|UNITED STATES
SECURITIES 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 September 30, 2003.

[    ]
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
(I.R.S. Employer
incorporation or organization)
Identification No.)


7615 Smetana Lane
Eden 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





Indicated by check mark whether the
registration is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



YES

NO X






At October 31, 2003, the Company had outstanding 13,666,318 shares of common stock, $.01 par value per share.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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CNS, Inc.
FORM 10-Q
For the Period Ended September 30, 2003
Index

|                               |  |                                                                                       | 
|------------------------------ |  | ------------------------------------------------------------------------------------- | 
|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.                        |  | Change in Securities and Use of Proceeds                                              | 
|Item 3.                        |  | Defaults Upon Senior Securities                                                       | 
|Item 4.                        |  | Submission of Matters to a Vote of Securities Holders                                 | 
|Item 5.                        |  | Other Information                                                                     | 
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                      | 
|SIGNATURES                     | 

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PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

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

|                                                            | September 30,2003 |  | March 31,2003 |        
|----------------------------------------------------------- | ----------------- |  | ------------- | -------
|                                                            |                   |  |               |        
|ASSETS                                                      |                   |  |               |        
|Current assets:                                             |                   | 
|Cash and cash equivalents                                   |                   |  | $             | 6,702  
|Marketable securities ( note 3 )                            |                   |  |               | 35,317 
|Accounts receivable, net                                    |                   |  |               | 13,458 
|Inventories  ( note 4 )                                     |                   |  |               | 5,558  
|Deferred income taxes                                       |                   |  |               | 1,483  
|Prepaid expenses and other current assets                   |                   |  |               | 2,073  
|                                                            |                   |  |               |        
|Total current assets                                        |                   |  |               | 64,591 
|Property and equipment, net                                 |                   |  |               | 1,629  
|Product rights, net                                         |                   |  |               | 1,125  
|Deferred income taxes                                       |                   |  |               | 890    
|                                                            |                   |  |               |        
|                                                            |                   |  | $             | 68,235 
|                                                            |                   |  |               |        
|                                                            |                   | 
|                                                            |                   | 
|LIABILITIES AND STOCKHOLDERS EQUITY                        |                   | 
|Current liabilities:                                        |                   | 
|Accounts payable and accrued expenses                       |                   |  | $             | 11,561 
|                                                            |                   |  |               |        
|Total current liabilities                                   |                   |  |               | 11,561 
|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 13,587 shares at          |                   | 
|September 30, 2003 and 13,306 shares at March 31, 2003      |                   |  |               | 193    
|Additional paid-in capital                                  |                   |  |               | 58,891 
|Treasury shares  at cost;  5,708 at September 30, 2003 and |                   | 
|5,989 at March 31, 2003                                     |                   |  |               | (24,499
|Retained earnings                                           |                   |  |               | 21,927 
|Accumulated other comprehensive income                      |                   |  |               | 162    
|                                                            |                   |  |               |        
|Total stockholders equity                                  |                   |  |               | 56,674 
|                                                            |                   |  |               |        
|                                                            |                   |  | $             | 68,235 
|                                                            |                   |  |               |        

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

---

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

|                                         | Three Months Ended
September 30, |  | Six Months Ended
September 30,
|---------------------------------------- | -------------------------------- |  | ------------------------------
|                                         |                                  |  |                               
|
|                                         |                                  |  |                               
|Net sales                                |                                  |  | $                             
|Cost of goods sold                       |                                  |  |                               
|                                         |                                  |  |                               
|Gross profit                             |                                  |  |                               
|                                         |                                  |  |                               
|Operating expenses:                      |                                  | 
|Advertising and promotion                |                                  |  |                               
|Selling, general and administrative      |                                  |  |                               
|                                         |                                  |  |                               
|Total operating expenses                 |                                  |  |                               
|                                         |                                  |  |                               
|Operating income                         |                                  |  |                               
|Interest income                          |                                  |  |                               
|                                         |                                  |  |                               
|Income before income taxes               |                                  |  |                               
|Income tax expense  ( note 9 )           |                                  |  |                               
|                                         |                                  |  |                               
|Net income                               |                                  |  | $                             
|                                         |                                  |  |                               
|                                         |                                  | 
|Basic net income per share  ( note 7 )   |                                  |  | $                             
|                                         |                                  |  |                               
|Diluted net income per share  ( note 7 ) |                                  |  | $                             
|                                         |                                  |  |                               
|Weighted average number of common        |                                  | 
|shares outstanding                       |                                  |  |                               
|                                         |                                  |  |                               
|Weighted average number of common and    |                                  | 
|assumed conversion shares outstanding    |                                  |  |                               
|                                         |                                  |  |                               

