UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                   FORM 10-QSB

              [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the quarterly period ended September 30, 2002

                                       OR

              [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934
                   For the transition period from ____________ to
                   ________________


                          Commission File No.: 0-11353

                           CIRCUIT RESEARCH LABS, INC.
        (Exact name of small business issuer as specified in its charter)

           ARIZONA                                       86-0344671
(State or other jurisdiction                          (I.R.S. Employer
 of incorporation or organization)                    Identification No.)



                  2522 West Geneva Drive, Tempe, Arizona 85282
               (Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (602) 438-0888

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

  The number of shares outstanding of each class of our common equity as of
November 1, 2002 is as follows:

Class of Common Equity                      Number of Shares
----------------------                      ----------------
Common Stock, par value $.10                3,706,880


                                                                               1
<PAGE>
                           Circuit Research Labs, Inc.
                           Index to Form 10-QSB Filing
                    For the Quarter Ended September 30, 2002

                                Table of Contents


                                                                            Page

PART I  -  FINANCIAL INFORMATION  ............................................3

     ITEM  1.  FINANCIAL STATEMENTS ..........................................3

           Condensed Consolidated Balance Sheets -
           September 30, 2002 (unaudited) and December 31, 2001 ..............3

           Condensed Consolidated Statements of Operations -
           Three and Nine Months ended September 30, 2002 and 2001
           (unaudited) .......................................................5

           Condensed Consolidated Statements of Cash Flows -
           Nine Months ended September 30, 2002 and 2001
           (unaudited) .......................................................6

           Notes to Condensed Consolidated Financial Statements  .............8


     ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
               OPERATION  ...................................................16

     ITEM  3.  CONTROLS AND PROCEDURES  .....................................30


PART II -  OTHER INFORMATION  ...............................................31

     ITEM  6.  EXHIBITS AND REPORTS ON FORM 8-K  ............................31


SIGNATURE ...................................................................32

                                                                               2
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                  CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                                 September 30,     December 31,
                                                      2002            2001
                                                 -------------     -----------
                                                  (Unaudited)
ASSETS

CURRENT ASSETS:
    Cash                                              $142,628        $280,895
    Accounts receivable, net                           844,941         641,156
    Inventories                                      2,975,165       2,828,198
    Other current assets                               172,383          93,861
                                                    ----------      ----------
    Total current assets                             4,135,117       3,844,110
                                                    ----------      ----------

PROPERTY, PLANT AND EQUIPMENT, NET                   1,178,752       1,413,607
                                                    ----------      ----------

OTHER ASSETS:
      Goodwill, net                                  7,476,008       5,734,180
      Deferred acquisition costs                             0          34,563
      Other                                             48,328          41,399
                                                    ----------      ----------
                                                     7,524,336       5,810,142
                                                    ----------      ----------
TOTAL                                              $12,838,205     $11,067,859
                                                    ==========      ==========

                                                                               3
<PAGE>

(continued)
                  CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                                 September 30,    December 31,
                                                      2002            2001
                                                 -------------    ------------
                                                  (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                $1,388,241      $1,011,955
    Notes payable                                    8,509,635       8,583,588
    Current portion of long-term debt                1,144,415         227,196
    Accrued salaries and benefits                      364,120         262,430
    Customer deposits                                   94,344          50,271
    Accrued professional fees                           28,620          48,672
    Other accrued expenses and liabilities             503,486         281,011
                                                    ----------      ----------
        Total current liabilities                   12,032,861      10,465,123

    Long-Term Debt                                     824,416         485,410
                                                    ----------      ----------

        Total Liabilities                           12,857,277      10,950,533
                                                    ----------      ----------

STOCKHOLDERS' EQUITY:
    Preferred stock, $100 par value -
      authorized 500,000 shares, none issued
    Common stock, $.10 par value -
      (authorized 20,000,000 shares, 3,706,880
      issued as of September 30, 2002 and
      2,388,880 as of December 31, 2001)               370,688         238,888
    Additional paid-in capital                       5,382,429       4,196,229
    Accumulated deficit                             (5,772,189)     (4,317,791)
                                                    ----------      ----------
        Total stockholders' equity (deficit)           (19,072)        117,326
                                                    ----------      ----------
TOTAL                                              $12,838,205     $11,067,859
                                                    ==========      ==========

See accompanying notes to consolidated condensed financial statements.

                                                                               4
<PAGE>
<TABLE>
<CAPTION>
                             CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES
                           CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                             (unaudited)


                                                Three Months Ended          Nine Months Ended
                                                  September 30,               September 30,
                                                 2002         2001           2002         2001
                                              ----------   ----------     ----------   ----------
<S>                                           <C>          <C>            <C>         <C>
NET SALES                                     $2,537,576   $3,060,315     $8,267,951  $10,990,454
COST OF GOODS SOLD                             1,287,500    1,437,781      4,250,553    4,674,265
                                              ----------   ----------     ----------   ----------
      Gross profit                             1,250,076    1,622,534      4,017,398    6,316,189
                                              ----------   ----------     ----------   ----------
OPERATING EXPENSES:
      Selling, general and administrative      1,049,737    1,155,970      3,318,680    3,663,168
      Research and development                   416,384      293,026      1,077,728    1,076,606
      Depreciation                                86,453       82,368        258,638      247,558
      Amortization                                     -      263,960              -      791,881
                                              ----------   ----------     ----------   ----------
      Total operating expenses                 1,552,574    1,795,324      4,655,046    5,779,213
                                              ----------   ----------     ----------   ----------
INCOME (LOSS) FROM OPERATIONS                   (302,498)    (172,790)      (637,648)     536,976
                                              ----------   ----------     ----------   ----------
OTHER INCOME (EXPENSE)
      Sundry income                               35,954        8,828         41,733       19,278
      Interest expense                          (287,877)    (269,459)      (858,483)    (819,816)
                                              ----------   ----------     ----------   ----------
      Total other expense                       (251,923)    (260,631)      (816,750)    (800,538)

LOSS BEFORE INCOME TAX                         ($554,421)   ($433,421)   ($1,454,398)   ($263,562)

PROVISION FOR INCOME TAXES                             0            0              0            0
                                              ----------   ----------     ----------   ----------
NET LOSS                                       ($554,421)   ($433,421)   ($1,454,398)   ($263,562)
                                              ==========   ==========     ==========   ==========

NET INCOME (LOSS) PER COMMON SHARE -              ($0.15)      ($0.19)        ($0.40)      ($0.11)
  BASIC AND DILUTED

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
  BASIC AND DILUTED                            3,706,880    2,337,404      3,629,635    2,302,202

</TABLE>
See accompanying notes to consolidated condensed financial statements.

                                                                               5
<PAGE>

                   CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                        Nine Months Ended
                                                          September 30,
                                                       2002            2001
OPERATING ACTIVITIES:                               ----------      ----------
   Net Loss                                        ($1,454,398)      ($263,562)
   Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
     Depreciation and amortization                     322,599       1,104,276
     Provision for uncollectable accounts                 (267)         50,000
     Stock compensation                                 50,000

Changes in assets and liabilities:
   Accounts receivable                                (203,518)       (332,348)
   Inventories                                         910,331        (522,587)
   Prepaid expenses and other assets                   (85,451)         53,102
   Accounts payable and accrued expenses               735,511         (99,834)
     Net cash provided by (used in)                 ----------      ----------
      operating activities                             274,807         (10,953)
                                                    ----------      ----------
INVESTING ACTIVITIES:
    Purchase of assets of Avocet Instruments, Inc.                      (8,350)
    Capital expenditures                               (22,979)        (15,866)
                                                    ----------      ----------
     Net cash used in investing activities             (22,979)        (24,216)
                                                    ----------      ----------
FINANCING ACTIVITIES:
   Proceeds from shareholder advances                                   36,741
   Principal payments on notes payable                 (84,991)
   Principal payments on long-term debt               (323,104)        (35,846)
   Proceeds from sale of common stock                   18,000          33,127
                                                    ----------      ----------
    Net cash provided by (used in)
     financing activities                             (390,095)         34,022
                                                    ----------      ----------
NET DECREASE IN CASH                                  (138,267)         (1,147)

CASH AT BEGINNING OF PERIOD                            280,895         272,203
                                                    ----------      ----------
CASH AT END OF PERIOD                                 $142,628        $271,056
                                                    ==========      ==========

See accompanying notes to consolidated condensed financial statements.

                                                                               6
<PAGE>

(continued)
                   CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                         Nine Months Ended
                                                            September 30,
                                                         2002            2001
                                                    ----------      ----------
Supplemental Disclosures of Cash Flow Information

    Cash paid for Interest                            $675,995        $790,483
                                                    ==========        ========
Supplemental schedule of non-cash investing
  and financing activities:

    Acquisitions:

    Fair value of assets acquired
      including goodwill                            $2,034,563        $ 86,330
    Debt issued to seller                             (750,000)        (77,980)
    Common Stock issued to seller                   (1,250,000)
                                                    ----------         -------
    Cash paid                                          (34,563)         (8,350)
                                                    ==========        ========
    Conversion of loan from stockholder to equity           $0         $97,500
                                                    ==========        ========
    Common stock issued for
      consulting services rendered                     $50,000              $0
                                                    ==========        ========
    Conversion of accounts payable
      to note payable                                  $11,038              $0
                                                    ==========        ========
    Solectron inventory purchase
      financed with long term Debt                    $829,328              $0
                                                    ==========        ========

See accompanying notes to consolidated condensed financial statements.

