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

                                    FORM 10-K

(Mark One)
|X|  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE ACT OF
     1934

                     For the fiscal year ended June 30, 2001
                                               --------------

                                       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 number 0-17219
                                                -------

                       GENTNER COMMUNICATIONS CORPORATION
                       ----------------------------------
             (Exact name of registrant as specified in its charter)

                     Utah                                        87-0398877    
   ----------------------------------------                   -----------------
        (State or other jurisdiction of                       (I.R.S. Employer
        incorporation or organization)                       Identification No.)

    1825 Research Way, Salt Lake City, Utah                        84119   
    ---------------------------------------                      ----------
   (Address of principal executive offices)                      (Zip Code)

                    Issuer's telephone number (801) 975-7200
                                              --------------

         Securities registered under Section 12(b) of the Exchange Act:

     Title of each class               Name of each exchange on which registered
     -------------------               -----------------------------------------
            None                                         None

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, $0.001 par value
                         ------------------------------
                                (Title of class)

        Indicate by check mark whether the issuer (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 by check mark disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to this
Form 10-K. |_|

        The aggregate market value of the voting common stock held by
non-affiliates is approximately $66,576,342 at September 1, 2001. This value was
computed at the price of $10.89 at which the stock traded on September 1, 2001
(which date is within 60 days of the filing of this Form 10-K).

        The number of shares outstanding of the issuer's Common Stock as of
September 1, 2001 was 8,612,978.


<PAGE>


                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

Overview

Gentner Communications  Corporation (the "Company") was organized under the laws
of the State of Utah on July 8, 1981 as Gentner  Engineering  Company,  Inc.  On
March 26,  1985,  Gentner  Engineering  Company  went public by way of a reverse
purchase when Insular,  Inc.  (incorporated  in Utah on July 8, 1983),  acquired
Gentner Engineering and changed its name to Gentner Electronics Corporation.  On
July 1,  1991,  Gentner  Electronics  Corporation  changed  its name to  Gentner
Communications  Corporation to more accurately  reflect the expanding  nature of
its business.

The Company primarily develops,  manufactures,  markets and distributes products
and  services  for  the  conferencing  equipment,   conferencing  services,  and
broadcast  markets.  Until 1991, the Company's  primary business was the sale of
studio and  transmitter-related  equipment to broadcast facilities.  Since then,
the Company has applied its core digital audio  technology to the development of
products  for  conferencing,   sound  reinforcement,   and  assistive  listening
applications.  In addition, the Company offers conferencing services,  including
conference  calling,  Webconferencing,  document  conferencing,  audio and video
streaming, and customer training and education.

The Company  initially  began  selling its products to the  telephone  interface
portion of the  broadcast  market.  These  products  are  primarily  used to put
callers on the air for call-in  talk  shows.  In 1991,  using the  technological
expertise  gained in the  broadcast  market,  the  Company  commenced  marketing
products specifically developed for the audioconferencing  market. The Company's
audioconferencing  products  provide  users  with a natural,  two-way  method of
conversation  without the cut-offs,  distortion,  noise and echo associated with
traditional   speakerphones.   Audioconferencing   products  are   installed  in
conference rooms, courtrooms, and distance learning facilities. The Company also
develops assistive  listening systems that provide enhanced audio for those with
hearing  disabilities.  Over the past two years,  the Company has  expanded  its
market opportunity by introducing products targeting the  videoconferencing  and
sound reinforcement markets.  Videoconferencing products are typically installed
in the same types of venues as the Company's  audioconferencing  products. Sound
reinforcement products target larger venues, such as stadiums, arenas, theaters,
houses  of  worship  and  convention  centers.  Product  sales  from  continuing
operations  accounted  for 71% of the  Company's  total  sales  from  continuing
operations during fiscal 2001,  compared to 79% in fiscal 2000 and 84% in fiscal
1999.

In fiscal 1993, the Company  introduced  Gentner  Conference Call(R) (1-800 LETS
MEET(R)), a comprehensive teleconferencing service. Over the past two years, the
Company has expanded its service offerings to include on-demand, reservationless
conference  calling,  Webconferencing,  and audio and video  streaming  over the
Internet. During fiscal year 2001, sales conferencing services accounted for 29%
of the  Company's  total sales from  continuing  operations,  compared to 21% in
fiscal 2000 and 16% in fiscal 1999.

The  Company's  international  sales were 13%,  12%,  and 12% of total sales for
fiscal years 2001, 2000, and 1999, respectively.

Business Strategy

In fiscal year 2001, the Company  changed its reportable  operating  segments to
reflect how it evaluates its  operating  performance  and  allocates  resources.
Prior  to  fiscal  year  2001,  the  Company's   reportable   segments  included
RFM/Broadcast,  Conferencing Products,  Conferencing Services and Other. On July
5, 2000,  the Company  concluded  the purchase of the assets of  ClearOne,  Inc.
Through  this   purchase,   the  Company   obtained   valuable   technology  for
videoconferencing  products, as well as existing  audioconferencing products and
related  technology.  As of April 12,  2001,  the Company sold the assets of the
remote  control  portion  of  the  RFM/Broadcast  division.  Subsequent  to  the
disposal,  the Company now  operates in two  different  segments - Products  and
Services.  See Note 15 to the  Consolidated  Financial  Statements  for  further
information on Segment  Reporting.  The operating  results of the remote control
portion of the division have been separately reported as discontinued operations
for all periods presented.  See further discussion of Discontinued Operations in

I
tem 7.

The  Products  segment is  responsible  for the  following  areas:  room  system
audioconferencing and videoconferencing  products, sound reinforcement products,
broadcast telephone interface products, and assistive listening systems.


                                       2

<PAGE>


The Services segment is responsible for all teleconferencing services, including
full-service conference calling; on-demand, reservationless conference calling,
Webconferencing, and audio and video streaming.

The Company is focused on increasing its share of target markets through new
product and service introductions, and through enhanced international efforts.

Products and Services

Products Segment
----------------

Room System  Conferencing  Products.  In 1991, the Company  combined the digital
technology in its broadcast telephone products with Digital Echo Cancellation(R)
to develop a line of  conferencing  products.  These  products  are used in such
settings as conference  rooms,  distance  learning  facilities,  and courtrooms.
Examples of current  applications  include  executive  boardrooms for Bell South
Telecommunications,  The Boeing Company,  and the National  Geographic  Society;
distance learning facilities in Oklahoma,  Indiana, Nebraska, North Carolina and
Wisconsin;  and  courtroom  applications  for the Montreal  Court System and the
Federal Bankruptcy Courts in San Jose. The Company is well known for these types
of quality products.

In 1998, the Company  introduced  and began shipping a new line of  conferencing
products under the brand name of Audio Perfect(R).  The Audio Perfect(R) product
line currently  consists of the AP800,  AP400, AP10,  AP-Ware(TM),  AP IR Remote
Control  and  APV200-IP.  Building  upon its Audio  Perfect(R)  technology,  the
Company began  shipping the newest  generation  of  conferencing  products,  the
XAP(TM) 800 and  XAP(TM)  TH1,  in June 2001.  The XAP(TM) and Audio  Perfect(R)
products are comprehensive  room-audio  control systems designed to excel in the
most  demanding  acoustical  environments  and routing  configurations.  Typical
applications include conference rooms,  courtrooms,  corporate  boardrooms,  and
distance learning facilities.  The XAP(TM) and AudioPerfect(R) products are also
used for integrating audio with videoconferencing systems.

The XAP(TM) 800 is the Company's most powerful,  feature-rich  audioconferencing
product to date. It builds upon the proprietary Distributed Echo Cancellation(R)
technology of the Company's popular AP800 and on the proven software control and
signal processing  capabilities of the Company's  PSR1212.  It also incorporates
noise cancellation technology,  assignable processing blocks, advanced automatic
gain  control  and speech  leveler,  an advanced  matrix  mixer,  advanced  room
combining technology, and wall-panel controls.

The  XAP(TM)  TH1 is the  telephone  interface  portion of the  XAP(TM)  800. It
connects  audioconferencing  participants  via a telephone line. The XAP(TM) TH1
provides the best available quality for single telephone line conferencing,  and
it enables up to 16 callers to be conferenced into a XAP(TM) 800 system using 16
XAP(TM) TH1s.

The AP800 performs the combined functions of several audio devices, including an
eight-channel  automatic  microphone  mixer,  a 12 X 12 matrix  mixer,  an audio
processor, an equalizer and an audio network controller. It also functions as an
echo canceller  using the Company's  digital  Distributed  Echo  Cancellation(R)
(D.E.C.)(R)  technology.  Before  D.E.C.,  only one echo  canceller  was used to
eliminate  acoustic  echo during a call.  With  D.E.C.,  an echo  canceller,  an
equalizer and an audio processor are placed on every microphone input,  yielding
crystal-clear audio in a greater variety of environments.

The  AP10  is  used  with  the  AP800  as  a  telephone   interface  to  connect
audioconferencing  participants  via a  telephone  line.  Each Audio  Perfect(R)
system can be  expanded  to  interface  with up to eight  AP800's and 16 AP10's,
providing a network of up to 16 phone lines, 32 line inputs, and 64 microphones,
all operating as a single unit.

The AP400  combines  the scaled  down  functions  of the AP800,  the AP10 and an
internal power amplifier.  Its four microphone  inputs,  compared to the AP800's
eight microphone inputs, make the AP400 more practical for small to medium sized
rooms.

AP-Ware(TM)  is a PC-based  software  designed to enhance  the Audio  Perfect(R)
family  of  products.  AP-Ware(TM)  simplifies  the  set-up,  configuration  and
operation  of  the  Audio  Perfect(R)  system  by  employing  a  graphical  user
interface.  The  graphic  orientation  provides  access  to  the  same  features
available via the front-panel controls of the AP800, AP400 and AP10, but does so
in a  more  user-friendly  manner.  AP-Ware(TM)  can  control  an  entire  Audio
Perfect(R) system using only one serial connection,  and can communicate with AP
units both locally and remotely via modem.

The AP IR Remote Control uses infrared transmission to operate the AP800, AP400
and AP10. Features include connect, disconnect, dial, redial, speed dial, hook
flash, volume control and micFrophone mute.


                                       3

<PAGE>

The  APV200-IP is a  videoconferencing  system that the Company  purchases  from
Viseon  Video,  Inc. The APV200-IP  delivers  high-quality  video,  is standards
based, and connects directly to any size TV, LCD projector,  flat screen, PC, or
laptop  computer.  When  combined  with other  Audio  Perfect(R)  products,  the
APV200-IP  can support up to 64  microphones  and  multiple  cameras,  providing
top-quality sound and video for any size room.

In July 2000, the Company purchased substantially all of the assets of ClearOne,
Inc.,  a Woburn,  Massachusetts-based  developer  of  multimedia  communications
equipment.  With the asset  purchase,  the Company  enhanced its technology with
respect to  videoconferencing,  which it  believes  enables  the Company to more
effectively  meet customer  demands for specific  features and  functionality in
future products by bringing videoconferencing product development in-house.

In addition to the  videoconferencing  technology  gained in the ClearOne,  Inc.
asset purchase, the Company acquired two audioconferencing products. The Gentner
ClearOne(R) is a portable,  plug-and-play  conference  phone. It complements the
Company's product suite and expands current  distribution methods because it can
be sold through  retail  distribution  channels as well as through the Company's
existing network of dealers and integrators.  In addition,  the Company obtained
the "VTC  AccuMic"  a  microphone  pad  that is  ideally  used as  high-quality,
affordable audio support for any videoconferencing  system. It is typically used
when audio coverage from a single microphone is insufficient.

Sound  Reinforcement  Products.  In March 2000,  the Company began  shipping the
PA870 power  amplifier,  and in December  2000,  the Company began  shipping the
PSR1212 matrix mixer with audio processing capabilities.  Both the PA870 and the
PSR1212 are designed for sound  reinforcement  applications in large venues such
as hotels, theaters, convention centers, and houses of worship.

Broadcast  Telephone  Interface  Products.  The  Company's  telephone  interface
product line offers a full selection of products ranging from simple single-line
couplers,  which enable users to send and receive audio over a single  telephone
line,  to  computerized  multiple-line  systems used in talk-show  programs.  An
example of the computerized  multi-line system is the Company's TS612,  which it
began selling in fiscal 1995. Using the TS612, talk-show hosts can screen calls,
bring callers on-air,  conference  several callers together,  or monitor whether
callers are on hold or talking to the show's producer.  The Company believes its
share of the domestic  telephone  interface  market is currently 50% or greater,
with potential for the largest growth in international markets.

In April 2001, the Company sold the remote control portion of the  RFM/Broadcast
product line.  The purchase was made by Burk  Technology  of Littleton,  MA. The
purchase price was $3.2 million.

Assistive  Listening System Products.  In March 1993, the Company began shipping
its Assistive Listening System (ALS) products. These products help the Company's
customers  comply with the Americans  with  Disabilities  Act (ADA) by providing
enhanced  audio for hearing  impaired  people in public places such as theaters,
houses of worship, schools, courtrooms, stadiums and arenas.

In February  1999,  the Company  introduced  its Venture  series of ALS products
designed  specifically  for tour audio and  language  translation  applications.
Venture  operates in the 216 MHz frequency range that has been designated by the
Federal   Communications   Commission  (FCC)  for  use  in  hearing   assistance
applications not specifically designed for the hearing impaired.

Backlog.  As of June 30, 2001,  the Company's  backlog was  approximately  $10.5
million.  As of June 30, 2000,  the  Company's  backlog was  approximately  $1.8
million.  The  Company  anticipates  100% of the  backlog at June 30, 2001 to be
shipped by June 30, 2002.  The increase in the  Company's  backlog is due to the
blanket  purchase order program for the Company's  dealers which was implemented
during  the  third  quarter  of  fiscal  2001.  See  further   discussion  under
Consolidated Results of Continuing Operations in Item 7.

Net revenues from the products  segment was $28.2 million in fiscal 2001,  $22.2
million in fiscal 2000 and $17.1 million in fiscal 1999.


                                       4

<PAGE>


Services Segment
----------------

Conference  Calling  Services.  In  February  1993,  the  Company  launched  its
teleconferencing  service  to provide  customers  with a  complete  offering  of
conferencing  solutions.  Gentner  Conference  Call(R)  (1-800 LETS MEET(R)) can
connect many different  telephone  callers  worldwide with superior  service and
excellent    clarity.    The   Company   also   facilitates    videoconferences,
dataconferences,  and  satellite  conferences.  In  November  1999,  the Company
enhanced  its   teleconferencing   service  with  the  introduction  of  Instant
Access(TM) Conferencing, which enables customers to conduct a conference call at
any time, from any location, without a reservation.

Webconferencing    Services.   In   October   1999,   the   Company   introduced
TheDataPort.com    Webconferencing    service   to   complement   its   existing
teleconferencing service offerings. TheDataPort.com enables customers to conduct
live, interactive meetings over the Internet, incorporating visual elements such
as graphics,  slides, and charts.  Polling, Q & A sessions,  and audio and video
transmission  are also  available,  and the event can be saved and  archived for
on-demand  playback.  The  DataPort.com  runs  on the  WebEx(R)  Webconferencing
platform.

Audio and Video  Streaming  Services.  In July 2001, the Company added audio and
video streaming to its suite of  conferencing  services,  enabling  customers to
enhance  conference  calls  with live and  archived  audio  and  video  over the
Internet.  Gentner  offers  audio  and  data  streaming  through  a third  party
provider.

Net revenues from the services  segment was $11.7  million in fiscal 2001,  $5.9
million in fiscal 2000 and $3.2 million in fiscal 1999.

Markets

Conferencing Equipment Market
-----------------------------

The Company  believes  that there is  significant  growth  potential in the U.S.
market for conferencing equipment.  Frost & Sullivan, an international marketing
consulting  company that publishes market research reports,  projects the target
market for the Company's conferencing products to grow from $940 million in 2000
to $2.5 billion in 2006.

This  market  is made up of three  separate  components:  the  audioconferencing
systems market, the videoconferencing  systems market, and the installed portion
of  the  professional  audio  market.   According  to  Frost  &  Sullivan,   the
audioconferencing  systems  market is projected grow from $91 million in 2000 to
$320 million in 2006, or at a compound annual growth rate of 23.1%.  The Company
estimates  that it increased its share of this market in 2000 to 17% from 15% in
1999.  The  videoconferencing  systems  market  is  projected  to grow from $350
million in 2000 to $1.1 billion in 2006, or at a compound  annual growth rate of
22.9%.  The  Company  estimates  that the  market  for its  sound  reinforcement
equipment is  approximately  $500 million.  There can be no assurance that these
markets will increase as expected, if at all.

The Company believes that the conferencing equipment market provides significant
sales growth potential for the future, and plans to continue providing solutions
to businesses and other end users through the sale of conferencing products.

Conferencing Services Market
----------------------------

The Company also believes there is significant  opportunity for its conferencing
services.  According  to Frost &  Sullivan,  the total  market for  conferencing
services in 2000 was $1.4 billion and should grow to $2.5  billion by 2006.  The
Company grew revenue from its  conferencing  services segment 98% in fiscal 2001
to $11.7  million from $5.9  million in fiscal  2000.  There can be no assurance
that this market will grow as expected, if at all.

This market is made up of two separate  components:  audioconferencing  services
and  Webconferencing  reseller services.  The total  audioconferencing  services
market is  projected  to grow from $1.4 billion in 2000 to $2.2 billion in 2006,
or at a  compound  annual  growth  rate of 7.0%.  The  Webconferencing  reseller
services market is projected to grow from $12 million in 2000 to $354 million in
2006, or at a compound  annual  growth rate of 73.5%.  There can be no assurance
that these markets will increase as expected, if at all.

Broadcast Market
----------------

The Company's  broadcast  telephone  interface products are targeted and sold to
radio and television stations,  broadcast networks, and other professional audio
customers.  The Company  believes that the worldwide  market for the products is


                                       5

<PAGE>

approximately $30 million.  The Company estimates that it has a worldwide market
share  of  approximately  13%.  The  United  States  is  considered  to  be  the
predominant  segment of the worldwide  broadcast market,  with over 12,000 radio
and 1,200 television stations in operation. The Company's products are primarily
sold to upgrade broadcast studios.  The size of the domestic broadcast market is
fixed,  as the  Federal  Communications  Commission  limits the total  number of
broadcast station licenses.

The Company has  traditionally  concentrated its efforts on selling its products
in the United States.  However,  while the United States is considered to be the
largest  single  broadcast  market  segment  in the  world,  it is  believed  to
represent only 20% of the total worldwide  broadcast telephone interface market.
The  international  broadcast  market is  expanding  as a result  of  government
deregulation  and  privatization  of  stations  and  the  increasing  number  of
frequencies  available for  commercial  use. In 1991, the Company began focusing
efforts on expanding its  international  market share and has appointed  dealers
located  in  key  areas  around  the  world  (see  "Description  of  Business  -
Distribution").

Marketing and Sales

The  Company's  conferencing  products are primarily  sold through  professional
audio/visual  equipment dealers and consultants.  These dealers and consultants,
in turn,  provide audio and video solutions to end users in applications such as
corporate boardroom systems, distance learning facilities,  and courtrooms.  The
Company  reaches  these end  users  through a sales  representative  and  dealer
network that regularly  interacts with potential end users in the target market.
The  Company  actively  participates  alongside  this  network at  communication
forums, trade shows, and industry  promotions.  The Company is reinforcing those
efforts by remaining  involved in the  distribution  network and offering dealer
training and education on its products and services.

In addition to employing the  dealer/consultant  channel  described  above,  the
Company  sells the  ClearOne(R)  conference  phone through  retail  distribution
channels such as office equipment and supply stores. The ClearOne(R)  conference
phone is a lower-priced product that does not require professional installation,
making it suitable for direct purchase by the end-user. As discussed previously,
the Company acquired this technology from ClearOne, Inc. in fiscal 2001.

The Company relies on a direct sales force and outside representative network to
sell its conference calling and Webconferencing  services.  The Company believes
that it has the potential to cross-sell  its products and services by partnering
with key dealers.  The Company also  believes it has an advantage in that it can
provide  higher-quality  products and  services as a package for  organizations'
conferencing needs.

Due to the large size of the conferencing equipment market and its potential for
intense  competition,  the Company expects this segment will continue to require
substantial  marketing  resources and research and development  efforts. To this
end,  the Company  intends to continue  to seek highly  trained and  experienced
personnel.  Additionally,  the Company has aggressively  focused on research and
development  to create an  expanded  and,  what the  Company  believes  to be, a
technologically  superior line of products.  The Company's strategy continues to
be to sell its conferencing  products through national and international dealers
who focus on integrating conferencing facilities for organizations.

