# UNITED STATESSECURITIES AND
EXCHANGE COMMISSION
Washington, D. C. 20549

# FORM 10-Q

(Mark One)

|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|- |  | ----------------------------------------------------------------------------------------

For
the Period Ended June 30, 2005.

|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|- |  | -----------------------------------------------------------------------------------------

# Commission File
Number: 0 - 16612

CNS, INC.
(Exact name of registrant as specified in its charter)

|Delaware                                                       | 41-1580270                         
|-------------------------------------------------------------- | -----------------------------------
|(State or other jurisdiction of
incorporation or organization) | (I.R.S. EmployerIdentification No.)

7615 Smetana LaneEden Prairie, MN 55344
(Address of principal executive offices including zip code)

(952) 229-1500
(Registrants telephone number, including area code)

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 Rule 12b-2 of the Exchange Act).

YES X     NO

At July 29, 2005, the Company had
outstanding 14,044,106 shares of common stock, $.01 par value per share.

---

CNS, Inc.FORM 10-Q
For the Period Ended June 30, 2005Index

|PART I. |  | FINANCIAL INFORMATION
|------- |  | ---------------------

| | Item 1. |  | Financial Statements
| | ------- |  | --------------------

| | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations
| | ------- |  | -------------------------------------------------------------------------------------

| | Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk
| | ------- |  | ----------------------------------------------------------

| | Item 4. |  | Controls and Procedures
| | ------- |  | -----------------------

|PART II. |  | OTHER INFORMATION
|-------- |  | -----------------

| | Item 1. |  | Legal Proceedings
| | ------- |  | -----------------

| | Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds
| | ------- |  | -----------------------------------------------------------

| | Item 3. |  | Defaults Upon Senior Securities
| | ------- |  | -------------------------------

| | Item 4. |  | Submission
of Matters to a Vote of Security Holders
| | ------- |  | ---------------------------------------------------

| | Item 5. |  | Other Information
| | ------- |  | -----------------

| | Item 6. |  | Exhibits
| | ------- |  | --------

SIGNATURES

---

PART
I  FINANCIAL INFORMATION

Item 1.  Financial
Statements

CNS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)
(in thousands, except per share amounts)

|                                                                          |  | Three Months Ended
June 30,
|------------------------------------------------------------------------- |  | ---------------------------
|
|Net sales                                                                 |  |                            
|Cost of goods sold                                                        |  |                            
|                                                                          |  |                            
|Gross profit                                                              |  |                            
|                                                                          |  |                            
|Operating expenses:                                                       |  |                            
|Advertising and promotion                                                 |  |                            
|Selling, general and administrative                                       |  |                            
|                                                                          |  |                            
|Total operating expenses                                                  |  |                            
|                                                                          |  |                            
|Operating income                                                          |  |                            
|Investment Income                                                         |  |                            
|                                                                          |  |                            
|Income before income taxes                                                |  |                            
|Income tax expense                                                        |  |                            
|                                                                          |  |                            
|Net income                                                                |  |                            
|                                                                          |  |                            
|                                                                         
|Basic net income per share                                                |  |                            
|                                                                          |  |                            
|Diluted net income per share                                              |  |                            
|                                                                          |  |                            
|                                                                         
|Weighted average number of common shares outstanding                      |  |                            
|                                                                          |  |                            
|Weighted average number of common and potential common shares outstanding |  |                            
|                                                                          |  |                            

The accompanying notes are an
integral part of the condensed consolidated financial statements.

---

CNS,
INC.CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited)(in
thousands, except per share amounts)

