================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-Q


                Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


                For the Quarterly Period Ended September 30, 2008


                         Commission File Number 0-13839




                            CAS MEDICAL SYSTEMS, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


           Delaware                                               06-1123096
--------------------------------------------------------------------------------
(State or other jurisdiction of                               (I.R.S. employer
 incorporation or organization)                              identification no.)


              44 East Industrial Road, Branford, Connecticut   06405
--------------------------------------------------------------------------------
          (Address of principal executive offices, including zip code)


                                 (203) 488-6056
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    Yes [X]  No [_]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer [_]        Accelerated Filer         [_]
Non-Accelerated Filer   [_]        Smaller Reporting Company [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).     Yes [_]   No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.004 par value
11,331,735 shares as of November 1, 2008.

================================================================================
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 2



                                      INDEX
                                      -----

PART I       Financial Information                                      Page No.
------       ---------------------                                      --------

     Item 1  Financial Statements (Unaudited)

             Condensed Consolidated Balance Sheets as of September 30,
             2008 and December 31, 2007                                        3

             Condensed Consolidated Statements of Operations for the
             Three and Nine Months Ended September 30, 2008 and 2007           5

             Condensed Consolidated Statements of Cash Flows for the
             Nine Months Ended September 30, 2008 and 2007                     6

             Notes to Condensed Consolidated Financial Statements              7

     Item 2  Management's Discussion and Analysis of Financial
             Condition and Results of Operations                              11

     Item 3  Quantitative and Qualitative Disclosures about Market Risk       16

     Item 4  Controls and Procedures                                          16



PART II      Other Information
-------      -----------------

     Item 1  Legal Proceedings                                                17

     Item 6  Exhibits                                                         17



     Signatures                                                               18




<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 3

                         PART I - FINANCIAL INFORMATION
                         ------------------------------

ITEM 1.  FINANCIAL STATEMENTS
-----------------------------

                            CAS Medical Systems, Inc.

                      Condensed Consolidated Balance Sheets
                      -------------------------------------
                                   (Unaudited)



<TABLE><CAPTION>
                                                    September 30,     December 31,
Assets                                                  2008              2007
------                                              ------------      ------------
<S>                                                 <C>               <C>
Current Assets:
    Cash and cash equivalents                       $    905,253      $    666,722
    Accounts receivable, net of allowance              4,992,781         4,947,300
    Recoverable income taxes                              44,299           230,458
    Inventories                                       11,204,974        10,021,118
    Deferred income taxes                                872,265           474,265
    Other current assets                                 496,848           414,204
                                                    ------------      ------------
Total current assets                                  18,516,420        16,754,067


Property and equipment:
    Property and equipment                             5,548,334         5,055,395
    Equipment at customers                               994,863           272,360
                                                    ------------      ------------
                                                       6,543,197         5,327,755


    Accumulated depreciation and amortization         (3,760,630)       (2,987,030)
                                                    ------------      ------------
                                                       2,782,567         2,340,725

Other Assets (net):
Intangible and other assets                            1,133,232           846,602
Goodwill                                               3,379,021         3,379,021
Deferred income taxes                                    388,639           567,971
                                                    ------------      ------------
                                                       4,900,892         4,793,594

Total assets                                        $ 26,199,879      $ 23,888,386
                                                    ============      ============
</TABLE>


<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 4

                            CAS Medical Systems, Inc.

                      Condensed Consolidated Balance Sheets
                      -------------------------------------
                                   (Unaudited)



<TABLE><CAPTION>
                                                    September 30,  December 31,
Liabilities and Stockholders' Equity                    2008           2007
------------------------------------                ------------   ------------
<S>                                                 <C>               <C>
Current Liabilities:
    Current portion of long-term debt               $    604,847   $    577,453
    Line-of-credit                                     2,982,825      2,249,349
    Notes payable                                         64,202         71,537
    Accounts payable                                   3,001,886      2,505,460
    Accrued expenses                                   1,362,380        962,154
                                                    ------------   ------------
        Total current liabilities                      8,016,140      6,365,953


Long-term debt, less current portion                   1,865,590      2,322,561
Deferred gain on sale and leaseback of property        1,202,360      1,303,338
Income taxes payable                                     153,125        145,125

Stockholders' Equity:
    Series A cumulative convertible preferred stock,
       $.001 par value per share, 1,000,000 shares
       authorized, no shares issued or outstanding            --             --
    Common stock, $.004 par value per share,
       40,000,000 shares authorized, 11,417,735 and
       10,984,785 shares issued at September 30,
       2008 and December 31, 2007, respectively,
       including shares held in treasury                  45,635         43,575
    Common stock held in treasury, at cost -
       86,000 shares                                    (101,480)      (101,480)
    Additional paid-in capital                         7,331,235      5,889,007
    Retained earnings                                  7,687,274      7,920,307
                                                    ------------   ------------
    Total stockholders' equity                        14,962,664     13,751,409
                                                    ------------   ------------

Total liabilities and stockholders' equity          $ 26,199,879   $ 23,888,386
                                                    ============   ============
</TABLE>


See accompanying notes.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 5

                            CAS Medical Systems, Inc.

