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, 1998
                      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, 1998

      Common stock, $.10 par value                   410,182

                                     
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                                                           number



Part I.  FINANCIAL INFORMATION:


   Item 1. Financial Statements

       Consolidated Condensed Balance Sheets
         September 30, 1998 (Unaudited) and
         December 31, 1997                                   2

       Consolidated Condensed Statements of
         Operations - Three and nine months ended
         September 30, 1998 and 1997 (Unaudited)             4

       Consolidated Condensed Statements of Cash
         Flows -  Nine months ended September 30, 1998
         and 1997 (Unaudited)                                5

       Notes to Consolidated Condensed Financial
         Statements (Unaudited)                              6


   Item 2. Management's Discussion and Analysis
         of Financial Condition and Results
         of Operations                                       8



Part II. OTHER INFORMATION:


   Item 5.   Other Information                             12

   Item 6.  Exhibits and Reports on Form 8-K               12

   Signatures                                              13

<PAGE>1

                      PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

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

                                              September 30,  December 31,
                                                     1998          1997
                                              (Unaudited)
ASSETS

CURRENT ASSETS:
   Cash and cash equivalents                  $ 130,884      $  119,851
   Securities available-for-sale                492,430          89,607
   Accounts receivable, less allowance for
      doubtful accounts of $6,520               214,758         112,320

   Inventories:
      Raw materials and supplies                143,406         176,439
      Work in process                           270,852         289,690
      Finished goods                            517,274         416,996

Total inventories                               931,532         883,125

   Prepaid expenses and other                    58,254         58,346

      Total current assets                    1,827,858       1,263,249

PROPERTY, PLANT AND EQUIPMENT:
   Land                                         130,869         130,869
   Building and improvements                    503,000         497,004
   Furniture and fixtures                       305,072         300,628
   Machinery and equipment                      604,456         599,864

   Total                                      1,543,397       1,528,365
   Less accumulated depreciation              1,041,458         996,810

      Property, plant and equipment - net       501,939         531,555


OTHER ASSETS - NET                                9,447          51,794

TOTAL                                        $2,339,244      $1,846,598


                                                (continued)

<PAGE>2

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


                                            September 30,     December 31,
                                                    1998             1997
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable                            $ 37,175        $  53,382
   Accrued salaries and benefits                 42,876           63,086
   Accrued professional fees                     19,721           29,302
   Customer deposits                             30,105           26,180
   Other accrued expenses and liabilities        27,386            7,315
   Long-term debt - current portion              11,080           16,481

      Total current liabilities                 168,343          195,746


LONG-TERM DEBT - LESS CURRENT PORTION             9,881          105,656

      Total liabilities                         178,224          301,402

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   59,768           59,768
   Additional paid-in capital                 1,247,240        1,247,240
   Retained earnings                          1,035,652          238,188
                                              2,342,660        1,545,196
   Less, common stock in treasury - at cost,
      187,500 shares                           (181,640)
Total stockholders' equity                    2,161,020        1,545,196

TOTAL                                        $2,339,244       $1,846,598

See accompanying notes to consolidated condensed financial statements.

<PAGE>3

               CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                (Unaudited)

                                   Three Months Ended   Nine Months Ended
                                     September 30,        September 30,
                                    1998      1997       1998        1997

NET SALES                       $421,598  $557,549  $1,263,473 $1,574,688

COST OF GOODS SOLD               191,158   267,040     561,893    751,228

   Gross profit                  230,440   290,509     701,580    823,460

OPERATING EXPENSES:
    Selling,  general  and  
      administrative             209,982   252,787     735,319    725,130
   Research and development       61,837    52,501     175,176    157,714

   Total operating expenses      271,819   305,288     910,495    882,844

LOSS FROM OPERATIONS             (41,379)  (14,779)   (208,915)   (59,384)

OTHER INCOME (EXPENSE):
   Proceeds from officer's life
   insurance in excess of cash
   surrender value                                   1,000,681
   Interest and other income      14,785     1,147      24,854     4,923
   Interest expense                         (3,151)    (19,156)   (9,677)

   Total other income (expense)   14,785    (2,004)  1,006,379    (4,754)

