SECURITIES
      AND EXCHANGE COMMISSION





Washington,
      D.C. 20549


__________





Form
      10-Q





X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR
      15(d) OF THE SECURITIESEXCHANGE ACT OF 1934




For
      the quarterly period ended
September 30, 2007




OR





_____  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF
      1934





For
      the
      transition period from ____________ to ____________





Commission
      file number -1-31943





**CRITICARE
                SYSTEMS, INC**(Exact
                Name of Registrant as Specified in Its
                Charter)





Delaware
            
            39-1501563(State
                or Other Jurisdiction of
              Incorporation
                or Organization)
            
            (I.R.S.
                Employer Identification No.)





20925 Crossroads
                Circle, Suite 100, 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 _____





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer.  See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange
      Act.


Large
      accelerated filer
 _____                                                   Accelerated
      filer 
_____                                             Non-accelerated
      filer X




Indicate
      by check mark whether the registrant is a shell company (as defined in Exchange
      Act Rule 12b-2).





Yes
      _____     No  X




Number
      of
      shares outstanding of each class of the registrant's classes of common stock
      as
      of September 30, 2007:  Voting Common Stock, 12,318,985
      shares.








CRITICARE
      SYSTEMS, INC.


CONSOLIDATED
      BALANCE SHEETS


SEPTEMBER
      30, 2007 AND JUNE 30, 2007





(UNAUDITED)


ASSETS
            
            September
                30,
              2007
            
            
            June
                30,
              2007CURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            5,833,213
            
            
            $
            4,635,823Accounts
                receivable, less allowance for doubtful accountsof $417,750 and $497,638, respectively
            
            
            5,959,986
            
            
            
            5,991,999Other
                receivables
            
            
            254,298
            
            
            
            251,950Short-term
                note receivable
            
            
            100,000
            
            
            
            50,000Inventories
            
            
            7,968,924
            
            
            
            8,177,523Prepaid
                expenses
            
            
            332,287
            
            
            
            219,859Total
                current assets
            
            
            20,448,708
            
            
            
            19,327,154Property,
                plant and equipment – net
            
            
            2,325,872
            
            
            
            2,190,389License
                rights and patents – net
            
            
            54,229
            
            
            
            55,980Long-term
                note receivable
            
            
            75,000
            
            
            
            75,000Total
                other assets
            
            
            129,229
            
            
            
            130,980TOTAL
                ASSETS
            
            $
            22,903,809
            
            
            $
            21,648,523LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIES:Accounts
                payable
            
            $
            4,223,325
            
            
            $
            3,826,834Accrued
                liabilities:Compensation
                and commissions
            
            
            1,103,477
            
            
            
            836,720Product
                warranties
            
            
            342,000
            
            
            
            349,000Other
            
            
            119,035
            
            
            
            191,389Obligations
                under capital lease
            
            
            75,713
            
            
            
            74,148Total
                current liabilities
            
            
            5,863,550
            
            
            
            5,278,091LONG-TERM
                LIABILITIES:Obligations
                under capital lease, less current portion
            
            
            84,436
            
            
            
            59,678Total
                long-term liabilities
            
            
            84,436
            
            
            
            59,678TOTAL
                LIABILITIES
            
            
            5,947,986
            
            
            
            5,337,769STOCKHOLDERS'
                EQUITY:Preferred
                stock - $.04 par value, 500,000 shares authorizedno
                shares issued or outstanding
            
            
            —
            
            
            
            —Common
                stock - $.04 par value, 15,000,000 shares authorized,
                12,413,005 and12,409,631 shares issued, and 12,318,985 and 12,313,321 shares
                outstanding,
              respectively
            
            
            496,520
            
            
            
            496,385Additional
                paid-in capital
            
            
            26,359,660
            
            
            
            26,338,267Common
                stock held in treasury at cost (94,020 and 96,310 shares,
                respectively)
            
            
            (352,236
            )
            
            
            (356,502
            )Retained
                earnings (accumulated deficit)
            
            
            (9,450,127
            )
            
            
            (10,088,767
            )Cumulative
                translation adjustment
            
            
            (97,994
            )
            
            
            (78,629
            )Total
                stockholders' equity
            
            
            16,955,823
            
            
            
            16,310,754TOTAL
                LIABILITIES AND STOCKHOLDERS’ EQUITY
            
            $
            22,903,809
            
            
            $
            21,648,523





See
      notes
      to consolidated financial statements.