Sales efforts for the Company's  broadcast telephone interface products focus on
the  domestic  and  international  sale of these  products  through a  worldwide
network  of  dealers.  Such  efforts  have  included  a  combination  of product
catalogs,  trade shows,  telemarketing,  direct mail, trade advertising,  fax on
demand, an Internet Web-page, and direct selling. The Company intends to support
dealers  with  product  information,  brochures  and data  sheets,  and has been
increasing  its  activities  aimed at garnering the attention of end users.  The
Company intends to sponsor sales promotions to encourage  dealers to feature the
Company's products,  and will also focus more on end-user  interaction  efforts.
The Company also intends to exhibit its products at high-profile  industry trade
shows to  ensure  that  its  products  remain  highly  visible  to  dealers  and
broadcasters.

Technical Services

Technical service, which is generally conducted over the telephone and sometimes
on site,  provides timely,  interactive help to customers needing operational or
technical  assistance  with the  Company's  products.  The  Company's  technical
services team provides  application and design  assistance,  customer and dealer
training,  technical documentation,  and a product rental program to reduce down
time during repair of a customer's  product.  The Company's  technical  services
team  also   regularly   communicates   with  the  Company's   engineering   and
manufacturing  groups to ensure that  customer  feedback can be directed  toward
initiating product improvements and incorporated into future products. Technical
service plays a vital role in solving  customer  problems and building  customer
confidence.  The  Company  has focused  its  resources  on ensuring  that strong
technical service to its customers remains a competitive advantage.


                                       6

<PAGE>

Warranty and Service

The Company  provides a one-year  warranty on its  products,  which  covers both
parts and labor. The Company,  at its option,  repairs or replaces products that
are defective during the warranty period if the proper preventative  maintenance
procedures  have been followed by customers.  Repairs that are  necessitated  by
misuse of such products or that are required outside the warranty period are not
covered by the Company's warranty.

In case  of a  defective  product,  the  customer  typically  returns  it to the
Company's facility in Salt Lake City, Utah. The Company's service personnel then
replace  or  repair  the  defective  item  and  ship it  back  to the  customer.
Generally, all servicing is done at the Company's plant, and the Company charges
its  customers a fee for those  service  items that are not covered by warranty.
The Company also sells extended warranties for its Audio Perfect products, which
enable customers to get a replacement unit within 24 hours.

Distribution

Product Segment 
---------------

Conferencing Products. The Company sells its conferencing systems and components
through independent audio/visual equipment dealers and consultants.  The Company
also uses a national network of independent  sales  representatives.  Currently,
89% of the Company's  conferencing  system sales are in the United  States.  The
Company's  primary  strategy for foreign  expansion is to establish  dealers and
master distributors in markets where it believes there is a growing need for the
type of products and services offered by the Company.

Sound Reinforcement Products. The Company sells its sound reinforcement products
to the professional audio market via the same network of sales  representatives,
consultants, and dealers that sells the Company's conferencing products.

Broadcast  Telephone  Interface  Products.  The  Company's  broadcast  telephone
interface   products  are   generally   sold  in  the  United   States   through
non-exclusive,  independent  broadcast  equipment  dealers.  End users generally
place orders with a dealer by calling a toll free  number.  The market is highly
competitive, and it is not unusual for a customer to call several dealers to get
the best possible price. Once a customer orders  equipment,  a dealer orders the
product  from the  Company to be shipped  directly to the  customer  or, in some
instances, ships the product to the customer from the dealer's inventory.

ALS  Products.  The Company  sells its ALS  products to the  professional  audio
market via the same network of sales representatives,  consultants,  and dealers
that sells the Company's conferencing products.

For   international   product  sales,   the  Company  has  established   Gentner
Communications  EuMEA  GmbH,  a  wholly  owned  subsidiary,   in  October  2000.
Headquartered  in Nuremberg,  Germany,  Gentner  EuMEA focuses on  distribution,
technical support,  and training in Europe, the Middle East and northern Africa.
In  addition,   the  Company  has  established,   and  continues  to  establish,
international  relationships  with  dealers  and  master  distributors  for  its
conferencing  products in Africa,  Asia,  Australia,  Europe, North America, and
South America.

Services Segment
----------------

Conference Calling  Webconferencing and Audio and Video Streaming Services.  The
Company  primarily sells its conference  calling  service through  telemarketing
directly to end users,  and continues to expand its activities and the number of
employees in this area. The Company also utilizes this sales force to cross-sell
certain  conferencing  products  directly to end users.  The Company  also sells
services  through  its  product  dealers and  independent  representatives,  and
provides  wholesale   conference  calling  services  to  several  long  distance
companies.

Competition

The principal  competitive  factors in the Company's markets include  innovative
product  design,  product  quality,  established  customer  relationships,  name
recognition, distribution, and price.

The  Company   believes  that  its  ability  to  successfully   compete  in  the
conferencing markets is essential to the Company's growth and development. There
are other companies with substantial financial,  technical,  manufacturing,  and
marketing  resources  currently  engaged in the  development  and  marketing  of
similar  products and services.  Some of these companies have launched  products


                                       7

<PAGE>

and services  competitive  with those being  developed and  manufactured  by the
Company.  However,  the Company has used its core digital  technology to produce
what it believes to be superior conferencing equipment and services. The Company
believes it is the only  provider of both  high-end  conferencing  products  and
comprehensive  conference  calling services,  and hopes it can uniquely position
itself in the expanding conferencing markets.

In the  audioconferencing  systems  market,  the Company's  competitors  include
Polycom, ASPI Digital,  SoundGear,  and other companies that offer both tabletop
and installed systems.  While Gentner owns the greatest portion of the installed
segment of the market,  Polycom owns the largest portion of the tabletop portion
of the market, as well as the majority of the overall  audioconferencing systems
market.  In  the   videoconferencing   systems  market,  the  Company's  primary
competitors include Polycom, Tandberg, PictureTel, and Sony. In the conferencing
services market, the Company's competitors include large Interexchange Carriers,
including AT&T, Global Crossing,  Sprint,  and WorldCom,  as well as independent
service  providers.  Many competitors in each market have substantial  financial
resources and production,  marketing,  engineering and other  capabilities  with
which to develop,  manufacture,  market and sell their  products.  In  addition,
there is potential for new  companies to enter theses  markets with new products
and services competitive with those of the Company.

In the  broadcast  market,  the Company has several  competitors  in each of its
product  lines.  There is not,  however,  any  single  competitor  who  directly
competes  with the  Company  in all such  product  lines.  Although  some of the
Company's   competitors   are   smaller   in  terms  of  annual   revenues   and
capitalization,  such  competitors  usually focus on a single product line. They
can therefore  devote their resources to products that are directly  competitive
with, and which may adversely impact sales of, the Company's products.  However,
the  Company's  name is well known with  respect to its  products.  The  Company
believes that this  advantage,  coupled with the Company's size, will help it to
preserve and increase its market share. However,  there can be no assurance that
the Company will be able to compete  successfully or that  competition  will not
have a material adverse effect on the Company's results of operations.

Product Development

The Company is highly committed to research and  development.  The Company views
its  investment  in research and  development  as a key  ingredient to long-term
business  success.  The Company's  research and  development  expenditures  were
$2,502,169 in fiscal 2001,  $1,270,819  in fiscal 2000 and  $1,194,686 in fiscal
1999.

The  Company is  continually  developing  new  products  and  services.  Current
research and development efforts are focused on the audioconferencing  products,
videoconferencing  products,  sound reinforcement products,  broadcast telephone
interface  products and assistive  listening system  products.  The Company also
invests resources in refining existing products. Moreover, the Company continues
to allocate resources to obtain and maintain product regulatory compliance, both
domestically and internationally.

The   Company's   core   technological   competencies   include  many  areas  of
telecommunications,  including  telephone  echo  cancellation  and acoustic echo
cancellation.  The Company's  capability to use Digital Signal  Processing (DSP)
technology to perform  audio  processing  operations is also a core  competency.
This technology is critical to the performance of the Company's products.

The Company  maintains an internal  computer aided design (CAD) team.  This team
creates the necessary  electrical  schematics,  printed  circuit board  designs,
mechanical designs, and manufacturing  documentation to support the research and
development  efforts.  The Company's CAD and product  design teams use networked
computing systems and sophisticated  software programs to facilitate all aspects
of product development.

The  Company  believes  that  ongoing  development  of  its  core  technological
competencies is vitally important to future sales.

Patent and Proprietary Rights

Trade secrets,  proprietary information, and technical know-how are important to
the Company's  scientific and commercial  success.  The Company currently relies
primarily on a  combination  of trade  secrets and  nondisclosure  agreements to
establish  and protect its  proprietary  rights in its  products.  Although  the
Company continues to take appropriate measures to protect the proprietary rights
in  its  products,  there  can be no  assurance  that  these  measures  will  be
successful.  In addition,  the laws of certain foreign countries may not protect
its intellectual property to the same extent as the laws of the United States.

The Company holds U.S.  patent number  6,173,059 B1, which deals with technology
in the Gentner ClearOne(R) conference phone.


                                       8

<PAGE>

The  Company  holds  federal  registered  servicemarks  for 1-800 LETS  MEET(R),
GENTNER CONFERENCE CALL(R),  GENTNER COURT CONFERENCE(R),  PERFECT COMMUNICATION
THROUGH TECHNOLOGY,  SERVICE AND EDUCATION(R),  and WE PUT THE WORLD ON SPEAKING
TERMS(R).  The Company  holds  federal  registered  trademarks  for  GENTNER(R),
"GENTNER(R)"  (as both the name and logo),  AUDIO  PERFECT(R),  CLEARONE(R),  "C
O(R)"  (logo),   DISTRIBUTED   ECHO   CANCELLATION(R),   and  DISTRIBUTED   ECHO
CANCELLATION  (D.E.C.)(R).  In addition  to these  registered  servicemarks  and
trademarks,  the  Company  has federal  applications  pending for the  following
trademarks:  VTM(TM),  VVD(TM),  and  XAP(TM).  The  Company  also  has  federal
applications pending for the following servicemarks:  EXPRESS CONFERENCESM,  and
INSTANT ACCESSSM.

The Company holds the following international  trademarks in Europe:  GENTNER(R)
and  "GENTNER(R)" (as both the name and logo). The Company also has applications
pending for the following trademarks:  PERFECT COMMUNICATION THROUGH TECHNOLOGY,
SERVICE, AND EDUCATION(TM) in Europe;  GENTNER(R) and CLEARONE(R) in Canada; and
GENTNER(R) and CLEARONE(R) in Brazil.

Government Regulation

The Company  designs and  manufactures  its  equipment  in  accordance  with the
technical design standards of the Federal  Communications  Commission (FCC) Part
15 and Part 68. Part 15 of the FCC Rules  governs the levels of  electromagnetic
radiation emanating from commercial computing  equipment.  The Company endeavors
to conform  all of its  products  covered  by Part 15 of the FCC Rules  based on
testing performed at a FCC approved testing  facility.  Part 68 of the FCC Rules
sets forth  standards for telephone  equipment that are intended to be connected
to the Public Switch Telephone Network (PSTN) used within the United States. The
Company's  applicable  telecommunications  products are tested by an independent
testing laboratory and are registered by the FCC.

The Company also designs and  manufactures  its  equipment  pursuant to industry
product safety standards.  The Canadian Standards Association (CSA), an approved
Nationally  Recognized  Testing  Laboratory  (NRTL)  under the  direction of the
Occupational  Safety and Health  Administration  (OSHA),  tests all products and
performs  quarterly  audits for continuing  compliance  with  applicable  safety
standards.

Several of the Company's  products are currently  registered for sale in various
international  markets.  The Company must conform to design standards similar to
those of the FCC and CSA in each of the foreign  countries in which the products
are sold.

Manufacturing

The Company currently manufactures and/or assembles its products using purchased
or  leased  manufacturing  equipment.  It  is  anticipated  that  the  equipment
presently  being used will  continue  to be  utilized  for  several  years.  The
Company's  manufacturing  facility incorporates modern,  modular,  assembly work
stations and work  accessories  that are designed to enhance the  efficiency and
quality of the manufacturing  process.  In March 2000, the Company  supplemented
its existing  manufacturing  capacity by adding a second surface-mount  assembly
line.  The new  equipment is  substantially  faster,  providing  three times the
equipment  capacity with just one more assembly line. The Company  believes that
it has sufficient  capacity to meet increased demand into fiscal 2002.  However,
the Company may  experience  unanticipated  demand or  constraints  on capacity,
which could adversely affect the business.

The Company generally purchases its assembly  components from distributors,  but
also buys a limited amount of components  directly from local  fabricators.  Its
principal  suppliers include  Avnet/Marshall,  Arrow/Bell,  Future  Electronics,
Precise Metal Products (all located in the United States),  and Suntech Circuits
(located in Taiwan).

The  Company's  policy is to have a minimum of two vendor  sources.  Many of the
components  utilized are bonded by certain  distributors and manufacturers.  The
bonding process places ordered products on the  distributors'  shelves until the
Company  requires  the  products.  The  Company is also  pursuing a  consignment
relationship with some of its distributors. These agreements will move inventory
to  "on-site"  vendor  stock  locations,  which will be managed by the  vendors.
Inventory  will be owned by the vendor  until such time as needed.  Only product
used will be charged to the Company.  Availability  has been limited for certain
components.  These difficult-to-find components include, but are not limited to,
capacitors,  memory products,  connectors, and microprocessors.  The Company has
been  successful  at  locating  an  adequate  supply of  components  to  prevent
production stoppage,  but these scarce components are costing more, thus putting


                                       9

<PAGE>

pressure on product margins.  Disruptions in supply or significant  increases in
components  costs  from  these  vendors  would  have an  adverse  effect  on the
Company's operations.

The  Company's  ALS  products,  as well  as the  ClearOne(TM)  conference  phone
product,  are  manufactured in Taiwan and shipped to the Company's  facility for
sale, ready for delivery to its customers.

During fiscal 2001, the Company's  videoconferencing  products were manufactured
by Viseon Video,  Inc.,  formerly  known as RSI Systems,  Inc., in  Minneapolis,
Minnesota  and  shipped to the  Company's  facility,  ready for  delivery to its
customers.

The Company upgraded its real-time  computer system in May 2000. The new program
is a graphical version of the previous program and provides a more user-friendly
interface,  increased  capabilities,  and greater access to management data. The
software is covered  under a  maintenance  contract  that allows for new version
upgrades.  The Company has developed an extensive  software  back-up system that
provides  for daily  back-ups  housed in a  fireproof  safe as well as  biweekly
back-ups in an off-site storage facility.

Telecommunications and Information Systems

The Company has become heavily reliant on its telecommunications and information
systems  network in order to conduct its day-to-day  operations.  Failure of the
network for an extended  amount of time could be  detrimental  to the  Company's
ongoing  business (see "Factors that May Affect Future  Results").  As such, the
Company is establishing,  and will continue to develop,  an infrastructure  that
can  support and  enhance  growth,  reduce  down-time,  and improve  operational
efficiencies.  Network features aimed at these objectives  include pre-wiring of
the  Company's  building  for ease of  changes  and new  installations;  several
different  back-up  power  sources to guard  against  power  failure;  redundant
equipment and circuit  cards for some  equipment;  alarm systems and  monitoring
equipment;  and a temperature  controlled network room. In addition, the Company
backs up its electronic data daily and stores the backup information off-site in
case of catastrophic failure.

The Company also has redundant  teleconferencing  bridging  equipment  that will
enable the  Company to  continue  to provide  bridging  services in the event of
equipment failure. In addition,  the Company has established  relationships with
other   teleconferencing   service   providers   to  outsource   the   Company's
teleconferencing business in the event of equipment failure.

Especially noteworthy is that as revenues from the Services segment grow, the
network structure must expand at the same rate. The Company has a fully scalable
network sufficient to accommodate projected future growth.

Financial Information by Geographic Region

See the  consolidated  financial  statements,  and  footnote 13  thereto,  for a
discussion of financial information by geographic region.

Employees

As of June 30, 2001, the Company had 193  employees,  188 of which were employed
on a  full-time  basis.  None  of  the  Company's  employees  are  subject  to a
collective bargaining agreement.



ITEM 2. PROPERTIES

All  of  the  Company's  U.S.  operations,   including  its  executive  offices,
conference  call  service,   product  sales,   research  and  development,   and
manufacturing,  and warehousing,  are conducted in a 57,000 square-foot facility
located  south of Salt Lake City.  The  Company  leases this  facility  under an
agreement that expires in October 2006.  The Company  believes the facility will
be reasonably adequate to meet its needs for the next twelve months.

Gentner  Communications  EuMEA, GmbH leases an office in Nuremberg,  Germany for
its  operations  which  consists of 191 square  meters and is under an agreement
that expires in April 2003.


                                       10

<PAGE>



ITEM 3. LEGAL PROCEEDINGS

The  Company is from time to time  subject  to claims  and suits  arising in the
ordinary course of business.  In the Company's opinion,  the ultimate resolution
of these  matters  will not have a  material  adverse  effect  on its  financial
position, results of operations or liquidity.



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

No matter was submitted to a vote of security  holders of the Company during the
fiscal year ended June 30, 2001.


                                       11

<PAGE>



                                     PART II



ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Since March 31, 2000,  the Company's  common stock has been traded on the NASDAQ
National Market under the symbol "GTNR." Prior to that date, the Company's stock
traded on the NASDAQ Small Cap Market.  The following  table sets forth the high
and low bid quotations for the common stock for the last two fiscal years.

                 2001                                    High      Low
                 ----                                    ----      ---
                 First Quarter                        $ 17.13  $ 12.00
                 Second Quarter                         16.44     8.50
                 Third Quarter                          15.69     9.75
                 Fourth Quarter                         14.30     9.50

                 2000                                    High      Low
                 ----                                    ----      ---
                 First Quarter                        $  8.63  $  5.00
                 Second Quarter                         17.88     8.00
                 Third Quarter                          24.38    11.50
                 Fourth Quarter                         20.25    11.25

The above inter-dealer quotations were obtained from the National Association of
Securities  Dealers (NASD), do not reflect markups,  markdowns,  or commissions,
and may not represent actual transactions.

As of September 1, 2001, there were approximately  7,000 holders of common stock
of the Company.

The Company does not pay a cash dividend and does not anticipate doing so in the
foreseeable  future.   Currently,  the  Company's  line  of  credit  arrangement
prohibits the payment of dividends.  The Company  intends to retain earnings for
future capital requirements, growth and product development.

In May 2000, the Company entered into an agreement to purchase substantially all
of the assets of ClearOne,  Inc. for $1.7 million in cash and 129,871  shares of
unregistered  Company Common Stock valued at $15.40 per share.  The  acquisition
was consummated July 5, 2000. The issuance of Common Stock to ClearOne, Inc. was
exempt from  registration  under the  Securities  Act of 1933, as amended,  as a
private offering made pursuant to the Section 4(2) of such act.



ITEM 6.  SELECTED FINANCIAL DATA

The  following  selected  financial  data has been  derived  from the  Gentner's
audited Consolidated  Financial  Statements.  The information set forth below is
not necessarily  indicative of results of future operations,  and should be read
in conjunction with "Management's  Discussion and Analysis or Plan of Operation"
and the  consolidated  financial  statements and related notes thereto  included
elsewhere in this Form 10-K.

The  presentation  of 1997 and 1998  financial  data has been modified from that
shown in the audited  financial  statements  for those years in order to reflect
results of continuing and discontinued operations separately.