                                                                               7
<PAGE>
                   CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


1.   The Consolidated Condensed Financial Statements included herein have been
prepared by Circuit Research Labs, Inc. ("CRL" or the "Company"), pursuant to
the rules and regulations of the Securities and Exchange Commission.  The
Consolidated Condensed Balance Sheet as of September 30, 2002 and the
Consolidated Condensed Statements of Operations for the three and nine months
ended September 30, 2002 and 2001 and the Consolidated Condensed Statements of
Cash Flows for the nine months ended September 30, 2002 and 2001 have been
prepared without audit.

     Certain  information and note disclosures normally  included in  financial
statements prepared in accordance with  accounting principles  generally
accepted in the United  States  of  America have  been  condensed  or omitted
pursuant  to  such  rules  and regulations,  although the Company believes that
the  disclosures are  adequate  to make the information presented not
misleading. It  is  suggested  that  these Consolidated Condensed  Financial
Statements be read in conjunction with the consolidated financial statements
and  notes thereto included in the Company's  Annual Report on Form 10-KSB for
the year ended December 31, 2001.

     In the opinion of management, the Consolidated Condensed Financial
Statements for the unaudited interim periods presented herein include all
adjustments, consisting only of normal recurring adjustments, necessary to
present a fair statement of the results of operations for such interim periods.
Net operating results for any interim period may not be comparable to the same
interim period in previous years, nor necessarily indicative of the results that
may be expected for the full year.

2.   Significant Accounting Policies are as follows:

a.   Net loss per share

     In calculating earnings per share for the three and nine months ended
September 30, 2002 the effects of 1,565,005 shares relating to options to
purchase common stock and 1,279,775 shares relating to warrants were not used
for computing diluted earnings per share because the result would be
anti-dilutive.  For the three and nine months ended September 30, 2001 the
options and warrants to purchase 1,000,000 and 1,708,158 shares respectively, of
common stock were not used in computing diluted earnings because the result
would be anti-dilutive.  Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings per Share," establishes standards for computing and
presenting earnings per share.  It also requires the dual presentation of basic
and diluted earnings per share on the face of the statement of operations.
Earnings per share is calculated as follows:

                                                                               8
<PAGE>

                               Three Months Ended          Nine Months Ended
                                 September 30,              September 30,
                                2002         2001          2002         2001
                              ----------   ---------     ----------   ---------
Numerator
  Net loss                     (554,421)    (433,421)   (1,454,398)    (263,562)
                               =========    =========   ===========    =========

Denominator
  Weighted average shares     3,706,880    2,337,404     3,629,635    2,302,202
                              =========    =========     =========    =========

Basic and diluted loss
  per share                      ($0.15)      ($0.19)       ($0.40)      ($0.11)
                                 =======      =======       =======      =======


b.   New accounting pronouncements

     In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS
Nos. 141 and 142 ("SFAS 141" and "SFAS 142"), "Business Combinations" and
"Goodwill and Other Intangible Assets."  SFAS 141 replaces APB Opinion No. 16
and eliminates pooling-of-interests accounting prospectively.  It also provides
guidance on purchase accounting related to the recognition of intangible assets
and accounting for negative goodwill.  SFAS 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach.  Under SFAS
142, goodwill will be tested at least annually and whenever events or
circumstances occur indicating that goodwill might be impaired.  SFAS 141 and
SFAS 142 are effective for all business combinations initiated after June 30,
2001.

     The company has adopted FASB 142, and accordingly amortization of goodwill
recorded for business combinations consummated prior to July 1, 2001 has ceased.
Companies are required to adopt SFAS 142 for fiscal years beginning after
December 15, 2001.  The Company adopted SFAS 142 on January 1, 2002.  SFAS 142
requires that goodwill be tested for impairment, at least annually, and shall
not be amortized.  The goodwill impairment test is a two-step process.  The
first step compares the fair value of a reporting unit with its carrying amount.
If the fair value exceeds the carrying amount, goodwill of the reporting unit is
considered not impaired and no further testing is necessary.  If the fair value
is less than the carrying value, the second step must be performed to determine
the amount of the impairment.  The second step compares the implied fair value
of the reporting unit goodwill with the carrying amount of that goodwill.  If
the carrying amount of the reporting unit goodwill exceeds the implied fair
value of that goodwill, an impairment loss is recognized in an amount equal to
that excess. Any loss resulting from the transitional impairment test will be
reflected as a change in accounting principle.

     The Company has determined the estimated fair value of the Orban reporting
unit with a view to determining whether the goodwill has been impaired under
these new rules. Management has concluded that the estimated fair value of the
Orban reporting unit is in excess of its carrying value as of January 1, 2002.
The fair value has been estimated based on the customer base, cash flows and
existing product line of the Orban reporting unit. As a result of this review
the Company has established that no impairment loss is required to be recorded
upon the adoption of SFAS 142.

     At the time that an acquisition is made, the Company records each asset
acquired and each liability assumed at its estimated fair value, which estimate
is subject to future adjustment when appraisals or other valuation data are
obtained. The excess of (i) the total consideration paid for the acquired assets
over (ii) the fair value of the assets acquired, fewer liabilities assumed, is
recorded as


                                                                               9
<PAGE>

goodwill.  As of September 30, 2002, the Company has no identifiable intangible
assets with definite lives.

     At December 31, 2001 and September 30, 2002, the Company reported
$5,734,180 and $7,476,008, respectively, of net goodwill on its consolidated
balance sheets.  At both dates, both amounts included $5,719,142 for the
acquisition of the assets of Orban, Inc. and $15,038 for the acquisition of the
assets of Avocet Instruments, Inc.  In addition, the September 30, 2002 balance
includes $1,741,828 for the acquisition of the assets of Dialog4 System
Engineering GmbH.  The following table presents the impact of goodwill
amortization on net income (loss) and net income (loss) per share for the three
and nine months ended September 30, 2001:

  Three Months Ended September 30, 2001       Net Loss   Basic EPS   Diluted EPS
  -------------------------------------      ---------   ---------   -----------
  Reported Net Loss                          ($433,422)     ($0.12)     ($0.12)
  Add back: Goodwill amortization              263,960       $0.07       $0.07
  Adjusted                                    (169,461)     ($0.05)     ($0.05)


  Nine Months Ended September 30, 2001        Net Loss   Basic EPS   Diluted EPS
  -------------------------------------      ---------   ---------   -----------
  Reported Net Loss                          ($263,562)     ($0.07)     ($0.07)
  Add back: Goodwill amortization              791,881        0.22        0.22
  Adjusted                                     528,319       $0.15       $0.15


     In August 2001, the FASB issued Statement of Financial Accounting Standards
No. 143 ("SFAS 143"), "Accounting for Obligations Associated with the Retirement
of Long-Lived Assets."  SFAS 143 establishes accounting standards for the
recognition and measurement of an asset retirement obligation and its associated
asset cost.  It also provides accounting guidance for legal obligations
associated with the retirement of tangible long-lived assets.  SFAS 143 is
effective in fiscal years beginning after June 15, 2002, with early adoption
permitted.  The Company plans to adopt SFAS 143 effective January 1, 2003.  The
Company has not determined the effect of adopting SFAS 143 on its consolidated
results of operations or financial position.

     In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS 144"),  "Accounting for the Impairment or Disposal of
Long-Lived Assets."  SFAS 144 establishes a single accounting model for the
impairment or disposal of long-lived assets, including discontinued operations.
SFAS 144 superseded Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," and APB Opinion No. 30, "Reporting the Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions."  The provisions of
SFAS 144 are effective in fiscal years beginning after December 15, 2001, with
early adoption permitted, and in general are to be applied prospectively.  The
Company adopted SFAS 144 effective January 1, 2002 and has determined that there
will be no impact to this standard on its consolidated results of operations and
financial position.

     In April 2002, the FASB approved SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, amendment of SFAS No. 13 and Technical
Corrections".  SFAS No. 145 rescinds previous accounting guidance, which
required all gains and losses from extinguishment of debt to be classified as an
extraordinary item.  Under SFAS No. 145, classification of the debt
extinguishment depends on

                                                                              10
<PAGE>

the facts and circumstances of the transaction.  SFAS No. 145 is effective for
fiscal years beginning after May 15, 2002.

     In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities."  SFAS No. 146 requires recognition
of costs associated with exit or disposal activities when they are incurred
rather than at the date of a commitment to an exit or disposal plan.  Examples
of costs covered by the standard include lease termination costs and certain
employee severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity.  SFAS No. 146 is
to be applied prospectively to exit or disposal activities initiated after
December 31, 2002.

c.   Reclassifications

     Certain reclassifications have been made to the 2001 consolidated condensed
financial statements to conform to the classifications used in 2002 and have no
effect on previously reported net loss.