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

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

|                                                 | Six Months EndedSeptember 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                      |                               | 
|                                                 |                               | 
|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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The accompanying condensed
consolidated financial statements as of September 30, 2003 and 2002 and March
31, 2003 are unaudited but, in the opinion of management, include all
adjustments (consisting only of normal, recurring accruals) necessary for a fair
presentation of results for the periods presented.

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, 2003 with
the exception of the following new pronouncements being adopted during the six
month period ended September 30, 2003:

In December 2002, the FASB issued
Statement of Financial Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation. This statement supercedes SFAS No. 123,
Accounting for Stock-Based Compensation. This statement provides alternative
methods of transition for a voluntary change to the fair value based method of accounting
for stock-based compensation. In addition, the statement amends disclosure requirements to
require prominent disclosures in annual and interim financial statements about the method
of accounting used for stock-based employee compensation and the effect of the method used
on reported results. The annual disclosure provisions became effective for the Company for
the year ended March 31, 2003. The interim disclosure provisions became effective for the
Company for the interim period beginning April 1, 2003.

The Company implemented SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity for financial instruments entered into or modified after May
31, 2003. There was no material impact on the Companys consolidated financial
position or results of operations as the result of implementing this standard.

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 fair market 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):

|                                                | For the Three Months Ended
September 30, |  | For the Six Months Ended
September 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 gain
(loss) on sales of marketable securities in the consolidated statements of operations.

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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):

|                                  | September 30,2003 |  | March 31,2003 |      
|--------------------------------- | ----------------- |  | ------------- | -----
|                                  |                   |  |               |      
|Finished goods                    |                   |  | $             | 3,635
|Raw materials and component parts |                   |  |               | 1,923
|                                  |                   |  |               |      
|Total inventories                 |                   |  | $             | 5,558
|                                  |                   |  |               |      

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

|                         | Three Months EndedSeptember 30, |  | Six Months EndedSeptember 30,
|------------------------ | ------------------------------- |  | -----------------------------
|                         |                                 |  |                              
|
|                         |                                 |  |                              
|Domestic  Breathe Right |                                 |  | $                            
|Domestic  FiberChoice   |                                 |  |                              
|International            |                                 |  |                              
|Domestic  Other         |                                 |  |                              
|                         |                                 |  |                              
|Total net sales          |                                 |  | $                            
|                         |                                 |  |                              

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

|                                    | Three Months EndedSeptember 30, |  | Six Months EndedSeptember 30,
|----------------------------------- | ------------------------------- |  | -----------------------------
|                                    |                                 |  |                              
|
|                                    |                                 |  |                              
|Net income                          |                                 |  | $                            
|Unrealized gain(loss) on marketable |                                 | 
|securities, net of income tax       |                                 |  |                              
|                                    |                                 |  |                              
|Total comprehensive income          |                                 |  | $                            
|                                    |                                 |  |                              

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

|                                             | Three Months EndedSeptember 30, |  | Six Months EndedSeptember 30,
|-------------------------------------------- | ------------------------------- |  | -----------------------------
|                                             |                                 |  |                              
|
|                                             |                                 |  |                              
|Average common shares outstanding            |                                 |  |                              
|Assumed conversion of stock options          |                                 |  |                              
|                                             |                                 |  |                              
|Average common and assumed conversion shares |                                 | 
|                                             |                                 |  |                              
|                                             |                                 |  |                              

Note 8  Dividends
The Company declared a $.04 per share cash dividend on August 26, 2003 for
shareholders of record as of October 2, 2003 and paid on October 16, 2003. Total
amount of dividends paid on October 16, 2003 was $561,000. No dividends were
paid in the prior period.