                                       12

<PAGE>


<TABLE>

                      SELECTED CONSOLIDATED FINANCIAL DATA
<CAPTION>

                                                                                   Years Ended June 30,
                                                                                   --------------------
                                                           2001            2000            1999            1998            1997
                                                           ----            ----            ----            ----            ----
<S>                                                    <C>             <C>             <C>             <C>             <C>         
Operating results:
Net sales                                              $ 39,878,405    $ 28,118,413    $ 20,268,102    $ 15,159,842    $ 11,825,570
Costs and expenses:
  Costs of goods sold                                    16,503,062      11,008,323       8,907,754       7,434,240       6,161,013
  Marketing and selling                                   7,753,292       6,165,917       4,313,639       3,189,014       3,131,723
  General and administrative                              4,648,999       3,132,125       2,544,665       2,470,949       2,006,999
  Product development                                     2,502,169       1,270,819       1,194,686         864,276         790,082
                                                       ------------    ------------    ------------    ------------    ------------
Operating income (loss)                                   8,470,883       6,541,229       3,307,358       1,201,361        (264,247)
  Other income (expense)                                    373,147         179,336         (78,112)       (213,707)       (206,622)
                                                       ------------    ------------    ------------    ------------    ------------
Income (loss) from continuing operations
 before income taxes                                      8,844,030       6,720,565       3,229,246         987,654        (492,869)
Provision from income taxes                               3,318,845       2,418,823       1,208,900          26,694          22,091
                                                       ------------    ------------    ------------    ------------    ------------
Income (loss) from continuing operations                  5,525,185       4,301,742       2,020,346         960,960        (492,960)
Income (loss) from discontinued operations,
 net of applicable taxes                                    737,280         426,591         524,125         443,489         120,062
Gain on disposal of business segment,
 net of applicable taxes                                  1,220,024            --              --              --              --
                                                       ------------    ------------    ------------    ------------    ------------
Net income (loss)                                      $  7,482,489    $  4,728,333    $  2,544,471    $  1,404,449    $   (372,898)
                                                       ============    ============    ============    ============    ============

Earnings per common share:
  Basic earnings (loss) from continuing operations     $       0.64    $       0.52    $       0.25    $       0.13    $      (0.06)
  Diluted earnings (loss) from continuing operations   $       0.61    $       0.49    $       0.24    $       0.12    $      (0.06)
  Basic earnings from discontinued operations          $       0.23    $       0.05    $       0.06    $       0.05    $       0.01
  Diluted earnings from discontinued operations        $       0.22    $       0.05    $       0.06    $       0.06    $       0.01
  Basic earnings (loss)                                $       0.87    $       0.57    $       0.31    $       0.18    $      (0.05)
  Diluted earnings (loss)                              $       0.83    $       0.54    $       0.30    $       0.18    $      (0.05)
Weighted average shares outstanding:
  Basic                                                   8,593,510       8,269,941       8,080,536       7,679,985       7,662,494
  Diluted                                                 9,015,644       8,740,209       8,468,884       7,960,252       7,662,494

Financial data:
Current assets                                         $ 19,411,029    $ 14,816,321    $  9,281,753    $  5,828,365    $  4,551,184
Property, plant and equipment, net                        3,696,615       3,050,349       2,125,959       2,320,336       2,493,287
Total assets                                             27,597,623      17,920,531      11,519,414       8,311,740       7,335,854
Long-term debt, net of current maturities                      --              --              --           402,584         687,274
Capital leases, net of current maturities                    48,227         205,530         455,389         752,728         784,354
Total stockholders' equity                               24,501,510      14,753,221       8,352,359       5,237,006       3,801,596
</TABLE>




ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

General

The  Company  develops,  manufactures,  markets  and  distributes  products  and
services for the conferencing  equipment,  conferencing  services, and broadcast
markets.  In fiscal year 2001,  the Company  changed  its  reportable  operating
segments to reflect how it evaluates  its  operating  performance  and allocates
resources. Prior to fiscal year 2001, the Company's reportable segments included
RFM/Broadcast,  Conferencing  Products,  Conferencing  Services and Other. As of
April 12, 2001, the Company sold the assets of the remote control portion of the
RFM/Broadcast  division.  Subsequent  to the disposal,  the Company  reports two
segments - Products  and  Services.  In the  Product  segment,  the  Company has
applied  its  core  digital  technology  to  the  development  of  products  for
conferencing,   sound   reinforcement,   assistive   listening   and   broadcast
applications.  During  fiscal 2001,  the Company  introduced  the  PSR1212,  the
XAP(TM)  800,  the  ClearOne(R)   conference  phone,  and  the  VRC2500,   which
contributed to a 27% increase in product-based revenues compared to fiscal 2000.
In the Service segment, the Company focused on increasing sales by adding to its
direct  sales  force,  and by  engaging  new  resellers  and new  private  label
accounts.  These efforts resulted in a 98% increase in service-based revenues in
fiscal 2001 compared to fiscal 2000. The Services segment includes  revenues and
expenses from the conferencing service bureau called 1-800 LETS MEET(R).

Discontinued Operations

On April 12, 2001, the Company sold the assets of the remote control  portion of
the RFM/Broadcast  division to Burk Technology,  Inc. of Littleton,  MA ("Burk")
for $3.2 million,  including  $750,000 in cash at closing,  and $1.75 million in
the form of a seven (7) year promissory  note, with interest at the rate of nine
percent  (9%),  secured  by a  subordinate  security  interest  in the  personal
property of Burk. The gain  associated  with the note receivable is recognizable
for book purposes but not for tax purposes until cash is received.  As such, the
Company has established a deferred tax liability for $511,000 in connection with
this  deferred  gain.  In addition,  up to $700,000 more is payable by Burk as a


                                       13

<PAGE>

commission  over a period of up to seven  years.  The  commission  is based upon
future net sales of Burk over base sales established within the agreement.  This
amount will be  recognized  as received.  The Company  retained  remote  control
related  inventory  in the amount of $70,000  and zero  liabilities  at June 30,
2001. The Company  realized a gain on the sale of $1,220,024,  net of applicable
income taxes of $725,788.

Summary operating results of the discontinued operations are as follows:

<TABLE>
<CAPTION>

                                                                 Year Ended June 30,
                                                                 -------------------
                                                          2001           2000           1999
                                                          ----           ----           ----

<S>                                                  <C>            <C>            <C>        
Net sales                                            $ 2,369,054    $ 2,753,529    $ 2,722,224
Cost of goods sold                                       806,581        924,488        969,933
Marketing and selling                                    281,852        597,835        616,101
Product development                                      104,736        550,837        300,265
                                                     -----------    -----------    -----------
Income before income taxes                             1,175,885        680,369        835,925
Provision for income taxes                              (438,605)      (253,778)      (311,800)
Gain on disposal of business segment, net of taxes     1,220,024           --             --
                                                     -----------    -----------    -----------
Net income from discontinued operations              $ 1,957,304    $   426,591    $   524,125
                                                     ===========    ===========    ===========

Basic earnings per share from
  discontinued operations                            $      0.23    $      0.05    $      0.06
Diluted earnings per share from
  discontinued operations                            $      0.22    $      0.05    $      0.06
</TABLE>



Consolidated Results of Continuing Operations

Year Ended June 30, 2001 Compared to Year Ended June 30, 2000
-------------------------------------------------------------

Sales from continuing  operations for the year ended June 30, 2001 increased 42%
to $39,878,405  from  $28,118,413 in fiscal 2000.  This dollar increase is split
evenly between product sales and services sales.

Product  revenues grew 27% in fiscal 2001 to  $28,189,612  from  $22,226,504  in
fiscal 2000.  This  increase  was mainly due to  continued  success of the Audio
Perfect(R) product line, as well as the introduction of new products,  including
the  PSR1212  and the  XAP(TM)  800.  The Audio  Perfect(R)  product  line began
shipping in April of 1998 with the AP800, and also includes the AP10, the AP400,
AP Tools, the AP IR Remote, and the APV200-IP.  Examples of typical applications
using the Company's products are corporate  conference rooms,  distance learning
rooms, and courtrooms.  The Company has realized more of the revenue  associated
with such  applications  as a result of this expanded  product line.  During the
second quarter of fiscal 2001, the Company began shipping the PSR1212, a digital
matrix mixer for the sound reinforcement marketplace.  During the fourth quarter
of fiscal 2001, the company  introduced its next generation  audio  product--the
XAP(TM) 800. Product revenues also include telephone interface  products,  which
are used to connect  telephone  line audio to  broadcast  audio  equipment,  and
assistive  listening  products,  which  provide  enhanced  audio for people with
hearing difficulties.

The Services  segment,  which is also known as 1-800 LETS  MEET(R),  experienced
sales growth of 98% in fiscal 2001 as compared to fiscal 2000.  Service revenues
were  $11,688,793  in fiscal 2001 as compared to $5,891,909 in fiscal 2000.  The
Company  offers  operator-assisted  conferencing;   on-demand,   reservationless
conference calling; Webconferencing,  and audio and video streaming. The Company
attributed  the growth in sales to an increased  customer base due in part to an
increase in sales staff for marketing  conference calling services,  an increase
in resellers selling the Company's  services,  and an overall increase in market
size during the past year.  The Company's  conference  calling  service is being
marketed not only to corporate  clients but also to telephone  service providers
for resale.

The  Company's  gross profit  margin from  continuing  operations  was 58.6% for
fiscal 2001 compared to 60.8% for fiscal 2000.  The decrease in gross margins is
the result of three factors.  First, the Company  implemented a blanket purchase
order program for its dealers during the third quarter of the fiscal year.  This
program offers higher  discounts off list price in exchange for larger  quantity
orders.  The dealers then have 12 months to take  delivery of the product.  This
program is intended to enable the  Company to better  predict its  manufacturing
schedule,  expense  levels and net revenues.  The second factor is increased raw
material  component  costs during the first half of the year.  During the latter
half of fiscal  2001,  the  Company  began to  experience  lower  pricing on raw
material components. The third factor is that the Company's Services segment has


                                       14

<PAGE>

a higher  cost-of-goods  rate. As this segment  becomes a bigger  portion of the
total revenue, it will create a lower overall gross margin percentage.

The Company believes that most of the key components required for the production
of its products are  currently  available in  sufficient  quantities to meet the
Company's  needs.  The Company has experienced  long component lead times in the
past,  but is starting to see  moderating  lead times on many  components.  Even
though the  Company  has  purchased  more of these  "longer-lead-time"  parts to
ensure continued delivery of products, reduction in these inventories will track
the  reduction  of lead times with an  undetermined  lag time.  The Company also
continues to focus on locating  other  sources for raw  materials  and enhancing
vendor relationships to further ensure adequate materials.

The Company's  operating  expenses increased 41% comparing fiscal 2001 to fiscal
2000. Fiscal 2001 continuing  operations expenses were $14,904,460,  as compared
to $10,568,861 for fiscal 2000.

Marketing  and selling  expenses for fiscal 2001 were  $7,753,292 as compared to
$6,165,917  for the prior year.  As a  percentage  of  revenues,  marketing  and
selling expenses decreased to 19.4% in fiscal 2001,  compared to 21.9% in fiscal
2000.  The  year-over-year  increase  in  marketing  and  selling  expenses  was
primarily due to higher commission expenses resulting from increased sales. Also
contributing to the increase were shelving expenses related to retail marketing.

Product development  expenses increased 97% when comparing fiscal 2001 to fiscal
2000. Fiscal 2001 product development  expenses were $2,502,169,  as compared to
$1,270,819  in fiscal 2000.  As a percentage  of revenues,  product  development
expenses  increased  to 6.3% in fiscal  2001 up from 4.5% in  fiscal  2000.  The
increase in product development expenses is due to increased salaries associated
with  additional  personnel and  development  costs  associated with new product
development.

General and administrative expenses increased 48% during fiscal 2001 as compared
to fiscal 2000.  Fiscal 2001 expenses were  $4,648,999 as compared to $3,132,125
in fiscal 2000.  General and  administrative  expenses were 11.7% of revenues in
fiscal 2001,  compared to 11.1% in fiscal 2000.  The increase in dollars was due
to a one-time  bad debt write off of  approximately  $400,000  with respect to a
single customer who filed bankruptcy during the second quarter.  Also associated
with this  increase  were the costs  incurred  in hiring  personnel  to  support
increased sales volume and the  infrastructure  costs associated with the hiring
of such new personnel,  as well as costs  associated with the Company's  Woburn,
Massachusetts  office, and the amortization expense associated with the goodwill
acquired in the ClearOne, Inc. asset purchase.

Interest  income  increased 68% in fiscal 2001 as compared to fiscal 2000.  This
increase is due to the increase in cash and cash equivalents.

Interest expense decreased 35% when comparing fiscal 2001 to fiscal 2000, due to
the maturing of certain of the Company's capital leases.

During fiscal 2001, income tax expense for continuing  operations was calculated
at a combined  federal  and state  effective  tax rate of  approximately  37.5%,
resulting in an income tax expense of $3,318,845.  This compares to fiscal 2000,
where the effective tax rate was 36%, and the income tax expense for  continuing
operations was $2,418,823.

Net income from  continuing  operations  for fiscal 2001 was  $5,525,185,  or an
increase of 28%, compared to net income from continuing operations of $4,301,742
for fiscal 2000. These results are due to increased revenues offset by increases
in expenses as described above.

Year Ended June 30, 2000 Compared to Year Ended June 30, 1999
-------------------------------------------------------------

Sales from continuing  operations for the year ended June 30, 2000 increased 39%
to $28,118,413 from $20,268,102 in fiscal 1999.  Product revenues  increased 30%
by $5,169,724 and service revenues increased 83% by $2,680,587.

Product revenues experienced a 30% increase when comparing fiscal 2000 to fiscal
1999,  increasing from $17,056,780 to $22,226,504.  This increase was mainly due
to  continued  success  of the Audio  Perfect(R)  product  line,  as well as the
introduction of new products,  including the APV200 IP and the GT1524. The Audio
Perfect(R) product line began shipping in April of 1998 with the AP800, and also
includes the AP10, the AP400, AP Tools, the AP IR Remote, and the APV200-IP. The
Company has realized more of the revenue  associated with a room installation as
a result of the expanded product line.  During the third quarter of fiscal 2000,
the Company  began  shipping the PA870 power  amplifier.  Product  revenues also
include telephone interface products and assistive listening products.


                                       15

<PAGE>

The Services  segment,  which is also known as 1-800 LETS  MEET(R),  experienced
sales growth of 83% in fiscal 2000 as compared to fiscal 1999.  Service revenues
were  $5,891,909 in fiscal 2000 as compared to  $3,211,322  in fiscal 1999.  The
Company attributes this growth in sales to an increased customer base as well as
the overall market growth for the year. This increase was also the result of the
Company  expanding its sales staff, who markets its conference  calling service,
and the  Company's  commitment  to quality  service.  The  Company's  conference
calling  service is being  marketed not only to corporate  clients,  but also to
long distance telephone service providers for resale.

The Company's  gross profit margin  percentage was 61% in fiscal 2000 and 56% in
fiscal 1999. This increase was primarily due to improved margins in conferencing
services,  improved  manufacturing  processes,  new  products  with higher gross
profit margins, and a different product mix.

During the second and third  quarter of fiscal  2000,  the  Company  conducted a
physical inventory of its fixed assets. The Company wrote off gross fixed assets
of $1,042,366 and wrote off accumulated  depreciation  of $1,038,234  during the
third quarter to reconcile the books to the physical assets.

The Company's  operating  expenses increased 31% comparing fiscal 2000 to fiscal
1999. Fiscal 2000 continuing  operations expenses were $10,568,861,  as compared
to $8,052,990 for fiscal 1999.

Marketing and selling  expenses  increased 43% in fiscal 2000 to $6,165,917 from
$4,313,639  the prior year. As a percentage  of revenues,  marketing and selling
expenses  were  21.9% in  fiscal  2000  compared  to 21.2% in fiscal  1999.  The
year-over-year  increase in marketing and selling  expenses was primarily due to
higher  commission  expense resulting from increased sales. Also contributing to
the increase were higher salary  expenses and recruiting  costs connected to the
hiring of additional marketing and selling personnel.

Product  development  expenses  increased 6% in fiscal 2000 to  $1,270,819  from
$1,194,686  in fiscal 1999.  As a percentage  of revenues,  product  development
expenses  were 4.5% in fiscal  2000 as  compared  to 5.9% in  fiscal  1999.  The
increase  in  absolute  dollars  was  due to the  development  expenses  for new
products and the hiring of personnel.

General and  administrative  expenses increased 23% in fiscal 2000 to $3,132,125
from $2,544,665 in fiscal 1999. General and  administrative  expenses were 11.1%
of revenues in fiscal 2000,  compared to 12.6% in fiscal  1999.  The increase in
absolute  dollars  was  mainly  due to  hiring of  personnel  to  support  sales
increases and the  infrastructure  costs  associated with the hiring of such new
personnel. Also contributing to the increase was the expense associated with the
NASDAQ National Market listing fees.

Interest  income  increased 159% in fiscal 2000 as compared to fiscal 1999. This
increase is due to the increase in cash and cash equivalents.

Interest expense decreased 56% when comparing fiscal 2000 to fiscal 1999, due to
the maturing of certain of the Company's  leases and the payoff of several notes
late in fiscal 1999.

During fiscal 2000 income tax expense was  calculated at a combined  federal and
state effective tax rate of approximately  36.0%,  resulting in a tax expense of
$2,418,823  which  compares to an effective tax rate of 37.4% and tax expense of
$1,208,900 for fiscal 1999.

Net income from  continuing  operations  for fiscal 2000 was  $4,301,742,  or an
increase  of  113%,  compared  to  net  income  from  continuing  operations  of
$2,020,346 for fiscal 1999.

Financial Condition and Liquidity

The  Company had cash and cash  equivalents  of $6.9  million on June 30,  2001,
which  represents  an  increase  of  $1.5  million  compared  to cash  and  cash
equivalents  of $5.4  million  on and  June  30,  2000.  Based  upon  continuing
operations,  net  operating  activities  provided cash of $3.7 million in fiscal
2001.  Net  investing  activities  used cash of $3.2  million  primarily  due to
expenditures  for property and  equipment and cash paid relating to the ClearOne
acquisition.  Net cash used for financing  activities was $0.1 million. Net cash
flow from discontinued operations totaled $1.0 million.

The Company had cash and cash  equivalents  of $5.4  million and $3.9 million at
June 30, 2000 and June 30,  1999,  respectively,  an  increase of $1.5  million.
Based on continuing  operations,  net operating activities provided cash of $2.5


                                       16

<PAGE>

million in fiscal 2000, a decrease of $1.3 million from 1999,  primarily  due to
an increase in accounts  receivable  because of  increased  credit  sales to new
customers.  Net investing  activities used cash of $1.7 million primarily due to
expenditures  for  property  and  equipment.  Net  cash  provided  by  financing
activities was $0.2 million, primarily due to proceeds from exercise of employee
stock  options,  partially  offset by  payments  of  capital  lease  obligations
totaling  approximately  $216,000.  Net cash flows from discontinued  operations
totaled $0.5 million in 2000.

The Company has an available revolving line of credit of $5.0 million,  which is
secured by the Company's accounts receivable and inventory. The interest rate on
the line of credit is  variable  (250 basis  points  over the  London  Interbank
Offered Rate (LIBOR) or prime less 0.25 percent, whichever the Company chooses).
The borrowing  rate was 6.44 percent on June 30, 2001.  There was no outstanding
balance on June 30, 2001. The line of credit was renewed as of December 22, 2000
and will expire on December  22, 2001.  Borrowings  under the line of credit are
subject to  certain  financial  and  operating  covenants.  The  Company  was in
compliance with the covenants on June 30, 2001.

During  April  2001,  the  Company  announced  that its board of  directors  had
approved a stock  repurchase  program to  purchase  up to 500,000  shares of the
Company's  common  stock over the  following  six months.  These  purchases  are
discretionary on the part of management and are to be made on the open market or
in  private   transactions.   In  fiscal  2001,  the  Company   repurchased  and
subsequently retired 15,300 shares for $191,381.

Management believes that the Company's working capital,  bank line of credit and
cash flows from  operating  activities  will be sufficient to meet the Company's
operating and capital expenditure requirements for continuing operations for the
next twelve months. In the longer term, or if the Company  experiences a decline
in revenue,  or in the event of other unforeseen events, the Company may require
additional  funds and may seek to raise  such  funds  through  public or private
equity or debt financing,  bank lines of credit, or other sources.  No assurance
can be given that additional financing will be available or, if available,  will
be on terms  favorable  to the  Company.  See  "Factors  that May Affect  Future
Results - Limited Capitalization".

Factors that May Affect Future Results

This Annual Report on Form 10-K contains  forward-looking  statements within the
meaning  of  Section   27A  of  the   Securities   Act  of  1933,   as  amended.
Forward-looking  statements  relate to the Company's  future plans,  objectives,
expectations,  and intentions.  These statements may be recognized by the use of
words  such  as  "believes,"   "expects,"  "may,"  "will,"  "intends,"  "plans,"
"should,"  "seeks,"  "anticipates,"  and  similar  expressions.  In  particular,
statements  regarding  the Company's  markets and market  share,  demand for its
products  and  services,  FCC  actions,  manufacturing  capacity  and  component
availability,  and the development and introduction of new products and services
are  forward-looking  statements and subject to material  risks.  Actual results
could differ markedly from those projected in the forward-looking  statements as
a result of the  factors set forth below and the matters set forth in the report
generally.  The Company cautions the reader,  however, that this list of factors
may  not be  exhaustive,  particularly  with  respect  to  future  factors.  Any
forward-looking   statements  are  made  pursuant  to  the  Private   Securities
Litigation Reform Act of 1995 and, as such, speak only as of the date made.

Rapid Technological Change
--------------------------

The products and services  markets are highly  competitive and  characterized by
rapid  technological  change.  The Company's  future  performance will depend in
large part upon its ability to remain  competitive and to develop and market new
products and  services in these  markets in a timely  fashion  that  responds to
customers' needs and incorporates new technology and standards.

The  Company may not be able to design and  manufacture  products  that  address
customer needs or achieve market acceptance.  Any significant failure to design,
manufacture,   and  successfully   introduce  new  products  or  services  could
materially harm the Company's business.

The  markets  in which the  Company  competes  have  historically  involved  the
introduction of new and technologically advanced products and services that cost
less or perform  better.  If the Company is not  competitive in its research and
development  efforts,  its  products  may  become  obsolete  or be priced  above
competitive levels.

Although  management  believes that,  based on their  performance and price, its
products and services are currently  attractive  to  customers,  there can be no
assurance  that  competitors  will not introduce  comparable or  technologically
superior  products  or  services,  which  are  priced  more  favorably  than the
Company's.


