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

                                 FORM 10-Q

     (Mark One)
  (X) Quarterly Report Under Section 13 or 15(D) of The Securities Exchange
      Act of 1934 For Quarter Ended September 30, 2001

                       OR

  ( ) Transition Report Pursuant to Section 13 or 15(d) of The  Securities
      Exchange Act of 1934


                       Commission File Number 0-275


                              Allen Organ Company
          (Exact name of registrant as specified in its charter)



     Pennsylvania                       23-1263194
  (State of Incorporation)      (I.R.S. Employer Identification No.)



  150 Locust Street, P. O. Box 36, Macungie, Pennsylvania      18062-0036
  (Address of principal executive offices)                     (Zip Code)



Registrant's telephone number, including area code           610-966-2200


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 _____

Number of shares outstanding of each of the issuer's classes of common
stock, as of November 8, 2001:

                    Class A - Voting          84,002  shares
                    Class B - Non-voting   1,086,457  shares
<PAGE>
                            ALLEN ORGAN COMPANY

                                   INDEX


Part I  Financial Information

   Item 1.Financial Statements

          Consolidated Condensed Statements of Income for the nine months
          ended September 30, 2001 and 2000

          Consolidated Condensed Balance Sheets at September 30, 2001
          and December 31, 2000

          Consolidated Condensed Statements of Cash Flows for the nine
          months ended September 30, 2001 and 2000

          Notes to Consolidated Condensed Financial Statements

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

   Item 3.Quantitative and Qualitative Disclosures About Market Risk.

Part II    Other Information

   Item 6.Exhibits and Reports on Form 8-K

   Signatures
<PAGE>
PART I  FINANCIAL INFORMATION
   ITEM 1.FINANCIAL STATEMENTS
                    ALLEN ORGAN COMPANY AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                 (Unaudited)

                       For the 3 Months Ended:      For the 9 Months Ended:
                       9/30/2001     9/30/2000      9/30/2001     9/30/2000

Net Sales             $15,385,870   $17,850,297    $43,764,562   $53,590,064

Cost and Expenses
 Costs of sales        10,212,368    10,958,677     31,319,047    31,993,121
 Selling, general and
  administrative        3,628,693     4,393,068     11,850,598    12,836,701
 Research and
  development           1,919,752     1,883,479      6,274,846     5,348,287
 Costs to close
  Southampton plant          --          --            530,000        --
 Impairment of VIR, Inc.
  goodwill                   --          --          1,400,000        --

   Total Costs and
    Expenses           15,760,813    17,235,224     51,374,491    50,178,109

(Loss) Income from
 Operations              (374,943)      615,073     (7,609,929)    3,411,955

Other Income (Expense)
 Interest and other
  income                  201,876       522,804        911,448     1,040,218
 Interest expense            --        (153,261)      (315,084)     (153,261)
 (Loss) Gain on sale of
  property, plant
   and equipment         (175,358)         (562)      (175,358)        7,686
 Minority interests in
  consolidated subsidiaries  --           8,474        (33,275)       42,977

 Total Other Income
  and Expense              26,518       377,455        387,731       937,620

(Loss) Income Before
  Taxes                  (348,425)      992,528     (7,222,198)    4,349,575

Income Tax (Benefit)
  Provision               (85,000)      334,000     (2,768,000)    1,465,000

Net (Loss) Income     $  (263,425)  $   658,528    $(4,454,198)  $ 2,884,575

Basic and Diluted (Loss)
  Earnings Per Share       $(0.23)        $0.56         $(3.81)        $2.46

Weighted Average Shares
  Used in Per Share
  Calculation           1,170,505     1,170,619      1,170,505     1,170,619

Dividends Per Share-Cash   $ 0.14         $0.14         $ 0.42         $0.42

Total Comprehensive
  (Loss) Income       $  (190,231)  $   558,461    $(4,578,269)  $ 2,761,997

                                   See accompanying notes.
<PAGE>
                    ALLEN ORGAN COMPANY AND SUBSIDIARIES
                    CONSOLIDATED CONDENSED BALANCE SHEETS


