8-K

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


        Date of Report (Date of earliest event reported)   SEPTEMBER 19, 2006
                                                         -----------------------

                               EMRISE CORPORATION
             (Exact name of registrant as specified in its charter)

          DELAWARE                    001-10346                  77-0226211
- ----------------------------    ------------------------     -------------------
(State or other jurisdiction    (Commission File Number)        (IRS Employer
     of incorporation)                                       Identification No.)


      9485 HAVEN AVENUE, SUITE 100
      RANCHO CUCAMONGA, CALIFORNIA                              91730
- ----------------------------------------               -------------------------
(Address of principal executive offices)                      (Zip Code)


       Registrant's telephone number, including area code: (909) 987-9220


          (Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (SEE General Instruction A.2. below):

|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)

|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))

|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))










ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

(1)  CHANGES TO EXISTING CREDIT FACILITY

     THIRD AMENDMENT TO CREDIT AGREEMENT ENTERED INTO AS OF SEPTEMBER 1, 2006 BY
     AND BETWEEN EMRISE CORPORATION AND WELLS FARGO BANK, N.A.

         On September 19, 2006, Emrise Corporation (the "Company") entered into
a Third Amendment to Credit Agreement entered into as of September 1, 2006 with
Wells Fargo Bank, N.A. (the "Amendment"). The Amendment provides for the waiver
by Wells Fargo Bank, N.A. of certain violations of financial covenants in the
Company's existing credit facility with Wells Fargo Bank, N.A. The Amendment
also provides for the reduction in the amount of the credit facility from $9.0
million to $1.5 million and limits borrowings to 80% of eligible accounts
receivable. Under the Amendment, the Company also remade all representations and
warranties, and reaffirmed all covenants, under the initial documents for the
credit facility. The Company's credit facility, including the materials terms
and conditions thereof, as initially in effect, is described below.

     REVOLVING LINE OF CREDIT NOTE DATED SEPTEMBER 1, 2006 IN FAVOR OF WELLS
     FARGO BANK

         On September 19, 2006, the Company executed a Revolving Line of Credit
Note dated September 1, 2006 in favor of Wells Fargo Bank, N.A. (the "Note").
The Note is substantially the same as the note initially executed in connection
with the Company's credit facility, except that the Note is in the amount of
$1.5 million, whereas the initial note was in the amount of $9.0 million, and
the maturity date of the Note is October 1, 2006, whereas the initial note
matured on September 1, 2006.

(2)  INITIAL TERM AND CONDITIONS OF CREDIT FACILITY

         On August 25, 2005, the Company, together with two subsidiaries, CXR
Telcom Corporation and Emrise Electronics Corporation, acting as guarantors,
obtained a credit facility from Wells Fargo Bank, N.A. for the Company's
domestic operations. As guarantors, each of CXR Telcom Corporation and Emrise
Electronics Corporation is jointly and severally liable with the Company for up
to $9,000,000. This facility is to be effective through September 1, 2006 and
replaced the previous credit facility the Company had with Wells Fargo Bank,
N.A. The previous facility was to expire July 1, 2005, but was informally
extended for two months. The new credit facility is subject to an unused
commitment fee equal to 0.25% per annum, payable quarterly based on the average
daily unused amount of the line of credit described in the following paragraph.

         The credit facility provides a $9,000,000 revolving line of credit
secured by accounts receivable, other rights to payment and general intangibles,
inventories and equipment. However, borrowings may not exceed $2,000,000 until
the bank has completed a collateral examination. Borrowings do not need to be
supported by specific receivables or inventory balances unless aggregate
borrowings under the line of credit exceed $2,000,000 at any time (a "conversion
event"). If a conversion event occurs, the line of credit will convert into a
formula-based line of credit until the borrowings are equal to or less than
$2,000,000. The formula generally provides that outstanding borrowings under the
line of credit may not exceed an aggregate of 80% of eligible accounts
receivable, plus 30% of the value of eligible finished goods inventory. The
interest rate is variable and is adjusted monthly based on the prime rate. The
prime rate at August 29, 2005 was 6.50%. Interest is payable monthly commencing
October 1, 2005. The outstanding principal balance will be due September 1,
2006.