                                       17

<PAGE>

Competition
-----------

The markets for the  Company's  products and  services  are highly  competitive.
These markets include the Company's  traditional dealer channel,  the market for
its  conferencing  services,  and the retail channel.  The Company competes with
businesses having  substantially  greater  financial,  research and development,
manufacturing,  marketing, and other resources. If the Company fails to maintain
or enhance its competitive  position,  it could experience pricing pressures and
reduced sales, margin, profits, and market share, each of which could materially
harm the Company.

General Economic Condition
--------------------------

As the  Company's  business  has grown,  it has become  increasingly  subject to
adverse changes in general economic  conditions,  which can result in reductions
in capital expenditures by customers,  longer sales cycles, deferral or delay of
purchase  commitments for products,  and increased price  competition.  Although
these factors have not materially  impacted the Company in recent years,  if the
current economic  slowdown  continues or worsens,  these factors could adversely
affect the Company's business and results of operations.

Marketing 
---------

The  Company is  subject  to the risks  inherent  in the  marketing  and sale of
current and new products and  services in an evolving  marketplace.  The Company
must  effectively  allocate  its  resources to the  marketing  and sale of these
products  through  diverse  channels  of  distribution.  The  Company's  current
strategy is to establish  distribution  channels and direct  selling  efforts in
markets where it believes there is a growing need for its products and services.
For  example,  with the  acquisition  of the  ClearOne  assets the  Company  has
expanded  its products to include the retail  market.  There can be no assurance
that this strategy will prove successful.

Difficulties in Managing Growth 
-------------------------------

The Company is  experiencing  a period of  significant  expansion in  personnel,
facilities and infrastructure, and management anticipates that further expansion
will be required to address potential growth in the Company's  customer base and
market  opportunities.  This  expansion  will require  continued  application of
management, operational and financial resources.

To manage the expected growth of operations and personnel,  the Company may need
to improve  its  transaction  processing,  operational  and  financial  systems,
procedures and controls.  The Company's current and planned personnel,  systems,
procedures  and controls  may not be adequate to support its future  operations.
Difficulties in managing these  challenges  could adversely affect the Company's
financial performance.

Difficulties in Estimating Customer Demand Could Harm Our Operating Results
---------------------------------------------------------------------------

Orders  from the  Company's  resellers  are  based  on  demand  from  end-users.
Prospective end-user demand is difficult to measure.  This means that any period
could be  adversely  impacted  by lower  end-user  demand,  which  could in turn
negatively  affect  orders the Company  receives from  resellers.  The Company's
expectation  for both short- and long-term  future net revenues are based on the
Company's  own estimate of future demand as well as backlog based on the blanket
purchase  order  program,  as discussed  above.  The Company also bases  expense
levels on those revenue estimates.  If the Company's estimates are not accurate,
the financial performance of the Company could be adversely affected.

Dependence on Distribution Network
----------------------------------

The Company  markets  its  products  primarily  through a network of dealers and
master distributors.  All of the Company's agreements regarding such dealers and
distributors are non-exclusive and terminable at will by either party.  Although
the Company believes that its  relationships  with such dealers and distributors
are good, there can be no assurance that any or all such dealers or distributors
will continue to offer the Company's products.

Price discounts to the Company's  distribution channel are based on performance.
However,  there are no obligations on the part of such dealers and  distributors
to provide any specified level of support to the Company's products or to devote
any  specific  time,  resources  or efforts to the  marketing  of the  Company's
products. There are no prohibitions on dealers or distributors offering products
that  are  competitive  with  those  of  the  Company.  Most  dealers  do  offer


                                       18

<PAGE>

competitive products. The Company reserves the right to maintain house accounts,
which are for  products  sold  directly  to  customers.  The loss of  dealers or
distributors could have a material adverse effect on the Company's business.

Limited Capitalization
----------------------

As of June 30, 2001,  the Company had $6.9 million in cash and $17.0  million in
working  capital.  The Company may be required to seek  additional  financing if
anticipated levels of revenue are not realized, if higher than anticipated costs
are incurred in the  development,  manufacture,  or  marketing of the  Company's
products,  or if  product  demand  exceeds  expected  levels.  There  can  be no
assurance that any additional  financing would be available on acceptable terms,
or at all.

In  addition,  the  Company's  $5 million  revolving  line of credit  matures in
December of 2001 and there can be no assurance  that the Company will be able to
extend the maturity date of the line of credit or obtain a  replacement  line of
credit from  another  commercial  institution.  The  Company had no  outstanding
balance  payable  on the line of credit as of June 30,  2001.  To the extent the
line of  credit  is not  extended  or  replaced  and  cash  from  operations  is
insufficient to fund operations,  the Company may be required to seek additional
financing.

Telecommunications and Information Systems Network 
--------------------------------------------------

The  Company is highly  reliant  on its  network  equipment,  telecommunications
providers,  data,  and software,  to support all  functions of the Company.  The
Company's  conference  calling service relies 100 percent on the network for its
revenues.  While the Company endeavors to provide for failures in the network by
providing  back-up  systems and  procedures,  there is no  guarantee  that these
back-up  systems and  procedures  will operate  satisfactorily  in an emergency.
Should the Company experience such a failure, it could seriously  jeopardize its
ability to continue operations.  In particular,  should the Company's conference
calling  service  experience  even a short term  interruption  of its network or
telecommunication  providers,  its  ongoing  customers  may  choose a  different
provider, and its reputation may be damaged,  reducing its attractiveness to new
customers.

Dependence on Supplier and Singlw
e Source of Supply

Certain electronic components used in connection with the Company's products can
only be obtained from single manufacturers and the Company is dependent upon the
ability of these  manufacturers  to deliver  such  components  to the  Company's
suppliers so that they can meet the Company's  delivery  schedules.  The Company
does not have a written  commitment from such suppliers to fulfill the Company's
future  requirements.  The  Company's  suppliers  maintain an  inventory of such
components,  but there can be no assurance that such  components  will always be
readily  available,  available at  reasonable  prices,  available in  sufficient
quantities,  or deliverable in a timely fashion.  If such key components  become
unavailable,  it is likely that the Company will experience delays,  which could
be significant,  in production and delivery of its products unless and until the
Company  can  otherwise   procure  the  required   component  or  components  at
competitive  prices,  if at all. The lack of  availability  of these  components
could have a materially adverse effect on the Company.

The Company believes that most of the key components required for the production
of its products are currently  available in sufficient  quantities.  The Company
has  experienced  long  component  lead times in the past,  but is  experiencing
improved lead times on many products. Even though the Company has purchased more
of these  "longer-lead-time"  parts to ensure  continued  delivery of  products,
reduction in these  inventories  have tracked with the  reduction of lead times.
Suppliers of some of these components are currently or may become competitors of
the Company,  which might also affect the  availability of key components to the
Company.  It is  possible  that  other  components  required  in the  future may
necessitate custom fabrication in accordance with specifications developed or to
be  developed  by the Company.  Also,  in the event the  Company,  or any of the
manufacturers  whose products the Company  expects to utilize in the manufacture
of its products, is unable to develop or acquire components in a timely fashion,
the Company's ability to achieve production yields,  revenues and net income may
be adversely affected.

Software Risks  
--------------

The Company has  developed  custom  software  for its  products and has licensed
additional  software from third  parties.  This software may contain  undetected
errors,  defects or bugs. Although the Company has not suffered significant harm
from any errors or defects to date, the Company may discover  significant errors
or defects in the future  that the  Company may or may not be able to fix or fix
in a timely or cost  effective  manner.  The Company's  inability to do so could
harm its business.


                                       19

<PAGE>

Manufacturing Process Risks
---------------------------

While the Company has substantial  experience in designing and manufacturing its
products,  the Company may still  experience  technical  difficulties and delays
with the manufacturing of the Company's products.  Potential difficulties in the
design and  manufacturing  process  that  could be  experienced  by the  Company
include difficulty in meeting required  specifications,  difficulty in achieving
necessary manufacturing efficiencies, and difficulties in obtaining materials on
a timely basis.

Reliance on Efficiency of Distribution and Third Parties
--------------------------------------------------------

The  Company's  financial  performance  is  dependent  in part on its ability to
provide  prompt,  accurate,  and complete  services to customers on a timely and
competitive basis. Delays in distribution in the Company's day-to-day operations
or  material  increases  in the  Company's  costs of  procuring  and  delivering
products  could have an adverse  effect on the Company's  results of operations.
Any failure of either the Company's computer operating systems,  the Internet or
the Company's  telephone system could adversely affect the Company's  ability to
receive  and process  customers'  orders and ship  products  on a timely  basis.
Strikes or other service  interruptions  affecting Federal Express  Corporation,
United Parcel  Service of America,  Inc.,  or other common  carriers used by the
Company  to  receive  necessary  components  or other  materials  or to ship the
Company's products also could impair its ability to deliver products on a timely
and cost-effective basis.

Lack of Patent Protection
-------------------------

The  Company  currently  relies  primarily  on a  combination  of trade  secret,
copyright,  trademark, and nondisclosure agreements to establish and protect its
proprietary  rights in its products.  There can be no assurance that others will
not independently  develop similar  technologies,  or duplicate or design around
aspects of the Company's technology.  The Company believes that its products and
other  proprietary  rights  do not  infringe  any  proprietary  rights  of third
parties. There can be no assurance,  however, that third parties will not assert
infringement  claims  in the  future.  Such  claims  could  divert  management's
attention and be expensive,  regardless of their merit. In the event of a claim,
the Company might be required to license third party  technology or redesign its
products, which may not be possible or economically feasible.

Government Funding and Regulation
---------------------------------

In the conferencing  market,  the Company is dependent on government  funding to
place its distance  learning sales and courtroom  equipment  sales. In the event
government  funding  was  stopped,  these sales  would be  negatively  impacted.
Additionally,  many  of the  Company's  products  are  subject  to  governmental
regulations. New regulations could significantly adversely impact sales.

Dividends Unlikely
------------------

The Company has never paid cash  dividends on its securities and does not intend
to  declare  or pay cash  dividends  in the  foreseeable  future.  Earnings  are
expected to be retained to finance  and expand its  business.  Furthermore,  the
Company's  revolving  line of credit  prohibits  the payment of dividends on its
Common Stock.

Potential Dilutive Effect of Outstanding Options and Possible Negative Effect of
--------------------------------------------------------------------------------
Future Financing
----------------

The Company has  outstanding  options  issued under the Company's 1990 Incentive
Plan and the 1998 Stock Option  Plan,  which  include  options to purchase up to
3,200,000  shares of Common Stock granted or available for grant. As of June 30,
2001, the Plans have 1,750,798 options outstanding. Holders of these options are
given an  opportunity to profit from a rise in the market price of the Company's
Common  Stock  with  a  resulting   dilution  in  the  interests  of  the  other
stockholders.  The holders of the options may  exercise  them at a time when the
Company  might be able to obtain  additional  capital  through a new offering of
securities on terms more favorable than those provided therein.

Dependence Upon Key Employees
-----------------------------

The Company is substantially dependent upon certain of its employees,  including
Frances M. Flood,  President  and Chief  Executive  Officer  and a director  and
shareholder  of the Company.  The loss of Ms. Flood by the Company  could have a
material adverse effect on the Company. The Company currently has in place a key
person  life  insurance  policy  on the  life  of Ms.  Flood  in the  amount  of
$5,000,000.


                                       20

<PAGE>

Possible Control by Officers and Directors
------------------------------------------

The officers and directors of the Company  together had beneficial  ownership of
approximately 29.0 percent of the Company's Common Stock (including options that
are currently exercisable or exercisable within sixty (60) days) as of September
1, 2001.  This  significant  holding in the  aggregate  places the  officers and
directors  in a  position,  when acting  together,  to  effectively  control the
Company and could delay or prevent a change in control.

Collectability of Outstanding Receivables
-----------------------------------------

The Company grants credit without  requiring  collateral to substantially all of
its  customers.  Although the  possibility  of a large  percentage  of customers
defaulting exists, the Company believes this scenario to be highly unlikely.

International Sales and Related Risks
-------------------------------------

International  sales  represent a  significant  portion of the  Company's  total
revenue.  For  example,  international  sales  represented  13  percent  of  the
Company's  total sales for fiscal 2001 and 12 percent  for fiscal  2000.  If the
Company  is unable to  maintain  international  market  demand,  its  results of
operations could be materially harmed. The Company's  international  business is
subject  to  the   financial  and   operating   risks  of  conducting   business
internationally, including: unexpected changes in, or imposition of, legislative
or  regulatory  requirements;  fluctuating  exchange  rates,  tariffs  and other
barriers;  difficulties in staffing and managing foreign subsidiary  operations;
export restrictions;  greater difficulties in accounts receivable collection and
longer  payment  cycles;  potentially  adverse tax  consequences;  and potential
hostilities and changes in diplomatic and trade relationships.

During October 2000, the Company established Gentner  Communications EuMEA GmbH,
a wholly owned subsidiary  headquartered in Nuremberg,  Germany.  The subsidiary
began  operations  during December 2000.  Gentner EuMEA focuses on distribution,
technical support, and training in Europe, the Middle East and Africa.

The Company's sales in the international  market are denominated in U.S. Dollars
and, Gentner EuMEA transacts  business in U.S. Dollars,  however,  its financial
statements are prepared in German Deutsche Marks according to German  accounting
principles.  Consolidation of Gentner EuMEA's financial statements with those of
the Company,  under United  States  generally  accepted  accounting  principles,
requires remeasurement to U.S. Dollars which is subject to exchange rate risks.

Euro Conversion
---------------

On January 1, 1999,  eleven member  countries of the European Union  established
fixed conversion rates between their existing  currencies  ("legal  currencies")
and one common currency, the Euro. The Euro is now trading on currency exchanges
and may be used in certain transactions such as electronic  payments.  Beginning
in January 2002, new  Euro-denominated  notes and coins will be used, and legacy
currencies  will be withdrawn from  circulation.  The conversion to the Euro has
eliminated  currency  exchange  rate risk for  transactions  between  the member
countries,  which  for the  Company  primarily  consists  of  sales  to  certain
customers and payments to certain suppliers. The Company is currently addressing
the issues involved with the new currency,  which include converting information
technology  systems,  recalculating  currency risk,  and revising  processes for
preparing  accounting and taxation records.  Based on the work completed so far,
the Company does not believe the Euro conversion will have a significant  impact
on the results of its operations or cash flows.

Integration of Acquired Business
--------------------------------

The Company has dedicated and will continue to dedicate,  substantial management
resources  in order to  achieve  the  anticipated  operating  efficiencies  from
integrating  ClearOne.   Difficulties   encountered  in  integrating  ClearOne's
operations  could  adversely  impact  the  business,  results of  operations  or
financial  condition  of the  Company.  Also,  the  Company  intends  to  pursue
acquisition  opportunities in the future. The integration of acquired businesses
could require substantial  management resources.  There can be no assurance that
any such integration will be accomplished  without having a short or potentially
long-term  adverse  impact on the  business,  results of operations or financial
condition of the Company or that the benefits expected from any such integration
will be fully realized.


                                       21

<PAGE>


New Accounting Pronouncements

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101,  "Revenue  Recognition in Financial  Statements."  SAB 101B,
which was issued in June 2000, delayed the implementation  date of SAB 101 until
no later than the fourth fiscal quarter of fiscal years beginning after December
15, 1999. This SAB clarifies proper methods of revenue recognition given certain
circumstances surrounding sales transactions. The Company adopted SAB 101 in its
fourth fiscal quarter of 2001. As expected, the adoption of SAB 101 did not have
a material impact on the Company's financial statements.

In 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No. 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities,"  which was
subsequently  amended  by SFAS No.  137  "Accounting  for  Derivative  Financial
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring  that  every  derivative  instrument,   including  certain  derivative
instruments  embedded in other  contracts,  be recorded in the balance  sheet as
either an asset or  liability  measured at its fair value.  The  statement  also
requires that changes in the  derivative's  fair value be recognized in earnings
unless specific hedge  accounting  criteria are met. SFAS No. 133, as amended by
SFAS No. 137 and SFAS No. 138, is effective for all fiscal years beginning after
June 15, 2000.  The Company  adopted  SFAS No. 133 in fiscal  2001.  Because the
Company  currently does not hold any derivative  instruments,  as expected,  the
adoption  of SFAS  No.  133 did not  have a  material  impact  on the  Company's
financial condition or results of operations.

In July 2001, the FASB issued SFAS No. 141,  "Business  Combinations."  SFAS 141
establishes new standards for accounting and reporting requirements for business
combinations and supersedes APB Opinion No. 16, "Business Combinations" and SFAS
No. 38, "Accounting for Preacquisition  Contingencies of Purchased Enterprises."
SFAS No. 141 requires  that the purchase  method of  accounting  be used for all
business   combinations   initiated   after   June   30,   2001.   Use   of  the
pooling-of-interest  method is now  prohibited.  The  statement  applies  to any
business combinations accounted for using the purchase method for which the date
of acquisition is July 1, 2001 or later,  modifies the criteria for  recognizing
intangible  assets and expands  disclosure  requirements.  The Company  does not
expect this statement to have a material impact on its financial statements.

In July 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets" which addresses financial accounting and reporting for acquired goodwill
and other  intangible  assets and  supersedes  APB Opinion  No. 17,  "Intangible
Assets." SFAS No. 142 eliminates  amortization of goodwill and intangible assets
with indefinite  lives and instead sets forth methods to  periodically  evaluate
goodwill for impairment. SFAS No. 142 provides guidance for testing goodwill and
intangible  assets that will not be amortized for impairment.  The  amortization
provisions of Statement  142 apply to goodwill and  intangible  assets  acquired
after June 30, 2001.  With respect to goodwill and  intangible  assets  acquired
prior to July 1, 2001,  companies  are required to adopt  Statement 142 in their
fiscal  year  beginning  after  December  15,  2001  (i.e.,  January 1, 2002 for
calendar year companies).  Early adoption is permitted for companies with fiscal
years beginning after March 15, 2001 provided that their first quarter financial
statements  have not been  issued.  The Company is  continuing  to evaluate  the
impact of this statement on its financial statements.



I
TEM 7A.  Qualitative and Quantitative Disclosures About Market Risk

Market risk  represents the risk of changes in value of a financial  instrument,
derivative or non-derivative,  caused by fluctuations in interest rates, foreign
exchange  rates  and  equity  prices.  Changes  in  these  factors  could  cause
fluctuations  in the results of the Company's  operations and cash flows. In the
ordinary  course of  business,  the Company is exposed to foreign  currency  and
interest rate risks.  These risks  primarily  relate to the sale of products and
services to foreign  customers  and changes in interest  rates on the  Company's
capital leases.

The Company currently has limited market risk sensitive  instruments  related to
interest rates. The Company's capital leases  obligations total $230,000 at June
30, 2001. The Company does not have  significant  exposure to changing  interest
rates on these capital  leases  because  interest  rates for the majority of the
capital leases are fixed. The Company has not undertaken any additional  actions
to cover interest rate market risk and is not a party to any other interest rate
market risk  management  activities.  A hypothetical 10 percent change in market
interest  rates over the next year would not impact the  Company's  earnings  or
cash flows as the  interest  rates on the  majority  of the  capital  leases are
fixed.

The Company does not purchase or hold any derivative  financial  instruments for
trading purposes.

                                       22

<PAGE>


Although the Company's  subsidiary  enters into transactions in currencies other
than its functional  currency,  foreign  currency  exposures  arising from these
transactions  are not  material to the  Company.  The primary  foreign  currency
exposure arises from the remeasurement of the Company's net equity investment in
its  foreign  subsidiary  to U.S.  dollars.  The  primary  currency to which the
Company is exposed is the German  Deutsche Mark. The fair value of the Company's
net foreign investments would not be materially affected by a 10 percent adverse
change in foreign currency exchange rates from June 30, 2001 levels.


                                       23

<PAGE>



ITEM 8.  FINANCIAL STATEMENTS

                   Index to Consolidated Financial Statements
                   ------------------------------------------

                                                                           Page
                                                                           ----

Report of Independent Auditors......................................        25

Consolidated Balance Sheets as of June 30, 2001 and 2000............        26

Consolidated Statements of Income for fiscal years
 ended June 30, 2001, 2000, and 1999................................        27

Consolidated Statements of Cash Flows for fiscal years 
 ended June 30, 2001, 2000, and 1999................................        28

Consolidated Statements of Shareholders' Equity for fiscal years
 ended June 30, 2001, 2000, and 1999................................        29

Notes to Consolidated Financial Statements..........................        30



                                       24

<PAGE>






                         Report of Independent Auditors

The Board of Directors and Shareholders
GENTNER COMMUNICATIONS CORPORATION

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Gentner
Communications  Corporation  as of June  30,  2001  and  2000,  and the  related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended June 30, 2001. These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material   respects,   the  consolidated   financial  position  of  Gentner
Communications  Corporation  at June 30,  2001 and  2000,  and the  consolidated
results of its  operations and its cash flows for each of the three years in the
period ended June 30, 2001, in conformity with accounting  principles  generally
accepted in the United States.


/s/ Ernst & Young, L.L.P.

