Criticare First Quarter 2005 Form 10-Q
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, 2005
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 -1-31943
CRITICARE
SYSTEMS, INC.
|
(Exact
name of registrant as specified in its
charter)
|
Delaware
|
|
39-1501563
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(IRS
Employer Identification No.)
|
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
____
Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Exchange Act Rule 12b-2).
Yes
____ No
X
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2).
Yes
____ No
X
Number
of
shares outstanding of each class of the registrant's classes of common stock
as
of September 30, 2005: Class A Common Stock 12,009,426 shares.
CRITICARE
SYSTEMS, INC.
CONSOLIDATED
BALANCE SHEETS
SEPTEMBER
30, 2005 AND JUNE 30, 2005
(UNAUDITED)
ASSETS
|
|
September
30,
2005
|
|
June
30,
2005
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
3,589,832
|
|
$
|
3,680,965
|
|
Accounts
receivable, less allowance for doubtful accounts
|
|
|
|
|
|
|
|
of
$300,000 and $300,000, respectively
|
|
|
7,710,851
|
|
|
6,847,432
|
|
Other
receivables
|
|
|
654,404
|
|
|
645,479
|
|
Inventories
|
|
|
6,420,233
|
|
|
5,551,093
|
|
Prepaid
expenses
|
|
|
264,188
|
|
|
255,104
|
|
Total
current assets
|
|
|
18,639,507
|
|
|
16,980,073
|
|
|
|
|
|
|
|
|
|
Property,
plant and equipment - net
|
|
|
2,233,177
|
|
|
2,010,417
|
|
|
|
|
|
|
|
|
|
License
rights and patents - net
|
|
|
68,232
|
|
|
69,983
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
20,940,917
|
|
$
|
19,060,473
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
4,420,623
|
|
$
|
3,033,559
|
|
Accrued
liabilities:
|
|
|
|
|
|
|
|
Compensation
and commissions
|
|
|
847,226
|
|
|
900,636
|
|
Product
warranties
|
|
|
422,522
|
|
|
452,000
|
|
Obligations
under capital lease
|
|
|
64,063
|
|
|
62,739
|
|
Other
|
|
|
184,572
|
|
|
191,807
|
|
Total
current liabilities
|
|
|
5,939,006
|
|
|
4,640,741
|
|
|
|
|
|
|
|
|
|
LONG-TERM
LIABILITIES:
|
|
|
|
|
|
|
|
Obligations
under capital lease
|
|
|
185,510
|
|
|
202,031
|
|
Other
long-term obligations
|
|
|
6,586
|
|
|
8,561
|
|
Total
long-term liabilities
|
|
|
192,096
|
|
|
210,592
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
6,131,102
|
|
|
4,851,333
|
|
|
|
|
|
|
|
|
|
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, 12,120,461
and
|
|
|
|
|
|
|
|
11,925,086
shares issued, and 12,009,426 and 11,812,493 outstanding,
respectively
|
|
|
484,818
|
|
|
477,003
|
|
Additional
paid-in capital
|
|
|
25,228,574
|
|
|
24,775,995
|
|
Common
stock held in treasury (111,035 and 112,593 shares,
respectively)
|
|
|
(383,931
|
)
|
|
(386,834
|
)
|
Retained
earnings (accumulated deficit)
|
|
|
(10,511,534
|
)
|
|
(10,648,912
|
)
|
Cumulative
translation adjustment
|
|
|
(8,112
|
)
|
|
(8,112
|
)
|
Total
stockholders' equity
|
|
|
14,809,815
|
|
|
14,209,140
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
20,940,917
|
|
$
|
19,060,473
|
|
See
notes
to consolidated financial statements.