2





CRITICARE
      SYSTEMS, INC.


CONSOLIDATED
      STATEMENTS OF INCOME


THREE
      MONTHS ENDED SEPTEMBER 30, 2007 AND 2006





(UNAUDITED)


**2007**
            
            
            **2006**NET
                SALES
            
            $
            9,137,725
            
            
            $
            8,206,593COST
                OF GOODS SOLD
            
            
            5,692,344
            
            
            
            5,085,520GROSS
                PROFIT
            
            
            3,445,381
            
            
            
            3,121,073OPERATING
                EXPENSES:Sales
                and marketing
            
            
            1,662,673
            
            
            
            1,296,373Research,
                development and engineering
            
            
            550,473
            
            
            
            642,282Administrative
            
            
            726,922
            
            
            
            856,228Total
            
            
            2,940,068
            
            
            
            2,794,883INCOME
                FROM OPERATIONS
            
            
            505,313
            
            
            
            329,190OTHER
                INCOME (EXPENSE):Interest
                expense
            
            
            (3,054
            )
            
            
            (4,119
            )Interest
                income
            
            
            44,760
            
            
            
            33,723Foreign
                currency exchange gain (loss)
            
            
            32,329
            
            
            
            254Other
                income (expense)
            
            
            59,293
            
            
            
            (23,172
            )Total
            
            
            133,328
            
            
            
            6,686INCOME
                BEFORE INCOME TAXES
            
            
            638,641
            
            
            
            332,876INCOME
                TAX PROVISION
            
            
            —
            
            
            
            —NET
                INCOME
            
            $
            638,641
            
            
            $
            332,876NET
                INCOME PER COMMON SHARE:Basic
            
            $
            0.05
            
            
            $
            0.03Diluted
            
            $
            0.05
            
            
            $
            0.03WEIGHTED
                AVERAGE NUMBER OF COMMONSHARES
                OUTSTANDING:Basic
            
            
            12,317,478
            
            
            
            12,293,773Diluted
            
            
            12,368,384
            
            
            
            12,368,293





See
      notes
      to consolidated financial statements.





3





CRITICARE
      SYSTEMS, INC.


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


THREE
      MONTHS ENDED SEPTEMBER 30, 2007 AND 2006





(UNAUDITED)


**2007**
            
            
            **2006**OPERATING
                ACTIVITIES:Net
                income
            
            $
            638,641
            
            
            $
            332,876Adjustments
                to reconcile net income to net cash used inoperating
                activities:Depreciation
            
            
            104,170
            
            
            
            131,658Amortization
            
            
            1,751
            
            
            
            1,750Share
                based compensation
            
            
            9,139
            
            
            
            29,467Provision
                for doubtful accounts
            
            
            1,433
            
            
            
            1,674Provision
                for obsolete inventory
            
            
            40,168
            
            
            
            42,000Changes
                in assets and liabilities:Accounts
                receivable
            
            
            9,254
            
            
            
            (2,086,226
            )Other
                receivables
            
            
            (52,348
            )
            
            
            33,805Inventories
            
            
            217,450
            
            
            
            121,578Prepaid
                expenses
            
            
            (112,428
            )
            
            
            (20,866
            )Accounts
                payable
            
            
            396,491
            
            
            
            491,363Accrued
                liabilities
            
            
            188,968
            
            
            
            (121,905
            )Net
                cash provided by (used in) operating activities
            
            
            1,442,689
            
            
            
            (1,042,826
            )INVESTING
                ACTIVITIES:Purchases
                of property, plant and equipment, net
            
            
            (288,673
            )
            