(LOSS) INCOME BEFORE INCOME TAX  (26,594)  (16,783)    797,464   (64,138)

INCOME TAX  EXPENSE                                                3,050

NET (LOSS) INCOME              $ (26,594)  $(16,783) $ 797,464 $ (67,188)

(LOSS) INCOME PER COMMON SHARE 
    Basic                          $(06.)     $(.03)     $1.62     $(.11)
    Diluted                                              $1.60
WEIGHTED AVERAGE NUMBER OF
   COMMON SHARES  OUTSTANDING -
   Basic                         410,182     597,682    493,515   597,682
   Diluted                                   497,238
                                     

See accompanying notes to consolidated condensed financial statements.

<PAGE>4

                 CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                (Unaudited)
                                                    Nine Months Ended
                                                    September 30,
                                                       1998          1997
OPERATING  ACTIVITIES:

NET INCOME  (LOSS)                                 $797,464       $(67,188)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH USED IN OPERATING ACTIVITIES:
  Depreciation and amortization                      45,909         58,306
  Proceeds from officer's life insurance in
    excess of cash surrender value               (1,000,681)
  Changes in assets and liabilities:
     Accounts receivable                           (102,438)       (47,810)
       Inventories                                  (48,407)        38,734
     Prepaid expenses and other assets                8,808          4,642
       Accounts payable, accrued expenses and
       customer deposits                            (22,002)       (44,638)

NET CASH USED IN OPERATING ACTIVITIES              (321,347)       (57,954)
INVESTING ACTIVITIES:
  Proceeds from officer's life insurance           1,033,051
  Purchase of securities                          (1,463,156)      (118,833)
  Proceeds from sale or maturity of securities     1,060,333        227,438
  Capital expenditures                               (15,032)       (15,068)
NET CASH PROVIDED BY INVESTING ACTIVITIES            615,196         93,537

FINANCING ACTIVITIES:
  Principal payments on  long-term debt             (101,176)       (15,804)
  Purchase of treasury shares                       (181,640)

NET CASH USED IN FINANCING ACTIVITIES               (282,816)       (15,804)
NET INCREASE IN CASH AND CASH EQUIVALENTS             11,033         19,779

CASH AND CASH EQUIVALENTS
  AT BEGINNING OF PERIOD                             119,851         48,048

CASH AND CASH EQUIVALENTS
  AT END OF PERIOD                                  $130,884       $ 67,827

SUPPLEMENTAL CASH FLOW INFORMATION
  Cash paid for interest                             $19,156        $ 9,677
  Cash paid for income taxes                                        $ 3,050


See accompanying notes to consolidated condensed financial statements.

<PAGE>5
                                     
               CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
                                     
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)

1.   The  Consolidated Condensed Financial Statements included herein  have
been  prepared  by  Circuit Research Labs, Inc. ("CRL" or  the  "Company"),
pursuant  to  the  rules  and regulations of the  Securities  and  Exchange
Commission.   The Consolidated Condensed Balance Sheet as of September  30,
1998  and the Consolidated Condensed Statements of Operations for the three
and  nine  months  ended September  30, 1998 and 1997 and the  Consolidated
Condensed Statements of Cash Flows for the nine months ended September  30,
1998 and 1997 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 on Form 10-KSB for the year  ended
December 31, 1997.

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.  The following is a reconciliation of the numerators and denominators of
basic and diluted income per share for the nine month period ended
September 30, 1998. For the three months ended September 30, 1998 and the
three and nine months ended September 30, 1997, the effects of 15,312 total
shares related to options to purchase common stock were not used for
computing diluted earnings per share because the results would be
antidulitive.

                                    Nine months ended September 30, 1998
                                  Income          Shares        Per-Share
                                (Numerator)    (Denominator)     Amounts

Basic                           $  797,464         493,515        $ 1.62
Effect of Dilutive Securities                        3,723

Diluted                         $  797,464         497,238        $ 1.60



3. The Company adopted SFAS No. 130, Reporting Comprehensive Income, on
January 1, 1998. Comprehensive (loss) income for the three and nine months
ended September 30, 1998 was $(26,594) and $797,464, respectively.
Comprehensive loss for the three and nine months ended September 30, 1997
was the same as net loss for these periods.