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 September 30, 2003, 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 Discussionand Analysis of Financial Condition and Results of Operations

This Report on Form 10-Q should be
read in conjunction with the Companys Annual Report on Form 10-K for the period
ended March 31, 2003.

The Companys revenues are
derived primarily from the manufacture and sale of the Breathe Right® nasal strip,
which is a nonprescription, disposable device designed to improve nasal breathing and
temporarily relieve nasal congestion, and to reduce or eliminate snoring and breathing
difficulties due to nasal congestion resulting from colds, allergies, sinusitis, and
deviated nasal septum. The Company began marketing FiberChoice® chewable tablets, an
innovative bulk fiber supplement in March of 2000. The Company began marketing Breathe
Right Snore Relief throat spray in March of 2002. Snore Relief spray lubricates and
soothes dry throats, while a natural astringent firms loose tissue to reduce the
vibrations that cause snoring.

The Company introduced Vapor Shot!
personal vaporizer in March of 2003. Vapor Shot! which is packaged with a reusable cup,
vapor concentrating lid and 8 effervescent tablets, provides instant drug free relief from
nasal congestion due to colds and allergies.

The Company has experienced in the
past, and expects to experience in the future, quarterly fluctuations in both domestic and
international sales and earnings. These fluctuations are due in part to timing and levels
of marketing promotions and seasonality of sales, as described below, as well as increases
and decreases in purchases by distributors in anticipation of future demand by consumers.

Results of Operations

Net sales for the quarter ended
September 2003 were $20.6 million, an increase of 18.6% versus net sales of $17.4 million
in the quarter ended September 2002. Net sales for the quarter ended September 2003 were
favorably impacted by $618,000, primarily relating to a reduction of estimated promotional
spending liabilities. Net sales increased by 19.4% to $38.1 million for the six month
period ended September 2003 compared to $31.9 for the same period last year.

Domestic net sales were $18.7 million
for the September quarter of 2003 compared to $15.3 million for the same quarter of 2002,
an increase of 22.2%. Contributing to the results were increased sales of Breathe Right
nasal strips, strong initial sales of Breathe Right Vapor Shot! personal vaporizer to
retailers and strong growth in FiberChoice sales. For the six months ended September 2003,
domestic net sales increased 18.3% to $33.2 million compared to $28.1 million for the same
period of 2002. For the six months ended September 30, 2003, domestic Breathe Right net
sales were $28.6 million, an increase of 16.2% versus $24.6 million in the prior year and
FiberChoice net sales were $4.4 million, an increase of 30.3% from $3.4 million for the
same period of 2002.

---

International sales for the quarter
ended September 2003 were comparable to the same quarter of 2002 at $2.0 million.
International net sales for the six months ended September 2003 of $4.9 million increased
27.6% compared to net sales of $3.9 million for the same period of 2002.

Gross profit was $14.2 million for
the September quarter of 2003 compared to $11.5 million for the same quarter of 2002 and
was $26.2 million for the six months ended September 2003 compared to $20.7 million for
the same period of 2002. Gross profit as a percentage of net sales increased to 68.7% for
the September quarter of 2003 compared to 66.0% for the same quarter of 2002 and was 68.7%
for the six months ended September 2002 compared to 64.8% for the same period of 2002. The
higher gross profit percentage in 2003 resulted primarily from lower material costs and
reduced freight expense.

Advertising and promotion expense for
the September quarter of 2003 was $4.2 million compared to $2.9 million for the same
period of 2002 as a result of an increase in FiberChoice advertising spending of $1.3
million. For the six months ended September 2003, advertising and promotion expense was
$8.7 million compared to $7.0 million for the previous comparable period. For the six
months ended September 2003, expenditures for the FiberChoice brand increased by $2.5
million as a result of expanded advertising efforts. International advertising and
promotion expenses increased by $600,000, primarily due to a snoring advertising test in
Japan.

