UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           -------------------------

                                    FORM 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
(Mark  One)

[x]     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT  OF  1934.

        For  the  fiscal  year  ended  June  30,  2001

[  ]    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 000-16061
                                               ---------

                            Criticare Systems, Inc.
                -------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


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

           Securities registered pursuant to Section 12(b) of the Act:

                                                    Name  of  Each  Exchange  on
     Title  of  Each  Class                                Which  Registered
     ----------------------                          --------------------------
                NA                                               NA
           -------------                                    -------------
                           [COVER PAGE 1 OF 2 PAGES.]

<PAGE>
           Securities registered pursuant to Section 12(g) of the Act:

                       Voting Common Stock, $.04 Par Value
                (together with associated Preferred Stock Purchase Rights)
      --------------------------------------------------------------------
                                (Title of class)

     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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  registrant's  knowledge, in definitive proxy or information statements
incorporated  by reference in Part III of this Form 10-K or any amendment to the
Form  10-K.  [  ]

     The aggregate market value of the voting common stock held by nonaffiliates
of the registrant as of August 31, 2001 was approximately $34,866,000. Shares of
voting  common stock held by any executive officer or director of the Registrant
and  any  person  who  beneficially  owns  10% or more of the outstanding voting
common  stock  have been excluded from this computation because such persons may
be  deemed  to  be  affiliates.  This determination of affiliate status is not a
conclusive  determination  for  other  purposes.

     On  August  31,  2001,  there  were  outstanding  10,796,224  shares of the
registrant's  $.04  par  value  voting  common  stock.

DOCUMENTS  INCORPORATED  BY  REFERENCE

     Portions  of the Proxy Statement for the Annual Meeting of the Stockholders
of  the  Registrant  to  be held November 30, 2001 are incorporated by reference
into  Part  III  of  this  report.

                           [COVER PAGE 2 OF 2 PAGES.]


<PAGE>
                                     PART I
                                     ------

Item  1.     BUSINESS.
-------      --------

     Criticare  Systems,  Inc.  (the  "Company"  or  "Criticare")  designs,
manufactures  and markets vital signs and gas monitoring instruments and related
noninvasive  sensors  used  to monitor patients in many healthcare environments.
Since  a  patient's  oxygen, anesthetic gas and carbon dioxide levels can change
dramatically  within  minutes,  causing severe side effects or death, continuous
monitoring of these parameters is increasing. The Company's monitoring equipment
improves  patient safety by delivering accurate, comprehensive and instantaneous
patient  information  to  the  clinician.  The  Company's  products  also  allow
hospitals  to  contain  costs  primarily by substituting cost-effective reusable
pulse  oximetry  sensors  for  disposable sensors, controlling the use of costly
anesthetics  and  increasing  personnel  productivity.

     To  meet  the needs of end-users in a wide variety of patient environments,
the  Company has developed a broad line of patient monitors which combine one or
more  of  its  patented or other proprietary technologies, for monitoring oxygen
saturation,  carbon  dioxide  and  anesthetic  agents,  with standard monitoring
technologies  that  provide  electrocardiogram ("ECG"), invasive and noninvasive
blood  pressures, temperature, heart rate and respiration rate. In addition, the
Company's  VitalView  telemetry  system  allows one nurse to monitor up to eight
patients  simultaneously  from  a  convenient  central  location.  This  allows
hospitals  to  move  out  of the intensive care unit those patients that require
continuous monitoring, but do not need all of an intensive care unit's extensive
and  costly  personnel  and  equipment  resources.

     According  to  the  guidance  set  by  Statement  of  Financial  Accounting
Standards  No.  131,  the  Company  operates  in  one  business  segment  in the
healthcare  environment.  The  chief  operating  decision maker does not utilize
segmented  financial  statements  in  making decisions about resource allocation
because  the  business  activities  that  generate  revenue do not have expenses
specifically  associated  with  them. Therefore, no segment data is disclosed in
the notes to the financial statements in Item 8. However, the Company's customer
base  is  differentiated  by  region  (see  note 9 in the notes to the financial
statements  in  Item  8  for  an  analysis  of  sales  by  geographic  area).

     The  Company  was  incorporated  under the laws of the State of Delaware in
October  1984.

Products
--------

     Criticare  markets a broad range of vital signs and gas monitoring products
designed  to  address  the  needs of a variety of end-users in different patient
environments.  Criticare's  monitors  display  information  graphically  and
numerically.  All  Criticare  monitors incorporate adjustable visual and audible
alarms to provide reliable patient-specific warnings of critical conditions, and
most  of  the  Company's monitors record up to 60 hours of trend data. Criticare
monitors  are  available with printer capability to provide permanent records of
patient  data.

     Model 8100 and 8500 Vital Signs Monitors.  The full-featured CSI 8100 Vital
     ----------------------------------------
Signs  Monitor  provides  maximum  flexibility  for  hospital,  transport  and
outpatient  care  settings.  The  unit's  custom  configurations  include  ECG,
ComfortCuff  (TM)  noninvasive  blood pressure, DOX (TM) digital oximetry, heart
rate,  temperature,  respiration  and  nurse  call  interface. Optional features
include  CO2  and  CO2/O2  monitoring  and  an  integrated
<PAGE>
printer.  The  8100 is well suited for busy departments that require basic vital
signs  monitoring  to  conscious  sedation.  The  8500  series of operating room
monitors  is  used  in  conjunction  with the 8100 series and provides automatic
identification  and  quantification  of  all  five  approved  anesthetic agents.

     Model  503DX,  504,  504+,  and 504DX Pulse Oximeters. Criticare's complete
     -----------------------------------------------------
line  of pulse oximeters meets the needs of virtually all clinical environments:
adult,  pediatric  and neonatal intensive care units, operating rooms, emergency
rooms,  nursing  homes, physicians' offices and ambulances. The line is designed
to  provide  accuracy  and  convenience  at  a competitive cost to the end-user.

     Model  506DX  and  507E  Patient Monitors.  The 507E series is comprised of
     -----------------------------------------
small,  compact, portable, full-featured vital signs monitors configured to meet
specific clinical needs. The 507E series is well-suited for dental and physician
offices.  The  507E series combines ECG, oxygen saturation and noninvasive blood
pressure  for  a complete vital signs monitor for physician offices and hospital
applications. The 507E series is an effective low-cost monitoring system for the
emergency  room  or  the  recovery  room.  The  506DX  is ideal for patient ward
monitoring  of  noninvasive  blood  pressure.

     Model  1100  Anesthesia  Monitor.  The  Model 1100 monitor provides patient
     --------------------------------
monitoring  for  a  wide variety of cardio-pulmonary parameters in an integrated
system.  The  Model 1100 is able to monitor two ECG waveforms, noninvasive blood
pressure,  three types of invasive blood pressure, respiration rate, heart rate,
temperature,  oxygen  saturation,  inspired/expired  oxygen,  carbon dioxide and
anesthetic  gases.  The  Model  1100  uses  the Company's proprietary disposable
respiratory  secretion  filter  system.

     Model 4400 and 4500 Series Blood Pressure, Pulse Oximetry and Temperature
     ------------------------------------------------------------------------
Combination  Monitors. The 4400 series monitor was developed in conjunction with
--------------------
Alaris  Medical ("Alaris") and incorporates Criticare's oximetry and noninvasive
blood  pressure technology with Alaris's temperature technology. The 4500 series
monitor  incorporates  Criticare's  noninvasive  blood  pressure technology with
Alaris's  temperature technology. Alaris has the rights to market these products
to  hospitals  in  the  United States and Canada. Criticare has rights to market
these  products  to  the  alternate  care  market  and to international markets.


                                        2
<PAGE>
     Model  602-14  POET(TM)  LT  Monitor.  The hand-held POET LT provides small
     ------------------------------------
hospitals  and alternate care environments with compact, portable carbon dioxide
monitoring.  The  POET  LT series is an effective, low-cost functioning solution
for  these  environments.

     VitalView(TM)  Central  Monitoring  Station.  The VitalView central station
     -------------------------------------------
makes  it  possible  for  one  nurse  or technician to monitor numerous patients
simultaneously.  The  VitalView  can receive, display and store data from a wide
variety  of  Criticare  monitors  including  the  507E  and  MPT.

     MPT(TM) Monitor.  The MPT (Multiple Parameter Telemetry) monitor allows the
     ---------------
transmission  of vital signs (ECG, blood oxygen saturation and noninvasive blood
pressure)  on a real time basis to a VitalView central station while the patient
is  ambulatory.  In  today's healthcare environment, hospitals benefit by moving
patients from expensive critical care departments as quickly as possible to less
expensive  general  nursing  floors.  MPT,  because  of  its complete monitoring
capability  and  its lower cost, allows the patient to be ambulatory while still
being  monitored  for  all  vital  signs.

     Pulse  Oximetry  Sensors.  Criticare  has designed proprietary, noninvasive
     ------------------------
sensors that can be used on any patient, from a premature infant to a full-grown
adult.  Criticare's  line  of  reusable  pulse  oximetry  sensors  offers  users
significant  cost savings compared to disposables.  Criticare's reusable sensors
generally  last  longer  than  the  one-year  warranty period and are easily and
inexpensively  cleaned  between  uses.  Criticare's  reusable  sensors include a
finger  sensor  for  routine  applications  and a multisite sensor for increased
placement  flexibility.  The  multisite sensor is fully immersible, allowing for
sterilization  between  patients.  The  Company also sells a range of disposable
sensors  designed for single use in cases where the facility would prefer to use
a  patient  charge  disposable  product.

     Water  Chek/Chek-Mate  Filter  System.  The  Company's patented, disposable
     -------------------------------------
Water  Chek  system  separates  a patient's respiratory secretions from a breath
sample  before  it  enters  the  gas  monitor(s)  for  analysis.  The  Company's
proprietary,  disposable  Chek-Mate filter enhances the removal of moisture from
the  sample,  while  preventing  cross-contamination.  This  system  allows  the
monitor to operate effectively regardless of humidity or patient condition.  The
self-sealing  feature  also  protects  the  healthcare  provider  from potential
contamination.  Criticare  has entered into three contracts to supply Water Chek
systems  to  be  utilized  on  OEM  supplied  equipment  to  the final customer.

Marketing  and  Sales
---------------------

     Domestic  Sales.  At  August  31,  2001, the Company's domestic sales force
     ---------------
consisted  of  eight employees and 100 independent dealers.  The Company's sales
force  and  independent  dealers market the Company's products to many different
types  of  medical  facilities such as hospitals, surgery centers, nursing homes
and  physician  offices.  The  Company sells its higher-end monitors (MPT, Vital
View  Central  Station  and

                                        3
<PAGE>
anesthetic  agent monitors) principally to hospitals whereas the vital signs and
pulse  oximeters  are  sold  primarily  for  nonhospital  settings.

     The  Company  has  begun  to  focus  on  selling  to  original  equipment
manufacturers  ("OEMs"). OEM business has become a significant sales channel for
the  Company  and  is  expected  to  be  the  primary driver of growth in future
periods.

     International  Sales.  One  of the Company's principal marketing strategies
     --------------------
has been to target international markets, particularly Europe, Latin America and
the  Pacific  Rim  countries.  During  fiscal 2001, Criticare sold its products,
principally  to  hospitals,  in  over  75  countries through over 75 independent
dealers.  Most  of  the  Company's  international  order  processing, invoicing,
collection  and  customer  service  functions  are  handled  directly  from  the
Company's  headquarters  in  Waukesha, Wisconsin.  Criticare believes demand for
the  Company's  products  in  international  markets is primarily driven by cost
containment concerns, and increased interest in using quality patient monitoring
products  for  improved  patient  management.

     In  fiscal  2001,  41%  of  Criticare's  net  sales,  or $11.4 million, was
attributable  to  international sales, of which approximately 60% was from sales
in  Europe  and the Middle East, 20% was from sales to Pacific Rim countries and
20%  was from sales to Canada and Central and South America. In fiscal 2000, 41%
of  Criticare's  net  sales  were attributable to international sales. In fiscal
1999,  37%  of  Criticare's net sales were attributable to exports. There are no
material  identifiable  assets  of  the  Company located in foreign markets. The
Company  sells  its  products  in  United  States  dollars and is not subject to
significant  currency  risks;  however,  an  increase in the value of the United
States  dollar  relative to foreign currencies could make the Company's products
less price competitive in those markets. In addition, significant devaluation of
certain foreign currencies could adversely affect the collectibility of accounts
receivable  from  international customers. The Company analyzes this risk before
making  shipments  to  countries  it  views  as  unstable.

     Clinical  Support.  At  August  31,  2001,  Criticare employed one clinical
     -----------------
support  specialist  to  provide  customer  training and education, primarily to
domestic  hospitals.  The  clinical  support  specialist  also  assists  in  the
periodic  training  and  education  of the direct sales force.  In addition, the
direct  sales  force  maintains  contact  with end-users and provides additional
training  and  updates.  Clinical  support in foreign markets is provided by the
Company's  clinical  support  staff  and  direct  sales  force.