<PAGE>6

4.  Ronald R. Jones, who was the President and a Director and Chief
Executive Officer of the Company, died on January 1, 1998. At a special
meeting of the Board of Directors of the Company on January 2, 1998, Gary
D. Clarkson was appointed President and Chief Executive Officer.  Mr.
Clarkson had been the Secretary/Treasurer and a Director of the Company,
and was co-founder of the Company with Ronald Jones in 1974.

On February 6, 1998, the Company received approximately $1,033,000 as
proceeds of an insurance policy payable upon the death of Ronald Jones.
Pursuant to an agreement between the Company and Ronald R. Jones, the
Company  repurchased all of Ronald R. Jones' 187,500 shares from the estate
of Ronald R. Jones for $181,640 on May 5, 1998.

5. Until March 31, 1998, Circuit Research Labs, Inc. was listed on the
NASDAQ Small Cap market. NASDAQ has raised its requirements for continued
listing. It now requires among other criteria, a public float of 500,000
shares, and the Company's public float is approximately 295,000 shares.
"Public float" is defined as shares that are not held directly or
indirectly by any officer or director of the issuer and by any other person
who is the beneficial owner of more than 10% of the total shares
outstanding. NASDAQ also requires a minimum market value of the public
float to be $1,000,000. The bid price on March 31, 1998 for the Company's
common stock was $2.00. The highest bid price in 1997 was $2.19. The market
value of the Company's public float at March 31, 1998 was approximately
$590,000. In addition, the Company did not meet other new monetary tests.
While the Company's common shares are no longer listed on the NASDAQ Small
Cap market, as of April 1, 1998, the shares have been listed on the OTC
Bulletin Board.

6.  On May 31, 1998, Gary M. Hamker resigned as a member of the Company's
Board of Directors.

7.  On July 16, 1998, the Company paid Royce T. Jones $98,000 as a
settlement of any and all claims that Royce T. Jones or the Estate of
Ronald R. Jones, may have had against  the Company. Such amount is included
in selling, general and administrative expenses. On July 21, 1998, Royce T.
Jones resigned as a member of the Company's Board of Directors.


<PAGE>7

Item.  2
                                     
               CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
                                     
                                     
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Liquidity and Capital Resources


       The Company had net working capital of approximately $1,660,000  and
the  ratio  of  current assets to current liabilities was  10.86  to  1  at
September  30,  1998.  At December 31, 1997, the Company  had  net  working
capital of approximately $1,068,000 and a current ratio of 6.45 to 1.

       In February 1998, the Company received $1,033,000 as proceeds of  an
insurance policy payable upon the death of Ronald R. Jones. In March  1998,
the  Company paid off the balance, plus accrued interest and early  payment
premium,  on  the  mortgage note collateralized by the Company's  operating
facility. Pursuant to an agreement between the Company and Ronald R. Jones,
the  Company  repurchased all of Ronald R. Jones' 187,500 shares  from  the
estate  of  Ronald R. Jones for $181,640 on May 5, 1998. In July 1998,  the
Company  paid Royce T. Jones $98,000 as a settlement of any and all  claims
that Royce T. Jones or the Estate  of Ronald R. Jones, may have had against
the Company.

      Securities increased from $90,000 at December 31, 1997 to $492,000 at
September 30, 1998.  The increase was the result of the investment  of  the
proceeds of the insurance policy mentioned above. The estimated fair  value
of the Company's securities at June 30, 1998 was $492,000.

       Accounts  receivable of $215,000 at September 30, 1998  compared  to
$112,000  at  December 31, 1997.  Accounts receivable as  a  percentage  of
sales for the three months ended September 30, 1998 was 51% as compared  to
30% for the three months ended December 31, 1997. One large credit sale  in
September accounted for the difference.

       Total  inventories were $932,000 at September 30, 1998  compared  to
total  inventories of $883,000 at December 31, 1997. The  increase  is  the
result of lower than expected sales for the first nine months of 1998.

