicable. The shares of common stock being offered assume
that: (i) the market price for the Company's common stock is equal to $3.125,
the same as the closing price on April 26, 1999; (ii) the exchange for common
stock occurs after December 6, 1999 for the Exchangeable Note and after August
19, 1999 for the Exchangeable Preferred Stock, such that the exchange price is
at a 15% discount to the market price; and (iii) include reserves for additional
shares of 25% for the Exchangeable Note and 67% for the Exchangeable Preferred
Stock, in accordance with the related agreements.
Generally, the rules of the Securities and Exchange Commission define
beneficial ownership to include securities with respect to which the investor
has voting or investment power. The rules also provide that beneficial ownership
includes shares of common stock underlying options, warrants and convertible
securities that can be exercised or converted within 60 days. To that extent,
the number of shares of our Common Stock underlying our Exchangeable Note, our
Exchangeable Preferred Stock and the warrants presented on the table may not
present the actual beneficial ownership from time to time of the selling
stockholders in accordance with these rules because of the floating-rate
conversion features of our Exchangeable Note and Exchangeable Preferred Stock.
In that regard, please see "Description of Certain Provisions of Our 6% Senior
Exchangeable Note Due March 10, 2002" and "Description of Certain Provisions of
Our Exchangeable Preferred Stock" for a more detailed description of these
factors.
We are not able to estimate the amount of shares that will be held by
the selling stockholders after completion of this offering because the selling
stockholders may offer all or some of the shares and because there currently are
no agreements, arrangements or understandings with respect to the sale of any of
the shares. The following table assumes that all of the shares being registered
will be sold. The selling stockholders are not making any representation that
any shares covered by the prospectus will or will not be offered for sale. The
selling stockholders reserve the right to accept or reject, in whole or in part,
any proposed sale of shares. The shares offered by this prospectus may be
offered from time to time by the selling stockholders named below.
<TABLE>
Senior Exchangeable
Promissory Note and
Series B Exchangeable Total Number of Shares
Preferred Stock Warrants Beneficially Owned
Percent
of
Shares of Shares of Outstanding
Shares of Common Shares of Shares of Common Shares of
Common Stock Shares of Common Common Stock Class
Stock being Common Stock Stock being After the
Name of Selling Underlying Offered Stock being Underlying Offered Offering
Stockholder (1) (2)(3) Underlying Offered (1) (2)(3) (4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------
Talisman Capital
Opportunity Fund Ltd.. 823,045 1,411,765 135,000 135,000 958,045 1,546,765 *
- ------------------------
AMRO International,
S.A................... 210,084 471,530 32,500 32,500 242,584 504,030 *
- ------------------------
Esquire Trade &
Finance Inc .......... 105,042 235,765 16,250 16,250 121,292 252,015 *
- ------------------------
Austinvest Anstalt
Balzers............... 105,042 235,765 16,250 16,250 121,292 252,015 *
- ------------------------
Total............ 1,443,213 2,554,825
========= =========
- ---------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
common stock. ** Prior to the offering, the above listed stockholders did not
own any of the Company's common stock.
(1) The shares of common stock underlying our Exchangeable Note and our
Exchangeable Preferred Stock presented on the table assume that the
exchange for common stock occurred on April 26, 1999, at which time the set
exchange prices of $3.645 and $3.57, respectively, would have been
applicable.
(2) The shares of common stock being offered assume that: (i) the market price
for the Company's common stock is equal to $3.125, the same as the closing
price on April 26, 1999; (ii) the exchange for common stock occurs after
December 6, 1999 for the Exchangeable Note and after August 19, 1999 for
the Exchangeable Preferred Stock, such that the exchange price is at a 15%
discount to the market price; and (iii) include reserves for additional
shares of 25% for the Exchangeable Note and 67% for the Exchangeable
Preferred Stock, in accordance with the related agreements.
(3) This registration statement also shall cover any additional shares of
common stock which become issuable in connection with the shares being
registered by reason of any stock dividend, stock split, recapitalization
or other similar transaction effected without the receipt of consideration
which results in an increase in the number of our outstanding shares of
common stock to the extent permitted under Rule 416 of the Securities Act.