     Warranty  and  Service.  Criticare  believes that customer service is a key
     ----------------------
element of its marketing program. Criticare's monitors and sensors are warranted
against  defects  for  one  year. If a problem develops with a Criticare product
while  under  warranty,  the Company typically provides a replacement unit until
the  product  can be repaired at the Company's facility. At August 31, 2001, the
Company  had  a  customer  service staff of 16 people at its Waukesha, Wisconsin
facility. The Company offers extended warranties and service contracts on all of
its  monitors.


                                        4
<PAGE>
Manufacturing
-------------

     Historically,  Criticare  has  manufactured  and  assembled  its  products
internally,  principally  at  the  Company's  facility  in  Waukesha, Wisconsin.
Recently,  prices  for  monitoring systems have eroded worldwide. In response to
this  pricing  pressure, in fiscal 2001 the Company entered into agreements with
two  offshore  contract  manufacturing  firms  located  in  Ireland  and Taiwan,
respectively,  that  exclusively  manufacture  medical  devices  in  a regulated
environment.  The  Company  has  worked closely with these two firms to maintain
product  quality and reliability. These two firms will perform the same rigorous
quality control testing at their facilities that Criticare has done in the past.
The  Company  expects to be out of the manufacturing of substantially all of its
established  product  lines  by  the  end  of  calendar  year 2001 and will then
concentrate  on  product  enhancements  and  new  product  development, customer
service,  and  increased  involvement  with  its  OEM  customers.  The  Company
anticipates  that it will continue limited production of new products internally
during  the  development  phase  and  for  a  short  period  after  commercial
introduction until production can be transitioned to the offshore manufacturers.

     The  Company's  oximeters  and  sensors  are  assembled  from off-the-shelf
components  and  other  parts  produced to the Company's specifications, such as
printed circuit board assemblies, custom transformers and sensor cable/connector
subassemblies.  Certain of Criticare's products incorporate components currently
purchased  from  single sources. While the Company believes these components are
available  from  alternate  sources  on reasonable terms, an interruption in the
delivery  of  these  or  other  components  could  have an adverse effect on the
Company.  In  order  to  reduce  the  risk  of  supply interruption, the Company
maintains  inventories  of  certain  components.

     The  ISO  9000  series  of  quality  management and assurance standards was
developed  by  the  International  Organization  for  Standardization  (ISO) and
published  in  1987.  In  1993  the  EC (European Community) was formed with the
signing  of  the  Maastricht  Treaty  by  12 European countries. One of the many
standards  adopted by this group is the ISO 9000 international quality assurance
and  quality  management  series  under  the designation EN2 9000. Based on this
action  by the EC and specific requirements from European customers, the Company
believes  ISO  9000  registration  will  be  required to compete in EC and other
international  markets as an indication of compliance with international quality
management  and  assurance  standards.  In  July  1994  the  Food  and  Drug
Administration  (FDA)  announced  its  intention  of  harmonizing  the  ISO 9000
standards  with  its  Medical  Device  Good  Manufacturing  Practices (GMP). The
Company  has achieved certification under ISO's standards 9001 and 9002. Each of
the offshore contract manufacturing firms has achieved certification under ISO's
standard  9001.  See  "Regulation."

Research, Development and Engineering
-------------------------------------

     Criticare  has  focused  its  research,  development  and  engineering
expenditures on products designed to meet identified market demands. The Company
seeks  to apply its expertise in gas monitoring and related sensor technology to
develop  new products and adapt existing products for new markets. At August 31,
2001, the Company had an in-house research, development and engineering staff of
21 people. The Company's research, development and engineering expenditures were
$2.4  million  in  fiscal  2001, $2.9 million in fiscal 2000 and $3.0 million in
fiscal  1999.

     The Company made significant investments in engineering in 1999 and 2000 to
update  the  entire  Criticare  product  line  and  develop the 8100 vital signs
monitor.  In  2001,  research  and  development  efforts  were  more  focused on
refinements  to  the  8100  product  line and the development of the 8500 series
monitor  which  features automatic identification and quantification of all five
approved  anesthetic  agents.


                                        5
<PAGE>
Competition
-----------

     The  markets  for  the  Company's  products are highly competitive. Many of
Criticare's  competitors,  including  its principal competitors described below,
have  greater  financial  resources,  more  established  brand  identities  and
reputations,  longer  histories in the medical equipment industry and larger and
more  experienced  sales  forces  than  Criticare.  In  these  respects,  such
competitors  have a competitive advantage over the Company. The Company competes
primarily  on  the  basis  of  product  features,  the  quality and value of its
products  (i.e., their relative price compared to performance features provided)
and  the  effectiveness of its sales and marketing efforts. The Company believes
that  its  principal  competitive  advantages  are provided by its focus on cost
containment,  provided  in  part  by  its  outsourcing  a  large  portion of its
manufacturing,  its  patented  and other proprietary technology and software for
noninvasive,  continuous  monitoring of oxygen, anesthetic gases, carbon dioxide
and  noninvasive  blood  pressure,  the efficiency and speed of its research and
development  efforts,  and  its  established  international  presence.

     The  principal  competing  manufacturers  of  pulse  oximeters  are Nellcor
Puritan  Bennett,  a  unit  of  a  subsidiary  of  Tyco  International Ltd., and
Datex/Ohmeda,  a  United  States  subsidiary  of  Instrumentarium  OY, a Finnish
company.  The  Company  estimates  that  Nellcor  Puritan Bennett has captured a
majority  of  the worldwide pulse oximeter market, and that Datex/Ohmeda and the
Company  have each captured significant portions of the worldwide pulse oximeter
market.  In addition, there are approximately four other companies which compete
in  the  market  for  pulse oximeters. The Company also indirectly competes with
manufacturers  of numerous other medical equipment products for limited customer
funds.

     The Company believes that the worldwide anesthetic agent and carbon dioxide
monitor markets are comparatively fragmented, with Datex/Ohmeda as the principal
competitor.  The  Company's  principal  competitors  in the domestic gas monitor
market  include Datex/Ohmeda and Koninklijke Philips Electronics N.V. The market
for  vital  signs  monitors  includes  competitors  such  as Koninklijke Philips
Electronics  N.V.,  Siemens  A.G.,  Datex/Ohmeda  and  Spacelabs  Medical,  Inc.

     The  Company  believes  that  its  principal  competitors in Western Europe
include  Datex/Ohmeda  and  that  the  Company  has  a significant share of this
market.  In the Pacific Rim countries, the Company believes that Datex/Ohmeda is
the  leading  competitor.

Regulation
----------

     As a manufacturer of medical diagnostic equipment, the Company is regulated
by  the  FDA  and  similar  foreign  governmental  agencies.  In  producing  its
products,  the  Company must comply with a variety of regulations, including the
good manufacturing practices regulations of the FDA.  In addition, it is subject
to  periodic  inspections  by  this

                                        6
<PAGE>
agency.  If  the  FDA  believes  that  its  legal  requirements  have  not  been
fulfilled,  it has extensive enforcement powers, including the ability to ban or
recall  products  from the market and to prohibit the operation of manufacturing
facilities.  The  Company  believes  its  products  comply  with  applicable FDA
regulations  in  all  material  respects.  In addition, the Company received ISO
9002 certification on April 29, 1993 and ISO 9001 certification on July 8, 1994.

     Under  the  Federal  Food,  Drug  and Cosmetic Act, as amended, all medical
devices  are  classified  as  Class I, Class II or Class III, depending upon the
level  of  regulatory control to which they will be subject.  Class III devices,
which  are the most highly controlled devices, are subject to premarket approval
by  the  FDA  prior  to  commercial  distribution  in  the  United  States.

     The  Company's  current  products  have  not  been  subject  to  the  FDA's
comprehensive  premarket  approval  requirements,  but  are generally subject to
premarket  notification  requirements.  If  a  new  device  is  substantially
equivalent to a device that did not require premarket approval, premarket review
is satisfied through a procedure known as a "510(k) submission," under which the
applicant  provides  product  information  supporting  its  claim of substantial
equivalence.  The  FDA  may also require that it be provided with clinical trial
results  showing  the  device's  safety  and  efficacy.

     The Company believes that the products it is currently developing generally
will be eligible for the 510(k) submission procedure and, therefore, will not be
subject  to  lengthy premarket approval procedures.  However, these products are
still  being developed and there can be no assurance that the FDA will determine
that  the  products  may  be  marketed  without  premarket  approval.

     Criticare  seeks, where appropriate, to comply with the safety standards of
Underwriters'  Laboratories  and  the  Canadian  Standards  Association  and the
standards  of  the European Community.  To date, the Company has not experienced
significant regulatory expense or delay in the foreign markets in which it sells
its  products.  Industry and professional groups such as the American Society of
Anesthesiologists,  to  the  extent  they  have  the  power  to  mandate certain
practices or procedures as part of their profession's standard of care, are also
a  source  of  indirect  regulation  of  the  Company's  business.

Patents  and  Trademarks
------------------------

     The  Company  believes  one  of  its  principal  competitive  advantages is
provided  by  its patented and other proprietary technology including its sensor
technology,  infrared  specific  anesthetic gas monitoring technology, UltraSync
signal  processing  software and disposable respiratory secretion filter system.
The  Company  has  13 issued U.S. patents and three patent applications pending.
The  Company's U.S. patents expire between 2004 and 2015. Criticare also has two
issued  foreign  patents and 11 foreign patent applications pending. There is no
assurance  that  any  patents  held  or  secured by the Company will provide any
protection  or

                                        7
<PAGE>
commercial  or  competitive  benefit to the Company.  There is also no assurance
that  the Company's products will not infringe upon patents held by others.  The
Company  is  the  owner  of  United  States  trademark registrations for "POET,"
"MPT,"  "REMOTEVIEW"  and  "MICROVIEW."

     The  Company  also  relies  upon trade secret protection for certain of its
proprietary  technology.  Although  the  Company  requires  its employees having
access  to  its  proprietary  information to sign confidentiality agreements, no
assurance  can be given that such agreements can be effectively enforced or that
others  will  not  independently  develop  substantially  equivalent proprietary
information and techniques or otherwise gain access to or disclose the Company's
trade  secrets.

Employees
---------

     At  August  31,  2001  Criticare  had  86  employees;  including  31  in
manufacturing  and  operations,  five  in  quality  control,  16  in  sales  and
marketing, 13 in administration and 21 in research, development and engineering.

     Many  of the Company's technical employees are highly skilled.  The Company
believes  that  its continued success depends in part on its ability to continue
to attract qualified management, marketing and technical personnel.  None of the
Company's  employees  are  subject  to  a  collective bargaining agreement.  The
Company  believes  that  its  relations  with  its  employees  are  good.

Backlog
-------

     Criticare's  backlog  on  June 30, 2001 and 2000 was approximately $813,000
and  $1,833,000,  respectively.  The  backlog at June 30, 2000 was significantly
higher than the current year due to problems experienced in obtaining components
from suppliers in fiscal 2000. This prevented the Company from shipping products
where  orders  had  been  received,  and  increased  the backlog in fiscal 2000.

     Criticare  generally  delivers its products out of inventory when specified
by  the  customer.  The Company does not believe that its backlog at any date is
indicative  of  its  future  sales.

Item  2.     PROPERTIES.
-------      ----------

     In  November  1992, the Company purchased a new 60,000 square foot facility
for  approximately  $4.5  million.  The  Company's  mortgage  calls  for monthly
installments  of  principal  and  interest  of approximately $28,000 and a final
"balloon" payment of approximately $3.0 million in April 2004. Due mainly to the
Company's  outsourcing initiatives, there is currently excess capacity available
at  this  facility. The Company is evaluating alternatives in order to eliminate
this  excess  capacity  and  reduce  costs,  including the potential sale of the
facility  or  the  leasing  of  a  portion  of  the  facility.

Item  3.     LEGAL  PROCEEDINGS.
-------      ------------------

     In the normal course of business Criticare may be involved in various legal
proceedings  from  time  to  time.  Criticare  does  not believe it is currently
involved  in  any

                                        8
<PAGE>
claim  or action the ultimate disposition of which would have a material adverse
effect  on  Criticare.

Item  4.     SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS.
-------      -----------------------------------------------------------

     No  matters  were submitted to a vote of security holders during the fourth
quarter  of  the  fiscal  year  ended  June  30,  2001.