                                      -2-




         The credit facility is subject to various financial covenants. The
minimum debt service coverage ratio of the Company must be not less than
1.25:1.00 on a rolling four-quarter basis. "Debt service coverage ratio" is
defined as net profit after taxes plus depreciation, plus or minus net
distributions divided by the sum of the current portion of long term debt plus
capitalized lease payments. The current ratio of the Company must be not less
than 1.50:1.00, determined as of each fiscal quarter end. "Current ratio" is
defined as total current assets divided by total current liabilities. Net profit
after taxes of the Company must be not less than $500,000, determined as of each
fiscal quarter end on a rolling four quarter basis; provided that the Company
may not sustain net loss after tax in any two consecutive fiscal quarters. Total
liabilities divided by tangible net worth of the Company must not at any time be
greater than 1.25:1.00, determined as of each fiscal quarter end. Tangible net
worth of the Company must not at any time be less than $14,250,000 measured at
the end of each quarter. "Total liabilities" is defined as current liabilities
plus non-current liabilities, minus subordinated debt. "Tangible net worth" is
defined as stockholders' equity plus subordinated debt, minus intangible assets.

         In the event of a default and continuation of a default, Wells Fargo
may accelerate the payment of the principal balance requiring the Company to pay
the entire indebtedness outstanding on that date. From and after the maturity
date of the note, or any earlier date that all principal owing under the note
becomes due and payable by acceleration or otherwise, the outstanding principal
balance will bear interest until paid in full at an increased rate per annum
equal to 4% above the rate of interest in effect from time to time under the
note. Events of default that would give rise to automatic acceleration of
payment of the principal balance and an increase in annual interest rate on
unpaid principal balance include:

     o    A failure to pay principal, interest or fees;
     o    Any financial statement or certificate furnished to Wells Fargo is
          incorrect, false or misleading;
     o    Inaccuracy of representations and warranties;
     o    Breach of covenant (other than those described in the preceding bullet
          points, and subject to a 20-day cure period if curable);
     o    Default under any other contract or instrument by which the Company or
          a guarantor have incurred any debt or other liability to any person or
          entity, including Wells Fargo;
     o    The filing of a notice of judgment lien against the Company or any
          guarantor; or the recording of any abstract of judgment against the
          Company or any guarantor in any county in which the Company or any
          guarantor has an interest in real property; or the service of notice
          of levy and/or write of attachment or execution against the assets of
          the Company or any guarantor; or the entry of a judgment against the
          Company or any guarantor;
     o    The Company or a guarantor shall become insolvent, have a receiver
          appointed, or generally fail to pay its debts as they become due, or
          make a general assignment for the benefit of its creditors;


                                      -3-




     o    Filing of a voluntary petition in bankruptcy, or filing an answer in
          an involuntary petition in bankruptcy admitting the jurisdiction of
          the court, or being adjudicated bankrupt;
     o    Wells Fargo in good faith believes a condition or event impairs, or is
          substantially likely to impair performance or payment by the Company;
     o    Death, incapacity, dissolution or liquidation of borrower or any
          guarantor; and
     o    Any change in ownership of an aggregate of 25% or more of the common
          stock of the Company.

ITEM 1.02 TERMINATION OF A MATERIAL DEFINITIVE AGREEMENT

         On September 19, 2006, the Company entered into the Amendment and
executed the Note and thereby terminated the initial note entered into by the
Company in favor of Wells Fargo Bank, N.A. in connection with the credit
facility. The disclosures contained in Item 1.01 of this Current Report on Form
8-K are incorporated herein by this reference.

ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
          OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.

         The disclosures contained in Item 1.01 of this Current Report on Form
8-K are incorporated herein by this reference.

ITEM 8.01 OTHER EVENTS.

         The Company is in the process of negotiating a new credit facility with
Wells Fargo Business Credit. The Company believes that the new credit facility,
which is expected to be a 3-year credit facility and provide at least $5 million
of revolving credit, will be sufficient to meet its domestic financing needs.
The Company believes that the new credit facility will provide for a higher
advance rate on both receivables and inventories than its current Wells Fargo
Bank credit facility and will provide the Company with greater flexibility and
financing for domestic acquisitions when complemented with financing support
through the Company's foreign credit sources in Europe. The Company cannot,
however, provide any assurances that it will be successful in negotiating or
entering into a new credit facility.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

         (a)   Financial Statements of Businesses Acquired.

               None.

         (b)   Pro Forma Financial Information.

               None.