CRITICARE
SYSTEMS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
THREE
MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
|
|
NET
SALES
|
|
$
|
7,672,313
|
|
$
|
5,331,357
|
|
|
|
|
|
|
|
|
|
COST
OF GOODS SOLD
|
|
|
4,737,013
|
|
|
3,459,923
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
2,935,300
|
|
|
1,871,434
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Sales
and marketing
|
|
|
1,486,832
|
|
|
1,314,487
|
|
Research,
development and engineering
|
|
|
626,650
|
|
|
541,118
|
|
Administrative
|
|
|
764,747
|
|
|
749,904
|
|
Total
|
|
|
2,878,229
|
|
|
2,605,509
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
|
|
57,071
|
|
|
(734,075
|
)
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE):
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(5,443
|
)
|
|
(6,661
|
)
|
Interest
income
|
|
|
20,256
|
|
|
8,608
|
|
Other
income
|
|
|
65,494
|
|
|
31,819
|
|
Total
|
|
|
80,307
|
|
|
33,766
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
|
|
137,378
|
|
|
(700,309
|
)
|
|
|
|
|
|
|
|
|
INCOME
TAX PROVISION
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS)
|
|
$
|
137,378
|
|
$
|
(700,309
|
)
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) PER COMMON SHARE
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
Diluted
|
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON
|
|
|
|
|
|
|
|
SHARES
OUTSTANDING:
|
|
|
|
|
|
|
|
Basic
|
|
|
11,843,923
|
|
|
11,451,465
|
|
Diluted
|
|
|
12,192,149
|
|
|
11,451,465
|
|
See
notes
to consolidated financial statements.
CRITICARE
SYSTEMS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
THREE
MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(UNAUDITED)
|
|
2006
|
|
2005
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
137,378
|
|
$
|
(700,309
|
)
|
Adjustments
to reconcile net income (loss) to net cash
|
|
|
|
|
|
|
|
used
in operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
146,155
|
|
|
152,656
|
|
Amortization
|
|
|
1,751
|
|
|
1,751
|
|
Provision
for doubtful accounts
|
|
|
—
|
|
|
40,075
|
|
Provision
for obsolete inventory
|
|
|
(125,440
|
)
|
|
75,000
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(863,419
|
)
|
|
525,261
|
|
Other
receivables
|
|
|
(8,925
|
)
|
|
283,160
|
|
Inventories
|
|
|
(949,483
|
)
|
|
(352,326
|
)
|
Prepaid
expenses
|
|
|
(9,084
|
)
|
|
140,150
|
|
Accounts
payable
|
|
|
1,387,064
|
|
|
(1,044,457
|
)
|
Accrued
liabilities
|
|
|
(92,098
|
)
|
|
(304,109
|
)
|
Net
cash used in operating activities
|
|
|
(376,101
|
)
|
|
(1,183,148
|
)
|
|
|
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases
of property, plant and equipment, net
|
|
|
(163,132
|
)
|
|
(56,374
|
)
|
Net
cash used in investing activities
|
|
|
(163,132
|
)
|
|
(56,374
|
)
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
|
|
|
Retirement
of obligations under capital lease
|
|
|
(15,197
|
)
|
|
(13,979
|
)
|
Proceeds
from issuance of common stock
|
|
|
463,297
|
|
|
5,388
|
|
Net
cash provided by (used in) financing activities
|
|
|
448,100
|
|
|
(8,591
|
)
|
|
|
|
|
|
|
|
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(91,133
|
)
|
|
(1,248,113
|
)
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
3,680,965
|
|
|
3,738,825
|
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
3,589,832
|
|
$
|
2,490,712
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
Cash
paid for:
|
|
|
|
|
|
|
|
Income
taxes paid-net
|
|
$
|
2,825
|
|
$
|
3,125
|
|
Interest
|
|
$
|
5,443
|
|
$
|
6,661
|
|
See
notes
to consolidated financial statements.
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 2005 financial
statements have been reclassified to conform to the 2006
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, 2005 and June 30, 2005, respectively:
|
|
September
30,
2005
|
|
June
30,
2005
|
|
Component
parts
|
|
$
|
2,581,319
|
|
$
|
3,573,396
|
|
Work
in process
|
|
|
1,228,376
|
|
|
1,085,172
|
|
Finished
units
|
|
|
2,923,398
|
|
|
1,330,825
|
|
Total
inventories
|
|
|
6,733,093
|
|
|
5,989,393
|
|
Less:
reserve for obsolescence
|
|
|
312,860
|
|
|
438,300
|
|
Net
inventory
|
|
$
|
6,420,233
|
|
$
|
5,551,093
|
|
3.
