SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                   __________

                                    Form 10-Q

  X  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE SECURITIES
---- EXCHANGE  ACT  OF  1934
     For  the  quarterly  period  ended  September  30,  2001
                                         --------------------

                                       OR

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(d)  OF THE SECURITIES
---- EXCHANGE  ACT  OF  1934

     For  the  transition  period  from  ____________  to  ____________

                         Commission file number -0-16061
                                                --------

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

                 Delaware                              39-1501563
  ----------------------------------------  ------------------------------------
     (State or other jurisdiction             (IRS Employer Identification No.)
   of incorporation or organization)

  20925 Crossroads Circle, Waukesha, Wisconsin                    53186
 -------------------------------------------------------------------------------
 (Address of principal executive offices)                       (Zip Code)

Registrant's  telephone  number  including  area  code  (262)  798-8282
                                                        ---------------

                                      N/A
-------------------------------------------------------------------------
  Former  name,  former  address  and  former fiscal year, if changed since last
report.

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

Number of shares outstanding of each class of the registrant's classes of common
stock  as  of  September  30,  2001:  Class  A  Common  Stock 10,796,224 shares.





<PAGE>
                             CRITICARE SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
                      SEPTEMBER 30, 2001 AND JUNE 30, 2001

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                        September 30,     June 30,
                                                                            2001          2001
                                                                        -------------  ------------
<S>                                                                     <C>            <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . .  $  1,477,696   $ 3,362,104
Accounts receivable, less allowance for doubtful accounts
   of $1,075,000 and $1,000,000, respectively. . . . . . . . . . . . .     6,248,352     7,122,464
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     2,464,420     3,970,454
Other receivables. . . . . . . . . . . . . . . . . . . . . . . . . . .        32,451        33,788
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     8,998,080     8,600,413
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .       454,764       502,172
                                                                        -------------  ------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . .    19,675,763    23,591,395

Property, plant and equipment - net. . . . . . . . . . . . . . . . . .     6,289,716     6,182,470

License rights and patents - net . . . . . . . . . . . . . . . . . . .        96,238        97,989
                                                                        -------------  ------------

TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 26,061,717   $29,871,854
                                                                        =============  ============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  2,474,783   $ 3,421,776
Accrued liabilities:
    Compensation and commissions . . . . . . . . . . . . . . . . . . .       914,234     1,196,493
    Product warranties . . . . . . . . . . . . . . . . . . . . . . . .       230,000       220,000
    Accrued taxes other than income. . . . . . . . . . . . . . . . . .       107,976        96,947
    Accrued royalty. . . . . . . . . . . . . . . . . . . . . . . . . .        96,871        68,351
    Accrued audit and legal fees . . . . . . . . . . . . . . . . . . .        36,998        35,900
    Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       437,249       469,674
Current maturities of long-term debt . . . . . . . . . . . . . . . . .        88,430        86,766
                                                                        -------------  ------------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . .     4,386,541     5,595,907

LONG-TERM DEBT, less current maturities. . . . . . . . . . . . . . . .     3,174,887     3,197,126

OTHER LONG-TERM OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . .        57,171        73,005


STOCKHOLDERS' EQUITY:
Preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .             -             -
Common stock - $.04 par value, 15,000,000 shares authorized,
   10,796,224 shares issued and outstanding. . . . . . . . . . . . . .       431,849       431,849
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . .    22,497,058    22,494,548
Common stock held in treasury (62,706 and 64,134 shares, respectively)      (116,806)     (119,467)
Retained earnings (accumulated deficit). . . . . . . . . . . . . . . .    (6,833,403)   (5,771,568)
Accumulated comprehensive income . . . . . . . . . . . . . . . . . . .     2,464,420     3,970,454
                                                                        -------------  ------------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . .    18,443,118    21,005,816
                                                                        -------------  ------------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 26,061,717   $29,871,854
                                                                        =============  ============
</TABLE>



See  notes  to  consolidated  financial  statements.

                                        2
<PAGE>

                             CRITICARE SYSTEMS, INC.
                         CONSOLIDATED INCOME STATEMENTS
                 THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                            2001          2000
                                        -------------  -----------
<S>                                     <C>            <C>
NET SALES. . . . . . . . . . . . . . .  $  5,489,137   $6,229,877

COST OF GOODS SOLD . . . . . . . . . .     3,677,701    3,718,831
                                        -------------  -----------

GROSS PROFIT . . . . . . . . . . . . .     1,811,436    2,511,046

OPERATING EXPENSES:
Marketing. . . . . . . . . . . . . . .     1,600,355    1,475,109
Research, development and engineering.       587,083      581,282
Administrative . . . . . . . . . . . .       660,778      562,238
                                        -------------  -----------
Total. . . . . . . . . . . . . . . . .     2,848,216    2,618,629