(4) Percent of outstanding shares is based upon the underlying common stock as
a percentage of current outstanding stock, adjusted for issuance of the
underlying common stock and exercise of vested stock options under the
Company's 1996 Stock Option Plan.
We are not aware of any material relationship between our company and
any selling stockholder within the past three years other than as a result of
the ownership of the stockholder's shares.
</TABLE>
<PAGE>
Description of Certain Provisions of Our 6% Senior Exchangeable Promissory Note
Due March 10, 2002
On March 10, 1999, the Company issued the Exchangeable Note and
warrants to purchase 135,000 shares of common stock at an exercise price of
$3.0375 per share (the "Note Warrants"). The gross proceeds to the Company in
the transaction were $3.0 million. Certain provisions and rights of the
Exchangeable Note are summarized as follows:
Interest Rate. Interest on the outstanding principal amount of the
Exchangeable Note is payable at the rate of 6% per annum, payable semiannually.
Such interest may be paid, at the option of the noteholder, either in cash
within 5 days of September 15 and March 15 of each year or by issuing additional
promissory notes. Upon an event of default, the interest on unpaid principal and
accrued and unpaid interest will accrue at 6% plus an additional 14% per annum
until the default is cured by the Company or waived by the noteholder. Events of
default include: (i) a failure to pay principal, interest, or other required
payments which is not cured within 10 calendar days after notice of such
failure; (ii) a failure to perform or comply with material covenants or
agreements which is not cured within 10 calendar days after notice; or (iii) the
delisting or ineligibility of the Company's common stock for trading on Nasdaq
for 10 trading days.
Exchange Price. The outstanding principal amount of the Exchangeable
Note is $3.0 million and any portion of that amount is exchangeable at the
election of the noteholder into shares of common stock. The actual number of
shares of common stock issuable upon exchange of the Exchangeable Note will be
determined by the following formula:
(the principal amount of the Exchangeable Note
tendered for exchange plus any accrued but
unpaid interest being exchanged plus any
unpaid liquidated damages and penalties)
divided by
(the applicable exchange price at the time of exchange).
The exchange price is subject to adjustment. On or before August 7,
1999, the exchange price of the Exchangeable Note is equal to $3.645 per share.
Thereafter, the exchange price of the Exchangeable Note is equal to either of
the following at the sole option of the noteholder: (i) $3.645 per share or (ii)
the average of any 3 closing bid prices as reported by Bloomberg L.P. for 22
trading days immediately preceding the applicable exchange date discounted by up
to 15% (8% discount through September 6, 1999; 12% discount through December 5,
1999; and 15% after December 5, 1999).
The following table sets forth the number of shares of common stock
issuable upon exchange of the Exchangeable Note. It assumes the market price of
the common stock is 25%, 50%, 75%, 100%, 125% and 150% of the closing price of
the common stock on April 26, 1999, which was $ 3.125 per share. It further
assumes that the exchange occurs after December 5, 1999 at the required exchange
price of 85% of the closing price, except where the closing price is at or above
$3.645, in which case the exchange price is $3.645.
Percent of Number of Shares
Market Price Issuable Upon Exchange
25% 4,517,647
50% 2,258,824
75% 1,505,882
100% 1,129,412
125% 823,045
150% 823,045
<PAGE>
In addition, the exchange price of the Exchangeable Note is subject to
adjustment upon the occurrence of certain other events, including, but not
limited to: (i) capital reorganizations of the Company; (ii) reclassification,
exchange, or substitution of the common stock; (iii) declaration or payment of
dividends or distributions on the common stock; and (iv) subdivision or
combination of the common stock.
Anti-dilution Protection. Until March 15, 2002, if the Company sells
common stock at a price lower than any applicable exchange price for the 6
months immediately preceding such issuance or sale, then the Company is required
to issue to the noteholder a number of shares of common stock as determined by
(i) subtracting the issuance or sale price from the lowest exchange price in
effect as described above, such sum multiplied by (ii) the number shares that
would have been received had the entire Exchangeable Note been tendered on the
day immediately preceding such sale or issuance, such product divided by (iii)
the exchange price in effect on the day immediately preceding such sale or
issuance.