                                        9
<PAGE>
                                     PART II
                                     -------

Item  5.     MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED STOCKHOLDER
-------      -------------------------------------------------------------------
MATTERS.
-------

The  Company's  common  stock  is  traded  on the Nasdaq National Market (Symbol
CXIM).  As  of  June 30, 2001, there were approximately 257 holders of record of
the  common stock.  The Company has never paid dividends on its common stock and
has  no  plans  to  pay  cash  dividends  in  the  foreseeable  future.
<TABLE>
<CAPTION>

                       Year Ended June 30,

                      2001               2000
                     -------           --------
<S>              <C>      <C>       <C>       <C>
Quarter Ended:.  High     Low       High      Low
September 30. .  $ 3.38  $ 2.31  $ 2.88  $ 1.88
December 31 (1). $ 3.00  $ 1.63  $ 2.75  $ 2.00
March 31. . . .  $ 3.44  $ 1.94  $ 5.06  $ 2.25
June 30 . . . .  $ 4.49  $ 2.55  $ 3.44  $ 1.97


(1)  Trading  of  the  Company's  common stock on the Nasdaq National Market was
suspended from October 6, 1999 until December 13, 1999 due to the delayed filing
of  the  Company's  1999  Annual  Report  on  Form  10-K  with  the  SEC.

</TABLE>

Item  6.     SELECTED  FINANCIAL  DATA.
-------      -------------------------

     The  following table sets forth selected financial data with respect to the
Company  for  each  of  the  periods  indicated.
<TABLE>
<CAPTION>

                                                         Years Ended June 30,
                                                         --------------------
                                    2001          2000          1999          1998          1997
                                ------------  ------------  ------------  ------------  ------------
<S>                             <C>           <C>           <C>           <C>           <C>
Net sales. . . . . . . . . . .   $27,736,304  $27,154,236   $28,512,507   $27,908,364   $26,235,355
Loss before income
  taxes and extraordinary gain     (178,232)    (186,388)   (4,388,171)     (499,276)   (2,749,435)
Net loss . . . . . . . . . . .     (178,232)    (186,388)   (4,388,171)     (499,276)   (2,179,489)
Net loss per common share-
  basic and diluted. . . . . .   $    (0.02)  $    (0.02)   $    (0.51)   $    (0.06)   $    (0.30)
Average shares outstanding . .    10,171,394    8,694,918     8,581,863     8,309,240     7,267,184
Stockholders' equity . . . . .   $21,005,816  $18,798,952   $12,711,709   $17,282,997   $14,227,135
Long-term obligations. . . . .     3,270,140    3,552,474     4,014,356     3,165,258     5,110,934
Working capital. . . . . . . .    17,995,497   16,257,780    10,340,014    13,716,891    12,053,165
Total assets . . . . . . . . .    29,871,854   27,210,867    24,041,987    24,726,819    25,145,066
</TABLE>


                                       10
<PAGE>
Item  7.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
-------      -------------------------------------------------------------------
RESULTS  OF  OPERATION.
----------------------

RESULTS  OF  OPERATIONS

     The  following  table  sets forth, for the periods indicated, certain items
from  the  Company's  Consolidated  Statements  of  Operations  expressed  as
percentages  of  net  sales.
<TABLE>
<CAPTION>

                                      PERCENTAGE  OF  NET  SALES
                                        YEARS  ENDED  JUNE  30,
                                        -----------------------
                                        2001    2000     1999
                                       ------  -------  ------
<S>                                    <C>     <C>      <C>
Net sales . . . . . . . . . . . . . .  100.0%   100.0%  100.0%
Cost of goods sold. . . . . . . . . .   59.4     60.6    54.5
Gross profit. . . . . . . . . . . . .   40.6     39.4    45.5

Operating expenses:
Marketing . . . . . . . . . . . . . .   23.0     29.5    31.4
Research, development and engineering    8.8     10.5    10.4
Administrative. . . . . . . . . . . .    9.1      8.6    14.6
Severance pay . . . . . . . . . . . .     --       --     2.8
Total . . . . . . . . . . . . . . . .   40.9     48.6    59.2

(Loss) from operations. . . . . . . .   (0.3)    (9.2)  (13.7)
Interest expense. . . . . . . . . . .   (0.9)    (1.0)   (1.5)
Interest income . . . . . . . . . . .    0.5      0.3     0.3
Equity in loss of investments . . . .     --       --    (0.5)
Gain on sale of stock . . . . . . . .     --      9.2      --
Loss before income taxes. . . . . . .   (0.7)    (0.7)  (15.4)
Income tax provision. . . . . . . . .     --       --      --
Net loss. . . . . . . . . . . . . . .   (0.7)%   (0.7)% (15.4)%
</TABLE>


                                       11
<PAGE>

FISCAL  YEAR  ENDED  JUNE  30,  2001  COMPARED  TO  JUNE  30,  2000

Net  sales  for  the fiscal year ended June 30, 2001 increased 2% from the prior
year.  However,  two  significant and isolated sales in the prior year, combined
with  the partial return of product from one of these sales in the current year,
had  the  effect  of  increasing  prior  year  revenue and reducing current year
revenue.  Adjusting for these items, the net sales in fiscal 2001 increased over
$2.6 million, or 10.3%, above the prior year. Approximately $2.1 million of this
increase  can  be  attributed to higher OEM sales, which grew 73% from the prior
year on a 77% increase in the number of units shipped. OEM business has become a
significant  distribution  channel  in  fiscal  2001, and this trend towards OEM
contributing  more  to  overall  Company sales is expected to continue in fiscal
2002  and  future  years.  Higher replacement part shipments contributed another
$300,000  to  the  sales  increase  between  years.

The  gross  profit percentage of 40.6% realized in fiscal 2001 improved from the
39.4%  generated  in  fiscal  2000.  Margins  in the current year were favorably
impacted  by  the recognition of $105,000 in deferred income from the settlement
of  a  contract  that  was  agreed to in January 2000 and fully satisfied in the
third  quarter  of  fiscal  2001. In addition, a warranty reserve was reduced by
$105,000  due  to  favorable  warranty experience on extended warranty contracts
sold  to  customers,  and  a  reserve  for  obsolete  inventory was decreased by
$75,000.  These adjustments increased margins approximately 1.0 percentage point
in  fiscal 2001. The Company expects to see improvement in its margins in fiscal
2002  due  to lower product costs expected from outsourcing the manufacturing of
the majority of its product lines to foreign manufacturers. See "Forward-Looking
Statements."

Total  operating  expenses  were  $1,856,000 lower in fiscal 2001 than the prior
year,  of which $1.2 million of this reduction was due to a decrease in bad debt
expense  between  years.  Marketing  expenses  in  fiscal 2000 included bad debt
expense  of  $1.2 million, including a specific charge of $900,000 in the fourth
quarter  related  to  the receivable balances of certain international customers
that  were  deemed  to  be  uncollectible  during  the fourth quarter. Marketing
expenses  in  fiscal  2001  included a $300,000 recovery of a portion of the bad
debt  expense  recognized  in  the  fourth  quarter  of  the prior year from the
repossession  of  inventory  sold,  and  more than offset the bad debt provision
provided  in  fiscal 2001. Excluding the $1.2 million impact on bad debt expense
between  years,  marketing expenses were still down $447,000 in fiscal 2001, due
mainly to more cost-effective spending on travel and trade shows. In addition to
the  reduction  in marketing expenses, engineering project expenses were reduced
nearly  $500,000  in fiscal 2001, due to significant spending incurred in fiscal
2000  related  to  the development of the 8100 product that was released in late
fiscal  2000.  The  reduction  in  marketing  and engineering expenses more than
offset  the  $200,000  increase in administrative expenses related mostly to the
termination  and  replacement  of  a  senior  manager  in  fiscal  2001.

The  overall $1,856,000 reduction in operating expenses in fiscal 2001, combined
with  slightly  higher  revenue and improved margins compared to the prior year,
resulted  in  an  $86,000  loss from operations, which represented a significant
improvement  from  the  $2,518,000  operating  loss  generated  in  fiscal 2000.

Other  income and expense in fiscal 2001 is comparable to that of the prior year
with  the  exception of the $2.5 million gain recorded in fiscal 2000. This gain
related  to  the  private  placement  sale  of  a portion of the Company's stock
investment  in  Immtech  International,  Inc.,  in which the Company still has a
position.  The  large  gain  allowed  the  Company to offset the majority of the
operating  loss  produced  in  fiscal 2000, resulting in a net loss of $186,000,
that  was  $8,000  greater  than  the  $178,000  loss  generated in fiscal 2001.



                                       12
<PAGE>
FISCAL  YEAR  ENDED  JUNE  30,  2000  COMPARED  TO  JUNE  30,  1999

For  the  twelve  months  ended  June  30,  2000,  international  sales  rose
approximately $600,000, but were offset by a decrease in total domestic sales of
approximately  $2,000,000.  The  increase in international sales was driven by a
13%  increase  in  the  number  of  units  sold and was partially offset by a 4%
decrease  in  the  average sales price per unit. The reduction in domestic sales
was  due to both lower volume, as the number of units shipped fell 15%, and a 7%
decrease  in the average sales price between years. The net result was a decline
in  net  sales  of  4.8%,  from  $28,512,507  to  $27,154,236.

The  gross  profit percentage declined from 45.5% in 1999 to 39.4% in 2000. This
decrease is due primarily to continued price erosion on products in a portion of
the  Company's  older  product  line.

Total  operating  expenses  were reduced by $3,700,000, which represents a 21.7%
cost  reduction  during  fiscal  2000.  Marketing  expenses  were  lowered  by
approximately $900,000 due to a variety of factors. These include a reduction in
service  labor  and materials, a decrease in payroll and related travel expenses
due  to  a  reduction  in  direct sales people as more dealers were added, and a
decrease  in  commissions  associated  with  the  lower  sales.  Offsetting  the
$1,800,000  of  reductions  was  a $900,000 increase in the reserve for doubtful
accounts  related to the receivable balances of certain international customers.
Research  and  development  expenses  decreased  approximately  $100,000, as the
design  phase  of  the  8100  product  was  completed  and production commenced.
Administration expenses decreased approximately $2,000,000. The majority of this
reduction  is  due  to  the  non-reoccurring  litigation  and  settlement  costs
associated  with a lawsuit in the prior year. In addition, $810,000 of severance
costs  were  recorded  in  1999.

Interest  expense was reduced $170,000 from 1999 levels due to the mortgage that
was  refinanced  in  March  1999.  However,  the  more significant change is the
$2,500,000 gain recorded on the private placement sale of 500,000 Immtech shares
in  fiscal  2000.

LIQUIDITY  AND  CAPITAL  RESOURCES

As  of  June  30,  2001,  the  Company  had a cash balance of approximately $3.4
million and no short-term borrowings. In October 2000, the Company received $4.0
million  in  proceeds  from  a  private  placement  of  additional shares of the
Company's  common stock. These proceeds allowed the Company to increase its cash
balance  in fiscal 2001 almost $3.3 million from the prior year. In fiscal 2001,
the Company used $688,322 of these proceeds for capital expenditures, $80,433 to
retire  long-term  debt,  and  $73,807  to  fund  operations.

In  fiscal  2000,  the  Company  generated  negative cash flow of $2,396,248 due
mainly  to  payments  made  in  fiscal 2000 to either partially or fully satisfy
liabilities  accrued  at  the  end of fiscal 1999. Accrued liabilities in fiscal
2000  were  reduced  $2,400,344  due  mostly to a $1,600,000 payment to a former
dealer  for the settlement of a lawsuit, the recognition of $380,000 of deferred
income  as  revenue  from a large customer deposit received late in fiscal 1999,
and the payment of approximately $350,000 of severance to the two co-founders of
the  Company  who resigned from their positions in fiscal 1999. These items, all
accrued  in  fiscal  1999  and  partially or fully settled or realized in fiscal
2000,  decreased  accrued liabilities and cash flow in fiscal 2000 and increased
accrued  liabilities  and  cash  flow  in  fiscal 1999. A $1,349,278 increase in
accounts  receivable  also  reduced  cash  flow  in fiscal 2000. Higher sales of
$1,207,740 in the last two months of fiscal 2000 compared to the prior year, the
majority of which were not yet due and therefore not collected before the end of
June,  increased the accounts receivable balance and decreased cash flow between
years.



                                       13
<PAGE>
In  March 1999, the Company refinanced its mortgage note on the Company's office
and  manufacturing facility. The new mortgage note requires monthly debt service
payments  of  approximately  $28,000,  with  a  final  payment  of approximately
$3,000,000  due  in  April  2004.

The  Company  has  implemented  programs  to  increase  accounts  receivable
collections,  decrease  inventory  levels,  reduce  product  development tooling
requirements, and lower sales demonstration equipment levels in order to improve
cash  flow  in  the  next  fiscal  year. Therefore, the Company expects that its
research and development activities and other capital and liquidity requirements
for  the  next twelve months will be satisfied by cash generated from operations
and  its  current  cash  balances.  There  are  currently no significant capital
expenditures  planned  for fiscal 2002. During fiscal 2001, the Company also had
access  to  a commercial bank demand line of credit of up to $4,000,000. At June
30,  2001,  there  were  no  borrowings  outstanding  on the line of credit. The
Company violated a covenant related to achieving certain income levels. The bank
waived  compliance  with this covenant subsequent to year end. This line expires
in  November 2001, but is expected to be extended with terms consistent with the
current  agreement.