                 Condensed Consolidated Statements of Operations
                 -----------------------------------------------
                                   (Unaudited)


<TABLE><CAPTION>
                                                  Three Months Ended               Nine Months Ended
                                                    September 30,                     September 30,
                                            -----------------------------     -----------------------------
                                                2008             2007             2008             2007
                                            ------------     ------------     ------------     ------------
<S>                                         <C>              <C>              <C>              <C>
Net sales                                   $ 11,708,082     $ 10,663,435     $ 31,212,552     $ 27,915,163

Cost of sales                                  7,407,603        6,634,787       20,740,040       17,830,189
                                            ------------     ------------     ------------     ------------

Gross profit                                   4,300,479        4,028,648       10,472,512       10,084,974

Operating expenses:
    Research and development                     553,888          439,861        1,531,853        1,725,261
    Selling, general and administrative        3,076,679        2,937,840        9,149,889        7,920,957
                                            ------------     ------------     ------------     ------------
                                               3,630,567        3,377,701       10,681,742        9,646,218
                                            ------------     ------------     ------------     ------------

Operating income (loss)                          669,912          650,947         (209,230)         438,756

Interest expense                                  72,546           71,455          215,803          189,382
                                            ------------     ------------     ------------     ------------

Income (loss) before income taxes                597,366          579,492         (425,033)         249,374

Income taxes /(benefit)                          268,500           40,298         (192,000)         (68,641)
                                            ------------     ------------     ------------     ------------

Net income (loss)                           $    328,866     $    539,194     $   (233,033)    $    318,015
                                            ============     ============     ============     ============
Earnings (loss) per common share:

    Basic                                   $       0.03     $       0.05     $      (0.02)    $       0.03
                                            ============     ============     ============     ============

    Diluted                                 $       0.03     $       0.05     $      (0.02)    $       0.03
                                            ============     ============     ============     ============
Weighted average number of common
shares outstanding:
    Basic                                     11,171,056       10,749,947       10,980,756       10,675,483
                                            ============     ============     ============     ============

    Diluted                                   12,085,122       11,982,011       10,980,756       12,094,725
                                            ============     ============     ============     ============
</TABLE>




See accompanying notes.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 6

                            CAS Medical Systems, Inc.

                 Condensed Consolidated Statements of Cash Flows
                 -----------------------------------------------
                                   (Unaudited)

<TABLE><CAPTION>
                                                                               Nine Months Ended
                                                                                 September 30,
                                                                        ------------------------------
                                                                            2008              2007
                                                                        ------------      ------------
<S>                                                                     <C>               <C>
OPERATING ACTIVITIES:
  Net (loss) income                                                     $   (233,033)     $    318,015
  Adjustments to reconcile net (loss) income to
  net cash provided (used) by operating activities:
    Depreciation and amortization                                            862,769           567,990
    Deferred income taxes                                                   (218,668)         (757,541)
    Provision for doubtful accounts                                           25,000            75,000
    Non-cash stock compensation                                              318,258           217,517
    Amortization of deferred gain on sale and leaseback of property         (100,978)           (9,422)
    Changes in operating assets and liabilities:
       Accounts receivable                                                   (70,481)       (1,507,895)
       Inventories                                                        (1,183,856)       (4,107,034)
       Other current assets                                                  (82,644)         (125,348)
       Recoverable income taxes, net                                         186,159           320,435
       Accounts payable and accrued expenses                                 896,653         2,373,533
       Income taxes payable                                                    8,000                --
                                                                        ------------      ------------
    Net cash provided (used) by operating activities                         407,179        (2,634,750)
                                                                        ------------      ------------

INVESTING ACTIVITIES:
  Expenditures for property and equipment                                 (1,215,442)       (1,012,607)
  Purchase of intangible assets                                             (375,799)         (288,358)
  Proceeds from sale of property                                                  --         2,801,852
                                                                        ------------      ------------
    Net cash provided (used) by investing activities                      (1,591,241)        1,500,887
                                                                        ------------      ------------

FINANCING ACTIVITIES:
  Repayments of long-term debt                                              (429,578)       (1,376,983)
  Proceeds from notes payable                                                298,704           329,011
  Repayments of notes payable                                               (306,039)         (260,283)
  Borrowings from line-of-credit, net                                        733,476         1,200,384
  Tax benefits from exercise of warrants                                          --           379,811
  Tax effect from vesting of restricted stock                                (14,730)               --
  Proceeds from issuance of common stock                                   1,140,760           226,043
                                                                        ------------      ------------
    Net cash provided by financing activities                              1,422,593           497,983
                                                                        ------------      ------------

Change in cash and cash equivalents                                          238,531          (635,880)

Cash and cash equivalents, beginning of period                               666,722         1,334,535
                                                                        ------------      ------------

Cash and cash equivalents, end of period                                $    905,253      $    698,655
                                                                        ============      ============
Supplemental Disclosures of Cash Flow Information:

  Cash paid during the period for interest                              $    219,380      $    191,980
  Cash collected during the period for income taxes, net                $   (152,761)     $    (11,346)
</TABLE>

See accompanying notes.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 7

                            CAS Medical Systems, Inc.
              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)

                               September 30, 2008

(1)  The Company

     CAS Medical Systems, Inc. ("CAS") and its wholly-owned subsidiary,
Statcorp, Inc. ("Statcorp") operate as one reportable business segment.
Together, CAS and Statcorp (collectively, the "Company" or "CASMED") develop,
manufacture and distribute diagnostic equipment and medical products for use in
the healthcare and medical industry. These products - specifically blood
pressure measurement technology, vital signs measurement equipment,
cardio-respiratory monitoring equipment, cerebral oximetry monitoring, and
supplies for neonatal intensive care - are sold by CASMED through its own sales
force, via distributors, manufacturers representatives and pursuant to original
equipment manufacturer agreements both internationally and in the United States.
The Company has several other products in various stages of development that it
believes will add to and complement its current product lines.


(2)  Basis of Presentation

     The financial statements included herein have been prepared, without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and disclosures included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted pursuant to such rules and regulations.
These condensed consolidated financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's Annual
Report filed on Form 10-K for the year ended December 31, 2007. The condensed
consolidated balance sheet as of December 31, 2007 was derived from the audited
financial statements for the year then ended.