|                                                                                                                                                                                     |  | June 30,
2005 |   | March 31,
2005
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | - | --------------
|ASSETS                                                                                                                                                                               |  |               |   |               
|Current assets:                                                                                                                                                                      |  |              
|Cash and cash equivalents                                                                                                                                                            |  |               | $ | 3,536         
|Marketable securities                                                                                                                                                                |  |               |   | 56,430        
|Accounts receivable, net                                                                                                                                                             |  |               |   | 11,256        
|Inventories                                                                                                                                                                          |  |               |   | 6,181         
|Deferred income taxes                                                                                                                                                                |  |               |   | 1,929         
|Prepaid expenses and other current assets                                                                                                                                            |  |               |   | 863           
|                                                                                                                                                                                     |  |               |   |               
|Total current assets                                                                                                                                                                 |  |               |   | 80,195        
|                                                                                                                                                                                    
|Property and equipment, net                                                                                                                                                          |  |               |   | 1,019         
|Product rights, net                                                                                                                                                                  |  |               |   | 1,387         
|Deferred income taxes                                                                                                                                                                |  |               |   | 899           
|                                                                                                                                                                                     |  |               |   |               
|                                                                                                                                                                                     |  |               | $ | 83,500        
|                                                                                                                                                                                     |  |               |   |               
|                                                                                                                                                                                    
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                 |  |              
|Current liabilities:                                                                                                                                                                 |  |              
|Accounts payable and accrued expenses                                                                                                                                                |  |               | $ | 14,731        
|                                                                                                                                                                                     |  |               |   |               
|Total current liabilities                                                                                                                                                            |  |               |   | 14,731        
|                                                                                                                                                                                    
|Stockholders equity:                                                                                                                                                                |  |              
|Preferred stock - authorized 8,484 shares;                                                                                                                                           |  |              
|none issued or outstanding                                                                                                                                                           |  |               |   |              
|Common stock - $.01 par value; authorized 50,000 shares;                                                                                                                             |  |              
|issued 19,295 shares; outstanding 14,079 shares at June 30, 2005 and
                                                                                14,246 shares at March 31, 2005 |  |               |   | 193           
|Additional paid-in capital                                                                                                                                                           |  |               |   | 61,811        
|Treasury shares - at cost;  5,216 at June 30, 2005 and 5,049 at March 31, 2005                                                                                                       |  |               |   | (29,534       
|Retained earnings                                                                                                                                                                    |  |               |   | 36,471        
|Accumulated other comprehensive income                                                                                                                                               |  |               |   | (172          
|                                                                                                                                                                                     |  |               |   |               
|Total stockholders equity                                                                                                                                                           |  |               |   | 68,769        
|                                                                                                                                                                                     |  |               |   |               
|                                                                                                                                                                                     |  |               | $ | 83,500        
|                                                                                                                                                                                     |  |               |   |               

The accompanying notes
are an integral part of the condensed consolidated financial statements.

---

CNS,
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)(in
thousands)

|                                                         |  | Three Months Ended
June 30,
|-------------------------------------------------------- |  | ---------------------------
|
|Operating activities:                                    |  |                            
|Net income                                               |  |                            
|Adjustments to reconcile net income to net cash          |  |                            
|from operating activities:                               |  |                            
|Depreciation and amortization                            |  |                            
|Deferred income taxes                                    |  |                            
|Changes in operating assets and liabilities:             |  |                            
|Accounts receivable                                      |  |                            
|Inventories                                              |  |                            
|Prepaid expenses and other current assets                |  |                            
|Accounts payable and accrued expenses                    |  |                            
|                                                         |  |                            
|Net cash from operating activities                       |  |                            
|                                                         |  |                            
|Investing activities:                                    |  |                            
|Purchases of marketable securities                       |  |                            
|Sales of marketable securities                           |  |                            
|Payments for purchases of property and equipment         |  |                            
|Payments for product rights                              |  |                            
|                                                         |  |                            
|Net cash from investing activities                       |  |                            
|                                                         |  |                            
|Financing activities:                                    |  |                            
|Proceeds from issuance of common stock under stock plans |  |                            
|Purchase of treasury shares                              |  |                            
|Payment of cash dividends                                |  |                            
|                                                         |  |                            
|Net cash from financing activities                       |  |                            
|                                                         |  |                            
|Net change in cash and cash equivalents                  |  |                            
|Cash and cash equivalents:                               |  |                            
|Beginning of period                                      |  |                            
|                                                         |  |                            
|End of period                                            |  |                            
|                                                         |  |                            

The accompanying notes
are an integral part of the condensed consolidated financial statements.

---

NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management, the
accompanying unaudited condensed consolidated financial statements include all
adjustments, consisting only of normal, recurring accruals, necessary for their fair
presentation in conformity with accounting principles generally accepted in the United
States of America (U.S. GAAP). Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities,
revenue, and expenses. Actual results and outcomes may differ from managements
estimates and assumptions.

The information included in this Form
10-Q should be read in conjunction with Managements Discussion and Analysis and
financial statements and notes thereto included in the Companys Annual Report on
Form 10-K for the year ended March 31, 2005.