Selling, general and administrative
expenses were $3.4 million for the September quarter of 2003 compared to $3.0 million for
the same quarter of 2002, and were $6.8 million for the six months ended September 2003
compared to $5.8 million for the same period of 2002. This increase related to increased
spending for new product development. Selling, general and administrative expenses dropped
as a percentage of net sales from 18.1% for the six month period ended September 2002 to
17.7% for the six month period ended September 2003.

Operating income for the September
quarter of 2003 was $6.5 million compared to $5.6 million for the same quarter of 2002.
For the six months ended September 2003, operating income was $10.8 million compared to
$7.9 million for the same period of 2002.

Investment income was $183,000 for
the September quarter of 2003 compared to $240,000 for the same quarter of 2002.
Investment income for the six months ended September 2003 was $377,000 compared to
$468,000 for the comparable period of 2002. The decrease was primarily the result of lower
market interest rates, partially offset by higher balances of interest bearing assets.

Net income for the September quarter
of 2003 was $4.2 million compared to $3.5 million for the same quarter of 2002. Income tax
expense was $2.5 million or 37.0% of income before taxes for the September quarter of 2003
compared to $2.3 million or 39.5% of income before taxes for the same quarter of 2002. For
the six month period ended September 2003, net income was $7.0 million compared to $5.1
million for the comparable period of 2002. Income tax expense for the six months ended
September 2003 was $4.1 or 37.0% of income before taxes compared to $3.3 million or 39.4%
for the same period of 2002.

---

Seasonality

The Company believes that a portion
of Breathe Right nasal strip use is for the temporary relief of nasal congestion and
congestion-related snoring. Sales of nasal congestion remedies are higher during the fall
and winter seasons because of increased use during the cough/flu season.

Liquidity and Capital
Resources

At September 30, 2003, the Company
had cash, cash equivalents and marketable securities of $42.0 million and working capital
of $53.0 million.

Net cash of $427,000 was used for
operating activities during the six month period ended September 2003 compared with net
cash provided from operating activities of $9.4 million for the same period of 2002. Cash
provided by operations for the six month period ended September 2003 was impacted by
increases in accounts receivable, inventories, and prepaid expenses and the payment of
operating liabilities including a $1.0 million payment of estimated federal income tax.

The Company had net purchases of
$10.3 million of marketable securities during the six month period ended September 2003
compared to net purchases of $5.4 million for the same period of 2002.

The Company issued 280,526 shares of
common stock for $1.2 million during the six months ended September 2003 under its
Employee Stock Purchase Plan. The Company did not repurchase any shares of common stock in
the six months ended September 2003. The Company has authority to repurchase up to 531,600
shares of its common stock in connection with the repurchase program that has been
authorized by the board of directors.

The Company declared a $.04 per share
dividend on August 26, 2003 for shareholders of record as of October 2, 2003 and paid on
October 16, 2003. The total dividend payment was $561,000. No dividends were paid in the
prior period.

The Company believes that its
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, management must make decisions which 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, management applies judgement based on its 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,
2003 with the exception of the following new pronouncements being adopted during the six
month period ended September 30, 2003:

In December 2002, the FASB issued
Statement of Financial Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation. This statement supercedes SFAS No. 123,
Accounting for Stock-Based Compensation. This statement provides alternative
methods of transition for a voluntary change to the fair value based method of accounting
for stock-based compensation. In addition, the statement amends disclosure requirements to
require prominent disclosures in annual and interim financial statements about the method
of accounting used for stock-based employee compensation and the effect of the method used
on reported results. The annual disclosure provisions became effective for the Company for
the year ended March 31, 2003. The interim disclosure provisions became effective for the
Company for the interim period beginning April 1, 2003.

The Company implemented SFAS No. 150,
Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equity for financial instruments entered into or modified after May
31, 2003. There was no material impact on the Companys consolidated financial
position or results of operations as the result of implementing this standard.