Property, Plant and Equipment
Property,
plant and equipment consist of the following:
|
|
September
30,
2005
|
|
June
30,
2005
|
|
Machinery
and equipment
|
|
$
|
2,946,676
|
|
$
|
2,800,269
|
|
Furniture
and fixtures
|
|
|
951,263
|
|
|
947,726
|
|
Leasehold
improvements
|
|
|
220,407
|
|
|
220,407
|
|
Production
tooling
|
|
|
2,023,001
|
|
|
2,009,809
|
|
Demonstration
and loaner monitors
|
|
|
1,688,295
|
|
|
1,352,267
|
|
Property,
plant and equipment - cost
|
|
|
7,829,642
|
|
|
7,330,478
|
|
Less:
accumulated depreciation
|
|
|
(5,596,465
|
)
|
|
(5,320,061
|
)
|
Property,
plant and equipment - net
|
|
$
|
2,233,177
|
|
$
|
2,010,417
|
|
The
Company capitalizes and subsequently reports at the lower of unamortized cost
or
net realizable value, all software production costs once technological
feasibility has been established for the product.
4.
Stock Options
Prior
to
fiscal 2006, the Company had adopted the disclosure-only provisions of SFAS
No.
123, “Accounting for Stock-Based Compensation” and SFAS No. 148, “Accounting for
Stock-Based Compensation—Transition and Disclosure”. Effective July 1, 2005, the
Company adopted the fair value recognition provisions of SFAS No. 123,
“Accounting for Stock-Based Compensation”. Under the modified prospective method
of adoption selected by the Company under the provisions of SFAS No. 148,
“Accounting for Stock-Based Compensation—Transition and Disclosure”,
compensation cost recognized in fiscal 2006 is the same as that which would
have
been recognized had the recognition provisions of SFAS No. 123 been applied
from
its original effective date. Results for the prior year has not been restated.
If the Company had elected to recognize compensation cost for the options
granted for the three months ended September 30, 2004, 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:
|
|
Three
Months ended September 30,
|
|
|
|
2005
|
|
2004
|
|
|
|
|
|
|
|
Net
income (loss) - as reported
|
|
$
|
137,378
|
|
$
|
(700,309
|
)
|
Add:
Stock-based employee compensation
|
|
|
|
|
|
|
|
expense
included in reported net income
|
|
|
40,017
|
|
|
--
|
|
Deduct:
Total stock-based employee compensation
|
|
|
|
|
|
|
|
expense
determined under fair value based
|
|
|
|
|
|
|
|
method
for all awards
|
|
|
(40,017
|
)
|
|
(29,362
|
)
|
Net
income (loss) - pro forma
|
|
$
|
137,378
|
|
$
|
(729,671
|
)
|
|
|
|
|
|
|
|
|
Basic
and diluted net income (loss)
per
share - as reported
|
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
Basic
and diluted net income (loss)
per
share - pro forma
|
|
$
|
0.01
|
|
$
|
(0.06
|
)
|
For
the
three months ended September 30, 2004 the Company granted options totaling
50,000 shares at an exercise price of $2.61, which are valued at $73,576. The
fair value of stock options used to compute pro forma net income (loss) and
net
income (loss) per share is the estimated present value at the grant date using
the Black-Scholes option-pricing model.
5.
Income Taxes
No
income
tax provision has been made in the consolidated income statements due to federal
and state net operating loss carry forwards that will be utilized to offset
taxable income earned. At September 30, 2005, the Company had federal net
operating loss carry forwards of approximately $17,661,000 (which expire from
2008 through 2025) and state net operating loss carry forwards of approximately
$12,022,000 (which expire from 2005 through 2020) available to offset future
taxable income. The Company has recorded a valuation allowance to offset the
related deferred income tax assets arising from these net loss carry forwards
due to the uncertainty of realizing the benefits of these assets in future
years.
6.