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.

Item  7A.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK.
--------      ----------------------------------------------------------------

     The Company has a 7.5% fixed rate mortgage note outstanding on its facility
and  land.  In addition, the Company has a demand line of credit facility with a
commercial  bank  with  interest  payable  monthly  at 25 basis points above the
bank's reference rate. The Company had no borrowings outstanding under this bank
facility  at  June  30,  2001,  2000,  and 1999. The Company could be subject to
financial  risk  on these two obligations if interest rates in the market change
significantly.


                                       14
<PAGE>
Item  8.     FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA.
-------      -----------------------------------------------

FINANCIAL  STATEMENTS

                    CRITICARE SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             JUNE 30, 2001 AND 2000
<TABLE>
<CAPTION>

ASSETS                                                         2001         2000
                                                            -----------  -----------
<S>                                                         <C>          <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 1) . . . . . . . . . . . .  $ 3,362,104  $   114,830
Accounts receivable, less allowance for doubtful accounts
  of $1,000,000 and $1,300,000, respectively . . . . . . .    7,122,464    6,782,765
Investments (Notes 1 and 3). . . . . . . . . . . . . . . .    3,970,454    5,704,675
Other receivables. . . . . . . . . . . . . . . . . . . . .       33,788      116,773
Inventories (Notes 1 and 2). . . . . . . . . . . . . . . .    8,600,413    8,178,326
Prepaid expenses . . . . . . . . . . . . . . . . . . . . .      502,172      219,852
                                                            -----------  -----------
Total current assets . . . . . . . . . . . . . . . . . . .   23,591,395   21,117,221

PROPERTY, PLANT AND EQUIPMENT (Notes 1 and 5):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . .      925,000      925,000
Building . . . . . . . . . . . . . . . . . . . . . . . . .    3,600,000    3,600,000
Machinery and equipment. . . . . . . . . . . . . . . . . .    2,055,518    2,009,312
Furniture and fixtures . . . . . . . . . . . . . . . . . .      837,238      763,282
Demonstration and loaner monitors. . . . . . . . . . . . .    1,463,909    1,407,587
Production tooling . . . . . . . . . . . . . . . . . . . .    3,122,938    2,651,145
                                                            -----------  -----------
Property, plant and equipment - cost . . . . . . . . . . .   12,004,603   11,356,326
Less accumulated depreciation. . . . . . . . . . . . . . .    5,822,133    5,367,670
                                                            -----------  -----------
Property, plant and equipment - net. . . . . . . . . . . .    6,182,470    5,988,656

OTHER ASSETS (Note 1):
License rights and patents - net . . . . . . . . . . . . .       97,989      104,990
                                                            -----------  -----------
Total other assets . . . . . . . . . . . . . . . . . . . .       97,989      104,990
                                                            -----------  -----------
TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . .  $29,871,854  $27,210,867
                                                            ===========  ===========
</TABLE>

See  notes  to  consolidated  financial  statements.


                                       15
<PAGE>
<TABLE>
<CAPTION>

LIABILITIES AND STOCKHOLDERS' EQUITY                                         2001          2000
                                                                         ------------  ------------
<S>                                                                      <C>           <C>
CURRENT LIABILITIES:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 3,421,776   $ 2,635,344
Accrued liabilities:
  Compensation and commissions. . . . . . . . . . . . . . . . . . . . .    1,187,493     1,243,839
  Product warranties (Note 1) . . . . . . . . . . . . . . . . . . . . .      220,000       325,000
  Accrued taxes other than income . . . . . . . . . . . . . . . . . . .       96,947       126,769
  Accrued audit and legal fees . . . . . . . . . . . . . . . . . . . . .      35,900        20,000
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      547,025       428,057
Current maturities of long-term debt (Note 5) . . . . . . . . . . . . .       86,766        80,432
                                                                         ------------  ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . .    5,595,907     4,859,441

LONG-TERM DEBT, less current maturities (Note 5). . . . . . . . . . . .    3,197,126     3,283,892

OTHER LONG-TERM OBLIGATIONS (Note 12) . . . . . . . . . . . . . . . . .       73,005       268,582

CONTINGENCIES (Note 6)

STOCKHOLDERS' EQUITY (Notes 5 and 7):
Preferred stock - $.04 par value, 500,000 shares authorized,
  no shares issued or outstanding . . . . . . . . . . . . . . . . . . .           --            --
Common stock - $.04 par value, 15,000,000 shares authorized,
  10,796,224 and 8,976,251 shares issued and outstanding, respectively       431,849       359,050
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . .   22,494,548    18,478,040
Common stock held in treasury (64,134 and 81,122 shares, respectively).     (119,467)     (151,111)
Retained earnings (accumulated deficit) . . . . . . . . . . . . . . . .   (5,771,568)   (5,591,702)
Accumulated comprehensive income. . . . . . . . . . . . . . . . . . . .    3,970,454     5,704,675
                                                                         ------------  ------------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . .   21,005,816    18,798,952
                                                                         ------------  ------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $29,871,854   $27,210,867
                                                                         ============  ============
</TABLE>

See  notes  to  consolidated  financial  statements.

                                       16
<PAGE>
                    CRITICARE SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED JUNE 30, 2001, 2000 AND 1999
<TABLE>
<CAPTION>

                                                    2001          2000          1999
                                                ------------  ------------  ------------
<S>                                             <C>           <C>           <C>
NET SALES (NOTE 9) . . . . . . . . . . . . . .  $27,736,304   $27,154,236   $28,512,507

COST OF GOODS SOLD . . . . . . . . . . . . . .   16,469,119    16,462,477    15,528,314
                                                ------------  ------------  ------------

GROSS PROFIT . . . . . . . . . . . . . . . . .   11,267,185    10,691,759    12,984,193

OPERATING EXPENSES:
Marketing (Note 1) . . . . . . . . . . . . . .    6,367,395     8,014,129     8,941,036
Research, development and engineering (Note 6)    2,446,907     2,861,733     2,963,134
Administrative (Note 6). . . . . . . . . . . .    2,538,938     2,333,445     4,157,811
Severance pay (Note 12). . . . . . . . . . . .           --            --       810,000
                                                ------------  ------------  ------------
Total. . . . . . . . . . . . . . . . . . . . .   11,353,240    13,209,307    16,871,981

LOSS FROM OPERATIONS . . . . . . . . . . . . .      (86,055)   (2,517,548)   (3,887,788)

OTHER INCOME (EXPENSE):
Interest expense (Note 5). . . . . . . . . . .     (253,150)     (259,280)     (427,008)
Interest income. . . . . . . . . . . . . . . .      157,782        90,440        82,094
Equity in loss of investments (Notes 1 and 3).           --            --      (150,000)
Gain on sale of stock (Note 3) . . . . . . . .           --     2,500,000            --
Other income/(expense) . . . . . . . . . . . .        3,191            --        (5,469)
                                                ------------  ------------  ------------
Total. . . . . . . . . . . . . . . . . . . . .      (92,177)    2,331,160      (500,383)

LOSS BEFORE INCOME TAXES . . . . . . . . . . .     (178,232)     (186,388)   (4,388,171)

INCOME TAX PROVISION (NOTES 1 AND 4) . . . . .           --            --            --
                                                ------------  ------------  ------------

NET LOSS . . . . . . . . . . . . . . . . . . .  $  (178,232)  $  (186,388)  $(4,388,171)
                                                ============  ============  ============

NET LOSS PER COMMON SHARE:
Basic. . . . . . . . . . . . . . . . . . . . .  $     (0.02)  $     (0.02)  $     (0.51)
Diluted. . . . . . . . . . . . . . . . . . . .  $     (0.02)  $     (0.02)  $     (0.51)

WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING (NOTE 7):
Basic. . . . . . . . . . . . . . . . . . . . .   10,171,394     8,694,918     8,581,863
Diluted. . . . . . . . . . . . . . . . . . . .   10,171,394     8,694,918     8,581,863
</TABLE>

See notes to consolidated financial statements.

                                       17
<PAGE>
                    CRITICARE SYSTEMS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    YEARS ENDED JUNE 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>

                                                                                                Retained
                                                          Additional    Common Stock            Earnings     Accumulated
                                         Common Stock      Paid-In            Treasury        (Accumulated  Comprehensive
                                       Shares     Amount   Capital        Shares     Cost       Deficit)     Income/Loss
<S>                                  <C>        <C>       <C>           <C>       <C>         <C>           <C>
BALANCE, JUNE 30, 1998. . . . . . .  8,351,151  $334,046  $17,964,250                         $(1,015,299)
Net loss. . . . . . . . . . . . . .                                                            (4,388,171)
Comprehensive income/(loss) . . . .
Issuance of common stock for
  patented technology . . . . . . .    350,000    14,000      (14,000)
Exercise of options and warrants. .      5,000       200       10,113
Common stock repurchased. . . . . .                                     103,840    (193,430)

BALANCE, JUNE 30, 1999. . . . . . .  8,706,151   348,246   17,960,363   103,840    (193,430)   (5,403,470)             0

Net loss. . . . . . . . . . . . . .                                                              (186,388)
Unrealized gain on investment . . .                                                                            5,704,675
Comprehensive income/(loss) . . . .
Common stock issued in settlement
  of lawsuit. . . . . . . . . . . .     30,000     1,200       68,175
Exercise of options . . . . . . . .    240,100     9,604      448,746
Employee common stock
  purchased from treasury . . . . .                               756   (22,718)     42,319        (1,844)

BALANCE, JUNE 30, 2000. . . . . . .  8,976,251   359,050   18,478,040    81,122    (151,111)   (5,591,702)     5,704,675

Net loss. . . . . . . . . . . . . .                                                              (178,232)
Unrealized (loss) on investment . .                                                                           (1,734,221)
Comprehensive income/(loss) . . . .
Common stock issued . . . . . . . .  1,801,273    72,051    3,977,063
Exercise of options . . . . . . . .     18,700       748        2,273
Employee common stock
  purchased from treasury . . . . .                            37,172   (16,988)     31,644        (1,634)

BALANCE, JUNE 30, 2001. . . . . . . 10,796,224  $431,849  $22,494,548    64,134   $(119,467)  $(5,771,568)    $3,970,454
                                         Total
                                     Stockholders'
                                        Equity
<S>                                  <C>
BALANCE, JUNE 30, 1998. . . . . . .  $17,282,997
Net loss. . . . . . . . . . . . . .   (4,388,171)
Comprehensive income/(loss) . . . .   (4,388,171)
Issuance of common stock for
  patented technology . . . . . . .            -
Exercise of options and warrants. .       10,313
Common stock repurchased. . . . . .     (193,430)

BALANCE, JUNE 30, 1999. . . . . . .   12,711,709
Net loss. . . . . . . . . . . . . .     (186,388)
Unrealized gain on investment . . .    5,704,675
Comprehensive income/loss . . . . .    5,518,287
Common stock issued . . . . . . . .       69,375
Exercise of options . . . . . . . .      458,350
Employee common stock
  purchased from treasury . . . . .       41,231

BALANCE, JUNE 30, 2000. . . . . . .   18,798,952
Net loss. . . . . . . . . . . . . .     (178,232)
Unrealized (loss) on investment . .   (1,734,221)
Comprehensive income/loss . . . . .   (1,912,453)
Common stock issued . . . . . . . .    4,049,114
Exercise of options . . . . . . . .        3,021
Employee common stock
  purchased from treasury . . . . .       67,182

BALANCE, JUNE 30, 2001. . . . . . .  $21,005,816

</TABLE>

See  notes  to  consolidated  financial  statements.