     ASSETS                                   September 30, 2001  Dec 31, 2000
                                                   (Unaudited)      (Audited)
Current Assets
  Cash                                               $   712,378   $ 2,712,368
  Investments Including Accrued Interest              11,837,373    24,694,377
  Accounts Receivable, net of reserves of
   $372,548 and $428,791, respectively                10,790,221    10,285,659
  Inventories:
   Raw Materials                                       6,081,871     7,684,892
   Work in Process                                     6,386,605     6,172,954
   Finished Goods                                      4,831,272     5,950,327
      Total Inventories                               17,299,748    19,808,173
  Income Taxes Prepaid and Receivable                  3,159,477        13,972
  Prepaid Expenses                                       547,137       304,342
  Deferred Income Tax Benefits                         1,169,554     1,094,701
     Total Current Assets                             45,515,888    58,913,592
Property, Plant and Equipment                         26,391,481    25,861,781
  Less Accumulated Depreciation                      (14,564,020)  (13,338,648)
     Total Property, Plant and Equipment              11,827,461    12,523,133
Other Assets
  Prepaid Pension Costs                                  499,622       506,702
  Inventory Held for Future Service                      809,689       690,657
  Note Receivable                                      1,955,779     1,556,721
  Cash Value of Life Insurance                         2,082,650     2,034,867
  Deferred Income Tax Benefits                           254,476       398,476
  Goodwill, net                                        2,574,831     4,165,002
  Other Assets                                            18,592        18,592
     Total Other Assets                                8,195,639     9,371,017
     Total Assets                                    $65,538,988   $80,807,742

     LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current Liabilities
  Notes Payable - Bank                               $    --       $ 8,700,000
  Accounts Payable                                     2,585,357     3,448,119
  Other Accrued Expenses                               2,163,045     2,816,102
  Customer Deposits                                    3,017,885     2,991,628
     Total Current Liabilities                         7,766,287    17,955,849
Noncurrent Liabilities
  Deferred and Other Noncurrent Liabilities              414,575       310,016
     Total Liabilities                                 8,180,862    18,265,865
Minority Interests                                        --           106,976

STOCKHOLDERS' EQUITY
  Common Stock     2001            2000
   Class A   127,232 shares;   127,232 shares            127,232       127,232
   Class B 1,410,761 shares; 1,410,761 shares          1,410,761     1,410,761
  Capital in Excess of Par Value                      12,758,610    12,758,610
  Retained Earnings
   Balance, Beginning                                 59,977,002    56,677,650
   Net (Loss) Income                                  (4,454,198)    3,954,896
   Dividends - Cash 2001 and 2000                       (491,615)     (655,544)
   Balance, End                                       55,031,189    59,977,002
  Accumulated Other Comprehensive Income:
   Unrealized Gain on Investments                         15,919       139,990
   Sub-Total                                          69,343,711    74,413,595
  Treasury Stock
   2001-43,230 Class A shares;324,304 Class B shares (11,985,585)       --
   2000-43,230 Class A shares;324,148 Class B shares     --        (11,978,694)
  Total Stockholders' Equity                          57,358,126    62,434,901
  Total Liabilities and Stockholders' Equity         $65,538,988   $80,807,742
                                       See accompanying notes.
<PAGE>


                    ALLEN ORGAN COMPANY AND SUBSIDIARIES
               CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (Unaudited)