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s
revenue and profitability is reliant on sales of Breathe Right nasal strips; (ii) the
Company currently has a seasonal pattern of sales that is typically higher in the fiscal
third and fourth quarters of each year due to increased nasal strip usage during the
cough/cold 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 effectively market Breathe Right nasal strips and upon
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 challenges in
successfully developing and introducing new products; (vi) the Company operates in
competitive markets where recent and potential entrants into the nasal dilator segment
pose competitive challenges; (vii) the Company is dependent upon contract manufacturers
for the production of substantially all of its products; and (viii) the Company currently
purchases most of its major components for its nasal strip products from different
contract manufacturers that obtain the raw materials from a single supplier.

Item 3. Quantitative and QualitativeDisclosures 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, 2003. See Item 7A of the
Companys Annual Report on Form 10-K for the year ended March 31, 2003.

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 review, they have concluded that these
controls and procedures are effective in ensuring that material information related to the
Company is made known to them by others within the Company.

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

There have been no significant
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 registrants internal control over financial reporting.

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PART II  OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable

Item 2. Changes in Securitiesand Use of Proceeds

Not Applicable

Item 3. Defaults Upon Senior Securities

Not Applicable

Item 4. Submission of Mattersto a Vote of Security Holders

On
August 27, 2003, CNS, Inc. held its Annual Meeting of Stockholders. Of the 13,432,318
shares of common stock entitled to vote, 12,898,363 were represented in person or by proxy
at the meeting and these shares were voted as follows:

1.    To
elect eight (8) directors to serve until the next Annual Meeting of Stockholders
or until their successors are duly elected.

|Nominee                | Votes For |  | Votes Withheld
|---------------------- | --------- |  | --------------
|Daniel E. Cohen        |           |  |               
|Patrick Delaney        |           |  |               
|R. Hunt Greene         |           |  |               
|Andrew J. Greenshields |           |  |               
|Marti Morfitt          |           |  |               
|H. Robert Hawthorne    |           |  |               
|Richard Perkins        |           |  |               
|Morris J. Siegel       |           |  |               

2.    To
amend the CNS, Inc. 2000 Stock Option Plan to increase the number of shares of
common stock authorized for issuance thereunder by 650,000.

| | Votes For |  |  | Votes Against |  |  | Votes Abstain |  |  | Broker Non-Vote | 
| | --------- |  |  | ------------- |  |  | ------------- |  |  | --------------- | 
| | 9,704,831 |  |  | 3,128,703     |  |  | 64,829        |  |  | 0               | 

3.    To ratify and approve the
appointment of KPMG LLP as independent auditors for the Company for the fiscal year ending March 31, 2004.

| | Votes For  |  |  | Votes Against |  |  | Votes Abstain |  |  | Broker Non-Vote | 
| | ---------- |  |  | ------------- |  |  | ------------- |  |  | --------------- | 
| | 11,938,119 |  |  | 937,786       |  |  | 22,458        |  |  | 0               | 

---

Item 5. Other Information

Not Applicable

Item 6. Exhibits and Reportson Form 8-K

The following exhibits are filed as part of this Report:

| |  | 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).
| |  | -- |  | --------------------------------------------------------------------------------------------

(b)    
Reports on Form 8-K

During
the quarter covered by this report, the Company furnished a Current Report on Form 8-K
dated July 17, 2003 reporting, under Item 12, the disclosure of information regarding its
results of operations for its quarter ended June 30, 2003 and attaching as an exhibit a
press release regarding its results of operations for that period under Item 7.

During
the quarter covered by this report, the Company also filed a Current Report on Form 8-K
dated August 26, 2003 reporting, under item 5, a quarterly dividend. A press release
related to the announcement of the dividend was attached as an exhibit under Item 7.

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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:   November 6, 2003 | By: /s/ Marti Morfitt Marti MorfittPresident & Chief Executive Officer                                               
|Date:   November 6, 2003 | By: /s/ Samuel E. ReinkensmeyerSamuel E. ReinkensmeyerVice President of Finance, ChiefFinancial Officer and Treasurer

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