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 June 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
August 13, 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 June 30, 2002

                                Table of Contents


                                                                          Page

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

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

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

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

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

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

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION  .. 15


PART II - OTHER INFORMATION .............................................. 30

     ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ......... 30

     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


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

CURRENT ASSETS:
    Cash                                              $122,215        $280,895
    Accounts receivable, net                           867,826         641,156
    Inventories                                      2,365,837       2,828,198
    Other current assets                               141,897          93,861
                                                   -----------     -----------
    Total current assets                             3,497,775       3,844,110
                                                   -----------     -----------

PROPERTY, PLANT AND EQUIPMENT, NET                   1,283,152       1,413,607
                                                   -----------     -----------
OTHER ASSETS:
    Goodwill, net                                    7,476,008       5,734,180
    Deferred acquisition costs                               0          34,563
    Other                                               38,399          41,399
                                                   -----------     -----------
                                                     7,514,407       5,810,142
                                                   -----------     -----------

TOTAL                                              $12,295,334     $11,067,859
                                                   ===========     ===========


                                                                              3
<PAGE>


(continued)

                  CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS


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

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                $1,291,178      $1,011,955
    Notes payable                                    8,500,097       8,583,588
    Current portion of long-term debt                  665,247         227,196
    Accrued salaries and benefits                      268,539         262,430
    Customer deposits                                   46,450          50,271
    Accrued professional fees                           19,470          48,672
    Other accrued expenses and liabilities             358,702         281,011
                                                   -----------     -----------
        Total current liabilities                   11,149,683      10,465,123

    Long-Term Debt                                     610,302         485,410
                                                   -----------     -----------
        Total Liabilities                           11,759,985      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 June 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                             (5,217,768)     (4,317,791)
                                                   -----------     -----------
        Total stockholders' equity                     535,349         117,326
                                                   -----------     -----------
TOTAL                                              $12,295,334     $11,067,859
                                                   ===========     ===========

See accompanying notes to consolidated condensed financial statements.


                                                                              4
<PAGE>


                   CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>
                                                 Three Months Ended          Six Months Ended
                                                     June 30,                    June 30,
                                                 2002         2001           2002         2001
                                              ----------   ----------     ----------   ----------
<S>                                           <C>          <C>            <C>          <C>
NET SALES                                     $2,767,849   $4,020,574     $5,730,375   $7,925,303
COST OF GOODS SOLD                             1,403,049    1,472,995      2,963,053    3,236,485
                                              ----------   ----------     ----------   ----------
      Gross profit                             1,364,800    2,547,579      2,767,322    4,688,818
                                              ----------   ----------     ----------   ----------

OPERATING EXPENSES:
      Selling, general and administrative      1,143,424    1,254,340      2,268,943    2,507,197
      Research and development                   346,344      459,529        661,344      783,580
      Depreciation                                86,029       90,443        172,185      165,190
      Amortization                                     0      263,961              0      527,921
                                              ----------   ----------     ----------   ----------
      Total operating expenses                 1,575,797    2,068,273      3,102,472    3,983,888
                                              ----------   ----------     ----------   ----------
INCOME (LOSS) FROM OPERATIONS                  ($210,997)    $479,306       (335,150)     704,930
                                              ----------   ----------     ----------   ----------

OTHER INCOME (EXPENSE)
      Sundry income                                  866        5,614          5,779       15,236
      Interest expense                          (287,182)    (272,889)      (570,606)    (550,357)
                                              ----------   ----------     ----------   ----------
      Total other expense                       (286,316)    (267,275)      (564,827)    (535,071)

INCOME (LOSS) BEFORE INCOME TAX                 (497,313)     212,031       (899,977)     169,859

PROVISION FOR INCOME TAXES                             0            0              0            0
                                              ----------   ----------     ----------   ----------
NET INCOME (LOSS)                              ($497,313)    $212,031      ($899,977)    $169,859
                                              ==========   ==========     ==========   ==========

NET LOSS  PER COMMON SHARE -
BASIC AND DILUTED                                 ($0.13)       $0.09         ($0.25)       $0.07

WEIGHTED AVERAGE NUMBER OF
 COMMON SHARES OUTSTANDING
      Basic and diluted                        3,706,880    2,296,022      3,590,372    2,284,309
</TABLE>

See accompanying notes to consolidated condensed financial statements.