3.   INVENTORIES
Inventories consist of the following at September 30, 2002  and December 31,
2001:
                                                September 30,   December 31,
                                                   2002            2001
                                                 ---------       ---------
                                                (Unaudited)

            Raw materials and supplies          $2,781,950      $2,176,797
            Work in process                      1,017,939       1,286,942
            Finished goods                         548,652         737,834
                                                 ---------       ---------
            Total                                4,348,541       4,201,573
            Less obsolescence reserve            1,373,376       1,373,376
                                                 ---------       ---------
            Inventories, net                    $2,975,165      $2,828,198
                                                 =========       =========


4.   LONG-TERM DEBT
Long term-debt at September 30, 2002 consisted of the following:

            Note to shareholder                   $178,905
            Avocet Instruments, Inc.                47,223
            Mortgage notes                         337,391
            Vendor note                             32,109
            Employee note                           16,020
            Solectron                              760,217
            Dialog4 GmbH                           597,055
                                                 ---------
            Total long-term debt                $1,968,831

            Less current portion                (1,144,415)
                                                 ---------
            Total long-term debt, less
              current portion                     $824,416
                                                 ==========

                                                                              11
<PAGE>

     On May 31, 2000, CRL Systems, Inc. and Harman Acquisition Corp. (formerly
known as Orban, Inc.) entered into a Credit Agreement to establish the terms and
conditions of the $8,500,000 loan from Harman to CRL Systems.  The agreement was
executed in conjunction with the Asset Sale Agreement between Harman and CRL
Systems, Inc.  The loan is evidenced by two promissory notes, the Senior
Subordinated Tranche A Note (the "Tranche A Note") and the Senior Subordinated
Tranche B Note (the "Tranche B Note").  The Tranche A Note, in the amount of
$5,000,000, originally bore interest at 8 percent per annum and required
quarterly principal payments beginning March 31, 2001, with a balloon payment of
$3,000,000 due on March 31, 2003.  The Tranche B Note, in the amount of
$3,500,000, originally bore interest at 8 percent per annum for the period from
June 1, 2000 to July 31, 2000 and 10 percent per annum from August 1, 2000 up to
its September 30, 2000 maturity date.  The notes are collateralized by, among
other things, all receivables, inventory and equipment, investment property,
including CRL's capital stock in CRL Systems, and intellectual property of CRL
and CRL Systems, as defined in the Guarantee and Collateral Agreement.  In
addition, all proceeds of debt or equity or sales of assets are to be first
applied to the remaining balance due on the notes, with the exception of
proceeds from the sale of stock to the Company's President and Chief Executive
Officer, Charles Jayson Brentlinger, pursuant to a Stock Purchase Agreement
between the Company and Mr. Brentlinger which was entered into prior to the date
of the Orban acquisition.

     The Company received several payment extensions on the Tranche A and B
notes.  First, in exchange for $150,000 cash and an increase in the interest
rates to 12 percent per annum for both the Tranche A and Tranche B notes, Harman
extended the maturity date of the Tranche B note to November 30, 2000.  The
maturity date of the Tranche B note was subsequently extended several additional
times without fees or other significant changes to the original terms of the
note and was due in full on April 30, 2002. Also, the first principal payment on
the Tranche A note of $250,000, originally due March 31, 2001, was extended to
September 30, 2001 with the remaining quarterly principal payments deferred
until April 30, 2002. Interest only payments are payable monthly for both notes.
The Asset Sale Agreement between CRL Systems and Harman contained a provision
allowing Harman to rescind the transaction if, as of November 30, 2000, CRL
Systems had not paid in full the $3.5 million short-term note.  If Harman had
exercised its option to rescind the agreement, it would have been required to
return $9,250,000 of the purchase price to CRL Systems, with the difference due
to Harman as liquidating damages.  Harman's option to rescind the agreement has
since expired.

     On October 1, 2001, the Company and Harman entered into an Amendment to the
Credit Agreement (the "Amended Credit Agreement") under which both the
short-term and the long-term promissory notes were amended and restated.  Under
the Amended Credit Agreement, both promissory notes were converted to demand
notes payable upon the demand of Harman.  Interest is paid monthly at 12 percent
per annum.  Additionally, under the Amended Credit Agreement, the first
principal payment on the Tranche A Note of $250,000, the due date of which had
been extended to September 30, 2001, was increased to $1,250,000 and the
maturity date was extended to April 30, 2002.

     On May 1, 2002, the Company entered into a Second Amendment to Credit
Agreement with Harman under which the long- and short- term demand notes were
amended and restated to remove the requirement for quarterly payments on the
long-term note and to extend the maturity dates for the notes to December 31,
2003, unless Harman demands payment at an earlier date.  Interest only payments
remain payable monthly at 12 percent per annum for both notes and are also due
on demand.

     On August 19, 2002 the Company executed a Letter of Agreement to extend the
interest payments due July 15, 2002, August 1, 2002 and August 15, 2002 each in
the amount of $42,410, for a total of $127,230 to be payable to Harman on or
before November 15th, 2002.

                                                                              12
<PAGE>

     In November, 2002 the Company and Harman verbally agreed to further extend
the interest payments due July 15, 2002, August 1, 2002 and August 15, 2002 each
in the amount of $42,410 and added the interest payments due September 15, 2002
along with the semi monthly payments due in October, November, each in the
amount of $42,410 for a total that amounts to $339,280 to be payable to Harman
on or before December 6, 2002. The verbal agreement will be formally documented
at a later date.

     In consideration for arranging the purchase financing of Orban, the Company
incurred fees of $97,500 to a stockholder, the total of which was included in
the current portion of long-term debt at December 31, 2000.  The note was due on
August 14, 2001 after being extended from its prior due date of May 14, 2001 and
accrued interest at 7.5 percent per annum.  On August 10, 2001, the note was
converted to equity at the market price of $1.05 per share.

     In connection with the acquisition of the assets of Orban, the Company
issued $205,000 in long-term debt to a stockholder in consideration for his role
in such acquisition.  The note bears interest at 7.5 percent per annum, with
principal and interest due monthly beginning August 1, 2000 for four years.
Based on a verbal agreement with the note holder, the Company made payments in
2001 sufficient for interest and some principal.   On November 12, 2001, the
Company and the stockholder agreed to defer the payments to January 2002 with
interest accruing at the rate of 7.5% per annum. As of September 30, 2002, the
Company has made partial payments on the accrued interest, and the outstanding
principal, balance of this debt was $178,905, plus over due interest of $2,665.

     On May 30, 2000, the Company mortgaged its office building and
manufacturing facility in Tempe, Arizona for $335,000 in order to raise part of
the purchase price payable in connection with its acquisition of Orban.  The
mortgage note bore interest at 15.25 percent per annum, payable monthly.  The
full principal balance of the mortgage note was originally due November 30,
2000, but the maturity date was extended to December 31, 2000. Prior to that
date, the Company refinanced the unpaid balance and entered into two new
mortgage agreements for $300,000 and $62,000, respectively.  The notes bear
interest at 11.75 percent per annum and 14.75 percent per annum, respectively.
Principal and interest payments are payable monthly for both notes commencing in
February 2001, using a 12-year amortization period and requiring a balloon
payment in February 2006.

     On June 12, 2000, the Company entered into an unsecured promissory note for
$68,387 from an employee, which bears interest at 12 percent per annum.  The
unpaid principal and interest that was due September 12, 2000 was extended to
June 30, 2001 without payment of a fee.  In order to further extend the note,
the Company agreed to make 12 monthly installments of principal and interest
over a one-year period commencing September 1, 2001.    As part of the
agreement, the note continues to bear interest at 12 percent per annum, but will
be compounded monthly. As of September 30, 2002 $16,060 was outstanding on this
debt.

     On May 31, 2001, CRL acquired the assets of Avocet Instruments, Inc. for
$82,980 plus other costs of $3,350.  The acquisition has been accounted for as
an asset purchase.  The excess of the total acquisition costs over the fair
value of the assets acquired was $16,195.  In conjunction with the Asset Sale
Agreement between the Company and Avocet Instruments, Inc. and Eric B. Lane
(Sellers), the Company and the Sellers entered into a Credit Agreement to
establish the terms and conditions of the purchase price.  The loan is evidenced
by an agreement whereby the Company paid the Sellers $25,000 interest-free, paid
$5,000 on the Closing Date, and $5,000 in each of the following four months.
Thereafter, the balance ($57,980) is being paid in monthly installments of
$1,200, including interest at the rate of five percent per annum for 54 months.

                                                                              13
<PAGE>

     In the fourth quarter of fiscal year 2001, the Company converted various
payables into notes payable and long-term debt totaling $179,903, of which
$90,076 was short-term debt and $89,827 was long-term debt. As of September 30,
2002 the balance of the notes payable and long-term debt have been reduced to
$27,635, all of which is current.


5.   ACQUISITION OF DIALOG4 ASSETS

     On January 18, 2002, the Company acquired the assets of Dialog4 System
Engineering GmbH ("Dialog4").  Dialog4, a German corporation based in
Ludwigsburg, Germany, is a worldwide leader in ISO/MPEG, audio, ISDN, satellite
transmission, networking and storage.  Dialog4 has been designing and
manufacturing equipment for the codec market for over ten years.  Its products,
available in Europe since 1993, include the MusicTaxi codec for encoding and
decoding audio and data over TCP/IP on the Internet, ISDN and satellite.

     The Company purchased the assets of Dialog4 pursuant to an Asset Sale and
Purchase Agreement for $2 million, comprised of 1,250,000 shares of restricted
common stock, valued at $1.00 per share, and $750,000 cash to be paid at a later
date either by the Company from its working capital or by the Company's
President and Chief Executive Officer, Charles Jayson Brentlinger.  On April 8,
2002, the Company executed an amendment to the Asset Sale and Purchase Agreement
with Dialog4.  The amended agreement extends the term of the Company's payments
to Dialog4 over twenty months while reducing the amount of the monthly payment
installments to $37,500 plus interest on the remaining principal balance at a
rate of 10 percent per annum.  The monthly installments of principal and
interest are due and payable on the twentieth day of each month commencing April
20, 2002.