       Net cash used in operating activities increased from $58,000 for the
nine  months ended September 30, 1997 to $321,000 for the nine months ended
September  30, 1998, primarily as the result of the increase  in  the  loss
from  operations  from $59,000 to $209,000 for the comparable  periods,  as
well as the increase in receivables and inventories discussed above.

       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 Company does  not  have  any
available  credit  facilities. The Company  presently  does  not  have  any
commitments for capital expenditures.

<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 1998 totaled $422,000 compared to
the  third  quarter  sales in 1997 of $558,000. The  Company  continues  to
experience  slower  demand across its product lines, in both  domestic  and
international markets.

       Cost  of goods sold was 45% of net sales for the third quarter ended
September 30, 1998 compared to 48% for the same period in 1997. The cost of
goods  sold  for  the nine-month period ended September 30,  1998  was  44%
compared to 48% for the same period of 1997.

       Selling,  general and administrative expenses were $210,000  in  the
third  quarter  of  1998  compared to selling, general  and  administrative
expenses  of  $253,000 for the third quarter of 1997. Selling, general  and
administrative  expenses were $735,000 in the nine months  ended  September
30,  1998  compared  to  selling, general and  administrative  expenses  of
$725,000 for the nine months ended September 30, 1997. There was an overall
decrease in selling, general and administrative expenses in 1998 except for
the payment of $98,000 as a settlement of any and all claims that Royce  T.
Jones or the Estate of Ronald R. Jones may have had against the Company.

       Research  and  development expense in the  second  quarter  of  1998
totaled $62,000,  compared to the 1997 third quarter total of $53,000.

       Proceeds from the gain on officer's life insurance in excess of cash
surrender  value  of  $1,001,000 was the  result  of  the  proceeds  of  an
insurance policy payable upon the death of Ronald R. Jones.

       Interest and other income of $14,800 for the third quarter  of  1998
compared  to  $1,100 for the third quarter of 1997. The  increase  was  the
result of more funds invested as a result of the insurance proceeds.

       In  March  1998,  the  Company paid off the  balance,  plus  accrued
interest and early payment premium, on the mortgage note collateralized  by
the  Company's  operating facility, and therefore the Company  incurred  no
interest  expense  during the third quarter of 1998.  Interest  expense  of
$3,200 for the third quarter of 1997 consists of the interest cost on  this
mortgage.

       For the three and nine months ended September 30, 1998, there is  no
income  tax  provision primarily because the proceeds from  officer's  life
insurance  is  not  expected  to be included in  taxable  income,  and  any
remaining  income  tax  benefit  has been offset  by  an  increase  in  the
valuation  allowance,  as  utilization of such benefit  is  not  reasonably
assured.

       Net loss for the third quarter of 1998 was $27,000 compared to a net
loss of $17,000 for the third quarter of 1997.

<PAGE>9

Year 2000 Readiness Disclosure
     
Many computer systems in use today were designed and developed using two
digits, rather than four, to specify the year. As a result, such systems
will recognize the year 2000 as "00."  This could cause many computer
applications to fail completely or to create erroneous results unless
corrective measures are taken. This is referred to as the "Y2K" problem.

In February 1998, the Company's board of directors passed a plan (the "Year
2000 Plan") that the Company developed to achieve Year 2000 readiness. The
Year 2000 Plan is intended to remediate the Year 2000 issue in all
categories of systems in use by CRL so that CRL may continue its operations
without interruptions or with minimal disruptions.  The Year 2000 Plan,
which also allocated financial resources to assure Y2K compliance, is
outlined below.

State of Readiness

Computer hardware - CRL uses Personal Computers ("PC") linked together in a
network. These PCs are upgraded periodically to increase efficiency and to
stay current with new technology. Any hardware that is not currently Y2K
compliant will be upgraded by year-end 1998. It is not anticipated that
there will be any substantial additional expenses incurred in these
upgrades.

Accounting software - CRL is under contract with a software company for
CRL's accounting software. It is anticipated that this software will be Y2K
compliant by year-end 1998. Since CRL is under contract with this software
company, this compliance is handled as a normal upgrade of software, and
CRL should not experience any additional expenses or delays in operations.