Note 1  Accounting
Principles
The accounting principles followed in
the preparation of the financial information contained herein are the same as those
described in the Companys Annual Report on Form 10-K for the year ended March 31,
2005. Refer to the Annual Report on Form 10-K for detailed information on accounting
policies.

Note 2  Stock-Based
Compensation
The Company accounts for stock-based
compensation arrangements in accordance with the provisions of Accounting Principles Board
Opinion (APB) No. 25, Accounting for Stock Issued to Employees,
and complies with the disclosure provisions of SFAS No. 123, Accounting for
Stock-Based Compensation as amended by SFAS No. 148, Accounting for
Stock-Based Compensation. Under APB No. 25, compensation cost is determined based on
the difference, if any, on the grant date between the fair value of the Companys
stock and the amount an employee must pay to acquire the stock. Accordingly, no
compensation expense associated with the intrinsic value of stock option grants or shares
sold to employees under the Employee Stock Purchase Plan has been recognized in the
Companys financial statements.

---

Had compensation cost for the
Companys stock option plan been determined based on the fair value of options at the
grant date, net earnings and earnings per share would have been as follows (in thousands,
except per share information):

|                                                             |  | Three Months Ended
June 30,
|------------------------------------------------------------ |  | ---------------------------
|
|Net income, as reported                                      |  |                            
|Deduct:  Total stock-based compensation expense determined   |  |                            
|under the fair value based method for all awards, net of tax |  |                            
|                                                             |  |                            
|Proforma net income                                          |  |                            
|                                                             |  |                            
|                                                            
|Earnings per share:                                          |  |                            
|Basic - as reported                                          |  |                            
|                                                            
|Basic - proforma                                             |  |                            
|                                                            
|Diluted - as reported                                        |  |                            
|                                                            
|Diluted - proforma                                           |  |                            

Note 3  Marketable
Securities
The Company classifies its marketable
debt securities as available-for-sale and records these securities at fair market value.
Net realized and unrealized gains and losses are determined on the specific identification
cost basis. Any unrealized gains and losses, net of deferred income taxes, are included in
stockholders equity as a separate component of other comprehensive income. A decline
in the market value of any available-for-sale security below cost that is deemed other
than temporary, results in a charge to operations resulting in the establishment of a new
cost basis for the security. Realized securities gains or losses are included in
investment income in the consolidated statements of operations.

---

Note 4  Inventories
Inventories are valued at the lower
of cost (determined on a first-in, first-out basis) or market. Inventory reserves have
been established for potential product obsolescence. The components of inventories are as
follows (in thousands):

|                                  | June 30,
2005 | March 31,
2005
|--------------------------------- | ------------- | --------------
|Finished goods                    |               |               
|Raw materials and component parts |               |               
|                                  |               |               
|Total inventories                 |               |               
|                                  |               |               

Note 5  Net sales
Net sales by brand and geographic
area are as follows (in thousands):

|                              |  | Three Months Ended
June 30,
|----------------------------- |  | ---------------------------
|
|Domestic - Breathe Right      |  |                            
|Domestic - FiberChoice        |  |                            
|Domestic - Other              |  |                            
|                              |  |                            
|Total Domestic                |  |                            
|International - Breathe Right |  |                            
|                              |  |                            
|Total net sales               |  |                            
|                              |  |                            

Note 6 
Comprehensive Income
A reconciliation of total comprehensive income is as follows (in thousands):

|                                      |  | Three Months Ended
June 30,
|------------------------------------- |  | ---------------------------
|
|Net income                            |  |                            
|Unrealized gain(loss) on marketable   |  |                            
|securities, net of income tax effects |  |                            
|                                      |  |                            
|Total comprehensive income            |  |                            
|                                      |  |                            

---



Note 7  Earnings
Per Share
A reconciliation of weighted average
common and potential common shares outstanding is as follows (in thousands):

|                                           |  | Three Months Ended
June 30,
|------------------------------------------ |  | ---------------------------
|
|Average common shares outstanding          |  |                            
|Potential common shares                    |  |                            
|                                           |  |                            
|Average common and potential common shares |  |                            
|                                           |  |                            

For the three months ended June 30,
2005 all outstanding stock options were included in the calculation of potential common
shares because the exercise price of all options were lower than the average market price
for the three month period. For the three month period ended June 30, 2004 there were
336,320 options with a weighted average exercise price of $11.33 which were excluded from
the calculation of potential shares due to the exercise price of the options being higher
than the average market price for the three month period.