Registration. The Company is required to register and keep registered
at least 125% of the aggregate number of shares of common stock into which the
Exchangeable Note is exchangeable and for which the Note Warrants are
exercisable.
Limitation on Shares Issuable: Notwithstanding the registration of such
number of shares, the Company is subject to the NASD Rule 4460(i) that limits
the Company from issuing securities equal to or in excess of 20% of the
Company's outstanding securities on the date immediately prior to the issuance
of the Exchangeable Note and the Note Warrants unless and until the stockholders
approve such an issuance. The terms of the Exchangeable Note also provide that
the number of shares issuable upon exchange of the Exchangeable Note cannot
exceed 19.9% of the Company's outstanding securities as of March 22, 1999 until
stockholder approval is received.
Cash Payments. Upon the occurrence of certain events, the Company may
be required to make significant cash payments to the holders of the Exchangeable
Note. One such event is the failure to issue stock certificates within 7
business days of the exchange date of all or any portion of the Exchangeable
Note. The Company must pay liquidated damages of $10,000 per day for every day
that that the certificates are delayed beyond the 7 business days allowed for
delivery of the stock certificates.
Prepayment and Redemption at the Company's Option. On or after March
10, 2000, the Company may prepay all or any portion of the Exchangeable Note
(the "Prepayment Portion") upon giving at least 20 trading days prior notice to
the noteholder. Such notice is irrevocable and the Company must pay, within 2
business days of the date fixed for prepayment, the greater of either (i) 120%
of the Prepayment Portion or (ii) an amount equal to the number of shares of
common stock into which such Prepayment Portion would be exchangeable multiplied
by the last executed trade price as reported by Bloomberg L.P. as of the close
of normal trading hours on the Nasdaq National Market on the trading day
immediately preceding the date of prepayment (either (i) or (ii) referred to as
the "Prepayment Amount"). However, up and until 5 business days prior to the
date fixed for prepayment, the noteholder may, at its sole option, submit a
notice of exchange in an exchange amount equal to all or any portion of the
Prepayment Amount and receive the number of shares of common stock issuable for
such exchange amount.
Change of Control. Upon a change of control, the Company must offer to
buy the Exchangeable Note at the greater of: (i) 150% of the principal plus
accrued and unpaid interest and penalties or (ii) an amount equal to the number
of shares into which the Exchangeable Note would be exchangeable multiplied by
the last executed trade price as reported by Bloomberg L.P. as of the close of
normal trading hours on the Nasdaq National Market on the trading day
immediately preceding the date of the change of control. A change of control
includes: (i) a purchase of a majority of the Company's common stock; (ii) a
merger of the Company with another entity in which the Company's stockholders
own less than a majority of the surviving entity; (iii) the removal or
replacement of a majority of the members of the Board of Directors who were
sitting on the Board at the time of the change of control; and (iv) the sale of
all or substantially all of the Company's assets to another entity.
<PAGE>
Right of First Offer. Until March 15, 2001, the noteholder has a right
of first offer on certain issuances by the Company of equity or debt securities.
Under the right of first offer, the Company must deliver written notice to the
noteholder at least 10 trading days prior to the closing of any proposed
offering. The noteholder has an option during the 5 trading day period following
delivery of notice to purchase up to the full amount of the securities being
offered in the proposed offering on the same terms. The right of first offer
does not apply to certain issuances by the Company, including: (i) shares issued
to employees upon exercise of options; (ii) shares issuable or issued in an
underwritten public offering; (iii) shares issuable in connection with a debt
financing to refinance existing term loans; (iv) shares issuable in an equipment
financing; and (v) shares issued in a joint venture or other strategic
investment.
Warrants. The Note Warrants issued in connection with the Exchangeable
Note have an exercise price of $3.0375 per share and expire at 5:00 p.m., New
York time, on March 10, 2004. The number of shares that may be purchased and the
exercise price at which shares can be purchased are both subject to adjustment
upon certain events, including the payment of dividends or distributions on and
the subdivision, combination or reclassification of the common stock underlying
the warrants.