                               For the 3 Months Ended:  For the 9 Months Ended:
                                9/30/2001   9/30/2000    9/30/2001  9/30/2000
CASH FLOWS FROM OPERATING
ACTIVITIES
 Net (loss) income            $ (263,425) $  658,528  $(4,454,198)  $2,884,575
 Adjustments to reconcile net
    (loss) income to net cash
    provided by operating
    activities
  Depreciation and amortization  655,515     701,991    2,257,931    1,710,801
  Loss from impairment of VIR,
   Inc. goodwill, Included
    in operating expenses           --          --      1,400,000       --
  Minority interest in
   consolidated subsidiaries        --        (8,474)      33,275      (42,977)
  Loss (Gain) on sale of
   property, plant and
   equipment                     175,358         562      175,358       (7,686)
 Change in assets and liabilities
  Accounts receivable         (2,787,901)   (279,737)    (504,562)   2,628,951
  Inventories                  1,329,979    (183,408)   2,389,393   (3,083,536)
  Income taxes prepaid and
   receivable                   (161,762)       --     (3,145,505)      --
  Prepaid expenses               157,945     116,849     (242,795)    (106,479)
  Prepaid pension costs           38,047      (7,851)       7,080       44,399
  Other assets                      --        22,548         --         22,548
  Deferred income tax benefits    39,246        --         69,147       --
  Accounts payable               706,004    (403,826)    (862,762)    (737,850)
  Accrued taxes on income           --      (176,530)        --       (521,231)
  Accrued expenses                11,094     212,829     (653,057)     490,461
  Customer deposits               24,982     (90,500)      26,257       42,177
  Deferred and other noncurrent
   liabilities                    34,853      96,550      104,559       97,576
    Net Cash (Used In) Provided
     by Operating Activities     (40,065)    659,531   (3,399,879)   3,421,729

CASH FLOW FROM INVESTING
ACTIVITIES
  Proceeds from the sale of
   property, plant and equipment  11,250       7,800       11,250       26,706
  Additions to goodwill             --      (286,788)    (156,243)    (838,216)
  Increase in note receivable       --          --       (399,058)    (405,612)
  Purchases of plant and
   equipment                    (250,087)   (870,745)  (1,238,984)  (2,482,176)
  Increase in cash value of
   life insurance                (47,783)   (346,850)     (47,783)    (346,850)
  Net sale (or purchase) of
   short-term investments        208,801  (6,932,102)  12,732,933   (5,567,100)
   Net Cash Provided by
    (Used in) Investing
    Activities                   (77,819) (8,428,685)  10,902,115   (9,613,248)

CASH FLOWS FROM FINANCING
ACTIVITIES
  Proceeds from bank loans          --     8,000,000    3,300,000    8,000,000
  Repayment of bank loans           --          --    (12,000,000)      --
  Proceeds from sale of
   subsidiary stock                 --          --         96,333       --
  Reacquired Class B
   common shares                    --          --         (6,891)      (3,732)
  Dividends paid in cash        (163,865)   (163,886)    (491,615)    (491,659)
  Subsidiary company stock
   reacquired from
    minority shareholders       (350,603)       --       (400,053)      --
  Net Cash (Used in) Provided
   By Financing Activities      (514,468)  7,836,114   (9,502,226)   7,504,609

NET (DECREASE) INCREASE IN CASH (632,352)     66,960   (1,999,990)   1,313,090

CASH, BEGINNING                1,344,730   1,455,407    2,712,368      209,277

CASH, ENDING                  $  712,378  $1,522,367 $    712,378   $1,522,367


             SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for:
   Income Taxes               $   77,777  $  510,811 $    319,777   $2,003,311
   Interest                   $     --    $  153,261 $    315,084   $  153,261
                       See accompanying notes.
<PAGE>
                    ALLEN ORGAN COMPANY AND SUBSIDIARIES
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Interim Financial Statements
  The  results  of operations for the interim periods shown in  this  report
  are  not  necessarily indicative of results to be expected for the  fiscal
  year.   In  the  opinion of management, the information  contained  herein
  reflects  all adjustments necessary to make the results of operations  for
  the  interim  periods  a  fair statement of  such  operations.   All  such
  adjustments are of a normal recurring nature.
  Certain  notes and other information have been condensed or  omitted  from
  the  interim  financial statements presented in the  Quarterly  Report  on
  Form  10-Q.   Therefore,  these financial statements  should  be  read  in
  conjunction with the company's 2000 Annual Report on Form 10-K.

2.Impairment of Goodwill
  During  March 2001 the Company recorded a charge to operating expenses  of
  $1,400,000 related to the impairment in the value of goodwill which  arose
  in  connection  with  the acquisition of VIR, Inc.   This  write  down  of
  goodwill  is  attributable  to the downturn  in  the  data  communications
  industry,  the  combination of VIR into the Company's  subsidiary  Eastern
  Research,  Inc. and closure of the VIR facility discussed in  more  detail
  below,  all of which reduced expectations of future cash flows from  VIR's
  operations.