Note 8  Dividends
The Company declared a $.06 per share
cash dividend on April 26, 2005 for shareholders of record as of May 20, 2005. The amount
of dividend, paid on June 3, 2005, was $858,000. The Company paid dividends of $689,000
during the three months ended June 30, 2004.

Note 9  Income Taxes
As part of the process of preparing
financial statements, the Company is required to estimate income taxes, both state and
federal. This process involves management estimating the actual current tax exposure
together with assessing temporary differences resulting from different treatment for tax
and accounting purposes. These differences result in deferred tax assets and liabilities,
which are included within the consolidated balance sheet. Management must then assess the
likelihood that deferred tax assets will be utilized to offset future taxable income
during the periods in which these temporary differences are deductible. Management
believes that as of June 30, 2005, based on the level of historical taxable income and
projections of future taxable income for the periods in which the deferred tax assets are
deductible, that it is more likely than not the Company will realize the benefits of these
deductible differences.

---

Item 2.  Managements
Discussion and Analysis of Financial Condition and Results of Operations

Managements Discussion and
Analysis of Financial Condition and Results of Operations may contain statements that are
forward-looking. These statements are based on current expectations and assumptions that
are subject to risks and uncertainties. Actual results could differ materially because of
factors discussed under Forward-Looking Statements and elsewhere in this
report.

This Quarterly Report on Form 10-Q
should be read in conjunction with the Companys Annual Report on Form 10-K for the
year ended March 31, 2005.

OverviewWe are in the business of developing
and marketing consumer health care products, including Breathe Right® branded products
focused on better breathing, and FiberChoice® branded products focused on digestive
health. We operate in niche categories of the large over-the-counter health care market
with unique product offerings that are supported by strong advertising and promotion
programs. Our competitive strengths include our brands and patented technologies,
well-established distribution networks domestically and internationally, a flexible and
low-cost operating model and an experienced management team.

Our principal product, the Breathe
Right nasal strip, improves breathing by dilating the nasal passages. Nasal strips provide
temporary relief from nasal congestion and stuffiness resulting from a variety of health
conditions, and also reduce or eliminate snoring. Breathe Right nasal strips, and the
entire Breathe Right product line, provide consumers drug free better
breathing solutions. Breathe Right nasal strips are sold in the United States and 26
markets internationally.

The Breathe Right brand has been
further extended by the launch of new products such as Breathe Right Snore Relief throat
spray in fiscal 2003 and the launch of Breathe Right Vapor Shot! personal vaporizer
in fiscal 2004.

We entered the bulk fiber category in
March 2000 with the launch of the FiberChoice® brand. The original FiberChoice product
is an orange flavored chewable fiber tablet that offers consumers an effective, convenient
and good-tasting way to supplement their daily intake of dietary fiber. In March 2005, CNS
extended the FiberChoice line to include sugar-free chewable fiber tablets in assorted
fruit flavors and a low-sugar, hard candy fiber drop.

In addition to further organic
development and expansion of the Breathe Right® and FiberChoice brands, we are
exploring opportunities to acquire established consumer health care brands, product lines
and new technologies that complement our better breathing and digestive health platforms.

Results of Operations
For the quarter ended June 30, 2005,
net sales were $23.5 million, an increase of 42.4% versus net sales of $16.5 million for
the quarter ended June 30, 2004.

---

Domestic net sales for the quarter
ended June 30, 2005 of $19.9 million increased by $5.3 million or 36.6% compared to the
quarter ended June 30, 2004. Net sales of Breathe Right brand products increased by 22.5%
to $14.7 million relating to continued strong consumer demand resulting from effective
consumer marketing. Net sales of FiberChoice brand products of $5.2 million increased by
106.8% compared to the quarter ended June 30, 2004. Sales of FiberChoice brand products
were positively impacted by increased advertising and promotion support and sales of the
two new products launched in February 2005.

Breathe Right international net sales
for the quarter ended June 30, 2005 were $3.6 million compared to $1.9 million for the
quarter ended June 30, 2004. The increase in international net sales for the three months
ended June 30, 2005 is the result of resuming product shipments to our distributor in
Japan along with continued strong growth in Canada and Europe.