The Note Warrants may be redeemed at any time, at the Company's option,
for $0.10 per share of common stock purchasable if the closing price of the
common stock, as reported by Bloomberg L.P. on the applicable market, exceeded
$12.00 per share for a period of 20 consecutive trading days and notice of
redemption is given to the warrantholder within 5 trading days after such 20
trading day period and no less than 30 days before the date fixed for
redemption. However, the Company's right of redemption is subject to the right
of the warrantholder to exercise the warrants prior to the redemption date.
Description of Certain Provisions of Our Exchangeable Preferred Stock
On March 22, 1999, the Company sold 1,500 shares of Series B Preferred
Stock at a price per share of $1,000 and issued warrants to purchase 65,000
shares of the Company's common stock at an exercise price of $3.82 per share
(subject to adjustment) (the "B-Warrants"). The rights, preferences and
privileges of the outstanding Exchangeable Preferred Stock are summarized as
follows:
Dividend Rights. Cumulative dividends of $30 per year per share must be
paid on the Series B Preferred Stock (3% dividend). Such dividends accrue daily
and are payable quarterly on April 30, July 31, October 31 and January 31 of
each year.
Liquidation Preference. The Series B Preferred Stock has a liquidation
preference of $1,000 per share plus all accrued but unpaid dividends. In case of
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary, the holders of Series B Preferred Stock must be paid $1,000 per
share of Series B Preferred Stock held prior to the payment of any amounts to
the holders of common stock. At the option of each holder of Series B Preferred
Stock, a transaction or series of related transactions in which more than 50% of
the voting power of the Company is disposed of or the consolidation, merger or
other business combination of the Corporation with or into any other person or
persons when the Company is not the survivor may be deemed a liquidation event
upon which the liquidation preference amounts must be paid to such holder. The
Series B Preferred Stock ranks pari passu with the Series A Preferred Stock with
regard to liquidation preference.
Exchange Price. Each share of Series B Preferred Stock has a stated
value of $1,000 and is convertible at the election of the holder into shares of
common stock. The actual number of shares of common stock issuable upon exchange
of the Series B Preferred Stock will be determined by the following formula:
(the number of shares of Series B Preferred Stock tendered for exchange
multiplied by $1,000)
divided by
(the applicable exchange price at the time of exchange).
The exchange price is subject to adjustment. On or before August 19,
1999, the exchange price of the Series B Preferred Stock is equal to $3.57 per
share. Thereafter, the exchange price of the Series B Preferred Stock is equal
to the lesser of (a) $3.57 per share or (b) the average of the 2 lowest
consecutive closing bid prices of the common stock as reported by Bloomberg L.P.
for the 20 consecutive trading days immediately preceding the applicable
conversion date discounted by 15%.
The following table sets forth the number of shares of common stock
issuable upon exchange of the Series B Preferred Stock. It assumes the market
price of the common stock is 25%, 50%, 75%, 100%, 125% and 150% of the closing
price of the common stock on April 26, 1999, which was $3.125 per share. It
further assumes the exchange takes place after August 19, 1999 at the required
exchange price of 85% of the closing price, except where the closing price is at
or above $3.57, in which case the exchange price is $3.57.
Percent of Number of Shares
Market Price Issuable Upon Exchange
25% 2,258,824
50% 1,129,412
75% 752,941
100% 564,706
125% 420,168
150% 420,168
In addition, the exchange price of the Series B Preferred Stock is
subject to adjustment upon the occurrence of certain other events, including
stock splits, stock dividends, combinations or other similar events. No
adjustment will be made for dividends (other than stock dividends), if any, paid
on the common stock.
If the applicable exchange price is less than $7.00, the Company has
the option to pay cash to any holder of Series B Preferred Stock in an amount
equal to the closing ask price on the principal market in which the common stock
is trading on the exchange date multiplied by the number of shares of common
stock which would have been issuable upon an exchange. This cash payment may be
made in lieu of issuing shares of common stock upon an exchange. However, the
Company must have given notice of such an election prior to or within 2 hours of
receipt of a notice of exchange from any holder of Series B Preferred Stock.