                                                                              5
<PAGE>


                   CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                        Six Months Ended
                                                             June 30,
                                                        2002            2001
                                                   -----------     -----------

OPERATING ACTIVITIES:
   Net Income (Loss)                                 ($899,977)       $169,859

   Adjustments to reconcile net income (loss)
      to net cash provided by (used in) operating
      activities
   Depreciation and amortization                       209,120         738,949
   Provision for uncollectable accounts                   (267)         20,160
   Stock compensation                                   50,000

Changes in assets and liabilities:
   Accounts receivable                                (226,403)       (288,620)
   Inventories                                         690,331        (386,996)
   Prepaid expenses and other assets                   (45,036)        117,444
   Cash overdraft                                                        5,239
   Accounts payable and accrued expenses               330,000        (472,308)
                                                   -----------     -----------
      Net cash provided by (used in)
         operating activities                          107,768         (96,273)
                                                   -----------     -----------
INVESTING ACTIVITIES:
    Purchase of assets of Avocet Instruments, Inc.                      (7,339)
    Capital expenditures                               (13,900)        (15,866)
                                                   -----------     -----------
      Net cash used in investing activities            (13,900)        (23,205)
                                                   -----------     -----------
FINANCING ACTIVITIES:
   Proceeds from shareholder advances                                   36,741
   Principal payments on notes payable                 (83,491)
   Principal payments on long-term debt               (187,057)        (11,841)
   Proceeds from sale of common stock                   18,000          33,127
                                                   -----------     -----------
   Net cash provided by (used in)
      financing activities                            (252,548)         58,027
                                                   -----------     -----------

NET DECREASE IN CASH                                  (158,680)        (61,451)

CASH AT BEGINNING OF PERIOD                            280,895         272,203
                                                   -----------     -----------
CASH AT END OF PERIOD                                 $122,215        $210,752
                                                   ===========     ===========

See accompanying notes to consolidated condensed financial statements.


                                                                              6
<PAGE>


(continued)

                   CIRCUIT RESEARCH LABS INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)


                                                        Six Months Ended
                                                             June 30,
                                                        2002            2001
                                                   -----------     -----------
Supplemental Disclosures of Cash Flow Information

   Cash paid for Interest                             $568,043        $521,024
                                                   ===========     ===========

Supplemental schedule of non-cash operating,
   investing and financing activities:

   Acquisitions:

   Fair value of assets acquired
     including goodwill                             $2,034,563         $85,319
   Debt issued to seller                              (750,000)        (77,980)
   Common Stock issued to seller                    (1,250,000)
   Costs paid in 2001                                  (34,563)
                                                   -----------     -----------
   Cash paid                                                $0          $7,339
                                                   ===========     ===========
   Common stock issued for consulting
     services rendered                                 $50,000              $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 June 30, 2002 and the Consolidated
Condensed Statements of Operations for the three and six months ended June 30,
2002 and 2001 and the Consolidated Condensed Statements of Cash Flows for the
six months ended June 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 six months ended June
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 six months ended June 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         Six Months Ended
                                   June 30,                   June 30,
                              2002          2001         2002          2001

Numerator
Net income (loss)             ($497,313)    $212,031     ($899,977)    $169,859
                              ==========   =========     ==========   =========
Denominator
Weighted average shares       3,706,880    2,296,022     3,590,372    2,284,309
                              ==========   =========     ==========   =========

Basic and diluted income (loss)
   per share                     ($0.13)       $0.09        ($0.25)      $0.07
                              ==========   =========     ==========   =========


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.

     Upon adoption of SFAS 142, amortization of goodwill recorded for business
combinations consummated prior to July 1, 2001 will cease, and intangible assets
acquired prior to July 1, 2001 that do not meet the criteria for recognition
under SFAS 141 will be reclassified to goodwill.  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 is in the process of determining the estimated fair value of
each reporting unit with a view to determining whether the goodwill value has
been impaired under these new rules.  In accordance with the transition
provisions of SFAS 142, this evaluation will be completed by June 30, 2002.
Management has completed phase one of its valuation process in order to
determine if the goodwill associated with the acquisition of Orban requires
impairment. Management has concluded based on customer base, cash flow, and the
existing product line that impairment will not be recorded at this time.