     On August 9, 2002, the Company agreed to purchase all existing inventory of
parts related to its Sountainer product from Solectron GmbH for a total price of
$829,328, payable in 24 equal monthly installments including interest.
Solectron had purchased the inventory pursuant to an agreement with Dialog4
approximately two years prior to the purchase of the assets of Dialog4 by the
Company.  The price was equal to the amount paid by Solectron for the inventory
of which the Company expects to release the future sales of that inventory.  The
agreement settled a dispute between the Company and Solectron in which Solectron
claimed the Company became liable for the obligation of Dialog4 to purchase the
inventory when the Company acquired the assets of Dialog4.  The Company
maintains it did not undertake the obligation of Dialog4, but to settle the
dispute, agreed to purchase the inventory which it will use in the manufacture
of Sountainer products.  The first monthly payment of $34,555 was made August
14, 2002 with subsequent payments due and payable on the 15th of every month. On
November 11, 2002,  the Company and Solectron executed a letter of understanding
in connection with the Settlement Agreement between Solectron and the Company
whereby the Company will defer the October 15, 2002,  November 15, 2002 and the
December 15, 2002  payments.  The three deferred payments will be allocated over
the period of one year beginning in January 2003 increasing the installments to
$43,194 per month over the same period of time.  Beginning in January 2004 the
installments will revert to $34,555 per month until the balance is paid in full
July 2004.  Mr. Brentlinger will also be required to sign a personal guarantee
under the revised Settlement Agreement. The Company has further agreed to
indemnify Mr. Brentlinger should he be required to make any payment under this
guarantee.

The following table shows the fair values of assets and liabilities recorded for
the acquisition of the assets of Dialog4 System Engineering GmbH:

                                                                              14
<PAGE>

            Inventories                           $228,000
            Property and equipment, net             65,000
            Goodwill                             1,742,000

            Share consideration paid            $1,250,000
            Debt issued                            750,000
            Cash consideration paid                 35,000
            Debt assumed                                 0

     In connection with the acquisition, Berthold Burkhardtsmaier, Dialog4's
managing director, became the Company's Vice President of European Operations
and a member of its board of directors.

                                                                              15
<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     The following discussion of our financial condition and results of
operations should be read together with the financial statements and the
accompanying notes included elsewhere in this report.  This discussion contains
statements about future events, expectations, risks and uncertainties that
constitute forward- looking statements, as do discussions elsewhere in this
report. Forward-looking statements are based on management's beliefs,
assumptions and expectations of our future economic performance, taking into
account the information currently available to management.  These statements are
not statements of historical fact.  Forward-looking statements involve risks and
uncertainties that may cause actual results, performance or financial condition
to differ materially from the expectations of future results, performance or
financial condition we express or imply in any forward-looking statements.  The
words "believe," "may," "will," "should," "anticipate," "estimate," "expect,"
"intend," "objective," "seek," "strive" or similar words, or the negative of
these words, identify forward-looking statements. Our actual results may differ
materially from those anticipated in those forward-looking statements as a
result of certain factors, including, but not limited to, those described below
under this Item 2, "Management's Discussion and Analysis or Plan of Operation -
Risk Factors."  We qualify any forward-looking statements entirely by these
cautionary factors.

RECENT DEVELOPMENTS

     We still owe Dialog4 approximately $597,000 payable $37,500 monthly plus
interest, for the purchase of the Dialog4 assets effective January 1, 2002. The
Company has requested a reduction in the amount payable to Dialog4 each
month (without reducing the total amount due) during the time the Company is
required to pay Dialog4's debt to Solectron GmbH, one of Dialog4's creditors.
described above.Dialog4 has requested the monthly payments to be made directly
to creditors of Dialog4, and we are currently negotiating with those creditors
for an acceptable payment schedule.  There is no assurance that we can achieve a
satisfactory settlement with those creditors.   Dialog4 has demanded payment of
the August, September and October payments (totaling $119,555.33 including
interest) in full by November 13, 2002 unless we can successfully negotiate a
payment schedule to Dialog4's creditors.  If we are unable to do so, it will
need to satisfy or settle the demands of Dialog4 for payment under the original
asset purchase agreement with Dialog4.

     We entered into a contract to sell our building at 2522 W. Geneva Tempe,
Arizona, 85258. The sales price will be for $668,378 and is expected to close in
2002.

                                                                              16
<PAGE>

OVERVIEW

    We develop, manufacture and market high-quality electronic audio
processing, transmission encoding and noise reduction equipment for the
worldwide radio, television, cable, Internet and professional audio markets.  In
recent periods, we have acquired the assets of other companies within our
industry or in related industries into which we desire to expand.  On May 31,
2000, we acquired the assets of Orban, Inc., a producer of audio editing and
processing equipment.  On May 31, 2001, we acquired the assets of Avocet
Instruments, Inc., a supplier of quality audio receivers and coders for the
television and post-production industry.  On January 18, 2002, we acquired the
assets of Dialog4 System Engineering GmbH, a producer of ISO/MPEG, audio, ISDN,
satellite transmission, networking and storage.

     We are still in the process of integrating the operations of our most
recently acquired operations, including integration of our financial accounting
and management information systems. Once this integration is complete, we expect
to benefit from cost savings produced by combined research and development,
marketing, sales and administration, manufacturing efficiencies and cross-
selling opportunities.  Our recent acquisition of the Dialog4 product line has
led to the establishment of our new Orban Europe division offices in
Ludwigsburg, Germany.  We now face the challenge of integrating our financial
accounting and management information systems with those of Dialog4 as well as
the challenge of overcoming obstacles produced as a result of different
corporate cultures, difficult legal system and different accounting and
reporting regulations.  We will also face new risks arising from foreign
currency fluctuations.

     We incurred losses of $2,046,640 and $2,258,121 during the years ended
December 31, 2001 and 2000, respectively.  Our deteriorating financial results
and reduced liquidity caused us to renegotiate our $8.5 million debt owed to
Harman, which we incurred in connection with our acquisition of the assets of
Orban. Under the terms of the new agreement, Harman can demand at any time that
we immediately pay in full the outstanding balance. Should this happen, we would
immediately be forced to file for protection under Chapter 11 of the United
States Bankruptcy Code. Our inability to pay the $8.5 million debt to Harman,
should payment be demanded, our difficulties in meeting our financing needs and
our negative working capital position have resulted in our independent public
accountants adding a going concern emphasis paragraph to their report (set forth
in our Form 10-KSB for the year ended December 31, 2001) by including a
statement that such factors raise substantial doubt about our ability to
continue as a going concern.  In addition to our efforts to reduce costs and
increase sales, we are currently seeking sources of long-term financing.
However, the inclusion of a going concern emphasis paragraph generally makes it
more difficult to obtain trade credit, insurance or additional capital through
public or private debt or equity financings.


                                                                              17
<PAGE>

RESULTS OF OPERATIONS

     The following table sets forth for the periods indicated certain summary
operating results:
<TABLE>
<CAPTION>
                                                 Three Months Ended          Nine Months Ended
                                                    September 30,               September 30,
                                                 2002         2001           2002         2001
                                              ----------   ----------     ----------   ----------
<S>                                           <C>          <C>            <C>         <C>
     Revenues:
        Net sales                             $2,537,576   $3,060,315     $8,267,951  $10,990,454
        Other income                              35,954        8,828         41,733       19,278
                                              ----------   ----------     ----------   ----------
           Total revenues                     $2,573,530   $3,069,143     $8,309,684  $11,009,732
                                              ==========   ==========     ==========  ===========
     Gross profit on net sales                $1,250,076   $1,622,534     $4,017,398   $6,316,189

     Gross profit margin                              49%          53%            49%          57%
     EBITDA (1)                                ($159,862)    $193,570      ($318,700)  $1,637,096
     Net cash provided by (used) in
      operating activities                      $167,039      $85,320       $274,807     ($10,953)
     Net cash used in investing activities        (9,079)      (1,011)       (22,979)     (24,216)
     Net cash (used in) provided by
      financing activities                      (137,547)     (24,005)      (390,095)      34,022
     Net (loss) income                          (554,421)    (433,422)    (1,454,398)    (263,562)
     Net (loss) income as a
      percent of net sales                           -22%         -14%           -18%          -2%
     Loss per share - basic and diluted           ($0.15)      ($0.19)        ($0.40)      ($0.11)
</TABLE>

(1)  EBITDA is defined as earnings before interest, taxes, depreciation and
amortization.  Companies and analysts do not calculate this measure in the same
fashion and, as a result, the measure presented may not be comparable to
similarly titled measures reported by other companies.  EBITDA should be
considered in addition to, not as a substitute for or superior to, operating
income, cash flows or other measures of financial performance prepared in
accordance with accounting principles generally accepted in the United States.
This information is not intended to assist investors in an analysis of our
liquidity because there are a number of uses of cash that are excluded from the
EBITDA measurement, as reported in our statement of cash flows.  Rather,
investors may wish to use this information as one of a number of points of
comparison between our reported net loss in 2002 and net income in 2001.  None
of the funds depicted by the EBITDA measure above were available for
management's discretionary use.