     In the opinion of the Company, all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position of the
Company and the results of its operations and its cash flows have been included
in the accompanying financial statements. The results of operations for interim
periods are not necessarily indicative of the expected results for the full
year.


(3)  Inventories, Properties and Intangible Assets

     Inventories are stated at the lower of cost or market on a first-in,
first-out (FIFO) basis. Inventories consisted of:

                                 September 30,            December 31,
                                     2008                     2007
                                 ------------             ------------
     Raw materials               $  8,580,390             $  7,481,065
     Work-in-process                   51,719                  187,134
     Finished goods                 2,572,865                2,352,919
                                 ------------             ------------
                                 $ 11,204,974             $ 10,021,118
                                 ============             ============

     Property and equipment are stated at cost. The Company has separately
reported its Fore-sight(R) cerebral oximetry monitors located at customer sites
within the U.S. Such equipment is held under a no cost program whereby customers
purchase disposable sensors for use with the Company's equipment. The Company
retains title to the monitors shipped to its customers under this program. The
monitors are depreciated on a straight-line basis over five years to cost of
sales. As of September 30, 2008, the Company has capitalized $994,863 of costs
pertaining to the monitors which have a net book value of $818,987. Other
property and equipment is depreciated using the straight-line method over the
estimated useful lives of the assets.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 8


     Intangible assets consist of patents issued, patents pending, trademarks,
purchased technology and other deferred charges which are recorded at cost.
Patents are amortized on a straight-line basis over 1 to 20 years. Costs
associated with the development of new external use software products are
expensed as incurred until technological feasibility has been established.
Technological feasibility is demonstrated by the completion of a detailed design
plan. Capitalization ceases when the product is available for general release to
customers. Capitalized costs are amortized over their estimated useful lives.
Deferred financing costs are amortized over the term of the related debt. Other
deferred charges are amortized over their estimated useful lives.

     The Company reviews its long-lived assets including goodwill for impairment
at least annually or whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. The Company believes
that the carrying amounts of its long-lived assets are fully recoverable.


(4)  Principal Products and Services

     The Company has categorized its sales of products and services into the
following categories:

     o    High acuity products - includes sales of the Fore-Sight(R) cerebral
          monitor, sensors and accessories.
     o    Low acuity products - includes sales of cardio-respiratory monitors
          and accessories used to monitor apnea in home-based and hospital
          settings; the Company's dual platform of vital signs monitors and
          accessories incorporating various combinations of measurement
          parameters for both human and veterinary use including pulse oximetry,
          electro-cardiography, temperature, non-invasive blood pressure, and
          capnography; co-branded products developed and manufactured by
          Analogic Corporation including vital signs monitors utilizing
          parameters as described above and also monitors that measure
          non-invasive cardiac output and hemodynamic status, and fetalgard
          monitors.
     o    Blood Pressure Measurement Technology - includes sales to Original
          Equipment Manufacturers ("OEM") of the Company's proprietary
          non-invasive blood pressure modules (MAXNIBP(R)), blood pressure cuffs
          and accessories for the OEM market and related license fees.
     o    Supplies and Service - includes sales of blood pressure cuffs and
          rapid infusor cuffs, neonatal intensive care supplies including
          electrodes and skin temperature probes, and service repair revenues.


(5)  Income (loss) per Common Share

     A summary of the denominators used to compute basic and diluted income
(loss) per share follows:
<TABLE><CAPTION>
                                                          Three Months Ended               Nine Months Ended
                                                            September 30,                     September 30,
                                                    -----------------------------     -----------------------------
                                                        2008             2007             2008             2007
                                                    ------------     ------------     ------------     ------------
     <S>                                            <C>              <C>              <C>              <C>
     Weighted average shares outstanding, net
       of restricted shares - used to compute
       basic income (loss) per share                  11,171,056       10,749,947       10,980,756       10,675,483

     Dilutive effect of restricted shares, and
       outstanding warrants and options                  914,066        1,232,164               --        1,419,242
                                                    ------------     ------------     ------------     ------------
     Weighted average shares of dilutive
       securities outstanding - used to compute
       diluted income (loss) per share                12,085,122       11,982,111       10,980,756       12,094,725
                                                    ============     ============     ============     ============
</TABLE>
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                          Page 9


     Diluted common stock equivalents such as (non-vested) restricted shares,
outstanding warrants and options are excluded from the computation of diluted
earnings per share where there is a loss as their inclusion would be
anti-dilutive.

(6)  Stock-Based Compensation

     Stock compensation expense was $86,943 and $86,383 and $318,258 and
$217,517 for the three-month and nine-month periods ended September 30, 2008 and
2007, respectively.

     As of September 30, 2008, the unrecognized stock-based compensation cost
related to non-vested restricted stock and stock option awards was $860,500.
Such amount, net of estimated forfeitures, will be recognized in operations over
a weighted average period of 2.1 years.

     The following table summarizes the Company's stock option information as
of, and for the nine-month period ended September 30, 2008:
<TABLE><CAPTION>
                                                                                  Aggregate       Weighted-Average
                                           Option         Weighted-Average        Intrinsic       Contractual Life
                                           Shares          Exercise Price         Value (1)      Remaining in Years
                                        ---------------------------------------------------------------------------
<S>                                     <C>                 <C>                 <C>                 <C>
Outstanding at December 31, 2007             524,425        $       2.11        $       3.39
Granted                                      125,000                3.89
Cancelled                                    (30,000)               4.00
Exercised                                    (29,300)               1.40
                                        ------------
Outstanding at September 30, 2008            590,125        $       2.43        $       1.57               6.35
Exercisable at September 30, 2008            461,791        $       2.00        $       2.00               5.40
</TABLE>

     (1) The intrinsic value of a stock option is the amount by which the
current market value of the underlying stock (as of September 30, 2008) exceeds
the option exercise price.