                                                                              9
<PAGE>


     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, less liabilities
assumed, is recorded as goodwill.  As of June 30, 2002, the Company has no
identifiable intangible assets with definite lives

     At December 31, 2001 and June 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 June 30, 2002 figure includes $1,741,828 for
the acquisition of the assets of Dialog4 System Engineering GmbH.  The following
table presents the impact of goodwill amortization to the three and six months
ended June 30, 2001 net income and net income per share:

     Three Months Ended June 30, 2001   Net Income    Basic EPS     Diluted EPS
     --------------------------------   ----------    ---------     -----------
     Reported Net Income                $212,031      $0.09         $0.09
     Add back: Goodwill amortization     263,961      $0.12         $0.12
     Adjusted                            475,992      $0.21         $0.21


     Six Months Ended June 30, 2001     Net Income    Basic EPS     Diluted EPS
     -------------------------------    ----------    ---------     -----------
     Reported Net Loss                  $169,859      $0.07         $0.07
     Add back: Goodwill amortization     527,921       0.23          0.23
     Adjusted                            697,780      $0.30         $0.30


     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 not yet determined
the impact, if any, this standard will have 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


                                                                             10
<PAGE>


accounting guidance which required all gains and losses from the extinguishment
of debt to be classified as an extraordinary item. Under SFAS No. 145,
classification of debt extinguishment depends on 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 income.


3.   INVENTORIES

Inventories consist of the following at June 30, 2002 and December 31, 2001:

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

          Raw materials and supplies                $2,076,367      $2,176,797
          Work in process                            1,060,648       1,286,942
          Finished goods                               602,198         737,834
                                                    ----------      ----------
          Total                                      3,739,213       4,201,573
          Less obsolescence reserve                  1,373,376       1,373,376
                                                    ----------      ----------
          Inventories, net                          $2,365,837      $2,828,198
                                                    ==========      ==========


4.   LONG-TERM DEBT

Long term-debt at June 30, 2002 consisted of the following:

          Note to shareholder                         $178,905
          Avocet Instruments, Inc.                      48,279
          Mortgage notes                               341,781
          Vendor note                                   47,216
          Employee note                                 21,868
          Dialog4 GmbH                                 637,500
                                                    ----------
          Total long-term debt                      $1,275,549

          Less current portion                        (665,247)
                                                    ----------
          Total long-term debt,
            less current portion                      $610,302
                                                    ==========


                                                                             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 entended to April 30, 2002.

     Effective 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 that amounts to $127,230 to be
payable to Harman on or before November 15th, 2002.


                                                                             12
<PAGE>


     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 June 30, 2002,
the Company has made partial payments on the accrued interest, and the
outstanding principal balance of this debt was $178,905, plus overdue interest
of $599.

     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 June 30, 2002, $21,868 was outstanding on this debt.

     On May 31, 2001, the Company 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.

     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 June 30, 2002
the balance of the notes payable and long-term debt have been reduced to
$65,313, of which $65,313 is current.


                                                                             13
<PAGE>


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.

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

          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.


                                                                             14
<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

     On August 9, 2002, the Company agreed to purchase all existing inventory of
parts related to its Sountainer product being held by Solectron GmbH for a total
price of $829,328, payable in 24 equal monthly installments without 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.
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.

     Effective May 1, 2002, we entered into a Second Amendment to Credit
Agreement with Harman Acquisition Corp. (formerly known as Orban, Inc.) under
which the $8,498,200 long- and short-term demand notes payable to Harman were
amended and restated to remove the requirement for quarterly principal 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, which it has the
right to do.  Interest only payments remain payable monthly at 12 percent per
annum for both notes and are also due on demand.


                                                                             15
<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 products.

     We are still in the process of integrating the operations of our CRL and
Orban divisions, 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 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.