            
            (63,144
            )Net
                cash used in investing activities
            
            
            (288,673
            )
            
            
            (63,144
            )FINANCING
                ACTIVITIES:Retirement
                of obligations under capital lease
            
            
            24,758
            
            
            
            (17,960
            )Proceeds
                from issuance of common stock
            
            
            16,655
            
            
            
            11,208Net
                cash provided by (used in) financing activities
            
            
            41,413
            
            
            
            (6,752
            )EFFECT
                OF EXCHANGE RATE CHANGES ON CASH
            
            
            1,961
            
            
            
            (5,609
            )NET
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
            
            
            1,197,390
            
            
            
            (1,118,331
            )CASH
                AND CASH EQUIVALENTS, BEGINNING OF PERIOD
            
            
            4,635,823
            
            
            
            3,793,781CASH
                AND CASH EQUIVALENTS, END OF PERIOD
            
            $
            5,833,213
            
            
            $
            2,675,450SUPPLEMENTAL
                CASH FLOW INFORMATION:Cash
                paid for:Income
                taxes paid-net
            
            $
            6,025
            
            
            $
            9,325Interest
            
            $
            3,054
            
            
            $
            4,119





See
      notes
      to consolidated financial statements.




4





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.  The
      three-month results represent past performance, and are not necessarily
      indicative of results for an entire year.  Certain amounts from the
      fiscal 2006 financial statements have been reclassified to conform to the 2007
      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, 2007 and June 30, 2007, respectively:





September
                30,
              2007
            
            
            June
                30,
              2007Component
                parts
            
            $
            2,574,628
            
            
            $
            2,507,293Work
                in process
            
            
            1,276,266
            
            
            
            1,106,885Finished
                units
            
            
            4,533,030
            
            
            
            4,938,345Total
                inventories
            
            
            8,383,924
            
            
            
            8,552,523Less:  reserve
                for obsolescence
            
            
            415,000
            
            
            
            375,000Net
                inventory
            
            $
            7,968,924
            
            
            $
            8,177,523





**3.  Property,
      Plant and Equipment**





Property,
      plant and equipment consist of the following:





September
                30,
              2007
            
            
            June
                30,
              2007Machinery
                and equipment
            
            $
            3,603,199
            
            
            $
            3,415,501Furniture
                and fixtures
            
            
            988,271
            
            
            
            946,668Leasehold
                improvements
            
            
            329,995
            
            
            
            290,084Production
                tooling
            
            
            2,405,562
            
            
            
            2,389,507Demonstration
                and loaner monitors
            
            
            1,971,673
            
            
            
            2,025,924Property,
                plant and equipment – cost
            
            
            9,298,700
            
            
            
            9,067,684Less:  accumulated
                depreciation
            
            
            (6,972,828
            )
            
            
            (6,877,295
            )Property,
                plant and equipment - net
            
            $
            2,325,872
            
            
            $
            2,190,389






5




**4.  Stock
      Options**





The
      Company has adopted the fair value recognition provisions of SFAS No. 123
      (R), “Share-Based Payment”.  Under the modified prospective method of
      adoption selected by the Company, compensation cost recognized is the same
      as
      that which would have been recognized had the recognition provisions of SFAS
      No.
      123 been applied from its original effective date.  Stock-based
      employee compensation expense included in reported net income totaled $9,139
      and
      $29,467 for the three months ended September 30, 2007 and 2006,
      respectively.





The
      Company did not grant any options for the three months ended September 30,
      2007.  The fair value of stock options used to compute net income per
      share is the estimated fair value at the grant date using the Black-Scholes
      option-pricing model.  The assumptions used when calculating the
      option-pricing model include the expected volatility of Criticare’s common stock
      at 51.0%, the risk-free interest rate of 4.73%, the expected option life of
      9.00
      years and the forfeiture rate of option grants approximates 0%.