Registration. The Company is required to register and keep registered
at least 167% of the aggregate number of shares of common stock into which the
Series B Preferred Stock is exchangeable and for which the B-Warrants are
exercisable.
Limitation on Shares Issuable. The terms of the Series B Preferred
Stock financing agreements prohibit the Company from issuing shares of common
stock upon exchange of the shares of Series B Preferred Stock or exercise of the
B-Warrants if such issuance would result in any holder beneficially owning in
excess of 9.9% of the Company's then-outstanding common stock. However, the
determination as to whether any holder's ownership exceeds that limit is to be
made solely by such holder of Series B Preferred Stock, not by the Company. In
addition, the Company is subject to the NASD Rule 4460(i) that limits the
Company from issuing securities equal to or in excess of 20% of the Company's
outstanding securities on the date immediately prior to the issuance of the
Series B Preferred Stock and B-Warrants unless and until the stockholders
approve such an issuance. The terms of the Series B Preferred Stock also provide
that the number of shares issuable upon exchange of the Series B Preferred Stock
cannot exceed 19.9% of the Company's outstanding common stock as of March 22,
1999 until stockholder approval is received.
Mandatory Exchange. At any time on or after August 20, 1999, if the
average of the closing bid prices for the 5 consecutive trading days is at least
$7.00 per share, the Company can require all holders of the Series B Preferred
Stock to convert their shares into shares of common stock (subject to certain
limits) or, at the option of the Company, buy out all such holders in cash at
the then-effective exchange price. The Company must provide no more than 3
trading days' written notice of such mandatory exchange or mandatory buy-out.
The Series B Preferred Stock is subject to mandatory conversion on or after
March 22, 2002.
Redemption. At any time upon the earlier of (i) an underwritten public
offering of the Company's common stock or (ii) September 22, 1999, the Company
may, at its option, redeem the shares of Series B Preferred Stock at a price of
140% of the original purchase price of $1,000 per share plus accrued and unpaid
dividends.
If the Company ceases to be listed on a national securities exchange,
the Nasdaq National Market or the OTC Bulletin Board, then the Company must
redeem all shares of Series B Preferred Stock at 115% of the original purchase
price of $1,000 per share plus accrued and unpaid dividends.
Cash Payments. Upon the occurrence of certain other events, the Company
may be required to make significant cash payments to the holders of the Series B
Preferred Stock. Such events include, but are not limited to the late issuance
or delivery of stock certificates upon an exchange of shares.
If stock certificates are not issued within 3 business days of any
exchange date, the Company must pay liquidated damages of $100 per $5,000 of
liquidation amount of Series B Preferred Stock being exchanged for the first
business day the certificates are late. The damages increase by $100 per $5,000
liquidation amount per day late (i.e., $500 per $5,000 on the fifth late day)
and are $1,000 plus $200 per day after 10 days.
If the Company is required to honor any and all requests for exchange
of the Series B Preferred Stock which would result in the issuance of a number
of shares of common stock equal to or in excess of 20% of the shares of common
stock which were issued and outstanding on the dates of issuance of the Series B
Preferred Stock and B-Warrants but fails to receive stockholder approval of such
an issuance, the Company must pay in cash an amount equal to the closing ask
price on the principal market in which the common stock is trading on the date
of exchange multiplied by the number of shares of common stock which would have
been issuable upon exchange. In addition, if such cash amounts are not paid
within 3 days of the exchange date, the Company must pay liquidated damages in
the same amounts as set forth above for the late issuance of stock certificates.
Protective Provisions. The Series B Preferred Stock ranks pari passu
with the Series A Preferred Stock and senior to the common stock with respect to
the right to receive dividend payments and liquidation preferences. The Series B
Preferred Stock has no voting rights, except as otherwise provided by applicable
law or pursuant to certain contractual protections described herein. The Company
is prohibited from, among other things, altering, changing or otherwise
adversely affecting the terms of the Series B Preferred Stock, creating or
issuing any senior securities, increasing the authorized number of shares of
Series B Preferred Stock, and acting so as to generate taxation under Section
305 of the Internal Revenue Code of 1986, as amended. In addition, any
modification of the rights of Series B Preferred Stock requires the vote of 85%
of the shares of Series B Preferred Stock outstanding.