                                       18

<PAGE>
                    CRITICARE SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED JUNE 30, 2001, 2000 AND 1999
<TABLE>
<CAPTION>

                                                                      2001          2000         1999
                                                                  ------------  ------------  -----------
<S>                                                               <C>           <C>           <C>
OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  (178,232)  $  (186,388)  $(4,388,171)
Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities:
    Depreciation . . . . . . . . . . . . . . . . . . . . . . . .      742,931       871,510      486,610
    Amortization . . . . . . . . . . . . . . . . . . . . . . . .        7,001         7,001        7,002
    Provision for doubtful accounts. . . . . . . . . . . . . . .     (300,000)      925,000      380,004
    Gain on sale of Immtech stock. . . . . . . . . . . . . . . .           --    (2,500,000)          --
    Litigation settled with common stock . . . . . . . . . . . .           --        69,375           --
    Changes in assets and liabilities:
      Accounts receivable. . . . . . . . . . . . . . . . . . . .      (39,699)   (1,349,278)     183,222
      Other receivables. . . . . . . . . . . . . . . . . . . . .       82,985       (33,667)     239,870
      Inventories. . . . . . . . . . . . . . . . . . . . . . . .     (670,510)      341,955     (461,786)
      Prepaid expenses . . . . . . . . . . . . . . . . . . . . .     (282,320)      (27,562)     146,007
      Accounts payable . . . . . . . . . . . . . . . . . . . . .      786,432      (442,676)     772,299
      Accrued liabilities. . . . . . . . . . . . . . . . . . . .     (251,877)   (2,401,762)   2,950,520
                                                                  ------------  ------------  -----------
Net cash (used in) provided by operating activities. . . . . . .     (103,289)   (4,726,492)     315,577

INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net. . . . . . . . .     (688,322)     (595,412)    (515,017)
Proceeds from sale of Immtech stock. . . . . . . . . . . . . . .           --     2,500,000           --
                                                                  ------------  ------------  -----------
Net cash (used in) provided by investing activities. . . . . . .     (688,322)    1,904,588     (515,017)

FINANCING ACTIVITIES:
Net proceeds from mortgage refinancing . . . . . . . . . . . . .           --            --      256,413
Repurchase of Company stock. . . . . . . . . . . . . . . . . . .           --            --     (193,430)
Principal payments on long-term debt . . . . . . . . . . . . . .      (80,432)      (73,925)     (92,776)
Proceeds from issuance of common stock . . . . . . . . . . . . .    4,119,317       499,581       10,313
                                                                  ------------  ------------  -----------
Net cash provided by (used in) financing activities. . . . . . .    4,038,885       425,656      (19,480)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . .    3,247,274    (2,396,248)    (218,920)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR . . . . . . . . . .      114,830     2,511,078    2,729,998
CASH AND CASH EQUIVALENTS, END OF YEAR . . . . . . . . . . . . .  $ 3,362,104   $   114,830   $2,511,078

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
  Income taxes paid-net. . . . . . . . . . . . . . . . . . . . .  $    16,639   $     7,535   $    8,010
  Interest . . . . . . . . . . . . . . . . . . . . . . . . . . .      253,653       259,590      437,401
Noncash investing and financing activities:
  Litigation settled with common stock . . . . . . . . . . . . .           --        69,375           --
  Cost of fixed asset disposals. . . . . . . . . . . . . . . . .           --       201,072           --
  Unrealized (loss)/gain on investment in Immtech. . . . . . . .   (1,734,221)    5,704,675           --
</TABLE>


See  notes  to  consolidated  financial  statements.

                                       19
<PAGE>
NOTES  TO  FINANCIAL  STATEMENTS

CRITICARE  SYSTEMS,  INC.  AND  SUBSIDIARIES
NOTES  TO  CONSOLIDATED  FINANCIAL  STATEMENTS
YEARS  ENDED  JUNE  30,  2001,  2000  AND  1999

1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

     NATURE  OF  BUSINESS  -  Criticare  Systems  Inc. designs, manufactures and
markets  patient monitoring equipment and related accessories to the health care
community  worldwide  and  is  headquartered in Waukesha, Wisconsin. The Company
sells domestically primarily to oral and stand-alone general surgery centers and
hospitals through regional sales managers and a dealer network. Internationally,
the  Company  sells mainly to hospitals through country managers and a worldwide
dealer  network.

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the  accounts  of  Criticare  Systems, Inc. (the "Company") and its wholly owned
subsidiaries:  Criticare  International  GmbH  Marketing  Services  ("Criticare
International"),  CSI  Trading,  Inc.  ("CSI  Trading"), Criticare Service GmbH,
Criticare  Biomedical,  Inc.  ("Criticare Biomedical"), Sleep Care, Inc. ("Sleep
Care"),  Criticare  (FSC),  Inc. and CSI International Corp. (DISC). CSI Trading
was  incorporated  in November 1996 to assist with European marketing activities
and  includes  a  branch  sales  office  in  India. All significant intercompany
accounts  and  transactions  have  been  eliminated.

     CASH  EQUIVALENTS  -  The  Company considers all investments with purchased
maturities  of  less  than  three  months  to  be  cash  equivalents.

     INVENTORIES  -  Inventories are stated at the lower of cost or market, with
cost  determined  on  the  first-in,  first-out  method.

     INVESTMENTS  -  In  fiscal  2000,  the  Company  ceased  accounting for its
investment in Immtech International, Inc ("Immtech") under the equity method and
recorded  the  asset on the balance sheet at its fair market value in accordance
with  Statement  of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for  Certain  Investments  in  Debt  and  Equity  Securities"  (see  Note  3).

     PROPERTY,  PLANT  AND EQUIPMENT - Property, plant and equipment is recorded
at cost. Each member of the Company's sales force is provided with demonstration
monitors  to  assist  them  in their sales efforts. Also, the Company has loaner
monitors  which  are  used  to  temporarily replace a customer's unit when it is
being  repaired  or upgraded. Depreciation is provided over the estimated useful
lives  of  the  assets. The building is being depreciated over 40 years, and the
remaining  assets  are  being  depreciated  over  three  to  seven  years, using
primarily  the  straight-line  method.

     LICENSE  RIGHTS AND PATENTS - License rights and patents are amortized over
the  estimated  useful  lives  of  the  related  agreements  using primarily the
straight-line  method.  Approximately  $7,000  of  amortization  was  charged to
operations  in  each  of

                                       20
<PAGE>
the  fiscal  years ended June 30, 2001, 2000 and 1999.  Accumulated amortization
approximated  $99,000  and  $92,000  at  June  30,  2001 and 2000, respectively.

     REVENUE  RECOGNITION  -  Revenues  and  the  costs  of  products  sold  are
recognized  as  the  related  products  are  shipped  or installed, if there are
significant  installation costs. This revenue recognition policy is utilized for
shipment  of  product  to  customers  including both distributors and end-users.

     PRODUCT WARRANTIES - Estimated costs for product warranties are accrued for
and  charged  to  operations  as  the  related  products  are  shipped.

     MARKETING  EXPENSES - Marketing expenses include all of the Company's sales
related  costs.  In fiscal 2001, recoveries of bad debts expensed in prior years
more  than  offset additional provisions expensed in the current year, resulting
in  a net credit of bad debt expense of $(25,757). The amount incurred in fiscal
2000  includes  a  $900,000  charge  to bad debt expense related to the accounts
receivable balances of certain international customers. Bad debt expense totaled
$1,160,614  and  $380,004  for  the  years  ended  June  30,  2000  and  1999,
respectively.

     RESEARCH  AND  DEVELOPMENT  EXPENSES  -  Research and development costs are
charged  to  operations  as  incurred.  Such  expenses  approximated $2,325,000,
$2,696,000  and  $2,798,000  in  2001,  2000  and  1999,  respectively.

     INCOME  TAXES  -  The  Company accounts for income taxes using an asset and
liability  approach.  Deferred  income  tax  assets and liabilities are computed
annually for differences between the financial statement and tax bases of assets
and  liabilities that will result in taxable or deductible amounts in the future
based  on  enacted  tax  laws  and  rates applicable to the periods in which the
differences  are  expected  to  affect  taxable  income.

     NET  INCOME  (LOSS)  PER  COMMON  SHARE  - Basic income (loss) per share is
computed  using  the weighted average number of common shares outstanding during
the  periods.  Diluted  income  per share is computed using the weighted average
number  of  common  and dilutive common equivalent shares outstanding during the
periods.  The  basic  and  diluted  weighted  average  number  of  common shares
outstanding in the financial statements are the same because including a diluted
calculation  in a loss position would produce an anti-dilutive per share amount.
The number of diluted weighted average common shares outstanding would be higher
by  370,260 shares in 2001 and 236,024 shares in 2000 without this anti-dilutive
impact.

                                       21
<PAGE>

     FAIR  VALUE  OF  FINANCIAL STATEMENTS - The Company's financial instruments
under  SFAS  No.  107  "Disclosure  About  Fair Value of Financial Instruments,"
includes  cash,  accounts receivable, accounts payable, borrowings under line of
credit  facility  and  long-term  debt.  The  Company believes that the carrying
amounts  of these accounts are a reasonable estimate of their fair value because
of  the  short-term nature of such instruments or, in the case of long-term debt
because  of  interest  rates  available  to the Company for similar obligations.

     COMPREHENSIVE  INCOME  -  In  1999,  the  Company  adopted  SFAS  No.  130,
"Reporting  Comprehensive  Income."  This  statement  establishes  rules for the
reporting  of  comprehensive  income  and  its components.  Comprehensive income
consists  of net income, foreign currency translation adjustments and unrealized
gains  on  investments,  and  is  presented  in  the  Consolidated  Statement of
Stockholders'  Equity.

     APPROVED  ACCOUNTING  STANDARDS  -  In  June 2001, the Financial Accounting
Standards Board finalized FASB Statements No. 141, "Business Combinations" (SFAS
141),  and  No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141
requires  the  use of the purchase method of accounting and prohibits the use of
the  pooling-of-interests  method  of  accounting  for  business  combinations
initiated after June 30, 2001. SFAS 141 also requires that the Company recognize
acquired intangible assets apart from goodwill if the acquired intangible assets
meet  certain  criteria. SFAS 141 applies to all business combinations initiated
after June 30, 2001 and for purchase business combinations completed on or after
July  1,  2001.  It  also  requires, upon adoption of SFAS 142, that the Company
reclassify  the  carrying amounts of intangible assets and goodwill based on the
criteria  in  SFAS  141.

     SFAS  142  requires,  among other things, that companies no longer amortize
goodwill,  but  instead  test  goodwill  for  impairment  at  least annually. In
addition,  SFAS  142  requires that the Company identify reporting units for the
purpose  of  assessing  potential  future  impairments of goodwill, reassess the
useful  lives  of  other  existing  recognized  intangible  assets,  and  cease
amortization  of intangible assets with an indefinite useful life. An intangible
asset  with  an  indefinite  useful  life  should  be  tested  for impairment in
accordance  with the guidance in SFAS 142. SFAS 142 is required to be applied in
fiscal  years  beginning  after  December  15,  2001  to  all goodwill and other
intangible  assets recognized at that date, regardless of when those assets were
initially  recognized.  SFAS 142 requires the Company to complete a transitional
goodwill  impairment  test  six months from the date of adoption. The Company is
also required to reassess the useful lives of other intangible assets within the
first  interim  quarter  after  adoption  of  SFAS  142.

     The  Company does not have any goodwill recorded as an asset as of June 30,
2001  and  has  only  a  small investment in intangible assets at June 30, 2001.
Therefore,  the  Company  does not expect adoption of SFAS 141 and 142 to have a
material  effect  on  the  Company's  financial  statements.

     Statement  of  Financial  Accounting  Standards  No.  133  "Accounting  for
Derivative  Instruments and Hedging Activities" (SFAS No.133) issued by the FASB
is  effective  for  financial  statements  with  fiscal quarters of fiscal years
beginning  after  June  15,  2000.  SFAS 133 requires companies to recognize all
derivative contracts as either assets or liabilities in the balance sheet and to
measure  them  at fair value. If certain conditions are met, a derivative may be
specifically  designated  as  a  hedge,  the  objective of which is to match the
timing  of  gain  or  loss  recognition  on  the  hedging  derivative  with  the
recognition  of  (i)  the  changes  in  the  fair  value  of the hedged asset or
liability  that  are attributable to the hedged risk or (ii) the earnings effect
of  the  hedged  forecasted  transaction.  For  a derivative not designated as a
hedging  instrument,  the  gain or loss is recognized in income in the period of
change.

                                       22
<PAGE>
     Historically, the Company has not entered into derivative contracts either
to  hedge  existing risks or for speculative purposes.  Accordingly, the Company
does not expect adoption of the new standard to affect its financial statements.

     In  March 2000, the FASB issued FASB interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation" ("FIN 44") which is effective
July  1,  2000.  This interpretation clarifies the application of APB Opinion 25
for  certain  issues  related to stock issued to employees. The Company believes
its  existing stock based compensation policies and procedures are in compliance
with FIN 44 and, therefore, that the adoption of FIN 44 will not have a material
effect  on  the  Company's  financial  statements.

     USE  OF  ESTIMATES  - The preparation of financial statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the  financial  statements  and  the  reported  amounts of revenues and expenses
during  the reporting period.  Actual results could differ from those estimates.

     RECLASSIFICATIONS  -  Certain  amounts  from  the  fiscal  2000  financial
statements  have  been  reclassified to conform to the fiscal 2001 presentation.

2.   INVENTORIES

     Inventories  consist  of  the  following  as  of  June  30:
<TABLE>
<CAPTION>

                                    2001        2000
<S>                              <C>         <C>
Component parts . . . . . . . .  $3,784,491  $3,721,474
Work in process . . . . . . . .   1,372,587   1,169,609
Finished units. . . . . . . . .   3,768,335   3,687,243
                                 ----------  ----------
Total inventories . . . . . . .   8,925,413   8,578,326
Less:  reserve for obsolescence     325,000     400,000
                                 ----------  ----------
Net inventory . . . . . . . . .  $8,600,413  $8,178,326
</TABLE>

3.   INVESTMENTS

     IMMTECH  INTERNATIONAL,  INC.  -  The  Company owns common stock of Immtech
International,  Inc.  ("Immtech").  Immtech  is  a  biopharmaceutical  company
focusing on the discovery and commercialization of therapeutics for treatment of
patients  afflicted  with opportunistic infectious diseases, cancer or comprised
immune  systems.  Immtech has two independent programs for developing drugs: one
based  on  a  technology  for  the design of a class of pharmaceutical compounds
referred  to  as  dications.  The  second  is  based  on  developing a series of
biological  proteins  that  work in conjunction with the immune system.  Immtech
has  no  products  currently  for sale, and none are expected to be commercially
available  for  several  years.  Immtech  has  a  March  31  fiscal  year  end.