     The exercise period for all outstanding stock options may not exceed ten
years from the date of grant. Stock options granted to employees and
non-employee directors vest ratably not less than two years from the grant date.
The Company attributes stock-based compensation cost to operations using the
straight-line method over the applicable vesting period.

     During the first nine months of 2008, non-qualified stock options to
purchase an aggregate of 125,000 shares of common stock were granted to
employees including a newly hired officer, and a recently appointed member of
the board of directors. The vesting of the stock options varies from one-third
per year over three years to one-fourth per year over four years from the grant
date.

     The weighted-average grant date fair value of stock options granted during
the nine-month period ended September 30, 2008 and 2007 was $2.90 and $4.53 per
share, respectively. The total intrinsic value of stock options exercised during
the nine-month periods ended September 30, 2008 and 2007 was $62,731 and
$239,583, respectively.

     The fair value of each option granted was estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:
<TABLE><CAPTION>
                                                                      Nine Months Ended
                                                         September 30, 2008       September 30, 2007
                                                         ------------------       ------------------
     <S>                                                 <C>                      <C>
     Weighted-average expected stock-price volatility          63.4%                     115.5%
     Weighted-average expected option life                   4.2 years                 4.2 years
     Average risk-free interest rate                       3.83% to 3.93%            4.47% to 4.61%
     Average dividend yield                                     0.0%                      0.0%
</TABLE>
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 10


     During July 2008, the Company issued an aggregate of 9,000 shares of
restricted stock under the 2003 Equity Incentive Plan to outside members of the
Board of Directors. The restricted stock vests quarterly over twelve months from
the grant date. Year-to-date, the Company has also issued 55,000 shares of
restricted stock to its officers including 20,000 shares issued to a newly hired
officer. The restricted stock grants contain various vesting schedules which
range from one-half per year for a two year grant to one-third per year for
three year grants. The weighted average unit market value of the restricted
stock on the date of grant for restricted stock issued during 2008 was $4.01. As
of September 30, 2008, 148,905 restricted shares issued to employees and members
of the board of directors remain issued and non-vested. The unamortized stock
compensation expense associated with the restricted shares as of September 30,
2008 is $541,656 and will be recognized ratably through March 31, 2011.

     All stock option and restricted stock grants were issued under the 2003
Equity Incentive Plan which has 204,850 shares remaining available for issuance
as of September 30, 2008.

(7)  Income Taxes

     The income tax expense (benefits) recognized in operations for the periods
presented vary from the statutory rate as a result of anticipated state and
federal R&D tax credits partially offset in 2007 by non-deductible stock
compensation expense.

     During the third quarter of 2007, the Company exchanged state tax
carryforwards for reduced cash credits payable to the Company of $155,000.

     During the first nine months of 2007, warrants to purchase 164,599 shares
of the Company's common stock were exercised resulting in tax deductions in
excess of compensation expense recognized of $1,140,579. As a result, the
Company reduced its income tax obligations by $399,811 and credited additional
paid-in capital.

     Recoverable income taxes consist of estimated state and federal tax refunds
generated from net operating losses.

(8)  Recent Accounting Pronouncements

     In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("SFAS 157"). SFAS 157 defines fair
value, establishes a framework for measuring the fair value of assets and
liabilities, and expands disclosure requirements regarding the fair value
measurement. SFAS 157 does not expand the use of fair value measurements. This
statement, as issued, is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years. FASB Staff Position (FSP) FAS No. 157-2 was issued in February 2008 and
deferred the effective date of SFAS 157 for nonfinancial assets and liabilities
to fiscal years beginning after November 2008. As such, the Company adopted SFAS
157 as of January 1, 2008 for financial assets and liabilities only. There was
no significant effect on the Company's financial statements. The Company does
not believe that the adoption of SFAS 157 to non-financial assets and
liabilities will significantly affect its financial statements.

     In February 2007, the FASB issued SFAS 159, "The Fair Value Option for
Financial Assets and Liabilities--including an amendment of FASB Statement No.
115" ("SFAS 159"). SFAS 159 expands the use of fair value accounting but does
not affect existing standards which require assets or liabilities to be carried
at fair value. The objective of SFAS 159 is to improve financial reporting by
providing companies with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. Under SFAS 159, a company
may elect to use fair value to measure eligible items at specified election
dates and report unrealized gains and losses on items for which the fair value
option has been elected in earnings at each subsequent reporting date. Eligible
items include, but not are limited to, accounts receivable, accounts payable,
and issued debt. If elected, SFAS 159 is effective for fiscal years beginning
after November 15, 2007. The Company has not elected to measure any additional
assets or liabilities at fair value that are not already measured at fair value
under existing standards.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 11


     In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business
Combinations" ("SFAS 141(R)"). SFAS 141(R) establishes principles and
requirements for how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, any
non-controlling interest in the acquiree and the goodwill acquired. SFAS 141(R)
also establishes disclosure requirements to enable the evaluation of the nature
and financial effects of the business combination. SFAS 141(R) is effective for
fiscal years beginning after December 15, 2009. The Company will apply the
provisions of SFAS 141 (R) to any acquisition after January 1, 2008.