Salt Lake City, Utah
July 27, 2001






                                       25

<PAGE>


<TABLE>

                       GENTNER COMMUNICATIONS CORPORATION

                           CONSOLIDATED BALANCE SHEETS
<CAPTION>

                                                                        June 30,
                                                               -------------------------
                                                                   2001         2000
                                                                   ----         ----
                                ASSETS

<S>                                                             <C>              <C>         
Current assets:
    Cash and cash equivalents ..............................   $ 6,852,243   $ 5,374,996
    Accounts receivable, less allowances of $436,000 in 2001
        and $302,000 in 2000 ...............................     7,212,970     4,153,677
    Note receivable - current portion ......................        71,423          --
    Inventory ..............................................     4,132,034     3,484,992
    Income tax receivable ..................................          --         987,912
    Deferred tax assets ....................................       247,402       136,000
    Prepaid expenses .......................................       779,648       678,744
                                                               -----------   -----------
        Total current assets ...............................    19,295,720    14,816,321

Property and equipment, net ................................     3,696,615     3,050,349
Goodwill, net ..............................................     2,633,732          --
Note receivable - long term portion ........................     1,716,477          --
Related party note receivable ..............................          --          52,488
Other intangible assets, net ...............................       181,722          --
Deposits and other assets ..................................        73,357         1,373
                                                               -----------   -----------

        Total assets .......................................   $27,597,623   $17,920,531
                                                               ===========   ===========


                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable .......................................   $   568,782   $   767,095
    Accrued compensation and other benefits ................       410,416       694,219
    Income tax payable .....................................       421,749          --
    Other accrued expenses .................................       719,112     1,045,607
    Current portion of capital lease obligations ...........       181,827       249,859
                                                               -----------   -----------
        Total current liabilities ..........................     2,301,886     2,756,780

Capital lease obligations ..................................        48,227       205,530
Deferred tax liabilities ...................................       746,000       205,000
                                                               -----------   -----------
        Total liabilities ..................................     3,096,113     3,167,310

Shareholders' equity:

    Common stock, 50,000,000 shares authorized, par value
      $.001, 8,617,978 and 8,427,145 shares issued and
      outstanding at June 30, 2001 and 2000, respectively ..         8,618         8,427
    Additional paid-in capital .............................     8,962,699     6,697,090
    Retained earnings ......................................    15,530,193     8,047,704
                                                               -----------   -----------
        Total shareholders' equity .........................    24,501,510    14,753,221
                                                               -----------   -----------

        Total liabilities and shareholders' equity .........   $27,597,623   $17,920,531
                                                               ===========   ===========

</TABLE>



                             See accompanying notes


                                       26

<PAGE>


<TABLE>

                       GENTNER COMMUNICATIONS CORPORATION

                        CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>

                                                           Years ended June 30,
                                         -------------------------------------------------------------
                                             2001                  2000                 1999
                                             ----                  ----                 ----
<S>                                      <C>          <C>      <C>         <C>      <C>          <C>  
Product sales..........................  $28,189,612  70.7%    $22,226,504 79.0%    $17,056,780  84.2%
Service sales..........................   11,688,793  29.3%      5,891,909 21.0%      3,211,322  15.8%
                                         -----------  ----     ----------- ----     -----------  ---- 
    Total net sales....................   39,878,405 100.0%     28,118,413100.0%     20,268,102 100.0%

Cost of goods sold - products..........   10,633,956  37.7%      8,033,867 36.1%      6,670,149  39.1%
Cost of goods sold - services..........    5,869,106  50.2%      2,974,456 50.5%      2,237,605  69.7%
                                         -----------  ----     ----------- ----     -----------  ---- 
    Total cost of goods sold...........   16,503,062  41.4%     11,008,323 39.2%      8,907,754  44.0%
                                         -----------  ----     ----------- ----     -----------  ---- 

Gross profit...........................   23,375,343  58.6%     17,110,090 60.8%     11,360,348  56.0%

Operating expenses:
    Marketing and selling..............    7,753,292  19.4%      6,165,917 21.9%      4,313,639  21.2%
    General and administrative.........    4,648,999  11.7%      3,132,125 11.1%      2,544,665  12.6%
    Product development................    2,502,169   6.3%      1,270,819  4.5%      1,194,686   5.9%
                                         -----------  ----     ----------- ----     -----------  ---- 
        Total operating expenses.......   14,904,460  37.4%     10,568,861 37.5%      8,052,990  39.7%
                                         -----------  ----     ----------- ----     -----------  ---- 

        Operating income...............    8,470,883  21.2%      6,541,229 23.3%      3,307,358  16.3%

Other income (expense):
    Interest income....................      397,438   1.0%        236,387  0.8%         91,411   0.5%
    Interest expense...................      (42,517) (0.1)%       (65,554)(0.2)%      (148,253) (0.7)%
    Other, net.........................       53,768   0.1%          8,503  0.0%        (21,270) (0.1)%
    Loss on foreign currency 
     transactions......................      (35,542) (0.1)%          --    0.0%           --     0.0%
                                         -----------  ----     ----------- ----     -----------  ---- 
        Total other income (expense)...      373,147   0.9%        179,336  0.6%        (78,112) (0.3)%
                                         -----------  ----     ----------- ----     -----------  ---- 

Income from continuing operations
    before income taxes................    8,844,030  22.1%      6,720,565 23.9%      3,229,246  16.0%
Provision for income taxes.............    3,318,845   8.3%      2,418,823  8.6%      1,208,900   6.0%
                                         -----------  ----     ----------- ----     -----------  ---- 
    Income from continuing operations..   5,525,185   13.8%      4,301,742 15.3%      2,020,346  10.0%

Discontinued operations:
Income from discontinued operations, 
    net of applicable taxes ($438,605
    in 2001, $253,778 in 2000 and 
    $311,800 in 1999)..................      737,280               426,591              524,125
Gain on disposal of business segment,
    net of applicable taxes ($725,788
    in 2001)...........................    1,220,024                  --                   --
                                         -----------           -----------          -----------
Net income.............................  $ 7,482,489           $ 4,728,333          $ 2,544,471
                                         ===========           ===========          ===========

Basic earnings per common share 
    from continuing operations.........  $      0.64           $      0.52          $      0.25
Diluted earnings per common share
    from continuing operations.........  $      0.61           $      0.49          $      0.24

Basic earnings per common share 
    from discontinued operations.......  $      0.23           $      0.05          $      0.06
Diluted earnings per common shares 
    from discontinued operations.......  $      0.22           $      0.05          $      0.06

Basic earnings per common share........  $      0.87           $      0.57          $      0.31
Diluted earnings per common share......  $      0.83           $      0.54          $      0.30
</TABLE>



                             See accompanying notes


                                       27

<PAGE>


<TABLE>

                       GENTNER COMMUNICATIONS CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>

                                                                     Years ended June 30,
                                                          -----------------------------------------
                                                              2001           2000           1999
                                                              ----           ----           ----
<S>                                                       <C>            <C>            <C>        
Cash flows from operating activities:
   Net income from continuing operations ..............   $ 5,525,185    $ 4,301,742    $ 2,020,346
   Adjustments to reconcile net income from
     continuing operations to net cash provided by
     continuing operating activities:
      Depreciation and amortization of property and
        equipment .....................................     1,044,878        751,202        659,074
      Amortization of other assets ....................       269,068         19,467         27,495
      Deferred income tax .............................       (81,402)       (33,000)       142,000
      Provision for bad debts .........................       575,909         74,863         17,733 
      Gain on investments .............................        (4,442)        (7,771)        (5,783)
      Tax benefits from stock option exercises
         allocated to contributed capital .............       117,084      1,287,000        239,000
      Changes in operating assets and liabilities:
         Accounts receivable ..........................    (3,635,202)    (1,986,246)      (516,637)
         Inventory ....................................      (354,001)      (623,781)       248,233
         Income taxes .................................     1,194,873     (1,216,999)       182,305
         Other current assets .........................      (100,904)      (535,303)        31,226
         Accounts payable and other accrued expenses ..      (833,324)       448,011        707,810
                                                          -----------    -----------    -----------
           Net cash provided by continuing operating
             activities ...............................     3,717,722      2,479,185      3,752,802

Cash flows from investing activities:
   Purchases of property and equipment ................    (1,356,275)    (1,684,200)      (466,451)
   Purchase of business ...............................    (1,758,085)          --             --
   Decrease (increase) in deposits and other assets ...        (9,335)          --            1,753
                                                          -----------    -----------    -----------

           Net cash used in investing activities ......    (3,123,695)    (1,684,200)      (464,698)

Cash flows from financing activities:
   Proceeds from issuance of common stock .............        15,095         30,274          3,912
   Exercise of employee stock options .................       324,989        355,255        327,970
   Repurchase of common stock .........................      (191,381)          --             --
   Principal payments on capital lease obligations ....      (252,841)      (215,854)      (318,594)
   Principal payments on long-term debt ...............          --             --         (688,214)
                                                          -----------    -----------    -----------

           Net cash provided by (used in) financing
              activities ..............................      (104,138)       169,675       (674,926)
                                                          -----------    -----------    -----------

Net increase in cash from continuing operations .......       489,889        964,660      2,613,178
Net cash flow from discontinued operations ............       987,358        488,153        593,680
Cash at the beginning of the year .....................     5,374,996      3,922,183        715,325
                                                          -----------    -----------    -----------

Cash at the end of the year ...........................   $ 6,852,243    $ 5,374,996    $ 3,922,183
                                                          ===========    ===========    ===========

Supplemental disclosure of cash flow information:
   Property and equipment financed by capital leases...   $    27,507    $      --      $      --
   Income taxes paid, net .............................   $(2,575,481)   $(2,635,601)   $  (956,827)
   Interest paid ......................................   $   (42,517)   $   (65,554)   $  (150,072)
   Consideration paid in stock for purchase of
     business .........................................   $(2,000,013)   $      --      $      --
</TABLE>



                             See accompanying notes


                                       28

<PAGE>

<TABLE>

                       GENTNER COMMUNICATIONS CORPORATION

                 CONSOLDIATED STATEMENTS OF SHAREHOLDERS' EQUITY
<CAPTION>

                                                          
                                              Common Stock           Additional                     Total
                                        ------------------------      Paid-In        Retained   Shareholders'
                                          Shares        Amount        Capital        Earnings       Equity
                                          ------        ------        -------        --------       ------

<S>                                     <C>          <C>            <C>            <C>           <C>        
Balances at June 30, 1998 .........     7,698,523    $     7,699    $ 4,454,407    $   774,900   $ 5,237,006

    Exercise of employee stock
      options .....................       429,702            430        327,540           --         327,970

    Issuance of common stock ......         1,466              1          3,911           --           3,912

    Tax benefits from stock option
      exercises allocated to
      contributed capital .........          --             --          239,000           --         239,000

    Net income ....................          --             --             --        2,544,471     2,544,471
                                        ---------    -----------    -----------    -----------   -----------

Balances at June 30, 1999 .........     8,129,691          8,130      5,024,858      3,319,371     8,352,359

    Exercise of employee stock
      options .....................       296,000            296        354,959           --         355,255

    Issuance of common stock ......         1,454              1         30,273           --          30,274

    Tax benefits from stock option
      exercises allocated to
      contributed capital .........          --             --        1,287,000           --       1,287,000

    Net income ....................          --             --             --        4,728,333     4,728,333
                                        ---------    -----------    -----------    -----------   -----------

Balances at June 30, 2000 .........     8,427,145          8,427      6,697,090      8,047,704    14,753,221

    Exercise of employee stock
      options .....................        75,125             75        324,914           --         324,989

    Issuance of common stock ......         1,137              1         15,094           --          15,095

    Tax benefits from stock option
      exercises allocated to
      contributed capital .........          --             --          117,084           --         117,084

    Consideration paid in stock for
      the purchase of business ....       129,871            130      1,999,883           --       2,000,013

    Repurchase and retirement of
      common stock by the Company .       (15,300)           (15)      (191,366)          --        (191,381)

    Net income ....................          --             --             --        7,482,489     7,482,489
                                        ---------    -----------    -----------    -----------   -----------

Balances at June 30, 2001 .........     8,617,978    $     8,618    $ 8,962,699    $15,530,193   $24,501,510
                                        =========    ===========    ===========    ===========   ===========
</TABLE>



                             See accompanying notes


                                       29

<PAGE>

                       GENTNER COMMUNICATIONS CORPORATION


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.      Organization and Summary of Significant Accounting Policies

Organization

Gentner  Communications  Corporation (the  "Company"),  designs and manufactures
high-technology  electronic equipment for the conferencing and broadcast markets
and provides  conference  calling  services.  The Company provides  products and
services  domestically and internationally.  The Company generally grants credit
without requiring collateral to its customers within these markets.

During October 2000, the Company established Gentner  Communications EuMEA GmbH,
a wholly owned subsidiary  headquartered in Nuremberg,  Germany.  The subsidiary
began  operations  during December 2000.  Gentner EuMEA focuses on distribution,
technical support, and training in Europe, the Middle East and northern Africa.

The Company is now  providing  consolidated  financial  statements  that include
Gentner EuMEA. This practice commenced in the second quarter of fiscal 2001. All
intercompany transactions have been eliminated in consolidation.

Summary of Significant Accounting Policies

Cash  Equivalents - The Company  considers all highly liquid  investments with a
maturity of three months or less when purchased to be cash equivalents.

Inventory - Inventories are stated at the lower of cost (first-in, first-out) or
market.

Shipping  and  Handling  Costs - Shipping  and  handling  costs are  expensed as
incurred and included in cost of sales.

Revenue  Recognition  - Revenue from  product  sales is  recognized  at the time
product is shipped.  Revenue from service  sales is  recognized  at the time the
service  is  rendered.  The  Company  records  reserves  for sales  returns  and
uncollectible  accounts,  at the time the  product  is  shipped  or  service  is
rendered.   Historically,   the   Company's   estimate  of  sales   returns  and
uncollectible accounts has not materially varied from actual results.

Foreign Currency  Translation - The functional currency of the Company's foreign
subsidiary  is the U.S.  dollar.  Accordingly,  the results of operations of the
Company's  foreign  subsidiary,  which are recorded by the  subsidiary in German
Deutsche Marks, are remeasured into the U.S. dollar using average exchange rates
during  the  year,  while  the  assets,  liabilities  and  equity  accounts  are
remeasured using period end exchange rates and historical rates, as appropriate.
The impact of this remeasurement is recorded in earnings.

Property and Equipment - Property and equipment are stated at cost. Depreciation
and  amortization are provided over the estimated useful lives of the respective
assets  using  the  straight-line  method.  Repairs  and  maintenance  costs are
expensed as incurred.

Long-Lived  Assets - The Company  regularly  evaluates  the carrying  amounts of
long-lived  assets,  including  goodwill and other intangible assets, as well as
the related  amortization  periods,  to determine  whether  adjustments to these
amounts or to the useful lives are required  based on current  circumstances  or
events. The evaluation, which involves significant management judgment, is based
on various analyses  including cash flow and profitability  projections.  To the
extent such  projections  indicate that future  undiscounted  cash flows are not
sufficient to recover the carrying amounts of the related long-lived assets, the
carrying  amount of the  underlying  assets will be reduced,  with the reduction
charged  to  expense,  so that the  carrying  amount  is  equal  to fair  value,
primarily  determined based upon future  discounted cash flows. No impairment of
the Company's long-lived assets has been indicated to date.

Goodwill  and  Other  Intangible   Assets  -  Other  intangible  assets  consist
principally of purchased  technology,  value assigned to a non-compete agreement
and certain other intangible assets. The Company amortizes  goodwill,  purchased
technology and other  intangible  assets on a  straight-line  basis over periods


                                       30

<PAGE>

ranging from three to fifteen years.  Accumulated  amortization was $515,285 and
$246,217  at June 30,  2001 and 2000,  respectively.  The  Company  performs  an
evaluation  of other assets on a periodic  basis to determine  that the recorded
costs are not in excess of their net realizable value.

Earnings per Share - The following table sets forth the computation of basic and
diluted net income per share:

<TABLE>
<CAPTION>

                                                               Year Ended June 30,
                                                     -----------------------------------
                                                        2001        2000         1999
                                                        ----        ----         ----
<S>                                                  <C>         <C>          <C>       
Numerator:
    Income from continuing operations..........      $5,525,185  $4,301,742   $2,020,346
    Income from discontinued operations........         737,280     426,591      524,125
    Gain on disposal of business segment.......       1,220,024        --           --
                                                     ----------  ----------   ----------
    Net income.................................      $7,482,489  $4,728,333   $2,544,471
                                                     ==========  ==========   ==========

Denominator for basic net income per
  share - weighted average shares:.............       8,593,510   8,269,941    8,080,536
Dilutive common stock equivalents using treasury
  stock method:................................         422,134     470,268      388,348
                                                     ----------  ----------   ----------
Denominator for diluted net income per share -
   weighted average shares:....................       9,015,644   8,740,209    8,468,884
                                                      =========   =========    =========

Basic net income per share:
    Continuing operations......................      $    0.64   $     0.52   $     0.25
    Discontinued operations....................           0.23         0.05         0.06
                                                     ----------  ----------   ----------
Basic net income per share.....................      $    0.87   $     0.57   $     0.31
                                                     =========   ==========   =========
Diluted net income per share:
    Continuing operations......................      $    0.61   $     0.49   $     0.24
    Discontinued operations....................           0.22         0.05         0.06
                                                     ----------  ----------   ----------
Diluted net income per share...................      $    0.83   $     0.54   $     0.30
                                                     =========   ==========   =========
</TABLE>


Options to  purchase  663,250,  523,500 and 45,000  shares of common  stock were
outstanding  as of June 30,  2001,  2000 and  1999,  respectively,  but were not
included in the computation of diluted earnings per share as the effect would be
antidilutive.

Research and Product  Development Costs - Research and product development costs
are expensed as incurred.

Income  Taxes - The  Company  provides  for income  taxes based on the asset and
liability method required by SFAS No. 109,  "Accounting for Income Taxes." Under
the asset and liability method, deferred tax assets and deferred tax liabilities
are  recognized  for the future tax  consequences  attributable  to  differences
between  the  financial  statement  carrying  amounts  of  existing  assets  and
liabilities  and their  respective  tax bases and operating  loss and tax credit
carryforwards.  Deferred tax assets and deferred  tax  liabilities  are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary  differences are expected to be recovered or settled.  The
effect on deferred tax assets and deferred  tax  liabilities  of a change in tax
rates is  recognized  in  operations  in the period that  includes the enactment
date.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements and
these accompanying notes. Actual results could differ from those estimates.

Stock-Based  Compensation - Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," (SFAS 123) defines a fair value-based
method  of  accounting  for  and  measuring   compensation  expense  related  to
stock-based compensation plans and encourages adoption of the standard. However,
the Statement  allows entities to continue to measure  compensation  expense for
stock-based  plans  using  the  intrinsic   value-based   method  prescribed  by
Accounting  Principles Board (APB) Opinion No. 25,  "Accounting for Stock Issued
to  Employees".  The Company has elected to continue to account for  stock-based
compensation  plans  using the  provisions  of APB  Opinion  No.  25.  Pro forma
footnote  disclosure  of net  income  has been made as if the fair  value  based
method of accounting defined in the Statement had been applied.

Advertising   Expenses  -   Advertising   expenses  are  expensed  as  incurred.
Advertising  expense for fiscal  years  2001,  2000 and 1999  totaled  $357,700,
$186,400 and $475,800, respectively.


                                       31

<PAGE>

New  Accounting  Pronouncements  - In December 1999, the Securities and Exchange
Commission issued Staff Accounting  Bulletin (SAB) 101, "Revenue  Recognition in
Financial  Statements."  SAB 101B,  which was issued in June 2000,  delayed  the
implementation  date of SAB 101 until no later than the fourth fiscal quarter of
fiscal  years  beginning  after  December 15, 1999.  This SAB  clarifies  proper
methods of revenue  recognition  given certain  circumstances  surrounding sales
transactions.  The Company adopted SAB 101 in its fourth fiscal quarter of 2001.
As  expected,  the  adoption  of SAB 101 did not have a  material  impact on the
Company's financial statements.

In 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No. 133,
"Accounting  for  Derivative  Instruments  and  Hedging  Activities,"  which was
subsequently  amended  by SFAS No.  137  "Accounting  for  Derivative  Financial
Instruments and Hedging  Activities - Deferral of the Effective Date of SFAS No.
133" and SFAS No. 138 "Accounting for Certain Derivative Instruments and Certain
Hedging Activities." SFAS No. 133 establishes accounting and reporting standards
requiring  that  every  derivative  instrument,   including  certain  derivative
instruments  embedded in other  contracts,  be recorded in the balance  sheet as
either an asset or  liability  measured at its fair value.  The  statement  also
requires that changes in the  derivative's  fair value be recognized in earnings
unless specific hedge  accounting  criteria are met. SFAS No. 133, as amended by
SFAS No. 137 and SFAS No. 138, is effective for all fiscal years beginning after
June 15, 2000.  The Company  adopted  SFAS No. 133 in fiscal  2001.  Because the
Company  currently does not hold any derivative  instruments,  as expected,  the
adoption  of SFAS  No.  133 did not  have a  material  impact  on the  Company's
financial condition or results of operations.

