UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C.  20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                      For Quarter Ended September 30, 1996
                         Commission File Number 0-11353

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

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

           2522 West Geneva Drive, Tempe, Arizona              85282 
          (Address of Principal executive office)            (Zip Code)

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

                                   172743 20 5
                                 (CUSIP Number)

       Indicate by  check mark  whether the registrant  (1) has  filed all
       reports  required  to be  filed  by  Section  13  or 15(d)  of  the
       Securities Exchange Act of 1934 during  the preceding 12 months (or

       for such  shorter period that the  registrant was required  to file
       such  reports),   and  (2)   has  been   subject  to   such  filing
       requirements for the past 90 days.

                 YES    X                           NO          

       Indicate the number  of shares outstanding of each  of the issuer's
       classes of common  stock, as of the close of the  period covered by
       this report.

                                              Outstanding at
                  Class                       September 30, 1996

             Common stock, $.10 par value      597,682


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                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                                      INDEX


                                                              Page
                                                             number



       Part I.  FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
          <S>                                                <C>

          Item 1. Financial Statements

               Consolidated Condensed Balance Sheets
                September 30, 1996 (Unaudited) and
                December 31, 1995                             3

               Consolidated Condensed Statements of
                Operations - Three and nine months ended
                September 30, 1996 and 1995 (Unaudited)       5

               Consolidated Condensed Statements of Cash
                Flows - Nine months ended September 30, 1996

                and 1995 (Unaudited)                          6


          Item 2. Management's Discussion and Analysis
                of Financial Condition and Results
                of Operations                                 7


       Part II. OTHER INFORMATION:


          Item 6.  Exhibits and Reports on Form 8-K           9

          Signatures                                         10


</TABLE>
<PAGE>1



                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                         PART I.   FINANCIAL INFORMATION


       The  Consolidated Condensed  Financial  Statements included  herein
       have  been  prepared by  the  Company  pursuant  to the  rules  and
       regulations  of  the  Securities  and  Exchange  Commission.    The
       Consolidated Condensed Balance  Sheet as of September  30, 1996 and
       the Consolidated  Condensed Statements of Operations for  the three
       and  nine  months  ended  September  30,  1996  and  1995  and  the
       Consolidated  Condensed  Statements  of Cash  Flows  for  the  nine
       months  ended  September  30,  1996 and  1995  have  been  prepared
       without audit.

       Certain  information  and  note disclosures  normally  included  in
       financial   statements  prepared  in   accordance  with   generally
       accepted  accounting  principles  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 for the year ended December 31, 1995.

       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.  Certain reclassifications
       have  been made  to the financial  statements for  the nine  months
       ended   September   30,   1995  to   conform   to   the   statement
       classifications  used  in 1996.    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.

<PAGE>2

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                      CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                               September 30, December 31,
                                                   1996          1995     
                                                      (Unaudited)
       <S>                                           <C>          <C>
       ASSETS

       CURRENT ASSETS:
           Cash and cash equivalents                $ 54,769     $ 25,974
           Securities available-for-sale             196,851      297,667
           Accounts receivable, less allowance for 

             doubtful accounts of $16,520            243,821      162,242

           Inventories:
             Raw materials and supplies              356,538      437,368
             Work in process                         341,345      169,640
             Finished goods                          236,424      229,620

             Total inventories                       934,307      836,628

           Prepaid expenses and other                 58,160       67,243

             Total current assets                  1,487,908    1,389,754


       PROPERTY, PLANT AND EQUIPMENT:
           Land                                      130,869      130,869
           Building and improvements                 497,004      497,004
           Furniture and fixtures                    390,450      383,523
           Machinery and equipment                   609,064      564,734

           Total                                   1,627,387    1,576,130
           Less accumulated depreciation           1,043,089      981,978

             Property, plant and equipment - net     584,298      594,152



       OTHER ASSETS - NET                            159,814      164,683

       STOCKHOLDER NOTES RECEIVABLE                                 1,081

       TOTAL                                      $2,232,020   $2,149,670
</TABLE>

                                                        (continued)
<PAGE>3

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                      CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                               September 30, December 31,
                                                    1996         1995    
                                                      (Unaudited)
       LIABILITIES AND STOCKHOLDERS' EQUITY
       <S>                                           <C>          <C>
       CURRENT LIABILITIES:
           Accounts payable                         $111,721  $    91,401
           Accrued salaries and benefits              43,813       58,004
           Accrued professional fees                  17,476       27,405
           Accrued customer deposits                  88,767       99,818
           Other accrued expenses and liabilities     32,982       26,210
           Long-term debt - current portion           14,941       19,136

           Total current liabilities                 309,700      321,974


       LONG-TERM DEBT - LESS CURRENT PORTION         120,802      138,458


       STOCKHOLDERS' EQUITY:
           Preferred stock, $100 par value - 
           authorized 500,000 shares, none issued
           Common stock, $.10 par value - authorized
           20,000,000 shares, 597,682 shares 
           issued and outstanding                     59,768       59,768
           Additional paid-in capital              1,247,240    1,247,240
           Retained earnings                         494,510      377,324
           Unrealized appreciation on securities 
           available-for sale                                       4,906