We believe the percentage
relationship between net sales and major expense lines in the statement of operations and
the percentage in the dollar amounts of each of the items presented below is important in
evaluating the performance of our business operations.

|                                    |  | Percentage of Sales
For three months Ended June 30, |  | % Inc. inDollar Amounts
|----------------------------------- |  | --------------------------------------------------- |  | -----------------------
|
|Sales                               |  |                                                     |  | 100.0%                 
|Gross profit                        |  |                                                     |  | 70.4%                  
|                                   
|Operating expenses:                 |  |                                                    
|Advertising and Promotion           |  |                                                     |  | 26.9%                  
|Selling, general and administrative |  |                                                     |  | 18.4%                  
|                                    |  |                                                     |  |                        
|Total operating expenses            |  |                                                     |  | 45.3%                  
|                                    |  |                                                     |  |                        
|Operating income                    |  |                                                     |  | 25.1%                  
|                                    |  |                                                     |  |                        

Gross profit was $16.6 million for
the June quarter of 2005 compared to $11.1 million for the quarter ended June 30, 2004.
Gross profit as a percentage of sales for the quarter ended June 30, 2005 increased to
70.4% compared to 67.4% for the three months ended June 30, 2004. The improved gross
profit percentage in the June quarter of 2005 was the result of lower product cost and
increased operational efficiencies.

Advertising and promotion expense for
the June quarter of 2005 was $6.3 million compared to $5.1 million for the same period of
2004, an increase of 22.9%. The $1.2 million increase in advertising and promotion expense
is partly the result of geographic expansion of FiberChoice advertising, as well as
support for the launch of new products. Advertising and promotion expense as a percent of
sales decreased from 31.1% for the quarter ended June 30, 2004 to 26.9% for the June 2005
quarter.

---

Selling, general and administrative
expenses were $4.3 million for the June quarter of 2005 compared to $3.6 million for the
same quarter of 2004. The increase is primarily the result of increased investment in
product development and research. Selling, general and administrative expense as a percent
of sales decreased from 21.6% for the quarter ended June 30, 2004 to 18.4% for the June
2005 quarter.

Operating income for the June quarter
of 2005 increased by 144.9% to $5.9 million compared to $2.4 million for the same quarter
of 2004. Operating income as a percentage of net sales increased to 25.1% for the quarter
ended June 30, 2005 from 14.6% for the quarter ended June 30, 2004. The increase in
operating profit was caused by the strong growth in sales volumes, the improvement in
gross profit margin explained above, as well as the improved efficiencies in operating
expenses.

Investment income was $321,000 for
the June quarter of 2005 compared to $214,000 for the same quarter of 2004. The increase
in market interest rates compared to the prior year quarter and an increase of $9.8
million in cash and marketable securities produced the increase in investment income. We
continue to increase the percentage of marketable securities invested in tax-exempt
investments that provide higher after-tax returns.

Net income for the quarter ended June
30, 2005 was $4.0 million compared to $1.7 million for the same quarter of 2004. Income
tax expense was $2.2 million or 35.0% of income before taxes for the June quarter of 2005
compared to $952,000 or 36.3% of income before taxes for the same quarter of 2004. The
reduction in the effective income tax rate reflects a shift from taxable investments to
tax-exempt securities and utilization of foreign export incentives.

Our financial position continues to
be strong, with cash and marketable securities of $60.0 million and no debt as of June 30,
2005.

Seasonality
The Company has experienced in the
past, and expects that it will continue to experience in the future, quarterly
fluctuations in both domestic and international sales and earnings. These fluctuations are
due in part to advertising levels and seasonality of sales, as well as increases and
decreases in purchases by distributors and retailers in anticipation of future demand by
consumers. The Company believes that significant portions of the Breathe Right®
product line are used for the temporary relief of nasal congestion and congestion-related
snoring. Sales of nasal congestion remedies are higher during the fall and winter seasons,
corresponding with the Companys third and fourth quarters.

Liquidity and Capital
ResourcesAs of June 30, 2005, we had cash and
marketable securities of $60.0 million and no debt on our balance sheet. The existing cash
and marketable securities may be used to acquire complementary consumer healthcare
businesses, pay dividends to our shareholders and/or buy back additional shares of CNS
common stock.