In July 2001, the FASB issued SFAS No. 141,  "Business  Combinations."  SFAS 141
establishes new standards for accounting and reporting requirements for business
combinations and supersedes APB Opinion No. 16, "Business Combinations" and SFAS
No. 38, "Accounting for Preacquisition  Contingencies of Purchased Enterprises."
SFAS No. 141 requires  that the purchase  method of  accounting  be used for all
business   combinations   initiated   after   June   30,   2001.   Use   of  the
pooling-of-interest  method is now  prohibited.  The  statement  applies  to any
business combinations accounted for using the purchase method for which the date
of acquisition is July 1, 2001 or later,  modifies the criteria for  recognizing
intangible  assets and expands  disclosure  requirements.  The Company  does not
expect this statement to have a material impact on its financial statements.

In July 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets" which addresses financial accounting and reporting for acquired goodwill
and other  intangible  assets and  supersedes  APB Opinion  No. 17,  "Intangible
Assets." SFAS No. 142 eliminates  amortization of goodwill and intangible assets
with indefinite  lives and instead sets forth methods to  periodically  evaluate
goodwill for impairment. SFAS No. 142 provides guidance for testing goodwill and
intangible  assets that will not be amortized for impairment.  The  amortization
provisions of Statement  142 apply to goodwill and  intangible  assets  acquired
after June 30, 2001.  With respect to goodwill and  intangible  assets  acquired
prior to July 1, 2001,  companies  are required to adopt  Statement 142 in their
fiscal  year  beginning  after  December  15,  2001  (i.e.,  January 1, 2002 for
calendar year companies).  Early adoption is permitted for companies with fiscal
years beginning after March 15, 2001 provided that their first quarter financial
statements  have not been  issued.  The Company is  continuing  to evaluate  the
impact of this statement on its financial statements.

Reclassification  - Certain amounts reported in prior year financial  statements
have been reclassified to conform with current year presentations.

2.      Discontinued Operations

On April 12, 2001, the Company sold the assets of the remote control  portion of
the RFM/Broadcast division to Burk Technology,  Inc. of Littleton,  MA ("Burk").
Burk is a  privately-held  developer  and  manufacturer  of  broadcast  facility
control  systems  products.  The Company  retained the  accounts  payable of the
remote control portion of the RFM/Broadcast  division.  Burk assumed obligations
for (i) unfilled customer orders,  and (ii) satisfying  warranty  obligations to
both existing customers of the Company, and for inventory sold to Burk.

The assets of the remote control portion of the RFM/Broadcast division were sold
to Burk for $3.2  million,  including  $750,000  in cash at  closing,  and $1.75
million in the form of a seven (7) year  promissory  note,  with interest at the
rate of nine percent  (9%),  secured by a subordinate  security  interest in the
personal  property of Burk.  The gain  associated  with the note  receivable  is
recognizable  for book purposes but not for tax purposes until cash is received.
As such,  the Company has  established  a deferred tax liability for $511,000 in
connection with this deferred gain. In addition,  up to $700,000 more is payable
by Burk as a commission  over a period of up to seven years.  The  commission is
based  upon  future  net sales of Burk over base  sales  established  within the
agreement.  This amount will be  recognized  as received.  The Company  retained


                                       32

<PAGE>

remote control related  inventory in the amount of $70,000 and zero  liabilities
at June 30, 2001. The Company realized a gain on the sale of $1,220,024,  net of
applicable income taxes of $725,788.

Summary operating results of the discontinued operations are as follows:

<TABLE>
<CAPTION>

                                                               Year Ended June 30,
                                                     -----------------------------------
                                                          2001        2000         1999
                                                          ----        ----         ----

<S>                                                  <C>         <C>          <C>       
    Net sales..................................      $2,369,054  $2,753,529   $2,722,224
    Cost of goods sold.........................         806,581     924,488      969,933
    Marketing and selling......................        281,852      597,835      616,101
    Product development........................         104,736     550,837      300,265
                                                     ----------  ----------   ----------
    Income before income taxes.................       1,175,885     680,369      835,925
    Provision for income taxes.................       (438,605)    (253,778)    (311,800)
    Gain on disposal of business segment, 
      net of taxes.............................       1,220,024        --           --
                                                     ----------  ----------   ----------
    Net income from discontinued operations....      $1,957,304  $  426,591   $  524,125
                                                     ==========  ==========   ==========

    Basic earnings per share from
      discontinued operations..................      $    0.23   $     0.05   $     0.06
    Diluted earnings per share from
      discontinued operations..................      $    0.22   $     0.05   $     0.06
</TABLE>

  

3.      Comprehensive Income

As of July 1, 1998,  the  Company  adopted  Statement  of  Financial  Accounting
Standards No. 130, "Reporting  Comprehensive  Income."  Comprehensive income for
the years ended June 30, 2001, 2000, and 1999 was equal to net income.

4.      Significant Customer

For the periods ended June 30, 2001,  2000,  and 1999,  the Company did not have
sales to any customer that equaled or exceeded ten percent of net revenue.

5.      Financial Instruments

The  carrying  values  of cash and cash  equivalents,  accounts  receivable  and
payable,  the Company's line of credit and accrued  liabilities  all approximate
fair value due to the short-term maturities of these assets and liabilities. The
carrying values of virtually all long-term notes payable and capital leases also
approximate fair value because applicable  interest rates either fluctuate based
on market conditions or approximate the Company's current borrowing rate.

The carrying value of the note  receivable  approximates  fair value because the
fixed rate on the note receivable approximates a market rate of interest.

6.      Inventory

Inventory is summarized as follows:
                                                   June 30,
                                         -------------------------
                                              2001          2000
                                              ----          ----

Raw materials                            $ 2,500,098   $ 1,559,210
Work in progress                             195,149       437,112
Finished goods                             1,436,787     1,488,670
                                         -----------   -----------
   Total inventory                       $ 4,132,034   $ 3,484,992
                                         ===========   ===========

Total  inventory is net of a reserve for obsolete and  slow-moving  inventory of
$226,000 and $94,000 at June 30, 2001 and 2000, respectively.



                                       33

<PAGE>

7.      Property and Equipment

Major  classifications  of property and equipment and estimated useful lives are
as follows:

                                                               June 30,
                                                     -------------------------
                                                           2001         2000
                                                           ----         ----

Office furniture and equipment - 5 to 10 years...... $ 4,541,371   $ 3,476,023
Manufacturing and test equipment - 5 to 10 years....   2,304,680     1,959,630
Telephone bridging equipment - 10 years.............     857,450       678,490
Vehicles - 3 to 5 years.............................        --          22,318
                                                     -----------   ----------- 
                                                       7,703,501     6,136,461
Accumulated depreciation and amortization...........  (4,006,886)   (3,086,112)
                                                     -----------   ----------- 
   Net property and equipment....................... $ 3,696,615   $ 3,050,349
                                                     ===========   ===========

8.      Line of Credit

The Company maintains a revolving line of credit (no outstanding balance on $5.0
million available at June 30, 2001 and 2000) with a commercial bank that expires
December 22, 2001 and which the Company  anticipates  renewing beyond that date.
The  line  of  credit  is  secured  by the  Company's  accounts  receivable  and
inventory.  The interest rate on the line of credit is a variable  interest rate
(250 basis points over the London  Interbank  Offered Rate (LIBOR) or prime less
0.25%,  whichever the Company chooses).  The borrowing rate was 6.44% as of June
30, 2001. The weighted  average interest rate for the years ended June 30, 2001,
2000 and 1999, respectively, was 8.14%, 7.58% and 8.1%. The terms of the line of
credit  prohibit  the payment of  dividends  and require the Company to maintain
other defined  financial  ratios and restrictive  covenants.  The Company was in
compliance  with all such  covenants at June 30, 2001 and 2000. No  compensating
balance arrangements are required.

9.      Leases

The Company has entered  into capital  leases with finance  companies to finance
the purchase of certain  furniture and equipment.  Property and equipment  under
capital leases are as follows: 
                                                              June 30,
                                                     -------------------------
                                                         2001          2000 
                                                         ----          ---- 

Office furniture and equipment...................... $   936,819   $   495,528
Manufacturing and test equipment....................     478,598       478,599
Telephone bridging equipment........................     284,296       296,117
Vehicles............................................        --          22,318
                                                     -----------   -----------
                                                       1,699,713     1,292,562
Accumulated depreciation and amortization...........  (1,018,919)     (956,811)
                                                     -----------   -----------
   Net property and equipment under capital leases.. $   680,794   $   335,751
                                                     ===========   ===========

Amortization expense for assets recorded under capital leases is included with
depreciation expense.



                                       34

<PAGE>


Future minimum lease payments under capital leases and noncancelable operating
leases with initial terms of one year or more are as follows:
                                                        Capital     Operating
                                                        -------     ---------
For years ending June 30:
   2002............................................. $   208,763   $ 1,243,759
   2003.............................................      36,641     1,036,557
   2004.............................................       7,316       590,425
   2005.............................................       7,316       410,058
   2006.............................................       2,439       418,604
   Thereafter.......................................        --         139,535
                                                     -----------   -----------
      Total minimum lease payments..................     262,475   $ 3,838,938
                                                     -----------   ===========
Less use taxes......................................     (15,672)
                                                     -----------
      Net minimum lease payments....................     246,803
Less amount representing interest...................     (16,749)
                                                     -----------
      Present value of net minimum lease payments...     230,054
Less current portion................................    (181,827)
                                                     -----------
      Capital lease obligation......................$     48,227
                                                    ============

Certain operating leases contain  escalation clauses based on the consumer price
index.  Rental  expense,  which was composed of minimum  rentals under operating
lease  obligations,  was  $1,052,293,  $664,026 and $511,836 for the years ended
June 30, 2001, 2000 and 1999, respectively. The Company's operating lease on its
facility,  which expires 2006,  provides for renewal options extending the terms
an additional  ten years.  Rates charged would be at prevailing  market rates at
the time of renewal.

10.     Royalty Agreements

The Company was a general partner in two limited partnerships,  Gentner Research
Ltd. ("GRL") and Gentner Research II, Ltd. ("GR2L"),  both related parties.  GRL
sold the proprietary interest in a remote control product line to the Company in
exchange for royalty  agreements  in 1987 and 1988.  Royalty  expense  under the
agreements  with GRL for the years  ended  June 30,  2001,  2000 and  1999,  was
$3,600,  $16,000 and $39,900,  respectively.  GRL was  dissolved on February 20,
2001 after consent to dissolution  and liquidation was received by a majority of
the  partners of GRL.  The product  line,  which  incorporated  the  proprietary
interest,  was deemed no longer integral to the product segment of the Company's
business.

In fiscal  1997,  GR2L sold the  proprietary  interest  in a new remote  control
product to the Company in exchange for a royalty agreement.  Royalty expense for
sales of remote  control  product under this  agreement  with GR2L for the years
ended  June  30,  2001,  2000  and  1999  was  $90,793,  $106,084  and  $82,989,
respectively.  As of June 30,  2001,  2000 and 1999,  GR2L owed the  Company $0,
$52,488 and $98,633,  respectively,  which was in the form of a note  receivable
from the partnership to the Company. The terms of the note were such that 50% of
all the royalty proceeds were applied to the payment of the note's principal and
interest first. The note was payable in full on April 30, 2001, and the interest
rate on the note was equal to the Company's  cost of short term funds.  The note
was repaid and GR2L was  dissolved on May 21, 2001 after the  completion  of the
sale  of the  remote  control  portion  of the  RFM/Broadcast  division  to Burk
Technology.  The Company paid $178,516 to GR2L in 2001, representing its royalty
on the gain on the sale of the  remote  control  product  line.  This  amount is
included in the determination of gain on sale in the statement of income.

11.     Income Taxes

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:



                                       35

<PAGE>

<TABLE>
<CAPTION>
                                                                       2001         2000
                                                                       ----         ----
<S>                                                              <C>           <C>      
Deferred tax liabilities:
   Deferred tax gain on disposal of discontinued operations..... $   511,000   $      --
   Tax over book depreciation of fixed assets...................     278,000       225,000
                                                                 -----------   -----------
Total deferred tax liabilities..................................     789,000       225,000

Deferred tax assets:
   Book over tax amortization of intangibles....................      43,000        20,000
   Accounts receivable and other related reserves...............     110,000        87,000
   Inventory reserves...........................................      49,000        35,000
   Other accruals...............................................      88,402        14,000
                                                                 -----------   -----------
Total deferred tax assets.......................................     290,402       156,000
                                                                 -----------   -----------
      Net deferred tax liabilities.............................. $  (498,598)  $   (69,000)
                                                                 ===========   =========== 

The classification of these deferred tax assets and liabilities on the balance
sheets as of June 30 are as follows:

                                                                       2001         2000
                                                                       ----         ----

Net current deferred tax assets................................. $   247,402   $   136,000
Net non-current deferred tax liabilities........................     746,000       205,000
                                                                 -----------   -----------
Net deferred tax liabilities.................................... $  (498,598)  $   (69,000)
                                                                 ===========   =========== 
</TABLE>


As discussed in Note 2, the deferred tax  liability  related to the deferred tax
gain  on  disposal  of  discontinued  operations  relates  solely  to  the  note
receivable issued in conjunction with the disposal of a business segment as does
the related deferred tax expense.

Income taxes on income from  continuing  operations for the years ending June 30
consist of the following:

<TABLE>
<CAPTION>

                                                         2001         2000          1999
                                                         ----         ----          ----
<S>                                                 <C>          <C>           <C>        
Current:
   Federal......................................... $ 2,771,400  $   998,220   $   695,183
   State...........................................     444,080      166,603       132,717
   Foreign.........................................      67,683         --            --
   Tax benefits allocated to contributed capital...     117,084    1,287,000       239,000
                                                    -----------  -----------   -----------
Total current......................................   3,400,247    2,451,823     1,066,900

Deferred:
   Federal.........................................     (69,000)     (30,000)      128,000
   State...........................................     (11,000)      (3,000)       14,000
   Foreign.........................................      (1,402)        --            --
                                                    -----------  -----------   -----------
Total deferred.....................................     (81,402)     (33,000)      142,000
                                                    -----------  -----------   -----------
                                                    $ 3,318,845  $ 2,418,823   $ 1,208,900
                                                    ===========  ===========   ===========
</TABLE>


The  reconciliation  of the  consolidated  provision for income taxes to amounts
determined  by applying  the  prevailing  U.S.  federal  statutory  tax rates to
pre-tax income from continuing  operations is as follows for the year ended June
30:


<TABLE>
<CAPTION>
                                                         2001         2000          1999
                                                         ----         ----          ----

<S>                                                      <C>          <C>           <C>  
Tax at federal statutory rate......................      34.0%        34.0%         34.0%
 Increase (reduction) in computed tax rate
  resulting from:
   State income taxes, net of federal effect.......       3.3          3.3           3.3
   Change in valuation allowance...................       -            -            (3.9)
   Nondeductible entertainment expenses and life
      insurance premiums...........................       0.1          0.3           0.1
   Other...........................................       0.1         (1.6)          3.9
                                                         ----         ----          ----
                                                         37.5%        36.0%         37.4%
                                                         ====         ====          ==== 
</TABLE>



                                       36

<PAGE>

12.      Stock Options

The  Company's  1990  Incentive  Plan ("1990  Plan") has shares of common  stock
available for issuance to employees and  directors.  Provisions of the 1990 Plan
include the granting of stock options. Generally, stock options vest over a five
year period at 10%,  15%, 20%, 25% and 30% per year over years one through five.
Certain  other stock  options vest in full after eight years  (2004).  Under the
1990 Plan, there are 200,000 shares  available under options still  outstanding.
The Company also has a 1998 Stock Option Plan ("1998  Plan").  Provisions of the
1998 Plan include the granting of stock options. Certain options granted through
December 1999 will vest based on earnings per share goals through 2003 but cliff
vest after 9.75 years if earnings per share goals are not met.  Options  granted
subsequent  to December 1999 will vest based on earnings per share goals through
2005 but cliff vest  after six years if  earnings  per share  goals are not met.
Under the 1998 Plan, there are 1,700,000 shares available. The 1998 Plan expires
June 10, 2008, or when all the shares available under the plan have been issued.
Information  for the fiscal years 1999 through 2001 with respect to the Plans is
as follows:

                                                                     Weighted
                                                     Number of        Average
Stock Options                                         Shares      Exercise Price
-------------                                         ------      --------------

Outstanding at June 30, 1998                        1,853,000        $  1.61
    Options granted                                   100,000           3.38
    Options expired and canceled                     (115,250)          2.25
    Options exercised                                (429,702)          0.75
                                                    ---------

Outstanding at June 30, 1999                        1,408,048           1.94
    Options granted                                   744,500          13.57
    Options expired and canceled                     (348,000)          5.43
    Options exercised                                (296,000)          1.22
                                                    ---------

Outstanding at June 30, 2000                        1,508,548          12.89
    Options granted                                   500,500          12.73
    Options expired and canceled                     (183,125)         10.81
    Options exercised                                 (75,125)          4.33
                                                    ---------

Outstanding at June 30, 2001                        1,750,798        $  8.37
                                                    =========

The following table summarizes  information  about stock options  outstanding at
June 30, 2001 under the Plans:

<TABLE>
<CAPTION>

                                        Options Outstanding          Options Exercisable
                                        -------------------          -------------------

                                      Weighted                                    Weighted
                        Options        Average      Weighted        Options       Average
         Exercise   Outstanding at   Contractual     Average     Exercisable at   Exercise
        Price Range  June 30, 2001 Remaining Life Exercise Price  June 30, 2001     Price
        -----------  ------------- -------------- --------------  -------------     -----

<S>   <C>      <C>      <C>           <C>             <C>            <C>            <C>  
      $0.72 to $1.96    331,548       2.8 years       $0.78          252,798        $0.77
      $1.97 to $3.92    432,000       6.9 years       $2.66          246,000        $2.66
      $3.93 to $5.88     20,000       7.8 years       $3.94            8,000        $3.94
      $5.89 to $9.81     27,500       8.3 years       $9.69           13,250        $9.69
      $9.82 to $11.77    94,000       9.6 years      $10.64           10,800       $10.44
     $11.78 to $13.73   211,500       9.3 years      $12.52           36,500       $12.40
     $13.74 to $15.70   633,750       8.9 years      $14.58          163,196       $14.42
     $15.71 to $19.63       500       8.7 years      $19.63              125       $19.63
                      ---------                                      -------
Total                 1,750,798                                      730,669
                      =========                                      =======
</TABLE>


There were 398,875 options available for future grant at June 30, 2001. However,
251,250 of the options  available are from the 1990 plan which,  under the terms
of the  1998  plan  are no  longer  issuable.  The  following  are  the  options
exercisable at the  corresponding  weighted  average  exercise price at June 30,
2001,  2000 and  1999,  respectively:  730,669  at $5.38;  304,798  at $1.45 and
341,548 at $0.82.


                                       37

<PAGE>


On May 12,  1999  the  Company  registered  with  the  Securities  and  Exchange
Commission  all shares of common stock  previously  issued or issuable under the
1998 Plan.

The Company applies  Accounting  Principles Board Opinion No. 25 "Accounting for
Stock Issued to Employees"  and related  interpretations  in accounting  for its
option plans.  No  compensation  expense has been recognized for options granted
under the stock option plans  because the exercise  price of the options  equals
the  market  price  of the  underlying  stock  on the  date  of  the  grant.  If
compensation  expense for the Company's  stock-based  compensation plan had been
determined  consistent  with SFAS 123  "Accounting and Disclosure of Stock-based
Compensation,"  the  Company's  net income and diluted  earnings per share would
have been the pro forma amount indicated below:

                                           Fiscal Year  Fiscal Year  Fiscal Year
                                               2001         2000         1999
                                               ----         ----         ----
 Net Income
        As Reported                         $7,482,489   $4,728,333   $2,544,471
            diluted earnings per share      $     0.83   $     0.54   $     0.30
        Pro Forma                           $4,879,869   $1,788,567   $1,865,777
            diluted earnings per share      $     0.54   $     0.22   $     0.22

The pro forma results above are not likely to be  representative  of the effects
of applying  SFAS 123 on reported net income for future  years as these  amounts
only reflect the expense from three years.

The weighted average fair value as defined by SFAS 123 of each option granted in
fiscal  2001,   2000  and  1999  is  estimated  as  $12.73,   $8.83  and  $1.97,
respectively,  on the date of  grant  using  the  Black-Scholes  model  with the
following weighted average  assumptions:  expected dividend yield, 0%; risk-free
interest rate, 4.85%;  expected price volatility,  82.75%;  and expected life of
options, 6.25 years.