         (c)   Exhibits.

               Number    Description
               ------    -----------

               10.1      Third Amendment to Credit Agreement entered into as of
                         September 1, 2006 by and between Emrise Corporation and
                         Wells Fargo Bank, N.A.

               10.2      Revolving Line of Credit Note dated September 1, 2006
                         in favor of Wells Fargo Bank


                                      -4-






                                    SIGNATURE

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



Date:  September 25, 2006                   EMRISE CORPORATION


                                            By: /S/ CARMINE T. OLIVA
                                                --------------------------------
                                                Carmine T. Oliva
                                                Chief Executive Officer



                                      -6-






                         EXHIBITS FILED WITH THIS REPORT

Number         Description
- ------         -----------

10.1           Third Amendment to Credit Agreement entered into as of September
               1, 2006 by and between Emrise Corporation and Wells Fargo Bank,
               N.A.

10.2           Revolving Line of Credit Note dated September 1, 2006 in favor of
               Wells Fargo Bank

EX-10.1

                                                                    Exhibit 10.1


                      THIRD AMENDMENT TO CREDIT AGREEMENT

      THIS AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into as
of September 1, 2006, by and between EMRISE CORPORATION, a Delaware corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

      WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Bank dated as
of September 1, 2005, as amended from time to time ("Credit Agreement");

      WHEREAS, as evidenced by Borrower's financial statements for the quarter
ending June 30, 2006, Borrower has violated Section 4.9(d) and Section 4.9(e)
of the Credit Agreement (the "Existing Violations");

      WHEREAS, the Line of Credit matures September 1, 2006;

      WHEREAS, Borrower has requested a short-term extension of the maturity
date of the Line of Credit during which time Borrower intends to seek
alternative financing;

      WHEREAS, Borrower has requested that Bank waive the Existing Violations;

      WHEREAS, Bank is willing to waive the Existing Violations and grant
Borrower a short-term extension of the Line of Credit, subject to the terms and
conditions set forth herein;

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree that the Credit
Agreement shall be amended as follows:

      1.    Section 1.1. is hereby amended and restated in its entirety, to read
            as follows:

                  "SECTION 1.1.    LINE OF CREDIT.

                  (a)   LINE OF CREDIT. Subject to the terms and conditions of
            this Agreement, Bank hereby agrees to make advances to Borrower from
            time to time up to and including October 1, 2006, not to exceed at
            any time the aggregate principal amount of One Million Five Hundred
            Thousand Dollars ($1,500,000.00) ("Line of Credit"), the proceeds of
            which shall be used to finance Borrower's working capital
            requirements and the working capital requirements of two of
            Borrower's subsidiaries, RO Associates, Incorporated and CXR Larus
            Corporation. Borrower's obligation to repay advances under the Line
            of Credit shall be evidenced by a promissory note dated as of
            September 1, 2006 ("Line of Credit Note"), all terms of which are
            incorporated herein by this reference.

                  (b)   LIMITATION ON BORROWINGS. Outstanding borrowings under
            the Line of Credit, to a maximum of the principal amount set

                                      -1-





            forth above, shall not at any time exceed an aggregate of eighty
            percent (80%) of the eligible accounts receivable of Borrower, RO
            Associates, Incorporated and CXR Larus Corporation (collectively,
            the "Borrowing Base Parties"). All of the foregoing shall be
            determined by Bank upon receipt and review of all collateral reports
            required hereunder and such other documents and collateral
            information as Bank may from time to time require. Borrower
            acknowledges that said borrowing base was established by Bank with
            the understanding that, among other items, the aggregate of all
            returns, rebates, discounts, credits and allowances for the
            immediately preceding three (3) months at all times shall be less
            than five percent (5%) of the Borrowing Base Parties' gross sales
            for said period. If such dilution of the Borrowing Base
            Parties' accounts for the immediately preceding three (3) months at
            any time exceeds five percent (5%) of the Borrowing Base Parties'
            gross sales for said period, or if there at any time exists any
            other matters, events, conditions or contingencies which Bank
            reasonably believes may affect payment of any portion of any of the
            Borrowing Base Parties' accounts, Bank, in its sole discretion, may
            reduce the foregoing advance rate against eligible accounts
            receivable to a percentage appropriate to reflect such additional
            dilution and/or establish additional reserves against the Borrowing
            Base Parties' eligible accounts receivable.