Line of Credit Facility
At
September 30, 2005, the Company had a $2,000,000 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, less 0.25% (6.50% as of September 30, 2005). As of
September 30, 2005 and 2004 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 income or liquidity levels. The Company was in compliance with the
covenants at September 30, 2005.
7.
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
in
fiscal year 2005 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 95,950 shares in 2005
without this anti-dilutive impact.
CRITICARE
SYSTEMS, INC.
Management's
Discussion and Analysis of
Results
of Operations and Financial Condition
Three
Months Ended September 30, 2005 and 2004
Results
of Operations
Net
sales
of $7,672,313 for the three months ended September 30, 2005 increased 43.9%
from
$5,331,357 for the same period in fiscal 2005. A 10.7% increase in the number
of
units shipped and a 29.8% increase in the average sales price were partially
offset by a 12.8% reduction in accessory sales in the current period. The
increased sales were the result of a $831,946 net increase in original equipment
manufacturer ("OEM") sales, $547,095 in acute care sales, a $410,182 increase
in
international sales and a $294,309 increase in domestic sales. 67.7% of the
Company’s increased sales were driven by an increase in sales to our largest OEM
customer.
The
gross
profit percentage of 38.2% for the three months ended September 30, 2005
increased from 35.1% for the same period in fiscal 2005. The increased margins
in the current period were mainly due to increased manufacturing overhead
absorption, resulting from the increase in the number of units shipped and
relatively fixed overhead costs. The gross profit for the first quarter of
fiscal 2006 was adversely affected by increased overhead costs associated with
the one-time manufacturing start-up costs related to our new portable cardiac
monitor. Upon the stabilization of the portable cardiac monitor product line
and
manufacturing process, the Company will explore cost savings through the
offshore manufacturing of the monitor.
Operating
expenses for the three months ended September 30, 2005 increased $272,720 from
the same period in fiscal 2005. The increase of $172,345 in sales and marketing
expenses was due mainly to a $75,603 increase in the commissions earned by
dealers and employees, due to increased sales, combined with a $57,620 decrease
in service sales for the three months ended September 30, 2005. The increase
of
$85,532 in research, development and engineering expenses was mainly due to
$125,000 of funding received, in the first quarter of fiscal 2005, from our
largest OEM customer to jointly develop a highly specialized monitoring system
for medical imaging applications. Administrative expenses increased by $14,800
mainly due to $40,017 in compensation expenses recognized in conjunction with
SFAS 123(R) and an increase of $11,449 in license fees, which was partially
offset by a $19,094 reduction in consulting fees and a $26,633 reduction in
legal fees. The Company has a receivable, that has been outstanding for over
one
year, with our distributor in Mexico in the amount of $1,240,858. If the
distributor is unable to complete the tender with the Mexican government, the
Company may need to reserve a portion of the receivable, which would increase
operating expenses.
Total
other income for the three months ended September 30, 2005 increased $46,541
from the same period in fiscal 2005. This increase was driven by a $42,750
increase in royalty fees.
The
$1,063,866 and $46,541 increase in gross profit and total other income
respectively, partially offset by the increased operating expenses of $272,720,
resulted in net income of $137,378 for the three months ended September 30,
2005
compared to a net loss of $(700,309) for the same period in fiscal
2005.
Liquidity
and Capital Resources
As
of
September 30, 2005, the Company had a cash balance of $3,589,832 that was
$91,133 lower than its balance at June 30, 2005 of $3,680,965. The Company
continues to maintain a long-term bank debt free balance sheet since August
30,
2002 when it sold its building and used the proceeds from the sale to retire
the
long-term bank debt on the facility.
The
Company’s cash position decreased by $91,133 for the three months ended
September 30, 2005 as $448,100 of cash provided by financing activities was
more
than offset by $163,132 of capital expenditures and $376,101 of cash used in
operations. Cash used in operations was $376,101 for the three months ended
September 30, 2005 as an increase of $1,812,902 in receivables and inventory
was
nearly offset by a $1,387,064 increase in accounts payable.
The
Company believes all future capital and liquidity requirements will be satisfied
by cash generated from operations, proceeds received from the issuance of common
stock related to the exercise of stock options, and its current cash balances.