     In December 2007, the FASB issued SFAS No. 160, "Accounting for
Non-controlling Interests." SFAS 160 clarifies the classification of
non-controlling interests in consolidated balance sheets and reporting
transactions between the reporting entity and holders of non-controlling
interests. Under this statement, non-controlling interests are considered equity
and reported as an element of consolidated equity. Further, net income
encompasses all consolidated subsidiaries with disclosure of the attribution of
net income between controlling and non-controlling interests. SFAS No. 160 is
effective prospectively for fiscal years beginning after December 15, 2008.
Currently, there are no non-controlling interests in any of the Company's
subsidiaries.



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS
-------------

     Certain statements included in this report, including without limitation
statements in the Management's Discussion and Analysis of Financial Condition
and Results of Operations, which are not historical facts, are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements represent the Company's current expectations
regarding future events. The Company cautions that such statements are qualified
by important factors that could cause actual results to differ materially from
expected results which may be contained in the forward-looking statements. All
forward-looking statements involve risks and uncertainties, including, but not
limited to, the following: foreign currency fluctuations, regulations and other
economic and political factors which affect the Company's ability to market its
products internationally, new product introductions by the Company's
competitors, increased price competition, dependence upon significant customers,
availability and cost of components for the Company's products, the impact of
any adverse litigation, marketplace acceptance for the Company's new products,
FDA and other governmental regulatory and enforcement actions, changes to
federal research and development grant programs presently utilized by the
Company and other factors described in greater detail in the Company's most
recent annual report on Form 10-K.

Results of Operations
---------------------

     For the three months ended September 30, 2008, the Company reported net
income of $329,000 or $0.03 per basic and diluted common share compared to net
income of $539,000 or $0.05 per basic and diluted common share reported for the
three months ended September 30, 2007. Net income for the prior year three month
period included a tax benefit of $155,000 related to an exchange of state tax
carryforwards for reduced cash credits payable to the Company. Pre-tax income
for the three months ended September 30, 2008 and 2007 was $597,000 and
$579,000, respectively. Sales and marketing expenses related to the Fore-Sight
cerebral oximeter products approximated $709,000 during the three months ended
September 30, 2008 compared to approximately $388,000 incurred during the prior
year. Pre-tax income for the three-month periods ended September 30, 2008 and
2007 was also affected by approximately $87,000 and $86,000 respectively, of
stock compensation expense. Pre-tax income of $597,000 for the third quarter of
2008 reflects successive improvement in the Company's quarterly operating
results for 2008 including heightened revenues levels, increased gross profit
margins and reductions in operating expenses as a percentage of revenues.

<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 12


     The Company reported a net loss of $233,000 or ($0.02) per basic and
diluted common share for the nine months ended September 30, 2008 compared to
net income of $318,000 or $0.03 per basic and diluted common share for first
nine months of 2007. Sales and marketing expenditures related to the Fore-Sight
cerebral oximeter products approximated $2,208,000 for the nine months ended
September 30, 2008 compared to $1,188,000 incurred during the same period of the
prior year. Pre-tax income for the nine-month periods ended September 30, 2008
and 2007 was also affected by $318,000 and $218,000 respectively, of stock
compensation expense.

     The Company generated revenues of $11,708,000 for the three months ended
September 30, 2008, an increase of $1,045,000 or 10%, compared to revenues of
$10,663,000 for the three months ended September 30, 2007. The following table
provides information with respect to revenues by major category:
<TABLE><CAPTION>
                                             Three Months Ended    Three Months Ended        Increase/
     ($000's)                                September 30, 2008    September 30, 2007        (Decrease)
                                             ------------------    ------------------    ------------------
     <S>                                       <C>                   <C>                   <C>
     Low Acuity Products                       $      5,289          $      6,068          $       (779)
     High Acuity Products                               831                    80                   751
     Blood Pressure Measurement Technology            2,195                 1,089                 1,106
     Supplies/Service                                 3,393                 3,426                   (33)
                                               ------------          ------------          ------------
                                               $     11,708          $     10,663          $      1,045
                                               ============          ============          ============

     Domestic sales                                   9,371                 8,903                   468
     International sales                              2,337                 1,760                   577
                                               ------------          ------------          ------------
                                               $     11,708          $     10,663          $      1,045
                                               ============          ============          ============
</TABLE>


     Low acuity product revenues for the three months ended September 30, 2008
decreased $779,000 or 13% as a result of decreases in sales of vital signs
monitors and accessories to certain key U.S. customers including products sold
into the veterinary market. Approximately $163,000 of veterinary product sales
for this period which would have been previously reported as low acuity sales
are currently reported as blood pressure measurement technology sales.

     High-acuity product revenues of $831,000 represent sales of the Company's
Fore-Sight cerebral oximetry monitors, sensors and accessories. During the third
quarter ended September 30, 2008, the Company placed or sold approximately 32
monitors with customers bringing the installed base of Fore-Sight monitors
worldwide to 125 monitors. Under the Company's monitor placement arrangements,
customers are entitled to use the Company's monitors at no cost in exchange for
purchase orders for Fore-Sight sensors.

     Blood pressure measurement technology sales of $2,195,000 for the three
months ended September 30, 2008 increased $1,106,000 or 102% from $1,089,000
reported for the same three months of the prior year. Sales to the Company's
largest OEM customer, Medtronic Physio-Control, accounted for approximately
$919,000 of the increase in sales during this period. Sales to this customer
during the prior year period were affected by their voluntary suspension of U.S.
product shipments initiated during January 2007. Additionally, approximately
$163,000 of sales reported in this category for the current period would have
been reported as low acuity sales during the prior period.

     Supplies and service sales decreased $33,000 or 1% to $3,393,000 for the
three months ended September 30, 2008 from $3,426,000 for the same three months
of the prior year. Sales of blood pressure cuffs rose 2% over the third quarter
of the prior year and were offset by decreases in sales of the Company's
Klear-Trace(R) electrodes and other consumable neonatal products.

