Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
--------------------
OR
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 0-16061
-------
CRITICARE SYSTEMS, INC.
---------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 39-1501563
----------------- ----------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
20925 Crossroads Circle, Suite 100, Waukesha, Wisconsin 53186
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (262) 798-8282
--------------
N/A
--------------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Number of shares outstanding of each class of the registrant's classes of common
stock as of September 30, 2002: Class A Common Stock 11,204,024 shares.
CRITICARE SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND JUNE 30, 2002
(UNAUDITED)
September 30, 2002 June 30, 2002
ASSETS ------------------ -------------
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,066,578 $ 3,523,070
Accounts receivable, less allowance for doubtful accounts of $300,000 . . . 5,179,578 5,481,952
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,544,221 2,304,689
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345,391 502,348
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,373,860 7,134,803
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455,482 453,347
-------------------- ------------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,965,110 19,400,209
Property, plant and equipment - net . . . . . . . . . . . . . . . . . . . . 2,271,978 5,983,060
License rights and patents - net. . . . . . . . . . . . . . . . . . . . . . 89,237 90,987
-------------------- ------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,326,325 $25,474,256
==================== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,426,183 $ 2,331,496
Accrued liabilities:
Compensation and commissions . . . . . . . . . . . . . . . . . . . . . . . 764,103 770,578
Product warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253,000 248,725
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614,405 490,922
Current maturities of long-term debt . . . . . . . . . . . . . . . . . . . - 93,589
-------------------- ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 4,057,691 3,935,310
LONG-TERM DEBT, less current maturities . . . . . . . . . . . . . . . . . . - 3,103,536
OTHER LONG-TERM OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . 44,792 48,344
STOCKHOLDERS' EQUITY:
Preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Common stock - $.04 par value, 15,000,000 shares authorized,
11,204,024, and 11,199,524 shares issued and outstanding, respectively. . 448,161 447,981
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . 23,358,274 23,350,124
Common stock held in treasury (135,101 and 100,890 shares, respectively). . (428,762) (309,059)
Subscriptions receivable. . . . . . . . . . . . . . . . . . . . . . . . . . (225,000) (225,000)
Retained earnings (accumulated deficit) . . . . . . . . . . . . . . . . . . (7,479,152) (7,187,501)
Cumulative translation adjustment . . . . . . . . . . . . . . . . . . . . . 6,100 5,832
Unrealized gain on investments. . . . . . . . . . . . . . . . . . . . . . . 1,544,221 2,304,689
-------------------- ------------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . 17,223,842 18,387,066
-------------------- ------------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,326,325 $25,474,256
==================== ============
See notes to consolidated financial statements.
2
CRITICARE SYSTEMS, INC.
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
2002 2001
------------ ------------
NET SALES . . . . . . . . . . . . . . $ 6,304,347 $ 5,489,137
COST OF GOODS SOLD. . . . . . . . . . 3,907,000 3,677,701
------------ ------------
GROSS PROFIT. . . . . . . . . . . . . 2,397,347 1,811,436
OPERATING EXPENSES:
Marketing . . . . . . . . . . . . . . 1,326,960 1,600,355
Research, development and engineering 628,940 587,083
Administrative. . . . . . . . . . . . 957,229 660,778
------------ ------------
Total . . . . . . . . . . . . . . . . 2,913,129 2,848,216
LOSS FROM OPERATIONS. . . . . . . . . (515,782) (1,036,780)
OTHER INCOME (EXPENSE):
Interest expense. . . . . . . . . . . (91,533) (62,676)
Interest income . . . . . . . . . . . 15,865 33,044
Other income. . . . . . . . . . . . . 299,799 4,577
------------ ------------
Total . . . . . . . . . . . . . . . . 224,131 (25,055)
LOSS BEFORE INCOME TAXES. . . . . . . (291,651) (1,061,835)
INCOME TAX PROVISION. . . . . . . . . - -
------------ ------------
NET LOSS. . . . . . . . . . . . . . . $ (291,651) $(1,061,835)
============ ============
NET LOSS PER COMMON SHARE:
Basic . . . . . . . . . . . . . . . . $ (0.03) $ (0.10)
Diluted . . . . . . . . . . . . . . . $ (0.03) $ (0.10)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING:
Basic . . . . . . . . . . . . . . . . 11,072,682 10,733,029
Diluted . . . . . . . . . . . . . . . 11,072,682 10,733,029
See notes to consolidated financial statements.