Change of Control. The Company is prohibited from effecting any merger
or consolidation with or into, or transferring all or substantially all of the
assets of the Company to another entity, unless the resulting entity assumes in
writing, or by operation of law, the obligations to deliver shares of stock or
securities to the holders of Series B Preferred Stock or B-Warrants.
Warrants. The B-Warrants issued in connection with the Series B
Preferred Stock have an exercise price of $3.82 per share. The warrants become
exercisable on September 15, 1999 and expire on September 15, 2002. The number
of shares that may be purchased and the exercise price at which shares can be
purchased are both subject to adjustment upon certain events, including the
payment of dividends or distributions on and the subdivision, combination or
reclassification of the common stock underlying the warrants.
<PAGE>
PLAN OF DISTRIBUTION
We will not receive any proceeds from the sale of the shares of our
common stock offered hereby.
The shares offered by this prospectus may be sold by the selling
stockholders or their respective pledgees, donees, transferees or successors in
interest, in one or more of the following transactions (which may involve one or
more block transactions):
o on the Nasdaq National Market;
o in sales occurring in the public market of such exchange;
o in privately negotiated transactions; or
o in a combination of such transactions.
Each sale may be made either at market prices prevailing at the time of
such sale or at negotiated prices or such other price as the selling
stockholders determine from time to time. Some or all of the shares offered by
this prospectus may be sold directly to market makers acting as principals or
through brokers acting on behalf of the selling stockholders or as agents for
themselves or their customers or to dealers for resale by such dealers. In
connection with such sales such brokers and dealers may receive compensation in
the form of discounts, commissions or concessions from the selling stockholders
and may receive commissions from the purchasers of shares offered by this
prospectus for whom they act as broker or agent (which discounts and commissions
are not anticipated to exceed those customary in the types of transactions
involved).
The selling stockholders have sole discretion not to accept any
purchase offer or make any sale of shares offered by this prospectus if they
deem the purchase price to be unsatisfactory. Any broker or dealer participating
in any such sale may be deemed to be an "underwriter" within the meaning of the
Securities Act and will be required to deliver a copy of this prospectus to any
person who purchases any of the shares offered by this prospectus from or
through such broker or dealer. The compensation of such broker-dealers may be
deemed underwriting discounts and commissions. In addition, any shares covered
by this prospectus that qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this prospectus.
The selling stockholders are prohibited from engaging in short sales,
except with respect to covered short sales after a conversion notice has been
delivered to us by the stockholder. Under the terms of the Exchangeable Note
agreements and the Exchangeable Preferred Stock financing agreements, the
selling stockholders are prohibited from entering into any short position or
similar position with respect to the common stock issued or issuable with
respect to the Exchangeable Note, Exchangeable Preferred Stock and warrants
issued in connection with those transactions.
To comply with certain states' securities laws, if applicable, the
shares offered by this prospectus will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In certain states, the shares
offered by this prospectus may not be sold unless (1) the shares offered by this
prospectus have been registered or qualified for sale in such state or an
exemption from registration exists or (2) qualification is available and is
complied with. Also, each selling stockholder will be subject to the applicable
provisions of the Securities Act and Exchange Act and the rules and regulations
of both acts, including Regulation M. Regulation M's provisions may limit the
timing of purchases and sales of shares of the common stock by the selling
stockholders.
We will pay all expenses of the offering of the shares offered by this
prospectus, except that the selling stockholders will pay any applicable
underwriting commission, discount and transfer taxes, as well as the fees and
disbursements of counsel to and experts for the selling stockholders.