     Sales to the U.S. market accounted for $9,371,000 or 80% of the total
revenues reported for the three months ended September 30, 2008, an increase of
$468,000 or 5% from the $8,903,000 in sales reported for the three months ended
September 30, 2007. International sales accounted for $2,337,000 or 20% of the
total revenues reported for the three months ended September 30, 2008, an
increase of $577,000 or 33% from the $1,760,000 reported for the same period of
the prior year.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 13


     The Company generated revenues of $31,213,000 for the nine months ended
September 30, 2008, an increase of $3,298,000 or 12%, compared to revenues of
$27,915,000 for the nine months ended September 30, 2007. The following table
provides information with respect to revenues by major category:
<TABLE><CAPTION>
                                              Nine Months Ended     Nine Months Ended        Increase/
     ($000's)                                September 30, 2008    September 30, 2007       (Decrease)
                                             ------------------    ------------------    ------------------
     <S>                                       <C>                   <C>                   <C>
     Low Acuity Products                       $     12,700          $     13,721          $     (1,021)
     High Acuity Products                             1,482                   108                 1,374
     Blood Pressure Measurement Technology            5,739                 3,700                 2,039
     Supplies/Service                                11,292                10,386                   906
                                               ------------          ------------          ------------
                                               $     31,213          $     27,915          $      3,298
                                               ============          ============          ============

     Domestic sales                                  23,434                21,795                 1,639
     International sales                              7,779                 6,120                 1,659
                                               ------------          ------------          ------------
                                               $     31,213          $     27,915          $      3,298
                                               ============          ============          ============
</TABLE>


     Low acuity product revenues for the nine months ended September 30, 2008
decreased $1,021,000 or 7% as a result of decreases in sales of vital signs
monitors to U.S. customers including products sold into the veterinary market.
Sales during the first quarter of 2007 had included several significant
shipments for orders received but not shipped during the fourth quarter of 2006.
Partially offsetting these shortfalls were increases in sales of Analogic
products.

     High-acuity product revenues which represent sales of the Company's
Fore-Sight cerebral oximetry monitors, sensors and accessories, increased
$1,374,000 for the nine months ended September 30, 2008 compared to the same
period of the prior year. The Company began marketing the Fore-Sight monitor
during the second quarter of 2007.

     Blood pressure measurement technology sales of $5,739,000 for the nine
months ended September 30, 2008 increased $2,039,000 or 55% from $3,700,000
reported for the same nine months of the prior year. Sales to one of the
Company's largest customers, Medtronic Physio-Control, accounted for the
majority of the increase in sales during this period.

     Supplies and service sales increased $906,000 or 9% to $11,292,000 for the
nine months ended September 30, 2008 from $10,386,000 for the same nine months
of the prior year. Sales of blood pressure cuffs increased 11% for this period
and accounted for the majority of the increase in sales in this category. Sales
of the Company's Klear-Trace(R) electrodes accounted for the balance of the
increase.

     Sales to the U.S. market accounted for $23,434,000 or 75% of the total
revenues reported for the nine months ended September 30, 2008, an increase of
$1,639,000 or 8% from the $21,795,000 in sales reported for the nine months
ended September 30, 2007. International sales accounted for $7,779,000 or 25% of
the total revenues reported for the nine months ended September 30, 2008, an
increase of $1,659,000 or 27% from the $6,120,000 reported for the same period
of the prior year.

     Cost of sales was $7,408,000 or 63.3% of revenues for the three months
ended September 30, 2008 compared to $6,635,000 or 62.2% for the same three
months of the prior year. The increase in cost of sales as a percentage of
revenues resulted from unfavorable product mix and inventory adjustments. In
addition, cost of sales for the same three months of the prior year were
negatively affected by a number of factors including shortfalls in OEM module
sales which normally carry gross margin rates favorable to other products sold
by the Company; Fore-sight cerebral oximetry manufacturing start-up costs;
increased blood pressure cuff sales as a percentage of total revenues which
normally carry lower relative gross margin rates; and unapplied manufacturing
overhead costs as a percentage of the reduced revenues for that period.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 14


     Cost of sales for the nine months ended September 30, 2008 was $20,740,000
or 66.4% of revenues compared to $17,830,000 or 63.9% of revenues for the nine
months ended September 30, 2007. Inventory adjustments and unfavorable product
mix primarily related to the first quarter of 2008 affected gross profit levels
for the nine months ended September 30, 2008. U.S. sales of the Company's vital
signs monitors during the first three months of 2008 were substantially below
the first three months of 2007 while international vital signs product sales
were significantly ahead of the prior year. The Company is presently focused on
a number of initiatives to improve gross profit margins for the balance of 2008
including raw material and component cost reductions, price increases where
appropriate, improved inventory management including inventory controls, product
procurement and organizational changes, and enhancements to manufacturing
productivity.

     Operating expenses for the three months ended September 30, 2008 increased
$253,000 or 8% to $3,631,000 from $3,378,000 for the three months ended
September 30, 2007. Operating expenses for the first nine months of 2008
increased $1,036,000 or 11% to $10,682,000 from $9,646,000 reported for the same
period the prior year.