3
CRITICARE SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)
2002 2001
------------ ------------
OPERATING ACTIVITIES:
Net loss . . . . . . . . . . . . . . . . . . . . . . $ (291,651) $(1,061,835)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . 228,655 246,045
Amortization. . . . . . . . . . . . . . . . . . . 1,750 1,751
Provision for doubtful accounts . . . . . . . . . - 75,000
Provision for obsolete inventory. . . . . . . . . 364,000 -
Gain on sale of Immtech stock . . . . . . . . . . (241,746) -
Gain on sale of building. . . . . . . . . . . . . (41,208) -
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . 302,374 799,112
Other receivables . . . . . . . . . . . . . . . 156,957 1,337
Inventories . . . . . . . . . . . . . . . . . . (568,513) (660,432)
Prepaid expenses. . . . . . . . . . . . . . . . (2,135) 47,408
Accounts payable. . . . . . . . . . . . . . . . 94,687 (946,993)
Accrued liabilities . . . . . . . . . . . . . . 117,731 (279,871)
------------ ------------
Net cash provided by (used in) operating activities. 120,901 (1,778,478)
INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net. . . (306,073) (90,526)
Proceeds from sale of Immtech stock. . . . . . . . . 241,746 -
Proceeds from sale of building . . . . . . . . . . . 3,795,164 -
------------ ------------
Net cash provided by (used in) investing activities. 3,730,837 (90,526)
FINANCING ACTIVITIES:
Retirement of long-term debt . . . . . . . . . . . . (3,197,125) (20,575)
Repurchase of Company common stock . . . . . . . . . (121,359) -
Proceeds from issuance of common stock . . . . . . . 9,986 5,171
------------ ------------
Net cash (used in) financing activities. . . . . . . (3,308,498) (15,404)
EFFECT OF EXCHANGE RATE CHANGES ON CASH. . . . . . . 268 -
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 543,508 (1,884,408)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR . . . . 3,523,070 3,362,104
------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR . . . . . . . $ 4,066,578 $ 1,477,696
============ ============
See notes to consolidated financial statements.
4
CRITICARE SYSTEMS, INC.
Condensed Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared by Criticare
Systems, Inc. (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") and, in the opinion of the Company,
include all adjustments necessary for a fair statement of results for each
period shown. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such SEC rules and
regulations. The Company believes that the disclosures made are adequate to
prevent the financial information given from being misleading. It is suggested
that these financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's latest annual report and
previously filed Form 10-K. Certain amounts from the fiscal 2001 financial
statements have been reclassified to conform to the 2002 presentation.
2. INVENTORY VALUATION
Inventory is stated at the lower of cost or market, with cost determined on the
first-in, first-out method. Components of inventory consisted of the following
at September 30, 2002 and June 30, 2002, respectively:
September 30, 2002 June 30, 2002
------------------ -------------
Component parts . . . . . . . . $ 3,508,213 $3,549,397
Work in process . . . . . . . . 588,243 499,950
Finished units. . . . . . . . . 4,587,404 4,031,456
-------------- ----------
Total inventories . . . . . . . 8,683,860 8,080,803
Less: reserve for obsolescence 1,310,000 946,000
-------------- ----------
Net inventory . . . . . . . . . $ 7,373,860 $7,134,803
3. INVESTMENTS
In July and August of 2002 the Company sold a total of 50,000 shares of its
Immtech International, Inc. ("Immtech") common stock and realized a gain of
$241,746. The Company held 406,374 shares of Immtech stock, which was trading
at $3.80 per share, on September 30, 2002. The market value of these shares
could change substantially due to overall market risk.
5
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
September 30, 2002 June 30, 2002
------------------ -------------
Land and building. . . . . . . . . . $ - $ 4,525,000
Machinery and equipment. . . . . . . 2,066,005 2,007,322
Furniture and fixtures . . . . . . . 827,046 809,277
Construction in progress . . . . . . - 116,798
Leasehold improvements . . . . . . . 202,984 -
Demonstration and loaner monitors. . 1,582,222 1,616,766
Production tooling . . . . . . . . . 3,463,156 3,425,117
-------------- -----------
Property, plant and equipment - cost 8,141,413 12,500,280
Less: accumulated depreciation. . . 5,869,436 6,517,220
-------------- -----------
Property, plant and equipment - net. $ 2,271,977 $ 5,983,060
On August 30, 2002, the Company sold its building in Waukesha, Wisconsin and
leased back approximately 62% of the building's square footage. The building
was sold for $4,000,000 and a gain of $41,208 was realized on the sale after the
payment of commissions and fees and the funding of $105,396 in capitalized build
out costs needed to split the building into two leasable spaces. The proceeds
from the sale were used to retire the $3,182,160 of debt on the Company's
balance sheet at August 30, 2002 and increased the Company's cash position by
approximately $500,000.
5. CONTINGENCIES
On August 6, 2002, in part due to the new regulations imposed under the
Sarbanes-Oxley Act, the Company initiated an internal review of its import and
export procedures. On August 28, 2002, senior management of the Company became
aware of actions that may have violated United States import/export laws and
regulations. Senior management of the Company immediately authorized an internal
audit of these possible violations, focusing on the sale of medical equipment
directly or indirectly into an embargoed country and possible marking issues.