           Total stockholders' equity              1,801,518    1,689,238


       TOTAL                                      $2,232,020   $2,149,670
</TABLE>
<PAGE>4

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                 Three Months Ended    Nine Months Ended
                                    September 30,        September 30,
                                    1996     1995      1996       1995

       <S>                        <C>      <C>      <C>        <C>
       NET SALES                  $631,295 $488,576 $1,869,587 $1,448,626

       COST OF GOODS SOLD           270,308 182,534    775,893    500,032

           Gross profit             360,987 306,042  1,093,694    948,594

       OPERATING EXPENSES:
           Selling, general and 
           administrative           238,270 292,716    762,236    788,882
           Research and development  58,419 100,252    211,087    301,526

           Total operating expenses 296,689 392,968    973,323  1,090,408

       INCOME (LOSS) FROM OPERATIONS 64,298 (86,926)   120,371   (141,814)

       OTHER INCOME (EXPENSE):
           Interest and other income  4,215    4,887    12,681     18,060
           Interest expense          (3,529) (3,674)   (15,816)   (14,737)

           Total other income 
           (expense)                 0  686   1,213     (3,135)     3,323

       INCOME (LOSS) BEFORE INCOME
           TAXES                      64,984(85,713)   117,236   (138,491)

       INCOME TAX  EXPENSE (BENEFIT)                        50    ( 8,000)


       NET INCOME (LOSS)           $ 64,984$(85,713) $ 117,186  $(130,491)

       INCOME (LOSS) PER COMMON 
       SHARE                          $.11    $(.14)       $.20    $(.22)

       WEIGHTED AVERAGE NUMBER OF
       COMMON SHARES  OUTSTANDING   597,682  597,682    597,682   597,682
                                                                         
</TABLE>
                   
<PAGE>5

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                     Nine Months Ended
                                                      September 30,
                                                        1996       1995   
       <S>                                             <C>       <C>
       OPERATING  ACTIVITIES:
       NET  INCOME (LOSS)                              $ 117,186 $(130,491)
       ADJUSTMENTS TO RECONCILE NET INCOME
       (LOSS) TO NET
       CASH (USED IN) PROVIDED BY OPERATING 

       ACTIVITIES:
          Depreciation and amortization                  69,199    64,503
          Changes in assets and liabilities:
             Accounts receivable                        (81,579)   37,028
               Income taxes receivable                             13,000
             Inventories                               (142,969)  (74,551)
             Prepaid expenses and other                   9,083     8,399
             Other assets                                (3,219)     (816)
            Accounts payable, accrued expenses and
            customer deposits                            (8,079)  107,560

       NET CASH (USED IN) PROVIDED BY OPERATING 
       ACTIVITIES                                        (40,378)  24,632 


       INVESTING ACTIVITIES:
          Purchase of securities                       (146,970) (386,309)
          Proceeds from sale or maturity of securities  242,880   346,031
          Capital expenditures                           (5,967)  (25,038)
          Payments received on stockholders' notes        1,081     3,381

       NET CASH PROVIDED BY (USED IN) INVESTING
       ACTIVITIES                                         91,024  (61,935)

       FINANCING ACTIVITIES:
          Principal payments on  long-term debt          (21,851)  (5,284)

       NET INCREASE (DECREASE) IN CASH 
       AND CASH EQUIVALENTS                              28,795   (42,587)

       CASH AND CASH EQUIVALENTS
          AT BEGINNING OF PERIOD                          25,974  122,217

       CASH AND CASH EQUIVALENTS
          AT END OF PERIOD                             $ 54,769  $ 79,630

       SUPPLEMENTAL CASH FLOW INFORMATION
          Cash paid for interest                        $15,816   $14,737

          Test equipment transferred from Inventories
          to Engineering Equipment                      $45,290

</TABLE>
<PAGE>6

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

             Financial Condition 

             The Company  had net  working capital  of $1,178,200 and  the
       ratio of  current assets to  current liabilities  was 4.80 to  1 at
       September 30,  1996.   At December  31, 1995,  the Company  had net
       working capital of $1,067,800 and a current ratio of 4.32 to 1.

             Accounts  receivable  increased  $81,600   from  $162,200  at
       December 31, 1995, to $243,800 at  September 30, 1996. The increase
       is the direct  result of an increase in sales in  the third quarter
       of 1996 compared  to the third quarter of 1995. The  average age of
       accounts receivable is consistent in both periods. 

             Total  inventories of  $934,300 at  September  30, 1996  were
       $97,700 higher than  total inventories of $836,600  at December 31,
       1995.  The  increase  in  work  in  process  and  decrease  in  raw
       materials inventories are due to production  runs for the DP100 and
       SC100.