                                                                              18
<PAGE>

                 THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002
         COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001


     Net Sales.  Net sales during the three and nine months ended September 30,
2002 were $2.5 million and $8.3 million, respectively, compared to $3.1 million
and $11.0 million during the comparable periods in 2001, reflecting a decrease
of 19% and a 25%, respectively.  The decrease in net sales was primarily
attributable to a decrease in demand for our product.  Our Orban division
reported net sales for the three and nine months ended September 30, 2002 of
$2.2 million and $7.0 million, respectively, compared to $2.9 million and $10.1
million for the same periods in 2001.  This decrease was primarily a result of a
decreased demand from our single largest customer by 72% during the three months
ended September 30, 2002 and 63% for the nine months ended September 30, 2002 as
compared to the same periods in 2001.  Our CRL division reported net sales for
the three and nine months ended September 30, 2002 of $175,000 and $500,000,
respectively, compared to $149,000 and $795,000 for the same periods in 2001,
representing an increase of 17% and a decrease of 37%, respectively.  This
increase for quarter ending September 30, 2002 is due to an unexpected order
from one of it's international customers. The decrease for the nine months ended
September 30, 2002 as compared to the same period in 2001 was the result of
decreased demand from one customer overseas.  We are uncertain whether this
decreased demand will continue for our CRL and Orban products, but generally, we
expect continued stable demand at current levels across these product lines in
2002.  Net sales for Orban Europe during the three and nine months September 30,
2002 ended were $251,000 and $851,000 respectively.

     Gross Profit.   Gross profit for the three and nine months ended September
30, 2002 was 49% and 49%, respectively, compared to 53% and 57% for the same
periods in 2001.  The decrease of 4% and 8%, respectively, in gross profit is
primarily due to decreased production caused by a decreased demand for our
products coupled with an increase in our fixed expenses as a result of our
purchase of the assets of Dialog4. Contributing factors also include and a
percentage increase in our variable expenses as a result of smaller quantity
material purchases creating a premium in the price along with higher freight
charges to expedite parts shipments.  Gross profit for our Orban Europe division
(Dialog4 ) for the three and nine months ended September 30, 2002 was 62% and
51%, respectively.  Gross profit declined as a result of discounts in sales
prices that we gave in an effort to successfully introduce Dialog4 products into
the market under the Orban name.

     Selling, General and Administrative.  Selling, general and administrative
expenses ("SG&A") for the three and nine months ended September 30, 2002 were
$1,050,000 and $3,319,000, respectively, representing a decrease of 9% and 9%,
respectively, compared to $1,156,000 and $3,663,000 reported during the same
periods in 2001.  As a percentage of net sales, SG&A increased from 38% for the
three months ended September 30, 2001 to 41% for the same period in 2002. SG&A
as a percentage of net sales increased from 33% for the nine months ended
September 30, 2001 to 40% for the same period in 2002. The increase in SG&A
expense is due in part to the variable component of SG&A (other domestic and
international sales and marketing expenses) associated with the acquisition of
the Dialog4 assets.  The fixed component of SG&A has also increased due to the
additional personnel in sales, marketing, administration and cost related to
operating the Orban Europe office following the January 18, 2002 acquisition.

     Research and Development.  Research and development expense during the
three and nine months ended September 30, 2002 was  $416,000 and $1,078,000,
respectively, compared to $293,000 and $1,077,000 during the comparable periods
for 2001, respectively, reflecting an increase of 42% and 0%. The 42% increase
in the three months ended September 30, 2002 as compared to the same period in


                                                                              19
<PAGE>

2001 is due to the increase in development projects targeting replacement
products, existing products and new products. Management believes that future
success is tied to new product development.

     Other (Income) Expense.   Other expense, net for the three and nine months
ended September 30, 2002 was $252,000 and $817,000, respectively, of which
$42,000 and $551,000 respectively, represents interest paid to Harman
International Industries, Inc. in connection with the seller carry-back loan
that financed a portion of the purchase price that we paid for the Orban assets.
Other expense, net for the three and nine months ended September 30, 2001 was
$263,000 and $801,000, respectively, of which $255,000 and $765,000,
respectively, represented interest and fees paid to Harman.  Interest expense
during the three and nine months ended September 30, 2002 was $288,000 and
$858,000, respectively, compared to $269,000 and $820,000 for the same periods
in 2001, respectively, reflecting an increase of 7% and 5%, respectively.  The
increase represents the interest expense associated with the Amendment to the
Asset Sales and Purchase Agreement that we entered into on April 8, 2002 and the
interest expense associated with the Material Liability Agreement between
Dialog4 and Solectron GmbH that was assumed by the Company as part of the
Settlement Agreement that we executed with Solectron.

     Operationally, we are reporting a loss before interest, taxes, depreciation
and amortization (EBITDA) of $180,000 and $379,000, respectively, for the three
and nine months ended September 30, 2002 which represents approximately 7% and
4%, respectively, of the total net sales in 2002 as compared to the same periods
2001 in which we reported profit before interest, taxes, depreciation and
amortization (EBITDA) of $174,000 and $1,576,000, respectively, representing 6%
and 14% of net sales, respectively.  The decrease in EBITDA is primarily due to
the reduction in sales.

     Net Loss.  Net loss for the three and nine months ended September 30, 2002
was $554,000 and $1,454,000, respectively, compared to net loss of  $433,000 and
$264,000 for the same periods in 2001.  Excluding the impact of the non-cash
items, we would have reported a net loss $792,000 for the nine months ended
September 30, 2002 compared to a positive net income of $929,000 for the same
period in 2001.

     Non-cash expense items for the nine months ended September 30, 2002 were as
     follows:
                 $0   Increase in inventory reserve
               (267)  Decrease in provision for uncollectible accounts
                  0   Amortization of intangibles
             50,000   Stock compensation
            258,638   Depreciation
            -------
           $308,371   Total (representing 22% of the net loss)
            =======


      Non-cash expense items for the nine months ended September 30, 2001 were
      as follows:

           $247,558   Depreciation
             50,000   Increase in provision for uncollectible accounts
            791,881   Amortization of intangibles
            -------
         $1,089,439   Total (representing 513% of the net income)
          =========

                                                                              20
<PAGE>

     The decrease in amortization from 2001 to 2002 reflected in the charts
above resulted from our adoption of Statement of Financial Accounting Standards
No. 142 effective January 1, 2002.

LIQUIDITY AND CAPITAL RESOURCES

     We had negative net working capital of approximately $7.9 million at
September 30, 2002, and the ratio of current assets to current liabilities was
..34 to 1.  At September 30, 2001, we had negative net working capital of
approximately $7.1 million and a current ratio of .37 to 1.  The decrease in
working capital is a result of our increased debt associated with our
acquisition of the Dialog4 assets.

     The negative working capital primarily resulted from the conversion to
demand notes of the $3.5 million short-term note and the $5 million long-term
notes payable to Harman.  The notes are payable on December 31, 2003 or upon the
earlier demand of Harman, as specified in the Second Amendment to Credit
Agreement that we entered into with Harman effective May 1, 2002.

     Our substantial obligation to Harman may have important consequences for
us, including the following:

     * Our ability to continue as a going concern will depend in part on whether
       Harman demands payment on the $8.5 million debt, or any portion thereof;
     * A significant portion of any cash flow from operations will be dedicated
       to servicing our debt obligations and will not be available for other
       business purposes;
     * The terms and conditions of our indebtedness limit our flexibility in
       planning for and reacting to changes in our business, and in making
       strategic acquisitions;
     * Our ability to obtain additional financing in the future for working
       capital, capital expenditures and other purposes may be substantially
       impaired; and
     * Our substantial leverage may make us more vulnerable to economic
       downturns and competitive pressures.

     Our ability to meet our debt service obligations and reduce our total
indebtedness to Harman depends in part on our future operating performance.  Our
future operating performance will depend on our ability to expand our business
operations by growing our core audio processing business, expanding our product
offerings and penetrating new and emerging markets, which we anticipate will
require additional financing.  In addition, our future operating performance
will depend on economic, competitive, regulatory and other factors affecting our
business that are largely beyond our control.  If we are unable to expand our
business operations as planned, we may not be able to service our outstanding
indebtedness to Harman.

     On January 18, 2002, we acquired the assets of Dialog4 System Engineering
GmbH.  We purchased the assets of Dialog4 pursuant to an Asset Sale and Purchase
Agreement for $2 million, comprised of 1,250,000 shares of our common stock,
valued at $1.00 per share, and $750,000 cash to be paid at a later date either
by us from our working capital or by our President and Chief Executive Officer,
Charles Jayson Brentlinger.  On April 8, 2002, we executed an amendment to the
Asset Sale and Purchase Agreement with Dialog4.  The amended agreement extends
the term of our payments to Dialog4 over twenty months while reducing the amount
of the monthly payment installments to $37,500 plus interest on the remaining
principal balance at a rate of 10 percent per annum.  The monthly installments
of principal and interest are due and payable on the twentieth day of each month
commencing April 20, 2002.

                                                                              21
<PAGE>

     Currently, we are in arrears by eight interest installments in an
aggregate amount of $339,280. In November 2002, Harman verbally agreed (with the
intention to formally document it at a later date), to defer the outstanding
interest payments to be due and payable December 6, 2002.

     We are further obligated to pay Solectron GmbH $34,555 per month through
July 2004. The first monthly payment of $34,555 was made August 14, 2002 with
subsequent payments due and payable on the 15th of every month. On November 11,
2002, the Company and Solectron executed a letter of understanding in connection
with the Settlement Agreement underwhich Solectron has allowed us to defer the
October 15, 2002; November 15, 2000 and the December 15, 2002  payments.  The
three deferred payments will be made over the period of one year beginning in
January 2003 increasing the installments to $43,194 per month over the same
period of time. Beginning in January 2004 the installments will revert to
$34,555 per month until the balance is paid in full July 2004.