Pursuant to the terms of registration rights agreements with the
selling stockholders, we have agreed to indemnify and hold harmless such selling
stockholders from, among other things, certain liabilities under the Securities
Act.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
Alyn by Brobeck, Phleger & Harrison LLP, Irvine, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference to the Annual Report on Form 10-K for the year ended December 31,
1998, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
<PAGE>
<TABLE>
============================================================ ==========================================================
<S> <C>
We have not authorized any person to make a statement that differs from what is
in this prospectus. If any person does make a statement that differs from what
is in this prospectus, you should not rely on it. This prospectus is not an
offer to sell, nor is it seeking an offer to buy,
these securities in any state in which the offer or sale ALYN CORPORATION
is not permitted. The information in this prospectus is
complete and accurate as of its date, but the information
may change after that date.
2,554,825 Shares
of Common Stock
.........
PROSPECTUS
.........
TABLE OF CONTENTS
Page
Risk Factors.......................................1
Where You Can Find More Information................8
Use of Proceeds....................................9
Selling Stockholders...............................9
Plan of Distribution..............................16
Legal Matters.....................................17
Experts...........................................17 April 29, 1999
============================================================ ==========================================================
</TABLE>
<PAGE>
II-8
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the various costs and expenses to be
paid by us with respect to the sale and distribution of the securities being
registered. All of the amounts shown are estimates except for the Securities and
Exchange Commission registration fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C> <C>
SEC Registration Fee........................................................... $ 2,130
Nasdaq National Market additional listing fee.................................. 17,500
Printing Expenses ............................................................. 1,500
Legal Fees and Expenses........................................................ 10,000
Accounting Fees and Expenses................................................... 3,000
Miscellaneous.................................................................. 2,000
------------
Total..................................................................... $ 36,130
============
</TABLE>
Item 15. Indemnification of Directors and Officers
Under Section 145 of the Delaware General Corporation Law, we can
indemnify our directors and officers against liabilities they may incur in such
capacities, including liabilities under the Securities Act. Our Bylaws provide
that we will indemnify our directors and officers to the fullest extent
permitted by law and require us to advance litigation expenses upon receipt by
us of an undertaking by the director or officer to repay such advances if it is
ultimately determined that the director or officer is not entitled to
indemnification. The Bylaws also provide that rights conferred under such Bylaws
do not exclude any other right such persons may have or acquire under any bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
Furthermore, under our Bylaws, we may purchase and maintain insurance to
indemnify directors and officers in instances in which they may not otherwise be
indemnified by us.
Our Certificate of Incorporation provides that, under Delaware law, our
directors shall not be liable for monetary damages for breach of the directors'
fiduciary duty of care to us and our stockholders. This provision in the
Certificate of Incorporation does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to us or our stockholders, for acts or omissions not
in good faith or involving intentional misconduct or knowing violations of law,
for actions leading to improper personal benefit to the director, and for
payment of dividends or approval of stock repurchases or redemptions that are
unlawful under Delaware law. The provision also does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.
<PAGE>
Item 16. Exhibits
Exhibit
Number Description of Exhibit
4.1* Certificate of Designation of Series A Convertible Preferred
Stock filed on January 8, 1999
4.2* Warrant to Purchase Shares of Common Stock of Alyn Corporation
dated January 8, 1999 by and between
Alyn and Seaside Partners, L.P.
4.3* 6% Senior Exchangeable Promissory Note due March 10, 2002
issued by Alyn to Talisman Capital
Opportunity Fund Ltd.
4.4* Registration Rights Agreement dated March 10, 1999 by and
between Alyn and Talisman Capital
Opportunity Fund Ltd.
4.5* Warrant Agreement dated March 10, 1999 by and between Alyn and
Talisman Capital Opportunity Fund
Ltd.
4.6* Certificate of Designations, Preferences and Rights of Series
B Exchangeable Preferred Stock filed
March 18, 1999
4.7* Registration Rights Agreement dated March 15, 1999 by and
between Alyn and each of the Investors
listed therein
4.8* Form of Stock Purchase Warrant dated March 22, 1999 issued
by Alyn to each of the Investors 5.1 Opinion of Brobeck,
Phleger & Harrison LLP 10.1* Series A Convertible Preferred
Stock Purchase Agreement dated January 8, 1999 by and between
Alyn and Seaside Partners, L.P.
