UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 27, 2003
Date of Report (Date of earliest event reported)
Circuit Research Labs, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Arizona 0-11353 86-0344671
- --------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1330 West Auto Drive
Tempe, Arizona 85284
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(602) 438-0888
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
------ -----------
99.1 Letter Agreement between Circuit Research Labs, Inc.
and Harman Acquisition Corp. dated as of March 27, 2003.
Item 9. Regulation FD Disclosure.
On April 1, 2003, the Registrant issued a press release relating to a
letter agreement between it and Harman Acquisition Corp., restructuring its
$8.5 million debt to Harman, subject to certain conditions. The letter
agreement is attached as Exhibit 99.1 hereto; the press release is as
follows:
NEWS RELEASE
------------
For further information contact:
C. Jayson Brentlinger
Tele. 602/438-0888, email Jay@Orban.com
Orban / Circuit Research Labs to Restructure Debt to Harman International
Tempe, Ariz., Apr. 1 - Orban/Circuit Research Labs, Inc. (OTC BB: CRLI) today
(Tuesday) announced an agreement in principle to restructure the company's debt
with Harman International Industries, Inc. (HAR) Circuit Research Labs purchased
Orban from Harman International in May 2000.
In announcing the action, C. Jayson "Jay" Brentlinger, President, CEO, and
Chairman of Orban/CRL, said, " Harman has been very supportive over the past
three years which is confirmed by this new agreement. We will now have an
opportunity for a fresh start to move the company forward in a very positive
way."
Broadly, the main elements of the agreement allow a restructuring of the Harman
debt of Circuit Research Labs, Inc. and its subsidiary companies under the
following terms:
* Prior to April 30, 2003 CRLI will issue $1.5 million in common stock for
cash consideration;
* CRLI will then make a $1 million cash principal payment on its
outstanding debt to Harman;
* Harman will permit CRLI to retain the cash raised by the sale of its
common stock in excess of the payment to Harman;
* Harman will agree to exchange $3.5 million principal amount of the debt
owed to Harman by CRLI and its outstanding warrant to purchase shares of
CRLI common stock, for a number of shares of CRLI common stock such that
Harman will own 19% of the then-outstanding shares of CRLI common stock
on a fully-diluted basis after giving effect to the issuance of equity
securities by CRLI referred to in paragraph 1 above. The shares of CRLI
common stock issued to Harman would be subject to (i) a registration
rights agreement with terms similar to the registration rights granted to
Harman in the warrant, including multiple demand rights, and (ii)
anti-dilution protection for issuances of equity securities following the
restructuring.
* Harman will exchange the remaining $3.982 million plus accrued interest
due from CRLI into a single, senior note with an interest fixed at 1.5%
above the current prime rate. Harman will then own 19% of outstanding
shares of CRLI. Commenting on this aspect of the restructure, Brentlinger
said, "We especially welcome having a great company like Harman as a
significant shareholder".
Mandatory principal payments will also be required on the anniversary of
restructuring for the next five years. Interest will be paid monthly; principal
will be payable annually at the rate of $250,000 per year for the first two
years, $500,000 per year for the following two years, and the balance due at the
balance due at the end of the five years.
The transaction is conditioned upon the $1,000,000 principal payment prior to
April 30, 2003.
This press release may contain "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, and stability of the regulatory
environment. Any of these assumptions could prove inaccurate, and therefore
there can be no assurance that the forward-looking information will prove to be
accurate.
Orban/Circuit Research Labs, Inc. develops, manufactures and markets electronic
audio processing, transmission encoding and noise reduction equipment for the
worldwide radio, television, cable, Internet and professional audio markets. The
Orban division manufactures and markets audio processing equipment, primarily
using digital technology. Orban Europe is a worldwide leader in ISO/MPEG, audio,
ISDN, satellite transmission, networking and storage.
More information is available at www.crlsystems.com and www.orban.com.
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.
CIRCUIT RESEARCH LABS, INC.
Date: April 1, 2003 By: /s/ Robert W. McMartin
---------------------------
Robert W. McMartin, Vice President,
Treasurer and Chief Financial Officer
Exhibit Index
Exhibit
Number Description
------ -----------
99.1 Letter Agreement between Circuit Research Labs, Inc.
and Harman Acquisition Corp. dated as of March 27, 2003.