The factual investigation pursuant to the internal audit is substantially
complete and no additional compliance issues have arisen as a result of the
factual investigation. A report setting forth the findings from the internal
audit is being completed. The import and export rules applicable to all United
States companies engaged in international business transactions contain
compliance guidelines. Violations may result in civil or criminal penalties, or
both, as well as the potential loss of export privileges. The Company has taken
action to adopt and implement a written compliance program with respect to
applicable import/export rules. The Company has also undertaken a voluntary
disclosure with the Bureau of Industry and Security ("BIS") and the Treasury's
Office of Foreign Asset Control ("OFAC"). Although there is no assurance, based
upon a review of the internal audit to date and precedents, the Company believes
a negotiated settlement of any violations will not have a material adverse
effect on the operations of the Company. At this time, the Company cannot
determine whether any monetary fines would have a material adverse effect on its
financial condition. The Company does not believe that the evidence supports the
denial of export privileges; however, any such penalty would have a material
adverse effect on the Company's business. The Company further believes that the
voluntary disclosure to the BIS, OFAC and, possibly, other agencies will serve
to mitigate any potential adverse consequences that otherwise might accrue.
6
CRITICARE SYSTEMS, INC.
Management's Discussion and Analysis of
Results of Operations and Financial Condition
Three Months Ended September 30, 2002 and 2001
RESULTS OF OPERATIONS
- -----------------------
Net sales for the three months ended September 30, 2002 increased 14.9% from the
same period in the prior year. The higher sales were driven by a 14.3% increase
in the number of units sold and a 6.8% increase in the average sales price per
unit for the same three month period in the prior year. The higher average per
unit sales price in the current period was mainly mix driven, as sales of the
Company's higher priced 8100 vital signs monitors and Vitalview central stations
increased 33.6% over the same period in the prior year. Sales were down
significantly in the prior year due mainly to the events of September 11th which
adversely affected sales in September 2001 and basically eliminated sales from
one of the Company's largest domestic trade shows that opened on September 12,
2001. This trade show was held in October in the current fiscal year and is
expected to contribute to strong sales in the Company's fiscal second quarter
ending December 31, 2002. See "Forward-Looking Statements."
The gross profit percentage of 38.0% for the three months ended September 30,
2002 was five percentage points higher than the same period in the prior year.
The higher sales volume in the current period resulted in a better utilization
of fixed manufacturing costs and improved margins approximately three percentage
points. In addition, due to the outsourcing of the majority of the Company's
products, approximately $140,000 of fixed costs that had previously been
classified as manufacturing expenses were more appropriately included in
administrative expenses in the current period ended September 30, 2002 and
improved margins.
Operating expenses for the three months ended September 30, 2002 increased only
2.3%, or $64,913, from the same period in the prior year, despite the
reclassification in the current period of approximately $140,000 of fixed costs
to administrative expenses discussed above. In addition, the Company's legal
and consulting expenses in the current period were almost $141,000 higher than
the prior year due mostly to the internal review being conducted by the Company
of its import and export procedures. The $296,451 increase in administrative
expenses in the current period was almost entirely offset by a $273,395
reduction in marketing expenses from the same period in the prior year, driven
mainly by lower expenses in international marketing and customer service.
Other income for the three months ended September 30, 2002 increased $249,186
from the same period in the prior year. The recognition of a $241,746 gain on
the sale of 50,000 shares of the Company's Immtech International, Inc. stock
and a $41,208 gain on the sale of the Company's building were the main
contributors to the higher other income recognition. These gains were partially
offset by a $28,857 increase in interest expense in the current period, as two
months of interest expense on the Company's mortgage on the facility and the
prepayment penalty on the early retirement of the debt during the three months
ended September 30, 2002 were greater than three months of interest expense
incurred on the mortgage during the three months ended September 30, 2001.
The higher sales for the three months ended September 30, 2002, combined with
the improved gross profit performance and an increase in other income more than
offset the slightly higher operating expenses, resulting in a $291,651 loss that
was significantly lower than the $1,061,835 loss recognized for the same period
in the prior year.
7
LIQUIDITY AND CAPITAL RESOURCES
- ----------------------------------
The Company has strengthened its balance sheet significantly at September 30,
2002 when compared to September 30, 2001. The Company has increased its cash
balance by more than $2.5 million over the last twelve months to $4,066,578 at
September 30, 2002 from $1,477,696 at September 30, 2001. In addition, the
Company's balance sheet at September 30, 2002 is now debt free due to the sale
of the Company's building on August 30, 2002. The Company sold its building in
Waukesha, Wisconsin, leased back approximately 62% of the its square footage,
and used the proceeds from the sale to retire $3,182,160 of debt on the balance
sheet on the date of sale. The building was sold for $4,000,000 and a gain of
$41,208 was realized on the sale after the payment of commissions and fees and
the funding of $105,396 in capitalized build out costs needed to split the
building into two leasable spaces. This transaction also increased the
Company's cash position by approximately $500,000 and was the main contributor
to the Company's $543,508 increase in cash from its balance of $3,523,070 at
June 30, 2002. In addition to strengthening the balance sheet, the reduction in
square footage and the elimination of interest expense on the mortgage is
expected to increase annual cash flows by almost $150,000 (see "Forward Looking
Statements").