                                                                            16
<PAGE>


RESULTS OF OPERATIONS

      The following table sets forth for the periods indicated certain summary
operating results:
<TABLE>
<CAPTION>
                                                Three Months Ended          Six Months Ended
                                                     June 30,                    June 30,
                                                2002         2001           2002         2001
                                                ----------   ----------     ----------   ----------
<S>                                             <C>          <C>            <C>          <C>
     Revenues:
        Net sales                               $2,767,849   $4,020,574     $5,730,375   $7,925,303
        Other income                                   866        5,614          5,779       15,236
                                                ----------   ----------     ----------   ----------
           Total revenues                       $2,768,715   $4,026,188     $5,736,154   $7,940,539
                                                ==========   ==========     ==========   ==========
     Gross profit on net sales                  $1,364,800   $2,547,580     $2,767,322   $4,688,818
     Gross profit margin                                49%          63%            48%          59%
     EBITDA (1)                                  ($105,901)    $860,519      ($120,251)  $1,459,165
     Net cash provided by (used in)
       operating activities                       $166,450     ($51,686)      $107,768     ($96,273)
     Net cash used in investing activities         (11,200)     (23,205)       (13,900)     (23,205)
     Net cash provided by (used in)
       financing activities                       (182,126)       3,103       (252,548)      58,027
     Net income (loss)                            (497,313)     212,031       (899,977)     169,859
     Net income (loss) as a percent of net sales       -18%           5%           -16%           2%
     Income (loss) per share - basic and diluted    ($0.13)       $0.09         ($0.25)       $0.07
</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.


                                                                             17
<PAGE>


            THREE AND SIX MONTHS ENDED JUNE 30, 2002
    COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2001

     Net Sales.   Net sales during the three and six months ended June 30, 2002
were $2.8 million and $5.7 million, respectively, compared to $4.0 million and
$7.9 million during the comparable periods in 2001, reflecting a decrease of 30%
and a 28%, respectively.  The decrease in net sales was primarily attributable
to a decreased in demand for our product.  Our Orban division reported net sales
for the three and six months ended June 30, 2002 of $2.6 million and $4.8
million, respectively, compared to $3.7 million and $7.3 million for the same
periods in 2001.  This decrease was primarily a result of a decreased demand
from our single largest customer by 53% during the three months ended June 30,
2002 and 58% for the six months ended June 30, 2002 as compared to the same
periods in 2001.  Our CRL division reported net sales for the three and six
months ended June 30, 2002 of $152,000 and $324,000, respectively, compared to
$296,000 and $646,000 for the same periods in 2001, representing a decrease of
48% and 50%, respectively.  This decrease 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 six months ended June 30, 2002 were
$243,000 and $570,000 respectively.

     Gross Profit.   Gross profit for the three and six months ended June 30,
2002 was 49% and 48%, respectively, compared to 63% and 59% for the same periods
in 2001. The decrease of 14% and 11%, respectively, in gross profit is primarily
due to decreased production coupled with an increase in our fixed expenses as a
result of our acquisition of the assets of Dialog4.  Gross profit for our Orban
Europe division (which is the former Dialog4 business) for the three and six
months ended June 30, 2002 was 56% and 45%, respectively.  Initially, the
percentage as a division was lower primarily due to the discounting of sales
price for the introduction of Orban Europe products into the market under the
Orban name.

     Selling, General and Administrative.  Selling, general and administrative
expenses ("SG&A") for the three and six months ended June 30, 2002 were
$1,143,000 and $2,269,000, respectively, representing a decrease of 9% and 10%,
respectively, compared to $1,254,000 and $2,507,00 reported the same periods
during 2001. As a percentage of net sales, SG&A increased from 31% for the
three months ended June 30, 2001 to 41% for the same period in 2002. SG&A as a
percentage of net sales increased from 32% for the six months ended June 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 six months ended June 30, 2002 was $346,000 and $661,000,
respectively, compared to $460,000 and $784,000 during the comparable periods
for 2001, respectively, reflecting a decrease of 25% and 16%. The decrease
resulted from the reduction of fees paid to outside consultants. The reduced
fees were due to the Company decreasing its use of the outside consultants.


                                                                             18
<PAGE>


     Other (Income) Expense.   Other expense, net for the three and six months
ended June 30, 2002 was $286,000 and $565,000, respectively, of which $255,000
and $510,000, 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 six months ended June 30, 2001 was $267,000 and $535,000,
respectively, of which $255,000 and $510,000, respectively, represented interest
and fees paid to Harman.  Interest expense during the three and six months ended
June 30, 2002 was $287,000 and $571,000, respectively, compared to $273,000 and
$550,000 for the same periods in 2001, respectively, reflecting an increase of
5% and 4%, 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.

