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

                                  FORM 10-K/A

                        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.]


                                        2
<PAGE>
Criticare  Systems,  Inc.  (the  "Company") is amending Item 8 of Part II of the
Company's  Annual Report on Form 10-K for the year ended June 30, 2001, as filed
with  the  Securities and Exchange Commission on September 27, 2001 (the "Annual
Report"),  to  reflect  a  change  in  Note  11 to the Financial Statements. The
Company  is  also  amending  Item  14 of Part IV of the Annual Report to replace
Exhibit  10.9.  Accordingly,  Item  8  of  Part II and Item 14 of Part IV of the
Annual  Report  are  hereby  amended  in  their  entirety  as  follows:

                                        3
<PAGE>
                                    PART II
                                    -------

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.


                                        4
<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.

                                        5
<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.


                                        6
<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.



                                        7
<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.

                                        8
<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  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.

                                        9
<PAGE>

     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.

                                       10
<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.

                                       11
<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


                                       12
<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>


                                       13
<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>


                                       14
<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
these covenants at June 30, 2001.  This non-compliance was waived by the lending
institution.


                                       15
<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 are
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>


                                       16
<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


                                       17
<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.

                                       18
<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.


                                       19
<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. 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.


                                       20
<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



                                       21
<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.



                                     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.


                                       22
<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.

The  Valuation and Qualifying Accounts and Reserves Financial Statement Schedule
for the years ending June 30, 2001, 2000 and 1999 has been previously filed with
the Securities and Exchange Commission in the Annual Report on Form 10-K for the
year  ended  June  30,  2001.

     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).

          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).


                                       23
<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, dated as of June 26,
2001.

          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.

__________________
*  Management  contract  or  compensatory  plan  or  arrangement.
+  Previously filed.

(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.

                                       24
<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 Form 10-K/A 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:  May 20, 2002


          Pursuant  to  the requirements of the Securities Exchange Act of 1934,
this Form 10-K/A 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     May 20, 2002
-------------------------  and Director (Principal Executive
Emil H. Soika              Officer)

/s/ Michael J. Sallmann    Vice President-Finance and Secretary   May 20, 2002
-------------------------  (Principal Financial and Accounting
Michael J. Sallmann        Officer)

*                          Chairman of the Board and Director
-------------------------
Karsten Houm

*                          Director
-------------------------
Milton Datsopoulos

*                          Director
-------------------------
N.C. Joseph Lai, Ph.D.


*                          Director
-------------------------
Dr. Higgins Bailey


*                          Director
-------------------------
Jeffrey T. Barnes


*                          Director
-------------------------
Stephen K. Tannenbaum

*By: /s/ Emil H. Soika                                            May 20, 2002
     --------------------
     Attorney-in-fact
     Pursuant to Power of
     Attorney
</TABLE>


                                       25