---

Cash generated from operating
activities for the quarter ended June 30, 2005 was $5.7 million, compared to $1.4 million
in the prior year period. The increase was driven by the growth in net income as well as
improvements in net operating assets and liabilities.

Purchases of marketable securities
exceeded sales and maturities by $494,000 for the first quarter of fiscal 2006.

There were 148,478 shares of common
stock issued for $696,000 during the three months ended June 2005 under our Employee Stock
Purchase Plan and shareholder approved equity compensation plans.

We repurchased 315,105 shares of
common stock for $6.3 million during the three months ended June 2005 at average prices of
$20.10 per share. We have authority to repurchase up to 110,400 additional shares of our
common stock in connection with the stock repurchase program that was authorized by the
board of directors.

Subsequent to the quarter end, the
Company announced that its board of directors authorized the repurchase of up to 1,000,000
additional shares of the Companys common stock under the Companys stock
repurchase program.

The board of directors declared a
$.06 per share cash dividend on April 26, 2005 for shareholders of record as of May 20,
2005. The amount of this dividend payment, paid on June 3, 2005, was $858,000. Dividends
of $689,000 were paid during the three months ended June 30, 2004.

We believe that our existing funds
and funds generated from operations will be sufficient to support its planned operations
for the foreseeable future.

Accounting Policies and
Recent Accounting Pronouncements

In preparing the consolidated
financial statements in conformity with accounting principles generally accepted in the
United States, we must make decisions that impact the reported amounts and related
disclosures. Such decisions include the selection of the appropriate principles to be
applied and the assumptions on which to base accounting estimates. In reaching such
decisions, we apply judgment based on our understanding and analysis of the relevant
circumstances.

The accounting principles followed in
the preparation of the financial information contained on Form 10-Q are the same as those
described in the Companys Annual Report on Form 10-K for the year ended March 31,
2005. Refer to the Annual Report on Form 10-K for detailed information on accounting
policies.

Forward-Looking Statements

Certain statements contained in this
Report on Form 10-Q and other written and oral statements made from time to time by the
Company do not relate strictly to historical or current facts but provide current
expectations or forecasts of future events. As such, they are considered

---

forward-looking
statements under the Private Securities Litigation Reform Act of 1995 and are
subject to certain risks and uncertainties that could cause actual results to differ
materially from those presently anticipated or projected. Such forward-looking statements
can be identified by the use of terminology such as may, will,
expect, plan, intend, anticipate,
estimate, or continue or similar words or expressions. It is not
possible to foresee or identify all factors affecting the Companys forward-looking
statements and investors therefore should not consider any list of factors to be an
exhaustive statement of all risks, uncertainties or potentially inaccurate assumptions.
Factors that could cause actual results to differ from the results discussed in the
forward-looking statements include, but are not limited to, the following factors: (i) the
Company depends on sales of Breathe Right nasal strips for the majority of its revenue;
(ii) the Companys business is subject to seasonality, with sales typically higher in
the fiscal third and fourth quarters of each year due to the cold/flu season and its
revenues and earnings may be impacted by the relative severity of such season; (iii) the
Companys success and future growth will depend significantly on its ability to
develop and achieve markets for additional products; (iv) the Companys competitive
position will, to some extent, be dependent on the enforceability and comprehensiveness of
the patents on its Breathe Right nasal strip technology which have been, and in the future
may be, the subject of litigation and could be narrowed as a result of the outcome of the
reexamination of one such patent by the United States Patent and Trademark Office; (v) the
Company has faced and will continue to face competition in its market; (vi) the Company
relies on third-party manufacturers for the production of all of its products; and (vii)
as of August 1, 2005, the Company relies on a single third-party manufacturer for the
production of its Breathe Right nasal strip products, with the raw materials being
supplied by a sole source and other factors and risks, including those set forth in the
Companys reports filed with the Securities and Exchange Commission, including those
risks identified in the section entitled Risk Factors in the Companys
Annual Report on Form 10-K for the year ended March 31, 2005. These forward-looking
statements are made as of the date of this report and the Company assumes no obligation to
update such forward-looking statements, or to update the reasons why actual results could
differ materially from those anticipated in such forward-looking statements.

---

Item 3.  Quantitative and
Qualitative Disclosures about Market Risk

The Companys market risk
exposure is primarily interest rate risk related to its cash, cash equivalents and
investments in marketable securities. The Companys risk to interest rate
fluctuations has not materially changed since March 31, 2005. See Item 7A of the
Companys Annual Report on Form 10-K for the year ended March 31, 2005.