3.Combination of Subsidiaries
  During  April  2001  the Company began combining its  Data  Communications
  subsidiaries  VIR  Linear  Switch (VIR) of Southampton,  PA  into  Eastern
  Research,  Inc.  (ERI), which is also a subsidiary of  the  Company.   VIR
  designs,  manufactures  and  markets a number  of  test  access  and  tech
  control  products  for  use  in customer networks.   The  combination  was
  completed  during  the  third  quarter of 2001  and  the  Southampton,  PA
  facility  has  been closed.  The combined operations are headquartered  at
  ERI's  facility in Moorestown, New Jersey.  Manufacturing of some of VIR's
  products  has been moved to ERI's supplier with other manufacturing  being
  transferred  to  the Macungie, PA plant.  The Company  has  estimated  the
  restructuring  charges (including employee severance, benefits  and  other
  exit  costs)  related  to  this  combination  and  plant  closure  to   be
  approximately  $530,000 of which $360,000 has been paid  as  of  September
  30,  2001.   The Company believes that the remaining $170,000  of  accrued
  termination   costs   is  adequate  to  cover  the   estimated   remaining
  expenditures.

4.Financing
  During June 2001 Eastern Research, Inc. repaid all outstanding bank  loans
  totaling  $12,000,000  with funds provided by Allen  Organ  Company.   The
  Company originally obtained these loans to give ERI financial autonomy  as
  it  explored  strategic alternatives.  As a result of the changes  in  the
  financial markets, the Company decided to repay the outstanding  loans  to
  eliminate the costs related to this financing.

5.New Accounting Standards
  Effective  January  1,  2001,  the Company  adopted  Financial  Accounting
  Standard  No.  133,  "Accounting for Derivative  Instruments  and  Hedging
  Activities,"  as  amended.  This standard  requires  that  all  derivative
  instruments  be  reported  on  the  balance  sheet  at  fair   value   and
  establishes  criteria  for  designation  and  effectiveness   of   hedging
  relationships.   The  Company  has no derivative  instruments  or  hedging
  activities  and  therefore this standard will not have an  affect  on  its
  financial statements.

  During  2001 the Financial Accounting Standards Board issued the following
  new  Statements that are applicable to the Company.  While the Company has
  not  conducted  an extensive study to determine the effect  of  these  new
  pronouncements, it does not feel that they will have a significant  affect
  on its financial statements.
   SFAS  141,  "Business Combinations" - requires the use  of  the  purchase
   method for all business combinations initiated after June 30, 2001.
   SFAS  142,  "Goodwill  and  Other  Intangible  Assets"  -  replaces   the
   requirement  to  amortize  intangible assets with  indefinite  lives  and
   goodwill  with a requirement for an impairment test.  The statement  will
   be adopted beginning 2002.
   SFAS  144,  "Accounting  for  the Impairment or  Disposal  of  Long-Lived
   Assets"  -  Establishes one accounting model, used for long-lived  assets
   to be held and used, disposed of by sale or otherwise disposed.

ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS.

Liquidity and Capital Resources:

    Cash flows from operating activities decreased during the three and nine
months  ended September 30, 2001 when compared to the same period  in  2000,
primarily  due  to  operating  losses incurred in  the  Data  Communications
segment.   These decreases were partially offset by reductions in  inventory
levels   in  the  Musical  Instruments,  Electronic  Assemblies   and   Data
Communications segments.
    Cash flows from investing activities were used to purchase property  and
equipment  during  the  nine  months  ended  September  30,  2001  including
approximately $478,000 in the Musical Instruments segment, $138,000  in  the
Electronic  Assemblies  segment  and $618,000  in  the  Data  Communications
segment.
    During  June 2001 the Company sold more than $12,000,000 in  short  term
investments  to  fund the repayment of bank loans discussed  in  Footnote  4
above.