     Operationally, the Company is reporting a loss before interest, taxes,
depreciation and amortization (EBITDA) of $106,000 and $120,000, respectively,
for the three and six months ended June 30, 2002 which represents approximately
4% and 2%, respectively, of the total net sales in 2002 as compared to the same
periods 2001 in which the Company reported profit before interest, taxes,
depreciation and amortization (EBITDA) of $861,000 and $1,459,000, respectively,
representing 21% and 18% of net sales, respectively.  The decrease in EBITDA is
primarily due to the reduction in sales.

     Net Loss.  Net loss for the three and six months ended June 30, 2002 was
$497,000 and $900,000, respectively, compared to net income of $212,000 and
$170,000 for the same periods in 2001.  Excluding the impact of the non-cash
items, we would have reported a net loss of $641,000 for the six months ended
June 30, 2002 compared to a positive net income of $929,000 for the same period
in 2001.

     Non-cash expense items for the six months ended June 30, 2002 were as
follows:

          $0      Increase in inventory reserve
        (267)     Decrease in provision for uncollectible accounts
           0      Amortization of intangible
      50,000      Stock compensation
     209,120      Depreciation
    --------
    $258,853      Total (representing 29% of the net loss)
    ========

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

    $211,028      Depreciation
     $20,160      Increase in provision for uncollectible accounts
     527,921      Amortization of intangible
    --------
    $759,109      Total (representing 447% of the net income)
    ========

     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.


                                                                             19
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     We had negative net working capital of approximately $7.7 million at
June 30, 2002, and the ratio of current assets to current liabilities was
..31 to 1.  At June 30, 2001, we had negative net working capital of
approximately $683,000 and a current ratio of .88 to 1.  The decrease in working
capital 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.

     Currently, we have missed the last three interest installments in an
aggregate amount of $127,230. On August 19, 2002 Harman agreed to defer the
payment of that amount until November 15, 2002. We are further obligated to pay
Solectron GmbH $34,555 per month through July 20024.

                                                                             20
<PAGE>


     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 expenditures related to expansion.

     Accounts receivable were $868,000 at June 30, 2002 compared to $641,000 at
December 31, 2001 representing a net increase of $227,000 or 35%.  The increase
is primarily due to an increase in sales for quarter ended June 30, 2002
compared to the quarter ended December 31, 2001.

     Total inventories were $2,366,000 at June 30, 2002 compared to total
inventories of $2,828,000 at December 31, 2001.  The value of inventory
decreased $462,000 or 16% due primarily to the reduction of finished goods and
work in process. 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. The
Company has currently not paid its July 15th and August 1st interest
installments and anticipates a further delay in its August 15th installment. The
Company anticipates that it will be able to catch up within the 3rd quarter.

     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 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 June 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 June 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


                                                                             21
<PAGE>


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 June 30, 2002, we had paid a total of $46,520 on the note and the
remaining unpaid balance was $21,868.

     Management believes that the required $37,500 due to Dialog4 each month can
be met from the operating cash flows generated from the Dialog4 line of
products.



                                                                             22
<PAGE>


RISK FACTORS

     You should carefully consider the following risk factors and all other
information contained in this report in evaluating us and our business.  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.


                                                                             23
<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 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 Decmeber 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. Our
ability to service our debt to Harman debt 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.


                                                                             24
<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.

WE HAVE A LIMITED OPERATING HISTORY ON WHICH TO BASE AN EVALUATION OF OUR
COMBINED OPERATIONS WITH ORBAN AND OUR PROSPECTS FOR THE FUTURE.

     We commenced our combined operations with Orban on May 31, 2000.
Accordingly, we have a limited operating history on which an evaluation of our
combined operations with Orban can be based. Our prospects must be considered in
light of the risks, expenses, difficulties and uncertainties frequently
encountered by companies in the early stages of integration, such as:

     *  the difficulty of integrating the operations, technologies, personnel
        and cultures of our companies;
     *  the potential disruption of the ongoing business of our companies;
     *  the distraction of management of our companies from ongoing business
        concerns;
     *  potential unknown liabilities associated with the merger of our
        companies; and
     *  the potential disruption of our employee base.