     Research and development ("R&D") expenses increased $114,000 or 26% to
$554,000 or 5% of revenues for the three months ended September 30, 2008
compared to $440,000 or 4% of revenues for the three months ended September 30,
2007. Decreases in reimbursements from the National Institutes of Health ("NIH")
pertaining to the Company's Near-Infrared Spectroscopy ("NIRS") technology
compared to the same period of the prior year were primarily responsible for the
increase in net R&D expenses. As of September 30, 2008, a maximum of
approximately $1.9 million remains available under the $2.8 million multi-year
NIH award received during 2007. R&D expenses for the first nine months of 2008
decreased $193,000 or 11% to $1,532,000 from $1,725,000 reported for the first
nine months of the prior year. During 2007, the Company incurred significant
costs surrounding the development of the Fore-sight cerebral monitor and sensors
which was launched during the second quarter of that year. Such spending
included project material costs and outside engineering technical support.

     Selling, general and administrative expenses ("S,G&A") increased $139,000
or 5% to $3,077,000, for the three months ended September 30, 2008 compared to
$2,938,000 for the three months ended September 30, 2007. S,G&A expenses
approximated 27% of revenues for both periods reported. Sales and marketing
expenses directly associated with the Fore-Sight cerebral oximetry effort
totaled $709,000 and increased approximately $321,000 over the same three months
of the prior year. Other sales and marketing expenses totaled $1,306,000 and
decreased $210,000 from the $1,516,000 of expenses reported for the three months
ended September 30, 2007. General and administrative expenses increased $28,000
or 3% to $1,062,000.

     S,G&A expenses for the first nine months of 2008 totaled $9,150,000, an
increase of $1,229,000, or approximately 16%, over the $7,921,000 reported for
the first nine months of 2007. Fore-Sight related sales and marketing expenses
were $2,208,000 and accounted for $1,020,000 of the increase in S,G&A expenses.
Other sales and marketing expenses totaled $3,977,000 and decreased
approximately $66,000 or 2% from the $4,043,000 reported for the nine months
ended September 30, 2007. G&A expenses totaled $2,965,000 and increased
approximately $275,000 or 10% primarily as a result of increased salaries and
related benefits associated with increased personnel, patent-related legal
costs, strategic planning costs, and stock compensation expense partially offset
by decreased company-wide bonus accruals, outside investor relations costs, and
Sarbanes Oxley expenses.

     Interest expense increased to $73,000 and $216,000, respectively for the
three and nine months ended September 30, 2008 compared to $71,000 and $189,000,
respectively for the three and nine months ending September 30, 2007. The
increase in interest expense resulted primarily from advances under the
Company's line-of-credit partially offset by long-term debt repayments.

     The income tax benefit of $192,000 for the nine months ended September 30,
2008 reflects a combined estimated federal and state effective tax benefit of
46%, reduced for prior period adjustments of $43,000 and varies from the
statutory rate as a result of anticipated state and federal R&D tax credits
partially offset by non-deductible expenses including stock compensation
expense. The income tax benefit of $68,000 recorded for the nine months
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 15


ended September 30, 2007 reflects an exchange of approximately $155,000 of state
tax carryforwards for reduced cash credits payable to the Company. The expected
combined federal and state effective tax rate approximated 31% due to
anticipated state and federal R&D tax credits, partially offset by
non-deductible stock compensation expense.

Financial Condition, Liquidity and Capital Resources
----------------------------------------------------

     At September 30, 2008, the Company's cash and cash equivalents totaled
$905,000 compared to $667,000 at December 31, 2007. Working capital increased
$117,000 to $10,505,000 at September 30, 2008, from $10,388,000 on December 31,
2007. The Company's current ratio decreased to 2.31 to 1 from 2.63 to 1.

     Cash provided by operations for the nine months ended September 30, 2008
was $407,000 compared to cash used of $2,635,000 for the first nine months of
the prior year. Increases in accounts payable and accrued expenses of $897,000
and earnings before depreciation and amortization of $847,000 were primarily
responsible for the increase in cash flow from operations and was partially
offset by increases in inventory of $1,184,000. Increases in inventories since
December 31, 2007 were primarily caused by purchases of blood pressure cuff raw
materials, purchases of finished products from Analogic and Fore-Sight cerebral
oximeter components offset slightly by reductions in vital signs monitoring and
accessories inventories. The Company has initiated an inventory reduction
program to reduce its inventory related working capital requirements and expects
to achieve reductions in inventory levels by its 2008 fiscal year end.

     Cash used in investing activities was $1,591,000 for the nine months ended
September 30, 2008 compared to cash provided of $1,501,000 for the first nine
months of the prior year. During September 2007, the Company realized proceeds
of $2,802,000 from the sale-leaseback of its headquarters. Expenditures for
property and equipment during the nine months ended September 30, 2008 were
driven by increases in Fore-Sight cerebral oximeter units at customer sites of
$723,000 and other purchases of $492,000 largely related to Fore-Sight
demonstration equipment, production equipment expenditures required to support
Fore-sight sensor manufacturing and increase blood-pressure cuff production
capacity as well as various information technology related expenditures. Prior
year expenditures reflected $1,013,000 of spending for leasehold improvements
and manufacturing and engineering equipment. Spending for intangible assets of
$376,000 for the first nine months of 2008 primarily included accrued contract
costs, deferred finance charges associated with the Company's amended
line-of-credit agreement and patent costs.

     Cash provided by financing activities for the nine months ended September
30, 2008 was $1,423,000 compared to cash provided of $498,000 for the first nine
months of the prior year. During May 2008, the Company consummated a private
placement of 333,333 shares of its common stock for aggregate proceeds of
$1,000,000. Repayments of long-term debt and insurance notes of $430,000 and
$306,000, respectively, were partially offset by advances from the Company's
line-of-credit of $733,000 and additional insurance related financings of
$299,000.