(LOSS) FROM OPERATIONS . . . . . . . .    (1,036,780)    (107,583)

OTHER INCOME (EXPENSE):
Interest expense . . . . . . . . . . .       (62,676)     (64,806)
Interest income. . . . . . . . . . . .        33,044        6,419
Other income/(expense) . . . . . . . .         4,577            -
                                        -------------  -----------
Total. . . . . . . . . . . . . . . . .       (25,055)     (58,387)

 (LOSS) BEFORE INCOME TAXES. . . . . .    (1,061,835)    (165,970)

INCOME TAX PROVISION . . . . . . . . .             -            -
                                        -------------  -----------

NET (LOSS) . . . . . . . . . . . . . .  $ (1,061,835)  $ (165,970)
                                        =============  ===========

NET (LOSS) PER COMMON SHARE
Basic. . . . . . . . . . . . . . . . .  $      (0.10)  $    (0.02)
Diluted. . . . . . . . . . . . . . . .  $      (0.10)  $    (0.02)

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING:
Basic. . . . . . . . . . . . . . . . .    10,733,029    8,898,607
Diluted. . . . . . . . . . . . . . . .    10,733,029    8,898,607
</TABLE>



See  notes  to  consolidated  financial  statements.

                                        3
<PAGE>
                             CRITICARE SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                           2001         2000
                                                       ------------  ----------
<S>                                                    <C>           <C>
OPERATING ACTIVITIES:
Net (loss). . . . . . . . . . . . . . . . . . . . . .  $(1,061,835)  $(165,970)
Adjustments to reconcile net (loss) to net cash
  (used in) provided by operating activities:
    Depreciation. . . . . . . . . . . . . . . . . . .      246,045     127,499
    Amortization. . . . . . . . . . . . . . . . . . .        1,751       3,600
    Provision for doubtful accounts . . . . . . . . .       75,000     100,000
    Changes in assets and liabilities:
      Accounts receivable . . . . . . . . . . . . . .      799,112     231,108
      Other receivables . . . . . . . . . . . . . . .        1,337      (7,130)
      Inventories . . . . . . . . . . . . . . . . . .     (660,432)    430,907
      Prepaid expenses. . . . . . . . . . . . . . . .       47,408    (271,628)
      Accounts payable. . . . . . . . . . . . . . . .     (946,993)   (249,210)
      Accrued liabilities . . . . . . . . . . . . . .     (279,871)     (4,967)
                                                       ------------  ----------
Net cash (used in) provided by operating activities .   (1,778,478)    194,209

INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net . . .      (90,526)   (116,434)
                                                       ------------  ----------
Net cash (used in) provided by investing activities .      (90,526)   (116,434)

FINANCING ACTIVITIES:
Principal payments on long-term debt. . . . . . . . .      (20,575)    (19,023)
Proceeds from issuance of common stock. . . . . . . .        5,171      39,258
                                                       ------------  ----------
Net cash provided by (used in) financing activities .      (15,404)     20,235

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS.   (1,884,408)     98,010
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR. . . . .    3,362,104     114,830
                                                       ------------  ----------
CASH AND CASH EQUIVALENTS, END OF YEAR. . . . . . . .  $ 1,477,696   $ 212,840
                                                       ============  ==========

</TABLE>



See  notes  to  consolidated  financial  statements.

                                        4
<PAGE>


                             CRITICARE SYSTEMS, INC.
              Condensed Notes to Consolidated Financial Statements
                                   (Unaudited)

1.  BASIS  OF  PRESENTATION

The  accompanying unaudited financial statements have been prepared by Criticare
Systems,  Inc.  (the  "Company")  pursuant  to  the rules and regulations of the
Securities  and  Exchange Commission ("SEC") and, in the opinion of the Company,
include  all  adjustments  necessary  for  a  fair statement of results for each
period shown.  Certain information and footnote disclosures normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  condensed  or  omitted  pursuant  to  such SEC rules and
regulations.  The  Company  believes  that  the disclosures made are adequate to
prevent  the financial information given from being misleading.  It is suggested
that  these  financial  statements  be  read  in  conjunction with the financial
statements  and notes thereto included in the Company's latest annual report and
previously  filed  Form  10-K.  Certain  amounts  from the fiscal 2001 financial
statements  have  been  reclassified  to  conform  to  the  2002  presentation.