     Any working capital generated from 2002 operations will be used to service
our contractual obligations and commercial commitments, excluding our
obligations to Harman.  Any excess working capital generated from 2002
operations will be applied to expand our business operations.  The terms of the
Harman debt restrict our ability to obtain financing for these types of
expansion expenditures, as well as financing for other purposes. Accordingly,
our ability to expand will primarily depend on our ability to generate
sufficient working capital from operations. We will closely monitor our working
capital in 2002 as we evaluate any expenditure related to expansion.

     Accounts receivable were $845,000 at September 30, 2002 compared to
$641,000 at December 31, 2001 representing a net increase of $204,000 or 32%.
The increase is primarily due to an increase in sales for quarter ended
September 30, 2002 compared to the quarter ended December 31, 2001.

     Total inventories were $2,975,000 at September 30, 2002 compared to total
inventories of $2,828,000 at December 31, 2001. The value of inventory increased
by $147,000 or 5% due primarily to the $829,000 of inventory associated with the
Solectron Settlement Agreement. The purchased parts from Solectron represent 28%
of the total inventory value.  In addition, we acquired $228,000 of inventory in
connection with the Dialog4 acquisition.

     For the year ending December 31, 2002, our principal working capital
requirements will be the payment of normal recurring operating costs.
Management believes that these requirements can be met from the operating cash
flows.

     On May 31, 2000, our wholly owned subsidiary, CRL Systems, Inc., acquired
the assets of Orban, Inc., a wholly owned subsidiary of Harman International
Industries, Inc.  The total stated purchase price was $10.5 million, of which $2
million was paid in cash and the balance of which was paid by means of a
combination of short-term and long-term promissory notes that we issued to
Harman.  On October 1, 2001, we entered into an Amendment to Credit Agreement
with Harman under which both the long-term and the short-term notes were
converted to demand notes payable on the demand of Harman or, if no demand is
sooner made, on the dates and in the amounts specified in the Amended Credit
Agreement.  Effective May 1, 2002, we entered into a Second Amendment to Credit
Agreement with Harman under which both demand notes were amended and restated to
remove the requirement for quarterly payments on the long-term note and to
extend the maturity dates for the notes to December 31, 2003, unless Harman
demands payment at an earlier date.  Interest only payments remain payable
monthly at 12 percent per annum for both notes and are also due on demand. On
August 19, 2002 the Company executed a Letter of Agreement to extend the
interest payments due July 15, 2002:


                                                                              22
<PAGE>

August 1, 2002 and August 15, 2002 each in the amount of $42,410, for a total
that amounts to $127,230 to be payable to Harman on or before November 15, 2002

     Approximately $9,563,000 of our total indebtedness is due and payable by
December 31, 2003, unless with respect to the $8,500,000 due Harman, payment is
demanded at an earlier date. Our President, Mr. Charles Jayson Brentlinger, has
committed to exercise his outstanding stock options, if necessary, to satisfy a
portion of the Company's debt payment requirements if operating cash flows are
inadequate to retire the debt.  If Mr. Brentlinger exercised all of his options
to purchase shares of our common stock, we would realize gross proceeds of
approximately $1,250,000.  We are actively pursuing opportunities to raise
additional capital through a private equity placement of our common stock, asset
based lending, or a combination of the two. We have currently engaged HD Brous &
Co., Inc. to advise and assist us in capital raising efforts. We cannot offer
any assurances that we will be able to attract additional capital or that
additional financing, if obtained, will be sufficient to meet our current
obligations.  If we cannot meet our current obligations, our ability to continue
as a going concern will be jeopardized.

     On September 12, 2000, we borrowed $68,387 from an employee to assist us in
the purchase of the assets of Orban.  The unsecured promissory note evidencing
the debt bears interest at 12 percent per annum.  The note was originally due
September 12, 2000 but was extended to September 30, 2001 without payment of a
fee.  In order to further extend the note, we agreed to make 12 monthly
installment payments of principal and interest over a one- year period
commencing September 1, 2001.  We did not pay a fee in connection with this
extension.  As part of the agreement, the note continues to bear interest at 12
percent per annum, but is compounded monthly.  As of September 30, 2002, we had
paid a total of $52,367 on the note and the remaining unpaid balance was
$16,020.

                                                                              23
<PAGE>

RISK FACTORS

     You should carefully consider the following risk factors and all other
information contained in this report in evaluating our business and us.  You
should also keep these risk factors in mind when you read and consider the
forward-looking statements in this report and other reports we file with the
SEC.  The risks and uncertainties described below are not the only ones facing
us. Additional risks and uncertainties that we are unaware of, or that we
currently deem less material, also may become important factors that affect us.


AS A RESULT OF OUR LARGE OUTSTANDING DEBT OBLIGATIONS, WE HAVE SIGNIFICANT
ONGOING DEBT SERVICE REQUIREMENTS WHICH MAY ADVERSELY AFFECT OUR FINANCIAL AND
OPERATING FLEXIBILITY.

     On May 31, 2000, we acquired the assets of Orban, a wholly- owned
subsidiary of Harman International Industries, Inc. Including the $250,000
previously paid to Harman as non- refundable deposits in 1999, the total stated
purchase price was $10.5 million, of which $2 million was paid in cash and the
balance of which was paid by means of a combination of short-term and long-term
promissory notes that we issued to Harman.  As of September 30, 2001, our total
indebtedness was approximately $8.5 million.  Effective October 1, 2001, this
indebtedness was converted to demand notes payable on the demand of Harman or,
if no demand is sooner made, on the dates and in the amounts set forth in the
amended Credit Agreement that we entered into with Harman.  Our substantial
leverage may have important consequences for us, including the following:

     * our ability to continue as a going concern will depend in part on
       whether Harman demands payment on the $8.5 million debt, or any
       portion thereof;
     * a significant portion of our cash flow from operations will be
       dedicated to servicing our debt obligations and will not be
       available for other business purposes;
     * the terms and conditions of our indebtedness limit our flexibility
       in planning for and reacting to changes in our business, and in
       making strategic acquisitions;
     * our ability to obtain additional financing in the future for working
       capital, capital expenditures, and other purposes may be
       substantially impaired; and
     * our substantial leverage may make us more vulnerable to economic
       downturns and competitive pressures.

     Our ability to meet our debt service obligations and reduce our total
indebtedness to Harman depends in part on our future operating performance.  Our
future operating performance will depend on our ability to expand our business
operations by growing our core audio processing business, expanding our product
offerings and penetrating new and emerging markets, which we anticipate will
require additional financing.  In addition, our future operating performance
will depend on economic, competitive, regulatory and other factors affecting our
business that are beyond our control.  If we are unable to expand our business
operations as planned, we may not be able to service our outstanding
indebtedness to Harman.


                                                                              24
<PAGE>

THE EXISTENCE OF AN UNQUALIFIED OPINION CONTAINING A GOING CONCERN EMPHASIS
PARAGRAPH ON OUR 2001 FINANCIAL STATEMENTS MAY MAKE IT MORE DIFFICULT FOR US TO
OBTAIN CREDIT OR ADDITIONAL CAPITAL AND MAY JEOPARDIZE OUR RELATIONSHIP WITH
EXISTING AND NEW CUSTOMERS.

     Our inability to pay the $8.5 million debt to Harman should payment be
demanded, our difficulties in meeting our financing needs and our negative
working capital position created by the demand notes have resulted in our
independent public accountants adding a going concern emphasis paragraph on our
2001 financial statements in their report by including a statement that such
factors raise substantial doubt about our ability to continue as a going
concern. The inclusion of a going concern emphasis paragraph generally makes it
more difficult to obtain trade credit, insurance or additional capital through
public or private debt or equity financings.  We may also find it more difficult
to maintain existing customer relationships and to initiate new customer
relationships.


WE WILL NEED ADDITIONAL DEBT OR EQUITY TO SERVICE THE DEBT PAYABLE AS A RESULT
OF OUR ACQUISITION OF ORBAN, AND WE MAY NOT BE ABLE TO OBTAIN THIS FINANCING ON
ACCEPTABLE TERMS.

     Upon our acquisition of the assets of Orban, we issued a $3.5 million
short-term note and a $5 million long-term note payable to Harman.  Effective
October 1, 2001, both of these notes were converted to demand notes payable on
the demand of Harman or, if no demand is sooner made, on the dates and in the
amounts set forth in the amended Credit Agreement that we entered into with
Harman. Effective May 1, 2002, we entered into a Second Amendment to the Credit
Agreement with Harman under which both demand notes were amended and restated to
remove the requirement for quarterly payments on the long-term note and to
extend the maturity date for the notes to December31, 2003, unless Harman
demands payment at on earlier date. Interest only payments remain payable semi-
monthly at 12 percent per annum for both notes and are also due on demand.

     Our ability to service our debt to Harman will depend on our ability to
obtain either additional debt or equity financing, or a combination thereof.  We
cannot be sure, however, that we will be able to obtain the necessary debt or
equity financing on acceptable terms.  Also, additional debt financing or the
sale of additional equity securities may cause the market price of our common
stock to decline.  If we are unable to obtain additional debt or equity
financing on acceptable terms, we may have to negotiate further restructuring of
the debt with Harman.  If Harman is unwilling to further restructure the debt,
we may default on the debt and our ability to continue as a going concern would
be jeopardized.


OUR ABILITY TO OBTAIN AN OUTSIDE LINE OF CREDIT IS SUBJECT TO THE APPROVAL OF
OUR CURRENT CREDITORS AND, IF SUCH APPROVAL IS WITHHELD, OUR ABILITY TO COMPETE
EFFECTIVELY IN OUR INDUSTRY COULD BE JEOPARDIZED.