     During  the  first  and  second quarters of fiscal 2000, the Company sold a
portion of its Immtech stock in a Private Placement. The proceeds from this sale
were  $2,500,000.  As  a  result of this sale, the Company owns less than 20% of
Immtech's  issued  and  outstanding common stock as of June 30, 2000. Therefore,
beginning  in  fiscal  2000,  in  accordance  with SFAS No. 115, "Accounting for
Certain  Investments  in  Debt  and  Equity  Securities,"  the  Company  ceased
accounting  for  the Immtech investment under the equity method and recorded the


                                       23
<PAGE>
asset on the balance sheet at the fair market value of $5,704,675. An unrealized
gain  was also recorded as a component of stockholders' equity. The Company held
456,374  shares  of  Immtech common stock, which was trading at $8.70 and $12.50
per  share,  on  June  30,  2001  and  2000,  respectively.

     The  following  is a summary of the Company's investment in and advances to
Immtech  as  of  June  30,  1999:
<TABLE>
<CAPTION>

                                       1999
<S>                                <C>
Investment in Immtech . . . . . .  $ 2,736,000
Advances to Immtech . . . . . . .      863,940
                                   ------------
Total . . . . . . . . . . . . . .    3,599,940
Less investment losses recognized   (3,599,940)
                                   ------------
Net investment. . . . . . . . . .  $         0
</TABLE>

     During  July  1998,  the Company purchased certain intangible assets and an
additional  172,414  shares of Immtech stock for $150,000. These intangibles and
shares  of  stock  were  subsequently  sold  to  the  former President and Chief
Executive  Officer  of the Company as part of a severance agreement for $150,000
(see Note 12). At the time of this transaction, the shares of Immtech stock were
carried  at  zero  value  under  the  equity  method  of  accounting.

     The  Company  has recognized investment losses related to the investment in
Immtech  of  $150,000  in  1999.

     During  April 1999, Immtech completed an Initial Public Offering ("IPO") of
its  stock.  As  part  of  this  IPO, the Company was required to sign a lock-up
agreement  by  which  it was agreed that no shares owned by the Company could be
sold  in  the  public  market until the Immtech stock traded at $20 (200% of its
initial  IPO  price  of  $10)  for  20 consecutive trading days and one year had
passed  from  the date of the IPO. As of June 30, 2000, these lock up provisions
have  been  satisfied.

     The  following  is summarized financial information for Immtech at June 30,
1999  and  for  the  twelve  months  then  ended.
<TABLE>
<CAPTION>

                                                   1999
<S>                                            <C>
Current assets. . . . . . . . . . . . . . . .  $ 8,541,000
Noncurrent assets . . . . . . . . . . . . . .       68,000
Current liabilities . . . . . . . . . . . . .      253,000
Noncurrent liabilities. . . . . . . . . . . .           --
Redeemable preferred stock. . . . . . . . . .           --
Common stockholders' equity (deficit) . . . .    8,356,000
Revenues. . . . . . . . . . . . . . . . . . .      136,000
Net loss. . . . . . . . . . . . . . . . . . .   (8,341,000)
Net loss attributable to common stockholders.   (4,657,000)
</TABLE>


                                       24
<PAGE>
4.   INCOME  TAXES

     The Company accounts for income taxes using an asset and liability approach
which  generally  requires  the  recognition  of  deferred income tax assets and
liabilities  based on the expected future income tax consequences of events that
have  previously  been  recognized  in the Company's financial statements or tax
returns.  In  addition, a valuation allowance is recognized if it is more likely
than not that some or all of the deferred income tax asset will not be realized.
A  valuation  allowance  is  used  to offset the related net deferred income tax
assets  due  to uncertainties of realizing the benefits of certain net operating
loss  and  tax  credit  carryforwards.

     Significant  components  of  the  Company's  deferred income tax assets and
deferred  income  tax  liabilities  are  as  follows:
<TABLE>
<CAPTION>

                                                           JUNE 30,      JUNE 30,      JUNE 30,
                                                             2001          2000          1999
<S>                                                      <C>           <C>           <C>
Deferred income tax assets:
  Accounts receivable and sales allowances. . . . . . .  $   415,000   $   533,000   $   170,000
  Inventory allowances. . . . . . . . . . . . . . . . .      164,000       191,000       254,000
  Product warranties. . . . . . . . . . . . . . . . . .       86,000       128,000       128,000
  Other accrued liabilities . . . . . . . . . . . . . .      210,000       246,000       392,000
  Severance pay accrual . . . . . . . . . . . . . . . .       52,000       145,000       279,000
  Lawsuit settlement. . . . . . . . . . . . . . . . . .           --            --       626,000
  Federal net operating loss carryforwards. . . . . . .    3,665,000     3,320,000     2,014,000
  State net operating loss carryforwards. . . . . . . .      467,000       483,000       291,000
  Federal tax credit carryforwards. . . . . . . . . . .      152,000       152,000       152,000
  Investment losses not deducted. . . . . . . . . . . .      709,000       709,000     1,532,000
                                                         ------------  ------------  ------------
  Total deferred income tax assets. . . . . . . . . . .    5,920,000     5,907,000     5,838,000

Deferred income tax liabilities:
  Excess of tax over book depreciation and amortization     (625,000)     (616,000)     (620,000)
  Prepaid expenses. . . . . . . . . . . . . . . . . . .      (28,000)      (13,000)       (7,000)
  Unrealized gain on investments. . . . . . . . . . . .   (1,557,000)   (2,237,000)           --
                                                         ------------  ------------  ------------
 Total deferred income tax liabilities . . . . . . . .    (2,210,000)   (2,866,000)     (627,000)

  Valuation allowance . . . . . . . . . . . . . . . . .   (3,710,000)   (3,041,000)   (5,211,000)

  Net deferred income taxes recognized in the
    consolidated balance sheets . . . . . . . . . . . .  $         0   $         0   $         0
</TABLE>

     At  June 30, 2001, the Company had federal net operating loss carryforwards
of  approximately  $10,779,000  which  expire  in 2008 through 2021. At June 30,
2001,  the  Company  had available for federal income tax purposes approximately
$41,000  of  alternative  minimum  tax  credit carryforwards which carry forward
indefinitely and approximately $111,000 of tax credit carryforwards which expire
in the years 2007 through 2009. The Company also has approximately $9,339,000 of
state  net  operating  loss  carryforwards,  which  expire in 2003 through 2016,
available  to  offset  certain  future  state  taxable  income.

     The  income  tax  provision  consists  of  the  following:
<TABLE>
<CAPTION>

                              2001   2000   1999
<S>                           <C>    <C>    <C>
Current
  Federal. . . . . . . . . .  $   0  $   0  $   0
  State. . . . . . . . . . .      0      0      0
  Total income tax provision  $   0  $   0  $   0
</TABLE>


                                       25
<PAGE>
     A  reconciliation  of  the  provision  for  income  taxes (benefits) at the
federal  statutory  income  tax  rate  to the effective income tax rate follows:
<TABLE>
<CAPTION>

                                                2001     2000     1999
<S>                                            <C>      <C>      <C>
Federal statutory income tax rate . . . . . .  (34.0)%  (34.0)%  (34.0)%
Losses for which no benefit was provided. . .   17.5     35.3     29.3
Non-deductible losses of subsidiaries . . . .   15.6     27.6      3.2
Other-net (principally stock options in 2000)    0.9    (28.9)     1.5
                                               -------  -------  -------
Effective income tax rate . . . . . . . . . .      0%       0%       0%
</TABLE>

5.     LINE  OF  CREDIT  FACILITY  AND  LONG-TERM  DEBT
<TABLE>
<CAPTION>

                                                                 2001        2000
<S>                                                           <C>         <C>
Long-term debt consists of the following:

  Mortgage note, 7.5% due in monthly installments of $27,793
    with a final payment of $3,048,253 due April 1, 2004,
    collateralized by real estate with a carrying value of
    approximately $3,754,000 at June 30, 2001. . . . . . . .  $3,283,892  $3,364,324
  Less current maturities. . . . . . . . . . . . . . . . . .      86,766      80,432
                                                              ----------  ----------
  Long-term debt . . . . . . . . . . . . . . . . . . . . . .  $3,197,126  $3,283,892
</TABLE>

     Aggregate  annual  principal payments required under terms of the long-term
debt  agreement  are  as  follows:
<TABLE>
<CAPTION>

<S>                    <C>
YEARS ENDING JUNE 30,  PRINCIPAL PAYMENTS
2002. . . . . . . . .  $            86,766
2003. . . . . . . . .               93,600
2004. . . . . . . . .            3,103,526
2005. . . . . . . . .                    0
2006. . . . . . . . .                    0
                       -------------------
Total . . . . . . . .  $         3,283,892
</TABLE>

     At  June  30,  2001,  the  Company  had  a $4,000,000 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, plus .25% (7.0% as of June 30, 2001). As of June
30,  2001,  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 levels of
tangible net worth and income levels. The Company was not in compliance with the
income  level  covenant  at June 30, 2001. This non-compliance was waived by the
lending  institution.


                                       26
<PAGE>
     In  March  1999,  the Company refinanced its mortgage note on the Company's
office and manufacturing facility.  The Company incurred a prepayment penalty of
approximately  $120,000,  which  was  recorded  as  interest  expense.

6.   CONTINGENCIES

     From  time  to  time,  various  lawsuits  arise out of the normal course of
business. These proceedings are handled by outside counsel. Currently management
is  not aware of any claim or action pending against the Company that would have
a  material  adverse  effect  on  the  Company.

     The  Company  received  two grants from the State of Wisconsin for research
and  development  of  certain  products.  The grants were to be repaid only upon
successful  completion  and marketing of the related product. Repayment of these
grants was to be made on a sales by unit basis. Repayments approximated $182,000
in  1999  and  constituted full repayment of one of these grants. The repayments
were  charged  to  expense  as  the related products were sold. Since the second
grant  did  not  result in the successful completion and marketing of a product,
the  Company  did  not  have  to  repay  the  grant.

7.   STOCKHOLDERS'  EQUITY

     STOCK  OPTIONS  -  In  December 1992, the Board of Directors approved a new
Employee  Stock  Option  Plan  and  Non-Employee Stock Option Plan. No new stock
options  can  be  granted  under the Employee Stock Option Plan and Non-Employee
Stock  Option  Plan  which  existed  prior to the approval of the new plans. The
Board  of  Directors  has  authorized  in  connection  with  these new plans the
issuance  of 2,220,000 reserved shares of common stock of which 137,930 reserved
shares  of  common  stock  remain  available for future issuance under the stock
option  plans  at  June 30, 2001. The Board of Directors increased the number of
reserved  shares for issuance under the Plans from 1,720,000 to 2,220,000 during
2001.  The activity during 1999, 2000 and 2001 for the above plans is summarized
as  follows:
<TABLE>
<CAPTION>

                                                NUMBER OF   STOCK OPTIONS  WEIGHTED AVG.
                                                 SHARES      PRICE RANGE   EXERCISE PRICE
<S>                                            <C>          <C>            <C>
Outstanding at July 1, 1998 . . . . . . . . .     839,700       1.88-3.63            2.50
  Granted . . . . . . . . . . . . . . . . . .     993,700       1.50-1.88            1.74
  Cancelled . . . . . . . . . . . . . . . . .    (636,800)      1.69-3.00            2.06
  Exercised . . . . . . . . . . . . . . . . .      (5,000)           2.06            2.06
                                               -----------
Outstanding at June 30, 1999. . . . . . . . .   1,191,600       1.50-3.00            1.83
  Granted . . . . . . . . . . . . . . . . . .     489,100       2.00-2.25            2.24
  Cancelled . . . . . . . . . . . . . . . . .    (287,700)      1.63-3.63            1.99
  Exercised . . . . . . . . . . . . . . . . .    (240,100)      1.50-2.75            1.91
                                               -----------
Outstanding at June 30, 2000. . . . . . . . .   1,152,900       1.50-2.75            1.96
  Granted . . . . . . . . . . . . . . . . . .     780,520       1.88-3.69            2.47
  Cancelled . . . . . . . . . . . . . . . . .    (279,100)      1.88-2.75            2.01
  Exercised . . . . . . . . . . . . . . . . .     (18,700)      1.63-2.97            2.03
                                               -----------
Outstanding at June 30, 2001. . . . . . . . .   1,635,620       1.50-3.69            2.19

Exercisable at June 30, 2001. . . . . . . . .     735,120       1.50-3.69            2.11

</TABLE>


                                       27
<PAGE>
     The  following table summarizes information about stock options outstanding
as  of  June  30,  2001:
<TABLE>
<CAPTION>

                              OPTIONS OUTSTANDING                                       OPTIONS EXERCISABLE
                                           Weighted Average
                            Shares            Remaining          Weighted            Shares
Range of                  Outstanding        Contractual     Average Exercise     Exercisable     Weighted Average
Exercise Prices        at June 30, 2001       Life-Years           Price        at June 30, 2001   Exercise Price
<S>                   <C>                  <C>               <C>                <C>               <C>
1.50-1.875 . . . . .             794,000              2.99  $            1.75           344,000  $            1.69
2.00-3.69. . . . . .             841,620              3.10               2.61           391,120               2.49
1.50-3.69. . . . . .           1,635,620              3.05               2.19           735,120               2.11
</TABLE>

     Outstanding  options  have  fixed  terms  and are exercisable over a period
determined by the Compensation Committee of the Company's Board of Directors but
no  longer  than  five  years  after  the  date  of  grant.