2.  INVENTORY  VALUATION

Inventory  is stated at the lower of cost or market, with cost determined on the
first-in,  first-out method.  Components of inventory consisted of the following
at  September  30,  2001  and  June  30,  2001,  respectively:
<TABLE>
<CAPTION>

                                 September 30, 2001   June 30, 2001
                                 -------------------  --------------
<S>                              <C>                  <C>
Component parts . . . . . . . .  $         3,955,229  $    3,784,491
Work in process . . . . . . . .            1,598,046       1,372,587
Finished units. . . . . . . . .            3,811,099       3,768,335
                                 -------------------  --------------
Total inventories . . . . . . .            9,364,374       8,925,413
Less:  reserve for obsolescence              366,294         325,000
                                 -------------------  --------------
Net inventory . . . . . . . . .  $         8,998,080  $    8,600,413
</TABLE>


3.  INVESTMENTS

The  Company  held  456,374  shares  of  Immtech International, Inc. ("Immtech")
stock,  which  was trading at $5.40 per share, on September 28, 2001. The market
value  of  these  shares  could change substantially due to overall market risk.

The  Company  entered  into  an agreement with Immtech dated November 2, 2001 in
order  to  have  the  restricted  legends  removed  from  the  Immtech  stock
certificates.  Under the agreement, portions of the Company's Immtech stock will
be  subject  to restrictions on transfer for relatively short-term periods of up
to  six  months,  after  which time all such stock will be free of restrictions.



                                        5
<PAGE>
4.  PROPERTY,  PLANT  AND  EQUIPMENT

Property,  plant  and  equipment  consist  of  the  following:
<TABLE>
<CAPTION>

                                      September 30, 2001   June 30, 2001
                                      -------------------  --------------
<S>                                   <C>                  <C>
Land and building. . . . . . . . . .  $         4,525,000  $    4,525,000
Machinery and equipment. . . . . . .            2,009,480       2,055,518
Furniture and fixtures . . . . . . .              812,931         837,238
Demonstration and loaner monitors. .            1,726,674       1,463,909
Production tooling . . . . . . . . .            3,201,683       3,122,938
                                      -------------------  --------------
Property, plant and equipment - cost           12,275,768      12,004,603
Less:  accumulated depreciation. . .            5,986,052       5,822,133
                                      -------------------  --------------
Property, plant and equipment - net.  $         6,289,716  $    6,182,470
</TABLE>


                                        6
<PAGE>
                             CRITICARE SYSTEMS, INC.
                     Management's Discussion and Analysis of
                  Results of Operations and Financial Condition
                 Three Months Ended September 30, 2001 and 2000

RESULTS  OF  OPERATIONS
-----------------------

Net  sales  for the three months ended September 30, 2001 decreased 12% from the
same  period  in fiscal 2000.  The sales reduction was driven by a 10% shortfall
in  the  number of units sold and a 2-4% decrease in the average sales price per
unit  from  the  prior year of products contributing the majority of the revenue
for  the  quarter.  The  decrease  in  sales  volume  can  be  attributed  to  a
combination  of  the  slowing  economy  and  the events of September 11th, which
basically  eliminated  sales  from  one  of the Company's largest domestic trade
shows  that  was held that week. In each of the last two fiscal years this trade
show  has generated up to 5% of the Company's total annual revenue, the majority
being  contributed  in  the  first  and  second  fiscal  quarters.  In addition,
international  sales  that  historically  represent  approximately  40% of total
Company  sales  were down in the first quarter from the same period in the prior
year.  On  a positive note, OEM sales continued to be a significant distribution
channel  for  the  Company  for  the  three  months  ended  September  30, 2001,
increasing  22%  from  the  same  period  the prior year and contributing 21% to
overall  Company  sales.  This  trend  towards  higher  OEM sales is expected to
continue  for  the  remainder  of  fiscal  2002  and  future  years.  See
"Forward-Looking  Statements."

Pricing  pressures,  combined  with  higher  manufacturing  costs to support the
Company's  efforts  to  transition  its  manufacturing  offshore, were the major
contributors  to the lower gross profit percentage of 33% generated in the first
quarter  of  the  current  year.  The  gross  profit  percentage  was down seven
percentage points from the 40% gross profit percentage that was generated in the
first  quarter  of  the  prior  year.  In addition to the lower sales prices for
monitors  discussed  above,  margins  on  accessory sales declined 4  percentage
points  in  the  current  quarter  from  the prior year.  The Company expects to
complete  its  outsourcing  plan  by  the  end  of calendar year 2001 and to see
improved  margins  for  the  last  two  quarters  of fiscal 2002 as it begins to
realize  lower  product  costs  from  its  foreign  manufacturers.  See
"Forward-Looking  Statements."

Operating  expenses  increased $229,587 for the three months ended September 30,
2001  compared  to  the  prior  year  due to higher marketing and administrative
spending.  Marketing  expenses  increased $125,246 mainly due to higher contract
labor  costs and operating supply spending for warranty repairs and paid service
work.  Administrative expenses increased $98,540 due mostly to higher accounting
and  consulting  fees  and  legal expenses related to various corporate matters.

