SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 15, 1999
ALYN CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 000-21153 33-0709359
(STATE OR OTHER (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
16761 Hale Avenue 92606
Irvine, California
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code (949) 425-1525
Not Applicable
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 5. OTHER EVENTS.
On December 15, 1999, the Registrant posted a statement on an internet bulletin
board associated with Yahoo Finance
(http://messages.yahoo.com/?action=q&board=ALYN), a copy of which is attached
hereto as Exhibit 99.1.
EXHIBIT NUMBER DESCRIPTION
Exhibit 99.1 Internet posting of the Registrant, dated December 15, 1999.
<PAGE>
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on behalf of the Registrant
by the undersigned thereunto duly authorized.
ALYN CORPORATION
By:
Name: Richard L. Little
Title: Chief Financial Officer
Date: December 16, 1999
Exhibit 99.1
Comments From Alyn on recent postings.
Although we have not made a posting to this bulletin board since earlier this
year, we do read what you have to say. Normally, time constraints and a general
policy of not responding to every statement made on this site causes us to be
"silent." One exception to this is when we observe important misunderstandings
or misinformation. Some recent postings are reason for this communication.
FLEMING INVESTMENT AND FINANCIAL STRUCTURE - We are very pleased to have
Fleming join us as a partner in our business. Bob Burr and Dave Edwards, while
not members of management, are providing us with the benefit of their extensive
experience in companies not unlike Alyn. The Fleming funds that invested in Alyn
did so because they saw an opportunity for growth in the future. Obviously there
can be no assurances, with much work yet to be done to have a smooth and
efficiently operating manufacturing company. However, we believe we have much of
the talent now in place to establish Alyn's success in manufacturing , even
though this task has taken far longer to accomplish than anyone would have
believed.
The structure of the investment is a straight-forward preferred stock,
convertible into common stock at $3.00 per share. It was a cash investment of
$7.5 million, from which we deducted our legal expenses in reporting the amount
invested. The 2,500,000 shares of common stock into which the preferred stock is
convertible can be voted on that basis on par with all other common stock
holders.
Funding sources have not "moved offshore" with the Fleming investment. The
specific group that made this investment is based in New York, as is their fund
that made approximately 86% of the investment. Fleming allocates their
investments among their funds when they are made. In this case, the other 14%
was allocated to Fleming US Discovery Offshore Fund III, based in Bermuda. As is
the case with many such private equity funds in this country and abroad, the
monies can come from investors all over the world. Money today clearly knows no
national boundaries.
The posting 539 by cc84lt appears to be among the most disturbing. Fleming is a
very old, very large, highly respected investment manager. The specific group
that lead the investment in Alyn is in the business of investing in companies
which have highly differentiated products, large market opportunities and
capable management. As we all know, they would not remain long in business if
their business methods included, as you suggested, driving companies down and
moving the technology offshore.
Comments made with respect to our financial structure, that the Company is
"upside down in debt", are also inaccurate. We believe our debt and equity are
in reasonable balance. Debt has a reasonable place in a balanced capital
structure.
INSIDER TRADING - There were numerous postings related to Robin Carden and the
sale of portions of his stock. We agree with mastersone_2000, in that Robin
Carden has sold very few shares since this Company went public. He could have
sold some at the time of the IPO, but didn't. There have been numerous times
since, where the stock was at a relatively high level, and he did not sell. If
one reviews the Yahoo insider trading page, you will note that the page shows he
sold 111,000 shares early this year. Those were not actually his sales. A
portion of his stock collateralizes a long outstanding personal loan. As the
stock moves down, some portion is sold to cover the decline, much as a margined
stock investment would be handled. This is done by Merrill Lynch - not Robin
Carden. The same is true of the 110,000 share "planned sale" shown for November
23 on the page. The 500,000 shares "disposed" in the entry pertained to his
donating 500,000 shares back to the Company during the 1998 Rights Offering, to
reduce the dilution of the offering on all other shareholders. I believe that
shows significant commitment to and belief in Alyn.
The only way Alyn management and employees could possibly succeed financially is
to deliver. Our corporate incentives are aligned with our investors' - if the
share price rises, we all make money. All Alyn employees have stock options in
order to align their values with the stockholders.
MANAGEMENT FOCUS - Posting 484 by knot2klutzy, makes comments which do not
accurately reflect the Company's management focus. I would like to reiterate
that Alyn has not "abandoned its zeal for developing extensive use of its
patented alloy." The Company is focusing its attention on those applications
which "move the needle" and can absorb plant capacity (read as covering overhead
cost). One of Alyn's problems of the past was chasing numerous glamour markets.