**5.  Income
      Taxes**





No
      income
      tax provision has been made in the consolidated statements of income due to
      federal and state net operating loss carry forwards that will be utilized to
      offset taxable income earned.  At September 30, 2007, the Company had
      federal net operating loss carry forwards of approximately $17,301,000 (which
      expire from 2008 through 2027) and state net operating loss carry forwards
      of
      approximately $10,187,000 (which expire from 2008 through 2021) available to
      offset future taxable income.  The Company has recorded a valuation
      allowance to offset the related deferred income tax assets arising from these
      net operating loss carry forwards due to the uncertainty of realizing the
      benefits of these assets in future years.





The
      Company or one of its subsidiaries files income tax returns in the U.S. federal
      jurisdiction, and various states and foreign jurisdictions.  The
      Company adopted the provisions of FASB Interpretation No. 48, "Accounting for
      Uncertainty in Income Taxes, on July 1, 2007" ("FIN 48").  As a result
      of the implementation of FIN 48, the Company did not recognize an increase
      in
      the liability for unrecognized tax benefits.  A reconciliation of the
      beginning and ending amount of unrecognized tax benefits is as
      follows:




Balance
                at July 1, 2007
            
            $
            0Additions
                based on tax positions related to the current year
            
            
            --Additions
                for tax positions of prior years
            
            
            --Reductions
                for tax positions of prior years
            
            
            --Settlements
            
            
            --Balance
                at September 30, 2007
            
            $
            0





The
      Company recognizes interest accrued related to unrecognized tax benefits in
      interest expense and penalties in operating expenses.  During the year
      ended June 30, 2007 the Company did not recognize any interest or
      penalties.  As of September 30, 2007, the Company had not accrued for
      any payments of interest and penalties.






6




**6. 
      Line of Credit Facility**





At
      September 30, 2007, the Company had a $2,000,000 demand line of credit facility
      with a commercial bank to meet its short-term borrowing
      needs.  Borrowings against the line were payable on demand with
      interest payable monthly at the bank's reference rate, less 0.25% (7.50% as
      of
      September 30, 2007).  As of September 30, 2007 and June 30, 2007,
      there were no borrowings against the line.  Borrowings under the line
      of credit facility are collateralized by substantially all assets of the
      Company.  The credit facility has covenants, which require minimum
      income or liquidity levels.  The Company was in compliance with the
      covenants at September 30, 2007.





**7. 
      Net Income Per Common Share**





Basic
      net
      income per share is computed using the weighted average number of common shares
      outstanding during the periods.  Diluted net income per share is
      computed using the weighted average number of common and dilutive common
      equivalent shares outstanding during the periods.  Additionally,
      antidilution occurs when the exercise price of the option is higher than the
      average market price of the common stock.  The diluted weighted
      average common shares outstanding would be higher by 137,750 shares for the
      three months ended September 30, 2007 and by 76,250 shares for the three months
      ended September 30, 2006 without this anti-dilutive impact.




7


CRITICARE
      SYSTEMS, INC.


Management's
      Discussion and Analysis of


Results
      of Operations and Financial Condition


Three
      Months Ended September 30, 2007 and 2006





**Results
      of Operations**





Net
      sales
      of $9,137,725 for the three months ended September 30, 2007 increased 11.3%
      from
      $8,206,595 for the same period in fiscal 2007.  A 25.2% increase in
      the average sales price and an 14.8% increase in the accessory sales were
      partially offset by a 7.1% reduction in number of units shipped, due to
      variations in the product mix, in the current period.  The increased
      sales were the result of a $1,624,753 increase in international sales and
      $555,174 in OEM sales, which was partially offset by a $1,127,477 decrease
      in
      domestic alternate care sales.  The increase in international sales
      was driven by the partial shipment of an order to the ministry of health of
      the
      Republic of Iraq of $1,520,257.  OEM sales increased due to the start
      of the production shipments to our newest OEM partner, Fukuda Denshi, Inc.
      of
      Japan.  The decrease in domestic alternate care sales was due to a
      large order to replace vital signs monitors in domestic plasma collection
      centers shipped in the first quarter of fiscal 2007 with no corresponding sales
      in fiscal 2008.