                  As used herein, "eligible accounts receivable" shall consist
            solely of trade accounts created in the ordinary course of a
            Borrowing Base Party's business, upon which such Borrowing Base
            Party's right to receive payment is absolute and not contingent upon
            the fulfillment of any condition whatsoever, and in which Bank has a
            perfected security interest of first priority, and shall not
            include:

            (i)   any account which is more than ninety-one (91) days past the
            date of invoice;

            (ii)  that portion of any account for which there exists any right
            of setoff, defense or discount (except regular discounts allowed in
            the ordinary course of business to promote prompt payment) or for
            which any defense or counterclaim has been asserted;

            (iii) any account which represents an obligation of any state or
            municipal government or of the United States government or any
            political subdivision thereof (except accounts which represent
            obligations of the United States government and for which the
            assignment provisions of the Federal Assignment of Claims Act, as
            amended or recodified from time to time, have been complied with to
            Bank's satisfaction);

            (iv)  any account which represents an obligation of an account
            debtor located in a foreign country;

                                      -2-




            (v)   any account which arises from the sale or lease to or
            performance of services for, or represents an obligation of, an
            employee, affiliate, partner, member, parent or subsidiary of a
            Borrowing Base Party;

            (vi)  that portion of any account, which represents interim or
            progress billings or retention rights on the part of the account
            debtor:

            (vii) any account which represents an obligation of any account
            debtor when twenty percent (20%) or more of a Borrowing Base Party's
            accounts from such account debtor are not eligible pursuant to (i)
            above;

            (viii) that portion of any account from an account debtor which
            represents the amount by which a Borrowing Base Party's total
            accounts from said account debtor exceeds twenty-five percent (25%)
            of such Borrowing Base Party's total accounts;

                  (ix)  any account deemed ineligible by Bank when Bank, in its
            sole discretion, deems the creditworthiness or financial condition
            of the account debtor, or the industry in which the account debtor
            is engaged, to be unsatisfactory.

                  (c)   BORROWING AND REPAYMENT. Borrower may from time to time
            during the term of the Line of Credit borrow, partially or wholly
            repay its outstanding borrowings, and reborrow, subject to all of
            the limitations, terms and conditions contained herein or in the
            Line of Credit Note; provided however, that the total outstanding
            borrowings under the Line of Credit shall not at any time exceed the
            maximum principal amount available thereunder, as set forth above."

      2.    Section 1.5, is hereby deleted in its entirety, and the following
substituted therefor:

                  "SECTION 1.5.    GUARANTIES. The payment and performance of
            all indebtedness and other obligations of Borrower to Bank shall be
            guaranteed jointly and severally by CXR Larus Corporation and Emrise
            Electronics Corporation in the principal amount of One Million Five
            Hundred Thousand Dollars ($1,500,000.00) each, as evidenced by and
            subject to the terms of guaranties in form and substance
            satisfactory to Bank."

      3.    Section 4.3(d) is hereby amended and restated in its entirety, to
read as follows:

                  "(d)  not later than 10 days after and as of the end of each
            month, a borrowing base certificate, an aged listing of accounts
            receivable and accounts payable, and a reconciliation of accounts,

                                      -3-




            and not later than 10 days after Bank's written request, a list of
            the names and addresses of all Borrower's account debtors;"

      4.    Bank hereby waives the Existing Violations. Such waiver by Bank
shall not be deemed an agreement by Bank to waive any other violation which may
occur under the Credit Agreement or the other Loan Documents, including without
limitation a subsequent violation of the provisions which are the subject of the
Existing Violations.

      5.    Except as specifically provided herein, all terms and conditions of
the Credit Agreement remain in full force and effect, without waiver or
modification. All terms defined in the Credit Agreement shall have the same
meaning when used in this Amendment. This Amendment and the Credit Agreement
shall be read together, as one document.

      6.    Borrower hereby remakes all representations and warranties contained
in the Credit Agreement and reaffirms all covenants set forth therein. Borrower
further certifies that as of the date of this Amendment there exists no Event of
Default as defined in the Credit Agreement, nor any condition, act or event
which with the giving of notice or the passage of time or both would constitute
any such Event of Default.

      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first written above.