             The Company's credit line expired on  July 1, 1996, and since
       it had not been used, the Company  did not pursue its renewal.  The
       Company  believes its  future  liquidity needs  will  be  met by  a
       combination  of  cash  generated  from  operating  activities,  the
       reduction of investments, and existing cash balances.

             The Financial Accounting Standards Board ("FASB") issued
       Statement of Financial Accounting Standards ("SFAS") No. 115 in
       May 1993 establishing certain new financial accounting and
       reporting standards for  investments in debt and equity
       securities.  SFAS No. 115 requires the classification of
       securities at acquisition into one of three categories:
       held-to-maturity, available-for-sale or trading -- with different
       reporting requirements for each classification.  All of the
       Company's marketable securities are classified as
       available-for-sale.  

             The Company adopted SFAS No. 115 as of January 1, 1995.  At
       December 31, 1995, the unrealized appreciation on securities
       available-for-sale was $4,900.  The estimated fair value of the
       Company's securities approximates cost at September 30, 1996.
       Certain of the statements contained in this document that are not
       historical  facts, including, without limitation, statements of
       future expectations, projections of results of operations  and
       financial condition, statements of future economic performance and
       other forward-looking statements within the meaning of the  
       Private Securities Litigation Reform Act of 1995, are subject to
       known and unknown risks, uncertainties and other factors which may

<PAGE>7

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES

       cause the actual results, performance or achievements of the
       Company to differ materially from those contemplated in such
       forward-looking statements.  In addition to the specific matters
       referred to herein, important factors which may cause actual
       results to differ from those contemplated in such forward-looking
       statements include: (i) the results of the Company's efforts to
       implement its business strategy; (ii) actions of the Company's
       competitors and the Company's ability to respond to such actions;
        (iii) changes in governmental regulation, tax rates and similar
       matters; and (iv) other risks detailed in the Company's other
       filings with the Commission.

<PAGE>8



                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

             Results of Operations

             Net sales for the third quarter  of 1996 totaled $631,300 and
       were 29% higher  than the third quarter sales in  1995 of $488,600.
       The increase was  due to shipments of CRL's  digital processor, the
       DP100, which CRL began shipping in the first quarter of 1996.
       .
             Cost  of goods  sold  was  43% of  net  sales for  the  third
       quarter  ended September  30, 1996  compared  to 37%  for the  same
       period in  1995. The increase is  the result of the  expected lower
       profit  margins  in  the Desert  Assemblies  division.  The  profit
       margin  on CRL's  main product lines  for the  third quarter  ended
       September  30, 1996  was 64%  which  was consistent  with the  same
       period of 1995.

             Selling,  general and administrative  expenses were  $238,300
       in  the third  quarter of  1996  compared to  selling, general  and
       administrative expenses of $292,700 for  the third quarter of 1995.

       The  decrease was  due  primarily to  a  decrease  in domestic  and
       international  marketing  costs  including travel  and  trade  show
       costs.  

             Research  and development  expense in  the  third quarter  of
       1996 totaled  $58,400, and was $41,900  lower compared to  the 1995
       third quarter  total of $100,300.   The  decrease was due  to lower
       developmental cost  on the new product  lines and lower  labor cost
       resulting from not having contract  engineers on staff. The Company
       does not  anticipate incurring  increases in   engineering  cost in
       the near future.   

             Total other  income (expense) of  $700 for the  third quarter
       of 1996  was comparable to   other  income (expense) of  $1,200 for
       the third quarter of 1995. 

             Interest  expense  consists  of  the  interest  cost  on  the
       long-term mortgage  collateralized   by the  Company's headquarters
       facility.

             The Company's  income tax  provision for  the three and  nine
       months ended September  30, 1996 is offset by  the partial reversal
       of the  deferred tax valuation  allowance recorded at  December 31,
       1995.

             Net  income for  the third  quarter  of 1996  was $65,000  as
       compared to  a net loss of $85,700  for the third quarter  of 1995.
       Net income for  the nine months ended September  30, 1996 increased
       $248,000 over the  same period of 1995 due to  the events explained
       above:  increased  revenue  due  to the  shipments  of  the  DP100;
       reduction  in selling,  general  and  administrative expenses;  and
       reduction in research and development expense.
<PAGE>9


                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                            II. OTHER INFORMATION

              
             Item 6.  Exhibits and Reports on Form 8-K

             (a) Exhibits included herein - None.


             (b) Reports on Form 8-K - None.

<PAGE>10

                    CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES


                                   SIGNATURES


       Pursuant  to the  requirements of  the Securities  Exchange Act  of
       1934, the  Registrant has duly caused  this report to be  signed on
       its behalf by the undersigned hereunto duly authorized.




                                               Registrant

                                               CIRCUIT RESEARCH LABS,INC.

                                               DATE:  November 12, 1996
                                               BY /s/Gary D. Clarkson    
          
                                               Gary D. Clarkson

                                               Treasurer (Authorized
                                               Officer for signature)

<PAGE>11