The
      gross
      profit percentage of 37.7% for the three months ended September 30, 2007
      decreased slightly from 38.0% for the same period in fiscal 2007. The decreased
      margins in the current period were mainly due to the small variations in the
      product mix and the timing of the manufacturing cycle.





Operating
      expenses for the three months ended September 30, 2007 increased $145,185 from
      the same period in fiscal 2007 due mainly to an increase of $366,300 in sales
      and marketing expenses, which was partially offset by a decrease of $129,306
      in
      administrative expenses.  The increase of $366,300 in sales and
      marketing expenses was driven by the partial shipment of the order to the
      ministry of health of the Republic of Iraq in which the Company's dealer earned
      commissions of $263,140.  Administrative expenses decreased by
      $129,306 due to the $91,540 of expenses incurred during the first quarter of
      fiscal 2007, in connection with the BlueLine consent solicitation, with no
      corresponding expense in fiscal 2008.





Total
      other income for the three months ended September 30, 2007 increased $126,642
      from the same period in fiscal 2007.  This increase was mainly due to
      increased foreign currency exchange rate gain of $32,075 and increased royalty
      income of $30,250 received during the quarter.





The
      net
      income of $638,641 for the three months ended September 30, 2007 as compared
      to
      net income of $332,876 for the same period in fiscal 2007, was the result of
      a
      $324,308 increase in gross profit and a $126,642 increase in total other income,
      partially offset by the increase in operating expenses of $145,185.




8


CRITICARE
      SYSTEMS, INC.


Management's
      Discussion and Analysis of


Results
      of Operations and Financial Condition





**Liquidity
      and Capital Resources**





As
      of
      September 30, 2007, the Company had a cash balance of $5,833,213, which was
      $1,197,390 higher than its balance at June 30, 2007 of $4,635,823 and $3,157,763
      higher than its balance at September 30, 2006.  The Company continues
      to maintain a long-term bank debt free balance sheet since August 30, 2002
      when
      it sold its building and used the proceeds from the sale to retire the long-term
      bank debt on the facility.





The
      Company’s cash position increased by $1,197,390 for the three months ended
      September 30, 2007 mainly due to $1,442,689 of cash provided by operating
      activities, which was partially offset by $288,673 of capital
      expenditures. Cash provided by operating activities of $1,442,689 for the
      three months ended September 30, 2007 was driven by net income of $638,641,
      a
      decrease of $217,450 in inventory and an increase in accounts payable of
      $396,491.





The
      Company believes all future capital and liquidity requirements will be satisfied
      by cash generated from operations, proceeds received from the issuance of common
      stock related to the exercise of stock options, and its current cash balances.
      No major capital equipment expenditures are expected in the Company’s current
      fiscal year ending June 30, 2008.  The Company also has a $2,000,000
      line of credit currently in place that could be utilized, if
      necessary.  At both September 30, 2007 and June 30, 2007, there were
      no borrowings outstanding under this line of credit.  The credit
      facility has covenants that require minimum income or liquidity
      levels.  The Company was in compliance with the covenants at September
      30, 2007.  This line expires in June 2008.





**Forward
      Looking Statements**





A
      number
      of the matters and subject areas discussed in this report 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 in this
      report.  These statements may be identified by the use of
      forward-looking words or phrases such as "anticipate," "believe," "could,"
      "expect," "intend," "may," "hope," "plan," "potential," "should," "estimate,"
      "predict," "continue," "future," "will," "would" or the negative of these terms
      or other words of similar meaning.





Such
      forward-looking statements are inherently subject to known and unknown risks
      and
      uncertainties.  The Company's actual results and future developments
      could differ materially from the results or developments expressed in, or
      implied by, these forward-looking statements.  Factors that may cause
      actual results to differ materially from those contemplated by such
      forward-looking statements 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,
      compliance with product safety regulations and product liability and product
      recall risks, risks relating to international sales and compliance with U.S.
      export regulations, 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.  Such uncertainties and other risks that may affect the
      Company's performance are discussed further in Part I, Item 1A, "Risk Factors,"
      in the Company's Form 10-K for the year ended June 30, 2007.  The
      Company undertakes no obligation to make any revisions to the forward-looking
      statements contained in this report or to update them to reflect events or
      circumstances occurring after the date of this report.