13.     International Sales

The Company provides products to the international  professional  communications
market.  These  products  are  designed,  manufactured,  distributed  from,  and
serviced at the Company's  facilities in Salt Lake City,  Utah.  During  October
2000,  Gentner  established  Gentner  Communications  EuMEA GmbH, a wholly owned
subsidiary that began operations during December 2000.  Gentner EuMEA focuses on
distribution,  technical  support and  training  to Europe,  the Middle East and
northern   Africa.   The  Company  also  uses  either  master   distributors  or
international  dealers to facilitate its  international  sales.  Currently,  the
Company's products are distributed to at least 70 different countries.

The Company ships products to unaffiliated distributors in worldwide markets. In
fiscal 2001, 2000 and 1999, such international sales were $5,100,100, $3,512,600
and $2,508,400,  respectively, and accounted for 13%, 12% and 12% of total sales
from  continuing  operations.  During  those  years,  the  Company  shipped  the
following  amounts to the following areas:  Canada - $1,221,500,  $1,040,600 and
$1,040,900;  EuMEA -  $2,063,200,  $1,120,900  and  $663,100;  Asia -  $884,100,
$718,600 and $331,000;  Latin America - $199,600,  $118,800 and $145,700;  Other
Areas - $731,700, $513,800 and $327,600.

14.     Retirement Savings and Profit Sharing Plan

The Company has a 401(k) retirement  savings and profit sharing plan to which it
makes  discretionary  matching  contributions,  as  authorized  by the  Board of
Directors.  All full-time  employees who are at least 21 years of age and have a
minimum of six months of service  with the Company at the plan date are eligible
to  participate  in the plan.  Matching  contributions,  if made, are based upon
amounts participating employees contribute to the plan. The Company's retirement
plan  contribution  expense  for the 2001,  2000 and 1999 fiscal  years  totaled
$66,000, $96,000 and $69,000, respectively.

15.     Segment Reporting

As a result of the sale of the remote  control  product  line,  the  Company has
changed how it evaluates its operations internally, resulting in a change in its
reported  segments from its Form 10-KSB for fiscal year 2000.  Subsequent to the
disposal,  the  Company  operates  in two  different  segments  -  Products  and
Services.  The  Products  segment  includes  products  for  conferencing,  sound
reinforcement,   broadcast   telephone   interface   and   assistive   listening
applications.  The Services  segment  includes  operator-assisted  conferencing;
on-demand,  reservationless conference calling;  Webconferencing,  and audio and


                                       38

<PAGE>

video streaming. Information for the prior years has been restated to conform to
this new method of evaluating  segments and to show continuing and  discontinued
operations.

The  accounting  policies  of the  reportable  segments  are the  same as  those
described  in the  summary  of  significant  accounting  policies.  The  Company
evaluates the  performance  of these  business  segments based upon a measure of
gross profit since  general and  administrative  costs are not allocated to each
segment.

The  Company's  reportable  segments  are  strategic  business  units that offer
products  and services to satisfy  different  customer  needs.  They are managed
separately  because each segment  requires focus and attention on its market and
distribution channel.

The following table summarizes the segment information:

<TABLE>
<CAPTION>

                                                                                     Company
                                                                                     -------
                                                 Products          Services           Totals
                                                 --------          --------           ------

Year Ended June 30, 2001:
------------------------
<S>                                            <C>               <C>              <C>         
Net sales                                      $28,189,612       $11,688,793      $ 39,878,405
Cost of goods sold                              10,633,956         5,869,106        16,503,062
                                                ----------         ---------        ----------
Gross profit                                    17,555,656         5,819,687        23,375,343

Marketing and selling                            5,302,634         2,450,658         7,753,292
General and administrative                                                           4,648,999
Product development                              2,502,169                           2,502,169
                                                                                   -----------
Total operating expenses                                                            14,904,460

Operating income                                                                     8,470,883
Other income (expense)                                                                 373,147
                                                                                    ----------
Income from continuing operations
    before income taxes                                                              8,844,030
Provision for income taxes                                                          (3,318,845)
                                                                                   ----------
Income from continuing operations                                                    5,525,185

Income from discontinued operations,
   net of applicable taxes of $438,065                                                 737,280
Gain on disposal of business segment,
   net of applicable taxes of $725,788                                               1,220,024
                                                                                   -----------

Net income                                                                        $  7,482,489
                                                                                  ============





                                       39

<PAGE>

Year Ended June 30, 2000:
------------------------
Net sales                                      $22,226,504       $ 5,891,909      $ 28,118,413
Cost of goods sold                               8,033,867         2,974,456        11,008,323
                                               -----------         ---------        ----------
Gross profit                                    14,192,637         2,917,453        17,110,090

Marketing and selling                            4,432,756         1,733,161         6,165,917
General and administrative                                                           3,132,125
Product development                              1,270,819                           1,270,819
                                                                                   -----------
Total operating expenses                                                            10,568,861

Operating income                                                                     6,541,229
Other income (expense)                                                                 179,336
                                                                                       -------
Income from continuing operations
   before income taxes                                                               6,720,565
Provision for income taxes                                                          (2,418,823)
                                                                                   ----------
Income from continuing operations                                                    4,301,742

Income from discontinued operations,
   net of applicable taxes of $253,778                                                 426,591
                                                                                  ------------

Net income                                                                        $  4,728,333
                                                                                  ============

Year Ended June 30, 1999:
------------------------
Net sales                                      $17,056,780       $ 3,211,322      $ 20,268,102
Cost of goods sold                               6,670,149         2,237,605         8,907,754
                                                 ---------         ---------       -----------
Gross profit                                    10,386,631           973,717        11,360,348

Marketing and selling                            3,337,424           976,215         4,313,639
General and administrative                                                           2,544,665
Product development                              1,194,686                           1,194,686
                                                                                   -----------
Total operating expenses                                                             8,052,990

Operating income                                                                     3,307,358
Other income (expense)                                                                 (78,112)
                                                                                      -------
Income from continuing operations
   before income taxes                                                               3,229,246
Provision for income taxes                                                          (1,208,900)
                                                                                   ----------
Income from continuing operations                                                    2,020,346

Income from discontinued operations,
   net of applicable taxes of $311,800                                                 524,125
                                                                                  ------------

Net income                                                                        $  2,544,471
                                                                                  ============
</TABLE>


16.     Purchase of Business

In May 2000, the Company entered into an agreement to purchase substantially all
of the assets of ClearOne, Inc. ("ClearOne") for $3.4 million plus approximately
$300,000 in inventory,  with a combination of cash and restricted  stock.  Under
the terms of the  agreement,  the Company  issued 129,871 shares of common stock
valued at $15.40 and cash of $1,758,085.  Goodwill resulting from the difference
between the purchase price plus  acquisition  costs and the net assets acquired,
including a  non-compete  agreement  of  $240,000,  totaled  approximately  $2.8
million and is being  amortized on a  straight-line  basis over  fifteen  years.
ClearOne was a privately held  developer and  manufacturer  of multimedia  group
communications  products.  On July 5, 2000, the  acquisition was consummated and
was accounted for under the purchase method of accounting. Operations since that
date are  included in the  consolidated  statement  of income for the year ended
June 30, 2001.

The following pro forma combined financial information reflects operations as if
the  acquisition  of ClearOne  had  occurred  as of July 1, 1999.  The pro forma
combined financial information is presented for illustrative purposes only, does


                                       40

<PAGE>

not purport to be indicative  of the  Company's  results of operations as of the
date  hereof and is not  indicative  necessarily  of what the  Company's  actual
results of operations  would have been had the acquisition  been  consummated on
such date.

<TABLE>
<CAPTION>

                                                                                  Fiscal year ended
                                                                                      June 30,
                                                                                      --------
                                                                                 2001          2000
                                                                                 ----          ----

<S>                                                                          <C>          <C>        
    Net revenue............................................................. $39,878,405  $28,617,198
                                                                             ===========  ===========
    Income from continuing operations.......................................  5,525,185    3,706,539
    Income from discontinued operations.....................................    737,280      426,951
    Gain on disposal of business segment....................................   1,220,024        --     
                                                                             -----------  -----------
    Net income.............................................................. $7,482,489   $ 4,133,490
                                                                             ==========   ===========

    Net income per share from continuing operations - basic................. $  0.64      $   0.45
    Net income per share from discontinued operations - basic...............    0.23          0.05
                                                                                ----          ----
    Net income per share - basic ........................................... $  0.87      $   0.50
                                                                                ====          ====

    Net income per share from continuing operations - diluted............... $  0.61      $   0.42
    Net income per share from discontinued operations - diluted.............    0.22          0.05
                                                                                ----          ----
    Net income per share - diluted.......................................... $  0.83      $   0.47
                                                                                ====          ====
</TABLE>


17.     Quarterly Results of Operations (Unaudited)

A summary of unaudited quarterly results of operations restated for discontinued
operations follows:

<TABLE>
<CAPTION>

                                                                       Fiscal 2001 Quarters Ended
                                                                       --------------------------
                                                          Sept. 30       Dec. 31        Mar. 31        June 30
                                                          --------       -------        -------        -------

<S>                                                     <C>            <C>            <C>            <C>        
Net sales ...........................................   $ 9,332,996    $ 9,680,383    $10,212,333    $10,652,693
Cost of goods sold ..................................    (3,765,553)    (3,971,158)    (4,327,987)    (4,438,364)
Operating expenses ..................................    (3,488,055)    (3,873,064)    (3,786,278)    (3,757,063)
Other income and expenses ...........................        64,079        118,727         69,277        121,064
                                                        -----------    -----------    -----------    -----------
Income from continuing operations before income taxes     2,143,467      1,954,888      2,167,345      2,578,330
Provision for income taxes ..........................      (799,513)      (752,477)      (808,313)      (958,542)
                                                        -----------    -----------    -----------    -----------
Income from continuing operations ...................     1,343,954      1,202,411      1,359,032      1,619,788
Income (loss) from discontinued operations ..........       185,724        337,451        241,981        (27,876)
Gain on disposal of business segment ................          --             --             --        1,220,024
                                                        -----------    -----------    -----------    -----------
Net income ..........................................   $ 1,529,678    $ 1,539,862    $ 1,601,013    $ 2,811,936
                                                        ===========    ===========    ===========    ===========

Basic earnings per share:
    Continuing operations ...........................   $      0.16    $      0.14    $      0.16    $      0.19
    Discontinued operations .........................          0.02           0.04           0.03           0.14
                                                        -----------    -----------    -----------    -----------
    Basic earnings per share ........................   $      0.18    $      0.18    $      0.19    $      0.33
                                                        ===========    ===========    ===========    ===========
Diluted earnings per share:
    Continuing operations ...........................   $      0.15    $      0.13    $      0.15    $      0.18
    Discontinued operations .........................          0.02           0.04           0.03           0.13
                                                        -----------    -----------    -----------    -----------
    Diluted earnings per share ......................   $      0.17    $      0.17    $      0.18    $      0.31
                                                        ===========    ===========    ===========    ===========
</TABLE>





                                       41

<PAGE>

<TABLE>
<CAPTION>

                                                                  Fiscal 2000 Quarters Ended
                                                                  --------------------------
                                                     Sept. 30       Dec. 31        Mar. 31        June 30
                                                     --------       -------        -------        -------

<S>                                               <C>            <C>            <C>            <C>        
Net sales .....................................   $ 6,196,827    $ 6,868,553    $ 7,097,675    $ 7,955,358
Cost of goods sold ............................    (2,414,831)    (2,753,666)    (2,668,379)    (3,171,447) 
Operating expenses ............................    (2,362,839)    (2,463,147)    (2,763,369)    (2,979,506)
Other income and expenses .....................        31,933         31,776         41,090         74,537
                                                  -----------    -----------    -----------    -----------
Income from continuing operations before income
  taxes .......................................     1,451,090      1,683,516      1,707,017      1,878,942
Provision for income taxes ....................      (540,175)      (628,145)      (637,286)      (613,217)
                                                  -----------    -----------    -----------    -----------
Income from continuing operations .............       910,915      1,055,371      1,069,731      1,265,725
Income (loss) from discontinued operations ....       169,481         (3,605)       170,524         90,191
                                                  -----------    -----------    -----------    -----------
Net income ....................................   $ 1,080,396    $ 1,051,766    $ 1,240,255    $ 1,355,916
                                                  ===========    ===========    ===========    ===========

Basic earnings (loss) per share:
    Continuing operations .....................   $      0.11    $      0.13    $      0.13    $      0.15
    Discontinued operations ...................          0.02          (0.00)          0.02           0.01
                                                  -----------    -----------    -----------    -----------
    Basic earnings per share ..................   $      0.13    $      0.13    $      0.15    $      0.16
                                                  ===========    ===========    ===========    ===========
Diluted earnings (loss) per share:
    Continuing operations .....................   $      0.10    $      0.12    $      0.12    $      0.14
    Discontinued operations ...................          0.02          (0.00)          0.02           0.01
                                                  -----------    -----------    -----------    -----------
    Diluted earnings per share ................   $      0.12    $      0.12    $      0.14    $      0.15
                                                  ===========    ===========    ===========    ===========
</TABLE>


18.    Stock Repurchase Program

During  April  2001,  the  Company  announced  that its board of  directors  had
approved a stock  repurchase  program to  purchase  up to 500,000  shares of the
Company's common stock over the next six months on the open market or in private
transactions.  During  the  fourth  quarter of fiscal  year  2001,  the  Company
repurchased  15,300  shares on the open market and  subsequently  retired  those
shares.



I
TEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

None exist.


                                       42

<PAGE>



                                    PART III



ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS

Directors and Executive Officers

Directors
---------

The following individuals are currently directors of the Company:

                                                                   Director
             Name                Age      Principal Occupation       Since
             ----                ---      --------------------       -----

      Edward Dallin Bagley        63      Attorney                    1994

      Brad R. Baldwin             46      Attorney and Commercial     1988
                                          Real Estate Agent

      Frances M. Flood            45      Chairman of the Board of    1998
                                          Directors, Chief
                                          Executive Officer and
                                          President of the Company

      Harry Spielberg             50      Director of Cosentini       2001
                                          Information Technologies'
                                          Audiovisual Group

      Randall J. Wichinski        48      Senior Tax Officer of       1999
                                          Ohio National Financial
                                          Services

      David Wiener                43      President and CEO of        2000
                                          SoundTube Entertainment,
                                          Inc.

Edward  Dallin  Bagley has been a Director  of the  Company  since  April  1994.
Previously,  Mr.  Bagley  served as a Director of the Company from April 1987 to
July 1991.  Mr. Bagley began  practicing  law in 1965. Mr. Bagley is currently a
director of Tunex International,  NESCO, Inc., and Buyers Online.com. Mr. Bagley
received a Juris Doctorate in 1965 from the University of Utah College of Law.

Brad R. Baldwin has been a Director of the Company  since 1988.  He currently is
an  attorney  licensed  in Utah and is engaged  in the  commercial  real  estate
business with Colliers  Commerce CRG in Salt Lake City.  From October 1, 1994 to
January 30, 2000, Mr. Baldwin served as President and Chief Executive Officer of
Bank One, Utah, a commercial  bank  headquartered  in Salt Lake City,  Utah. Mr.
Baldwin received a Juris Doctorate in 1980 from the University of Washington.

Frances M.  Flood has been a Director  of the  Company  since June of 1998.  Ms.
Flood  joined  the  Company  in  October  1996 as  Vice-President  of Sales  and
Marketing.  She was named President in December 1997, Chief Executive Officer in
June 1998 and  Chairman  of the Board in  November  2000.  Prior to joining  the
Company,  Ms. Flood was Area  Director of Sales and Marketing for Ernst & Young,
LLP,  an  international  accounting  and  consulting  firm.  Ms.  Flood has over
twenty-five   years   experience  in  sales,   marketing,   change   management,
international  business and finance. Ms. Flood is currently a director of Mining
Services  International  and SoundTube  Entertainment,  Inc. Ms. Flood graduated
from Thomas Edison State College with a B.S./B.A. degree in Banking and Finance.

Harry  Spielberg has been a Director of the Company  since  January 2001.  Since
January  1996,  Mr.  Spielberg  has been the Director of  Cosentini  Information
Technologies'  Audiovisual Group, a division of the consulting engineering firm,
Cosentini  Associates.  Previously,  Mr.  Spielberg  served  as Vice  President,
Engineering for Media  Facilities  Corp. and Barsky & Associates.  Mr. Spielberg
received a Bachelor of Art degree in Psychology from the State University of New
York.


                                       43

<PAGE>

Randall J.  Wichinski  has been a Director of the Company since June 1999. He is
currently  Senior Tax Officer of Ohio National  Financial  Services.  From April
1983 to  March  1999,  Mr.  Wichinski  was  employed  at Ernst & Young  LLP,  an
international  accounting and consulting firm,  serving as a Tax Partner for ten
years.  He  received  a  bachelor's  degree  in 1977 and a Masters  of  Business
Administration degree in 1982 from the University of Wisconsin-Madison.

David Wiener has been a Director of the Company since  January 2000.  Mr. Wiener
has served as President and CEO of SoundTube Entertainment, Inc., a manufacturer
of  innovative  commercial  and consumer  audio  speakers,  since  January 1995.
SoundTube  Entertainment  is a division  of David  Wiener  Ventures,  a product,
fashion and image development  company founded by Mr. Wiener in 1982. Mr. Wiener
received  his  bachelor's  degree  in  engineering,  aerodynamics  and art  from
Hampshire College in Amherst, Massachusetts.

Director Compensation and Committees
------------------------------------

All directors serve until their  successors are elected and have qualified.  The
Company paid each director  $650 per month for services  provided as a director.
Employee directors receive no additional compensation for serving on the Board.

The  Board  of  Directors  has  two  committees:   the  Audit  and  Compensation
Committees.  The Audit  Committee is  currently  composed of Mr.  Edward  Dallin
Bagley, Mr. Brad R. Baldwin,  Mr. Harry Spielberg,  Mr. Randall J. Wichinski and
Mr. David Wiener. The Compensation Committee is currently composed of Mr. Edward
Dallin  Bagley,  Mr.  Brad R.  Baldwin,  Mr.  Harry  Spielberg,  Mr.  Randall J.
Wichinski  and Mr. David  Wiener.  The Audit  Committee is  authorized to review
proposals  of the  Company's  auditors  regarding  annual  audits and  quarterly
reviews, recommend the engagement or discharge of the Company's auditors, review
recommendations  of  such  auditors  concerning  accounting  principles  and the
adequacy of internal controls and accounting procedures and practices, to review
the scope of the annual audit and  quarterly  reviews,  to approve or disapprove
each  professional  service or type of  service  other  than  standard  auditing
services to be provided by the  auditors,  and to review and discuss the audited
financial  statements  with  the  auditors.  The  Compensation  Committee  makes
recommendations  to  the  Board  of  Directors  regarding  remuneration  of  the
executive  officers and directors of the Company and  administers  the incentive
plans for directors, officers and key employees.

Meetings of the Board of Directors and Committees
-------------------------------------------------

The Board of Directors held six meetings  during the last fiscal year. The Audit
Committee  held  four  formal   meetings   during  the  last  fiscal  year.  The
Compensation Committee held four formal meetings during the last fiscal year.

Executive Officers
------------------

The executive officers of the Company as of June 30, 2001 are as follows:

     Name              Age    Position
     ----              ---    --------

Frances M. Flood        45    President and Chief Executive Officer
Tracy Bathurst          37    Vice President of Technology - Research
Curtis Hewitson         37    Vice President of Human Resources
Eugene W. Kuntz, Jr.    38    Vice President of Technology - Development
Susie S. Strohm         41    Vice President of Finance and Chief Financial
                              Officer
James A. Valeo          40    Vice President of Strategic Operations and General
                              Counsel

For the biography of Ms. Flood, see "Directors."

Tracy  Bathurst was named Vice President of Technology - Research in April 2000.
He has been with  Gentner  since  September  1988,  serving in various  roles in
engineering  and  engineering  management.  He  is  responsible  for  technology
development  for the  organization.  Prior to joining the Company,  Mr. Bathurst
worked in the cable television and  telecommunications  industries for over five
years.  Mr.  Bathurst  holds a Bachelor  of Science  degree from  Southern  Utah
University.

Curtis  Hewitson  was  named  Vice  President  of Human  Resources  for  Gentner
Communications  in November  1998. He has been with Gentner since  December 1994
serving in Human Resources. He is responsible for all aspects of Human Resources
and office administration.  Prior to joining the Company, Mr. Hewitson worked in
the telecommunications industry for nine years. In 1989, Mr. Hewitson received a
Bachelor of Science degree from the University of Utah.


                                       44

<PAGE>

Eugene W. Kuntz, Jr. has been with Gentner  Communications  since November 1999.
Mr. Kuntz was named Vice  President of Technology - Development in January 2001.
He is responsible for all  engineering  development  projects and  manufacturing
activities  for the  organization.  From 1987 to November  1999, Mr. Kuntz was a
manager  of  research  and  development  at  Computer  Sciences  Corporation  in
Clearfield,  Utah.  Mr. Kuntz holds a Bachelor of Science  degree in  Electrical
Engineering   from  Montana   State   University   and  a  Masters  of  Business
Administration degree from Utah State University.