     On February 11, 2008, the Company amended and restated its existing line of
credit with NewAlliance Bank (the "Bank"). The Company entered into a new
Commercial Loan Agreement (the "Loan Agreement") and related Commercial
Revolving Promissory Note (the "Note") which provide for borrowings on a
revolving basis, at the Bank's discretion up to $10,000,000. Loans in excess of
$2,000,000 up to $10,000,000 can be made only if the maximum principal amount
outstanding does not exceed a borrowing base equal to the sum of (i) 75% of
eligible receivables (as defined in the Loan Agreement) and (ii) the lesser of
$2,500,000 or 30% of eligible inventory (as defined in the Loan Agreement.)
Interest on the outstanding loans pursuant to the Note is at the Prime Rate (as
defined in the Loan Agreement) minus 0.5%. Borrowings under the Loan Agreement
and the Note are secured by a first priority lien in all the business assets of
the Company pursuant to a Security Agreement (the "Security Agreement"). The
Credit Agreement, which contains customary non-financial covenants and financial
covenants consisting of a debt service coverage ratio and a debt to tangible net
worth ratio, expires on the final maturity date of May 1, 2009. Such covenants
are measured on an annual basis at the end of the fiscal year.

     The Company believes that its sources of funds consisting of cash and cash
equivalents and funds available from the revolving credit facility will be
sufficient to meet its current and expected short-term requirements. The Company
may also pursue other financing alternatives to meet its capital needs although
it is uncertain that, if needed, it would be able to find additional sources of
funds on commercially acceptable terms to support the Company's long-term
initiatives.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 16


Critical Accounting Policies and Estimates
------------------------------------------

     The Company's discussion and analysis of financial condition and results of
operations are based on the condensed financial statements. The preparation of
these financial statements requires the Company to make estimates and judgments
that affect the amounts reported in them. The Company's critical accounting
policies and estimates include those related to revenue recognition, the
valuations of inventories and deferred income tax assets, measuring stock
compensation, and warranty costs, determining useful lives of intangible assets,
and making asset impairment valuations. The Company bases its estimates on
historical experience and on various other assumptions that management believes
to be reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. For additional information
about the Company's critical accounting policies and estimates, see Note 3 to
the financial statements included in the Company's Form 10-K for the year ended
December 31, 2007. There were no significant changes in critical accounting
policies and estimates during the three months ended September 30, 2008.

     New accounting pronouncements and the Company's assessment of their impact
on the financial statements are disclosed in Note 7 to the notes to condensed
consolidated financial statements contained herein.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
------------------------------------------------------------------

     The Company has certain exposures to market risk related to changes in
interest rates. The Company has an outstanding line-of-credit agreement, under
which there were borrowings of $2,982,825 at September 30, 2008. The
line-of-credit agreement, amended as of February 11, 2008, bears interest at
variable rates based on prime rate indices. The Company holds no derivative
securities for trading purposes and is not subject in any material respect to
currency or other commodity risk.


ITEM 4. CONTROLS AND PROCEDURES
-------------------------------

     The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the Company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the Company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure based on the definition of "disclosure
controls and procedures" in Rule 13a-15(e). In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
necessarily is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

     The Company carried out an evaluation, under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and the Company's Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of September 30, 2008. Based upon the foregoing evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of that date.

     There have been no changes in the Company's internal control over financial
reporting during the quarter ended September 30, 2008 that have materially
affected, or are reasonably likely to materially affect the Company's internal
control over financial reporting.

     Reference is made to the Certifications of the Chief Executive Officer and
the Chief Financial Officer about these and other matters attached as Exhibits
31.1, 31.2 and 32.1 to this report.
<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 17


                           PART II - OTHER INFORMATION
                           ---------------------------

ITEM 1. LEGAL PROCEEDINGS
-------------------------

     The manufacture and sale of our products exposes us to product liability
claims and product recalls, including those which may arise from misuse or
malfunction of, or design flaws in, our products or use of our products with
components or systems not manufactured or sold by us. Product liability claims
or product recalls, regardless of their ultimate outcome, could require us to
spend significant time and money in litigation or to pay significant damages. We
are currently a defendant in a pending product liability action which may be
scheduled for trial in early 2009. Although we believe that our product
liability insurance is sufficient to cover any damages and costs that are likely
with respect to this matter, there can be no assurance that this will be the
case with respect to any future matters. Furthermore, we may not be able to
obtain insurance in the future at satisfactory rates or in adequate amounts. In
addition, publicity pertaining to the misuse or malfunction of, or design flaws
in, our products could impair our ability to successfully market and sell our
products and could lead to product recalls.

     In addition, we may become, in the normal course of our business
operations, a party to other legal proceedings in addition to those described in
the paragraph above. None of these other proceedings would be expected to have a
material adverse impact on our results of operations, financial condition, or
cash flows.


ITEM 6. EXHIBITS
----------------

     31.1   Certification pursuant to Rule 13a-14(a) of Andrew E. Kersey,
            President and Chief Executive Officer

     31.2   Certification pursuant to Rule 13a-14(a) of Jeffery A. Baird, Chief
            Financial Officer

     32.1   Certification pursuant to 18 U.S.C. 1350 of Periodic Financial
            Report of Andrew E. Kersey, President and Chief Executive Officer
            and Jeffery A. Baird, Chief Financial Officer



<PAGE>
                                                                       Form 10-Q
                                                              September 30, 2008
                                                                         Page 18



                                   SIGNATURES
                                   ----------

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



CAS MEDICAL SYSTEMS, INC.
-------------------------
     (Registrant)



/s/  Andrew E. Kersey                                   Date:   November 6, 2008
------------------------------------------
By:  Andrew E. Kersey
     President and Chief Executive Officer



/s/  Jeffery A. Baird                                   Date:   November 6, 2008
------------------------------------------
By:  Jeffery A. Baird
     Chief Financial Officer