     The  Company  has  adopted  the disclosure-only provisions of SFAS No. 123,
"Accounting  for  Stock-Based  Compensation,"  but applies Accounting Principles
Board  Opinion  No.  25,  "Accounting for Stock Issued to Employees" and related
interpretations  in  accounting  for  its plans.   If the Company had elected to
recognize  compensation cost for the options granted during the years ended June
30,  2001, 2000 and 1999, consistent with the method prescribed by SFAS No. 123,
net loss and net loss per share would have been changed to the pro forma amounts
indicated  below:
<TABLE>
<CAPTION>

                                                       YEARS  ENDED  JUNE  30,
                                                    2001         2000         1999
<S>                                              <C>         <C>           <C>
Net income (loss)-as reported . . . . . . . . .  $(178,232)  $  (186,388)  $(4,388,171)
Net income (loss)-pro forma . . . . . . . . . .  $(507,678)  $  (365,626)  $(4,555,200)
Net income (loss) per common share-as reported.  $   (0.02)  $     (0.02)  $     (0.51)
Net income (loss) per common share-pro forma. .  $   (0.05)  $     (0.04)  $     (0.53)
Assumptions used:
  Expected volatility . . . . . . . . . . . . .       37.5%           23%         15%
  Risk-free interest rate . . . . . . . . . . .          5%            6%          5%
  Expected option life (in years) . . . . . . .          4             4           3

Weighted average fair market value of options
  granted during the fiscal year ended June 30   $    0.61   $      0.38   $    0.23

</TABLE>

     The  fair value of stock options used to compute pro forma net loss and net
loss per common share is the estimated present value at the grant date using the
Black-Scholes  option-pricing  model.

     STOCK  WARRANTS  -  In  September  1995,  the  Company  executed  a warrant
agreement with a consultant.  The warrant agreement provided for the issuance of
warrants  to  purchase  up to 150,000 shares of the common stock of the Company,
exercisable  at  a  price of $2.00 per share.  The warrant was exercisable as to
37,500  shares  upon execution of the agreement and the warrants to purchase the
remaining  112,500  shares  were  to  become  exercisable if certain performance
parameters  were achieved by September 1996.  Such parameters were not met as of
such  date.  In January 1997, the agreement was extended and the parameters were
changed.  By June 30, 1997, warrants to purchase the remaining 112,500 shares of


                                       28
<PAGE>
common  stock  at  a  price  of $2.00 per share became exercisable.  The warrant
holder exercised rights and purchased 41,000 shares of common stock at $2.00 per
share  during  the  year  ended  June  30,  1998. The warrants were exercised to
purchase  15,000 shares of common stock at $2.00 per share during the year ended
June  30,  2001,  and  the  remainder  of  such  warrants  expired.

     In February 1998, the Company executed a similar warrant agreement with the
consultant.  The  warrant  agreement  provides  for  the issuance of warrants to
purchase up to 150,000 shares of common stock at a price of $3.00 per share. The
warrant  is  exercisable as to 30,000 shares upon execution of the agreement and
the  warrants  to  purchase  the remaining 120,000 shares will be exercisable if
certain performance parameters are achieved by February 1999. No such parameters
were  achieved.  During  the  year  ended  June 30, 1998, the Company recognized
$23,065  of  expense  related  to  the value of the services performed under the
agreement.  As of June 30, 2001, 30,000 warrants were exercisable. Such warrants
expire  in  February  2003.

     In  December  2000, the Company executed another warrant agreement with the
consultant.  The  warrant  agreement  provides  for  the issuance of warrants to
purchase up to 70,000 shares of common stock at a price of $1.875 per share. The
warrant  vests over a four year period in four equal increments each year on the
anniversary  date  of  the warrant. The warrant terminates as to any shares that
are unvested at the time the consultant ceases to provide consulting services to
the  Company. As of June 30, 2001, none of these warrants were exercisable. Such
warrants  expire  in  December  2005.

     COMMITMENT  TO  ISSUE  SHARES  OF COMMON STOCK - In April 1998, the Company
agreed  to and accepted the patent rights assigned to them by a third party with
respect  to certain technology related to the transmission of clinical data.  In
consideration  for the patent, the Company has agreed to provide the third party
with  400,000  shares  of common stock payable over a four-year time period with
additional consideration of up to 112,000 shares contingent upon the achievement
of  certain  sales  levels.  The  Company  recorded  a  charge  to operations of
$900,000  in  fiscal 1998 with respect to the value of the in-process technology
which  was expensed as research and development costs.  The 400,000 shares to be
issued  have  been considered to be outstanding shares for purposes of computing
basic  and  diluted  income  (loss)  per common share in 1998.  During 1999, the
Company  renegotiated  the  agreement  and issued the third party 350,000 shares
instead of the 400,000 shares payable over four years and the 112,000 contingent
shares.

     PREFERRED  STOCK - The Company's Board of  Directors  has  the authority to
determine  the  relative  rights  and preferences of any series it may establish
with  respect  to  the  500,000  shares  of  $.04 par value authorized preferred
shares.  No  preferred  stock  is  issued  or  outstanding.

     On  March  27,  1997,  the  Board  of  Directors  of the Company declared a
dividend  of one preferred share purchase right (a "Right") for each outstanding
share  of  common stock of the Company.  The dividend was made on April 24, 1997
to  the  stockholders  of  record  on  that  date  to  purchase  Preferred Stock
("Preferred")  upon  the  occurrence  of  certain  events.  The  Rights  will be
exercisable  the  tenth business day after a person or group acquires 20% of the
Company's  common  stock,  or  makes  an  offer  to  acquire  30% or more of the
Company's  common  stock.  When  exercisable,  each right entitles the holder to
purchase  for  $25, subject to adjustment, one-hundredth of a share of Preferred
for  each share of common stock owned.  Each share of Preferred will be entitled
to a minimum preferential quarterly dividend of $25 per share, but not less than
an  aggregate  dividend of 100 times the common stock dividend.  Each share will
have  100  votes,  voting  together  with the common stock.  In the event of any
merger, each share of Preferred will be entitled to receive 100 times the amount
received  per  share  of  common  stock.  The  Rights  expire  on April 1, 2007.

                                       29
<PAGE>
8.   EMPLOYEE  BENEFIT  PLAN

     The  Company  has  a  401(k) plan which covers substantially all employees.
Company  contributions  to the plan are discretionary and determined annually by
the Company's Board of Directors. The Company's contributions were approximately
$87,000,  $77,000,  and  $84,000  in  2001,  2000  and  1999,  respectively.

9.  BUSINESS  AND  CREDIT  CONCENTRATIONS

     The  Company  is  a manufacturer of medical monitors and telemetry products
whose  customers  include hospitals and alternative health care sites throughout
the  world.  Although  the  Company's products are sold primarily to health care
providers,  concentrations  of  credit  risk  with  respect  to  trade  accounts
receivable  are limited due to the Company's large number of customers and their
geographic  dispersion.  The  Company  currently  coordinates  substantially all
international  sales  and  distribution  activities  through its headquarters in
Waukesha,  Wisconsin.  Such  activities  were previously provided by the Company
with  the  assistance  of  Criticare  International. Identifiable assets located
outside  of  the  United  States  are insignificant in relation to the Company's
total  assets.  Net  export  sales  by  geographic  area  are  as  follows:
<TABLE>
<CAPTION>

                                         2001         2000         1999
<S>                                   <C>          <C>          <C>
Europe and Middle East . . . . . . .  $ 6,833,000  $ 5,437,000  $ 4,635,000
Pacific Rim. . . . . . . . . . . . .    2,313,000    2,662,000    2,243,000
Canada and Central and South America    2,217,000    3,035,000    3,634,000
                                      -----------  -----------  -----------
Export net sales . . . . . . . . . .  $11,363,000  $11,134,000  $10,512,000
U.S. net sales . . . . . . . . . . .   16,373,000   16,020,000   18,001,000
                                      -----------  -----------  -----------
Total net sales. . . . . . . . . . .   27,736,000   27,154,000   28,513,000

Note:  Sales in Europe and the Middle East have been combined due to joint sales
responsibility in these areas. No country made up more than 10% of the Company's
total  sales.
</TABLE>

10.  OTHER BUSINESS CONCENTRATIONS

     During  1999,  the  Company  entered into an OEM agreement with a customer.
Sales  to  this  customer approximated $3,383,000, $2,031,000, and $4,360,000 in
fiscal 2001, 2000, and 1999, respectively. These sales represented approximately
12%, 8%, and 15% of the Company's total sales, respectively. This customer had a
receivable  balance  of $630,716, $935,520, and $448,546 on June 30, 2001, 2000,
and 1999, respectively, which represented 9%, 14%, and 7% of the Company's total
receivables  as  of  these  dates.

     The  Company  also  has  a  supplier  that  it made purchases from totaling
approximately  $4,461,000,  $3,358,000, and $3,087,000 in fiscal 2001, 2000, and
1999, respectively. These purchases represent approximately 19%, 16%, and 16% of
the  Company's  total purchases, respectively. The Company had a payable balance
owed  to this vendor of $144,131, $220,999, and $122,603 on June 30, 2001, 2000,
and  1999,  respectively, which represents 4%, 8%, and 4% of the Company's total
payables  as  of  these  dates.


                                       30
<PAGE>
11.  COMMITMENTS

     The  Company  leases  certain  operating  equipment under various operating
leases  for  varying  periods  through fiscal 2006. Rent expense was $165,361 in
2001  and  $207,553  in  2000.

     The future minimum rental commitments under these leases are as follows:

<TABLE>
<CAPTION>
                    Year ended June 30,
<S>                 <C>
2002                     $91,222
2003                      35,084
2004                      22,008
2005                      18,831
Thereafter                15,693
                         --------
Total                    $182,838
</TABLE>

     During  fiscal  2001 the Company entered into supply partnership agreements
with  two  offshore  contract  manufacturing  firms that exclusively manufacture
medical  devices  in  a  regulated environment. These two firms will manufacture
specific  products  designated by the Company in accordance with formal purchase
orders. The initial term of the agreements is for a period of three years and is
automatically  extended  for additional periods of two years each, unless either
party  gives  written notice at least sixty days prior to the end of the initial
term  or  the  then  current  extension  term.  To  ensure an adequate supply of
products  manufactured  by these companies is maintained, the agreements require
that these firms keep on hand in their finished goods inventories one full month
of  supply  of  all products under current purchase orders, in addition to a one
month  supply  that  will  be maintained by the Company. At June 30, 2001, a one
month  supply of product maintained at these two firms would total approximately
$475,000. In the event the Company would cancel a purchase order under either of
these  agreements,  the  Company  would  be required to purchase at cost all raw
materials,  work-in-progress  and  finished  goods inventories for that purchase
order.  In  addition,  any  property  or  equipment  that  these firms purchased
specifically  for the production of the Company's products would be purchased at
mutually  agreed  upon  prices.  There  have  not  been  any  purchase  order
cancellations  under  these  agreements.

12.  SEVERANCE  PAY

     During  November  1998,  the  two  co-founders of the Company resigned from
their  positions.  The  Company  has  provided  each of these individuals with a
severance  agreement,  which  includes  a  portion  of  their  salary and fringe
benefits  for a period which approximates three years. The salary portion of the
severance expires on November 30, 2001 and the fringe benefit portion expires on
September  30,  2001,  with  the  exception of health and dental benefits, which
continue  until  age  65  or  comparable  coverage  is available through another
employer.


                                       31
<PAGE>
INDEPENDENT  AUDITORS'  REPORT

To  the  Stockholders  and  Directors  of  Criticare  Systems,  Inc.:

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

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

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all material respects, the financial position of Criticare Systems,
Inc.  and  subsidiaries  at  June  30,  2001  and  2000 and the results of their
operations  and their cash flows for each of the three years in the period ended
June  30,  2001,  in  conformity  with generally accepted accounting principles.