Item 4.  Controls and
Procedures

# (a)  Evaluation of
Disclosure Controls and Procedures.

The Companys Chief Executive
Officer, Marti Morfitt, and Chief Financial Officer, Samuel E. Reinkensmeyer, have
evaluated the Companys disclosure controls and procedures as of the end of the
period covered by this report. Based upon that evaluation, they have concluded that as of
that date, the Companys disclosure controls and procedures are effective.

# (b)  Changes in Internal
Control Over Financial Reporting.

There have been no changes in
internal control over financial reporting that occurred during the fiscal quarter covered
by this report that have materially affected, or are reasonably likely to materially
affect, the Companys internal control over financial reporting.

---

PART II - OTHER
INFORMATION

|Item 1. |  | Legal Proceedings
|------- |  | -----------------

| |  | Not Applicable
| |  | --------------

|Item 2. |  | Unregistered Sales of Equity Securities and Use of Proceeds
|------- |  | -----------------------------------------------------------

| |  | The following
table provides certain information regarding purchases made by CNS, Inc. of its common
stock in the quarter covered by this report:
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------

Issuer
Purchases Of Equity Securities

|Period                   | Total Number ofShares Purchased | Average PricePaid per Share | Total Number ofShares Purchased as
Part of PubliclyAnnounced Plan orProgram | Maximum Number (orApproximate Dollar
Value) of Shares thatMay Yet Be PurchasedUnder the Plans orPrograms (1)
|------------------------ | ------------------------------- | --------------------------- | --------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------
|April 1 - April 30, 2005 | 55,105                          | $16.63                      | 55,105                                                                      | 370,400                                                                                                     
|May 1 - May 31, 2005     | 35,000                          | $19.31                      | 35,000                                                                      | 335,400                                                                                                     
|June 1 - June 30, 2005   | 225,000                         | $21.07                      | 225,000                                                                     | 110,400                                                                                                     
|Total                    | 315,105                         | $20.10                      | 315,105                                                                     | 110,400                                                                                                     

| | (1) |  | On
February  11,  2002,  the  Company  announced  that its board of  directors  had
approved a stock repurchase program  authorizing the Company to repurchase up to
1,000,000  shares of the  Companys  common stock from time to time in open
market transactions or in privately negotiated transactions.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | On
August 2, 2005, the board of directors authorized the Company to repurchased an additional
1,000,000 shares of the Companys common stock under the previous program that was
authorized as of February 2002.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 3. |  | Defaults Upon Senior Securities
|------- |  | -------------------------------

| |  | Not Applicable
| |  | --------------

|Item 4. |  | Submission of Matters to a Vote of Security Holders
|------- |  | ---------------------------------------------------

| |  | Not Applicable
| |  | --------------

|Item 5. |  | Other Information
|------- |  | -----------------

| |  | Not Applicable
| |  | --------------

---

|Item 6. |  | Exhibits
|------- |  | --------

| |  | The following
exhibits are filed as part of this Report:
| |  | --------------------------------------------------------

| | 10.1 |  | Amended
and Restated Supply Agreement dated as of August 1, 2005 between CNS, Inc. and Webtec
Converting, LLC.**
| | ---- |  | ----------------------------------------------------------------------------------------------------------------

| | 31.1 |  | Certifications
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Rules 13a-14 and 15d-14 of the Exchange Act).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 |  | Certifications
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(Rules 13a-14 and 15d-14 of the Exchange Act).
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------

| | 32 |  | Certifications
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350).
| | -- |  | --------------------------------------------------------------------------------------------

**
Certain portions of this Exhibit
have been deleted and filed separately with the Commission pursuant to a request for
confidential treatment under Rule 24b-2. Spaces corresponding to the deleted portions are
represented by brackets with asterisks.

---

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.

|      |                | CNS, INC.                                                                              
|----- | -------------- | ---------------------------------------------------------------------------------------
|     
|     
|Date: | August 5, 2005 | By:                                                                                    
|      |                | Marti MorfittPresident & Chief Executive Officer                                       
|     
|     
|Date: | August 5, 2005 | By:                                                                                    
|      |                | Samuel E. Reinkensmeyer
Vice President of Finance, ChiefFinancial Officer and Treasurer

---