Other significant events impacting cash flows for the three months ended
September 30, 2002 included the sale of 50,000 shares of its Immtech
International, Inc. stock in July and August of 2002 that resulted in the
recognition of a realized gain of $241,746. The Company held 406,374 shares of
Immtech stock after the sale of these shares, which was trading at $3.80 per
share on September 30, 2002. Also, in accordance with the authorized buyback of
up to 500,000 shares of the Company's common stock by the Board of Directors in
the third quarter of fiscal 2002, the Company purchased 35,100 shares of stock
at a cost of $121,359 in the first quarter of fiscal 2003. The Company has now
acquired a total of 76,223 shares of its common stock under this approved stock
buyback.
The Company believes all capital and liquidity requirements for the remainder of
fiscal 2003 will be satisfied by cash generated from operations and its current
cash balances. The Company's $4,000,000 line of credit expires in November
2002, but is expected to be extended with terms consistent with the current
agreement. At September 30, 2002 there were no borrowings outstanding under
this line of credit
FORWARD LOOKING STATEMENTS
- ----------------------------
A number of the matters and subject areas discussed herein that are not
historical or current facts deal with potential future circumstances and
developments. These include anticipated product introductions, expected future
financial results, liquidity needs, financing ability, management's or the
Company's expectations and beliefs and similar matters discussed in Management's
Discussion and Analysis or elsewhere herein. The discussions of such matters
and subject areas are qualified by the inherent risk and uncertainties
surrounding future expectations generally, and also may materially differ from
the Company's actual future experience.
8
The Company's business, operations and financial performance are subject to
certain risks and uncertainties which could result in material differences in
actual results from management's or the Company's current expectations. These
risks and uncertainties include, but are not limited to, general economic
conditions, demand for the Company's products, costs of operations, the
development of new products, the reliance on single sources of supply for
certain components in the Company's products, government regulation, health care
cost containment programs, the effectiveness of the Company's programs to manage
working capital and reduce costs, competition in the Company's markets,
compliance with product safety regulations and product liability and product
recall risks, risks relating to international sales and compliance with U.S.
export regulations, unanticipated difficulties in outsourcing the manufacturing
of the majority of its products to foreign manufacturers and risks related to
foreign manufacturing, including economic and political instability, trade and
foreign tax laws, production delays and cost overruns and quality control, and
the Company's ability to reduce costs by eliminating excess capacity at its
principal facility.
CONTROLS AND PROCEDURES
- -------------------------
Within 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on this evaluation, the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective. It should be noted
that in designing and evaluating the disclosure controls and procedures,
management recognized that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect the internal controls subsequent
to the date the Company completed its evaluation.
9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------------
(a) Exhibits:
3.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to the Registration Statement filed on Form S-1,
Registration No. 33-13050).
3.2 By-Laws of the Company (incorporated by reference to the Registration
Statement filed on Form S-1, Registration No. 33-13050).
4.1 Specimen Common Stock certificate (incorporated by reference to the
Registration Statement filed on Form S-1, Registration No. 33-13050).
4.2 Rights Agreement (incorporated by reference to the Company's Current
Report on Form 8-K filed on April 18, 1997).
10.1 Employment Agreement, dated as of May 18, 2000, between the Company
and Joseph P. Lester.
(b) Reports on Form 8-K: None in the quarter ended September 30, 2002.
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CRITICARE SYSTEMS, INC.
(Registrant)
Date: November 14, 2002 BY /s/ Michael J. Sallmann
------------------------------------
Michael J. Sallmann
Vice President - Finance
(Chief Accounting Officer and
Duly Authorized Officer)
11
CERTIFICATIONS
--------------
I, Emil H. Soika, President and Chief Executive Officer of Criticare Systems,
Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Criticare
Systems, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date.
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls.
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Emil H. Soika
-----------------------------------------
Emil H. Soika
President and Chief Executive Officer
12
CERTIFICATIONS
--------------
I, Michael J. Sallmann, Vice President - Finance and Secretary of Criticare
Systems, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Criticare
Systems, Inc.
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date.
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
controls.
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002
/s/ Michael J. Sallmann
-----------------------------------------
Michael J. Sallmann
Vice President - Finance and Secretary
13