Results of Operations:

Sales and Operating Income
                           For the 3 Months Ended      For the 9 Months Ended
                           9/30/2001    9/30/2000      9/30/2001     9/30/2000
 Net Sales to
  Unaffiliated Customers
   Musical Instruments   $ 5,976,634  $ 6,786,023    $18,208,419   $21,295,085
   Data Communications     7,960,398    8,280,161     16,770,366    24,110,559
   Electronic Assemblies   1,134,936    2,335,438      7,401,992     6,248,354
   Audio Equipment           313,902      448,675      1,383,785     1,936,066
     Total               $15,385,870  $17,850,297    $43,764,562   $53,590,064

 Intersegment Sales
   Musical Instruments   $    10,260  $    68,022    $    51,087   $   248,012
   Data Communications           136       57,330        193,574        57,330
   Electronic Assemblies        --          --            --            15,577
   Audio Equipment            22,081       10,224         41,482        17,156
     Total               $    32,477  $   135,576    $   286,143   $   338,075

 Income (Loss) from Operations
   Musical Instruments   $ 1,170,937  $ 1,090,758    $ 1,846,125   $ 4,020,315
   Data Communications      (972,644)    (786,980)    (9,006,780)   (1,290,409)
   Electronic Assemblies    (175,962)     376,931        257,670       976,389
   Audio Equipment          (397,274)     (65,636)      (706,944)     (294,340)
     Total               $  (374,943) $   615,073    $(7,609,929)  $ 3,411,955

Musical Instruments Segment
    Sales decreased $809,389 and $3,086,666 respectively, for the three  and
nine  months ended September 30, 2001 when compared to the same  periods  in
2000.   While  the  order  rate  for the  first  nine  months  of  2001  was
approximately equal to 2000.  The 2000 sales were higher for the period  due
to shipments made against a higher order backlog.
   The gross profit percentage increase to 40% during the three months ended
September  30, 2001 from 34% in the same period of 2000.  This  increase  is
due  to  a  $450,000  increase in inventory related  to  an  update  of  the
Company's  standard product costs to reflect the current level of  cost  for
materials, wages and overhead.  The gross profit margin decreased to 31% for
the  nine  months ended September 30, 2001 as compared to 37%  in  the  same
period  in  2000  due to lower sales over which to absorb  fixed  costs  and
changes in product mix.
    Selling,  general and administrative, research and development  expenses
decreased slightly during the three and nine months ended September 30, 2001
when compared to the same periods in 2000.

