Criticare Systems, Inc. Announces Fiscal 2005 First Quarter Financial Results.

MILWAUKEE -- CRITICARE SYSTEMS, INC. (AMEX:CMD - News). Criticare Systems, Inc. today announced its first quarter results for fiscal 2005. Revenue was $5,331,357 for the first quarter of fiscal 2005 as compared to $6,372,417 for the same quarter in fiscal 2004. The company's first quarter revenue was severely impacted by the reduction in sales to Criticare's largest OEM partner and the cancellation of three oral surgery sales conferences in the southeast. Year to year quarterly sales comparison from these sources amounted to a shortfall of $1,360,000. The company's long-standing and largest OEM partner was purchased in mid-year by a large health care organization. Subsequently, Criticare has been in negotiations with a number of viable alternatives to replace the lost sales and expects to announce the results by the end of the second quarter of fiscal 2005. The oral surgery conferences, scheduled in Florida and Louisiana, were cancelled due to weather. Sales conferences for this market represent over 80% of the company's annual domestic revenue and continue to be the main venue for Criticare's oral surgery products. The gross profit for the first quarter of fiscal 2005 was $1,871,434 compared to $2,574,407 for the same period last year. The net loss was $(700,309) compared to a net loss of $(391,730) for the same period last year.

Moving forward, Criticare has received a first year forecast and shipment schedule for its cardiac imaging assist product line per a distribution agreement. Market introduction will take place during the current fiscal year. This has been the largest product development program the company has ever undertaken, recently receiving FDA approval to market. Its contribution is expected to be the most significant of all current company initiatives.

As previously stated, the company is actively pursuing an agenda that is outside of organic growth. Criticare's management team and its board of directors believe it is imperative to increase the critical mass of the company to support the goal of greater liquidity and shareholder value.

Criticare Systems, Inc. will host a conference call on Tuesday, November 16, 2004 at 12 PM Eastern time to discuss the first quarter results. The call in number is 1-800-374-7425, utilizing code # 714041. The call will be hosted by Emil Soika, Criticare CEO. Questions should be emailed to [e-mail], prior to the call.

CSI (www.csiusa.com) designs, manufactures, and markets cost-effective patient monitoring systems and noninvasive sensors for a wide range of hospitals and alternate health care environments throughout the world.

This press release contains forward-looking statements. Such statements refer to the Company's beliefs and expectations. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those described. Such uncertainties include, but are not limited to, the timely completion of new products, regulatory approvals for new products, the risk of new and better technologies, risks relating to international markets, as well as general conditions and competition in the company's markets. Other risks are set forth in CSI's reports and documents filed from time to time with the Securities and Exchange Commission.

CRITICARE SYSTEMS, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
            THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                              (UNAUDITED)


                                                     2004       2003
                                                ---------- -----------
NET SALES                                       $5,331,357 $6,372,417

COST OF GOODS SOLD                               3,459,923  3,798,010
                                                ---------- -----------

GROSS PROFIT                                     1,871,434  2,574,407

OPERATING EXPENSES:
Sales and marketing                              1,314,487  1,507,446
Research, development and engineering              541,118    600,593
Administrative                                     749,904    901,258
                                                ---------- -----------
     Total                                       2,605,509  3,009,297

LOSS FROM OPERATIONS                              (734,075)  (434,890)

OTHER INCOME (EXPENSE):
Interest expense                                    (6,661)        --
Interest income                                      8,608      9,739
Other income                                        31,819     33,421
                                                ---------- -----------
     Total                                          33,766     43,160

LOSS BEFORE INCOME TAXES                          (700,309)  (391,730)

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

NET LOSS                                         $(700,309) $(391,730)
                                                ========== ===========

NET LOSS PER COMMON SHARE
Basic                                               $(0.06)    $(0.04)
Diluted                                             $(0.06)    $(0.04)

WEIGHTED AVERAGE NUMBER OF COMMON
    SHARES OUTSTANDING:
Basic                                           11,451,465 11,074,738
Diluted                                         11,451,465 11,074,738







                        CRITICARE SYSTEMS, INC.
                      CONSOLIDATED BALANCE SHEETS
                 SEPTEMBER 30, 2004 AND JUNE 30, 2004

                              (UNAUDITED)



ASSETS                                          Sept. 30,    June 30,
                                                   2004        2004
                                              ----------- ------------

CURRENT ASSETS:
Cash and cash equivalents                      $2,490,712  $3,738,825
Accounts receivable, less allowance
 for doubtful accounts of $300,075
 and $260,000, respectively                     5,924,548   6,489,884
Other receivables                                  76,646     359,806
Inventories                                     6,630,693   6,418,135
Prepaid expenses                                  224,225     364,375
                                              ----------- ------------
Total current assets                           15,346,824  17,371,025

Property, plant and equipment - net             2,062,816   2,094,330

License rights and patents - net                   75,234      76,985
                                              ----------- ------------

TOTAL ASSETS                                  $17,484,874 $19,542,340
                                              =========== ============


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable                               $2,192,948  $3,237,405
Accrued liabilities:
    Compensation and commissions                  825,114     863,113
    Product warranties                            460,000     444,000
    Liability under guarantees                    490,000     490,000
    Out of court settlement                        50,000     200,000
    Obligations under capital lease                58,929      57,712
    Other                                          45,903     174,395
                                              ----------- ------------
Total current liabilities                       4,122,894   5,466,625

LONG-TERM LIABILITIES:
    Obligations under capital lease               249,574     264,770
    Other long-term obligations                    18,028      21,646
                                              ----------- ------------
Total long-term liabilities                       267,602     286,416

TOTAL LIABILITIES                               4,390,496   5,753,041

STOCKHOLDERS' EQUITY:
Preferred stock - $.04 par value,
 500,000 shares authorized no shares
 issued or outstanding                                 --          --
Common stock - $.04 par value,
 15,000,000 shares authorized,
 11,574,749 shares issued, and
 11,452,321 and 11,450,021
 outstanding, respectively                        462,990     462,990
Additional paid-in capital                     23,967,004  23,965,900
Common stock held in treasury (122,428
 and 124,728 shares, respectively)               (405,155)   (409,439)
Retained earnings (accumulated deficit)       (10,926,979)(10,226,670)
Cumulative translation adjustment                  (3,482)     (3,482)
                                              ----------- ------------
Total stockholders' equity                     13,094,378  13,789,299
                                              ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $17,484,874 $19,542,340
                                              =========== ============