Criticare Systems Annual Revenues Show 6% Increase Over Prior Year; Operating Profit $306,216 Vs. A 1997 Loss of $1,416,045.

MILWAUKEE--(BUSINESS WIRE)--Aug. 20, 1998--CRITICARE SYSTEMS, INC. (NASDAQ-NMS:CXIM) announced fourth quarter and 12-month results.

For fiscal year 1998, net sales were $27,908,364 compared to $26,235,355 a year ago, an increase of approximately 6%. The company generated an operating profit of $306,216 versus a loss of $1,416,045 the year before. Net sales for the fourth quarter were $6,929,389 versus $7,695,028 for the prior year. After special items, Criticare recorded a loss of $807,524 or $.10 per share, for the quarter versus a loss of $1,649,086 or $.23 per share for the same period in fiscal 1997. The loss for the year, after special items, was $499,277, or $.06 per share, versus a loss of $2,179,489, or $.30 per share in 1997. The net loss for the fourth quarter and fiscal 1998 included a $900,000 ($.11 per share) charge for purchased research and development related to the acquisition of certain patented technologies during the fourth quarter. This technology was acquired in exchange for stock; no cash was involved. It should be noted that before applying the patent-related charge off, the Company would have earned $.05 for the year.

Gerhard Von der Ruhr, Criticare CEO, summed up the present state of the company: "Criticare's task is neither simple nor easy, and its greatest strengths are not adequately presented in the 1998 numbers. We did in fact make solid progress this year.

1. We achieved a 12-month operating profit of $306,216 against a

sizable 12-month operating loss of $1,416,045 in 1997.

2. OEM sales went from zero in 1997 to $2,292,585 in 1998.

3. Over $2,000,000 was spent on R&D.

4. Alternate care sales increased by almost 18%.

5. Acceptance of MPT(TM) in the medical community continues to

increase. The first medical article describing the contribution of the product has been published. An even more significant article is expected to be published later this year."

Von der Ruhr continued, "It is, however, the company's current activities that we would have shareholders and investors focus on:

1. OEM sales went from nothing to over $2 million. We are mindful of

the Frost & Sullivan study which stated that contract manufacturers in the data communications market are perfectly positioned for continuous growth. The large OEMs in this market have accepted the idea of outsourcing, and the leading contract manufacturers have mastered the art of providing manufacturing services, such as design, prototyping, and logistics operations. Criticare is a quality contract manufacturer. By utilizing large OEM partners, Criticare can leverage and maximize its engineering strengths.

2. Criticare's commitment to quality R&D has enabled the company to

have at least five new or revamped products in its pipeline. These products are expected to be released starting in the third quarter of fiscal 1999 through the second quarter of fiscal 2000. No one should assume that Criticare is standing still.

3. Criticare acquired some very complementary patents to its MPT(TM)

Telmetry System that will give the company a leading position in home market applications where continuous transmission is neither desired nor practical. Exception reporting or transmission upon reaching an alarm limit is the key to success in this market. Nobody wants to pay for an open telephone line 24 hours per day. As mentioned earlier, this acquisition resulted in a $900,000 charge in the fourth quarter of fiscal 1998.

4. Criticare has begun the necessary steps to spin-off a portion of

its investment in Immtech to its shareholders. Immtech, meanwhile, is in the process of raising additional equity.

We full understand that Criticare's size does not allow it to be a prime player in every market. We have excellent engineering which creates superior products. Our goal is twofold. In general, through OEM relationships, we want to leverage this product line. In particular, we will seek out those niche markets where Criticare can be a dominant force. We cannot be all things to all people, but we can be very good at what we do. This is what Criticare Systems is all about."

Criticare Systems, Inc. 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 ability to negotiate new OEM contracts, the timely completion of new products, the risk of new and better technologies, as well as general conditions in the company's markets.

                       CRITICARE SYSTEMS, INC.
                     CONSOLIDATED INCOME STATEMENT
                              (UNAUDITED)

                                       THREE MONTHS ENDED JUNE 30,
                                         1998                  1997

NET SALES                         $ 6,929,389           $ 7,695,028
COST OF GOODS SOLD                  3,595,127             4,147,694
     GROSS PROFIT                   3,334,262             3,547,334

TOTAL OPERATING EXPENSES            4,091,675             4,427,502

OPERATING PROFIT (LOSS)              (757,413)             (880,168)

NET INTEREST EXPENSE                   50,111               768,918
EQUITY IN LOSS OF
INVESTMENTS                                 0                     0
     TOTAL NON-OPERATING
      EXPENSES                         50,111               768,918

     INCOME (LOSS) BEFORE
      INCOME TAXES                   (807,524)           (1,649,086)

INCOME TAX PROVISION                        0                     0
     NET (LOSS)                     ($807,524)          ($1,649,086)

EARNINGS PER SHARE - BASIC
 & DILUTED                             ($0.10)               ($0.23)

AVERAGE SHARES OUTSTANDING          8,351,151             7,267,184


                                        TWELVE MONTHS ENDED JUNE 30,
                                         1998                  1997
                                        -----                 -----

NET SALES                         $27,908,364           $26,235,355
COST OF GOODS SOLD                 14,870,453            14,059,508
     GROSS PROFIT                  13,037,911            12,175,847

OPERATING EXPENSES                 12,731,695            13,591,892

OPERATING PROFIT (LOSS)               306,216           (1,416,045)

NET INTEREST EXPENSE                  685,493             1,009,390
EQUITY IN LOSS OF INVESTMENTS         120,000               324,000
  TOTAL NON-OPERATING EXPENSES        805,493             1,333,390

  INCOME (LOSS) BEFORE INCOME
   TAXES                             (499,277)           (2,749,435)

INCOME TAX PROVISION (BENEFIT)              0                     0
     NET INCOME (LOSS)              ($499,277)          ($2,749,435)
EXTRAORDINARY GAIN ON                                       569,946
 EXTINGUISHMENT OF DEBT
     NET (LOSS)                      (499,277)           (2,179,489)
EARNINGS PER SHARE - BASIC
 & DILUTED                             ($0.06)               ($0.30)

AVERAGE SHARES OUTSTANDING          8,351,151             7,267,184




    CONTACT: Gerhard Von der Ruhr, Criticare, 414/798-8282
              Malcolm McGuire, CCRI Corporation, 800/828-0406