Susie S.  Strohm  became  Vice  President  of  Finance in 1997 and was named CFO
during 1998. In February 1996, Ms. Strohm joined the Company as its  Controller.
She is responsible for all the Company's accounting, financial and tax planning,
financial and  management  reporting,  and  Securities  and Exchange  Commission
filings.  Prior to  joining  the  Company,  Ms.  Strohm was the  Controller  for
Newspaper  Agency  Corporation  in Salt Lake City,  Utah. She graduated from the
University of Utah with a Bachelor of Science degree in Accounting, and received
her Masters of Business Administration degree from Westminster College.

James A. Valeo joined Gentner  Communications as its Vice President of Strategic
Operations  and General  Counsel in October 2000.  Prior to joining the Company,
from 1996 to 2000 he practiced  law with the law firm of Jones Waldo  Holbrook &
McDonough  in Salt Lake  City,  Utah,  focusing  on  mergers  and  acquisitions,
corporate finance,  and general corporate law. Earlier, Mr. Valeo worked for two
law firms in Washington,  D.C. Mr. Valeo received a Bachelor of Arts degree from
New York University in 1982, and a Juris Doctorate degree from Boston University
in 1986.

Compliance with Section 16(a) of the Securities Exchange Act

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's directors and executive officers, and persons who own more than 10% of
a  registered  class  of the  Company's  equity  securities  to  file  with  the
Securities and Exchange  Commission  initial reports of ownership and reports of
changes of ownership of equity  securities of the Company.  Officers,  directors
and greater  than 10%  shareholders  are  required  to furnish the Company  with
copies of all Section 16(a) forms they file.

Based solely on a review of the copies of such reports  furnished to the Company
and written  representations  that no other reports were  required,  the persons
described above have filed all applicable Section 16(a) requirements  during the
preceding  fiscal year,  except that the  following  Forms were filed late:  Mr.
Valeo's  Form 4 relating to a grant of stock  options in  November  2000 and Mr.
Bagley's Form 4 relating to an open market purchase of stock in October 2000.

Subsequent Event

On August 23, 2001,  Randy  Wichinski  joined the Company as its Chief Financial
Officer.  Mr.  Wichinski  will  continue  to  serve on the  Board of  Directors.
Effective on August 23, 2001,  Susie Strohm will continue as the Company's  Vice
President  of Finance  and, in  addition,  will assume the  responsibilities  of
Controller.


ITEM 11.  EXECUTIVE COMPENSATION

Summary Compensation

The  following  table sets forth,  for each of the  Company's  last three fiscal
years,  the  compensation of the Chief Executive  Officer of the Company and the
other previously named executive  officers of the Company whose total salary and
bonus for the year ended June 30, 2001 exceeded $100,000,  for services rendered
in all capacities to the Company during such fiscal years.



                                       45

<PAGE>


<TABLE>

                           SUMMARY COMPENSATION TABLE
<CAPTION>


                                         Annual Compensation       Long-Term Compensation
                                         -------------------   ---------------------------------
                                                                     Awards         Payouts
                                                               ------------------ --------------
                                                                        Securities
                                                    Other      Restric-   Under-            All
                                                   Annual        ted      lying           Other
                                                   Compen-      Stock    Options   LTIP   Compen-
Name and Position      Year    Salary      Bonus   sation       Awards    /SARS   Payouts sation(1)
-----------------      ----    ------      -----   ------       ------    -----   ------- -------

<S>                    <C>   <C>         <C>         <C>         <C>     <C>       <C>     <C>   
Frances M. Flood      Fiscal
CEO & President        2001  $160,000    $58,400     None        None     None     None    $2,056

                      Fiscal
                       2000  $160,333    $73,700     None        None    50,000    None    $1,802

                      Fiscal
                       1999  $104,912    $66,064     None        None     None     None    $2,022

Tracy Bathurst        Fiscal
Vice President(2)      2001  $100,000    $18,500     None        None     None     None    $1,850
        
                      Fiscal
                       2000   $93,073     $5,000     None        None    50,000    None    $1,765

Curtis Hewitson       Fiscal
Vice President         2001   $80,002    $13,600     None        None     None     None    $2,179

                      Fiscal
                       2000   $73,574    $31,400     None        None    50,000    None    $1,841

                      Fiscal
                       1999   $60,000    $10,278     None        None     None     None    $1,800

Eugene W. Kuntz, Jr.  Fiscal
Vice President(3)      2001   $92,502     $9,500     None        None    30,000    None     None

Susie Strohm          Fiscal
CFO & Vice President   2001  $110,000    $37,000     None        None     None     None    $2,316

                      Fiscal
                       2000  $100,167    $55,538     None        None    50,000    None    $1,976

                      Fiscal
                       1999   $72,716    $44,414     None        None     None     None    $1,721
</TABLE>


1  These   amounts   reflect   the   Company's  contributions  to  the  deferred
   compensation plan (401(k) plan).
2  Mr. Bathurst was not an executive officer until fiscal year 2000.
3  Mr. Kuntz was not an executive officer until fiscal year 2001.


Stock Options/SARS

The  following  table  sets  forth the stock  option and SAR grants to the named
executive officers for the last fiscal year:



                                       46

<PAGE>


              OPTION/SAR GRANTS IN FISCAL YEAR ENDED JUNE 30, 2001
                               (INDIVIDUAL GRANTS)

                          Number of       Percent of
                         Securities      Total Options
                         Underlying      /SARs Granted    Exercise
                        Options/SARs     to Employees      or Base    Expiration
Name and Position        Granted (#)    in Fiscal Year  Price ($/Sh)     Date
-----------------        -----------    --------------  ------------     ----

Eugene W. Kuntz, Jr.       30,000              6%          $12.50     12/01/2010

The  options  will vest over five years  based on  earnings  per share goals but
cliff vest after six years if earnings per share goals are not met.

Aggregated Stock Option/SAR Exercises

The following  table sets forth the aggregated  stock options and SARs exercised
by  the  named  executive  officers  in  fiscal  2001  and  the  year-end  value
in-the-money of unexercised options and SARs:

<TABLE>

       AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR ENDED JUNE 30, 2001
                     AND FISCAL YEAR-END OPTION/SAR VALUES
<CAPTION>


                                                      Number of
                                                      Securities              Value of
                                                      Underlying             Unexercised
                                                      Unexercised           In-The-Money
                                                     Options/SARs           Options/SARs
                                                     at FY-End (#)          at FY-End ($)
                         Shares
                        Acquired         Value       Exercisable/           Exercisable/
Name and Position    on Exercise (#) Realized ($)    Unexercisable          Unexercisable
-----------------    --------------- ------------   ---------------     -------------------

<S>                         <C>           <C>       <C>                 <C>             
Frances M. Flood            0             $0        176,334/146,000     $1,655,344/$828,750

Tracy Bathurst              0             $0         19,750/80,250       $174,140/$182,085

Curtis Hewitson             0             $0         35,750/99,250       $294,619/$399,069

Eugene W. Kuntz, Jr.        0             $0          2,500/57,500              $0/$0

Susie Strohm                0             $0        99,464/119,000       $902,607/$564,724
</TABLE>




ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain  information  regarding  ownership of the
Common  Stock of the Company as of September 1, 2001 by (i) each person known to
the Company to be the beneficial owner of more than 5% of the outstanding Common
Stock of the  Company,  (ii)  each  director  of the  Company,  (iii)  the Chief
Executive  Officer and each other executive  officer of the Company whose salary
and bonus for the year  ended  June 30,  2001  exceeded  $100,000,  and (iv) all
executive officers and directors of the Company as a group. Each person has sole
investment  and voting  power with respect to the shares  indicated,  subject to
community property laws where applicable,  except as otherwise  indicated below.
The address for each beneficial  owner is in care of the Company,  1825 Research
Way, Salt Lake City, Utah 84119.



                                       47

<PAGE>

                                              Amount of             Percentage
        Names of Beneficial Owners      Beneficial Ownership(1)     of Class(2)
        --------------------------      ---------------------        ---------

        Edward Dallin Bagley                 1,738,668(3)              20.2%
        Frances M. Flood                       296,913(4)              3.4%
        Susie Strohm                           169,729(5)              2.0%
        Brad R. Baldwin                        102,666(6)              1.2%
        Curtis Hewitson                         70,224(7)              0.8%
        Tracy Bathurst                          39,730(8)              0.5%
        David J. Wiener                         18,500(9)              0.2%
        Randall J. Wichinski                    18,200(10)             0.2%
        Eugene W. Kuntz, Jr.                    15,813(11)             0.2%
        Harry Spielberg                          5,000(12)             0.1%

        Directors and Executive Officers
        as a Group (11 people)              2,500,5133(13)             29.0%

1    For each shareholder, the calculation of percentage of beneficial ownership
     is based on 8,612,978 shares of Common Stock outstanding as of September 1,
     2001 and shares of Common Stock subject to options held by the  shareholder
     that are currently  exercisable or exercisable  within 60 days of September
     1, 2001.

2    The percentage ownership for any person is calculated assuming that all the
     stock  that  could be  acquired  by that  person  within  60 days by option
     exercise or otherwise, is in fact outstanding and that no other stockholder
     has exercised a similar right to acquire additional shares.

3    Director.  Includes:  1,321,285 shares owned directly;  options to purchase
     5,000 shares that are exercisable within 60 days; 100,000 shares owned by a
     corporation  controlled by Mr. Bagley; 50 shares owned by Mr. Bagley's wife
     as custodian for one of Mr. Bagley's daughters;  and 312,333 shares held in
     the Bagley  Family  Revocable  Trust,  of which Mr.  Bagley is  co-trustee.
     Excludes: 50 shares owned by another of Mr. Bagley's daughters who is not a
     member of his household.  Mr. Bagley disclaims beneficial ownership of such
     50 shares  and fifty  percent  of the  shares  owned by the  Bagley  Family
     Revocable Trust.

4    President,  CEO and  Director.  Includes:  54,579  shares  owned  directly;
     options to purchase 242,334 shares that are exercisable within 60 days.

5    Vice President and CFO. Includes: 31,265 shares owned directly;  options to
     purchase 138,464 shares that are exercisable within 60 days.

6    Director.  Includes:  67,666  shares  owned  directly;  options to purchase
     30,000 shares that are  exercisable  within 60 days; and 5,000 shares owned
     by Mr. Baldwin's wife.

7    Vice President.  Includes: 6,724 shares owned directly; options to purchase
     63,500 shares that are exercisable within 60 days.

8    Vice President.  Includes:  730 shares owned directly;  options to purchase
     39,000 shares that are exercisable within 60 days.

9    Director. Includes: 6,000 shares owned directly; options to purchase 12,500
     shares that are exercisable within 60 days.

10   Director. Includes: 5,700 shares owned directly; options to purchase 12,500
     shares that are exercisable within 60 days.

11   Vice President.  Includes:  813 shares owned directly;  options to purchase
     15,000 shares that are exercisable within 60 days.

12   Director.  Includes:  0 shares owned  directly;  options to purchase  5,000
     shares that are exercisable within 60 days.

13   Includes: an additional 70 shares owned directly by one additional officer;
     and options to purchase 25,000 shares that are  exercisable  within 60 days
     by this officer.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Gentner  Research Ltd.  ("GRL"),  is a related  limited  partnership,  formed on
August  1985,  in which the  Company is the general  partner  and Edward  Dallin
Bagley and, among other unrelated  parties,  certain members of his family,  are
the limited  partners.  In 1987 and 1988,  GRL sold to the  Company  proprietary
interests in the VRC-1000  (now  VRC-2000),  VRC-1000  Modem (now  VRC-2000) and
Digital Hybrid in exchange for royalty payments.  Royalty expense  recognized by
the  Company  for the years  ending  June 30,  2001,  2000 and 1999 was  $3,600,
$16,000 and $39,900,  respectively. GRL was dissolved on February 20, 2001 after
consent to  dissolution  and  liquidation  was  received  by a  majority  of the


                                       48

<PAGE>

partners of GRL. The product line, which incorporated the proprietary  interest,
was deemed no longer integral to the product segment of the Company's  business.
The following directors and/or executive officers and members of their immediate
families have purchased the following interests in GRL:

               Edward Dallin Bagley (Director)...................  10.42%
               The Bagley Family Revocable Trust.................   5.21%
               Robert O. Baldwin (father of Brad Baldwin)........  10.42%

The  Company  has also  formed a second  related  limited  partnership,  Gentner
Research II, Ltd. ("GR2L"),  also in which it acts as general partner. In fiscal
year 1997,  GR2L sold  proprietary  interest  in the  GSC3000 to the  Company in
exchange for royalty  payments.  Royalty  expense  related to product sales with
GR2L for the years ending June 30, 2001, 2000 and 1999 was $90,793, $106,084 and
$82,989.  GR2L was dissolved on May 21, 2001 after the completion of the sale of
the remote control portion of the RFM/Broadcast division to Burk Technology. The
Company paid $178,516 to GR2L in 2001,  representing  its royalty on the gain on
the sale of the remote  control  product  line.  This  amount is included in the
determination  of gain  on  sale  in the  statement  of  income.  The  following
directors and/or executive officers and members of their immediate families have
purchased the following interests in GR2L:

               Brad R. Baldwin (Director)........................   3.19%
               Robert O. Baldwin (father of Brad Baldwin)........   9.58%
               Edward D. Bagley (Director).......................   6.39%
               The Bagley Family Revocable Trust.................   6.39%



ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEUDLES, AND REPORTS ON FORM 8-K

Schedules not listed have been omitted  because the  information  required to be
set forth therein is not  applicable or is shown in the financial  statements or
notes thereto.

Exhibits Required by Item 601 of Regulation S-K

EXHIBIT
NUMBER            DESCRIPTION
-----------------------------

3.1 1,2     Articles of Incorporation  and all amendments  thereto through March
            1, 1988.  (Page 10)  (incorporated  by reference  from the Company's
            Annual Report on Form 10-K for the fiscal year ended June 30, 1989)
3.2 1,2     Amendment to Articles of  Incorporation,  dated July 1, 1991.  (Page
            65)  (incorporated  by reference from the Company's Annual Report on
            Form 10-K for the fiscal year ended June 30, 1991)
3.3 1,2     Bylaws,  as amended on August 24, 1993.  (Page 16)  (incorporated by
            reference  from the  Company's  Annual Report on Form 10-KSB for the
            fiscal year ended June 30, 1993)
10.1 1,2    VRC-1000  Purchase  Agreement between Gentner  Engineering  Company,
            Inc. (a former  subsidiary  of the Company which was merged into the
            Company) and Gentner Research Ltd., dated January 1, 1987. (Page 71)
            (incorporated  by reference from the Company's Annual Report on Form
            10-K for the fiscal year ended June 30, 1989)
10.2 1,2    Digital Hybrid Purchase Agreement between Gentner Engineering,  Inc.
            and Gentner  Research,  Ltd.,  dated  September  8, 1988.  (Page 74)
            (incorporated  by reference from the Company's Annual Report on Form
            10-K for the fiscal year ended June 30, 1991)
10.3 1,2,3  1990   Incentive   Plan,  as  amended   August  7,  1996  (Page  40)
            (incorporated  by reference from the Company's Annual Report on Form
            10-KSB for the fiscal year ended June 30, 1996)
10.4 1,2,3  1997  Employee  Stock  Purchase  Plan  (Page  37)  (incorporated  by
            reference  from the  Company's  Annual Report on Form 10-KSB for the
            fiscal year ended June 30, 1997)
10.5 1,2    Lease between Company and Valley American  Investment  Company (Page
            71)  (incorporated  by reference from the Company's Annual Report on
            Form 10-KSB for the fiscal year ended June 30, 1997)
10.6 3      1998 Stock Option Plan and Form of Grant  (incorporated by reference
            from the Company's  Annual Report on Form 10-KSB for the fiscal year
            ended June 30, 1998)
10.7        Promissory Note, Loan Agreement,  and Commercial  Security Agreement
            between Company and Bank One, Utah, N.A. dated as of January 5, 1999
            (original aggregate amount of $5,000,000) (Page 15) (incorporated by
            reference  from the  Company's  Form  10-QSB for the  quarter  ended
            December 31, 1998)


                                       49

<PAGE>

10.8        Asset Purchase  Agreement and related  documents between the Company
            and  ClearOne,  Inc.  dated  as of July  5,  2000  (incorporated  by
            reference from the Company's Form 8-K/A filed on September 12, 2000)
10.9        Third  Addendum  to  Lease  between   Company  and  Valley  American
            Investment  Company dated as of September 18, 2000  (incorporated by
            reference  from  the  Company's  Form  10-Q  for the  quarter  ended
            December 31, 2000)
10.10       Modification  Agreement to  Promissory  Note,  Loan  Agreement,  and
            Commercial  Security  Agreement  between Company and Bank One, Utah,
            N.A.  dated as of December 22, 2000  (original  aggregate  amount of
            $5,000,000)  (incorporated by reference from the Company's Form 10-Q
            for the quarter ended December 31, 2000)
10.11       Asset Purchase  Agreement and related  documents between the Company
            and Burk  Technology,  dated as of April 12, 2001  (incorporated  by
            reference from the Company's Form 8-K filed on April 26, 2001)

The following documents are filed as exhibits to this Form 10-K.

EXHIBIT
NUMBER            DESCRIPTION
------            -----------


21                Subsidiary of the Company
23                Consent of Ernst & Young LLP, Independent Auditors


1    Denotes exhibits specifically incorporated into this Form 10-K by reference
     to other  filings  pursuant  to the  provisions  of Rule  12B-32  under the
     Securities Exchange Act of 1934.
2    Denotes  exhibits   specifically   incorporated  into  this  Form  10-K  by
     reference,  pursuant to Regulation S-K, Item 10(f)(2).  These documents are
     located  under  File No.  0-17219  and are  located at the  Securities  and
     Exchange  Commission,  Public  Reference  Branch,  450 South 5th St., N.W.,
     Washington, DC 20549.
3    Identifies management or compensatory plans, contracts or arrangements.


Reports on Form 8-K

A report  on Form 8-K was  filed on April  26,  2001,  to  announce  the sale of
substantially   all  of  the  assets  of  the  remote  control  portion  of  the
RFM/Broadcast segment to Burk Technology.



                                       50

<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                       GENTNER COMMUNICATIONS CORPORATION


September 14, 2001                     By:    /s/ Frances M. Flood 
                                              ---------------------
                                       Frances M. Flood
                                       Chief Executive Officer

                                POWER OF ATTORNEY

Know all men by these presents,  that each person whose signature  appears below
constitutes and appoints each of Frances M. Flood and Susie Strohm,  jointly and
severally,  his true and lawful  attorney in fact and agent,  with full power of
substitution  for  him  and in his  name,  placed  and  stead,  in any  and  all
capacities,  to sign any or all  amendments  to this  report on Form 10-K and to
file the same,  with all  exhibits  thereto and other  documents  in  connection
therewith  with the  Securities and Exchange  Commission,  hereby  ratifying and
confirming  all that each said attorney in fact or his substitute or substitutes
may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.


     Signature                      Title                        Date
     ---------                      -----                        ----

 /s/ Frances M. Flood      Director, President and        September 14, 2001
---------------------      Chief Executive Officer
Frances M. Flood        (Principal Executive Officer)

 /s/ Susie Strohm         Vice President - Finance        September 14, 2001
-----------------         (Principal Financial and
Susie Strohm                 Accounting Officer)

/s/ Edward Dallin Bagley          Director                September 14, 2001
------------------------
Edward Dallin Bagley

/s/ Brad R. Baldwin               Director                 September 7, 2001
-------------------
Brad R. Baldwin

/s/ Harry Spielberg               Director                September 14, 2001
-------------------
Harry Spielberg

/s/ David Wiener                  Director                September 14, 2001
----------------
David Wiener

/s/ Randall J. Wichinski          Director                September 10, 2001
------------------------
Randall J. Wichinski



                                       51




                                   EXHIBIT 21

                            SUBSIDIARY OF THE COMPANY

During October 2000, the Company established Gentner Communications EuMEA GmbH,
a wholly owned subsidiary headquartered in Nuremberg, Germany. The subsidiary
began operations during December 2000.

During March 2001,  the Company  established  Gentner  Ventures,  Inc., a wholly
owned  subsidiary  headquartered  in Salt Lake City,  Utah.  The  subsidiary was
established to facilitate future acquisitions.

During June 2001, the Company and Gentner Ventures, Inc. formed Gentner Holdings
LLC, a Utah limited liability corporation, in order to create a better business
structure for potential future acquisitions.





                                   EXHIBIT 23

               Consent of Ernst & Young LLP, Independent Auditors




                                      

<PAGE>



                         Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements
(Form S-8) pertaining to the 1998 Stock Option Plan, 1997 Employee Stock
Purchase Plan, and the 1990 Incentive Plan of Gentner Communications Corporation
of our report dated July 27, 2001, with respect to the financial statements of
Gentner Communications Corporation included in the Annual Report (Form 10-K) for
the year ended June 30, 2001.

                                                   /s/ Ernst & Young LLP



Salt Lake City, Utah
September 25, 2001