Internal developmental and operational software - CRL is currently
evaluating all internal software used in development of products and in
internal Company operations. It is anticipated that no substantial cost
will be incurred in bringing all internal developmental and operational
software to compliance. These programs are off- the-shelf products, which
will either be upgraded or replaced by an alternative product that is
compliant.

Suppliers - CRL has a significant inventory of raw materials. It is
estimated that the Company could continue to manufacture products for 3
months with current supplies of raw materials. This quantity of raw
materials is expected to be the same at year-end 1999. If a supplier were
unable to deliver after this three-month period due to Y2K non-compliance,
CRL would look for an alternative supplier, or redesign the product to use
an alternative, available part. CRL feels that either one of these
alternatives could be realized without significant additional expense or
loss of revenue. CRL is currently requesting Y2K compliance documentation
from its major suppliers.

Shipping and freight companies  -  CRL uses several methods and companies
to ship products to customers. The Company feels that due to the abundance
of alternatives available there should not be a problem distributing
products.  CRL has no method of assuring compliance from public
transportation and shipping, Postal Service, FAA etc., which could
adversely affect the Company's ability to deliver products.

CRL's products - Three of CRL's products contain embedded chips, which need
to be Y2K compliant. The Company has identified all products that were
shipped with non-Y2K compliant chips and is notifying these customers that
a free software upgrade is available to make these chips

<PAGE>10

Y2K compliant. The number of products shipped with non-Y2K compliant chips
is small and the cost to supply the Y2K compliant software is insignificant
to the Company. All products that are currently in inventory and that are
currently being manufactured contain embedded chips, which are Y2K
compliant

CRL's dealers - CRL is currently requesting Y2K compliance documentation
from major dealers who purchase the Company's products on credit to insure
that there will be no delay of payment of invoices.

Cost

The Board of Directors of CRL has allocated $10,000 for the Company's
estimated cost of Y2K compliance. The estimated cost of new hardware,
software and manpower to become Y2K compliant was used to determine this
estimated cost.

Risk

CRL believes that its internal operations will be Y2K compliant, and there
will be no material interruption in operations. However, due to the general
uncertainty inherent in the Y2K problem, resulting from the uncertainty of
the Y2K readiness of third-party supplies and customers, the Company is
unable to determine at this time whether the consequences of Y2K failures
will have a material impact on the Company's result of operations,
liquidity or financial condition. CRL believes that, with the
implementation of the Y2K plan initiated by the board of directors, that
the possibility of significant interruptions in normal operations should be
reduced.


Contingency Plans

Internal Y2K compliance will be completed prior to June 30, 1999. Any
unexpected problems associated with internal compliance will be remedied
with alternative available hardware or software. Contingency plans with
external companies will be accomplished by having alternative supplies and
shippers. This should minimize the potential risk of interruptions to
operations.

Forward Looking Information

      This 10QSB includes "forward-looking" statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Management's
anticipation of future events is based upon assumptions regarding levels of
competition, research and development results, raw material markets, the
markets in which the Company operates, stability of the regulatory
environment, the Company's ability to become Y2K compliant, and other risk
detailed from time to time in the Company's filings. Any of these
assumptions could prove inaccurate, and therefore there can be no assurance
that the forward-looking information will prove to be accurate.

<PAGE>11

               CIRCUIT RESEARCH LABS, INC. and SUBSIDIARIES
                                     


                                     
                        Part II. OTHER INFORMATION

Item 5. Other Information

The Company's common shares are no longer listed on the NASDAQ Small Cap
market, but as of April 1, 1998, the shares have been listed on the OTC
Bulletin Board.

On May 5, 1998, pursuant to an agreement between the Company and Ronald
R. Jones, the Company repurchased all of Ronald R. Jones' 187,500
shares from the estate of Ronald R. Jones for the price of  $181,640.

Item 6.  Exhibits and Reports on Form 8-K

      (a) Exhibits included herein: none

      (b) Reports on Form 8-K: none

<PAGE>12

               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 13, 1998
                                       BY /s/Gary D. Clarkson
                                       Gary D. Clarkson

                                       President (Authorized Officer for
                                       signature)

<PAGE>13