/s/  BDO  Seidman,  LLP
Milwaukee,  Wisconsin
August  21,  2001

                                       32


<PAGE>
QUARTERLY  RESULTS

     The  following  table  contains  quarterly  information, which includes all
adjustments,  consisting  only of normal recurring adjustments, that the Company
considers  necessary  for  a  fair presentation.  The Company recorded a gain of
$2,500,000  in  the  quarter  ended  September  30,  1999 related to the sale of
Immtech  stock.  This item was an unusual, nonrecurring adjustment.
<TABLE>
<CAPTION>

                                                       QUARTERS ENDED
                      JUNE 30,    MARCH 31,    DEC. 31,   SEPT. 30,    JUNE 30,    MARCH 31,    DEC. 31,    SEPT. 30,
                        2001        2001         2000        2000        2000        2000         1999        1999
                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                  <C>         <C>          <C>         <C>         <C>         <C>          <C>         <C>
Net sales . . . . .  $   7,678   $    7,264   $   6,564   $    6,230  $   7,519   $    6,131   $   6,901   $    6,603
Gross profit. . . .      3,252        2,923       2,581        2,511      2,326        2,235       3,142        2,989
(Loss) income from
  operations. . . .       (149)          37         134         (108)    (1,317)      (1,143)       (215)         157
Net (loss) income .       (161)          44         106         (166)    (1,367)      (1,197)        489        1,880
Net (loss) income
  per common
  share-Basic . . .      (0.01)        0.00        0.01        (0.02)     (0.16)       (0.14)       0.06         0.22
       -Diluted . .      (0.01)        0.00        0.01        (0.02)     (0.16)       (0.14)       0.06         0.21
</TABLE>

     The  Company typically receives a substantial volume of its quarterly sales
orders  at  or  near  the  end of each quarter.  In anticipation of meeting this
expected  demand, the Company usually builds a significant inventory of finished
products throughout each quarter.  If the expected volume of sales orders is not
received  during  the  quarter,  or is received too late to allow the Company to
ship  the  products  ordered during the quarter, the Company's quarterly results
and  stock  of  finished  inventory  can  be  significantly  affected.


Item  9.     CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
-------      -------------------------------------------------------------------
FINANCIAL  DISCLOSURE.
---------------------

     The Company's change in accountants for the 1999 fiscal year was previously
reported  in the Company's Current Report on Form 8-K filed on October 13, 1999,
as  amended  on  October  25, 1999, and the Company's Current Report on Form 8-K
filed  on  November  5,  1999.

                                       33
<PAGE>
PART  III
---------

Item  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT.
--------      --------------------------------------------------------

     Information  regarding  the executive officers and directors of the Company
is  incorporated  herein  by  reference  to  the discussions under "Nominees for
Election  as  Director,"  "Other Directors," "Section 16(a) Beneficial Ownership
Reporting  Compliance" and "Executive Officers" in the Company's Proxy Statement
for  the  2001  Annual Meeting of Stockholders (the "Criticare Proxy Statement")
which  will  be  filed  on  or  before  October  29,  2001.

Item  11.     EXECUTIVE  COMPENSATION.
--------      -----------------------

     Incorporated  herein  by  reference  to  the  discussion  under  "Executive
Compensation"  in  the  Criticare  Proxy  Statement.

Item  12.     SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
--------      -----------------------------------------------------------------

     Incorporated  herein  by  reference  to  the  discussion  under  "Security
Ownership"  in  the  Criticare  Proxy  Statement.

Item  13.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.
--------      --------------------------------------------------

     Incorporated  herein  by  reference  to  the  discussion  under "Employment
Agreements  and  Severance  Arrangements"  in  the  Criticare  Proxy  Statement.

                                     PART IV
                                     -------

Item  14.     EXHIBITS,  FINANCIAL  STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
--------      -----------------------------------------------------------------

(a)     The  following  documents  are  filed  as  part  of  this  report:

     1.     Financial  Statements.  The  following  consolidated  financial
            ---------------------
statements  of  the  Company  are  included  in  Item  8  of  this  report.

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

          Consolidated  Statements  of Operations - for the years ended June 30,
2001,  2000  and  1999.

          Consolidated  Statements of Stockholders' Equity - for the years ended
June  30,  2001,  2000  and  1999.


                                       34
<PAGE>
          Consolidated  Statements  of Cash Flows - for the years ended June 30,
2001,  2000  and  1999.

          Notes  to  consolidated  financial  statements.

     2.     Financial  Statement  Schedules:
            -------------------------------

          Independent  Auditors'  Report.

          Financial  Statement Schedule for the years ending June 30, 2001, 2000
and  1999:

Schedule
Number     Description                       Page
------     -----------                       ----

II         Valuation  and  Qualifying          40
           Accounts  and  Reserves

     All  other  schedules  for  which  provision  is  made  in  the  applicable
accounting  regulations  of  the  Securities  and  Exchange  Commission  are not
required  under  the  related  instructions,  are  inapplicable  or the required
information is shown in the financial statements or notes thereto, and therefore
have  been  omitted.

     3.     Exhibits:
            --------

          3.1     Restated  Certificate  of  Incorporation  of  the  Company
(incorporated  by  reference  to  the  Registration  Statement  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).


                                       35
<PAGE>

          10.1*     1999 Employee Stock Purchase Plan (incorporated by reference
to  the  Company's Annual Report on Form 10-K for the year ended June 30, 1999).

          10.2*     1992  Employee  Stock Option Plan (incorporated by reference
to the Company's Registration Statement on Form S-8, Registration No. 33-60644).

          10.3*     1992  Nonemployee  Stock  Option  Plan  (incorporated  by
reference  to the Company's Registration Statement on Form S-8, Registration No.
33-60214).

          10.4*     1987  Employee  Stock Option Plan (incorporated by reference
to the Company's Registration Statement on Form S-8, Registration No. 33-33497).

          10.5*     1987  Nonemployee  Stock  Option  Plan  (incorporated  by
reference  to the Company's Registration Statement on Form S-8, Registration No.
33-40038).

          10.6*     Form  of Executive Officer and Director Indemnity Agreement
(incorporated  by reference to the Company's Registration Statement on Form S-1,
Registration  No.  33-13050).


                                       36
<PAGE>
          10.7*     Severance  Agreement,  dated  as  of  November 16, 1998, of
Gerhard  J.  Von  der Ruhr (incorporated by reference to the Company's Quarterly
Report  on  Form  10-Q  for  the  quarter  ended  March  31,  1999).

          10.8*     Severance  Agreement, dated as of November 16, 1998, of N.C.
Joseph  Lai (incorporated by reference to the Company's Quarterly Report on Form
10-Q  for  the  quarter  ended  March  31,  1999).

          10.9*     Employment  Agreement  of  Emil  H.  Soika, (incorporated by
reference  to  the  Company's Annual Report on Form 10-K for the year ended June
30,  1999).

          10.10*     Employment Agreement of Stephen D. Okland, (incorporated by
reference  to  the  Company's Annual Report on Form 10-K for the year ended June
30,  1999).

          10.11*     Employment  Agreement  of  Drew  M.  Diaz, (incorporated by
reference  to  the  Company's Annual Report on Form 10-K for the year ended June
30,  1999).

          10.12     Supply  Partnership  Agreement,  dated as of August 1, 2000,
between  the  Company  and  BioCare  Corporation.

          10.13     Supply  Agreement, dated as of October 26, 2000, between the
Company  and  TriVirix  International  Limited.

          21     Subsidiaries (incorporated by reference to the Company's Annual
Report  on  Form  10-K  for  the  year  ended  June  30,  1999).

          23.1     Consent  of  BDO  Seidman,  LLP

          24     Power  of  Attorney (incorporated by reference to the signature
page  hereof).

__________________
*  Management  contract  or  compensatory  plan  or  arrangement.

(b)     Reports  on  Form  8-K.

     The  Company filed no reports on Form 8-K during the quarter ended June 30,
2001.

(c)     Exhibits.

     The  response to this portion of Item 14 is submitted as a separate section
of  this  report.

(d)     Financial  Statement  Schedules.

     The  response to this portion of Item 14 is submitted as a separate section
of  this  report.

                                       37
<PAGE>
                                   SIGNATURES


     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized.

                              CRITICARE  SYSTEMS,  INC.

                              By /s/ Emil H. Soika
                                ----------------------------------
                                   Emil  H.  Soika,  President
                                   and  Chief  Executive  Officer

                              Date:  September 26, 2001


                                POWER OF ATTORNEY

KNOW  ALL  MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes  and  appoints  Emil  H.  Soika and Michael J. Sallmann, and each of
them,  as  his  true and lawful attorneys-in-fact and agents, with full power of
substitution  and  resubstitution,  for him and in his name, place and stead, in
any  and  all  capacities, to sign any and all amendments to this Report on Form
10-K  and  to  file  the  same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said  attorneys-in-fact and agents, and each of them full power and authority to
do  and  perform each and every act and thing requisite and necessary to be done
in  connection  therewith,  as  fully to all intents and purposes as he might or
could  do  in  person,  hereby  ratifying  and  confirming  all  that  said
attorneys-in-fact  and  agents,  or  any  of them, or their or his substitute or
substitutes,  may  lawfully  do  or  cause  to  be  done  by  virtue  hereof.

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

Signature                                  Title                         Date
-------------------------  -------------------------------------  ------------------
<S>                        <C>                                    <C>
/s/ Emil H. Soika          President, Chief Executive Officer     September 26, 2001
-------------------------  and Director (Principal Executive
Emil H. Soika              Officer)

/s/ Michael J. Sallmann    Vice President-Finance and Secretary   September 26, 2001
-------------------------  (Principal Financial and Accounting
Michael J. Sallmann        Officer)

/s/ Karsten Houm           Chairman of the Board and Director     September 26, 2001
-------------------------
Karsten Houm

/s/ Milton Datsopoulos     Director                               September 26, 2001
-------------------------
Milton Datsopoulos

/s/ N.C. Joseph Lai        Director                               September 26, 2001
-------------------------
N.C. Joseph Lai, Ph.D.


/s/ Higgins Bailey         Director                               September 26, 2001
-------------------------
Dr. Higgins Bailey


/s/ Jeffrey T. Barnes      Director                               September 26, 2001
-------------------------
Jeffrey T. Barnes


/s/ Stephen K. Tannenbaum  Director                               September 26, 2001
-------------------------
Stephen K. Tannenbaum

</TABLE>


                                       38
<PAGE>
INDEPENDENT  AUDITORS'  REPORT

To  the  Board  of  Directors  and  Stockholders  of
  Criticare  Systems,  Inc.:

The  audits  referred  to  in  our  report dated August 21, 2001 relating to the
consolidated financial statements of Criticare Systems, Inc., which is contained
in  Item  8  of  this  Form  10-K  included the audit of the financial statement
schedules  listed  in  Item  14.  These  financial  statement  schedules are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  financial  statement  schedules  based  upon  our  audits.

In  our  opinion  such  financial  statement  schedules  present  fairly, in all
material  respects,  the  information  set  forth  therein.



/s/  BDO  Seidman,  LLP
Milwaukee, Wisconsin
August 21, 2001

                                       39
<PAGE>
                                   SCHEDULE II

                             CRITICARE SYSTEMS, INC.

                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                FOR THE YEARS ENDED JUNE 30, 2001, 2000 AND 1999

<TABLE>
<CAPTION>

            Column A              Column B     Column C     Column D     Column E
            ---------            -----------  -----------  -----------  -----------
                                 Balance at   Charged to                Balance at
                                  Beginning    Costs and                  End of
Description                       of Period    Expenses    Deductions     Period
-----------                      -----------  -----------  -----------  -----------
<S>                              <C>          <C>          <C>          <C>
YEAR ENDED JUNE 30, 1999:

Allowance for doubtful accounts  $   300,000  $   380,004  $   305,004  $   375,000

Reserve for sales returns and
  allowances                     $   100,000  $   760,194  $   800,194  $    60,000

Reserve for obsolete inventory   $    37,920  $   521,684  $        --  $   559,604

YEAR ENDED JUNE 30, 2000:

Allowance for doubtful accounts  $   375,000  $ 1,160,614  $   235,614  $ 1,300,000

Reserve for sales returns and
  allowances                     $    60,000  $   554,101  $   554,101  $    60,000

Reserve for obsolete inventory   $   559,604  $    94,310  $   253,914  $   400,000

YEAR ENDED JUNE 30, 2001:

Allowance for doubtful accounts  $ 1,300,000  $   685,873  $   985,873  $ 1,000,000

Reserve for sales returns and
  allowances                     $    60,000  $        --  $        --  $    60,000

Reserve for obsolete inventory   $   400,000  $        --  $    75,000  $   325,000

</TABLE>


                                       40