Data Communications Segment
    Sales decreased $319,763 and $7,340,193 respectively, for the three  and
nine  months ended September 30, 2001 when compared to the same  periods  in
2000, resulting in a significant operating loss for the first nine months of
2001.   This  segment's  order rate in the first nine  months  of  2001  was
significantly  lower than the same period in 2000.  The  sales  decrease  is
attributable  to  a  general slowdown in the national  economy  and  a  more
significant industry-wide slowdown in the Data Communications markets.  Some
of  this  segment's  products  had been sold to Competitive  Local  Exchange
Carriers  (CLEC)  that  were hit hard by the economic down-turn,  with  many
having  difficulty raising capital required to continue to build  out  their
networks  and  deliver  services.   As a result,  many  CLEC's  have  become
insolvent.   This  segment  has since redirected  its  sales  and  marketing
efforts away from CLEC's and has focused on healthier markets for which  its
product   line   is  well  suited,  including  the  wireless   and   certain
international  markets.  This segment has been successful in increasing  its
order  rate during the third quarter of 2001 to near the sales level of  the
third  quarter of 2000.  ERI's current order rate remains at  or  above  the
levels of the fourth quarter of 2000.
   Cost of goods sold for the three and nine months ended September 30, 2001
includes  $819,000  and  $1,539,000  respectively,  of  additional  non-cash
inventory  valuation adjustments recorded at VIR, Inc. for slow  moving  and
obsolete  inventory associated with discontinued product lines.  The  result
of these adjustments was to decrease gross profit margins by 10% from 47% to
37% in the third quarter and by 9% from 43% to 34% for the nine months ended
September  30, 2001.  Gross profit margins during the three and nine  months
ended September 30, 2000 were 46% and 47% respectively.  The decrease in the
gross profit margins for the nine months ended September 30, 2001 (excluding
the  inventory  valuation adjustments) was due to lower  sales  volume  over
which  to  absorb  fixed costs and competitive pressures  to  lower  selling
prices of products.
    Sales  and marketing expenditures decreased $569,007 (24%) and  $672,703
(11%)   during  the  three  and  nine  months  ended  September   30,   2001
respectively, when compared to the same periods in 2000.
    General and administrative expenses decreased $183,313 (24%) and $42,172
(2%) during the three and nine months ended September 30, 2001 respectively,
when compared to the same periods in 2000.
   Research and development expenditures increased $26,124 (2%) and $912,716
(21%)  respectively for the three and nine months ended September  30,  2001
when compared to the same periods in 2000.
    As  discussed in Note 2 above, the first quarter of 2001 and nine months
ended  September 30, 2001 operating expenses includes a charge of $1,400,000
related to the write down of the value of VIR's goodwill.
    In  April  2001 the Company announced plans for restructuring  its  Data
Communications  segment.   The  Company has  combined  the  VIR  operations,
located  in  Southampton,  PA into ERI with the  combined  operations  being
headquartered in Moorestown, NJ.  The Southampton, PA facility has  be  been
closed.   Manufacture  of some of VIR's products has  been  moved  to  ERI's
supplier  with  other manufacturing being transferred to  the  Macungie,  PA
plant.   VIR  employed about 30 people with some being  transferred  to  the
Moorestown  facility.  See Note 3 above for additional information  on  this
plant closing.
    Because  of  the  economic  downturn that  resulted  in  this  segment's
significant reduction in sales volume during the first six months  of  2001,
the  Company  took  additional steps to reduce  its  expenditures  for  this
segment.  ERI reduced its workforce by 10 positions during the first quarter
of  2001 resulting in severance and related costs of approximately $100,000.
In  April  of 2001 ERI reduced its workforce by an additional 11  positions.
These  additional  terminations  along with  the  VIR  plant  closure  costs
discussed  above  resulted  in a total restructuring  charge  for  the  Data
Communications  segment  of  $640,000 which was included  in  the  operating
results of the second quarter of 2001.  In addition this segment has reduced
its planned operating and capital expenditures for the balance of the year.
   ERI has introduced significant new products during 2001 including the DNX-
88  and  an  OC3/STM1  interface card for the DNX line,  its  first  optical
product.   The  DNX-88  system scales from 8 to 688  T1/E1  interfaces.   It
leverages  all  narrowband and broadband interfaces within the  current  DNX
portfolio,  including  T1/E1,  T3, STS1 and OC3/STM1,  while  retaining  its
ability  to  groom  multi-service traffic by performing  non-blocking  3-1-0
cross  connections.  Initial orders for the new products are  in  line  with
Company.
    With  the cost reductions and new markets focus listed above the Company
previously  announced that it plans for the Data Communications  segment  to
approach breakeven from operations in the last quarter of 2001.  The Company
remains  on  track to achieve this goal.  However, the current economic  and
market  conditions  make  future sales visibility problematic,  which  could
jeopardize achievement of this goal.

Electronic Assemblies Segment
    Sales  decreased  $1,200,502  during the  third  quarter  and  increased
$1,153,638 during the nine months ended September 30, 2001 when compared  to
the  same  periods in 2000.  The decrease in sales for the third quarter  is
the  result  that  the  severe economic slowdown has had  on  the  Company's
contract  manufacturing customers.  The current order rate is  significantly
lower than the prior year and is expected to continue at this lower level in
future quarters.  Because of this decrease the Company has taken actions  to
reduce its costs at its Macungie, PA plant including reductions in personnel
related to this segment of the business.
    Gross  margin for the third quarter was a loss of $(60,076)  (5%).   The
gross profit margin percentage for the nine months ended September 30,  2001
was  8%.  Gross profit margins were 20% for the three and nine months  ended
September 30, 2000.
    Selling,  general  and administrative expenses for the  three  and  nine
months ended September 30, 2001 increased slightly when compared to the same
periods in 2000.