     In connection with our acquisition of Orban, we entered into a Credit
Agreement with Harman.  Under the terms of the Credit Agreement, we are bound by
certain covenants that prevent us from obtaining additional credit facilities
without the prior written approval of Harman.  This limitation on our ability to
obtain additional outside lines of credit may curtail our ability to make
strategic acquisitions and to conduct research and development.  This in turn
could jeopardize our competitive position within our industry.

                                                                              25
<PAGE>

FOREIGN CURRENCY FLUCTUATIONS COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.

     On January 18, 2002, we acquired the assets of Dialog4 System Engineering
GmbH.  Our acquisition of this new product line has led to the establishment of
our new Orban Europe offices in Ludwigsburg, Germany.  Transactions and expenses
of our Orban Europe operations will be conducted in Euros which will expose us
to market risks related to foreign currency exchange rate fluctuations that
could adversely affect our operating results. For instance, a strengthening of
the U.S. dollar against the Euro could reduce the amount of cash and income we
receive and recognize from Orban Europe.  Furthermore, it is likely that for
accounting purposes we will recognize foreign currency gains or losses arising
from our operations in Europe on weighted average rates of exchange in the
period incurred and translate assets and liabilities of these operations into
U.S. dollars based on year- end foreign currency exchange rates, both of which
are subject to currency fluctuations between the U.S. dollar and the Euro.  As
foreign exchange rates vary, our results from operations and profitability may
be adversely affected.

     We expect to derive approximately 13% of our total revenues from our Orban
Europe operations.  This percentage may increase in future years as we further
develop and expand our operations in Europe.  We cannot predict the effects of
exchange rate fluctuations on our operating results.  We do not currently intend
to engage in foreign currency exchange hedging transactions to manage our
foreign currency exposure.  If and when we do engage in foreign currency
exchange hedging transactions, we cannot determine whether our strategies will
adequately protect our operating results from the effects of exchange rate
fluctuations.


OUR FUTURE SUCCESS IS DEPENDENT ON OUR SUCCESSFUL INTEGRATION OF OUR RECENTLY
ACQUIRED OPERATIONS INTO OUR OWN.

     We are in the process of integrating the recently acquired operations of
Orban, Inc. on May 31, 2000, Avocet Instruments, Inc. on May 31, 2001 and
Dialog4 Systems Engineering GmbH, on January 18, 2002 with our existing
operations in order to achieve economies of scale, manufacturing and marketing
efficiencies, reduced operational expenses and cross-selling opportunities.
Although the combination of our operations with those of our recently acquired
assets has produced substantial synergies, nevertheless this combination is
ongoing and continues to present significant management challenges.  We cannot
determine whether this integration, and the synergies expected to result from
that integration, will be achieved to the extent initially anticipated. If
management is unable to completely and successfully integrate our operations
with those of recently acquired operations, we will not fully realize the
benefits of integration noted above, and our business, results of operations and
financial condition could be adversely affected.


WE SERVE A MARKET IN WHICH THERE ARE A LIMITED NUMBER OF CUSTOMERS AND OUR
FINANCIAL WELL-BEING IS DIRECTLY TIED TO THE FINANCIAL HEALTH OF THESE
CUSTOMERS.

     In recent years, the radio and television industry in the United States has
experienced a great deal of consolidation of ownership.  As a result, several
corporations now own a substantial number of radio and television stations.
These corporations are the largest purchasers of our audio processing and
post-production equipment.  Moreover, a significant amount of our revenue is
derived from audio processing replacement orders that come from these customers.
Our financial stability and well- being is thus directly tied to the financial
health of these customers.  If these customers experience financial difficulty,
regardless of the cause, they may delay, reduce or cancel orders for new audio
processing or post-production equipment.  If this occurs, our results of
operations could decline and we could experience difficulty in servicing our
debt obligations.

                                                                              26
<PAGE>

WE MUST ADAPT TO RAPID TECHNOLOGICAL CHANGE AND INCREASED COMPETITION IF WE ARE
GOING TO BE ABLE TO COMPETE EFFECTIVELY IN OUR INDUSTRY.

     While audio processing has been and will continue to be our core business,
we are using our existing technologies to enter the emerging markets of digital
audio broadcasting, cable television and Internet-related audio delivery.  These
markets are characterized by rapid technological change and require a
significant commitment of capital and human resources.  We intend to engage
continually in research and development activities so that we can improve our
current products and develop new products.  However, our significant debt
obligations may limit the amount of resources, both capital and human, that we
can commit to research and development.  This could jeopardize the success and
reception of our products in these emerging markets. In addition, because of the
rapid pace of change and the intense competition that characterizes these
markets, our products may become unmarketable or obsolete by a competitor's more
rapid introduction to the marketplace.


WE DEPEND ON A NUMBER OF VENDORS TO SUPPLY US WITH COMPONENT PARTS THAT ARE
NECESSARY TO THE PRODUCTION OF OUR AUDIO PROCESSING AND POST-PRODUCTION
EQUIPMENT.

     We rely on certain vendors to provide component parts for use in the
manufacturing of our audio processing and post- production equipment.  As
technology improves, some of these parts have become obsolete and vendors have
discontinued their production of such parts.  When this occurs, we must either
obtain these necessary parts from alternative sources, or design around these
parts so that we are able to continue producing our audio processing and
post-production equipment.  If any of the component parts that we require become
unavailable and we are not able to design around these parts, we may not be able
to offer some of our products and our sales revenues may decline.


OUR PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF THE BOARD EXERCISES
SIGNIFICANT CONTROL OVER US.

     Charles J. Brentlinger, our President, Chief Executive Officer and Chairman
of the Board, currently owns 821,182 shares of our common stock and holds
options to purchase approximately 1,346,503 additional shares.  Based on a total
of 3,706,880 shares of our common stock issued and outstanding as of September
30, 2002, if Mr. Brentlinger exercises all of his options he will own of record
and beneficially approximately 68% of our issued and outstanding shares.
Pursuant to the Stock Purchase Agreement between Mr. Brentlinger and the Company
dated June 23, 1999 it was amended to give Mr. Brentlinger an anti-dilution
provision in the event the Company acquires the stock of or substantially all of
the assets of another corporation or entity in a transaction in which the
purchase price of stock or assets is authorized but previously unissued common
stock of the Company.  The number of shares of common stock subject to the
option  shall be increased by the percentage by the total number of share of
common stock outstanding shall be increase as a result of the acquisition, but
the price per share shall be the same as the price per share to exercise the
option prior to the acquisition approved by the

                                                                              27
<PAGE>

board of directors May 31, 2001, This means that Mr. Brentlinger exercises, and
will continue to exercise, significant control over the business and affairs of
our company.  Mr. Brentlinger's exercise of this control may, in certain
circumstances, deter or delay a merger, tender offers, other possible takeover
attempts or changes in our management, which may be favored by some or all of
our minority shareholders.


WE DEPEND ON A FEW KEY MANAGEMENT PERSONS.

     We are substantially dependent on the personal efforts and abilities of
Charles Jayson Brentlinger, our Chairman, President and Chief Executive Officer,
and Robert Orban, our Vice President and Chief Engineer.  The loss of either of
these officers or our other key management persons could harm our business and
prospects for growth.  As a result, we have obtained key man life insurance
policies on the lives of each of these officers.  We also have employment
agreements with each of these officers which are more fully described elsewhere
in this report.


THE MARKET PRICE OF OUR COMMON STOCK HAS BEEN VOLATILE AND THE VALUE OF YOUR
INVESTMENT MAY DECLINE.

     The volatility of the market price of our common stock may cause wide
fluctuations in the price of our common stock on the OTC Bulletin Board.  The
market price of our common stock is likely to be affected by:

     * changes in general conditions in the economy or the financial
       markets;
     * variations in our quarterly operating results;
     * changes in financial estimates by securities analysts;
     * other developments affecting us, our industry, customers or
       competitors;
     * the operating and stock price performance of companies that
       investors deem comparable to us; and
     * the number of shares available for resale in the public markets
       under applicable securities laws.


THE LIQUIDITY OF OUR COMMON STOCK COULD BE RESTRICTED BECAUSE OUR COMMON STOCK
FALLS WITHIN THE DEFINITION OF A PENNY STOCK.

     Under the rules and regulations of the Securities and Exchange Commission
(SEC), as long as the trading price of our common stock on the OTC Bulletin
Board is less than $5 per share, our common stock will come within the
definition of a "penny stock."  On August 12, 2002, the last sale price of our
common stock on the OTC Bulletin Board was $0.70 per share.  Generally speaking,
the definition of a "penny stock" does not include stock that is traded on
Nasdaq or on a national securities exchange.  Since our common stock is traded
on the OTC Bulletin Board, rather than on Nasdaq or a national securities
exchange, our common stock falls within the definition of a  "penny stock" while
it is trading below $5 per share.  As a result, the trading of our common stock
is subject to certain "penny stock" rules and regulations.

     The SEC rules and regulations require that broker-dealers, prior to
effecting any transaction in a penny stock, satisfy certain disclosure and
procedural requirements with respect to the prospective customer.  These
requirements include delivery to the customer of an SEC-prepared risk disclosure
schedule explaining the nature and risks of the penny stock market, disclosure
to the customer of the commissions payable to both the broker-dealer and any
other salesperson in connection with the

                                                                              28
<PAGE>

transaction, and disclosure to the customer of the current quotations for the
stock to be purchased.  In addition, if the broker-dealer is the sole market
maker, it must disclose this fact and the broker-dealer's presumed control over
the market. Finally, prior to effecting any penny stock transaction, broker-
dealers must make individualized written suitability determinations and obtain a
written agreement from customers verifying the terms of the transaction.
Subsequent to any sale of penny stock, broker-dealers must send monthly
statements disclosing recent price information for the penny stock held in the
customer's account and certain other information relating to the limited market
in penny stocks. These rules, regulations and procedural requirements may
restrict the ability of broker- dealers to sell our common stock or discourage
them from doing so.  As a result, purchasers may find it more difficult to
dispose of, or to obtain accurate quotations for, our common stock.