10.2* Loan Agreement dated March 10, 1999 by and between Alyn and
Talisman Capital Opportunity Fund Ltd.
10.3* Series B Exchangeable Preferred Stock and Warrant Purchase
Agreement dated March 15, 1999 by and
between Alyn and each of the Investors listed therein 23.1
Consent of Independent Accountants 23.2 Consent of Brobeck, Phleger &
Harrison LLP (included in Exhibit 5.1) 24.1 Power of Attorney (included on
signature page of Registration Statement)
* Incorporated by reference to the exhibit with the same number to the
Company's Current Report on Form 8-K filed April 28, 1999.
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended; (ii) To reflect in the
prospectus any facts or events arising after the effective
date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information
set forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering price
may be reflected in the form of prospectus filed with the
Commission under Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and (iii) To include any material
information with respect to the plan of distribution not
previously disclosed in this registration statement or any
material change to such information in this registration
statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by us pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934, as amended, that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of Alyn's Annual
Report under Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference into this registration statement shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Alyn pursuant to the foregoing provisions, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Alyn of expenses incurred or
paid by a director, officer or controlling person of Alyn in the successful
defense of any action, suit, or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the question has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irvine, State of California, on the 29
day of April, 1999.
ALYN CORPORATION
By /S/ Arne Van Roon
Arne Van Roon,
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Arne
Van Roon and Richard L. Little jointly and severally, as attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendment to this Registration Statement and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said attorneys-in-fact, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person hereby ratifying
and confirming all that said attorneys-in-fact or any of them, or their or his
or her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/S/ Arne Van Roon Director, President and
- ----------------------------------------- Chief Executive Officer
Arne Van Roon (Principal Executive Officer) April 28, 1999
Vice President, Finance and Administration
/S/ Richard L. Little and Chief Financial Officer (Principal
- ----------------------------------------- Financial and Accounting Officer) and
Richard L. Little Secretary April 28, 1999
/S/ James L. Hesburgh
- -----------------------------------------
James L. Hesburgh Director and Chairman April 28, 1999
/S/ Robin A. Carden
- -----------------------------------------
Robin A. Carden Director April 28, 1999
/S/ Harry EDElson
- -----------------------------------------
Harry Edelson Director April 28, 1999
/S/ Michael Markbreiter
- -----------------------------------------
Michael Markbreiter Director April 28, 1999
</TABLE>
<PAGE>
April 28, 1999
Alyn Corporation
16761 Hale Avenue
Irvine, California 92606
Re: Alyn Corporation Registration Statement on Form S-3
for 2,554,825 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to Alyn Corporation, a Delaware
corporation (the "Company"), in connection with the proposed issuance and sale
by the Company of up to 2,554,825 shares of the Company's Common Stock (the
"Shares") pursuant to the Company's Registration Statement on Form S-3 (the
"Registration Statement") filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
This opinion is being furnished in accordance with the
requirements of Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the
corporate proceedings taken by the Company in connection with the issuance and
sale of the Shares. Based on such review, we are of the opinion that the Shares
have been duly authorized, and if, as and when issued in accordance with the
Registration Statement and the related prospectus (as amended and supplemented
through the date of issuance) will be legally issued, fully paid and
nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.1
to the Registration Statement and to the reference to this firm under the
caption "Legal Matters" in the prospectus which is part of the Registration
Statement. In giving this consent, we do not thereby admit that we are within
the category of persons whose consent is required under Section 7 of the Act,
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder, or Item 509 of Regulation S-K.
This opinion letter is rendered as of the date first written
above and we disclaim any obligation to advise you of facts, circumstances,
events or developments which hereafter may be brought to our attention and which
may alter, affect or modify the opinion expressed herein. Our opinion is
expressly limited to the matters set forth above and we render no opinion,
whether by implication or otherwise, as to any other matters relating to the
Company or the Shares.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated January 28, 1999, except
as to Notes 9 and 10, which are as of March 23, 1999, relating to the
consolidated financial statements which appears in Alyn Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
Costa Mesa, California
April 26, 1999
<PAGE>
DOCUMENT NO. 177225.02