     We cannot guarantee that any or all of the above risks, expenses,
difficulties and uncertainties will not occur as a result of our integration of
the Orban operations.  Nor can we guarantee that our integration with Orban will
be achieved successfully or as rapidly as we would like.


                                                                             25
<PAGE>


OUR FUTURE SUCCESS IS DEPENDENT ON OUR SUCCESSFUL INTEGRATION OF THE ORBAN
OPERATIONS INTO OUR OWN.

     We are in the process of integrating the operations of Orban 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 Orban
has produced substantial synergies, nevertheless this combination is ongoing and
continues to present significant management challenges.  We cannot determine
whether that 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
Orban, 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.

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 MAY NOT BE ABLE TO RETAIN OUR EXISTING PERSONNEL OR HIRE AND RETAIN THE
ADDITIONAL PERSONNEL THAT WE NEED TO SUSTAIN AND GROW OUR BUSINESS.

     Our future success will depend on our ability to attract, retain and
motivate employees with the necessary skills and expertise required by our
business.  Competition for employees who possess the technical expertise to
develop and manufacture our products is intense.  A shortage in available
skilled labor could require us to increase our wages and benefits to attract
and retain enough employees.  An increase in our labor costs, or our inability
to attract, retain and motivate employees, would likely harm our growth plans
and may adversely affect our business and results of operations.


                                                                             26
<PAGE>


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 820,318 shares of our common stock and holds
options to purchase approximately 1,365,005 additional shares.  Based on a total
of 3,706,880 shares of our common stock issued and outstanding as of June 30,
2002, if Mr. Brentlinger exercises all of his options he will own of record and
beneficially approximately 43.1% of our issued and outstanding shares.  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 LOCATION OF OUR ORBAN DIVISION SUBJECTS US TO A NUMBER OF RISKS THAT ARE
BEYOND OUR CONTROL WHICH COULD RESULT IN PRODUCTION INTERRUPTIONS.

     Our business depends on the efficient and uninterrupted production of our
audio processing equipment and other products.  Our Orban division is currently
located in San Leandro, California, and we expect to maintain our operations at
this facility for the foreseeable future.  While we have taken precautions
against production interruptions, interruptions could nevertheless result from
natural disasters such as earthquakes, fires or floods.  In addition, the power
shortages which occur in California from time to time have resulted in planned
and unplanned power outages and increased energy costs which we may not be able
to pass on to our customers.  Power outages, which last beyond our backup and
alternative power arrangements, could harm our customers and our business.
Finally, our location in the Silicon Valley corridor of California subjects us
to increased operating costs and labor shortages which could adversely affect
our production capabilities and result in reduced revenues.


                                                                             27
<PAGE>


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 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.


                                                                             28
<PAGE>

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>


                           PART II - OTHER INFORMATION


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

Our Annual Meeting of Shareholders was held on June 18, 2002 in Tempe, Arizona.
On the record date for the Annual Meeting, 3,706,880 shares of common stock were
outstanding and eligible to vote.  A quorum was present at the Annual Meeting.
At the Annual Meeting, our shareholders approved the following matters:

    1.  A proposal to elect six (6) directors of the Company to serve for the
        ensuing year and until their successors are elected or until such
        director's earlier resignation or removal.

        Nominee                        Votes in Favor (1)   Votes Withheld (1)
        --------------------------     ------------------   ------------------

        Charles Jayson Brentlinger     3,303,685            120
        Berthold Burkhardtsmaier       3,303,685            120
        Gary D. Clarkson               3,303,561            244
        Robert A. Orban                3,303,685            120
        Carl E. Matthusen              3,303,561            244
        Phillip T. Zeni, Sr.           3,303,685            120

        (1) Using cumulative voting in accordance with Company bylaws and
            Arizona law.

                                                                             30
<PAGE>


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) Amendment 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


    (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 June 30, 2002, the Registrant filed the
following reports on Form 8-K:

         Form 8-K (Item 4 and Item 5) filed on May 13, 2002 reporting a change
in the Registrant's certifying accountant and reporting the execution of the
Second Amendment to Credit Agreement between the Registrant and Harman
Acquisition Corp.


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


                                                                             32
<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) Amendment 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


    (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.


                                                                             33