                                        WELLS FARGO BANK,
EMRISE CORPORATION                       NATIONAL ASSOCIATION


By: /s/ Carmine T. Oliva                By: /s/ Matthew S. Thomson
   --------------------------              --------------------------
   Carmine T. Oliva                        Matthew S. Thomson
   CFO and Secretary                       Vice President


                                      -4-

EX-10.2

                                                                    Exhibit 10.2


WELLS FARGO                                        REVOLVING LINE OF CREDIT NOTE
- --------------------------------------------------------------------------------

$1,500,000.00                                                Ontario, California
                                                                September 1,2006

FOR VALUE RECEIVED, the undersigned Emrise Corporation ("Borrower") promises to
pay to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank") at its
office at Inland Empire RCBO, 4141 Inland Empire Blvd., Suite #350, Ontario, CA
91764, or at such other place as the holder hereof may designate, in lawful
money of the United States of America and in immediately available funds, the
principal sum of $1,500,000.00, or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

1.    INTEREST:

1.1   INTEREST. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) at a
rate per annum equal to the Prime Rate in effect from time to time. The term
"Prime Rate" means at any time the rate of interest most recently announced
within Bank at its principal office as its Prime Rate, with the understanding
that the Prime Rate is one of Bank's base rates and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
Each change in the rate of interest hereunder shall become effective on the date
each Prime Rate change is announced within Bank.

1.2   PAYMENT OF INTEREST. Interest accrued on this Note shall be payable on the
1st day of each month, commencing October 1, 2006.

1.3   DEFAULT INTEREST. From and after the maturity date of this Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to 4% above the rate of
interest from time to time applicable to this Note.

2.    BORROWING AND REPAYMENT:

2.1   BORROWING AND REPAYMENT. Borrower may from time to time during the term of
this Note borrow, partially or wholly repay its outstanding borrowings, and
reborrow, subject to all of the limitations, terms and conditions of this Note
and of the Credit Agreement between Borrower and Bank defined below; provided
however, that the total outstanding borrowings under this Note shall not at any
time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the
holder hereof less the amount of principal payments made hereon by or for
Borrower, which balance may be endorsed hereon from time to time by the holder.
The outstanding principal balance of this Note shall be due and payable in full
on October 1,2006.

2.2   ADVANCES. Advances hereunder, to the total amount of the principal sum
available hereunder, may be made by the holder at the oral or written request of
(a) Carmine T. Oliva or Sid Sananikone, any one acting alone, who are authorized
to request advances and direct the disposition of any advances until written
notice of the revocation of such authority is received by the holder at the
office designated above, or (b) any person, with respect to advances deposited
to the credit of any deposit account of Borrower, which advances, when so
deposited, shall be conclusively presumed to have been made to or for the
benefit of Borrower regardless of the fact that persons other than those
authorized to request advances may have authority to draw against such account.
The holder shall have no obligation to determine whether any person requesting
an advance is or has been authorized by Borrower.

2.3   APPLICATION OF PAYMENTS. Each payment made on this Note shall be credited
first, to any interest then due and second, to the outstanding principal balance
hereof.





3.    EVENTS OF DEFAULT:

      This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Bank dated as of September
1, 2005, as amended from time to time (the "Credit Agreement"). Any default in
the payment or performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute an "Event of
Default" under this Note.

4.    MISCELLANEOUS:

4.1   REMEDIES. Upon the occurrence of any Event of Default, the holder of this
Note, at the holder's option, may declare all sums of principal and interest
outstanding hereunder to be immediately due and payable without presentment,
demand, notice of nonperformance, notice of protest, protest or notice of
dishonor, all of which are expressly waived by Borrower, and the obligation, if
any, of the holder to extend any further credit hereunder shall immediately
cease and terminate. Borrower shall pay to the holder immediately upon demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel fees and all
allocated costs of the holder's in-house counsel), expended or incurred by the
holder in connection with the enforcement of the holder's rights and/or the
collection of any amounts which become due to the holder under this Note, and
the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

4.2   OBLIGATIONS JOINT AND SEVERAL. Should more than one person or entity sign
this Note as a Borrower, the obligations of each such Borrower shall be joint
and several.

4.3   GOVERNING LAW. This Note shall be governed by and construed in accordance
with the laws of the State of California.

IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first
written above.

Emrise Corporation


By: /s/ Carmine T. Oliva
    ---------------------------------------
    Carmine T. Oliva, CFO and Secretary