BECAUSE OUR SUCCESS DEPENDS IN PART ON OUR ABILITY TO PROTECT OUR INTELLECTUAL
PROPERTY, INFRINGEMENT ON OUR PROPRIETARY RIGHTS COULD LEAD TO COSTLY LITIGATION
AND DECREASED REVENUES.

     Our copyrights, patents, trademarks, trade secrets and similar intellectual
property are critical to our success.  To establish and protect our proprietary
rights, we rely on a combination of copyright, trademark, patent and trade
secret laws, confidentiality and non-disclosure agreements and contractual
provisions with employees and third parties, and license agreements with
consultants, vendors and customers. Despite such protections, there can be no
assurance that these steps will be adequate, that we will be able to secure
trademark registrations for all of our marks in the United States or other
countries or that third parties will not infringe upon or misappropriate our
copyrights, patents, trademarks and similar proprietary rights.  In addition,
effective copyright, patent and trademark protection may be unenforceable or
limited in certain countries.  In the future, litigation may be necessary to
enforce and protect our trade secrets, copyrights, patents and other
intellectual property rights.  We may also be subject to litigation to defend
against claims of infringement of the rights of others or to determine the scope
and validity of the intellectual property rights of others.  Any such litigation
could cause us to incur substantial expenses and would adversely affect our
financial condition.

                                                                              29
<PAGE>

ITEM 3.  CONTROLS AND PROCEDURES.

Within 90 days prior to the filing of this report we carried out an evaluation,
under the supervision and with the participation of our chief executive officer
("CEO") and chief financial officer ("CFO"), of the effectiveness of the design
and operation of our disclosure controls and procedures pursuant to Rule 15d-15
under the Securities Exchange Act of 1934. Based on this evaluation, our CEO and
CFO concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed in our reports that we file
with or submit to the Securities and Exchange Commission ("SEC") is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rule and forms.

In addition, we reviewed our internal controls, and there have been no
significant changes in our internal controls or in other factors that could
significantly affect those controls subsequent to the date of their last
evaluation.

                                                                              30
<PAGE>
                                     PART II

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

Exhibit
Number  Description

2.1(1)  Asset Sale and Purchase Agreement, dated as of November 16, 2001, among
        Dialog4 System Engineering GmbH, Berthold   Burkhardtsmaier,  Cornelia
        Burkhardtsmaier, Friedrich  Maier, Circuit Research Labs,  Inc.  and CRL
        Systems, Inc.
10.1(1) mendment to Existing Agreements and Closing Declaration, dated as of
        January 18, 2002, among Dialog4 System Engineering GmbH, Berthold
        Burkhardtsmaier, Cornelia Burkhardtsmaier, Friedrich Maier, Circuit
        Research Labs, Inc., CRL Systems, Inc. and Charles Jayson Brentlinger
10.2(2) Second Amendment to Existing Agreements and Closing Declaration, dated
        as of March 26, 2002, among Dialog4 System Engineering GmbH, Berthold
        Burkhardtsmaier, Cornelia Burkhardtsmaier, Friedrich Maier, Circuit
        Research Labs, Inc., CRL Systems, Inc. and Charles Jayson Brentlinger
10.3(3) Second Amendment to Credit Agreement, dated as of May 1, 2002, by and
        among Circuit Research Labs, Inc., as Parent, CRL Systems, Inc. as
        Borrower, and Harman Acquisition Corporation (formerly known as Orban,
        Inc.), as Lender
10.4(3) Second Amended and Restated Tranche A Note, dated as of May 1, 2002,
        from CRL Systems, Inc. to Harman Acquisition Corporation (formerly known
        as Orban, Inc.) in the amount of $5,000,000
10.5(3) Second Amended and Restated Tranche B Note, dated as of May 1, 2002,
        from CRL Systems, Inc. to Harman Acquisition Corporation (formerly known
        as Orban, Inc.) in the amount of $3,500,000
10.6(4) Form of Circuit Research Labs, Inc. Stock Option Agreement
10.7 *  Settlement Agreement, dated as of August 9, 2002, among CRL Systems,
        Inc., Charles Jayson Brentlinger and Solectron GmbH.

*    Filed herewith.
(1)  Incorporated by reference to the Registrant's Report on Form
     8-K dated February 4, 2002.
(2)  Incorporated by reference to the Registrant's Report on Form
     10-KSB for the fiscal year ended December 31, 2001.
(3)  Incorporated by reference to the Registrant's Report on Form
     8-K dated May 13, 2002.
(4)  Previously filed with the Registrant's Form 10-QSB  for  the
     first quarter ended March 31, 2002.


     (b)  During the three months ended September 30, 2002, the Registrant filed
          the following reports on Form 8-K:

          Form 8-K (Item 9) filed on August 19, 2002 the filing of our quarterly
          report on Form 10QSB for the quarter ended June 30, 2002 and the
          submission of the required certifications in connection with such
          report.

                                                                              31
<PAGE>

                                   SIGNATURES

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

                                      CIRCUIT RESEARCH LABS, INC.


Dated: November 19, 2002              By: /s/ C. Jayson Brentlinger
                                      --------------------------------
                                      C. Jayson Brentlinger
                                      Chief Executive Officer, President and
                                      Chairman of the Board


                                 CERTIFICATIONS

I, C. Jayson Brentlinger, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Circuit Research
Labs, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;
     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing  the equivalent
function):
     a) all significant deficiencies in the design or operation of internal
     controls which could adversely  affect the registrant's ability to record,
     process, summarize and report financial data and have identified  for the
     registrant's auditors any material weaknesses in internal controls; and
     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

                                                                              32
<PAGE>

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 19, 2002                 /s/ C. Jayson Brentlinger
                                        ----------------------------
                                        Chief Executive Officer,
                                        President and
                                        Chairman of the Board


I, Robert W. McMartin, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Circuit Research
Labs, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a) designed such disclosure controls and procedures to ensure that material
     information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;
     b) evaluated the effectiveness of the registrant's disclosure controls and
     procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and
     c)  presented in this quarterly report our conclusions about the
     effectiveness of the disclosure  controls and procedures based on our
     evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing  the equivalent
function):
     a) all significant deficiencies in the design or operation of internal
     controls which could adversely  affect the registrant's ability to record,
     process, summarize and report financial data and have identified  for the
     registrant's auditors any material weaknesses in internal controls; and
     b) any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 19, 2002                 /s/ Robert W. McMartin
                                        ------------------------
                                        Chief Financial Officer,
                                        Vice President and Treasurer

                                                                              33
<PAGE>

                                  Exhibit Index

Exhibit
Number  Description

2.1(1)  Asset Sale and Purchase Agreement, dated as of November 16, 2001, among
        Dialog4 System Engineering GmbH, Berthold   Burkhardtsmaier,  Cornelia
        Burkhardtsmaier, Friedrich  Maier, Circuit Research Labs,  Inc.  and CRL
        Systems, Inc.
10.1(1) mendment to Existing Agreements and Closing Declaration, dated as of
        January 18, 2002, among Dialog4 System Engineering GmbH, Berthold
        Burkhardtsmaier, Cornelia Burkhardtsmaier, Friedrich Maier, Circuit
        Research Labs, Inc., CRL Systems, Inc. and Charles Jayson Brentlinger
10.2(2) Second Amendment to Existing Agreements and Closing Declaration, dated
        as of March 26, 2002, among Dialog4 System Engineering GmbH, Berthold
        Burkhardtsmaier, Cornelia Burkhardtsmaier, Friedrich Maier, Circuit
        Research Labs, Inc., CRL Systems, Inc. and Charles Jayson Brentlinger
10.3(3) Second Amendment to Credit Agreement, dated as of May 1, 2002, by and
        among Circuit Research Labs, Inc., as Parent, CRL Systems, Inc. as
        Borrower, and Harman Acquisition Corporation (formerly known as Orban,
        Inc.), as Lender
10.4(3) Second Amended and Restated Tranche A Note, dated as of May 1, 2002,
        from CRL Systems, Inc. to Harman Acquisition Corporation (formerly known
        as Orban, Inc.) in the amount of $5,000,000
10.5(3) Second Amended and Restated Tranche B Note, dated as of May 1, 2002,
        from CRL Systems, Inc. to Harman Acquisition Corporation (formerly known
        as Orban, Inc.) in the amount of $3,500,000
10.6(4) Form of Circuit Research Labs, Inc. Stock Option Agreement
10.7 *  Settlement Agreement, dated as of August 9, 2002, among CRL Systems,
        Inc., Charles Jayson Brentlinger and Solectron GmbH.

*    Filed herewith.
(1)  Incorporated by reference to the Registrant's Report on Form
     8-K dated February 4, 2002.
(2)  Incorporated by reference to the Registrant's Report on Form
     10-KSB for the fiscal year ended December 31, 2001.
(3)  Incorporated by reference to the Registrant's Report on Form
     8-K dated May 13, 2002.
(4)  Previously filed with the Registrant's Form 10-QSB  for  the
     first quarter ended March 31, 2002.

                                                                              34