The  lower  sales  and  the  decrease  in gross profit performance for the three
months  ended  September  30, 2001, combined with the higher operating expenses,
resulted  in  a  net  loss before taxes of $1,061,835 which was $895,865 greater
than  the  $165,970  loss  generated for the same period in the prior year.  The
Company  expects  profitability  to  improve  significantly  in  the  last three
quarters  of fiscal 2002 from the results generated in the first quarter, driven
by  higher sales, stronger margins as it begins to realize the cost savings from
its  outsourced  manufacturing  plan,  and  lower  operating  expenses.  See
"Forward-Looking  Statements."


                                        7
<PAGE>
LIQUIDITY
---------

As  of  September  30, 2001, the Company had a cash balance of $1,477,696, which
was  down  from  a  balance  of  $3,362,104  at June 30, 2001, and no short-term
borrowings.  $1,778,478  of  the $1,884,408 reduction in cash in the quarter was
used  to  support  operating  activities,  while another $90,526 was invested in
property,  plant, and equipment and $20,575 was used to pay down long term debt.
The  decrease  in  the  Company's  cash position in the fiscal first quarter was
primarily  a  timing  issue as strong cash collections in the first month of the
fiscal  second  quarter  have  increased the Company's cash and cash equivalents
balance  to  approximately  $2.6  million  in early November. The favorable cash
inflow  in  October  2001 was driven mainly by payments of receivables for sales
made  in June 2001 with extended payment terms. The Company believes all capital
and liquidity requirements for the remainder of fiscal 2002 will be satisfied by
cash  generated from operations and periodic utilization of a $4,000,000 line of
credit  currently  in  place, if necessary. At September 30, 2001, there were no
borrowings  outstanding under this line of credit. The line of credit expires in
November  2002.

FORWARD  LOOKING  STATEMENTS
----------------------------

A  number  of  the  matters  and  subject  areas  discussed  herein that are not
historical  or  current  facts  deal  with  potential  future  circumstances and
developments.  These  include anticipated product introductions, expected future
financial  results,  liquidity  needs,  financing  ability,  management's or the
Company's expectations and beliefs and similar matters discussed in Management's
Discussion  and  Analysis  or elsewhere herein.  The discussions of such matters
and  subject  areas  are  qualified  by  the  inherent  risk  and  uncertainties
surrounding  future  expectations generally, and also may materially differ from
the  Company's  actual  future  experience.

The  Company's  business,  operations  and  financial performance are subject to
certain  risks  and  uncertainties which could result in material differences in
actual  results  from management's or the Company's current expectations.  These
risks  and  uncertainties  include,  but  are  not  limited to, general economic
conditions,  demand  for  the  Company's  products,  costs  of  operations,  the
development  of  new  products,  the  reliance  on  single sources of supply for
certain components in the Company's products, government regulation, health care
cost containment programs, the effectiveness of the Company's programs to manage
working  capital  and  reduce  costs,  competition  in  the  Company's  markets,
unanticipated  difficulties  in outsourcing the manufacturing of the majority of
its  products  to  foreign  manufacturers  and  risks  related  to  foreign
manufacturing,  including  economic and political instability, trade and foreign
tax  laws,  production  delays  and  cost  overruns and quality control, and the
Company's  ability  to  reduce  costs  by  eliminating  excess  capacity  at its
principal  facility.



                                        8
<PAGE>
                           PART II - OTHER INFORMATION

Item  6.  Exhibits  and  Reports  on  Form  8-K.
          --------------------------------------

     (a)  Exhibits:

          3.1  Restated  Certificate  of  Incorporation  of  the  Company
               (incorporated by reference to the Registration Statement filed on
               Form  S-1,  Registration  No.  33-13050).

          3.2  By-Laws  of  the  Company  (incorporated  by  reference  to  the
               Registration  Statement  filed  on  Form  S-1,  Registration  No.
               33-13050).

          4.1  Specimen  Common  Stock certificate (incorporated by reference to
               the  Registration  Statement  filed on Form S-1, Registration No.
               33-13050).

          4.2  Rights  Agreement  (incorporated  by  reference  to the Company's
               Current  Report  on  Form  8-K  filed  on  April  18,  1997).

     (b)  Reports  on  Form  8-K:  None in the quarter ended September 30, 2001.




                                        9
<PAGE>

                                   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.

                                         CRITICARE  SYSTEMS,  INC.
                                               (Registrant)

Date:  November  14,  2001               BY   /s/ Michael J. Sallmann
                                            ------------------------------------
                                             Michael  J.  Sallmann
                                             Vice  President  -  Finance
                                             (Chief  Accounting  Officer  and
                                             Duly  Authorized  Officer)


                                       10