9




**Quantitative
      and Qualitative Disclosures abouto Market Risk**




The
      Company has a demand line of credit facility with a commercial bank with
      interest payable monthly at 25 basis points below the bank's reference
      rate.  The Company had no borrowings outstanding under this bank
      facility at September 30, 2007 and June 30, 2007.  Due historically to
      the lack of need to borrow from this credit facility and due to the Company’s
      current cash position, the Company is not subject to financial risk on this
      obligation if interest rates in the market change significantly.





The
      Company’s net sales are primarily denominated in United States dollars, except
      for a small amount of net sales from the Company’s operation in India
      denominated in Indian rupees.  As a result, part of the Company’s
      accounts receivable are denominated in rupees and translated into U.S. dollars
      for financial reporting purposes.  A 10% change in the exchange rate
      of the U.S. dollar with respect to the Indian rupee would not have a material
      adverse effect on the Company’s financial condition or results of operations for
      the quarter ended September 30, 2007.  The Company does not use any
      hedges or other derivative financial instruments to manage or reduce exchange
      rate risk.





**Controls
      and Procedures**





As
      of the
      end of the period covered by this report, 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 Vice President
      - Finance, of the Company’s disclosure controls and procedures (as defined in
      Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
      amended).  Based on this evaluation, the Company’s Chief Executive
      Officer and Vice President - Finance concluded that, as of the end of such
      period, the Company’s disclosure controls and procedures were effective in
      recording, processing, summarizing and reporting, on a timely basis, information
      required to be disclosed by the Company in reports that the Company files with
      or submits to the Securities and Exchange Commission.  It should be
      noted that in designing and evaluating the disclosure controls and procedures,
      management recognized 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 was required to apply
      its
      judgment in evaluating the cost-benefit relationship of possible controls and
      procedures.  The Company has designed its disclosure controls and
      procedures to reach a level of reasonable assurance of achieving the desired
      control objectives and based upon the evaluation described above, the Company’s
      Chief Executive Officer and Vice President –Finance concluded that the Company’s
      disclosure controls and procedures were effective at reaching that level of
      reasonable assurance.





There
      was
      no change in the Company’s internal control over financial reporting (as defined
      in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934,
      as
      amended) during the Company’s most recently completed fiscal quarter that has
      materially affected, or is reasonably likely to materially affect, the Company’s
      internal control over financial reporting.





10


PART
      II -
      OTHER INFORMATION





Item
      1A.  Risk Factors





There
      have been no material changes from the risk factors previously disclosed in
      Part
      I, Item 1A, "Risk Factors," of the Company's Form 10-K for the year ended June
      30, 2007.  Please refer to that section for disclosures regarding the
      risks and uncertainties relating to the Company's business.





Item
      6.    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
            
            Amended
                and Restated Rights Agreement, dated as of March 27, 2007, between
                the
                Company and LaSalle Bank, National Association, as rights agent
                (incorporated by reference to the Company’s Current Report on Form 8-K
                filed on March 30, 2007).31.1
            
            Certification
                of Emil H. Soika, President and Chief Executive Officer (Principal
                Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley
                Act of
                2002.31.2
            
            Certification
                of Joel D. Knudson, Vice President - Finance and Secretary (Principal
                Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley
                Act of
                2002.32*
            
            Certification
                of Principal Executive Officer and Principal Financial Officer pursuant
                to
                18 U.S.C. Section 1350.


__________________


*
      This
      Exhibit is not “filed” for purposes of Section 18 of the Securities Exchange Act
      of 1934, as amended, or incorporated by reference into any filing under the
      Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
      as
      amended.





11


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 9, 2007


BY 
/s/
      Joel D.
      Knudson


Joel
      D.
      Knudson


Vice
      President – Finance


(Chief
      Accounting Officer and


Duly
      Authorized Officer)








12