No major capital equipment expenditures are expected in the Company’s next
fiscal year ending June 30, 2006. The Company also has a $2,000,000 line of
credit currently in place that could be utilized, if necessary. At June 30,
2005, there were no borrowings outstanding under this line of credit. The credit
facility has covenants which require minimum income or liquidity levels. The
Company was in compliance with the covenants at September 30, 2005. This line
expires in June 2006.
Forward
Looking Statements
A
number
of the matters and subject areas discussed herein that are not historical or
current facts deal with potential future circumstances and developments. These
include anticipated product introductions, expected future financial results,
liquidity needs, financing ability, management's or the Company's expectations
and beliefs and similar matters discussed in Management's Discussion and
Analysis or elsewhere herein. The discussions of such matters and subject areas
are qualified by the inherent risk and uncertainties surrounding future
expectations generally, and also may materially differ from the Company's actual
future experience.
The
Company's business, operations and financial performance are subject to certain
risks and uncertainties which could result in material differences in actual
results from management's or the Company's current expectations. These risks
and
uncertainties include, but are not limited to, general economic conditions,
demand for the Company's products, costs of operations, the development of
new
products, the reliance on single sources of supply for certain components in
the
Company's products, government regulation, health care cost containment
programs, the effectiveness of the Company's programs to manage working capital
and reduce costs, competition in the Company's markets, 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.
Quantitative
and Qualitative Disclosures about Market Risk
The
Company has a demand line of credit facility with a commercial bank with
interest payable monthly at 25 basis points below the bank's reference rate.
The
Company had no borrowings outstanding under this bank facility at September
30,
2005 and June 30, 2005. Due historically to the lack of need to borrow from
this
credit facility and due to the Company’s current cash position, the Company is
not subject to financial risk on this obligation if interest rates in the market
change significantly.
The
Company’s net sales are primarily denominated in United States dollars, except
for a small amount of net sales from the Company’s operation in India
denominated in Indian rupees. As a result, part of the Company’s accounts
receivable are denominated in rupees and translated into U.S. dollars for
financial reporting purposes. A 10% change in the exchange rate of the U.S.
dollar with respect to the Indian rupee would not have a material adverse effect
on the Company’s financial condition or results of operations for the quarter
ended September 30, 2005. The Company does not use any hedges or other
derivative financial instruments to manage or reduce exchange rate
risk.
Controls
and Procedures
As
of the
end of the period covered by 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 Vice President
- Finance, of the Company’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended). Based on this evaluation, the Company’s Chief Executive Officer and
Vice President - Finance concluded that, as of the end of such period, the
Company’s disclosure controls and procedures were effective in recording,
processing, summarizing and reporting, on a timely basis, information required
to be disclosed by the Company in reports that the Company files with or submits
to the Securities and Exchange Commission. 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. The Company
has
designed its disclosure controls and procedures to reach a level of reasonable
assurance of achieving the desired control objectives and based upon the
evaluation described above, the Company’s Chief Executive Officer and Vice
President -Finance concluded that the Company’s disclosure controls and
procedures were effective at reaching that level of reasonable
assurance.
There
was
no change in the Company’s internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934,
as
amended) during the Company’s most recently completed fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
PART
II -
OTHER INFORMATION
Item
6.
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).
|
|
31.1
|
Certification
of Emil H. Soika, President and Chief Executive Officer (Principal
Executive Officer) pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002.
|
|
31.2
|
Certification
of Joel D. Knudson, Vice President - Finance and Secretary (Principal
Financial Officer) pursuant to Section 302 of the Sarbanes-Oxley
Act of
2002.
|
|
32*
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant
to
18 U.S.C. Section 1350.
|
__________________
*
This
Certification is not “filed” for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or incorporated by reference into any filing
under the Securities Act of 1933, as amended, or the Securities Exchange Act
of
1934, as amended.
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 10,
2005
BY
/s/
Joel D. Knudson
Joel D. Knudson
Vice President - Finance
(Chief Accounting Officer and
Duly Authorized Officer)