Audio Equipment Segment
   Sales decreased $134,776 and $552,281 for the three and nine months ended
September 30, 2001 when compared to the same periods in 2000.  Gross  profit
margins  decreased to 20% for the nine months September 30, 2001 as compared
to  42%  in the same period of 2000 due to lower sales over which to  absorb
fixed costs.
    Selling, general and administrative costs decreased slightly during nine
months ended September 30, 2001 when compared to the same period in 2000.
    Legacy  Audio  has  historically sold  its  products  through  a  direct
marketing  program.  The Company believes that this method  of  distribution
has  limited its ability to penetrate the broader market.  Legacy has  begun
implementing  plans  to distribute its products through a  more  traditional
dealer  network.  The Company has added independent retail dealers and  will
continue  to  do  so  in  a conservative manner to build  a  quality  dealer
network.  During this period Legacy has been shifting marketing resources to
the  new method of distribution.  In addition, the general economic slowdown
has  slowed  the  sales of consumer goods.  This has  resulted  in  a  sales
decrease in direct sales that has not been offset by dealer sales.

Other Income and Expense
    Investment  income  decreased during the three  and  nine  months  ended
September  30, 2001 when compared to the same period in 2000  due  to  lower
invested balances.
   (Loss) Gain on Sale of Property, Plant & Equipment for the three and nine
months  ended September 30, 2001 includes approximately $158,000  of  losses
related  to  the  sale or abandonment of property at VIR's  Southampton,  PA
facility that was closed in September 2001.

Factors that May Affect Operating Results
The  statements  contained in this report on Form 10-Q that are  not  purely
historical are forward looking statements within the meaning of Section  27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of  1934, including statements regarding the Company's expectations,  hopes,
intentions  or strategies regarding the future.  Forward looking  statements
include:  statements  regarding  future  products  or  product  development;
statements  regarding  future  research and  development  spending  and  the
Company's  marketing and product development strategy, statements  regarding
future production capacity.  All forward looking statements included in this
document  are  based  on information available to the Company  on  the  date
hereof,  and  the Company assumes no obligation to update any  such  forward
looking  statements.  Readers are cautioned not to place undue  reliance  on
these  forward looking statements, which reflect management's opinions  only
as  of  the  date hereof.  Readers should carefully review the risk  factors
described  in other documents the Company files from time to time  with  the
Securities and Exchange Commission, including the Annual Report on Form  10-
K.   It  is important to note that the Company's actual results could differ
materially  from  those  in such forward looking statements.   Some  of  the
factors  that could cause actual results to differ materially are set  forth
below.
The   Company  has  experienced  and  expects  to  continue  to   experience
fluctuations  in  its  results  of  operations.   Factors  that  affect  the
Company's  results  of operations include the volume and  timing  of  orders
received, changes in global economics and financial markets, changes in  the
mix  of products sold, market acceptance of the Company's and its customer's
products,  competitive  pricing pressures, global currency  valuations,  the
availability  of  electronic  components that  the  Company  purchases  from
suppliers,  the Company's ability to meet increasing demand,  the  Company's
ability  to  introduce new products on a timely basis,  the  timing  of  new
product  announcements and introductions by the Company or its  competitors,
changing  customer  requirements, delays in new product qualifications,  the
timing  and extent of research and development expenses and fluctuations  in
manufacturing yields.  As a result of the foregoing or other factors,  there
can   be  no  assurance  that  the  Company  will  not  experience  material
fluctuations  in  future operating results on a quarterly or  annual  basis,
which   would  materially  and  adversely  affect  the  Company's  business,
financial condition and results of operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   No change from information disclosed in the Company's 2000 annual report
   on form 10-K.

PART II    OTHER INFORMATION
   Item 6.     Exhibits and Reports on Form 8-K
   (b)  Forms 8-K
        1.The Company filed a Form 8-K dated July 24,  2001 announcing
          that  its subsidiary Eastern  Research,  Inc.  had been
          chosen  by  Telstra Corp. Ltd  as  a  supplier  of  Time
          Division  Multiplexer  equipment for Telstra's  Business
          Data Access Network.

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 thereunto duly authorized.

                                           Allen Organ Company
                                           (Registrant)


Date:  November 9, 2001             /s/ STEVEN MARKOWITZ
                                    Steven Markowitz, President and Chief
                                    Executive Officer

Date:  November 9, 2001             /s/ NATHAN S. ECKHART
                                    Nathan S. Eckhart, Vice President-Finance,
                                    Chief Financial and Principal
                                    Accounting Officer