Alyn's primary goal is to reach cash flow breakeven. The market for our product
is virtually unlimited, but only if we deliver. Right now our job is FOCUS and
EXECUTION.
In posting 504 by blue_special_now, a statement is made that we don't have a
"real" extrusion plant, because the plant consists primarily of the 4000-ton
extrusion press. This statement is not accurate. We have plans to add additional
equipment to reduce our cost structure and reduce our outside dependency. Order
flow, delivery times of equipment and financial resources all have to be
balanced to decide the nature and the timing of the investments. It makes sense
to sub-contract certain production processes until enough demand exists to get a
reasonable payback on the investment when it is made. Just recently, for
example, we installed a large machine for cutting and trimming nuclear shielding
plates and other products, which will dramatically reduce our costs. We will do
the same for several other processes. The cost savings are substantial and will
increase our margins and competitiveness.
NUCLEAR MARKET AND COMPETITION - There were a number of postings regarding the
Company's nuclear business, patents and competition. At this time, Boralyn
material is being used and considered for use only in applications for storage
of spent fuel rods in operating sites. Although, as sites in the U.S. and Europe
are decommissioned, we will seek that business as well. The challenge the
industry faces is how to store the growing number of spent fuel rod assemblies.
The cooling ponds are full or soon to be full on a high percentage of the
world's nuclear power stations, with no long-term storage sites on-stream or
likely to be so within the next decade or more. The industry is addressing this
problem by developing large storage containers called "dry cell casks" and by
re-racking the cooling ponds to increase their capacities (called "wet
racking"). Boralyn is being used in the dry cell casks currently and is in
testing for wet racking. Each represent extremely large and immediate (i.e.,
within a year) opportunities. Once again, our challenge is execution, not a lack
of opportunity. For your general information, once fuel rod assemblies are
removed from the reactors, they are put in water to cool for approximately 10
years. The Government's original intent was then to move the assemblies to
long-term storage sites, like under the Nevada desert. The challenge has been
that no one wants to have these long-term sites in their vicinity - thus, the
problem and the opportunity for Boralyn.
Boral is our principal competitor. It is a material developed in the 60-ies,
which has served well in a number of applications. Boralyn, a 90-ies material,
has a number of competitive advantages, including increased absorption,
reliability and cost. However, we believe the most important longer-term
advantage is that Boralyn has structural properties, whereas, Boral does not.
New cask designs will take advantage of these structural characteristics,
resulting in reduced costs and improved performance of the product. Other
competing materials are Borated Aluminum and Borated Stainless Steel produced by
a number of companies. Boralyn compares very well with these materials in a
number of applications.
Alyn Corporation has strong patents to protect its position in the nuclear
market. Reynolds Metals recently began marketing a competing shielding material,
which it acquired from a small Orange County company that it purchased some time
ago and relocated East. Even if they do begin to develop a market for their
material, no one should rush to conclude that Alyn is "gone" for that reason, as
posted by proberts_1977 this past week. Competition is always healthy. And Alyn
Corporation will defend its position when its patents are infringed upon.
INVESTOR COMMUNICATIONS - We understand your frustration regarding news about
the Company. We walk a fine line. With no analysts following the Company
currently, it makes the challenge all the greater.
The Earnings Release Conference Call for the third quarter was cancelled due to
a lack of investor interest. As interest in this form of investors communication
rises, we will reinstate the calls. In the meantime we will communicate through
press releases when important events happen and occasionally on the web.
In closing, Posting 464 by human1156 provides a very well-stated description of
both the opportunity and the challenge. We do absolutely believe that Boralyn
can be the "metal of the future" and we are focusing our efforts to realize this
goal. Unfortunately, our work, at this stage of development, is hardly visible
to the outside world. But it is establishing an essential basis to harvest the
full potential of the products. We wish you happy holidays and we look forward
to a very positive year 2000.
Some of the information discussed above may contain projections or other
forward-looking statements regarding future events or the future financial
performance of the Company. We wish to caution you that these statements are
only predictions and that actual events or results may differ materially. We
refer you to the documents the Company files from time to time with the
Securities and Exchange Commission, specifically, the Company's most recent
Annual Report on Form 10-K/A, the Company's Quarterly Report on Form 10-Q and
the Company's Registration Statement on Form S-3/A, filed with the Securities
and Exchange Commission on October 29, 1999. These documents contain and
identify important factors that could cause the actual results to differ
materially from those contained in our projections or forward-looking
statements.
